Filed Pursuant to
Rule 424(b)(5)
File #333-49129-01
PROSPECTUS SUPPLEMENT
(to Prospectus dated November 17, 1998)
$1,833,159,000 (Approximate)
LB Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates,
Series 1998-C4
Structured Asset Securities Corporation (the "Depositor") will establish
the Trust. The Trust will issue the eight (8) classes of "Offered Certificates"
described in the table below, together with 11 additional classes of "Private
Certificates". The Offered Certificates are the only securities offered pursuant
to this prospectus supplement. The Private Certificates are not offered by this
prospectus supplement. The Private Certificates are subordinated to, and provide
credit enhancement for, the Offered Certificates.
The assets of the Trust will include a pool of 285 fixed rate, monthly pay
mortgage loans secured by first priority liens on 327 commercial and multifamily
residential properties. The mortgage pool will have an "Initial Pool Balance" of
approximately $2,025,590,706. The mortgage loans and related mortgaged
properties are more fully described in this prospectus supplement.
-----------------------------
You should fully consider the risk factors beginning on page S-27 in this
Prospectus Supplement prior to investing in the Offered Certificates.
-----------------------------
No governmental agency or instrumentality has insured or guaranteed the
Offered Certificates or the underlying mortgage loans.
The Offered Certificates will represent interests in the Trust only and
will not represent an interest in or obligations of any other party.
This prospectus supplement may be used to offer and sell the Offered
Certificates only if accompanied by the Depositor's prospectus
dated November 17, 1998.
<TABLE>
<CAPTION>
Approximate Initial % of
Certificate Balance or Initial Initial Pass- Assumed Final Expected Ratings
Offered Certificates Notional Amount(1) Pool Balance Through Rate(3) Distribution Date(5) CUSIP No. (Moody's/S&P)(6)
- -------------------- ------------------ ------------ --------------- -------------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1-a .......... $ 275,000,000 13.6% 5.870% August 2006 501773BZ7 Aaa/AAA
Class A-1-b .......... $ 693,553,000 34.2% 6.210% October 2008 501773CA1 Aaa/AAA
Class A-2 ............ $ 500,000,000 24.7% 6.300% October 2008 501773CB9 Aaa/AAA
Class B .............. $ 106,343,000 5.2% 6.360% October 2008 501773CC7 Aa2/AA
Class C .............. $ 106,344,000 5.3% 6.500% November 2008 501773CD5 A2/A
Class D .............. $ 121,535,000 6.0% 6.500% December 2008 501773CE3 Baa2/BBB
Class E .............. $ 30,384,000 1.5% 6.500% December 2008 501773CF0 Baa3/BBB-
Class X .............. $2,025,590,706(2) N/A 0.564%(4) September 2023 501773CG8 Aaa/AAAr
</TABLE>
(footnotes to table on next page)
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
Lehman Brothers Inc. (the "Underwriter") will purchase the Offered
Certificates from the Depositor, subject to the satisfaction of certain
conditions. The Underwriter currently intends to sell the Offered Certificates
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. See "Method of Distribution" in this
Prospectus Supplement. Proceeds to the Depositor from the sale of the Offered
Certificates will be an amount equal to approximately 104.0% of the initial
aggregate Certificate Balance of the Offered Certificates, plus accrued
interest, before deducting expenses payable by the Depositor.
LEHMAN BROTHERS
The date of this Prospectus Supplement is November 17, 1998
<PAGE>
Footnotes to the Table on the Cover of this Prospectus Supplement:
(1) The initial Certificate Balance or Notional Amount of any class of Offered
Certificates may be as much as 5% larger or smaller than the aggregate
principal balance or amount, as the case may be, shown in the table on the
cover for such class. The terms "Certificate Balance" and "Notional
Amount" are defined in this Prospectus Supplement under "Description of
the Offered Certificates--General".
(2) The Class X Certificates will not have a Certificate Balance and will not
entitle the holders thereof to any distributions of principal. The Class X
Certificates will accrue interest on a Notional Amount that is equal to
the aggregate of the Certificate Balances outstanding from time to time of
those classes of Certificates that do have Certificate Balances.
(3) In addition to distributions of interest, the holders of one or more
classes of the Offered Certificates may be entitled to receive a portion
of any prepayment premiums and/or yield maintenance charges received from
time to time on the underlying mortgage loans. See "Description of the
Offered Certificates--Distributions--Distributions of Prepayment Premiums
and Yield Maintenance Charges" in this Prospectus Supplement.
(4) The Pass-Through Rate shown in the table on the cover page for the Class X
Certificates is the rate applicable for distributions to be made in
December 1998. The Pass-Through Rate for such class is variable and will
be calculated pursuant to a formula described under "Description of the
Offered Certificates--Distributions--Calculations of Pass-Through Rates"
in this Prospectus Supplement.
(5) The table on the cover shows the month and year in which the Assumed Final
Distribution Date for each Class of Offered Certificates occurs. The
Assumed Final Distribution Date is described under "Summary of Prospectus
Supplement--Relevant Dates and Periods" in this Prospectus Supplement. The
Rated Final Distribution Date, which is also described under "Summary of
Prospectus Supplement--Relevant Dates and Periods" in this Prospectus
Supplement, occurs in October 2035.
(6) By Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services, a Division of the McGraw-Hill Companies, Inc. ("S&P";
and, together with Moody's, the "Rating Agencies"). See "Ratings" in this
Prospectus Supplement.
Important Notice about the Information Contained in this Prospectus Supplement
and the Accompanying Prospectus
Information about the Offered Certificates is contained in two separate
documents, each of which provides summary information in the front part thereof
and more detailed information in the text that follows: (a) the accompanying
prospectus dated November 17, 1998 (the "Prospectus"), which provides general
information, some of which may not apply to the Offered Certificates; and (b)
this prospectus supplement dated November 17, 1998 (this "Prospectus
Supplement"), which describes the specific terms of the Offered Certificates.
You are urged to read both the Prospectus and this Prospectus Supplement
in full to obtain material information concerning the Offered Certificates. If
the descriptions of the Offered Certificates vary between this Prospectus
Supplement and the Prospectus, you should rely on the information contained in
this Prospectus Supplement. You should only rely on the information contained in
this Prospectus Supplement and the Prospectus. The Depositor has not authorized
any person to give any information or to make any representation that is
different.
This Prospectus Supplement and the Prospectus include cross-references to
sections in these materials where you can find further related discussions. The
Table of Contents in this Prospectus Supplement and the Prospectus identify the
pages where these sections are located.
This Prospectus Supplement uses certain capitalized terms that are defined
either in a different section of this Prospectus Supplement or in the
Prospectus. This Prospectus Supplement includes an "Index of Principal
Definitions" that identifies where to locate any definitions contained in this
Prospectus Supplement for those capitalized terms that are most significant or
are most commonly used and that are not otherwise defined in the Prospectus. The
Prospectus contains a "Glossary" in which various significant or commonly used
terms are defined.
This Prospectus Supplement and the Prospectus include words such as
"expects", "intends", "anticipates", "estimates" and similar words and
expressions. Such words and expressions are intended to identify forward-looking
statements. Any forward-looking statements are made subject to risks and
uncertainties which could cause actual results to differ materially from those
stated. Such risks and uncertainties include, among other things, declines in
general economic and business conditions, increased competition, changes in
demographics, changes in political and social conditions, regulatory initiatives
and changes in customer preferences, many of which are beyond the control of the
Depositor, the Master Servicer, the Special Servicer, the Trustee or any related
borrower. The forward-looking statements set forth in this Prospectus Supplement
are made as of the date of this Prospectus Supplement. The Depositor has no
obligation to update or revise any such forward-looking statement.
-----------------------------
The Depositor has filed with the Securities and Exchange Commission (the
"SEC") a registration statement (of which this Prospectus Supplement and the
Prospectus form a part) under the Securities Act of 1933, as amended, with
respect to the Offered Certificates. This Prospectus Supplement and the
Prospectus do not contain all of the information contained in the registration
statement. For further information regarding the documents referred to in this
Prospectus Supplement and the Prospectus, you should refer to the registration
statement and the exhibits thereto. The registration statement and such exhibits
can be inspected and copied at prescribed rates at the public reference
facilities maintained by the SEC at its Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549,
S-2
<PAGE>
and at its Regional Offices located at: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 6066; and New York Regional
Office, Seven World Trade Center, New York, New York 10048. Copies of such
materials can also be obtained electronically through the SEC's Internet Web
Site (http://www.sec.gov).
-----------------------------
The Underwriter is offering the Offered Certificates when, as and if
issued and delivered to and accepted by the Underwriter, subject to prior sale
and subject to the Underwriter's right to reject orders in whole or in part. It
is expected that the Offered Certificates will be delivered in book-entry form
through the Same-Day Funds Settlement System of The Depository Trust Company on
or about November 24, 1998, against payment therefor in immediately available
funds.
There is currently no secondary market for the Offered Certificates. The
Underwriter has informed the Depositor that it presently intends to make a
secondary market in the Offered Certificates, but it is not obligated to do so.
There can be no assurance that such a market will develop or, if it does
develop, that it will continue. The Depositor does not intend to list the
Offered Certificates on any securities exchange. See "Risk Factors--Risks
Related to the Certificates--Limited Liquidity" in this Prospectus Supplement.
-----------------------------
S-3
<PAGE>
TABLE OF CONTENTS
Page
----
IMPORTANT NOTICE ABOUT
THE INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS.............................................S-2
EXECUTIVE SUMMARY..........................................................S-6
SUMMARY OF PROSPECTUS SUPPLEMENT...........................................S-7
RISK FACTORS..............................................................S-27
Risks Related to the Offered Certificates...........................S-27
Risks Related to the Mortgage Loans.................................S-29
DESCRIPTION OF THE MORTGAGE POOL..........................................S-40
General.............................................................S-40
Certain Terms and Conditions of
the Mortgage Loans...............................................S-42
Credit Lease Loans..................................................S-46
Assessments of Property Condition...................................S-48
Additional Mortgage Loan Information................................S-48
Mortgage Pool Characteristics.......................................S-50
Assignment of the Mortgage Loans....................................S-69
Representations and Warranties......................................S-70
Cures and Repurchases...............................................S-71
Changes in Mortgage Pool Characteristics............................S-71
SERVICING OF THE MORTGAGE LOANS...........................................S-72
General.............................................................S-72
The Master Servicer and the Special Servicer........................S-74
Servicing and Other Compensation
and Payment of Expenses..........................................S-74
Evidence as to Compliance...........................................S-78
Modifications, Waivers, Amendments
and Consents.....................................................S-78
Custodial Account...................................................S-80
The Controlling Class Representative................................S-82
Realization Upon Defaulted Mortgage Loans;
Sale of Defaulted Mortgage Loans
and REO Properties...............................................S-83
REO Properties......................................................S-85
Inspections; Collection of Operating Information....................S-86
Replacement of the Master Servicer
or the Special Servicer..........................................S-86
Maintenance of Insurance............................................S-87
Certain Matters Regarding the Depositor,
the Master Servicer and the Special Servicer.....................S-87
Events of Default...................................................S-88
Rights Upon Event of Default........................................S-89
DESCRIPTION OF THE OFFERED CERTIFICATES...................................S-90
General.............................................................S-90
Registration and Denominations......................................S-92
Collection Account..................................................S-92
Seniority...........................................................S-93
Certain Relevant Characteristics of
the Mortgage Loans...............................................S-94
Distributions.......................................................S-95
Allocation of Realized Losses and
Certain Other Shortfalls and Expenses...........................S-105
P&I Advances.......................................................S-106
Appraisal Reductions...............................................S-107
Reports to Certificateholders;
Certain Available Information...................................S-108
Voting Rights......................................................S-113
Amendment..........................................................S-113
Termination........................................................S-114
The Trustee........................................................S-114
The Fiscal Agent ..................................................S-114
YIELD AND MATURITY CONSIDERATIONS........................................S-115
Yield Considerations...............................................S-115
Price/Yield Tables.................................................S-117
Weighted Average Lives.............................................S-119
USE OF PROCEEDS..........................................................S-120
FEDERAL INCOME TAX CONSEQUENCES..........................................S-120
General............................................................S-120
Discount and Premium; Prepayment Premiums..........................S-120
Constructive Sales of Class X Certificates.........................S-122
Characterization of Investments in
Offered Certificates............................................S-122
Possible Taxes on Income From
Foreclosure Property and Other Taxes............................S-122
Reporting and Other Administrative Matters.........................S-123
CERTAIN ERISA CONSIDERATIONS.............................................S-123
LEGAL INVESTMENT.........................................................S-126
METHOD OF DISTRIBUTION...................................................S-127
LEGAL MATTERS............................................................S-127
RATINGS..................................................................S-128
INDEX OF PRINCIPAL DEFINITIONS...........................................S-130
S-4
<PAGE>
Page
----
ANNEX A-1--CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS................... A-1
The Mortgage Pool
Loan Group 1
Loan Group 2
ANNEX A-2--CERTAIN MONETARY TERMS OF THE MORTGAGE LOANS.................... A-2
Loan Group 1
Loan Group 2
ANNEX A-3--CERTAIN ADDITIONAL INFORMATION REGARDING
THE GROUP 2 MORTGAGED PROPERTIES................................ A-3
ANNEX A-4--CERTAIN INFORMATION REGARDING RESERVES.......................... A-4
Loan Group 1
Loan Group 2
ANNEX B--TERM SHEET.........................................................B-1
ANNEX C-1--PRICE/YIELD TABLES...............................................C-1
ANNEX C-2--DECREMENT TABLES.................................................C-2
ANNEX D--FORM OF DELINQUENT LOAN STATUS REPORT..............................D-1
ANNEX E--FORM OF HISTORICAL LOAN MODIFICATION REPORT........................E-1
ANNEX F--FORM OF HISTORICAL LOSS ESTIMATE REPORT............................F-1
ANNEX G--FORM OF REO STATUS REPORT..........................................G-1
ANNEX H--FORM OF WATCH LIST REPORT..........................................H-1
ANNEX I--FORM OF OPERATING STATEMENT ANALYSIS...............................I-1
ANNEX J--FORM OF NOI ADJUSTMENT WORKSHEET...................................J-1
ANNEX K--FORM OF COMPARATIVE FINANCIAL STATUS REPORT........................K-1
S-5
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
This Executive Summary summarizes selected information relating to the
Offered Certificates. It does not contain all of the information you need to
consider in making your investment decision. To understand all of the terms of
the offering of the Offered Certificates, you should read carefully this
Prospectus Supplement and the accompanying Prospectus in full.
<TABLE>
<CAPTION>
Initial Approx. Initial Weighted
Certificate % of Approx. Pass-Through Pass- Average
Balance or Initial Pool Initial Credit Rate Through Life Principal
Class(es) Ratings(1) Notional Amount(2) Balance Support(3) Description Rate (years)(4) Window(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
A-1-a Aaa/AAA $ 275,000,000 13.6% 27.50% Fixed 5.870% 5.085 12/98 - 8/06
A-1-b Aaa/AAA $ 693,553,000 34.2% 27.50% Fixed 6.210% 9.613 8/06 - 10/08
A-2 Aaa/AAA $ 500,000,000 24.7% 27.50% Fixed 6.300% 8.388 12/98 - 10/08
B Aa2/AA $ 106,343,000 5.2% 22.25% Fixed 6.360% 9.892 10/08 - 10/08
C A2/A $ 106,344,000 5.3% 17.00% Fixed 6.500% 9.916 10/08 - 11/08
D Baa2/BBB $ 121,535,000 6.0% 11.00% Fixed 6.500% 9.999 11/08 - 12/08
E Baa3/BBB- $ 30,384,000 1.5% 9.50% Fixed 6.500% 10.058 12/08 - 12/08
Variable IO
X Aaa/AAAr $ 2,025,590,706(5) N/A N/A Strip Rate 0.564% N/A 12/98 - 9/23
Private Certificates--Not Offered Hereby(6)
F (7) $ 50,640,000 2.5% 7.00% Fixed 6.000% 10.058 12/08 - 12/08
G (7) $ 45,576,000 2.3% 4.75% Fixed 5.600% 11.795 12/08 - 5/13
H (7) $ 15,192,000 0.8% 4.00% Fixed 5.600% 14.659 5/13 - 8/13
J (7) $ 20,255,000 1.0% 3.00% Fixed 5.600% 14.932 8/13 - 9/14
K (7) $ 10,128,000 0.5% 2.50% Fixed 5.600% 16.557 9/14 - 3/16
L (7) $ 15,192,000 0.8% 1.75% Fixed 5.600% 18.009 3/16 - 10/17
M (7) $ 10,128,000 0.5% 1.25% Fixed 5.600% 19.351 10/17 - 6/18
N (7) $ 25,320,706 1.3% 0.00% Fixed 5.600% 20.088 6/18 - 9/23
</TABLE>
- -----------------
(1) Ratings shown are those of Moody's and S&P, respectively. Classes marked
"NR" will not be rated by the applicable rating agency.
(2) Depending on the actual size of the Initial Pool Balance, the initial
Certificate Balance or Notional Amount of any class of Certificates may be
as much as 5% larger or smaller than the aggregate principal balance or
notional amount shown above.
(3) Represents the aggregate initial Certificate Balance (expressed as a
percentage of the Initial Pool Balance) of all classes of Certificates
that are subordinate to the indicated class.
(4) Based on the assumptions that each borrower timely makes all payments on
its mortgage loan, that each mortgage loan with an Anticipated Repayment
Date (as defined under "Summary of Prospectus Supplement--The Mortgage
Loans and Mortgaged Properties" in this Prospectus Supplement) is paid in
full on such date, and that no mortgage loan is otherwise prepaid prior to
stated maturity. Further based on the other Modeling Assumptions (as
defined under "Yield and Maturity Considerations" in this Prospectus
Supplement).
(5) Notional Amount.
(6) Information in this Prospectus Supplement regarding the terms of the
Private Certificates is provided solely because of its potential relevance
to an investment decision with respect to the Offered Certificates.
(7) Not presented.
- --------------------------------------------------------------------------------
S-6
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary contains selected information from this Prospectus
Supplement. It does not contain all of the information you need to consider in
making your investment decision. To understand all of the terms of the offering
of the Offered Certificates, you should read carefully this Prospectus
Supplement and the Prospectus in full.
Overview of the Transaction
Establishment of the Trust..........The Depositor is establishing a trust, to be
designated as LB Commercial Mortgage Trust
(the "Trust"). The assets of the Trust
(collectively, the "Trust Fund") will
primarily consist of a pool of certain
multifamily and commercial mortgage loans
having the characteristics described in this
Prospectus Supplement (collectively, the
"Mortgage Loans").
Issuance of the Certificates........The Depositor is establishing the Trust for
purposes of issuing the Series 1998-C4
Commercial Mortgage Pass-Through
Certificates (the "Certificates") in
multiple classes (each, a "Class"). The
Certificates will, in the aggregate,
represent the entire beneficial ownership of
the Trust. The registered holders of the
Certificates are referred to in this
Prospectus Supplement as "Holders" or
"Certificateholders".
The Governing Document..............The governing document for purposes of
establishing the Trust and issuing the
Certificates will be a Pooling and Servicing
Agreement to be dated as of the Cut- off
Date, between the Depositor, the Trustee,
the Master Servicer and the Special Servicer
(the "Pooling Agreement"). See "--The
Relevant Parties" and "--Relevant Dates and
Periods" below. The Pooling Agreement will
also govern the servicing and administration
of the Mortgage Loans and the other assets
of the Trust. A copy of the Pooling
Agreement will be filed with the SEC as an
exhibit to a Current Report on Form 8-K
("Form 8-K"), within 15 days after the
initial issuance of the Offered
Certificates. The SEC will make such Form
8-K and its exhibits available to the public
for inspection.
Relevant Parties
Depositor ..........................Structured Asset Securities Corporation, a
special purpose Delaware corporation. The
Depositor is a direct, wholly-owned
subsidiary of the Underwriter. See "--The
Issuer" in the Prospectus.
Master Servicer.....................First Union National Bank, a national
banking association. See "Servicing of the
Mortgage Loans--The Master Servicer and the
Special Servicer--The Master Servicer" in
this Prospectus Supplement.
Special Servicer....................Lennar Partners, Inc., a Florida
corporation. See "Servicing of the Mortgage
Loans--The Master Servicer and the Special
Servicer--The Special Servicer" in this
Prospectus Supplement.
The Holder (or Holders) of Certificates
representing a majority interest in the
Controlling Class will have the right,
subject to certain conditions described in
this Prospectus Supplement, to replace the
Special Servicer and, further, to elect a
representative from whom the Special
Servicer will seek advice and approval and
take direction. At any particular time, the
"Controlling Class" will, in general, be the
most subordinate Class of Certificates
(other than the Class X, Class R-I, Class
R-II and Class R-III Certificates)
outstanding with a then-current Certificate
Balance that is at least equal to 25% of the
initial Certificate Balance thereof. See
"Servicing of the Mortgage
Loans--Replacement of the Master Servicer or
Special Servicer" and "--Controlling Class
Representative" in this Prospectus
Supplement.
- --------------------------------------------------------------------------------
S-7
<PAGE>
- --------------------------------------------------------------------------------
Trustee.............................LaSalle National Bank, a national banking
association. See "Description of the Offered
Certificates--The Trustee" in this
Prospectus Supplement. The Trustee will also
have certain duties with respect to REMIC
administration (in such capacity, the "REMIC
Administrator").
Fiscal Agent........................ABN AMRO Bank N.V., a Netherlands banking
corporation. See "Description of the Offered
Certificates--The Fiscal Agent" in this
Prospectus Supplement.
Relevant Dates and Periods
Cut-off Date........................In general, November 1, 1998. The Cut-off
Date is the date as of which each particular
Mortgage Loan became part of the Trust. As
to any individual Mortgage Loan, the Cut-off
Date is its Due Date occurring in November
1998 (or, if it was originated during such
calendar month, its date of origination).
References in this Prospectus Supplement and
in the Prospectus to the "Cut-off Date" are
to the applicable Cut-off Date for each
Mortgage Loan.
Closing Date........................On or about November 24, 1998. The Closing
Date is the date on which the Offered
Certificates will initially be issued.
Distribution Date...................The 15th day of each month or, if any such
15th day is not a business day, the next
succeeding business day. The first
Distribution Date will be December 15, 1998.
The Distribution Date is the date each month
on which distributions are to be made on the
Certificates.
Record Date.........................With respect to any Distribution Date, the
last business day of the calendar month
immediately preceding the month in which
such Distribution Date occurs. The Record
Date is relevant for establishing which
Certificateholders are entitled to receive
distributions on the related Distribution
Date.
Determination Date..................In general, with respect to any Mortgage
Loan and Distribution Date, the 8th day of
the calendar month in which such
Distribution Date occurs or, if any such 8th
day is not a business day, the immediately
preceding business day. Solely in the case
of the Mortgage Loan identified in this
Prospectus Supplement as the "Fresno Loan",
however, the Determination Date for any
Distribution Date will be the 10th day of
the calendar month in which such
Distribution Date occurs or, if any such
10th day is not a business day, the
immediately following business day.
References in this Prospectus Supplement and
in the Prospectus to "Determination Date"
are to the applicable Determination Date for
each Mortgage Loan and Distribution Date.
The Determination Date is relevant for
purposes of establishing the end of the
Collection Period for the related
Distribution Date.
Collection Period...................With respect to any Mortgage Loan for any
Distribution Date, the period that begins
immediately following the Determination Date
in the calendar month prior to the month in
which such Distribution Date occurs and
continues through and includes the
Determination Date in the calendar month in
which such Distribution Date occurs, except
that the first Collection Period begins
immediately following the Cut-off Date.
References in this Prospectus Supplement and
in the Prospectus to "Collection Period" are
to the applicable Collection Period for each
Mortgage Loan and Distribution Date. Amounts
available for distribution on any
Distribution Date will be a function of the
payments and other collections received, and
any advances of payments due, in respect of
each Mortgage Loan during the related
Collection Period.
- --------------------------------------------------------------------------------
S-8
<PAGE>
- --------------------------------------------------------------------------------
Interest Accrual Period.............With respect to any Distribution Date, the
calendar month immediately preceding the
month in which such Distribution Date
occurs. The amount of interest distributable
with respect to the interest-bearing
Certificates on any Distribution Date will
be a function of the interest accrued
through the end of the related Interest
Accrual Period.
Rated Final Distribution Date...... The Distribution Date in October 2035. As
discussed in this Prospectus Supplement, the
ratings assigned to the Offered Certificates
will represent the likelihood of timely
receipt by the Holders thereof of all
interest to which they are entitled on each
Distribution Date and, except in the case of
the Class X Certificates, the ultimate
receipt by the Holders thereof of all
principal to which they are entitled by the
Rated Final Distribution Date.
Assumed Final Distribution Date.....With respect to any Class of Certificates,
the Distribution Date on which the Holders
of such Certificates would be expected to
receive their last distribution based upon--
o The assumption that each borrower timely
makes all payments on its Mortgage Loan.
o The assumption that each underlying
Mortgage Loan with an Anticipated
Repayment Date is paid in full on that
date.
o The assumption that no borrower otherwise
prepays its Mortgage Loan prior to stated
maturity.
o The other Modeling Assumptions set forth
under "Yield and Modeling Assumptions" in
this Prospectus Supplement.
The Assumed Final Distribution Date for each
Class of Offered Certificates is the
Distribution Date in the calendar month and
year set forth below for such Class.
Assumed Final
Class Distribution Date
----- -----------------
Class A-1-a August 2006
Class A-1-b October 2008
Class A-2 October 2008
Class B October 2008
Class C November 2008
Class D December 2008
Class E December 2008
Class X September 2023
Overview of the Certificates
General.............................The Certificates will consist of 19 Classes,
eight (8) of which will be Classes of
Offered Certificates and 11 of which will be
Classes of Private Certificates. The Offered
Certificates are the only securities being
offered pursuant to this Prospectus
Supplement. The Depositor does not intend to
register any of the Private Certificates
under the Securities Act of 1933, as amended
(the "Securities Act"), and is not offering
such Certificates to you pursuant to this
Prospectus Supplement or the Prospectus. The
Depositor has included information regarding
the Private Certificates in this Prospectus
Supplement because of its potential
relevance to an investment decision with
respect to the Offered Certificates.
- --------------------------------------------------------------------------------
S-9
<PAGE>
- --------------------------------------------------------------------------------
Certain Characteristics of
the Certificates
A. The Offered Certificates.........Each Class of Offered Certificates will have
the approximate initial Certificate Balance
or Notional Amount as set forth below,
subject to a variance of plus or minus 5%,
and will accrue interest at an annual rate
(the "Pass-Through Rate") as set forth or
otherwise described below:
Approx. Initial
Certificate Balance Pass-Through
Class or Notional Amount Rate
----- ------------------ ----
Class A-1-a $ 275,000,000 5.870%
Class A-1-b $ 693,553,000 6.210%
Class A-2 $ 500,000,000 6.300%
Class B $ 106,343,000 6.360%
Class C $ 106,344,000 6.500%
Class D $ 121,535,000 6.500%
Class E $ 30,384,000 6.500%
Class X $2,025,590,706(1) 0.564%(2)
---------------
(1) The Class X Certificates will accrue
interest based on a Notional Amount
equal to the aggregate of the
Certificate Balances outstanding from
time to time of those Classes of
Certificates that have Certificate
Balances.
(2) The Pass-Through Rate shown above for
the Class X Certificates is the rate
applicable for the Distribution Date in
December 1998. The Pass-Through Rate for
such Class will be variable and will be
determined pursuant to a formula
described under "Description of the
Offered Certificates--Distributions--
Calculations of Pass-Through Rates" in
this Prospectus Supplement. Based on
such formula, the Pass-Through Rate for
such Class will generally be a function
of the weighted average of the strip
rates at which interest accrues on the
respective components of the Notional
Amount of the Class X Certificates from
time to time.
See "Description of the Offered
Certificates--General" and
"--Distributions--Calculations of
Pass-Through Rates" in this Prospectus
Supplement.
B. The Private Certificates........Each Class of the Private Certificates will
have the approximate initial Certificate
Balance as set forth below, subject to a
variance of plus or minus 5%, and will
accrue interest at the Pass-Through Rate as
set forth below:
Approx. Initial Pass-Through
Class Certificate Balance Rate
----- ------------------- ----
Class F $ 50,640,000 6.000%
Class G $ 45,576,000 5.600%
Class H $ 15,192,000 5.600%
Class J $ 20,255,000 5.600%
Class K $ 10,128,000 5.600%
Class L $ 15,192,000 5.600%
Class M $ 10,128,000 5.600%
Class N $ 25,320,706 5.600%
Registration and Denominations......The Trust will be issuing the Offered
Certificates in book-entry form in original
denominations of: (i) in the case of the
Class X Certificates, $250,000 initial
notional amount and in any whole dollar
denomination in excess thereof; and (ii) in
the case of the other Classes of Offered
Certificates, $10,000 initial principal
amount and in any whole dollar denomination
in excess thereof. Each Class of Offered
Certificates will be represented by one or
more Certificates registered in the name of
Cede & Co., as nominee of The Depository
Trust Company ("DTC").
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S-10
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As a result, you will not receive a fully
registered physical certificate representing
your interest in any Offered Certificate,
except under the limited circumstances
described in this Prospectus Supplement and
in the Prospectus. See "Description of the
Offered Certificates--Registration and
Denominations" in this Prospectus Supplement
and "Description of the
Securities--Book-Entry Registration" in the
Prospectus.
Optional Termination ...............The Trust may be terminated when the
aggregate Stated Principal Balance (as
defined under "Description of the Offered
Certificates--Certain Relevant
Characteristics of the Mortgage Loans" in
this Prospectus Supplement) of the Mortgage
Pool is less than 1.0% of the Initial Pool
Balance. See "Description of the Offered
Certificates--Termination" in this
Prospectus Supplement.
Federal Income
Tax Consequences .................The Pooling Agreement will require the
Trustee, as REMIC Administrator, to make
elections to treat designated portions of
the Trust Fund as three separate "real
estate mortgage investment conduits" (each,
a "REMIC"). The lowest-tier REMIC will hold,
among other things, the Mortgage Loans, as
well as any Mortgaged Properties (as defined
in this Prospectus Supplement under "--The
Mortgage Loans and Mortgaged Properties"
below) that may have been acquired by the
Trust following a borrower default, but will
exclude collections of certain additional
interest accrued (and deferred as to
payment) in respect of each Mortgage Loan
with an Anticipated Repayment Date that
remains outstanding thereafter (such
excluded collections of additional interest
are referred to in this Prospectus
Supplement as the "Non-REMIC Assets"). The
Non-REMIC Assets will collectively
constitute a grantor trust (the "Grantor
Trust") for federal income tax purposes. The
Offered Certificates will evidence "regular
interests" in a REMIC. The Offered
Certificates (other than the Class A-1-a and
Class X Certificates) will also represent
pro rata undivided beneficial interests in
the Grantor Trust.
As a result of the foregoing, the Offered
Certificates will be treated as newly issued
debt instruments for federal income tax
purposes. You will have to report income on
your Certificates in accordance with the
accrual method of accounting even if you are
otherwise a cash method taxpayer.
The Class D, Class E and Class X
Certificates will, and the other Classes of
Offered Certificates will not, be issued
with original issue discount. If you own a
Certificate issued with original issue
discount, you may be required to report
original issue discount income before
receiving a corresponding amount of cash.
For tax information reporting purposes, the
Trustee, as REMIC Administrator, will
compute the accrual of discount and premium
on the Certificates based on the assumption
that each Mortgage Loan with an Anticipated
Repayment Date will be paid in full on such
date and on the further assumption that no
borrower will otherwise prepay its Mortgage
Loan prior to stated maturity.
It is anticipated that any prepayment
premium or yield maintenance charge
allocable to a Class of Offered Certificates
will be ordinary income to the Holders of
such Class as such amounts become due to the
Trust. See "Description of the Offered
Certificates-- Distributions--Distributions
of Prepayment Premiums and Yield Maintenance
Charges" in this Prospectus Supplement.
For a more detailed discussion of the
federal income aspects of investing in the
Certificates, see "Federal Income Tax
Consequences" in this Prospectus Supplement
and "Federal Income Tax Considerations" in
the Prospectus.
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ERISA...............................It is anticipated that certain employee
benefit plans and other retirement
arrangements subject to Title I of ERISA or
Section 4975 of the Code will be able to
invest in the Class A-1-a, Class A-1-b,
Class A-2 and Class X Certificates, without
giving rise to a prohibited transaction,
based upon an individual prohibited
transaction exemption granted to the
Underwriter by the U.S. Department of Labor.
However, investments in the other Offered
Certificates by, on behalf of or with assets
of such entities, will be restricted as
described under "Certain ERISA
Considerations" in this Prospectus
Supplement.
If you are a fiduciary of any employee
benefit plan or other retirement arrangement
subject to Title I of ERISA or section 4975
of the Code, you should review carefully
with your legal advisors whether the
purchase or holding of the Offered
Certificates could give rise to a
transaction that is prohibited under ERISA
or Section 4975 of the Code. If you are
using funds of an insurance company general
account to purchase any Offered
Certificates, you should consider the
availability of Prohibited Transaction Class
Exemption 95-60. See "Certain ERISA
Considerations" in this Prospectus
Supplement and "ERISA Considerations" in the
Prospectus.
Legal Investment....................The following Classes of Offered
Certificates, upon initial issuance, will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended
("SMMEA"):
o Class A-1-a
o Class A-1-b
o Class A-2
o Class B
o Class X
The other Offered Certificates, upon initial
issuance, will not constitute "mortgage
related securities" within the meaning of
SMMEA. You should consult your own legal
advisors to determine whether and to what
extent the Offered Certificates constitute
legal investments for you. See "Legal
Investment" in this Prospectus Supplement
and in the Prospectus.
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. In the case of Offered
Certificates purchased at a discount, a
slower than anticipated rate of prepayments
could result in a lower than anticipated
yield. In the case of Class X Certificates
or any other Offered Certificates purchased
at a premium, a faster than anticipated rate
of prepayments could result in a lower than
anticipated yield. If you are contemplating
the purchase of a Class X Certificate, you
should be aware that the yield to maturity
on the Class X Certificates will be highly
sensitive to the rate and timing of
principal prepayments and other liquidations
of Mortgage Loans and that an extremely
rapid rate of prepayments and/or other
liquidations in respect of the Mortgage
Loans could result in a complete or partial
loss of your initial investment. See "Yield
and Maturity Considerations" in this
Prospectus Supplement and "Yield and
Prepayment Considerations" in the
Prospectus.
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Ratings.............................It is a condition to the issuance of the
respective Classes of the Offered
Certificates that they receive the credit
ratings indicated below:
Class Moody's S&P
----- ------- ---
Class A-1-a............... Aaa AAA
Class A-1-b............... Aaa AAA
Class A-2................. Aaa AAA
Class B................... Aa2 AA
Class C................... A2 A
Class D................... Baa2 BBB
Class E................... Baa3 BBB-
Class X................... Aaa AAAr
The ratings of the Offered Certificates
address the timely payment of interest and,
except in the case of the Class X
Certificates, the ultimate payment of
principal on or before the Rated Final
Distribution Date. Such ratings do not,
however, address--
o The tax attributes of the Offered
Certificates or of the Trust.
o The likelihood or frequency of voluntary
or involuntary principal prepayments on
the Mortgage Loans.
o The degree to which prepayments on the
Mortgage Loans might differ from those
originally anticipated.
o The likelihood that prepayment premiums
or yield maintenance charges will be
received with respect to the Mortgage
Loans.
o The likelihood that any Mortgage Loan
with an Anticipated Repayment Date will
remain outstanding past such date and
will thereafter accrue any interest at a
rate in excess of its current mortgage
interest rate.
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.
For a description of the limitations of the
ratings of the Offered Certificates, see
"Ratings" in this Prospectus Supplement and
"Risk Factors--Limited Nature of Rating" in
the Prospectus.
Reports to Certificateholders.......On each Distribution Date, the following
reports will be available to you through the
sources described under "Description of the
Offered Certificates--Reports to
Certificateholders; Available Information"
in this Prospectus Supplement:
o Delinquent Loan Status Report
o Historical Loan Modification Report
o Historical Loss Estimate Report
o REO Status Report
o Watch List Report
o Loan Payoff Notification Report
o Comparative Financial Status Report
o Operating Statement Analysis
The contents of such reports are described
in this Prospectus Supplement under
"Description of the Offered
Certificates--Reports to Certificateholders;
Available Information".
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Upon reasonable prior notice, you will be
permitted to review at the Trustee's offices
during normal business hours a variety of
information and documents that pertain to
the Mortgage Loans and Mortgaged Properties,
including loan documents, borrower operating
statements, rent rolls and property
inspection reports.
See "Description of the Offered
Certificates--Reports to Certificateholders;
Available Information" in this Prospectus
Supplement.
Analytics on Bloomberg..............Certain information regarding the Offered
Certificates and the Mortgage Loans
initially will be available from Bloomberg,
L.P.
The Certificates: A Structural Summary
Seniority.......................... The following chart sets forth the relative
seniority of the respective Classes of
Certificates for purposes of--
o Making distributions of interest and, if
and when applicable, distributions of
principal.
o Allocating losses and other shortfalls on
the Mortgage Loans, as well as certain
default-related and otherwise
unanticipated expenses of the Trust.
In general, each identified Class of
Certificates will, for the above specified
purposes, be subordinate to each other Class
of Certificates, if any, listed above it in
the following chart. Accordingly, the Class
A-1-a, Class A-1-b, Class A-2 and Class X
Certificates (collectively, the "Senior
Certificates") are the most senior Classes
of Certificates.
Summary Seniority Chart
-------------------- ---------------------
Class A-1-a
Class A-1-b Most Senior Class A-2
and Class X -------------------------- and Class X
-------------------- | ---------------------
|
|
-----------------
Class B
-----------------
|
|
-----------------
Class C
-----------------
|
|
-----------------
Class D
-----------------
|
|
-----------------
Class E
-----------------
|
|
-------------------------------------------------------
Various Classes of Private Certificates
-------------------------------------------------------
Most Subordinate
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S-14
<PAGE>
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The only form of credit support for any
Class of Offered Certificates will be the
above-referenced subordination of the other
Classes of Certificates to which it is
senior, including all of the Private
Certificates.
See "Description of the Offered
Certificates--General", "--Seniority",
"--Distributions" and "--Allocation of
Realized Losses and Certain Other Shortfalls
and Expenses" in this Prospectus Supplement.
Distributions
A. General.........................Distributions of interest and principal will
generally be made to the Holders of the
various Classes of Certificates entitled
thereto, sequentially based upon their
relative seniority as depicted in the
Summary Seniority Chart above. For purposes
of calculating distributions on the Senior
Certificates on any Distribution Date,
however, the Mortgage Loans have been
divided into two loan groups (each, a "Loan
Group"), designated as "Loan Group 1" and
"Loan Group 2", respectively. Loan Group 1
will consist of 229 Mortgage Loans,
representing 84.7% of the Initial Pool
Balance, and Loan Group 2 will consist of 56
Mortgage Loans, representing 15.3% of the
Initial Pool Balance. Loan Group 2 includes
all but eight of the Mortgage Loans that are
secured by mortgage liens on multifamily
properties, and Loan Group 1 includes all of
the Mortgage Loans that are not otherwise
included in Loan Group 2. See "Description
of the Offered Certificates--Seniority",
"--Distributions--Loan Groups" and
"--Distributions--Priority of Payments" in
this Prospectus Supplement.
B. Distributions of Interest.......Each Class of Certificates (other than the
Class R-I, Class R-II and Class R-III
Certificates) will bear interest. In the
case of each such Class, such interest will
accrue during each Interest Accrual Period
based upon--
o the Pass-Through Rate for such Class for
the related Distribution Date,
o the Certificate Balance or Notional
Amount, as the case may be, of such Class
outstanding immediately prior to the
related Distribution Date, and
o the assumption that each year consists of
twelve 30-day months.
The timing of a prepayment on a Mortgage
Loan may result in the collection of less
than a full month's interest on such
Mortgage Loan during the Collection Period
of prepayment. As and to the extent
described in this Prospectus Supplement,
such shortfalls (net of the respective
portions thereof attributable to the fees of
the Master Servicer and certain other
items), will be allocated to reduce the
amount of accrued interest otherwise payable
to the Holders of the respective Classes of
interest-bearing Certificates, in reverse
order of their seniority as depicted in the
Summary Seniority Chart above. Any
allocations of such shortfalls among the
Holders of the respective Classes of the
Senior Certificates will be made on a pro
rata basis.
On each Distribution Date, subject to
available funds and the payment priorities
described in this Prospectus Supplement, you
will be entitled to receive your
proportionate share of all unpaid
distributable interest accrued in respect of
your Class of Offered Certificates through
the end of the related Interest Accrual
Period.
See "Description of the Offered
Certificates--Distributions-- Calculations
of Interest", "--Distributions--Priority of
Payments" and "--Allocations of Realized
Losses and Certain Other Shortfalls and
Expenses" in this Prospectus Supplement.
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C. Distributions of Principal......The respective Classes of Certificates with
Certificate Balances are referred to in this
Prospectus Supplement as the "Principal
Balance Certificates". In general, subject
to available funds and the payment
priorities described above, the Holders of
each Class of Principal Balance Certificates
will be entitled to receive an aggregate
amount of principal over time equal to the
related Certificate Balance. However, the
Pooling Agreement will require the Trustee
to make such distributions of principal in a
specified sequential order such that--
o No distributions of principal will be
made to the Holders of any Class of
Private Certificates until the
Certificate Balance of each Class of
Offered Certificates (other than the
Class X Certificates, which have no
Certificate Balance) is reduced to zero.
o No distributions of principal will be
made to the Holders of the Class B, Class
C, Class D or Class E Certificates until,
in the case of each such Class, the
Certificate Balance of each more senior
Class of Offered Certificates (other than
the Class X Certificates, which have no
Certificate Balance) is reduced to zero.
o No distributions of principal will be
made to the Holders of the Class A- 1-b
Certificates until either:
(i) the Certificate Balance of the Class
A-1-a Certificates is reduced to
zero; or
(ii) because of losses on the Mortgage
Loans and/or certain default- related
or otherwise unanticipated expenses
of the Trust, the Certificate
Balances of the Class B, Class C,
Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L,
Class M and Class N Certificates
(collectively, the "Subordinate
Principal Balance Certificates") have
been reduced to zero (in which case,
any distributions of principal on the
Class A-1-a, Class A-1-b and Class
A-2 Certificates will be made on a
pro rata basis).
o In general, unless and until the
Certificate Balances of the respective
Classes of the Subordinate Principal
Balance Certificates have all been
reduced to zero because of losses on the
Mortgage Loans and/or certain
default-related or otherwise
unanticipated expenses of the Trust, 84%
of all payments (or advances in lieu
thereof) and other collections of
principal received in respect of the
Mortgage Loans constituting Loan Group 1
will be applied to make distributions of
principal on the Class A-1-a and/or Class
A-1-b Certificates prior to being applied
to making any distributions of principal
on the Class A-2 Certificates.
o In general, unless and until the
Certificate Balances of the respective
Classes of the Subordinate Principal
Balance Certificates have all been
reduced to zero because of losses on the
Mortgage Loans and/or certain
default-related or otherwise
unanticipated expenses of the Trust, 100%
of all payments (or advances in lieu
thereof) and other collections of
principal received in respect of the
Mortgage Loans constituting Loan Group 2,
together with 16% of all payments (or
advances in lieu thereof) and other
collections of principal received in
respect of the Mortgage Loans
constituting Loan Group 1, will be
applied to make distributions of
principal on the Class A-2 Certificates
prior to being applied to making any
distributions of principal on the Class
A-1-a and/or Class A- 1-b Certificates.
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S-16
<PAGE>
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o With respect to any Distribution Date,
distributions of principal will not be
made on the Class A-1-a, Class A-1-b
and/or Class A-2 Certificates if doing so
would result in an interest shortfall on
any Class of Senior Certificates.
The aggregate distributions of principal to
be made on the respective Classes of
Certificates with Certificate Balances on
any Distribution Date will be a function
of--
o the amount of all scheduled payments of
principal due on the Mortgage Loans
during the related Collection Period that
are either received as of the related
Determination Date or advanced by the
Master Servicer, and
o the amount of any prepayments and other
unscheduled collections of previously
unadvanced principal in respect of the
Mortgage Loans that are received during
the related Collection Period.
See "Description of the Offered
Certificates--Calculation of the Principal
Distribution Amount" and
"--Distributions--Priority of Payments" in
this Prospectus Supplement.
D. Distributions of
Prepayment Premiums and
Yield Maintenance Charges...Any prepayment premium and/or yield
maintenance charge collected in respect of a
Mortgage Loan will be distributed, in the
proportions described in this Prospectus
Supplement, to the Holders of the Class X
Certificates and/or to the Holders of any
other Class or Classes of Certificates
senior to the Class H Certificates that may
be entitled to receive a portion of the
related prepayment of principal. See
"Description of the Offered
Certificates--Distributions of Prepayment
Premiums and Yield Maintenance Charges" in
this Prospectus Supplement.
Allocation of Losses and Certain
Other Shortfalls and Expenses....Losses on the Mortgage Loans, together with
certain default-related and other
unanticipated expenses of the Trust, may
cause the aggregate Stated Principal Balance
of the Mortgage Loans to be less than the
aggregate Certificate Balance of the
respective Classes of Principal Balance
Certificates (any such deficit being
referred to in this Prospectus Supplement as
a "Mortgage Pool Deficit"). If a Mortgage
Pool Deficit exists following the
distributions made on the Certificates on
any Distribution Date, then the Certificate
Balances of the respective Classes of the
Subordinate Principal Balance Certificates
will be successively reduced, in the reverse
order of their seniority as depicted in the
Summary Seniority Chart above, until the
subject Mortgage Pool Deficit is eliminated.
If a Mortgage Pool Deficit exists at any
time after the Certificate Balances of the
respective Classes of the Subordinate
Principal Balance Certificates have all been
reduced to zero, then the Certificate
Balances of the Class A-1-a, Class A-1-b and
Class A-2 Certificates will be reduced on a
pro rata basis, until the subject Mortgage
Pool Deficit is eliminated.
In addition, the timing of a prepayment on a
Mortgage Loan may result in the collection
of less than a full month's interest on such
Mortgage Loan during the Collection Period
of prepayment. As and to the extent
described in this Prospectus Supplement,
such shortfalls (net of the respective
portions thereof attributable to the fees of
the Master Servicer and certain other items)
will be allocated to reduce the amount of
accrued interest otherwise payable to the
Holders of the respective Classes of
interest-bearing Certificates, in reverse
order of their seniority as depicted in the
Summary Seniority Chart above. Any
allocations of such shortfalls among the
Holders of the respective Classes of the
Senior Certificates will be made on a pro
rata basis.
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See "Description of the Offered
Certificates--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses"
and "Servicing of the Mortgage
Loans--Servicing and Other Compensation and
Payment of Expenses" in this Prospectus
Supplement.
Advances............................In general, the Master Servicer will be
required to make advances (each, a "P&I
Advance"), for distribution to the
Certificateholders, in the amount of any
delinquent monthly payments (other than
balloon payments) of principal and interest
due on the Mortgage Loans. The Master
Servicer and, in some cases, the Special
Servicer will also generally be required to
make advances (each, a "Servicing Advance")
to cover certain costs and expenses relating
to the servicing and administration of the
Mortgage Loans. P&I Advances and Servicing
Advances are collectively referred to in
this Prospectus Supplement as "Advances". If
the Master Servicer or Special Servicer
fails to make any Advance that it is
required to make, the Trustee will be
required to make such Advance. If the
Trustee fails to make any Advance that it is
required to make, the Fiscal Agent will be
required to make such Advance. None of the
Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, however, will
be required to make any Advance that it
determines, in its good faith and reasonable
judgment, will not be recoverable from
proceeds of the related Mortgage Loan. As
and to the extent described in this
Prospectus Supplement, any party that makes
an Advance will be entitled to receive
interest thereon.
See "Description of the Offered
Certificates--P&I Advances" and "Servicing
of the Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses" in
this Prospectus Supplement.
Appraisal Reductions................If certain adverse events or circumstances,
called "Appraisal Trigger Events", occur or
exist with respect to a Mortgage Loan or the
related Mortgaged Property, the Special
Servicer will be obligated to obtain a new
appraisal of such Mortgaged Property. The
new appraised value may reflect an
"Appraisal Reduction Amount", which will, in
general, be calculated based upon a
comparison of (i) 90% of such new appraised
value to (ii) the principal balance of, and
certain other amounts due under, the subject
Mortgage Loan. If an Appraisal Reduction
Amount does exist, the amount otherwise
required to be advanced in respect of
interest on the subject Mortgage Loan will
be reduced generally in the same proportion
that the Appraisal Reduction Amount bears to
the principal balance of such Mortgage Loan.
Due to the payment priorities, this will
generally reduce the funds available to pay
interest on the most subordinate Class of
Certificates then outstanding. See
"Description of the Offered
Certificates--Appraisal Reductions" in this
Prospectus Supplement.
The Mortgage Loans and Mortgaged Properties
The Mortgage Pool...................The Trust Fund will primarily consist of the
pool of Mortgage Loans (the "Mortgage
Pool"). Each Mortgage Loan constitutes the
obligation of one or more persons
(individually and collectively, as to such
Mortgage Loan, the "Borrower") to repay a
specified sum with interest. Each Mortgage
Loan will be secured by a first lien on the
fee and/or leasehold interest of the related
Borrower or another person in one or more
commercial or multifamily residential
properties (each, a "Mortgaged Property").
For more detailed information on the
Mortgage Loans, see the following sections
in this Prospectus Supplement:
o "Description of the Mortgage Pool"
o "Risk Factors--Risks Related to the
Mortgage Loans"
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o Annex A-1 - Certain Characteristics of
the Mortgage Loans
o Annex A-2 - Certain Monetary Terms of the
Mortgage Loans
o Annex A-3 - Certain Additional
Information Regarding the Group 2
Mortgage Loans
o Annex A-4 - Certain Information Regarding
Reserves
Set forth below is certain statistical
information regarding the Mortgage Loans and
the Mortgaged Properties. In reviewing such
information, as well as the statistical
information regarding the Mortgage Loans and
the Mortgaged Properties contained elsewhere
in this Prospectus Supplement, you should be
aware that--
o All numerical information provided with
respect to the Mortgage Loans is provided
on an approximate basis.
o All weighted average information provided
with respect to the Mortgage Loans
reflects weighting of the Mortgage Loans
by their Cut-off Date Balances.
o When information with respect to the
Mortgaged Properties is expressed as a
percentage of the Initial Pool Balance,
such percentages are based upon the
Cut-off Date Balances of the related
Mortgage Loans.
o In certain cases involving a Mortgage
Loan that is secured by multiple
Mortgaged Properties located in more than
one state, a portion of such Mortgage
Loan has been allocated to each such
Mortgaged Property.
o Statistical information regarding the
Mortgage Loans may change prior to the
date of issuance of the Certificates due
to changes in the composition of the
Mortgage Pool prior to the Closing Date.
o Certain capitalized terms used with
respect to the Mortgage Loans are defined
under "Description of the Mortgage Pool"
in this Prospectus Supplement.
A. General Characteristics .........The Mortgage Pool will have the following
general characteristics as of the Cut-off
Date:
Initial Pool Balance(1) .................................. $2,025,590,706
Number of Mortgage Loans ................................. 285
Number of Mortgaged Properties ........................... 327
Maximum Cut-off Date Balance(2) .......................... $ 249,347,368
Minimum Cut-off Date Balance ............................. $ 598,212
Average Cut-off Date Balance ............................. $ 7,107,336
Maximum Mortgage Rate .................................... 8.940%
Minimum Mortgage Rate .................................... 5.920%
Weighted Average Mortgage Rate ........................... 6.840%
Maximum Original Term to Maturity ........................ 300 months
Minimum Original Term to Maturity ........................ 60 months
Weighted Average Original Term to Maturity ............... 123 months
Maximum Remaining Term to Maturity ....................... 298 months
Minimum Remaining Term to Maturity ....................... 57 months
Weighted Average Remaining Term to Maturity .............. 121 months
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Maximum Debt Service Coverage Ratio(3) .......................... 3.59x
Minimum Debt Service Coverage Ratio ............................. 1.20x
Weighted Average Debt Service Coverage Ratio .................... 1.67x
Maximum Cut-off Date Loan-to-Value Ratio(4) .................... 82.33%
Minimum Cut-off Date Loan-to-Value Ratio ........................ 17.97%
Weighted Average Cut-off Date
Loan-to-Value Ratio ......................................... 65.69%
Maximum Maturity Loan-to-Value Ratio(5) ......................... 75.73%
Minimum Maturity Loan-to-Value Ratio ............................ 8.32%
Weighted Average Maturity Loan-to-Value Ratio ................... 56.42%
----------
(1) The "Initial Pool Balance" is equal to
the aggregate Cut-off Date Balance of
the Mortgage Pool and is subject to a
permitted variance of plus or minus 5%.
(2) The "Cut-off Date Balance" of each
Mortgage Loan is equal to its unpaid
principal balance as of the Cut-off
Date, after application of all payments
of principal due in respect of such
Mortgage Loan on or before such date,
whether or not received.
(3) The "Debt Service Coverage Ratio" or
"DSCR" for any Mortgage Loan is equal
to the Net Cash Flow (as such term is
defined in this Prospectus Supplement)
generated by the related Mortgaged
Property, divided by the product of 12
times the monthly payment of principal
and/or interest due in respect of such
Mortgage Loan on the Cut-off Date. Debt
Service Coverage Ratios have not been
calculated and are not presented for
Credit Lease Loans (as such term is
defined below).
(4) The "Cut-off Date Loan-to-Value Ratio"
or "Cut-off Date LTV Ratio" for any
Mortgage Loan is equal to its Cut-off
Date Balance, divided by the estimated
value of the related Mortgaged Property
as set forth in the most recent
third-party appraisal available to the
Depositor (or, in the case of the
Mortgage Loans identified in this
Prospectus Supplement as the "Arden
Loan" and the "Fresno Loan", an
internal valuation by the Originator
(as such term is defined in this
Prospectus Supplement under
"Description of the Mortgage
Pool--General")). Cut-off Date
Loan-to-Value Ratios have not been
calculated and are not presented for
Credit Lease Loans.
(5) The "Maturity Loan-to-Value Ratio" for
any Mortgage Loan that provides for a
balloon payment or has an Anticipated
Repayment Date is equal to the unpaid
principal balance of such Mortgage Loan
that will be outstanding as of its
maturity date or Anticipated Repayment
Date, as applicable, assuming no
defaults or prepayments, divided by the
estimated value of the related
Mortgaged Property as set forth in the
most recent third-party appraisal
available to the Depositor (or, in the
case of the Mortgage Loans identified
in this Prospectus Supplement as the
"Arden Loan" and the "Fresno Loan", an
internal valuation by the Originator).
Maturity Loan-to-Value Ratios have not
been calculated and are not presented
for Credit Lease Loans or for fully
amortizing Mortgage Loans.
B. State Concentration .............The table below shows the number of, and the
percentage of the Initial Pool Balance
secured by, Mortgaged Properties located in
the indicated states:
Number of
Mortgaged % of Initial
State Properties Pool Balance
----- ---------- ------------
California 34 19.8%
Texas 37 11.5%
New York 35 10.5%
Illinois 27 9.5%
Florida 30 8.3%
The remaining Mortgaged Properties are
located throughout 30 other states and
Puerto Rico. No more than 3.7% of the
Initial Pool Balance is secured by Mortgaged
Properties located in any such other
jurisdiction.
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S-20
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C. Property Types..................The table below shows the number of, and the
percentage of the Initial Pool Balance
secured by, Mortgaged Properties operated
for each indicated purpose:
The Mortgage Pool
Number of
Mortgaged % of Initial
Property Type Properties Pool Balance
------------- ---------- ------------
Anchored Retail 73 20.1%
Regional Mall 3 12.9%
Unanchored Retail 54 7.1%
----------------- ----- -----
Total Retail 130 40.1%
Multifamily Rental 67 17.9%
Hospitality 20 17.9%
Office 44 9.5%
Office/Industrial 12 5.5%
Credit Leases(1) 28 3.9%
Industrial/Warehouse 16 3.3%
Self Storage 5 0.8%
Health Care 1 0.7%
Manufactured Housing Community 3 0.3%
Parking Garage 1 0.2%
----------
(1) Properties subject to Credit Leases,
regardless of property type.
Loan Group 1
Number of
Mortgaged % of Initial
Property Type Properties Pool Balance
------------- ---------- ------------
Anchored Retail 73 23.7%
Regional Mall 3 15.2%
Unanchored Retail 54 8.4%
----------------- ----- -----
Total Retail 130 47.3%
Multifamily Rental 8 3.2%
Hospitality 20 21.1%
Office 44 11.2%
Office/Industrial 12 6.5%
Credit Leases(1) 28 4.6%
Industrial/Warehouse 16 3.9%
Self Storage 5 0.9%
Health Care 1 0.8%
Manufactured Housing 3 0.3%
Parking Garage 1 0.2%
----------
(1) Properties subject to Credit Leases,
regardless of property type.
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S-21
<PAGE>
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Loan Group 2
Number of
Mortgaged % of Initial
Property Type Properties Pool Balance
------------- ---------- ------------
Multifamily Rental 59 100%
The Six Largest Mortgage Loans
A. The Omni Loan....................Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Omni Loan". See "Description of the
Mortgage Pool--Significant Mortgage
Loans--The Omni Loan" in this Prospectus
Supplement.
Cut-off Date Balance ................. $249,347,368
Mortgage Rate ........................ 6.25%
Original Term to Maturity ............ 120 months
Original Amortization Term ........... 300 months
Sponsor .............................. TRT Holding Inc./ Omni Hotels
Properties ........................... 5 Full Service Omni Hotels
Size ................................. 1,858 rooms
Locations ............................ IL, NY, TX
Appraised Value ...................... $ 499,800,000
Cut-off Date LTV Ratio ............... 49.89%
DSCR ................................. 2.34x
Lockbox .............................. Springing, if DSCR falls below 1.50x
Reserves ............................. Ongoing taxes, insurance, and 3.5%
FF&E with a letter of credit for one
additional month of reserve
B. The Ontario Mills Loan..........Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Ontario Mills Loan". See "Description
of the Mortgage Pool--Significant Mortgage
Loans--The Ontario Mills Loan" in this
Prospectus Supplement.
Cut-off Date Balance.................. $145,000,000
Mortgage Rate......................... 6.75%
Original Term to Maturity............. 120 months
Original Amortization Term............ 360 months
Sponsor............................... Simon Property Group, The Mills
Corporation, Kan Am
Anchors............................... AMC Entertainment,
JC Penney, Sports Authority,
Burlington Coat Factory, Marshall's
Property.............................. Super Regional Mall
Size.................................. 1,220,625 SF
Location.............................. Ontario, CA
Appraised Value....................... $250,000,000
Cut-off Date LTV Ratio................ 58.00%
DSCR.................................. 1.73x
Lockbox............................... Springing, if DSCR falls below 1.25x
Reserves.............................. Ongoing taxes and reserves
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S-22
<PAGE>
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C. The Arden Loan...................Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Arden Loan". See "Description of the
Mortgage Pool--Significant Mortgage
Loans--The Arden Loan" in this Prospectus
Supplement.
Cut-off Date Balance.................. $111,200,000
Mortgage Rate......................... 6.61%
Sponsor............................... Arden Realty, Inc.
Original Term to Maturity............. 118 months
Original Amortization................. Interest only for 57 months;
then P&I based on
300 month amortization
Properties............................ 12 suburban office and
R&D Industrial properties
Size.................................. 2,239,948 SF
Location.............................. CA
Valuation............................. $235,000,000
Cut-off Date LTV Ratio................ 47.32%
DSCR.................................. 2.35x
Lockbox............................... Springing, if DSCR falls below
1.50x
Reserves.............................. Ongoing taxes, insurance, and
$3,270,000 (floor amount,
replenishing reserve) in tenant
improvements, leasing
commissions
and capital expenditures reserve
D. The Fresno Loan.................Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Fresno Loan". See "Description of the
Mortgage Pool--Significant Mortgage
Loans--The Fresno Loan" in this Prospectus
Supplement.
Cut-off Date Balance ............... $69,000,000
Mortgage Rate ...................... 6.52%
Original Term to Maturity .......... 120 months
Original Amortization Term ......... 360 months
Sponsor ............................ The Macerich Company
Anchors ............................ Macy's, JC Penney, Gottschalk's
Property ........................... Regional Mall
Size ............................... 881,413 SF
Location ........................... Fresno, CA
Valuation .......................... $113,693,000
Cut-off Date LTV Ratio ............. 60.69%
DSCR ............................... 1.74x
Lockbox ............................ Springing, if DSCR falls to or below 1.35x
Reserves ........................... Taxes and insurance if lockbox triggered
E. The Bayside Loan.................Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Bayside Loan". See "Description of the
Mortgage Pool--Significant Mortgage
Loans--The Bayside Loan" in this Prospectus
Supplement.
Cut-off Date Balance ................ $62,936,317
Mortgage Rate ....................... 5.92%
Original Term to Maturity ........... 121 months
Original Amortization Term .......... 360 months
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S-23
<PAGE>
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Sponsor.............................. The Rouse Company
Major Tenants........................ Hard Rock Cafe, The Limited,
Warner Brothers Store
Property............................. Regional Mall
Size................................. 230,781 SF
Location............................. Miami, FL
Value(1)............................. $101,980,000
Cut-off Date LTV Ratio(1)............ 61.71%
DSCR................................. 1.80x
Lockbox.............................. Hard
Reserves............................. Ongoing taxes, insurance, replacement
reserves, tenant improvements
and leasing commissions
--------------
(1) Bayside has an appraised value of
$116,000,000. For purposes of
calculating Cut-off Date LTV Ratio,
this value has been adjusted to
$101,980,000 to reflect the existence
of municipal bond financing on the
adjacent parking garage.
F. The Inland Loan.................Set forth below is certain loan and property
information in respect of the Mortgage Loan
identified in this Prospectus Supplement as
the "Inland Loan". See "Description of the
Mortgage Pool--Significant Mortgage
Loans--The Inland Loan" in this Prospectus
Supplement.
Cut-off Date Balance................. $54,600,000
Mortgage Rate........................ 6.36%
Original Term to Maturity............ 120 months
Original Amortization Term........... Interest only to Maturity
Sponsor.............................. Inland Real Estate Company
Anchors.............................. Wal-Mart, The Gap,
Dominick's, Pier One
Properties........................... 12 Community and
Neighborhood Shopping Centers
Size................................. 1,196,551 SF
Locations............................ IL, MN, IN, WI
Appraised Value...................... $105,995,000
Cut-off Date LTV Ratio............... 51.51%
DSCR................................. 2.74x
Lockbox.............................. Springing, if DSCR falls below 1.50x
Reserves............................. Ongoing taxes, tenant improvements and
leasing commissions if lockbox triggered
Credit Lease Loans..................Mortgage Loans identified in this Prospectus
Supplement as "Credit Lease Loans" are
secured by Mortgaged Properties that are
subject to a net lease obligation of a
tenant having the characteristics described
in the following sentence that occupies
substantially all of the property. Except in
those cases where a public rating has not
been issued, such tenant, its direct or
indirect parent or a guarantor of such
tenant's obligations under the lease has a
public senior unsecured long- term debt
rating of at least "BB" (or the equivalent)
from at least one nationally recognized
statistical rating organization. See "Risk
Factors and Other Special
Considerations--Risks Related to the
Mortgage Loans--Credit Lease Loans Have
Special Risks" and "--Reliance on Credit
Quality of Credit Tenants and Guarantors
Have Special Risks" and "Description of the
Mortgage Pool--Credit Lease Loans" in this
Prospectus Supplement.
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S-24
<PAGE>
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Payment Terms.......................Each Mortgage Loan accrues interest at the
annual rate (its "Mortgage Rate") set forth
with respect thereto on Annex A-1 to this
Prospectus Supplement. The Mortgage Rate for
each Mortgage Loan is fixed for the entire
term of such Mortgage Loan.
Each Mortgage Loan provides for scheduled
payments of principal and/or interest
("Scheduled P&I Payments") to be due on a
particular day each month (its monthly "Due
Date"). The Due Date for each Mortgage Loan
other than the Fresno Loan is the first day
of each month. The Due Date for the Fresno
Loan is the tenth day of each month.
Each Mortgage Loan identified in this
Prospectus Supplement as a "Balloon Loan"
provides for one of the following:
o monthly payments of interest only for its
entire term to stated maturity; or
o an amortization schedule that is
significantly longer than its remaining
term to stated maturity and which, in
some cases, begins only after the end of
an initial interest-only period.
In any event, a Balloon Loan will require a
substantial payment of principal on its
maturity date (such payment, together with
the corresponding interest payment, a
"Balloon Payment").
Mortgage Loans identified in this Prospectus
Supplement as "ARD Loans" provide material
disincentives to the related Borrower to
allow its Mortgage Loan to remain
outstanding past a specified date (the
"Anticipated Repayment Date" or "ARD"). Such
disincentives, which in each case will begin
effective as of the related Anticipated
Repayment Date, include:
o The accrual of interest in excess of that
accrued at the related Mortgage Rate.
Such additional interest will be deferred
until payment in full of all other
amounts due under the ARD Loan (including
the entire principal balance thereof). In
general, such additional interest will be
compounded.
o The application of certain excess cash
flow from the related Mortgaged Property
to pay principal. Such payment of
principal will be in addition to the
principal portion of the Scheduled P&I
Payment.
The remaining Mortgage Loans, referred to in
this Prospectus Supplement as "Fully
Amortizing Loans", have amortization
schedules that amortize such Mortgage Loans
in full or substantially in full by their
respective maturity dates.
The table below shows the number and
percentage of Mortgage Loans that are
Balloon Loans, ARD Loans and Fully
Amortizing Loans, respectively:
Number of % of Initial
Loan Type Mortgage Loans Pool Balance
--------- -------------- ------------
Balloon Loans 252 62.0%
ARD Loans 11 35.2%
Fully Amortizing Loans 22 2.8%
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S-25
<PAGE>
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Delinquency Status..................No Mortgage Loan was more than 30 days
delinquent in respect of any Scheduled P&I
Payment as of the Cut-off Date or at any
time during the 12-month period preceding
the Cut-off Date.
Prepayment Terms....................The prepayment restrictions for each
Mortgage Loan are more fully described on
Annex A-1 to this Prospectus Supplement. A
prepayment lockout is currently in effect
for each Mortgage Loan.
Set forth below is information regarding the
remaining lockout periods for the Mortgage
Loans:
Maximum Remaining Lockout Period: 292 months
Minimum Remaining Lockout Period: 22 months
Weighted Average Remaining Lockout Period: 118 months
Two hundred seventy-three (273) Mortgage
Loans, representing 97.5% of the Initial
Pool Balance, are Defeasance Loans.
"Defeasance Loans" permit the related
Borrower, no earlier than the second
anniversary of the Closing Date, to obtain a
release of the related Mortgaged Property
(or, where applicable, one or more of the
related Mortgaged Properties) from the lien
of the related mortgage or other security
instrument by delivering U.S. Treasury
obligations as substitute collateral.
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S-26
<PAGE>
RISK FACTORS
You should consider the following factors (as well as the factors set
forth under "Risk Factors" in the Prospectus) in deciding whether to purchase
the Offered Certificates of any Class.
Risks Related to the Offered Certificates
The Offered Certificates are Supported by Limited Assets. If the assets of
the Trust are insufficient to make payments on your Certificates, no other
assets will be available to you for payment of the deficiency. See "Risk
Factors--Limited Assets" in the Prospectus
Risks Associated With Liquidity and Market Value. There is currently no
secondary market for the Offered Certificates. The Underwriter has informed the
Depositor that it currently intends to make a secondary market in the Offered
Certificates, but it is under no obligation to do so. There can be no assurance
that a secondary market for the Offered Certificates will develop. Even if a
secondary market does develop for the Offered Certificates, there is no
assurance that it will provide you with liquidity of investment or that the
market will continue for the life of the Offered Certificates. The Depositor
does not intend to list the Offered Certificates on any securities exchange.
Lack of liquidity could result in a significant reduction in the market value of
your Certificates. In addition, the market value of your Certificates at any
time may be affected by many factors, including then prevailing interest rates
and the then perceived riskiness of commercial mortgage-backed securities
relative to other investments. See "Risk Factors--Limited Liquidity" in the
Prospectus.
Uncertain Yields to Maturity. The yield on your Certificates will depend
on (a) the price you paid for such Certificates and (b) the rate, timing and
amount of distributions on such Certificates. The rate, timing and amount of
distributions on your Certificates will, in turn, depend on:
o the Pass-Through Rate(s) for your Certificates;
o the rate and timing of payments and other collections of principal
on the Mortgage Loans;
o the rate and timing of defaults, and the severity of losses, if any,
on the Mortgage Loans;
o the rate, timing, severity and allocation of other shortfalls and
expenses that reduce amounts available for distribution on the
Certificates; and
o the collection and distribution of prepayment premiums and yield
maintenance charges with respect to the Mortgage Loans.
Except to the extent that any of your Certificates have a fixed
Pass-Through Rate, these factors cannot be predicted with any certainty.
Accordingly, you may find it difficult to analyze the effect that such factors
might have on the yield to maturity of your Certificates. See "Description of
the Mortgage Pool", "Description of the Offered Certificates--Distributions" and
"--Allocation of Realized Losses and Certain Other Shortfalls and Expenses" and
"Yield and Maturity Considerations" in this Prospectus Supplement. See also
"Yield and Prepayment Considerations" in the Prospectus.
Risks Related to the Rate of Prepayment. If you purchase your Certificates
at a premium, and if payments and other collections of principal on the Mortgage
Loans occur at a rate faster than you anticipated at the time of your purchase,
then your actual yield to maturity may be lower than you had assumed at the time
of your purchase. Conversely, if you purchase your Certificates at a discount,
and if payments and other collections of principal on the Mortgage Loans occur
at a rate slower than you anticipated at the time of your purchase, then your
actual yield to maturity may be lower than you had assumed at the time of your
purchase. You should consider that prepayment premiums and yield maintenance
charges, even if available and distributable in respect of your Certificates,
may not be sufficient to offset fully any loss in yield on your Certificates.
The investment performance of your Certificates may vary materially and
adversely from your expectations due to the rate of prepayments and other
unscheduled collections of principal on the Mortgage Loans being faster or
slower than you anticipated. Accordingly, the actual yield to you may not be
equal to the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any Offered Certificates, you should make an independent decision as
to the appropriate prepayment assumptions to be used. See "Yield and Maturity
Considerations" in this Prospectus Supplement.
S-27
<PAGE>
If you purchase Class X Certificates, your yield to maturity will be
highly sensitive to the rate and timing of principal payments and losses on the
Mortgage Loans. Prior to investing in the Class X Certificates, you 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 your failure to recoup fully your initial investment.
Risks Associated with Borrower Defaults; Delinquencies and Defaults by
Borrowers May Delay Payments to You. The rate and timing of delinquencies and
defaults on the Mortgage Loans will affect the amount of distributions on your
Certificates, the yield to maturity of your Certificates, the rate of principal
payments on your Certificates and the weighted average life of your
Certificates. Delinquencies on the Mortgage Loans, unless covered by P&I
Advances, may result in shortfalls in distributions of interest and/or principal
on your Certificates for the current month. Although any such shortfalls may be
made up on future Distribution Dates, no interest would accrue on any such
shortfalls. Thus, any such shortfalls would adversely affect the yield to
maturity of your Certificates.
If you calculate the anticipated yield to maturity for your Certificates
based on an assumed rate of default and amount of losses on the Mortgage Loans
that is lower than the default rate and amount of losses actually experienced
and such additional losses result in a reduction of the distributions on or the
aggregate principal balance or notional amount of your Certificates, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. The timing of any loss on a liquidated Mortgage Loan
that results in a reduction of the distributions on or the aggregate principal
balance or notional amount of your Certificates will also affect the actual
yield to maturity of your Certificates, even if the rate of defaults and
severity of losses are consistent with your expectations. In general, the
earlier your loss occurs, the greater the negative effect on your yield to
maturity.
Even if losses on the Mortgage Loans do not result in a reduction of the
distributions on or the aggregate principal balance or notional amount of your
Certificates, such losses may still affect the timing of distributions on (and,
accordingly, the weighted average life and yield to maturity of) your
Certificates. See "Yield and Maturity Considerations" in this Prospectus
Supplement.
Potential Conflicts of Interest. The Special Servicer will have
considerable latitude in determining whether to liquidate or modify defaulted
Mortgage Loans. See "Servicing of the Mortgage Loans--Modifications, Waivers and
Amendments" in this Prospectus Supplement. In certain circumstances, the
existing Special Servicer may be replaced by the Holder or Holders of
Certificates representing a majority interest in the Controlling Class. The
interests of the Holders of the Controlling Class of Certificates (which,
subject to significant losses on the Mortgage Pool, will be a Class of Private
Certificates) may be in conflict with the interests of the Holders of the
Offered Certificates. In addition, there is no restriction on the Master
Servicer, the Special Servicer or any of their respective affiliates acquiring
Certificates, including Private Certificates. Each of the Master Servicer and
the Special Servicer is obligated to perform its respective servicing duties in
accordance with the terms of the Pooling Agreement, including the servicing
standard described in this Prospectus Supplement. As a Holder of Private
Certificates, however, each of the Master Servicer and Special Servicer could
have interests when dealing with defaulted Mortgage Loans or otherwise
performing its duties under the Pooling Agreement that may be in conflict with
your interests.
As of the Closing Date, it is expected that the Depositor will hold the
Controlling Class of Certificates. However, if and when such Certificates are
sold, it is possible that the purchasers thereof will replace Lennar Partners,
Inc. as the Special Servicer in connection with their acquisition of the
Controlling Class. See "Servicing of the Mortgage Loans--Replacement of the
Master Servicer or the Special Servicer" in this Prospectus Supplement.
In addition, each of the Master Servicer and the Special Servicer services
(and will, in the future, service) existing and new loans for third parties,
including portfolios of loans similar to the Mortgage Loans, in the ordinary
course of its business. The properties securing these mortgage loans may be in
the same markets as certain of the Mortgaged Properties. Consequently, personnel
of the Master Servicer or the Special Servicer, as applicable, may perform
services, on behalf of the Trust, with respect to the Mortgage Loans at the same
time as they are performing services, on behalf of other persons, with respect
to other mortgage loans secured by properties that compete with the Mortgaged
Properties. Despite the obligation of each of the Master Servicer and Special
Servicer to perform its respective servicing obligations in accordance with the
terms of the Pooling Agreement, including the servicing standard described in
this Prospectus Supplement, such other servicing and property management
obligations may pose inherent conflicts for the Master Servicer or the Special
Servicer.
Certain Rights to Payment that are Senior to Distributions on the
Certificates. The Master Servicer, the Special Servicer and the Trustee are each
entitled to receive out of payments on or proceeds of specific Mortgage Loans
(or, in some cases, out of general collections on the Mortgage Pool) certain
payments or reimbursements for or in respect of compensation, Advances (with
interest thereon) and indemnities, prior to distributions on the Certificates.
In particular, Advances are intended to provide liquidity not credit support,
and the advancing party is entitled to receive interest on its Advances to
offset its cost of funds.
S-28
<PAGE>
ERISA Considerations. The regulations that govern pension and other
employee benefit plans subject to ERISA and plans and other retirement
arrangements subject to Section 4975(c) of the Code are complex. Accordingly, if
you are using the assets of such plans or arrangements to acquire Offered
Certificates, you are urged to consult legal counsel regarding consequences
under ERISA and the Code of the acquisition, ownership and disposition of
Offered Certificates. In particular, the purchase or holding of the Class B,
Class C, Class D and Class E Certificates by any such plan or arrangement may
result in a prohibited transaction or the imposition of excise taxes or civil
penalties. As a result, such Certificates should not be acquired by, on behalf
of, or with assets of any such plan or arrangement, 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
("PTCE") 95-60. Sections I and III of PTCE 95-60 provide an exemption from the
prohibited transaction rules for certain transactions involving an insurance
company general account. See "Certain ERISA Considerations" in this Prospectus
Supplement and "ERISA Considerations" 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. The
collection of payments on the Mortgage Loans, the servicing of the Mortgage
Loans and the distributions on your Certificates are highly dependent upon
computer systems of the Master Servicer, the Trustee, the Borrowers and other
third parties. The Master Servicer, the Special Servicer and the Trustee are
currently modifying their computer systems and applications and expect that they
will be year 2000 ready. They are also assessing the year 2000 readiness of key
vendors and subcontractors to determine whether key processes and business
activity will be interrupted. If the Master Servicer, the Special Servicer, the
Trustee or any of their respective key vendors and subcontractors do not have by
the year 2000 computerized systems which are able to correctly interpret data
involving dates, the ability of such party to service the Mortgage Loans (in the
case of the Master Servicer and the Special Servicer) or make distributions with
respect to the Certificates (in the case of the Trustee) may be materially and
adversely affected. The failure of any Borrower to be "year 2000 compliant"
could adversely affect the ability of the related Mortgaged Property to compete
with other comparable properties.
Risks Related to the Mortgage Loans
Repayment of the Mortgage Loans depends on the Successful Operation of the
Mortgaged Properties. The Mortgage Loans are secured by first mortgage liens on
interests in the following types of real property:
o Anchored Retail
o Unanchored Retail
o Regional Mall
o Multifamily
o Manufactured Housing Community
o Hospitality
o Office
o Office/Industrial
o Industrial/Warehouse
o Self-Storage
o Health Care
o Parking Garage
Lending on multifamily and commercial properties is generally perceived as
involving greater risk than lending on the security of single-family residential
properties. This is because multifamily and commercial real estate lending
involves larger loans, and repayment is dependent upon the operation of the
related real estate project.
The ability of a Mortgaged Property to generate net operating income may
be adversely affected by a number of factors, including:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o the proximity and attractiveness of competing properties;
o new construction;
o the adequacy of the property's management and maintenance;
o an increase in operating expenses;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or replaced.
S-29
<PAGE>
Other factors that may adversely affect the ability of a Mortgaged
Property to generate net operating income are more general in nature, such as:
o national, regional or local economic conditions (including plant
closings, industry slowdowns and unemployment rates);
o local real estate conditions (such as an oversupply of retail space,
office space or multifamily housing);
o demographic factors;
o customer tastes and preferences; and
o retroactive changes in building codes.
The volatility of net operating income generated by a Mortgaged Property
over time will be influenced by many of the foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the rate at which new rentals occur;
o the percentage of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with
revenues; and
o the level of capital expenditures required to maintain the property
and to maintain or replace tenants.
Therefore, Mortgaged Properties with short-term or less creditworthy sources of
revenue and/or relatively high operating costs, such as those operated as
health-care facilities and hotel properties, can be expected to have more
volatile cash flows than Mortgaged Properties with medium to long-term leases
from creditworthy tenants and/or relatively low operating costs. A decline in
the real estate market will tend to have a more immediate effect on the net
operating income of such Mortgaged Properties with short-term revenue sources
and may lead to higher rates of delinquency or defaults.
Tenant Concentration Entails Risk. In those cases where a Mortgaged
Property is leased to a single tenant or is primarily leased to one or a small
number of major tenants, a deterioration in the financial condition or a change
in the plan of operation of any such tenant can have particularly significant
effects on the net cash flow generated by such Mortgaged Property. If any such
tenant defaults under or fails to renew its lease, the resulting adverse
financial effect on the operation of such Mortgaged Property will be
substantially more severe than would be the case with respect to a property
occupied by a large number of less significant tenants.
Any Mortgaged Property operated for retail, office or industrial purposes
also may be adversely affected if there is a concentration of tenants in a
particular business or industry at any such property and that particular
business or industry declines.
Tenant Bankruptcy Entails Special Risks. The bankruptcy or insolvency of a
major tenant, or a number of smaller tenants, at any particular Mortgaged
Property may adversely affect the income produced by such property. Under the
federal Bankruptcy Code, a tenant has the option of assuming or rejecting any
unexpired lease. If the tenant rejects the lease, the landlord's claim for
breach of the lease would be a general unsecured claim against the tenant
(absent collateral securing the claim). The claim would be limited to the unpaid
rent reserved under the lease for the periods prior to the bankruptcy petition
(or earlier surrender of the leased premises) which are unrelated to the
rejection, plus the greater of one year's rent or 15% of the remaining reserved
rent (but not more than three years' rent).
Certain Additional Risks Relating to Tenants. The Mortgaged Properties
will be affected by the expiration of leases and the ability of the respective
Borrowers to renew the leases or relet the space on comparable terms. Even if
vacated space is successfully relet, the costs associated with reletting,
including tenant improvements and leasing commissions in the case of Mortgaged
Properties operated for retail or office purposes, can be substantial and could
reduce cash flow from the Mortgaged Properties. Moreover, if a tenant at any
Mortgaged Property defaults in its lease obligations, the Borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the property.
Property Value May Be Adversely Affected Even When Current Operating
Income Is Not. Various factors may adversely affect the value of the Mortgaged
Properties without affecting their current net operating income, including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations or fiscal policy;
o zoning or tax laws; and
o potential environmental or other legal liabilities.
S-30
<PAGE>
Property Management May Affect Property Value. The operation of a
Mortgaged Property will depend upon the property manager's performance and
viability. The property manager generally is responsible for the following:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are carried out
in a timely fashion.
Mortgaged Properties that derive revenues primarily from short-term rental
commitments, such as hotels, health care facilities and self-storage facilities,
are generally more management intensive than properties leased to tenants under
long-term leases.
Factors Affecting the Operation of Retail Properties. One hundred eight
(108) Mortgage Loans, representing 40.1% of the Initial Pool Balance, are
secured by retail properties at which customers may purchase various consumer
goods and other products or may obtain various entertainment, recreational or
personal services (such Mortgaged Properties, the "Retail Properties").
The Retail Properties consist of--
o Regional and super-regional malls;
o Community and strip shopping centers;
o Power centers; and
o Individual stores and businesses.
The value and operation of a Retail Property depend on the qualities and
success of its tenants. The success of tenants generally at a Retail Property
will be affected by--
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o demographics of the surrounding area;
o traffic patterns and access to major thoroughfares;
o availability of parking;
o customer tastes and preferences; and
o the drawing power of other tenants (some tenants may have clauses in
their leases that permit them to cease operations at the property if
certain other stores are not operated at the property).
A Retail Property generally must compete with comparable properties for
tenants. Such competition is generally based on--
o rent (the owner of a Retail Property may be required to offer a
potential tenant a "free rent" period);
o tenant improvements (the owner of a Retail Property may at its own
expense significantly renovate and/or adapt space at the property to
meet a particular tenant's needs); and
o the age and location of the property.
Issues Involving Anchor Tenants. The presence or absence of an "anchor
tenant" in a mall or shopping center also can be important, because anchors play
a key role in generating customer traffic and making the mall or center
desirable for other tenants. An "anchor tenant" is a retail tenant whose space
is substantially larger in size than that of other tenants at the same retail
mall or shopping center and whose operation is vital in attracting customers to
the property. Fifty-five (55) Mortgage Loans, representing 20.1% of the Initial
Pool Balance, are secured by retail properties that the Depositor considers to
be "anchored".
The economic performance of an "anchored" Retail Property will be
adversely affected by various factors, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or a
self-owned anchor;
o the cessation of the business of a self-owned anchor or of an anchor
tenant (notwithstanding its continued payment of rent); or
o a loss of an anchor tenant's ability to attract shoppers.
S-31
<PAGE>
New Forms of Competition. The Retail Properties may also face competition
from sources outside a given real estate market or with lower operating costs.
For example, all of the following compete with more traditional department
stores and specialty shops for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
o telemarketing.
Factors Affecting the Operation of Multifamily Rental Properties.
Sixty-four (64) Mortgage Loans representing 17.9% of the Initial Pool Balance,
are secured by Mortgaged Properties improved by multifamily apartment buildings
(such Mortgaged Properties, the "Multifamily Rental Properties"). Factors that
will affect the value and operation of a Multifamily Rental Property include:
o the physical attributes of the apartment building (e.g., its age,
appearance, amenities and construction quality);
o the location of the property;
o the characteristics of the surrounding neighborhood;
o the ability of management to provide adequate maintenance and
insurance;
o the property's reputation;
o the level of mortgage interest rates (which may encourage tenants to
purchase rather than lease housing);
o the presence of competing properties;
o the tenant mix (e.g., the tenant population may be predominantly
students or may be heavily dependent on workers from a particular
business or personnel from a local military base);
o adverse local or national economic conditions (which may limit the
amount that may be charged and may result in a reduction in timely
rent payments or a reduction in occupancy levels); and
o state and local regulations (which may affect the building owner's
ability to increase rent to the market rent for an equivalent
apartment).
Effects of State and Local Regulations. Certain states where the
Multifamily Rental Properties are located regulate the relationship between
owner and tenants and require a written lease, good cause for eviction,
disclosure of fees and notification to residents of changed land use. Certain
states where the Multifamily Rental Properties are located also prohibit
retaliatory evictions, limit the reasons for which a landlord may terminate a
tenancy, limit the reasons for which a landlord may increase rent and prohibit a
landlord from terminating a tenancy solely because the building has been sold.
In addition, numerous counties and municipalities impose rent control
regulations on apartment buildings. These regulations 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 permit vacancy decontrol. 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 Multifamily Rental Property.
Factors Affecting the Operation of Hospitality Properties. Sixteen (16)
Mortgage Loans, representing 17.9% of the Initial Pool Balance, are secured by
full service hotels, limited service hotels or motels (such Mortgaged
Properties, the "Hospitality Properties"). Certain of the Hospitality Properties
are associated with national or regional franchise chains, while others are not
affiliated with any franchise chain but may have their own brand identity.
Various factors may adversely affect the economic performance of a
Hospitality Property, including:
o adverse economic or social conditions, either local, regional or
national (which may limit the amount that can be charged for a room
and reduce occupancy levels);
o the construction of competing hotels or resorts;
o continuing expenditures for modernizing, refurbishing and
maintaining existing facilities prior to the expiration of their
anticipated useful lives (to satisfy such costs, the related
Mortgage Loans generally require the Borrowers to fund reserves for
furniture, fixtures and equipment);
o a deterioration in the financial strength or managerial capabilities
of the owner and operator of a Hospitality Property and
o changes in travel patterns caused by changes in access, energy
prices, labor strikes, relocation of highways, the construction of
additional highways or other factors.
S-32
<PAGE>
In addition, because hotel and motel rooms generally are rented for short
periods of time, such types of properties tend to respond more quickly to
adverse economic conditions and competition than do other commercial properties.
Risks Relating to Affiliation with a Franchise or Hotel Management
Company. The performance of a Hospitality Property that is affiliated with a
franchise or hotel management company depends in part on:
o the continued existence and financial strength of the franchisor or
hotel management company;
o the public perception of the franchise or hotel chain service mark;
and
o the duration of the franchise licensing or management agreements.
Franchise agreements for certain of the Hospitality Properties may
terminate prior to the effective maturity date of the related Mortgage Loan.
Replacement franchises may require significantly higher fees.
The transferability of franchise license agreements is generally
restricted. Accordingly, in the event of a foreclosure of a Hospitality
Property, the Trustee and the Special Servicer may be limited in their ability
to use any franchise license applicable to such property without the
franchisor's consent. Conversely, in the case of certain Mortgage Loans, the
Trustee and Special Servicer may be unable to remove a franchisor or a hotel
management company that it desires to replace following a foreclosure. In the
case of most Hospitality Properties, an agreement was obtained from the
franchisor to provide advance notice to the lender prior to terminating any
license.
Some states require that liquor licenses be held by a natural person
and/or prohibit the transfer of liquor licenses to any person without the prior
approval of the relevant licensing authority. In the event of a foreclosure of a
Hospitality Property, it is unlikely that the Trustee (or the Special Servicer
on its behalf) or any other purchaser in the foreclosure sale would be entitled
to the rights under any liquor license for such property. If such is the case,
it is possible that a new liquor license, if applied for, could not be obtained.
Factors Affecting the Operation of Office Properties. Forty-four (44)
Mortgage Loans, representing 9.5% of the Initial Pool Balance, are secured by
office properties (such Mortgaged Properties, the "Office Properties"). One (1)
other Mortgage Loan, representing 5.5% of the Initial Pool Balance, is secured
by eight office and four R&D/industrial buildings, the substantial majority of
the net rentable area of which consists of office space. A number of factors
will affect the value and operation of an Office Property, including:
o the number and quality of tenants in the building;
o the physical attributes of the building in relation to competing
buildings;
o access to transportation;
o the strength and stability of the local economy;
o the availability of tax benefits;
o the desirability of the location of business; and
o the cost of refitting office space for a new tenant (which is often
significantly higher than the cost of refitting other types of
properties for new tenants).
Risks Associated with Related Parties. Certain groups of Borrowers are
under common control. The largest of these groups of affiliated Borrowers are
obligors under a Mortgage Loan representing 12.3% of the Initial Pool Balance.
In addition, certain tenants lease space at more than one Mortgaged Property,
and certain tenants are related to or affiliated with a Borrower. See Annex A-1
to this Prospectus Supplement. The bankruptcy or insolvency of, or other
financial problems with respect to, any such Borrower or tenant 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. See "Certain Legal
Aspects of Mortgage Loans--Bankruptcy Laws" in the Prospectus.
Credit Lease Loans Have Special Risks. Twenty-six (26) Mortgage Loans,
representing 3.9% of the Initial Pool Balance, are Credit Lease Loans. A "Credit
Lease Loan" is a Mortgage Loan secured by a Mortgaged Property that is subject
to a net lease (a "Credit Lease") with a tenant having the characteristics
described in the next sentence (a "Credit Tenant") and occupying substantially
all of such property. Except in two cases where no public rating has been
issued, each Credit Tenant has (or, alternatively, the direct or indirect parent
of such tenant or any guarantor of such tenant's obligations under the related
Credit Lease (a "Credit Lease Guarantor") has) a public senior unsecured
long-term debt rating of at least "BB" (or the equivalent) by at least one
nationally recognized statistical rating organization. Based on the foregoing,
the Credit Lease Loans were generally underwritten to lower debt service
coverage ratios and higher loan-to-value ratios than would have been acceptable
had the related Mortgaged Properties been leased to less creditworthy tenants.
In the event that a Credit Tenant defaults in its obligations under a Credit
Lease, the Mortgaged Property may not be relet for sufficiently high rent to
support debt service on the related Credit Lease Loan or funds received in
liquidation of such Mortgaged Property may not be sufficient to satisfy the
Borrower's obligations under such Credit Lease Loan.
See "Description of the Mortgage Pool--Credit Lease Loans" in this
Prospectus Supplement.
S-33
<PAGE>
Any rating assigned to a Credit Tenant or Credit Lease Guarantor, as
applicable, by a rating agency will reflect only such rating agency's assessment
of the long-term unsecured debt obligations of such entity. Such rating is not
an assessment of the likelihood that the Credit Leases will not be terminated
(pursuant to their terms or otherwise) or that the Credit Lease Loans will be
timely repaid in full.
Reliance on Credit Quality of Credit Tenants and Guarantors Has Special
Risks. With respect to each Credit Lease Loan, interest and principal payments
depend principally on the payment by the related Credit Tenant or Credit Lease
Guarantor, if any, of monthly rent and other payments due under the related
Credit Lease form such Credit Tenant. A downgrade in the credit rating of any of
the Credit Tenants and/or the Credit Lease Guarantors may have a related adverse
effect on the rating of your Certificates even if there is no default under the
related Credit Lease Loan. See "Ratings" in this Prospectus Supplement.
If a Credit Tenant or Credit Lease Guarantor defaults on its obligations
to make monthly rental payments under a Credit Lease or the related guaranty, as
the case may be, the Borrower under the related Credit Lease Loan may not have
the ability to make required payments under such Credit Lease Loan. If a payment
default on a Credit Lease Loan occurs, the Special Servicer may be entitled to
foreclose upon or otherwise realize upon the related Mortgaged Property to
recover amounts due under the Credit Lease Loan and will also be entitled (as
successor to the Borrower), after appointment of a receiver or purchase of the
property at foreclosure, to pursue any available remedies against the defaulting
Credit Tenant and any defaulting Credit Lease Guarantor, which may include
rights to all future monthly rental payments under the subject Credit Lease. If
the default occurs before significant amortization of a Credit Lease Loan has
occurred and no recovery is available from the related Borrower or from the
Credit Tenant or any Credit Lease Guarantor, it is unlikely that the Special
Servicer will be able to recover in full the amounts then due under such Credit
Lease Loan.
See "Description of the Mortgage Pool--Credit Lease Loans" in this
Prospectus Supplement.
Loan Concentration Entails Risk. In general, the inclusion a mortgage pool
of one or more loans that have outstanding principal balances that are
substantially larger than the other mortgage loans in the pool 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 distributed more evenly. Several
Mortgage Loans have Cutoff Date Balances that are substantially higher than the
average Cut-off Date Balance, which is $7,107,336. The following table sets
forth Cut-off Date Balances and certain other information for the six largest
individual Mortgage Loans. See "Description of the Mortgage Pool--Significant
Mortgage Loans" in this Prospectus Supplement for a description of each of the
Mortgage Loans listed on the following table.
Cut-off Date Balances and Concentration of Significant Mortgage Loans
<TABLE>
<CAPTION>
Cut-off % of Initial Cut-off Date Debt Service
Mortgage Loan Date Balance Pool Balance LTV Ratio Coverage Ratio
- ------------- ------------ ------------ --------- --------------
<S> <C> <C> <C> <C>
Omni Loan $249,347,368 12.3% 49.89% 2.34x
Ontario Mills Loan $145,000,000 7.2% 58.00% 1.73x
Arden Loan $111,200,000 5.5% 47.32% 2.35x
Fresno Loan $ 69,000,000 3.4% 60.69% 1.74x
Bayside Loan $ 62,936,317 3.1% 61.71% 1.80x
Inland Loan $ 54,600,000 2.7% 51.51% 2.74x
------------ ---- ----- ----
Total/Weighted Average $692,083,685 34.2% 53.46% 2.14x
</TABLE>
Geographic Concentration Entails Risks. A concentration of Mortgaged
Properties in a particular locale, state or region increases the exposure of the
Mortgage Pool to various factors, including:
o any adverse economic developments that occur in the locale, state or
region where the Mortgaged Properties are located;
o changes in the real estate market where the Mortgaged Properties are
located;
o changes in governmental rules and fiscal policies in the
governmental jurisdiction where the Mortgaged Properties are
located; and
o acts of nature, including floods, tornadoes and earthquakes in the
areas where the Mortgaged Properties are located.
S-34
<PAGE>
The Mortgaged Properties are located in 35 states and Puerto Rico. The
Mortgaged Properties located in each of the following states secure Mortgage
Loans (or the allocated loan amounts) that represent 5% or more of the Initial
Pool Balance:
Total Cut-off Date Balance
of Mortgage Loans Secured % of Initial
State by Properties in the Particular State Pool Balance
- ----- ------------------------------------- ------------
California $401,108,232 19.8%
Texas $233,832,858 11.5%
New York $213,094,260 10.5%
Illinois $191,465,787 9.5%
Florida $168,134,019 8.3%
Risk of Changes in Mortgage Pool Composition. The Mortgage Loans amortize
at different rates and mature over a period of 25 years. In addition, certain
Mortgage Loans may be prepaid or liquidated. As a result of the foregoing, the
relative composition of the Mortgage Pool will change over time.
If you purchase Certificates with a Pass-Through Rate that is equal to or
calculated based upon a weighted average of interest rates on the Mortgage
Loans, your Pass-Through Rate will be affected (and may decline) as the relative
composition of the Mortgage Pool changes.
In addition, as payments and other collections of principal are received
with respect to the Mortgage Loans, the remaining Mortgage Pool may exhibit an
increased concentration with respect to property type, number and affiliation of
Borrowers and geographic location. The later the Assumed Final Distribution Date
for your Certificates (that is, except in the case of the Senior Certificates,
the more subordinate that your Certificates are relative to other Offered
Certificates), the more likely you are to be exposed to any risks associated
with changes in concentrations of Borrower, loan or property characteristics.
Extension and Default Risks Associated With Balloon Loans and ARD Loans.
Two hundred fifty-two (252) Mortgage Loans, representing 62.0% of the Initial
Pool Balance, are Balloon Loans, and eleven (11) Mortgage Loans, representing
35.2% of the Initial Pool Balance, are ARD Loans. The ability of a Borrower
under a Balloon Loan to make the required Balloon Payment at maturity, and the
ability of a Borrower under an ARD Loan to repay such Mortgage Loan on or before
the related Anticipated Repayment Date, in each case depends upon its ability to
refinance the loan or to sell the related Mortgaged Property and, further, on
the financial strength and business plans of the Borrower's sponsor. The ability
of a Borrower to refinance its Mortgage Loan or sell the related Mortgaged
Property will be affected by a number of factors occurring at the time of
attempted refinancing or sale, including:
o the level of available mortgage rates;
o the fair market value of the related Mortgaged Property;
o the Borrower's equity in the related Mortgaged Property;
o the financial condition of the Borrower;
o operating history of the related Mortgaged Property;
o tax laws;
o prevailing general and regional economic conditions; and
o the availability of credit for multifamily or commercial properties.
See "Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans" and "--Additional Mortgage Loan Information" in this Prospectus
Supplement and "Risk Factors--Balloon Payments; Borrower Default" in the
Prospectus.
Any failure of a Borrower under a Balloon Loan to timely pay its Balloon
Payment will be a default thereunder. Subject to certain limitations, the
Special Servicer may extend, modify or otherwise deal with Mortgage Loans that
are in material default or as to which a payment default is reasonably
foreseeable. See "Servicing of the Mortgage Loans--Modifications, Waivers and
Amendments" in this Prospectus Supplement. There can be no assurance that any
extension or modification will increase the recoveries in a given case.
The failure of a Borrower under an ARD Loan to repay such Mortgage Loan by
the related Anticipated Repayment Date will not constitute a default thereunder.
Although an ARD Loan includes several provisions that give the Borrower an
incentive to repay such Mortgage Loan by the related Anticipated Repayment Date,
there can be no assurance that such Borrower will be sufficiently motivated or
able to do so.
S-35
<PAGE>
If any Balloon Loan remains outstanding past its stated maturity, or if
any ARD Loan remains outstanding past its Anticipated Repayment Date, the
weighted average lives of certain Classes of the Offered Certificates may be
extended. See "Yield and Maturity Considerations" in this Prospectus Supplement
and "Yield and Prepayment Considerations" in the Prospectus.
Risks of Subordinate and Other Additional Financing. While all of the
Mortgage Loans either (i) prohibit the related Borrower from encumbering the
Mortgaged Property with additional secured debt or (ii) require the consent of
the mortgagee under the related Mortgage Loan prior to so encumbering such
property, a violation of such prohibition may not become evident until the
related Mortgage Loan otherwise defaults. The existence of any subordinated
indebtedness (and, in the case of the Bayside Loan, the senior secured debt
described above) increases the difficulty of refinancing the related Mortgage
Loan at maturity, and the related Borrower may have difficulty repaying multiple
loans. See "Certain Legal Aspects of Mortgage Loans--Secondary Financing;
Due-On-Encumbrance Provisions" in the Prospectus. Furthermore, certain of the
Mortgage Loans permit, and certain Borrowers have incurred, additional
indebtedness for operating costs or similar purposes. Additional debt, in any
form, may cause a diversion of funds from property maintenance and increase the
likelihood that the Borrower will become the subject of a bankruptcy proceeding.
Owners of certain Borrowers may incur indebtedness that is secured by
their ownership interests in such Borrowers. Such financing effectively reduces
the indirect equity interest of any such Owner in the related Mortgaged
Property. With respect to three Mortgage Loans, representing 5.5% of the Initial
Pool Balance, the owners of the related Borrowers were known to have incurred
such indebtedness as of the origination date of the related Mortgage Loan.
In addition, the Borrower under the "Bayside Loan" described in this
Prospectus Supplement has incurred additional debt that has an outstanding
principal balance of $14,200,000 as of the Cut-off Date. This debt is secured by
a lien on the parking garage portion of the "Bayside Property" and its lien is
senior to the Mortgage on such portion of the "Bayside Property" securing the
Bayside Loan. See "Description of the Mortgage Pool--Significant Mortgage
Loans--The Bayside Loan--Additional Debt" in this Prospectus Supplement.
The Depositor has not been able to confirm the existence of any other debt
of the respective Borrowers.
Limited Recourse. You should consider all of the Mortgage Loans to be
nonrecourse loans (i.e., in the event of a default, recourse will be limited to
the related Mortgaged Property or Properties securing the defaulted Mortgage
Loan). In those cases where recourse to a Borrower or guarantor is permitted by
the loan documents, the Depositor has not undertaken any evaluation of the
financial condition of such Borrower or guarantor. Consequently, payment on each
Mortgage Loan prior to maturity is dependent on one or more of the following:
o the sufficiency of the net operating income;
o the market value of the property at maturity; or
o the ability of the Borrower to refinance the Mortgaged Property.
None of the Mortgage Loans is insured or guaranteed by any governmental
entity or by any other person.
Environmental Risks. A third-party environmental consultant conducted an
environmental site assessment (or updated a previously conducted assessment)
with respect to each Mortgaged Property on or after October 6, 1997. Each such
environmental site assessment or update generally complied with ASTM standards.
In the case of certain Mortgaged Properties, a "Phase II" environmental
assessment was also performed. If any such assessment or update revealed a
material adverse environmental condition or circumstance at any Mortgaged
Property, then (depending on the nature of the condition or circumstance) one of
the following actions has been or is expected to be taken--
o environmental insurance was obtained;
o an operations and maintenance plan (including, in several cases, in
respect of asbestos-containing materials ("ACMs"), lead-based paint
and/or radon) or periodic monitoring of nearby properties has been
or is expected to be implemented in the manner and within the time
frames specified in the related Mortgage Loan documents; or
o an escrow reserve was established to cover the estimated cost of
remediation.
There can be no assurance, however, that the environmental assessments
identified all environmental conditions and risks or that the related Borrowers
will implement all recommended operations and maintenance plans. In addition,
the current environmental condition of the Mortgaged Properties could be
adversely affected by tenants or by the condition of land or operations in the
vicinity of the Mortgaged Properties (such as underground storage tanks).
S-36
<PAGE>
Liability of the Trust Under Environmental Laws. Various environmental
laws may make a current or previous owner or operator of real property liable
for the costs of removal or remediation of hazardous or toxic substances on,
under or adjacent to such property. Those laws often impose liability whether or
not the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. For example, certain laws impose liability for
release of ACMs into the air or require the removal or containment of ACMs. The
owner's liability for any required remediation generally is not limited by law
and accordingly could exceed the value of the property and/or the aggregate
assets of the owner. In addition, the presence of hazardous or toxic substances,
or the failure to remediate the adverse environmental condition, may adversely
affect the owner's or operator's ability to use such property. In certain
states, contamination of a property may give rise to a lien on the property to
ensure the costs of cleanup. In some states this lien has priority over the lien
of an existing mortgage. In addition, third parties may seek recovery from
owners or operators of real property for personal injury associated with
exposure to hazardous substances. Persons who arrange for the disposal or
treatment of hazardous or toxic substances may be liable for the costs of
removal or remediation of such substances at the disposal or treatment facility.
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), as well as certain other federal
and state laws, provide that a secured lender (such as the Trust) may be liable,
as an "owner" or "operator" of the real property, regardless of whether the
Borrower or a previous owner caused the environmental damage, if (i) agents or
employees of the lender are deemed to have participated in the management of the
Borrower or (ii) under certain conditions the lender actually takes possession
of a Borrower's property or control of its day-to-day operations (as for
example, through the appointment of a receiver or foreclosure). Although
recently enacted legislation clarifies the activities in which a lender may
engage without becoming subject to liability under CERCLA and similar federal
laws, such legislation has no applicability to state environmental laws.
Moreover, future laws, ordinances or regulations could impose material
environmental liability.
See "Certain Legal Aspects of the Mortgage Loans--Environmental Matters"
in the Prospectus.
Risks Related to Lead-Based Paint at Multifamily Properties. Federal law
requires owners of residential housing constructed prior to 1978 to disclose to
potential residents or purchasers any condition on the property that causes
exposure to lead-based paint and the potential hazards to pregnant women and
young children, including that the ingestion of lead-based paint chips and/or
the inhalation of dust particles from lead-based paint by children can cause
permanent injury, even at low levels of exposure. Property owners can be held
liable for injuries to their tenants resulting from exposure under various laws
that impose affirmative obligations on property owners of residential housing
containing lead-based paint. The environmental assessments revealed the
existence of lead-based paint at certain of the Multifamily Properties. In these
cases, the Borrowers have either implemented operations and maintenance programs
or are in the process of removing the lead-based paint.
Risks Related to Off-Site LUSTs. Certain of the Mortgaged Properties are
in the vicinity of sites containing leaking underground storage tanks ("LUSTs")
or other potential sources of groundwater contamination. Although the owners of
those Mortgaged Properties and the Trust may not have legal liability for
contamination of the Mortgaged Properties from such off-site sources, the
enforcement of rights against third parties may result in additional transaction
costs.
Risks Related to ACMs. At several of the Mortgaged Properties, ACMs have
been detected through sampling by environmental consultants. The ACMs found at
these Mortgaged Properties are not expected to present a significant risk as
long as the related Mortgaged Property continues to be properly managed. In
connection therewith, the related Borrowers have agreed to establish and
maintain operations and maintenance or abatement programs and/or have funded
environmental reserves. Nonetheless, there can be no assurance that the value of
a Mortgaged Property as collateral for the Mortgage Loan will not be adversely
affected by the presence of ACMs.
Risks Related to Property Condition. Except for the Mortgaged Properties
securing the Credit Lease Loans, licensed engineers inspected all of the other
Mortgaged Properties during the 12 months (or, in three such cases, during the
19 months) preceding the Cut-off Date to assess the structure, exterior walls,
roofing, interior construction, mechanical and electrical systems and general
condition of the site, buildings and other improvements located at each
Mortgaged Property. In some cases, the inspections identified conditions at a
particular Mortgaged Property requiring repairs or replacements estimated to
cost in excess of $100,000. In such cases, the Originator generally required the
related Borrower to fund reserves, or deliver letters of credit or other
instruments, to cover such costs. There is no assurance, however, that all
conditions requiring repair or replacement were identified or that such
reserves, letters of credit or other instruments will be adequate to cover the
corresponding costs.
Reserves May Be Insufficient. The Mortgage Loans generally require that
reserves be funded on a monthly basis from cash flow generated by the related
Mortgaged Property to cover ongoing monthly, semi-annual or annual expenses such
as taxes and insurance. The Mortgage Loans generally also required reserves to
be established, or letters of credit or other instruments to be delivered, upon
the closing of the Mortgage Loan to fund identified capital expenditure items,
certain leasing costs, identified environmental remediation costs or identified
engineering remediation costs when such needs were identified. Such reserves,
letters of credit or other instruments may not be sufficient to offset the
actual costs of the items which they were intended to cover. In addition, cash
flow from the Mortgaged Properties may not be sufficient to fund fully the
ongoing monthly reserve requirements.
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Limitations on Enforceability of Cross-Collateralization. The Mortgage
Pool includes twenty (20) Mortgage Loans that are, either individually or
through cross-collateralization with other such Mortgage Loans, secured by more
than one Mortgaged Property. Three of those Mortgage Loans represent 12.3%, 5.5%
and 2.7%, respectively, of the Initial Pool Balance. None of the other seventeen
(17) such Mortgage Loans represents more than 1.0% of the Initial Pool Balance.
Certain of those twenty (20) Mortgage Loans are secured by multiple Mortgaged
Properties as a result of cross-collateralization with certain other such
Mortgage Loans. For purposes of this Prospectus Supplement, all of those twenty
(20) Mortgage Loans will constitute "Cross-Collateralized Mortgage Loans".
Certain of the Cross-Collateralized Mortgage Loans or particular groups thereof
provide for a full or partial termination of the applicable
cross-collateralization and/or a release of one or more of the related Mortgaged
Properties from the related mortgage lien(s), upon the satisfaction of the
conditions described under "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans" in this Prospectus Supplement.
Certain of the Cross-Collateralized Mortgage Loans or particular groups
thereof are (in each case) secured by Mortgaged Properties located in two or
more states. Such "multi-state" Mortgage Loans collectively represent 15.0% of
the Initial Pool Balance. Foreclosure actions are brought in state court and the
courts of one state cannot exercise jurisdiction over property in another state.
Therefore, upon a default under any such "multi-state" Mortgage Loan, it may not
be possible to foreclose on the related Mortgaged Properties simultaneously.
Certain of the Cross-Collateralized Mortgage Loans or particular groups
thereof have (in each case) more than one Borrower. Such "multi-Borrower"
Mortgage Loans collectively represent 12.9% of the Initial Pool Balance. If a
Borrower under any such "multi-Borrower" Mortgage Loan were to become a debtor
in a bankruptcy case, the creditors of that Borrower or the representative of
that Borrower's bankruptcy estate could challenge the pledging of such
Borrower's Mortgaged Property as a fraudulent conveyance. A lien granted by a
Borrower under any such "multi-Borrower" Mortgage Loan to secure repayment of
another Borrower's Mortgage Loan or share of the related loan proceeds, as the
case may be, could be avoided if a court were to determine that--
o the first such Borrower was insolvent at the time of granting the
lien, was rendered insolvent by the granting of the lien, was left
with inadequate capital or was not able to pay its debts as they
matured, and
o the first such Borrower did not receive fair consideration or
reasonably equivalent value for pledging its Mortgaged Property for
the equal benefit of the other Borrower(s) under such
"multi-Borrower" Mortgage Loan or the other Mortgage Loan(s) with
which it is cross-collateralized.
Among other things, a legal challenge to the granting of the lien may focus on
the benefits realized by the debtor/Borrower from the respective Mortgage Loan
proceeds, as well as the benefit to it from the related cross-collateralization
arrangement. If a court were to conclude that the granting of the lien was an
avoidable fraudulent conveyance, that court could nullify the lien or mortgage
effecting the cross-collateralization and nullify or subordinate all or part of
the related Mortgage Loan(s) to existing or future indebtedness of that
Borrower. The court could also allow the Borrower to recover payments it made
pursuant to the avoided cross-collateralization.
Limitations on Enforceability and Collectability of Prepayment Premiums
and Yield Maintenance Charges. Ten (10) Mortgage Loans, representing 2.2% of the
Initial Pool Balance, require that, during some period of the related loan term,
any voluntary principal prepayment be accompanied by an additional amount
("Prepayment Consideration") generally calculated as a percentage of the amount
prepaid (a "Prepayment Premium") and/or based on a yield maintenance formula (a
"Yield Maintenance Charge"). See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions" in this
Prospectus Supplement. Any Prepayment Premiums and/or Yield Maintenance Charges
collected on the Mortgage Loans will be distributed to the persons and in the
amounts and priorities described in this Prospectus Supplement under
"Description of the Offered Certificates--Distributions--Distributions of
Prepayment Premiums and Yield Maintenance Charges". The Depositor makes no
representation or warranty, however, as to the collectability of any Prepayment
Premium or Yield Maintenance Charges.
The enforceability, under the laws of a number of states, of provisions
providing for the payment of a Prepayment Premium or Yield Maintenance Charge
upon an involuntary prepayment is unclear. Accordingly, the obligation of any
Borrower under its Mortgage Loan to pay a Prepayment Premium or Yield
Maintenance Charge in connection with an involuntary prepayment may not be
enforceable under applicable law. In addition, even if the obligation is
enforceable, any related liquidation proceeds may not be sufficient to make such
payment. Liquidation proceeds are generally applied to cover outstanding
servicing expenses and unpaid principal and interest prior to being applied to
cover any Prepayment Premium or Yield Maintenance Charge due in connection with
the liquidation of such Mortgage Loan. Furthermore, the Special Servicer has
authority to waive a Prepayment Premium or Yield Maintenance Charge in
connection with obtaining a pay-off of a defaulted Mortgage Loan. See "Servicing
of the Mortgage Loans--Modifications, Waivers and Amendments" in this Prospectus
Supplement and "Certain Legal Aspects of Mortgage Loans--Enforceability of
Prepayment and Late Payment Fees" in the Prospectus.
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In certain circumstances involving the sale of Mortgage Loans by the
Trust, no Prepayment Premium or Yield Maintenance Charge will be payable. See
"Description of the Mortgage Pool--Cures and Repurchases", "Servicing of the
Mortgage Loans--Realization Upon Defaulted Mortgage Loans; Sale of Defaulted
Mortgage Loans and REO Properties" and "Description of the Offered
Certificates--Termination" in this Prospectus Supplement.
Limitations on Enforceability of Other Provisions. The Mortgage Loans
contain due-on-sale clauses, each of which permits the lender (with limited
exception) to accelerate the maturity of the Mortgage Loan upon the sale,
transfer or conveyance of (i) the related Mortgaged Property or (ii) certain
interests in the related Borrower. The Mortgage Loans also include
debt-acceleration clauses, each of which permits the lender to accelerate the
debt upon specified monetary or non-monetary defaults by the Borrower. The
courts of all states will enforce acceleration clauses in the event of a
material payment default. The equity courts of any state, however, may refuse to
allow the foreclosure of a mortgage or deed of trust or to permit the
acceleration of the indebtedness if--
o the default is deemed to be immaterial,
o the exercise of such remedies would be inequitable or unjust, or
o the circumstances would render the acceleration unconscionable.
All or substantially all of the Mortgage Loans are, in each case, secured
by an assignment of leases and rents pursuant to which the related Borrower
assigned its right, title and interest as landlord under the leases on the
related Mortgaged Property and the income derived therefrom to the lender as
further security for the related Mortgage Loan, while retaining a license to
collect rents for so long as there is no default. In the event the Borrower
defaults, the license terminates and the lender is entitled to collect rents. In
come cases, such assignments may not be perfected as security interests prior to
actual possession of the cash flow. In some cases, state law 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 mortgagor, the lender's ability to collect the rents may be adversely
affected. See "Certain Legal Aspects of Mortgage Loans--Leases and Rents" in the
Prospectus.
Limitations of Appraisals. Appraisals were obtained for the Mortgaged
Properties securing all but two of the Mortgage Loans. In the case of those two
Mortgage Loans, which represent 8.9% of the Initial Pool Balance, internal
valuations of the related Mortgaged Properties were performed by the Originator.
Appraisals represent the analysis and opinion of an appraiser. They are not
guaranties of, and may not be indicative of, present or future value. 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. Moreover, appraisals seek to establish the
amount a typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale of a
Mortgaged Property under a distress or liquidation sale. Information regarding
the appraised values of the Mortgaged Properties is presented for illustrative
purposes only on Annex A-1 to this Prospectus Supplement.
Tax Considerations Related to Foreclosure. If the Trust were to acquire a
Mortgaged Property pursuant to a foreclosure or deed in lieu of foreclosure, the
Special Servicer would be required to retain an independent contractor to
operate and manage the Mortgaged Property. Any net income from such operation
and management, other than qualifying "rents from real property" (as defined in
section 856(d) of the Code), or any rental income based on the net profits of a
tenant or sub-tenant or allocable to a service that is non-customary in the area
and for the type of building involved, will subject the Trust to federal (and
possibly state or local) tax on such income at the highest marginal corporate
tax rate (currently 35% for federal purposes), thereby reducing net proceeds
available for distribution with respect to the Certificates.
Uninsured Loss; Sufficiency of Insurance. The Borrowers 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, the Borrower could lose both its
investment in and its anticipated profits and cash flow from its Mortgaged
Property, which would adversely affect the Borrower's ability to make payments
under its Mortgage Loan. Although, in general, the Borrowers have covenanted to
insure their respective Mortgaged Properties as described under "Description of
the Mortgage Pool--Certain Underwriting Matters--Hazard, Liability and Other
Insurance" in this Prospectus Supplement, there is a possibility of casualty
losses with respect to a 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 not required to be maintained by a
Borrower, except in the case of Mortgaged Properties located in the state of
California where either (i) a seismic assessment revealed a probable or bounded
maximum loss in excess of 20% of the amount of the estimated cost of the
improvements or (ii) the related Mortgage Loan has a Cut-off Date Balance in
excess of $50 million. In two such cases where earthquake insurance was obtained
with respect to a Mortgage Loan with a Cut-off Date Balance in excess of $50
million, the related Mortgaged Property may be covered under a blanket policy
which also covers other Mortgaged Properties and/or other
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<PAGE>
properties not securing the Mortgage Loans. As a result of aggregate and per
occurrence limits under any such blanket policy, losses at other properties
covered thereby may reduce the amount of insurance coverage with respect to a
Mortgaged Property covered thereby.
Risks Particular to Ground Leases. Several of the Mortgage Loans are
secured by first mortgage liens on the related Borrower's leasehold interest in
all or a portion of the related Mortgaged Property. Upon the bankruptcy of a
lessor or a lessee under a ground lease, the debtor entity has the right to
assume (continue) or reject (breach and vacate the premises) the ground lease.
If a debtor lessor rejects the lease, the lessee has the right to remain in
possession of its leased premises under the rent reserved in the lease for the
term (including renewals). If a debtor lessee/Borrower rejects any or all of its
leases, the Borrower's lender may not be able to succeed to the
lessee/Borrower's position under the lease unless the lessor has specifically
granted the lender such right. If both the lessor and the lessee/Borrowers are
involved in bankruptcy proceedings, the Trustee may be unable to enforce the
bankrupt lessee/Borrower's obligation to refuse to treat as terminated a ground
lease rejected by a bankrupt lessor. In such circumstances, it is possible that
the Trustee could be deprived of its security interest in the leasehold estate,
notwithstanding lender protection provisions contained in the lease or mortgage.
See "Certain Legal Aspects of Mortgage Loans--Leasehold Risks" in the
Prospectus.
Risks Associated With Zoning Compliance. Due to changes in zoning
requirements since the construction thereof, certain of the Mortgaged Properties
may not comply with current zoning laws, including density, use, parking and set
back requirements. The operation of these properties is considered to be a
"permitted non-conforming use". This means that the Borrower is not required to
alter its structure to comply with the new law; however, the Borrower may be
limited in its ability to rebuild the premises "as is" in the event of a
substantial casualty loss. This may adversely affect the cash flow available
following such loss. If a substantial casualty were to occur, insurance proceeds
may not be sufficient to pay the Mortgage Loan in full. In addition, if the
Mortgaged Property were repaired or restored in conformity with the current law,
the value of the Mortgaged Property or the revenue-producing potential of the
Mortgaged Property may be less than that which existed before the casualty.
Costs Associated With Compliance With ADA. Under the Americans with
Disabilities Act of 1990 (the "ADA"), all public accommodations are required to
meet certain federal requirements related to access and use by disabled persons.
If a Mortgaged Property does not currently comply with the ADA, the related
Borrower may be required to incur significant costs in order bring the property
into compliance. In addition, noncompliance could result in the imposition of
fines by the federal government or an award or damages to private litigants.
Litigation. You should be aware that there may be legal proceedings
pending and, from time to time, threatened against the Borrowers. The Depositor
cannot provide any assurance that such litigation will not have a material
adverse effect on the distributions to you.
DESCRIPTION OF THE MORTGAGE POOL
General
The Mortgage Pool has an Initial Pool Balance of $2,025,590,706, subject
to a variance of plus or minus 5%. The Initial Pool Balance is equal to the
aggregate Cut-off Date Balance of the Mortgage Loans. The "Cut-off Date Balance"
of each Mortgage Loan is equal to its unpaid principal balance as of the Cut-off
Date, after application of all payments due in respect of such Mortgage Loan on
or before such date, whether or not received. The Cut-off Date Balances of the
Mortgage Loans range from $598,212 to $249,347,368, and the average Cut-off Date
Balance of the Mortgage Loans is $7,107,336.
This "Description of the Mortgage Pool" section contains certain
statistical information regarding the Mortgage Loans and the Mortgaged
Properties. In reviewing such information, as well as the statistical
information regarding the Mortgage Loans and the Mortgaged Properties contained
elsewhere in this Prospectus Supplement, you should be aware that--
o All numerical information provided with respect to the Mortgage
Loans is provided on an approximate basis.
o All weighted average information provided with respect to the
Mortgage Loans reflects weighting of the Mortgage Loans by their
Cut-off Date Balances.
o When information with respect to the Mortgaged Properties is
expressed as a percentage of the Initial Pool Balance, such
percentage is based upon the Cut-off Date Balances of the related
Mortgage Loans.
o In certain cases involving a Mortgage Loan that is secured by
multiple Mortgaged Properties located in more than one state, a
portion of such Mortgage Loan has been allocated to each such
Mortgaged Property.
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o Statistical information regarding the Mortgage Loans may change
prior to the date of issuance of the Certificates due to changes in
the composition of the Mortgage Pool prior to the Closing Date.
o Certain capitalized terms used with respect to the Mortgage Loans
are defined under "Summary of Prospectus Supplement--The Mortgage
Loans and Mortgaged Properties" in this Prospectus Supplement.
Each Mortgage Loan constitutes the obligation of the related Borrower to
repay a specified sum with interest. Each Mortgage Loan is evidenced by a
promissory note ( a "Mortgage Note") and secured by a mortgage, deed of trust,
deed to secure debt or other similar security instrument (a "Mortgage") that
creates a first mortgage lien on the fee simple and/or leasehold interest of the
related Borrower or another party in one or more related Mortgaged Properties.
In general, the Mortgage Loans are secured by the Borrower's fee simple interest
in the related Mortgaged Property or the Borrower's leasehold interest and the
ground lessor's fee interest in the related Mortgaged Property. Twelve (12)
Mortgage Loans, representing 7.1% of the Initial Pool Balance, are secured
solely by the Borrower's leasehold interest in the related Mortgaged Property.
In the latter cases, the ground lessor has generally agreed to give the holder
of the Mortgage Loan notice of, and the right to cure, any default by the lessee
and the term of the ground lease extends at least ten (10) years beyond the
maturity date of the Mortgage Loan.
The table below shows the number of, and the percentage of the Initial
Pool Balance secured by, Mortgaged Properties operated for each indicated
purpose:
Number of
Mortgaged % of Initial
Property Type Properties Pool Balance
- ------------- ---------- ------------
Anchored Retail 73 20.1%
Regional Mall 3 12.9%
Unanchored Retail 54 7.1%
- ----------------- ---- ------
Total Retail 130 40.1%
Multifamily Rental 67 17.9&
Hospitality 20 17.9%
Office 44 9.5%
Office/Industrial 12 5.5%
Credit Leases(1) 28 3.9%
Industrial/Warehouse 16 3.3%
Self Storage 5 0.8%
Health Care 1 0.7%
Manufactured Housing 3 0.3%
Parking Garage 1 0.2%
- ----------
(1) Properties subject to Credit Leases, regardless of property type.
The table below shows the number of, and the percentage of the Initial
Pool Balance secured by, Mortgaged Properties located in the indicated states:
Number of
Mortgaged % of Initial
State Properties Pool Balance
- ----- ---------- ------------
California 34 19.8%
Texas 37 11.5%
New York 35 10.5%
Illinois 27 9.5%
Florida 30 8.3%
The remaining Mortgaged Properties are located throughout 30 other states
and Puerto Rico. No more than 3.7% of the Initial Pool Balance is secured by
Mortgaged Properties located in any such other jurisdiction.
All of the Mortgage Loans were originated directly or indirectly through
an affiliate of the Depositor or specifically for sale to such affiliate (such
affiliate, the "Originator").
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Certain Terms and Conditions of the Mortgage Loans
Due Dates. All of the Mortgage Loans other than the Fresno Loan provide
for Scheduled P&I Payments to be due on the first day of each month. The Fresno
Loan provides for Scheduled P&I Payments to be due on the tenth day of the
month.
Mortgage Rates; Calculations of Interest. Each Mortgage Loan bears
interest at a Mortgage Rate that is fixed until maturity. As described below,
however, each ARD Loan will accrue interest after its Anticipated Repayment Date
at a rate that is in excess of the Mortgage Rate otherwise in effect. As used in
this Prospectus Supplement, the term "Mortgage Rate" does not include the
incremental increase in the rate at which interest may accrue on any Mortgage
Loan due to a default or on any ARD Loan after its Anticipated Repayment Date.
As of the Cut-off Date, the Mortgage Rates for the Mortgage Loans ranged from
5.92% per annum to 8.94% per annum, and the weighted average Mortgage Rate for
the Mortgage Loans was 6.84% per annum.
No Mortgage Loan provides for negative amortization or, except as
described below with respect to the ARD Loans, for the deferral of interest.
Each Mortgage Loan will accrue interest on the basis of one of the
following conventions as detailed in Annex A-1 to this Prospectus Supplement:
o Actual number of days elapsed during each one-month accrual period
(an "Actual/360 Basis"). Mortgage Loans that accrue interest on an
Actual/360 Basis are referred to in this Prospectus Supplement as
"Actual/360 Mortgage Loans".
o A 360-day year consisting of twelve 30-day months (a "30/360
Basis"). Mortgage Loans that accrue interest on a 30/360 Basis are
referred to in this Prospectus Supplement as "30/360 Mortgage
Loans".
ARD Loans. Eleven (11) Mortgage Loans, representing 35.2% of the Initial
Pool Balance, are ARD Loans.
An "ARD Loan" is characterized by the following features:
o A maturity date that is approximately 25 years following
origination.
o The designation of an Anticipated Repayment Date that is
approximately 10 years following origination. The Anticipated
Repayment Date for each ARD Loan is listed on Annex A-1 to this
Prospectus Supplement.
o The ability of the related Borrower to prepay such Mortgage Loan,
without restriction (including without any obligation to pay a
Prepayment Premium or a Yield Maintenance Charge), at any time on or
after the related Anticipated Repayment Date (and, in the case of
certain ARD Loans, at any time on or after a date which may be up to
six months prior to the related Anticipated Repayment Date).
o Until its Anticipated Repayment Date, the accrual of interest at its
fixed Mortgage Rate.
o From and after its Anticipated Repayment Date, the accrual of
interest at a fixed annual rate (the "Revised Rate") equal to the
sum of (i) its Mortgage Rate, plus (ii) a specified margin (such
margin, the "Additional Interest Rate").
o The deferral of any interest accrued from and after the Anticipated
Repayment Date that is in excess of interest accrued at the related
Mortgage Rate on its unpaid principal balance outstanding from time
to time (such excess interest being referred to as "Additional
Interest"). Any Additional Interest accrued in respect of an ARD
Loan following its Anticipated Repayment Date will not be payable
until the entire principal balance of, and all other sums due under,
such Mortgage Loan have been paid in full. In general, unpaid
Additional Interest in respect of any ARD Loan will compound monthly
at the related Revised Rate.
o From and after the Anticipated Repayment Date, the application to
accelerated amortization of principal of any and all monthly cash
flow from the related Mortgaged Property which remains after payment
of the applicable Scheduled P&I Payment and permitted operating
expenses and capital expenditures. Such additional monthly payments
of principal are referred to as "Accelerated Amortization Payments".
Accelerated Amortization Payments and Additional Interest are
considered separate from Scheduled P&I Payments due in respect of
any ARD Loan.
By the related Anticipated Repayment Date, the Borrower under each ARD
Loan is required to enter into a lockbox agreement whereby all revenue from the
related Mortgaged Property will be deposited directly into a designated account
(the "Lockbox Account") controlled by the Master Servicer.
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Balloon Loans. Two hundred fifty-two (252) Mortgage Loans, representing
62.0% of the Initial Pool Balance, are Balloon Loans.
A "Balloon Loan" is characterized by either--
o no amortization of principal (i.e., a requirement that the related
Borrower make only payments of interest) prior to stated maturity,
or
o an amortization schedule that is significantly longer than the
actual term of such Mortgage Loan,
which in either case results in a Balloon Payment being due in respect of such
Mortgage Loan on its stated maturity date.
Fully Amortizing Loans. Twenty-two (22) Mortgage Loans, representing 2.8%
of the Initial Pool Balance, are Fully Amortizing Loans.
A "Fully Amortizing Loan" is characterized by:
o substantially equal Scheduled P&I Payments throughout the term of
such Mortgage Loan, and
o an amortization schedule that is approximately equal to the actual
term of such Mortgage Loan.
Amortization of Principal. The table below shows the indicated information
regarding the amortization schedules and terms to maturity (or, in the case of
the ARD Loans, to their respective Anticipated Repayment Dates) for the Mortgage
Loans (or the specified sub-groups thereof) as of the Cut-off Date.
Fully
Balloon ARD Amortizing All
Loans Loans Loans Loans
----- ----- ----- -----
Original Term to Maturity (mos.)
Maximum 240 120 300 300
Minimum 60 84 177 60
Weighted Average 122 117 237 123
Remaining Term to Maturity (mos.)
Maximum 239 120 298 298
Minimum 57 75 176 57
Weighted Average 120 115 236 121
Original Amortization Term (mos.)(1)
Maximum 360 360 300 360
Minimum 180 300 177 177
Weighted Average 342 327 230 334
Remaining Amortization Term (mos.)(1)
Maximum 360 360 298 360
Minimum 178 298 176 176
Weighted Average 340 326 229 332
- -----------
(1) Excludes the "Inland Loan" described herein, which is the sole Mortgage
Loan that requires payments of interest only to its stated maturity date.
Certain Mortgage Loans provide for a recast of the amortization schedule
and an adjustment of the Scheduled P&I Payments thereon upon application of
specified amounts of condemnation proceeds or insurance proceeds to pay the
unpaid principal balance of the Mortgage Loan.
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Prepayment Provisions. As of their respective dates of origination, all of
the Mortgage Loans prohibited voluntary prepayments for some specified period (a
"Lockout Period"). In certain cases, such Lockout Period is followed by one or
both of the following:
o a period (a "Prepayment Consideration Period") during which any
voluntary principal prepayment must be accompanied by a form of
Prepayment Consideration, and/or
o a period (an "Open Period") during which voluntary principal
prepayments may be made without any Prepayment Consideration.
The prepayment terms of each of the Mortgage Loans are more particularly
described in Annex A-1 to this Prospectus Supplement.
Lockout Periods. As of the Cut-off Date, a Lockout Period was in effect
for all of the Mortgage Loans and--
o the maximum remaining Lockout Period as of the Cut-off Date is 292
months;
o the minimum remaining Lockout Period as of the Cut-off Date is 22
months; and
o the weighted average remaining Lockout Period as of the Cut-off Date
is 118 months.
Prepayment Consideration. Ten (10) Mortgage Loans, representing 2.2% of
the Initial Pool Balance, provide for a Prepayment Consideration Period for some
portion of the related loan term. The Prepayment Consideration for such Mortgage
Loans may be in the form of Prepayment Premiums or Yield Maintenance Charges.
Prepayment Premiums are calculated as a percentage (which may decline over time)
of the principal amount prepaid. Yield Maintenance Charges are calculated on the
basis of a yield maintenance formula (subject, in certain instances, to a
minimum equal to a specified percentage of the principal amount prepaid).
Prepayment Premiums and/or Yield Maintenance Charges actually collected on the
Mortgage Loans will be distributed to the persons and in the amounts and
priorities described under "Description of the Offered
Certificates--Distributions--Distributions of Prepayment Premiums and Yield
Maintenance Charges" in this Prospectus Supplement. The Depositor makes no
representation or warranty as to the enforceability of the provision of any
Mortgage Loan requiring the payment of a Prepayment Premium or Yield Maintenance
Charge or as to the collectability of any Prepayment Premium or Yield
Maintenance Charge. See "Risk Factors--Risks Related to the Mortgage
Loans--Limitations on Enforceability and Collectability of Prepayment Premiums
and Yield Maintenance Charges" in this Prospectus Supplement and "Certain Legal
Aspects of Mortgage Loans--Enforceability of Prepayment and Late Payment Fees"
in the Prospectus.
Open Periods. Where a Mortgage Loan provides for an Open Period, the Open
Period generally begins no more than three months prior to stated maturity (or,
in the case of an ARD Loan, prior to the related Anticipated Repayment Date).
Defeasance. Two hundred seventy-three (273) Mortgage Loans, representing
97.5% of the Initial Pool Balance, are Defeasance Loans. A "Defeasance Loan" is
a Mortgage Loan that, during specified periods and subject to certain
conditions, permits the related Borrower(s) to pledge to the holder of such
Mortgage Loan the requisite amount of direct, non-callable United States
government securities (the "Defeasance Collateral") and thereby obtain a release
of the related Mortgaged Property (or, in the case of a Cross-Collateralized
Mortgage Loan or group of Cross-Collateralized Mortgage Loans secured by
multiple Mortgaged Properties, one or more of such Mortgaged Properties). In
general, the Defeasance Collateral to be delivered in connection with the
defeasance of any Defeasance Loan must provide for a series of payments that--
o will be made prior, but as close as possible, to all successive Due
Dates through and including the scheduled maturity date (or, in the
case of an ARD Loan, the Anticipated Repayment Date) for such
Mortgage Loan, and
o will, in the case of each such Due Date, be in an aggregate amount
equal to or greater than (with any excess to be returned to the
related Borrower) the Scheduled P&I Payment due on such date (or, in
the case of an ARD Loan for its Anticipated Repayment Date, the then
remaining unpaid principal balance of such Mortgage Loan).
If less than all of the Mortgaged Properties securing any Cross-Collateralized
Mortgage Loan or group of Cross-Collateralized Mortgage Loans are to be released
in connection with any such defeasance, however, the amount of the Defeasance
Collateral will be calculated based on the allocated loan amount for the
Mortgaged Property or Properties to be released and the portion of the Scheduled
P&I Payments attributable to such allocated loan amount.
In connection with any such defeasance, the related Borrower is required
to deliver a security agreement granting the Trust a first priority security
interest in the Defeasance Collateral, together with an opinion of counsel
confirming the first priority status of such security interest.
S-44
<PAGE>
In no event is defeasance of any Defeasance Loan permitted prior to the
second anniversary of the Closing Date.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. All of the Mortgage
Loans contain both a "due-on-sale" clause and a "due-on-encumbrance" clause. In
general, these clauses either permit the holder of the Mortgage to accelerate
the maturity of the related Mortgage Loan if the Borrower sells or otherwise
transfers or encumbers the related Mortgaged Property or prohibit the Borrower
from doing so without the consent of the holder of the Mortgage. See
"--Additional Mortgage Loan Information--Other Financing" in this Prospectus
Supplement. Certain of the Mortgage Loans, however, permit one or more of the
following types of transfer:
o a transfer of the related Mortgaged Property if certain specified
conditions are satisfied or if the transfer is to a transferee
reasonably acceptable to the lender;
o a transfer of the related Mortgaged Property to a person that is
related to the Borrower; or
o a transfer of certain beneficial interests in the Borrower.
See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale Clauses in
Mortgage Loans" and "--Secondary Financing; Due-on-Encumbrance Provisions" in
the Prospectus.
Cross-Collateralized Mortgage Loans. The Mortgage Pool includes twenty
(20) Mortgage Loans that are, either individually or through
cross-collateralization with other such Mortgage Loans, secured by more than one
Mortgaged Property. Three of those Mortgage Loans represent 12.3%, 5.5% and
2.7%, respectively, of the Initial Pool Balance. None of the other seventeen
(17) such Mortgage Loans represents more than 1.0% of the Initial Pool Balance.
Certain of those twenty (20) Mortgage Loans are secured by multiple Mortgaged
Properties as a result of cross-collateralization with certain other such
Mortgage Loans. For purposes of this Prospectus Supplement, all of those twenty
(20) Mortgage Loans will constitute "Cross-Collateralized Mortgage Loans".
Certain of the Cross-Collateralized Mortgage Loans or particular groups thereof
provide for a full or partial termination of the applicable
cross-collateralization and/or a release of one or more of the related Mortgaged
Properties from the related mortgage lien(s), upon the satisfaction of the
conditions of one or more of the following conditions:
o the pay down of the Mortgage Loan in an amount equal to a specified
percentage (generally between 115% and 125%) of the portion of the
aggregate loan amount allocated to the Mortgaged Property or
Mortgaged Properties to be released.
o the satisfaction of certain property performance tests (such as an
occupancy test) for the remaining Mortgaged Properties; and/or
o the satisfaction of certain debt service coverage and loan-to-value
tests for the remaining Mortgaged Properties.
Set forth below are the number of Mortgaged Properties securing, and the
percentage of the Initial Pool Balance represented by, each "multi-property"
Mortgage Loan that represents more than 1.0% of the Initial Pool Balance. None
of the Mortgage Loans set forth in the following table are cross-collateralized
with any other Mortgage Loan.
Number of
Mortgaged % of Initial Cut-off Date
Mortgage Loan Properties Pool Balance LTV Ratio DSC Ratio
- ------------- ---------- ------------ ----------- ---------
Omni Loan 5 12.31% 49.89% 2.34x
Arden Loan 12 5.49% 47.32% 2.35x
Inland Loan 12 2.70% 51.51% 2.74x
The Master Servicer or the Special Servicer, as the case may be, will
determine whether to enforce the cross-default and cross-collateralization
rights upon a default with respect to any of the Cross-Collateralized Mortgage
Loans. The Certificateholders will not have any right to participate in or
control any such determination.
Nonrecourse Nature of Mortgage Loans. You should consider each Mortgage
Loan to be a nonrecourse obligation of the related Borrower (i.e., in the event
of a payment default, the recourse of the Trust will be limited to the related
Mortgaged Property or Properties for satisfaction of the Borrower's
obligations). In those cases where the related Mortgage Loan documents permit
recourse to a Borrower or guarantor, the Depositor has not undertaken an
evaluation of the financial condition of any such person. None of the Mortgage
Loans is insured or guaranteed by any governmental entity or by any other
person.
S-45
<PAGE>
Credit Lease Loans
Twenty-six (26) Mortgage Loans, representing 3.9% of the Initial Pool
Balance, are Credit Lease Loans. Except in the two cases where no public rating
has been issued, each Credit Lease Loan is secured by a Mortgage on a Mortgaged
Property that is subject to a net lease with a Credit Tenant, which possesses,
or whose parent or affiliate that guarantees such tenant's obligations
possesses, a public senior unsecured long-term debt rating of at least "BB" (or
the equivalent) by a nationally recognized statistical rating organization.
Each Credit Lease has a primary lease term (the "Primary Term") that
expires on or after the scheduled final maturity date of the related Credit
Lease Loan. The Credit Lease Loans (exclusive of any Balloon Payment thereunder)
are scheduled to be fully repaid from monthly rental payments made over the
Primary Term of the related Credit Lease. In connection with each Credit Lease
Loan that provides for a Balloon Payment, the Trust will have the benefit of a
residual value insurance policy that insures the payment of the Balloon Payment
to the extent that the related Mortgaged Property cannot be sold for such amount
at the stated maturity date because of changes in market conditions. Certain of
the Credit Leases give the Credit Tenant the right to extend the term of the
Credit Lease by one or more renewal periods after the end of the Primary Term.
The amount of the monthly rental payments payable by each Credit Tenant
(plus, in the case of certain Credit Lease Loans, the amount in the debt service
reserve account, which will be drawn upon through the date of the termination to
cover any rent shortfalls) is equal to or greater than the scheduled payment of
all principal, interest and other amounts due each month on the related Credit
Lease Loan (exclusive of any Balloon Payment thereunder). In the case of each
Credit Lease Loan with a debt service reserve account, withdrawals of funds on
deposit in such account will be used to supplement monthly rental payments under
the related Credit Lease in an amount necessary to cover Scheduled P&I Payments
due under such Mortgage Loan during specific months during the term of such
Mortgage Loan.
The table below shows, for each Credit Tenant or related Credit Lease
Guarantor, the number and aggregate Cut-off Date Balance of the related Credit
Lease Loan or Loans, the rating of the Credit Tenant or related Credit Lease
Guarantor and the Credit Lease type.
<TABLE>
<CAPTION>
Number Cut-off Date Lease Credit Rating
Tenant/Guarantor of Loans Balance Type(3) (Moody's/S&P)
- ---------------- -------- ------- ------- -------------
<S> <C> <C> <C> <C>
Kmart 3 $11,834,934 NNN Ba2 / BB
Food Lion 2 $11,595,033 NNN A3 / A-
Garden Ridge 1 $10,377,575 NNN (4)
Walgreen 3 $ 9,705,019 NN Aa3 / A+
CVS 6 $ 9,658,555 NN A3 / A-
Eckerd(1) 3 $ 7,974,406 NNN/NN A2 / A
Rite Aid 3 $ 5,560,672 NN Baa1 / BBB+
Bell Atlantic of Virginia 1 $ 4,132,482 B A1 / AA
Staples 1 $ 2,640,770 NN Baa2 / BBB-
Revco(2) 1 $ 2,440,922 NN A3 / A-
Southland (7-11)(5) 1 $ 1,462,648 NN Ba1 / BB+
IHOP 1 $ 1,375,000 NNN (4)
- ---- -- -----------
Total 26 $78,758,016 -- --
</TABLE>
- -----------
Unless otherwise indicated, such ratings were the highest rating assigned to
long-term obligations of the applicable tenant or guarantor, as applicable, by
Moody's and S&P, respectively.
(1) Based upon the rating of Eckerd's parent, J.C. Penney Corporation,
although it has made no explicit guaranty of Eckerd's obligations. Eckerd
Greensboro and Eckerd San Antonio, securing Mortgage Loans with a total
Cut-off Date Balance of $5,453,702, are triple net leased and Eckerd
Chattanooga, securing a Mortgage Loan with a Cut-off Date Balance of
$2,520,704, is double net leased.
(2) Based upon the rating of Revco's parent, CVS Corporation, although it has
made no explicit guaranty of Revco's obligations.
(3) "NNN" means triple net lease; "NN" means double net lease; and "B" means
bond-type lease.
(4) Private rating; disclosure not available.
(5) Senior unsecured credit facilities.
Each Credit Lease generally provides that the related Credit Tenant is
responsible for all real property taxes and assessments levied or assessed
against the related Mortgaged Property and, except as discussed below in the
case of certain of the Double Net Leases, for all charges for utility services,
insurance and other operating expenses incurred in connection with the operation
of the related Mortgaged Property.
S-46
<PAGE>
Generally, each Credit Lease Loan provides that if the Credit Tenant
defaults beyond applicable notice and grace periods in the performance of any
covenant or agreement in such Credit Lease (a "Credit Lease Default"), then the
holder of the related Mortgage may require the related Mortgagor either (i) to
terminate such Credit Lease or (ii) refrain from the exercise of any of its
rights thereunder. A Credit Lease Default will constitute a default under the
related Credit Lease Loan, although in certain cases the related Borrower may
possess certain cure rights.
In addition, most of the Credit Leases permit the Credit Tenant, at its
own expense, and generally with the consent of the related Borrower, to make
such alterations or improvements on the related Mortgaged Property as the Credit
Tenant may deem necessary or desirable. Such actions, if undertaken by the
Tenant, will not affect the Credit Tenant's obligation under the Credit Lease.
Lease termination rights and rent abatement rights, if any, provided to
Credit Tenants in the Credit Leases may be divided into three categories: (i)
termination and abatement rights directly arising from certain casualty
occurrences or condemnations ("Casualty or Condemnation Rights"), (ii)
termination and abatement rights arising from a Borrower's default relating to
its obligations under a Credit Lease to perform required maintenance, repairs or
replacements with respect to the related Mortgaged Property ("Maintenance
Rights") and (iii) termination and abatement rights arising from a Borrower's
default in the performance of various other obligations under the Credit Lease,
including remediating environmental conditions not caused by the Credit Tenant,
enforcement of restrictive covenants affecting other property owned by the
Borrower in the area of the related Mortgaged Property and complying with laws
affecting such Mortgaged Property or common areas related to such Mortgaged
Property ("Additional Rights"). Certain Credit Leases ("Bond-Type Leases") do
not provide for Casualty or Condemnation Rights, Maintenance Rights or
Additional Rights, and the Credit Tenants thereunder are required, at their
expense, to maintain their related Mortgaged Property in good order and repair.
Other Credit Leases provide for Casualty or Condemnation Rights and may provide
for Additional Rights ("Triple Net Leases"). The Credit Tenants under Triple Net
Leases are required, at their expense, to maintain their Mortgaged Properties,
including the roof and structure, in good order and repair. Additionally,
certain of the Credit Leases provide for Casualty or Condemnation Rights and
Maintenance Rights and may provide for Additional Rights ("Double Net Leases").
If the Borrower defaults in the performance of certain obligations under a
Triple Net Lease or a Double Net Lease and the Credit Tenant exercises its
Additional Rights or Maintenance Rights, there could be a disruption in the
stream of Monthly Rental Payments available to pay principal and interest to the
Credit Lease Loans. Generally, Additional Rights and Maintenance Rights are
mitigated by repair and maintenance reserves, debt service coverage ratios in
excess of 1.0x and, prior to the disbursement of such Mortgage Loan, receipt of
tenant estoppel certificates (i.e., a certificate of the Credit Tenant
confirming the non-existence of landlord default).
Credit Leases with respect to one Credit Lease Loan, representing 0.2% of
the Initial Pool Balance, are Bond-Type Leases, Credit Leases with respect to 11
Credit Lease Loans, representing 2.0% of the Initial Pool Balance, are Triple
Net Leases and Credit Leases with respect to 14 Credit Lease Loans, representing
1.7% of the Initial Pool Balance, are Double Net Leases.
At the end of the term of the Credit Leases, Credit Tenants are generally
obligated to surrender the related Mortgaged Properties in good order and in the
original condition received by the Credit Tenant, except for ordinary wear and
tear and repairs required to be performed by the Mortgagor.
In general, each Credit Tenant is obligated under its Credit Lease to make
all monthly rental payments directly to the owner of the related Credit Lease
Loan.
In connection with each Credit Lease that provides for Casualty or
Condemnation Rights, the Trust will have the benefit of a noncancelable Lease
Enhancement Policy issued by the Enhancement Insurer. A "Lease Enhancement
Policy" is an insurance policy that provides, subject to customary exclusions,
that in the event of a permitted termination by a Credit Tenant of its Credit
Lease as a result of a casualty or condemnation, the Enhancement Insurer will
pay to the Master Servicer on behalf of the Trustee the "loss of rents" (that
is, a lump sum payment of all outstanding principal plus, subject to the
limitation below, accrued interest on the Credit Lease Loan). The Enhancement
Insurer is not required to pay interest for a period greater than 75 days past
the date of the exercise of a Casualty or Condemnation Right. The "Enhancement
Insurer" is Chubb Custom Insurance Company which, as of the Cut-off Date, had a
financial strength rating of "AAA" from S&P. If the Credit Lease permits the
Credit Tenant to abate all or a portion of the rent in the event of a partial
condemnation, the "loss of rents" will be an amount equal to the portion of any
monthly rental payments not made by such Credit Tenant for the period from the
date the abatement commences until the earlier of the date the abatement ceases
or the expiration date of the initial term of such Credit Lease. The Enhancement
Insurer is not required to pay amounts due under any Credit Lease Loan other
than principal and, subject to the limitation above, accrued interest.
Accordingly, it is not required to pay any Prepayment Premium or Yield
Maintenance Charge due thereunder or any amounts the Borrower is obligated to
pay thereunder to reimburse the Master Servicer or the Trustee for outstanding
servicing advances.
Each Lease Enhancement Policy contains certain exclusions from coverage,
including loss arising from damage or destruction directly or indirectly caused
by war, insurrection, rebellion, revolution, usurped power, pollutants or
radioactive matter, or from a taking (other than by condemnation).
S-47
<PAGE>
The Mortgage Loans which are Credit Lease Loans are indicated on Annex A-1
to this Prospectus Supplement by the designation "CTL" in the property type
column.
Assessments of Property Condition
Property Inspections. All of the Mortgaged Properties were inspected in
connection with the origination or acquisition of the related Mortgaged Loans to
assess their general condition. No inspection revealed any patent structural
deficiency or any deferred maintenance considered by the Depositor to be
material and adverse to the interests of the Holders of the Offered Certificates
and for which adequate reserves have not been established.
Appraisals. The Mortgaged Properties securing all but two of the Mortgage
Loans were appraised by a state certified appraiser or an appraiser belonging to
the Appraisal Institute, and such appraisals were conducted in accordance with
the Uniform Standards of Professional Appraisal Practices. Internal valuations
where performed for the Mortgaged Properties securing the Arden Loan and the
Fresno Loan. The primary purpose of each such appraisal or internal valuation
was to provide an opinion of the fair market value of the related Mortgaged
Property. There can be no assurance that another appraiser would have arrived at
the same opinion of value. The resulting "Appraised Values" are shown on Annex
A-1 to this Prospectus Supplement.
Environmental Assessments. A "Phase I" environmental site assessment was
performed with respect to all the Mortgaged Properties in connection with the
origination of the related Mortgage Loans. In certain cases, additional
environmental testing, as recommended by such "Phase I" assessment, was
performed. In each case where environmental assessments recommended remediation,
the originator determined that the necessary remediation had been undertaken in
a satisfactory manner, was being undertaken in a satisfactory manner or would be
adequately addressed post-closing. In some instances, the Originator required
that reserves be established to cover the estimated cost of such remediation.
Environmental site assessments indicated the presence of friable asbestos at the
Mortgaged Property securing the Fresno Loan. The Borrower under the Fresno Loan
and its predecessors have implemented, and such Borrower has covenanted to
continue, an asbestos operations and maintenance program, including the removal,
upon renovation of tenant spaces when warranted, of ACMs that are either
disturbed during construction or present a material potential hazard due to
condition or location. The Originator required the Fresno Borrower to establish
a reserve of approximately $477,000 for potential costs associated with the
plan, although this was not a recommendation set forth in the related
environmental assessment.
Engineering Assessments. In connection with the origination of each
Mortgage Loan (other than the Credit Lease Loans), a licensed engineer inspected
the related Mortgaged Property to assess the structure, exterior walls, roofing,
interior structure and mechanical and electrical systems. The resulting reports
indicated certain deferred maintenance items and/or recommended capital
improvements with respect to certain of the Mortgaged Properties. In such cases,
the related Borrowers were generally required to deposit with the lender an
amount equal to between 100% and 125% of the licensed engineer's estimated cost
of the recommended repairs, corrections or replacements to assure their
completion.
Earthquake Analyses. An architectural and engineering consultant performed
an analysis on each of the 34 Mortgaged Properties located in the State of
California. This was done in order to evaluate the structural and seismic
condition of the property and to assess, based primarily on statistical
information, the maximum probable or bounded loss for the property in the case
of an earthquake. Each Mortgaged Property that is located in California and
secures any Mortgage Loan described under "--Significant Mortgage Loans" is
covered by earthquake insurance as described in such section. With respect to
the other Mortgaged Properties located in California, the related seismic
analysis reports, which were prepared not earlier than October 27, 1997,
concluded that in the event of an earthquake, only two of such Mortgaged
Properties, representing security for 0.97% of the Initial Pool Balance, is
likely to suffer a maximum probable or bounded loss in excess of 20% of the
amount of the estimated replacement cost of the improvements. Earthquake
insurance is not required to be maintained by a Borrower, except in the case of
Mortgaged Properties located in the state of California where either (i) a
seismic assessment revealed a maximum probable or bounded loss in excess of 20%
of the amount of the estimated replacement cost of the improvements or (ii) the
related Mortgage Loan has a Cut-off Date Balance in excess of $50 million. In
two such cases where earthquake insurance was obtained with respect to a
Mortgage Loan with a Cut-off Date Balance in excess of $50 million, the related
Mortgaged Property may be covered under a blanket policy which also covers other
Mortgaged Properties and/or other properties not securing the Mortgage Loans. As
a result of aggregate and per occurrence limits under any such blanket policy,
losses at other properties covered thereby may reduce the amount of insurance
coverage with respect to a Mortgaged Property covered thereby.
Additional Mortgage Loan Information
Delinquencies. No Mortgage Loan will be as of the Cut-off Date, or has
been at any time during the 12-month period preceding the Cut-off Date, 30 days
or more delinquent in respect of any Scheduled P&I Payment.
S-48
<PAGE>
Tenants. All of the Mortgaged Properties securing Credit Lease Loans, as
well as twenty-one (21) other Mortgaged Properties used for retail purposes
(which together represent security for 7.2% of the Initial Pool Balance), are
leased to a single tenant. See Annex A-1 to this Prospectus Supplement.
Certain of the Multifamily Rental Properties have material concentrations
of student tenants.
Other Financing. While all of the Mortgage Loans either (i) prohibit the
related Borrower from encumbering the Mortgaged Property with additional secured
debt or (ii) require the consent of the holder of the first lien prior to so
encumbering such property. A violation of such prohibition may not become
evident until the related Mortgage Loan otherwise defaults. See "Certain Legal
Aspects of Mortgage Loans--Secondary Financing; Due-On-Encumbrance Provisions"
in the Prospectus. Furthermore, certain of the Mortgage Loans permit, and
certain Borrowers have incurred, additional indebtedness for operating costs or
similar purposes.
Owners of certain Borrowers may incur indebtedness that is secured by
their ownership interests in such Borrowers. With respect to three Mortgage
Loans, representing 5.5% of the Initial Pool Balance the owners of the related
Borrowers were known to have incurred such indebtedness as of the origination
date of the related Mortgage Loan.
The Borrower under the Bayside Loan has incurred additional debt that has
an outstanding principal amount of $14,200,000 as of the Cut-off Date. This debt
is secured by a lien on the parking garage portion of the Bayside Property and
such lien is senior to the Mortgage on such portion of the Bayside Property
securing the Bayside Loan. See "--Significant Mortgage Loans--The Bayside
Loan--Additional Debt" in this Prospectus Supplement.
The Depositor has not been able to confirm the existence of any other debt
of the respective Borrowers.
Zoning and Building Code Compliance. The Originator examined whether the
use and operation of the related Mortgaged Properties were in material
compliance with zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to such Mortgaged
Properties at the time of origination. The Originator may have considered legal
opinions, certifications from government officials, representations by the
related Borrower or property condition assessments undertaken by independent
licensed engineers in assessing compliance. The Depositor does not believe that
there are any material existing violations with respect to the Mortgaged
Properties.
In some cases, the use, operation or structure of a Mortgaged Property
constitutes a permitted nonconforming use or structure. Generally in such cases,
the improvements on such Mortgaged Property may not be rebuilt to their current
state in the event that such improvements are materially damaged or destroyed.
Where a Mortgaged Property constitutes a permitted nonconforming use or
structure and the improvements thereon may not be rebuilt in the event of a
major casualty, the Originator--
o determined that casualty insurance proceeds would be available in an
amount sufficient to pay off the related Mortgage Loan in full;
o determined that the Mortgaged Property, if permitted to be repaired
or restored in conformity with current law, would constitute
adequate security for the related Mortgage Loan; and/or
o required a corresponding endorsement to the title insurance policy.
There is no assurance, however, that the conclusions of the Originator in this
regard are correct.
Hazard, Liability and Other Insurance. Each Mortgage generally requires
the related Borrower to maintain the following insurance coverage--
o Hazard insurance in an amount that generally is (subject to a
customary deductible) at least equal to the lesser of the
outstanding principal balance of the related Mortgaged Loan and 100%
of the full insurable replacement cost of the improvements located
on the such Mortgaged Property. In general, the standard form of
hazard insurance policy covers physical damage to, or destruction
of, the improvements on a 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. However, certain Credit Lease Loans permit the related
Credit Tenant to "self-insure".
o If any portion of a Mortgaged Property was in an area identified in
the Federal Register by the Flood Emergency Management Agency as
having special flood hazards, flood insurance meeting the
requirements of the Federal Insurance Administration guidelines, if
available, in an amount that is not less than the least of: (i) the
outstanding principal balance of such Mortgage Loan; (ii) the full
insurable value of such Mortgaged Property; (iii) the maximum amount
of insurance
S-49
<PAGE>
available under the National Flood Insurance Act of 1968, as
amended; and (iv) 100% of the replacement cost of the improvements
located on the related Mortgaged Property.
o Comprehensive general liability insurance against claims for
personal and bodily injury, death or property damage occurring on,
in or about such Mortgaged Property, in an amount customarily
required by institutional lenders.
o Business interruption or loss of rents insurance in an amount not
less than the projected rental income or revenue from such Mortgaged
Property for a period of at least six months.
In general, the Mortgaged Properties (including those located in
California) are not insured against earthquake risks. However, earthquake
insurance was required to be in place at the time or origination for each of the
34 Mortgaged Properties located in California as to which a seismic study
established a maximum probable or bounded loss from an earthquake to be greater
than 20% of the amount of the estimated replacement cost of the improvements or
as to which the Cut-off Date Balance of the related Mortgage Loan is greater
than $50 million. In two such cases where earthquake insurance was obtained with
respect to a Mortgage Loan with a Cut-off Date Balance in excess of $50 million,
the related Mortgaged Property may be covered under a blanket policy which also
covers other Mortgaged Properties and/or other properties not securing the
Mortgage Loans. As a result of aggregate and per occurrence limits under any
such blanket policy, losses at other properties covered thereby may reduce the
amount of insurance coverage with respect to a Mortgaged Property covered
thereby.
Mortgage Pool Characteristics
Set forth below is certain information regarding the characteristics of
the Mortgage Loans and Mortgaged Properties, presented in a tabular format. In
addition, a detailed presentation of certain characteristics of the Mortgage
Loans and Mortgaged Properties is shown, both on a
loan-by-loan/property-by-property basis and in tabular format, on Annex A-1,
Annex A-2, Annex A-3 and Annex A-4 to this Prospectus Supplement. Unless
otherwise indicated, such information is presented as of the Cut-off Date. The
statistics in the tables and schedules on Annex A-1, Annex A-2, Annex A-3 and
Annex A-4 to this Prospectus Supplement were derived, in many cases, from
information and operating statements furnished by or on behalf of the respective
Borrowers. Such information and operating statements were generally unaudited
and have not been independently verified by the Depositor or the Underwriter.
For purposes of this Prospectus Supplement, including the tables and
schedules on Annex A-1, Annex A-2, Annex A-3 and Annex A-4 to this Prospectus
Supplement, the indicated terms have the following meanings:
1. "Debt Service Coverage Ratio", "DSC Ratio", "Cut-off Date DSC Ratio" or "UW
NCF DSCR" means, with respect to any Mortgage Loan (other than a Credit Lease
Loan), the ratio of (a) "Net Cash Flow" produced by the related Mortgaged
Property to (b) the annualized amount of debt service that will be payable under
that Mortgage Loan commencing after the origination date. Debt Service Coverage
Ratios are not presented in this Prospectus Supplement for Credit Lease Loans
because such Mortgage Loans were, in large part, underwritten based upon the
Credit Tenant. In connection therewith, such ratios would be expected to be
lower than for the other Mortgage Loans. The following discussion does not apply
to Credit Lease Loans or the related Mortgaged Properties.
In general, the "Net Cash Flow" for any Mortgaged Property is (x) the
revenue derived from the use and operation of such Mortgaged Property, less (y)
operating expenses (such as utilities, administrative expenses, repairs and
maintenance, tenant improvement costs, leasing commissions, management fees and
advertising), fixed expenses (such as insurance, real estate taxes, ground lease
payments (if applicable) and, in the case of the Bayside Loan, debt service
payments and reserve deposits required under the terms of the Miami Bonds) and
replacement reserves and an allowance for vacancies and credit losses. Net Cash
Flow does not reflect interest expenses and non-cash items such as depreciation
and amortization, and generally does not reflect capital expenditures.
In determining the Net Cash Flow for any Mortgaged Property, the
Originator relied on one or more of the following items supplied by the related
Borrower. In general, such items were not audited or otherwise confirmed by an
independent party.
o Rolling 12-month operating statements.
o Applicable year-to-date financial statements, if available.
o Rent rolls that were current as of the date not earlier than six
months prior to the respective date of origination. In general, rent
rolls were used for Mortgaged Properties other than Hospitality
Properties (each such Mortgaged Property other than a Hospitality
Property, a "Rental Property").
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<PAGE>
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the Originator generally relied on the most recent rent roll (as
applicable) supplied by the related Borrower. Where the actual vacancy shown
thereon and the market vacancy was less than 5.0%, the Originator normally
assumed a minimum of 5.0% vacancy in determining revenue from rents, except
that, in the case of certain anchored shopping centers and certain single tenant
properties (including all the Mortgaged Properties with Credit Tenants), space
occupied by such anchor or single tenants may have been disregarded in
performing the vacancy adjustment due to the length of the related leases or
creditworthiness of such tenants, in accordance with the Originator's
underwriting standards.
In determining rental revenue for Mortgaged Properties that constitute
multifamily, self storage and manufactured housing properties, the Originator
either reviewed rental revenue shown on the certified rolling 12-month operating
statements or annualized the rental revenue and reimbursement of expenses shown
on rent rolls or recent partial year operating statements with respect to the
prior one to twelve month periods.
For the other Rental Properties, the Originator generally annualized
rental revenue shown on the most recent certified rent roll (as applicable),
after applying the vacancy factor, without further regard to the terms
(including expiration dates) of the leases shown thereon. In the case of
Hospitality Properties, gross receipts were determined on the basis of
historical operating levels shown on the Borrower-supplied 12-month trailing
operating statements.
In the case of Mortgaged Properties that constitute residential
health-care facilities, receipts were based on historical occupancy levels,
historical operating revenues and the then-current occupancy rates (with private
occupancy rates within the then-current market ranges and vacancy levels at a
minimum of 5%).
In general, any non-recurring revenue items and non-property related
revenue were eliminated from the calculation except in the case of residential
health care facilities.
In determining the "expense" component of Net Cash Flow for each Mortgaged
Property, the Originator generally relied on full-year or year-to-date financial
statements, rolling 12-month operating statements and/or year-to-date financial
statements supplied by the related Borrower, except that--
o If tax or insurance expense information more current than that
reflected in the financial statements was available, the newer
information was used.
o Property management fees were generally assumed to be 3% to 6% of
effective gross revenue (except with respect to Hospitality
Properties, where a minimum of 4% of gross receipts was assumed, and
except with respect to certain single-tenant Mortgaged Properties,
where fees as low as 1.5% of effective gross receipts were assumed).
o In general, assumptions were made with respect to the average amount
of reserves for leasing commissions, tenant improvement expenses and
capital expenditures.
o Expenses were generally assumed to include annual replacement
reserves equal to:
(i) in the case of Mortgaged Properties that constitute retail,
office and industrial/warehouse properties, not less than
$0.04 and not more than $0.57 per square foot net rentable
commercial area;
(ii) in the case of Multifamily Rental Properties, not less than
$150 or more than $311 per residential unit per year,
depending on the condition of the property;
(iii) in the case of Hospitality Properties, not less than 3.5% of
the gross revenues received by the property owner on an
ongoing basis;
(iv) in the case of Mortgaged Properties that constitute
residential health-care facilities, $225 to $335 per bed per
year;
(v) in the case of Mortgaged Properties that constitute
manufactured housing communities, not less than $35 per pad
per year; and
(vi) in the case of Mortgaged Properties that constitute self
storage facilities, not less than $0.10 or more than $0.20 per
square foot per year. In addition, in some instances, the
Originator recharacterized as capital expenditures those items
reported by Borrowers as operating expenses (thus increasing
"net cash flow") where the Originator determined appropriate.
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<PAGE>
2. "Cut-off Date Loan-to-Value Ratio", "Cut-off Date LTV Ratio" or "Cut-off Date
LTV" means, with respect to any Mortgage Loan (other than a Credit Lease Loan),
the ratio, expressed as a percentage, of (a) the Cut-off Date Balance of a
Mortgage Loan to (b) the appraised value of the related Mortgaged Property as
shown on the most recent third-party appraisal thereof available to the
Depositor (or, in the case of the Arden Loan and the Fresno Loan, an internal
valuation by the Originator), net of, in the case of the Mortgaged Property
securing the Bayside Loan, the outstanding principal balance of the Miami Bonds
as of the Cut-off Date. Cut-off Date Loan-to-Value Ratios are not presented in
this Prospectus Supplement for Credit Lease Loans because such Mortgage Loans
were, in large part, underwritten based upon the Credit Tenant. In connection
therewith, such ratios would be expected to be higher than for other Mortgage
Loans.
3. "Maturity Loan-to-Value Ratio", "Maturity Date Loan-to-Value Ratio",
"Maturity LTV Ratio" or "Maturity Date LTV Ratio" means the ratio, with respect
to any Mortgage Loan (other than a Credit Lease Loan), expressed as a
percentage, of (a) the expected balance of a Balloon Loan on its scheduled
maturity date (prior to the payment of any Balloon Payment) or, in the case of
an ARD Loan, on the Anticipated Repayment Date to (b) the appraised value of the
Mortgaged Property as shown on the most recent third-party appraisal thereof
available to the Depositor (or, in the case of the Arden Loan and the Fresno
Loan, an internal valuation by the Originator), net of, in the case of the
Mortgaged Property securing the Bayside Loan, the outstanding principal balance
of the Miami Bonds as of the Cut-off Date. Maturity Loan-to-Value Ratios are not
presented in this Prospectus Supplement with respect to the Credit Lease Loans.
4. "Loan per Unit", "Loan per Bed", "Loan per Pad" or "Loan per Room" means,
with respect to each Mortgage Loan secured by a lien on a Multifamily Rental
Property, a Hospitality Property, a Mortgaged Property that constitutes a
manufactured housing community or a Mortgaged Property that constitutes a
health-care facility, respectively, the Cut-off Date Balance of such Mortgage
Loan divided by the number of dwelling units, beds, pads or guest rooms,
respectively, at or on the related Mortgaged Property.
5. "Loan per Sq. Ft." means, with respect to each Mortgage Loan secured by a
lien on a Mortgaged Property that constitutes a retail, industrial/warehouse,
self storage or office property, the Cut-off Date Balance of such Mortgage Loan
divided by the net rentable square foot area of the related Mortgaged Property.
6. "Year Built/Renovated" means the year that a Mortgaged Property was
originally constructed or, if applicable, most recently renovated in a
substantial manner. With respect to any Mortgaged Property which was constructed
in phases, "Year Built/Renovated" refers to the year that the first phase was
originally constructed.
7. "Weighted Average" or "wtd. avg." means averages weighted on the basis of the
Cut-off Date Balances of the related Mortgage Loans.
8. "Underwriting Reserves" means estimated annual capital costs, as used by the
Originator in determining Net Cash Flow.
9. "Administrative Cost Rate" means, with respect to each Mortgage Loan, the sum
of the Master Servicing Fee Rate for such Mortgage Loan and the per annum rate
at which the monthly fee of the Trustee is calculated.
10. "Original Amortization Term" means, with respect to each Mortgage Loan, the
number of months from origination to the month in which such Mortgage Loan would
fully amortize in accordance with such loan's amortization schedule, without
regard to any Balloon Payment, if any, due on such Mortgage Loan and assuming no
prepayments of principal and no defaults.
11. "Remaining Amortization Term" means, with respect to each Mortgage Loan, the
number of months remaining from the Cut-off Date to the month in which such
Mortgage Loan would fully amortize in accordance with such loan's amortization
schedule, without regard to any Balloon Payment, if any, due on such Mortgage
Loan and assuming no prepayments of principal and no defaults.
12. The following abbreviations relating to prepayment provisions have the
indicated meanings.
o "L(v)" means, with respect to any Mortgage Loan, a period of v years
during which prepayments of principal are prohibited.
o "1%(w)" means with respect to any Mortgage Loan, a period of w years
during which prepayments of principal are permitted, but must be
accompanied by a Prepayment Premium equal to 1.0% of the principal
amount prepaid.
o "YM1% (x)" means, with respect to any Mortgage Loan, a period of x
years during which prepayments of principal are permitted, but must
be accompanied by an amount that constitutes the greater of a Yield
Maintenance Charge and 1.0% of the principal amount prepaid.
o "YM (y)" means, with respect to any Mortgage Loan, a period of y
years during which prepayments of principal are permitted, but must
be accompanied by an amount that constitutes a Yield Maintenance
Charge.
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<PAGE>
o "O(z)" means, with respect to any Mortgage Loan, a period of z years
during which prepayments of principal are permitted without the
payment of any Prepayment Premium or Yield Maintenance Charge and no
defeasance can be required.
13. "D" means each applicable Mortgage Loan, permits the related Borrower to
pledge Defeasance Collateral to the holder of such Mortgage Loan.
14. "Occupancy Percentage" or "Occupancy Rate" means, with respect to any
Mortgaged Property, references to--
o in the case of Mortgaged Properties that constitute multifamily
rental properties, manufactured housing communities and assisted
living/congregate care facilities, the percentage of rental units,
pads and rooms, respectively, that are rented as of the date of
determination,
o in the case of Mortgaged Properties that constitute office and
retail properties, the percentage of the net rentable square footage
rented as of the date of determination,
o in the case of self-storage facilities, either the percentage of the
net rentable square footage rented as of the date of determination
or the percentage of units rented as of the date of determination
(depending on Borrower reporting),
o In the case of Hospitality Properties, the percentage of available
rooms occupied as of the trailing twelve-month (such period ending
on the date of determination).
15. "Remaining Term to Maturity" means, with respect to each Mortgage Loan, the
number of months remaining to maturity (or, in the case of an ARD Loan, to the
Anticipated Repayment Date).
16. "Original Term to Maturity" means, with respect to each Mortgage Loan, the
number of months from origination to maturity (or, in the case of an ARD Loan,
to the Anticipated Repayment Date).
17. "Capital Imp. Reserve" means funded reserves escrowed for repairs,
replacements and corrections of issues outlined in the engineering reports.
18. "Replacement Reserve" means funded reserves escrowed for ongoing items such
as repairs and replacements, including, in the case of Hospitality Properties,
reserves for furniture, fixtures and equipment. In certain cases, however, the
reserve will be subject to a maximum amount, and once such maximum amount is
reached, such reserve will not thereafter be funded, except to the extent it is
drawn upon.
19. "TI/LC Reserve" means funded reserves escrowed for tenant improvement
allowances and leasing commissions. In certain cases, however, the reserve will
be subject to a maximum amount, and once such maximum amount is reached, such
reserve will not thereafter be funded, except to the extent it is drawn upon.
20. "Original Interest-Only Period" means, with respect to any Mortgage Loan,
the period, if any, following the related origination date during which
scheduled payments of interest only are required.
21. "Remaining Interest-Only Period" means, with respect to any Mortgage Loan,
the period, if any, following the Cut-off Date during which scheduled payments
of interest only are required.
22. "Shadow" means, with respect to any Retail Property, a store or other
business that materially affects the draw of customers to such Retail Property,
but which may be located at a nearby property or on a portion of such Retail
Property that does not constitute security for the related Mortgage Loan.
23. "NAP" means that with respect to a particular category of data that such
data is not applicable.
24. "NAV" means that with respect to a particular category of data, such data is
not available.
The sum in any column of any of the following tables may not equal the
indicated total due to rounding.
The DSC Ratio and the Cut-off Date LTV Ratio calculations for the Mortgage
Loans are exclusive of Credit Lease Loans because the Credit Lease Loans were
originated primarily on the basis of the creditworthiness of the related Credit
Tenants or Guarantors.
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<PAGE>
Significant Mortgage Loans
The Omni Loan
The Loan. The "Omni Loan" has a Cut-off Date Balance of $249,347,368,
representing 12.3% of the Initial Pool Balance, and is secured by first priority
Mortgages encumbering the fee simple interests in five luxury hotels (the "Omni
Properties") operating under the Omni name in New York, Chicago, Houston, Dallas
and the Dallas suburb of Irving. The respective portions of the Omni Loan
allocable to the five Omni Properties are cross-collateralized and
cross-defaulted. The single note evidencing the Omni Loan was entered into by
six related special purpose entities (the "Omni Borrower") owned and controlled
by Omni Credit Holding Company, a wholly owned subsidiary of TRT Holdings Inc.
("TRT Holdings"). TRT Holdings, headquartered in Dallas, Texas, is a privately
held holding company that owns interests in hotels and energy-related companies
including a 100% ownership interest in Tana Oil & Gas, and significant
investments in the common shares of Texaco, Inc. and Pacific Gas & Electric Co.
TRT Holdings acquired the Omni brand name as well as nine Omni-flagged hotels in
1996 thus increasing its hotel investments and organizing them under a single
franchise affiliation. Between 1995 and 1997, approximately $85 million in
capital expenditures have been invested in the Omni Properties, with the
majority of the expenditures related to the New York property.
The Omni Loan is an ARD Loan with an Anticipated Repayment Date of
September 1, 2008 and a stated maturity of September 1, 2023. Prior to the
Anticipated Repayment Date, the Omni Borrower must make monthly payments of
principal and interest based on a fixed Mortgage Rate of 6.25% per annum and an
amortization schedule of 25 years. From and after the Anticipated Repayment
Date, the mortgage interest rate steps up to the Revised Rate, which is the
greater of (1) 11.25% per annum, and (2) 5% over the then-applicable United
States Treasury rate. Any Additional Interest accrued on the Omni Loan will be
deferred and added to the outstanding principal balance but will not earn
interest. After the Anticipated Repayment Date, the Omni Borrower must also
apply net cash flow derived from the operation of the Omni Properties (after
debt service and reserves) toward additional amortization of principal.
The Omni Borrower is prohibited from voluntarily prepaying the Omni Loan
prior to the Anticipated Repayment Date. After the Anticipated Repayment Date,
the Omni Loan may be voluntarily prepaid in whole or in part without payment of
any Prepayment Consideration. The Omni Borrower has the right to defease all or
a portion of the Omni Loan after the second anniversary of the Closing Date.
The Properties. The hotels are located in New York City, Chicago, Houston,
Dallas and the Dallas suburb of Irving. The hotels contain a total of 1,858
rooms and range in size from 337 rooms to 410 rooms. In addition, the Chicago
property includes 139,000 square feet of office space and 24,000 square feet of
retail space on the section of Michigan Avenue known as the "Magnificent Mile."
The hotels are known as the Omni Berkshire Place Hotel (in New York), the Omni
Chicago Hotel, the Omni Houston Hotel, the Omni Dallas Hotel Park West and the
Omni Mandalay Hotel (in the Dallas suburb of Irving). For the trailing 12 months
ended July 31, 1998, the Omni Properties achieved an overall weighted average
occupancy of 74.1% and an overall average daily rate of $172.19.
The following chart summarizes certain information regarding the hotels.
Overview of the Omni Hotels
<TABLE>
<CAPTION>
Yr. Built/ Avg. ADR RevPar Appraised
Property Location # Rooms Renovated Occ. (1) (1) (2) (1) (3) Value
- -------- -------- ------- --------- -------- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Omni Berkshire Place Hotel New York, New York 396 1926/1995 73.7% $259.88 $191.53 $172,300,000
Omni Chicago Hotel Chicago, Illinois 347 1990 78.6% $186.78 $146.84 $119,800,000(4)
Omni Mandalay Hotel Irving (Dallas), Texas 410 1982 73.9% $154.26 $113.96 $ 87,700,000
Omni Houston Hotel Houston, Texas 368 1981 72.3% $129.31 $ 93.48 $ 66,200,000
Omni Dallas Hotel Park West Dallas, Texas 337 1990 71.9% $119.63 $ 86.02 $ 53,800,000
------ ----- ------- ------- ------------
Totals/Weighted Avg 1,858 74.1% $172.19 $127.51 $499,800,000
</TABLE>
- ------------
(1) Based on trailing 12 months ended 7/31/98.
(2) "ADR" means average daily rate.
(3) "RevPar" means revenue per available room.
(4) The Chicago appraised value includes the office and retail components.
Additional Collateral. A letter of credit in the approximate amount of
$2.7 million (the "Reserve Letter of Credit") has been posted by the Omni
Borrower to cover one month's reserve payments for taxes, insurance, debt
service and furniture, fixtures and equipment expenditures ("FF&E"). Under
certain circumstances, the lender may also draw on the Reserve Letter of Credit
to pay for any recording taxes due in connection with any recordation of an
executed but unrecorded second mortgage on the Omni Property located in New York
(the "NY Omni Property"),
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<PAGE>
Property Management. With the exception of the office and retail space at
the Omni Property located in Chicago (the "Chicago Omni Property"), the Omni
Properties are managed by Omni Hotel Management Company under separate
agreements. The office and retail space at the Chicago Omni Property is managed
by U.S. Equities Asset Management, Inc. The management agreements can be
terminated by the lender mortgagee under the Omni Loan if an event of default
occurs under the related loan documents, and the management fees in all of the
management agreements are subordinated to the Omni Loan.
Appraised Value. The aggregate appraised value of the Omni Properties as
of August 1998 was $499,800,000, and the Omni Loan has a Cut-off Date LTV Ratio
of 49.89%.
DSC Ratio. The Omni Loan has a Debt Service Coverage Ratio of 2.34x.
Lock Box. If the current debt service coverage ratio as calculated in
accordance with the related Mortgage Loan documents (the "DSCR") (as calculated
monthly on a rolling 12-month period), of the Omni Loan falls below 1.50x, a
lock box account shall be established until such time the current DSCR increases
to or exceeds 1.50x, when the operation of the lock box account may be
suspended, subject to certain conditions pursuant to the loan documents.
Intercompany Debt. Prior to the acquisition of the Omni Borrower, several
members of the Omni Borrower had previously made an aggregate of $113.8 million
in intercompany loans to the Omni Borrower which owns the NY Omni Property. This
intercompany debt is subordinated to the Omni Loan and pledged to the lender as
additional collateral. A standstill agreement provides that this intercompany
debt can be paid only from excess cash flow, prohibits any transfer of the debt
and requires the approval of the mortgagee under the Omni Loan before a
reorganization of the Omni Borrower can be undertaken.
The New York Mortgage. The first mortgage on the NY Omni Property secures
the Omni Loan only to the extent of $40,000,000 of the aggregate indebtedness
thereunder. The Omni Borrower executed an unrecorded second mortgage on the NY
Omni Property securing maximum additional indebtedness of $132,500,000 under the
Omni Loan. The lender is permitted to record that second mortgage if the current
DSCR (calculated monthly based on a rolling 12-month period) of the Omni Loan
(taking into account the net income from all five Omni Properties) is ever less
than or equal to 1.35x, unless the Omni Borrower has delivered and (there is
then in effect) a third-party letter of credit (acceptable to the mortgagee
under the Omni Loan) in the amount of 148% of the portion of the outstanding
principal balance of the Omni Loan that is allocated to the NY Omni Property.
Any letter of credit delivered by the Omni Borrower must be returned to the Omni
Borrower, and the mortgagee under the Omni Loan is prohibited from recording the
second mortgage, if and when the current DSCR is greater than or equal to 1.50x
for at least six consecutive months. The Omni Borrower must pay the potential
mortgage recording tax into a reserve account if the current DSCR is less than
or equal to 1.50x. The lien of the Trust on the NY Omni Property that is created
by the second mortgage could be impaired if additional liens arise on the NY
Omni Property prior to any recordation of the second mortgage.
Releases and Substitutions. After the second anniversary of the Closing
Date, the Omni Borrower may defease the Omni Loan in whole or in part and obtain
the release of an individual Omni Property as long as certain conditions are
satisfied including, but not limited to, the current DSCR of the remaining
properties must be the greater of (1) the DSCR for the 12 calendar months
immediately preceding the closing of the loan, or (2) the current DSCR of the
remaining properties (including the defeased property) and the debt amount that
includes the defeased loan amount for the 12 calendar months immediately
preceding the release. So long as there is no event of default, the NY Omni
Property or up to two (2) other individual Omni Properties may be individually
substituted with another hotel property provided that a number of conditions are
met, including (1) an appraisal of the substitute property must show an equal or
greater value than the property to be released, (2) the current DCSR for all the
properties following the substitution is equal to or greater than the current
DSCR before substitution, (3) the net operating income of the substituted
property does not show on average a 3% decline in its net operating income over
the prior 3 years, and (4) the Rating Agencies have affirmed their ratings of
the Certificates. No substitutions are permitted after the Anticipated Repayment
Date.
Reserves and Escrows. The Omni Borrower will make monthly escrow payments
for taxes and insurance. In addition, the Omni Borrower shall make monthly
reserve payments equal to 3.5% of gross income for the Omni Properties for the
calendar month prior to the preceding calendar month to be used for FF&E.
The Ontario Mills Loan
The Loan. The "Ontario Mills Loan" has a Cut-off Date Balance of
$145,000,000, representing 7.2% of the Initial Pool Balance, and is secured by a
first priority Mortgage encumbering the fee simple interest in a super regional
mall known as the Ontario Mills Mall (the "Ontario Mills Property") with
approximately 1.2 million square feet and located in Ontario, California. The
Ontario Mills Loan was made to Ontario Mills Limited Partnership, a Delaware
limited partnership (the "Ontario Mills Borrower"). Ontario Mills Borrower is
owned, directly or indirectly, by The Mills Corporation (50%), Simon Property
Group (25%) and Kan Am USA XIV Limited Partnership (25%). The Mills Corporation
and Simon Property Group are both publicly traded real estate investment trusts
("REITs") whose shares
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are listed on the New York Stock Exchange under the symbols of "MLS" and "SPG"
respectively. The Mills Corporation, headquartered in Arlington, Virginia, is a
fully integrated self-managed owner and developer of super-regional value and
entertainment oriented malls, as well as community centers. Its portfolio
consists of approximately 14.1 million square feet of space and six additional
centers are under development in various locations across the country. Simon
Property Group, headquartered in Indianapolis, Indiana, is a fully integrated
developer, owner and manager of regional and community shopping centers
throughout the United States. Simon Property Group, the largest owner of
regional malls in the United States, owns or has interests in 241 properties
containing an aggregate of 165 million square feet of gross leasable area in 35
states.
The Ontario Mills Loan is an ARD Loan with an Anticipated Repayment Date
of December 1, 2008 and a stated maturity of December 1, 2028. Commencing in
January 1999, the Ontario Mills Loan requires monthly payments of principal and
interest based on a fixed Mortgage Rate of 6.75% per annum and an amortization
schedule of 30 years. From and after the Anticipated Repayment Date, the
mortgage interest rate steps up to the Revised Rate, which is the greater of (1)
11.75% per annum and (2) 5% over the then-applicable United States Treasury
Rate. Any Additional Interest accrued on the Ontario Mills Loan will be deferred
and added to the outstanding principal balance and will earn interest at the
Revised Rate. After the Anticipated Repayment Date, the Ontario Mills Borrower
must also apply net cash flow derived from the operation of the Ontario Mills
Property (after debt service and reserves) toward additional amortization of
principal.
The Ontario Mills Borrower is prohibited from voluntarily prepaying the
Ontario Mills Loan in whole or in part prior to 30 days before the Anticipated
Repayment Date. During the 30-day period prior to the Anticipated Repayment
Date, the Ontario Mills Loan may be voluntarily prepaid in full but not in part.
On and after the Anticipated Repayment Date, the Ontario Mills Borrower may
prepay the loan in whole or in part without payment of any Prepayment
Consideration. The Ontario Mills Borrower has the right to defease all or a
portion of the Ontario Mills Loan after the second anniversary of the Closing
Date.
The Property. The Ontario Mills Property is a single story enclosed super
regional mall containing a gross leasable area ("GLA") of 1,220,625 square feet.
In addition, there is a 125,000 square foot AMC Multi-Cinema occupying its own
14.7 acre pad contiguous to the center that is not a part of the Ontario Mills
Loan collateral. The Ontario Mills Property was developed during 1995 and 1996
and is situated on a 116.3 acre site in Ontario, California which is about 40
miles east of downtown Los Angeles in an area known as the Inland Empire.
Ontario Mills contains 166 tenants including 14 anchor tenants, four (4) of
which occupy space in excess of 50,000 square feet each (the "Major Anchors").
The Major Anchors are JC Penney, Sports Authority, Burlington Coat Factory and
Marshalls, and in the aggregate such Major Anchors occupy 23.4% of the GLA.
Tenants other than Major Anchors include Saks Off Fifth, TJ Maxx, Bed, Bath &
Beyond, Virgin Megastore and the Mikasa Factory Store. As of October 1, 1998,
the Ontario Mills Property reported an occupancy level of 97.1% (exclusive of
the 14 anchor tenants) and 98.5% overall occupancy (including the 14 anchor
tenants).
Summaries of pertinent information regarding the Ontario Mills Property
including the major anchor tenants, square footage and total GLA, leading
tenants other than the major anchor tenants and other information follow in the
charts below.
GLA Overview of the Ontario Mills Property(1)
Tenant Square Footage As % Total GLA(2) Lease Expiration
- ------ -------------- ----------------- ----------------
JC Penney 105,028 8.6% 7/31/11
Burlington Coat Factory 79,989 6.6% 1/31/12
Marshalls 50,895 4.2% 1/31/12
Sports Authority 50,111 4.1% 1/29/12
--------- -----
Major Anchor Space 286,023 23.4%
Other Anchor Space 292,962 24.0%
In-Line Stores 504,921 41.4%
Entertainment Space
(excludes AMC) 136,719 11.2%
--------- -----
Total 1,220,625 100.0%
- ------------
(1) As of October 1, 1998 rent roll.
(2) May not sum to total due to rounding.
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<PAGE>
Ten Largest Tenants (Other Than Major Anchors) at the Ontario Mills Property (1)
Tenant Square Footage As % of Total GLA(2)
- ------ -------------- --------------------
Dave & Busters 59,275 4.9%
Totally For Kids 49,599 4.1%
Bed, Bath & Beyond 44,208 3.6%
TJ Maxx 35,308 2.9%
American Wilderness 30,639 2.5%
Sega Gameworks 30,210 2.5%
Saks Off Fifth 28,600 2.3%
Virgin Megastore 27,521 2.3%
Off Rodeo Drive 25,236 2.1%
Mikasa Factory Store 21,078 1.7%
------- ----
Total 351,674 28.8%
- -------------
(1) As of October 1, 1998 rent roll.
(2) May not sum to total due to rounding.
Aggregate Lease Expiration Schedule for the Ontario Mills Property(1)
Year Expiring Square Feet As % of Total GLA(2)
- ---- -------------------- --------------------
1998, including month-to-
month leases 4,497 0.4%
1999 7,675 0.6%
2000 13,267 1.1%
2001 211,632 17.3%
2002 72,507 5.9%
2003 33,673 2.8%
2004 12,082 1.0%
2005 5,382 0.4%
2006 174,726 14.3%
2007 98,537 8.1%
2008 44,018 3.6%
2009 & beyond 523,899 42.9%
Vacant 18,730 1.5%
--------- --------
Total 1,220,625 100.0%
5 Year Avg. Rollover 61,916 5.1%
7 Year Avg. Rollover 50,762 4.2%
- -----------
(1) Includes anchor tenants.
(2) May not sum to total due to rounding.
Mall Sales and Occupancy Costs. The Ontario Mills Borrower projected as
part of its July 1998 budget that 1998 sales for comparable in-line space would
be $358 per square foot. The Originator's analysis of tenant occupancy costs as
a percent of sales (with sales based on the Ontario Mills Borrower's July 1998
budget and occupancy costs based on the October 1998 rent roll), excluding the
AMC Theater, indicated that occupancy costs were approximately 9.4%.
Property Management. The Ontario Mills Property is managed by Mills
Services Corp., a Delaware corporation affiliated with The Mills Corporation and
the Ontario Mills Borrower. The mortgagee under the Ontario Mills Loan is
entitled to terminate the management agreement if an event of default occurs
under the Ontario Mills Loan.
Appraised Value. The appraised value of the Ontario Mills Property as of
September, 1998, was $250,000,000, and the Ontario Mills Loan has a Cut-off Date
LTV Ratio of 58.00%.
DSC Ratio. The Ontario Mills Loan has a Debt Service Coverage Ratio of
1.73x.
S-57
<PAGE>
Lock Box. The Ontario Mills Borrower will be required to establish a lock
box account and will cause all tenants to make payments directly to the lock box
(1) during any period when the current DSCR is less than 1.25x, (2) on the date
which is (a) 30 days prior to the Anticipated Repayment Date or (b) the
Anticipated Repayment Date if the Ontario Mills Borrower provides evidence to
the lender 30 days prior to the Anticipated Repayment Date that the Ontario
Mills Loan will be repaid on the Anticipated Repayment Date, and (3) upon the
occurrence of an Event of Default.
Development Parcel Releases. The Ontario Mills Borrower may obtain a
release of certain non-income earning portions of the Ontario Mills Property if,
among other conditions, no event of default exists, the Rating Agencies affirm
their ratings of the Certificates and the current DSCR will be equal to or
greater than 1.80x after giving effect to the release.
Option Parcel Release. A tenant under a ground lease at the Ontario Mills
Property has an option to purchase the underlying land. If the tenant exercises
such purchase option, the option parcel will be released from the lien of the
related Mortgage if, among other conditions, the Ontario Mills Borrower deposits
with the lender cash or a letter of credit in the amount of the total proceeds
from the sale, which must be not less than $1,200,000. Such cash or letter of
credit would be held until the Ontario Mills Loan is paid in full.
Reserves and Escrows. The Ontario Mills Borrower must make monthly escrow
payments for real estate taxes and insurance.
Seismic Assessment. The Ontario Mills Property has a seismic risk
assessment with a probable maximum loss of 11.0% of the amount of the estimated
replacement cost of the improvements. The property has the benefit of an
earthquake insurance policy.
The Arden Loan
The Loan. The "Arden Loan" has a Cut-off Date Balance of $111,200,000,
representing 5.5% of the Initial Pool Balance, and is secured by first priority
Mortgages encumbering the fee simple interests in 12 suburban office and
R&D/industrial properties located in the metropolitan areas of Los Angeles and
San Diego, California (the "Arden Properties"). The respective portions of Arden
Loan allocable to the 12 Arden Properties are cross-collateralized and
cross-defaulted. The Arden Loan was made to a special purpose entity (the "Arden
Borrower") controlled by Arden Realty, Inc. ("Arden Realty"). Arden Realty,
headquartered in Los Angeles, California, is an owner, manager and acquirer of
office and industrial properties located in southern California; and, as of
September 30, 1998, the company reported its portfolio of properties included
138 commercial properties (most of which are office properties) totaling
approximately 17.9 million square feet. Arden Realty is a publicly traded REIT
that issued shares publicly for the first time in 1996. Its shares are listed on
the New York Stock Exchange under the symbol "ARI".
The Arden Loan is an ARD Loan with an Anticipated Repayment Date of April
16, 2008 and a stated maturity of April 16, 2028. The Arden Borrower accrues
interest at a fixed Mortgage Rate of 6.61% per annum until the related
Anticipated Repayment Date. The Arden Loan requires monthly payments of interest
only during the first 57 months of the loan term and, thereafter, beginning with
the payment due in May 2003, requires monthly payments of interest and principal
based on an amortization schedule of 25 years. From and after the Anticipated
Repayment Date, the fixed interest rate will step-up to the Revised Rate, which
is the greater of (1) 11.61% and (2) 5% over the then-applicable United States
Treasury rate. Any Additional Interest accrued on the Arden Loan will be
deferred and added to the outstanding principal balance and will earn interest
at the Revised Rate. After the Anticipated Repayment Date, the Arden Borrower
must also apply net cash flow derived from the operation of the Arden Properties
(after debt service and reserves) toward additional amortization of principal.
The Arden Borrower is prohibited from voluntarily prepaying the Arden Loan
prior to the Anticipated Repayment Date. After the Anticipated Repayment Date,
the Arden Loan may be voluntarily prepaid in whole or in part without any
payment of Prepayment Consideration. The Arden Borrower has the right to defease
all or a portion of the Arden Loan after the second anniversary of the Closing
Date.
The Properties. The 12 Arden Properties consist of eight (8) suburban
office properties and four (4) R&D/Industrial properties representing 2,239,948
square feet of net rentable area ("NRA"). Individual properties range in size
from 52,186 square feet to 597,550 square feet and are located in or around the
Los Angeles and San Diego metropolitan areas. With the exception of one property
built in 1991 and renovated in 1996, the remaining 11 Arden Properties were
built during the 1980s with certain of them renovated in the mid- 1990s. There
are approximately 353 tenants, including, among others, ARCO, Sony, Executone
Info System, Interplay Productions and Honeywell. The 15 largest tenants occupy
35.5% of the NRA of the Arden Properties and the single largest tenant, ARCO,
occupies 5.3% of the total NRA. As of September 1, 1998, the Arden Properties
reported an overall occupancy level of 94.0%.
A breakdown of the Arden Properties by property type as well as summaries
on the properties including locations, square footage, main tenants and other
pertinent information are highlighted in the charts that follow.
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<PAGE>
Overview of the Arden Properties
Summary by Property Type (1)
Type # Properties Square Feet As % of Total NRA (2)
- ---- ------------ ----------- ---------------------
Office 8 1,815,335 81.0%
R&D/Industrial 4 424,613 19.0%
-- --------- -----
Total 12 2,239,948 100.0%
- ----------
(1) As of September 1, 1998 rent roll.
(2) May not sum to total due to rounding.
Summary of the Arden Properties by Location (1)
<TABLE>
<CAPTION>
Property Location Type NRA
- -------- -------- ---- ---
<S> <C> <C> <C>
Centerpointe La Palma La Palma, Orange County, CA Office 597,550
Von Karman Corporate Center Irvine, Orange County, CA Office 451,477
600 Corporate Pointe Culver City, Los Angeles County, CA Office 273,339
16000 Ventura Encino, Los Angeles County, CA Office 174,841
Yorba Linda Business Center Yorba Linda, Orange County, CA R&D/Industrial 167,142
Poway Industrial Poway, San Diego County, CA R&D/Industrial 112,000
Governor Park Plaza San Diego, San Diego County, CA Office 104,065
1950 Sawtelle Los Angeles, Los Angeles County, CA Office 103,772
Via Frontera Rancho Bernardo, San Diego County, CA R&D/Industrial 77,920
Huntington Commerce Center Huntington Beach, Orange County, CA R&D/Industrial 67,551
Sunset Pointe Newhall, Los Angeles County, CA Office 58,105
Huntington Beach Plaza I & II Huntington Beach, Orange County, CA Office 52,186
---------
Total 2,239,948
</TABLE>
- -----------
(1) As of September 1, 1998 rent roll.
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<PAGE>
Fifteen Largest Tenants at the Arden Properties
Ranked By Annual Base Rent ("ABR")
<TABLE>
<CAPTION>
Months
Remaining In Rentable As % of As % of
Tenant Lease Term(1) (2) Square Feet Total NRA(3) ABR Total ABR(3)
- ------ ----------------- ----------- ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
ARCO 95 117,865 5.3% $ 2,110,298 6.8%
Sony 64 96,980 4.3% $ 1,705,292 5.5%
Interplay Productions 93 101,325 4.5% $ 1,215,900 3.9%
Karl Storz Endoscopy 7 56,324 2.5% $ 945,168 3.1%
Kaiser Foundations Health Plan 62 42,051 1.9% $ 857,840 2.8%
Chicago Title 66 48,506 2.2% $ 807,672 2.6%
Executone Info System 86 112,000 5.0% $ 604,800 2.0%
IKON Office Solutions 19 53,132 2.4% $ 599,752 1.9%
Protection One 61 23,520 1.0% $ 547,546 1.8%
City National Bank 99 19,928 0.9% $ 539,269 1.7%
Document Sciences 42 33,102 1.5% $ 441,515 1.4%
Honeywell, Inc. 37 24,521 1.1% $ 441,378 1.4%
Employment Development Dept 11 22,145 1.0% $ 391,776 1.3%
International Technology Corp. 42 24,735 1.1% $ 379,930 1.2%
Brown & Caldwell 55 19,916 0.9% $ 370,438 1.2%
-- ------- ---- ----------- ----
Total/Weighted Average 65 796,050 35.5% $11,958,573 38.7%
</TABLE>
- -------------
(1) Remaining lease term from September 1, 1998.
(2) Weighted average is based on square footage.
(3) May not sum to total due to rounding.
Aggregate Lease Expiration Schedule for the Arden Properties(1)
Year Expiring Square Feet As % of Total NRA(2)
- ---- -------------------- --------------------
1998, including month-to-
month leases 344,550 15.4%
1999 337,762 15.1%
2000 241,222 10.8%
2001 162,865 7.3%
2002 255,438 11.4%
2003 177,660 7.9%
2004 199,376 8.9%
2005 117,921 5.3%
2006 215,183 9.6%
2007 51,974 2.3%
2008 0 0.0%
2009 0 0.0%
2010 & beyond 4,093 0.2%
Vacant 131,904 5.9%
--------- -----
Total 2,239,948 100.0%
5 Year Avg. Rollover 268,367 12.0%
7 Year Avg. Rollover 245,553 11.0%
- ------------
(1) As of September 1, 1998 rent roll.
(2) May not sum to total due to rounding.
S-60
<PAGE>
Property Management. The Arden Properties are managed by Arden Realty
Limited Partnership, the parent of the Arden Borrower, under a single management
agreement. The lender is entitled to terminate the management agreement if an
event of default occurs under the Arden Loan documents. All management fees are
subordinated to the Arden Loan.
Value. The Arden Loan has a Cut-off Date LTV Ratio of 47.32% based upon an
internal valuation of $235,000,000 (9.0% cap rate applied to an underwritten net
operating income ("NOI") of $21,150,001).
DSC Ratio. The Arden Loan has a Debt Service Coverage Ratio of 2.35x.
Lock Box. The Arden Borrower will be required to establish one or more
lock box accounts and instruct or cause tenants or other payors to make all rent
and other payments into the lock box account(s) if, among other events, (1) the
current DSCR falls below 1.50x during the loan's interest only period or below
1.27x during its amortization term, (2) the Arden Borrower fails to repay the
Arden Loan on the Anticipated Repayment Date or (3) an event of default occurs.
Reserves and Escrows. The Arden Borrower must make monthly escrow payments
for real estate taxes and insurance. Upon closing of the Arden Loan, a reserve
account was funded in the amount of $3,270,000 to be used for tenant
improvements, leasing commissions and capital expenditures. As funds are
disbursed, the account is replenished to the initial funding amount from excess
cash flow.
Releases and Substitutions. At any time after the second anniversary of
the Closing Date and on or before the Anticipated Repayment Date, the Arden
Borrower is permitted to defease the Arden Loan in whole or in part and obtain a
release of one or more properties if, among other conditions, the current DSCR
of the remaining properties is not less than the greater of (1) 2.22x during the
loan's interest only period or 1.81x during its amortization term, or (2) the
current DSCR of the remaining properties and the released properties for the
prior twelve calendar months. During such period, the Arden Borrower may release
one or more properties by substituting one or more office properties
(individually, a "Substitute Property") provided that, no substitution can occur
after the Anticipated Repayment Date, the substitution conditions noted below
must be satisfied, a substitution may not take place more than two (2) times
during the term of the Arden Loan, and no more than five (5) properties may be
released during the term of the Arden Loan. The substitution conditions include:
(1) an appraisal of the substitute property must be delivered to the lender, (2)
after giving effect to the substitution, the current DSCR of the properties must
be at least equal to the greater of (a) 2.22x during the loan's interest only
period or 1.81x during its amortization term, or (b) the current DSCR for the
Arden Loan, based on all the Arden Properties (including the property to be
substituted) immediately preceding the substitution, (3) the net operating
income of the substitute property must not show a downward trend for the prior 3
years, (4) the net operating income and current DSCR of the substitute property
must be 125% greater than the net operating income and current DSCR of the
property being substituted, and (5) the Rating Agencies must have affirmed their
ratings of the Certificates.
Seismic Assessment. The Arden Properties have an aggregate seismic risk
assessment with a probable maximum loss of 14.63% of the amount of the estimated
replacement cost of the improvements. Such Mortgaged Properties have the benefit
of an earthquake insurance policy from an AAA-rated insurer.
The Fresno Loan
The Loan. The "Fresno Loan" has a Cut-off Date Balance of $69,000,000,
representing 3.4% of the Initial Pool Balance, and is secured by a first deed of
trust encumbering the fee simple interest in a regional mall and seven (7)
outparcels (together, the "Fresno Property") known as the Fresno Fashion Fair
Mall located in Fresno, California. The Fresno Loan was made to a limited
partnership (the "Fresno Borrower") that was established to own the Fresno
Property and is affiliated with and controlled by The Macerich Company
("Macerich"). Macerich, headquartered in Santa Monica, California, is a
developer, owner and manager of regional and community shopping centers
throughout the United States with a concentration in California. As of August
11, 1998, Macerich owned interests in 41 regional malls and five (5) community
centers representing aggregating approximately 35 million square feet of GLA.
Macerich is a publicly traded REIT whose shares are listed on the New York Stock
Exchange under the symbol "MAC".
The Fresno Loan is an ARD Loan with an Anticipated Repayment Date of
August 10, 2008 and a stated maturity of August 10, 2031. The Fresno Loan
accrues interest at a fixed Mortgage Rate of 6.52% per annum until the related
Anticipated Repayment Date. The Fresno Loan requires monthly payments of
interest only during the first three (3) years of the loan term (through July
10, 2001) and, thereafter, requires monthly payments of interest and principal
based on an amortization schedule of 30 years. From and after the Anticipated
Repayment Date, the fixed interest rate will step up to the Revised Rate, which
is the greater of (a) 9.52% per annum, and (b) 3% over the then-applicable
United States Treasury rate. Any Additional Interest accrued on the Fresno Loan
will be deferred and added to the outstanding principal balance and will earn
interest at the Revised Rate. After the Anticipated Repayment Date, the Fresno
Borrower must also apply net cash flow derived from the operation of the Fresno
Property (after debt service and reserves) toward additional amortization of
principal.
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<PAGE>
The Fresno Borrower is prohibited from voluntarily prepaying the Fresno
Loan prior to the Anticipated Repayment Date. After the Anticipated Repayment
Date, the Fresno Loan may be voluntarily prepaid in whole or in part without the
payment of any Prepayment Consideration. The Fresno Borrower has the right to
defease the Arden Loan after the second anniversary of the Closing Date.
The Property. The Fresno Property is a single level regional mall with a
GLA of 881,413 square feet. Situated on 68.53 acres, the Fresno Property
provides 4,821 parking spaces (5.47 spaces per 1,000 square feet). Originally
developed in 1970, the mall was expanded via a new addition in 1980 and was
further expanded by 56,963 square feet in 1983. The three (3) anchor tenants at
the Fresno Property are Macy's, JC Penney and Gottschalk's, which together
occupy 484,231 square feet or 54.9% of the GLA. Macy's owns its improvements
which are situated on a pad owned by the Fresno Borrower and leased to Macy's.
The in-line mall space equals 357,330 square feet or 40.5% of the GLA. The seven
(7) outparcels total 39,852 square feet. As of June 30, 1998, the Fresno
Property reported an occupancy level of 98.3%, including anchor tenants.
A summary of the anchor tenants as well as in-line tenants and other
information regarding the Fresno Property follows in the charts below.
GLA Overview of the Fresno Property(1)
<TABLE>
<CAPTION>
Tenant Square Feet As % of Total GLA(2) Anchor Lease Expiration
- ------ ----------- -------------------- -----------------------
<S> <C> <C> <C>
Macy's (On Leased Pad)(3) 176,410 20.0% 9/20/33
JC Penney 153,769 17.4% 11/30/02
Gottschalk's 154,052 17.5% 4/30/16
------- -----
Total Anchor Space 484,231 54.9%
In-Line Space 357,330 40.5%
Outparcels 39,852 4.5%
------- -----
Total 881,413 100.0%
</TABLE>
- ----------
(1) As of June 30, 1998 rent roll.
(2) May not sum to total due to rounding.
(3) Macy's square footage excludes space for Macy's Woman and Macy's Men and
Children's stores, which are included in the in-line space.
Ten Largest In-Line Tenants at the Fresno Property(1)
Tenant Square Feet Lease Expiration
- ------ ----------- ----------------
Macy's (2) 76,650 4/30/16
World Footlocker 15,734 12/31/02
The Limited 13,500 1/31/08
Express 12,600 1/31/05
America The Beautiful Dreamer 7,500 5/23/99
Charlotte Russe 7,500 6/30/10
The Gap 7,328 1/31/06
Lerner 6,863 6/30/05
Victoria's Secret 6,478 1/31/06
Miller's Outpost for Levi's 6,000 1/31/04
--------
Total 160,153
- -------------
(1) As of June 30, 1998 rent roll.
(2) This is the Macy's Men & Children's store under a separate lease from the
anchor pad lease and the Macy's Woman store lease.
(3) May not sum to total due to rounding.
S-62
<PAGE>
Lease Expiration Schedule for
In-Line and Outparcel Tenants
at the Fresno Property
As % of
Total In-Line &
Year Expiring Square Feet Outparcels GLA(1)
- ---- -------------------- -----------------
1998, including month-to-month leases 18,030 4.5%
1999 14,531 3.7%
2000 23,007 5.8%
2001 29,506 7.4%
2002 35,029 8.8%
2003 20,036 5.0%
2004 39,114 9.8%
2005 27,932 7.0%
2006 25,353 6.4%
2007 18,820 4.7%
2008 38,558 9.7%
2009 & beyond 90,520 22.8%
Vacant 16,746 4.2%
-------- -----
Total 397,182 100.0%
5 Year Avg. Rollover 24,021 6.0%
7 Year Avg. Rollover 25,608 6.4%
- ------------
(1) May not sum to total due to rounding.
Mall Sales and Occupancy Costs. The Fresno Borrower reported that sales
were $322 per square foot for the trailing twelve-month period ending May 31,
1998 (based on same store sales and excluding anchor tenants). For the same
trailing twelve-month period, tenant occupancy costs as a percent of sales
(based on the Originator's analysis of the Fresno Borrower's reported base rent,
percentage rent and reimbursements) were approximately 11.0%, also excluding
anchor tenants.
Property Management. The Fresno Property is managed by Macerich Property
Management Company, a California corporation that is affiliated with and
controlled by Macerich. The management agreement can be terminated by the lender
upon an event of default under the loan documents.
Value. The Fresno Loan has a Cut-off Date LTV Ratio of 60.69% based upon
an internal valuation of $113,693,000 (8.5% cap rate applied to an underwritten
NOI of $9,666,799).
DSC Ratio. The Fresno Loan has a Debt Service Coverage Ratio of 1.74x.
Lock Box. The Fresno Borrower must establish a lock box account and
instruct the tenants of the Fresno Property to make payments to the lock box
account if, among other events, (a) an event of default occurs under the Fresno
Loan, (b) the Fresno Borrower has not repaid the Fresno Loan in full on or
before the Anticipated Repayment Date or (c) the current DSCR of the Fresno
Property is less than or equal to 1.35x.
Seismic Assessment. The Fresno Property has a seismic risk assessment with
a probable maximum loss of 10.0% of the amount of the estimated replacement cost
of the improvements. The property has the benefit of an earthquake insurance
policy.
Environmental Assessment. The environmental site assessment for the Fresno
Property indicated the presence of friable asbestos in the Fresno Property. The
Fresno Borrower and its predecessors have implemented, and the Fresno Borrower
has covenanted to continue, an asbestos operations and maintenance program,
including the removal, upon renovation of tenant spaces when warranted, of ACMs
that are either disturbed during construction or present a material potential
hazard due to condition or location. The Originator required the Fresno Borrower
to establish a reserve of approximately $477,000 for potential costs associated
with the plan, although this was not a recommendation by the related
environmental assessment.
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<PAGE>
The Bayside Loan
The Loan. The "Bayside Loan" has a Cut-off Date Balance of $62,936,317,
representing 3.1% of the Initial Pool Balance, and is secured by a first
priority Mortgage encumbering the leasehold interest in the multi-tenant
specialty retail center known as Bayside Marketplace and a second priority
Mortgage encumbering the leasehold interest in the attached parking garage
(collectively, the "Bayside Mortgage"). The specialty retail center and parking
garage (the "Bayside Property") is located in Miami, Florida. The Bayside Loan
was made to a limited partnership (the "Bayside Borrower") that was established
to own the Bayside Property and is affiliated with and controlled by The Rouse
Company ("Rouse"). Rouse, headquartered in Columbia, Maryland, is a developer
and owner of urban marketplaces and regional retail centers, pioneering the
enclosed mall, specialty and theme retailing, open storefronts, interior
landscaping, cooperative advertising, merchandizing programs and food courts.
Some of Rouse's well-known developments include Faneuil Hall in Boston;
Harborplace and Gallery At Harborplace in Baltimore; and Riverwalk in New
Orleans. Rouse was founded in 1939 and has been a publicly traded company since
1957. As of January l, 1998, it began operating as a REIT. Rouse's shares are
traded on the New York Stock Exchange under the symbol "RSE".
The Bayside Loan is a 10 year Balloon Loan with an amortization term of 30
years. The Mortgage Rate of the Bayside Loan is 5.92% per annum. Debt service
payments are due monthly and the stated maturity of the Bayside Loan is November
l, 2008. The Bayside Borrower is prohibited from prepaying the loan in whole or
in part at any time prior to its stated maturity date. The Bayside Borrower is
permitted to defease the Bayside Loan and obtain a release of the Bayside
Property at any time after the second anniversary of the Closing Date.
The Property. The Bayside Property is a multi-tenant specialty retail
center built in 1987 and known as Bayside Marketplace, with a total GLA of
230,781 square feet, and a public parking garage that is connected to the retail
center by pedestrian walkways. The retail center offers a variety of
entertainment, dining and shopping establishments in several multi-level
buildings interconnected by walkways. The retail center occupies a 13.1 acre
site facing Miami's Biscayne Bay and located near the Port of Miami Cruise Line
Terminal and site of the planned American Airlines Arena, intended host arena
for the Miami Heat. The parking garage occupies an 11.3 acre parcel and contains
1,200 parking spaces (5.20 spaces per 1,000 square feet). The Bayside Borrower
holds leasehold interests in the Bayside Property pursuant to separate ground
leases with the City of Miami, both of which expire in 2030 (see "--Ground Lease
Considerations" below). As of September 25, 1998, the retail center reported an
occupancy level of 95.7%.
A summary of the tenancies at the Bayside Property (including nationally
recognized tenants) follows.
Tenant Summary of the Bayside Property(1)
As % of
Tenant GLA Total GLA(2) Lease Expiration
- ------ --- ------------ ----------------
Hard Rock Cafe 19,200 8.3% 11/30/23
The Limited 8,269 3.6% 7/31/99
Warner Brothers Store 7,858 3.4% 11/30/03
The Gap 6,285 2.7% 1/31/99(3)
Victoria's Secret 6,269 2.7% 1/31/03
Guess? 5,488 2.4% 9/30/07
Hooters 5,354 2.3% 2/01/00
Miami Heat Logo 4,069 1.8% 12/31/02
Disney Store 3,048 1.3% 8/31/01
------- ------
Nationally Recognized Tenants 65,840 28.5%
Other Tenants 122,162 53.0%
Entrepreneurial Market 7,578 3.3%
Food Court 7,046 3.1%
Other Restaurants 28,155 12.2%
------- -------
Total 230,781 100.0%
- ------------
(1) As of September 25, 1998 rent roll.
(2) May not sum to total due to rounding.
(3) The Gap has given notice of exercise of its renewal option extending
through August 31, 2003, although the Bayside Borrower has not yet agreed
to it. Pursuant to a notification clause, the lease now extends through
January 31, 1999.
S-64
<PAGE>
Lease Expiration Schedule for the Bayside Property(1)
Year Expiring Square Feet As % of GLA(2)
- ---- -------------------- --------------
1998, including month-to month leases 10,217 4.4%
1999 26,787 11.6%
2000 16,245 7.0%
2001 24,904 10.8%
2002 22,954 9.9%
2003 34,427 14.9%
2004 8,057 3.5%
2005 16,687 7.2%
2006 4,677 2.0%
2007 9,646 4.2%
2008 19,566 8.5%
2009-2022 0 0.0%
2023 19,200 8.3%
Vacant 9,836 4.3%
------- ----
Total 223,203 96.7%
5 year Avg. Rollover 20,221 8.8%
7 year Avg. Rollover 20,513 8.9%
- -----------
(1) Based on September 25, 1998 rent roll, exclusive of 7,578 square feet of
small specialty retail or kiosk spaces, which individually average 315
square feet.
(2) May not sum to total due to rounding.
Mall Sales and Occupancy Costs. The Bayside Borrower's reported sales for
1997 (based on same store sales) were $576 per square foot. For the same period,
the Originator's analysis of occupancy costs as a percent of sales (derived by
dividing total retail revenues by total retail sales) indicated that occupancy
costs were approximately 13.9%.
Property Management. The retail center is managed by Rouse-Miami, Inc. the
Borrower's general partner and an affiliate of Rouse and the parking garage is
managed by Miami Parking Associates, of Central Parking System of Florida, Inc.
(the "Managers"). The mortgagee under the Bayside Loan has the right to replace
one or both Managers upon an event of default under the related loan documents.
Additional Debt. The City of Miami, fee owner of the retail center land
and the parking garage land, financed the development of the parking garage
through the issuance of revenue bonds (the "Miami Bonds") in an original amount
of $16,570,000. The Miami Bonds are secured by the City of Miami's fee interest
in the parking garage land and by the Bayside Borrower's leasehold interest in
the parking garage. The Bayside Borrower is the obligor of a note payable to the
City of Miami in the principal amount of the Miami Bonds. The annual debt
service on the Miami Bonds is approximately $1,350,000, subject to a schedule of
principal payments. The Miami Bonds had an outstanding principal balance of
$14,200,000 as of the Cut-off Date and are scheduled to fully amortize by July
2014. The indenture for the Miami Bonds permits subordinate leasehold financing
but the bond trustee is not required to provide to the mortgagee under the
Bayside Loan any notices of default or the right to cure such default. In
connection with the issuance of the Miami Bonds, the Bayside Borrower funded a
reserve account controlled by the bond trustee in an amount equal to a full year
of required debt service payments under the Miami Bonds. All revenues collected
from the operation of the parking garage from time to time are deposited into
another account controlled by the bond trustee. Any revenues that exceed debt
service payments and reserve deposits required under the Miami Bonds are
deposited into the lock box account established under the Bayside Loan as
described below.
Other Obligations. The ground lease relating to the shopping center
portion of the Bayside Property requires the Bayside Borrower or any of its
successors or assigns to lease a portion of the space and provide monetary
assistance for tenant improvements to minority tenants and make an annual
contribution of at least $100,000 for the education and development of minority
businesses.
Appraised Value. The Bayside Property had an appraised value of
$116,000,000 as of June 1998. For purposes of the presentation in this
Prospectus Supplement, the appraised value of the Bayside Property has been
adjusted to $101,980,000, which is the property's appraised value net of the
outstanding principal balance of the Miami Bonds as of the Cut-off Date. The
Cut-off Date LTV Ratio of the Bayside Loan (calculated on such basis) is 61.71%.
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DSC Ratio. The Bayside Loan has a Debt Service Coverage Ratio of 1.80x.
Ground Lease Considerations. The Bayside Borrower owns leasehold interests
in the Bayside Property. The ground lessor is the City of Miami pursuant to
separate ground leases that expire in 2030. Each ground lease grants to the
Bayside Borrower two options to extend the expiration date by 15 years each
time. The ground lease relating to the shopping center portion of the Bayside
Property requires annual ground rent payments of the greater of (1) $1,000,000,
or (2) 35% of net income available for distribution (as defined in the ground
lease). The ground lease relating to the parking garage portion of the Bayside
Property requires annual ground rent payments of the greater of (1) $80,000, or
(2) 50% of net income available for distribution (as defined in the ground
lease). The combined ground rent payment used in the underwriting of the Bayside
Loan was $1,700,000. The ground leases require the City of Miami's approval of a
new operator of the Bayside Property in the event of a foreclosure by the lender
or the sale of the Bayside Property at foreclosure. The City of Miami has agreed
to give the holder of the Bayside Loan notice of, and has granted such holder
the right to cure, any default or breach by the lessee. It has also agreed to
give mortgagees under loans secured by each respective leasehold interest the
right to enter into a new lease (on the same terms and conditions as the
existing lease) upon a termination of the existing lease. With respect to the
parking garage portion of the Bayside Property, the right of the mortgagee under
the Bayside Loan to enter into a new lease is prior to a similar right held by
the bond trustee for the Miami Bonds, although any new leasehold interest would
(like the existing leasehold interest) be encumbered by a senior lien in favor
of that bond trustee.
Lock Box. The Bayside Borrower must deposit or cause to be deposited by
tenants, all rents and receipts at the retail center, and any revenues from the
parking garage that exceed debt service payments and reserve deposits required
under the Miami Bonds, into a lock box account from which monthly payments of
principal and interest, required reserve deposits and other amounts due on the
Bayside Loan will be made. Prior to (but not following) an event of default,
amounts in excess of such monthly payments, required reserve deposits and other
amounts may be disbursed from the lock box account to the Bayside Borrower.
Reserves and Escrows. The Bayside Borrower is required to make monthly
escrow payments for real estate taxes and insurance premiums, including those
for wind insurance. The Bayside Borrower also must make monthly reserve payments
in the amount of $2,750 for repairs and replacements and other capital
improvements and monthly reserve payments in the amount of $4,583 to a tenant
improvement and leasing commissions reserve, except that the Bayside Borrower is
not required to make deposits in such an account to the extent the amount on
deposit would equal or exceed $150,000.
The Inland Loan
The Loan. The "Inland Loan" has a Cut-off Date Balance of $54,600,000,
representing 2.7% of the Initial Pool Balance, and is secured by first priority
Mortgages encumbering the fee simple interests in seven (7) neighborhood
shopping centers and five (5) community shopping centers (collectively, the
"Inland Properties") with an aggregate 1,196,551 square feet of GLA. The
respective portions of the Inland Loan allocable to the Inland Properties are
cross-collateralized and cross-defaulted. The Inland Properties are located in
Illinois, Indiana, Minnesota and Wisconsin. The Inland Loan was made to a
special purpose entity (the "Inland Borrower") that was established to own the
Inland Properties and is affiliated with and controlled by Inland Real Estate
Corporation ("Inland Real Estate"). Inland Real Estate, headquartered in Oak
Brook, Illinois, was formed in 1994 to invest in neighborhood and community
centers located primarily within a 400 mile radius of its headquarters as well
as single-user retail properties located throughout the United States. Inland
Real Estate, with over 11.9 million square feet of properties, is a REIT whose
shares are publicly registered but not listed or traded on an exchange.
The Inland Loan is an ARD Loan with an Anticipated Repayment Date of
October 1, 2008 and a stated maturity of October 1, 2033. The Inland Loan
requires payments of interest only until the Anticipated Repayment Date based on
the Mortgage Rate of 6.36% per annum. From and after the Anticipated Repayment
Date, (1) the fixed interest rate steps up to the Revised Rate, which is the
greater of (a) 11.36% per annum or (b) 5% over the then-current yield of the
applicable 25-year United States Treasury bond, (2) the Inland Borrower must
make monthly payments of interest at the Mortgage Rate and equal monthly
principal payments based on a straightline 25-year amortization schedule and (3)
the Inland Borrower must apply net cash flow derived from the operation of the
Inland Properties (after debt service and reserves) toward additional
amortization of principal. Any Additional Interest accrued on the Inland Loans
will be deferred and added to the outstanding principal balance and will earn
interest at the Revised Rate.
The Inland Borrower is prohibited from voluntarily prepaying the Inland
Loan prior to three months before the Anticipated Repayment Date. The Inland
Loan is freely prepayable thereafter. The Inland Borrower has the right to
defease all or a portion of the Inland Loan and obtain a release of one or more
Inland Properties after the second anniversary of the Closing Date.
The Properties. The 12 Inland Properties are made up of seven (7)
neighborhood retail centers and five (5) community shopping centers with an
aggregate GLA of 1,196,551 square feet. The Inland Properties are located in
various locations in the Midwest primarily in Illinois where 9 of the centers
are located and one each in Indiana, Minnesota and Wisconsin. The Inland
Properties were developed at various times during the 1980s and 1990s and were
acquired by the Inland Borrower in late 1997 and the first half of 1998. The
Inland Borrower has invested approximately $780,000 to date in capital
improvements since acquiring the Inland Properties, which range in size
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from 12,784 square feet to 270,283 square feet. Anchor tenants include Kmart,
Dominick's, Sears, Walgreens and Wal-Mart. As of October 1, 1998, the Inland
Properties reported an overall economic occupancy of 98.3% and a physical
occupancy of 98.4% The variance between physical occupancy and economic
occupancy represents certain master leased space currently not occupied, but for
which a limited amount of monthly rental payments are held in escrow for the
benefit of the Inland Borrower and included under the lien of the Mortgage. The
variance also includes one unoccupied anchor space in a center also anchored by
Wal-Mart (Lake Park Shopping Center) for which the tenant was continuing to make
monthly rental payments as of October 1, 1998. This tenant's lease expires in
December, 2011.
A summary of information regarding the 12 retail centers appears in the
tables that follow.
Overview of the Inland Properties
<TABLE>
<CAPTION>
Property Location Center Type GLA
- -------- -------- ----------- ---
<S> <C> <C> <C>
Bergen Plaza Oakdale, Washington County, MN Community 270,283
Lake Park Shopping Center Michigan City, Laporte County, IN Community 229,639
Chestnut Court Shopping Center Darien, DuPage County, IL Community 170,027
Naper West Plaza Naperville, DuPage County, IL Community 165,311
Oak Forest Commons Oak Forest, Cook County, IL Community 108,360
High Point Center Madison, Dane County, WS Neighborhood 86,204
St. James Crossing Shopping Center Westmont, DuPage County, IL Neighborhood 49,992
Elmhurst City Center Elmhurst, DuPage County, IL Neighborhood 39,117
Wauconda Shopping Center Wauconda, Lake County, IL Neighborhood 31,157
Homewood Plaza Homewood, Cook County, IL Neighborhood 19,000
Western Howard Plaza Chicago, Cook County, IL Neighborhood 12,784
Wisner Plaza Chicago, Cook County, IL Neighborhood 14,677
---------
Total 1,196,551
</TABLE>
Anchor Tenants at the Inland Properties(1)
Property Anchors and National Tenants
- -------- ----------------------------
Bergen Plaza Kmart, Rainbow Foods, Blockbuster
Lake Park Shopping Center Wal-Mart, Ameritech, Famous Footwear, BancOne
Chestnut Court Shopping Center Blockbuster
Naper West Plaza Blockbuster, Famous Footwear, TJ Maxx,
The Olive Garden
Oak Forest Dominick's, Hollywood Video, Sears Optical
High Point Center Pier One Imports
St. James Crossing Countrywide Home
Elmhurst City Center Walgreens, Famous Footwear
Wauconda Shopping Center Sears Hardware
Homewood Plaza Blockbuster
Western Howard Plaza The Gap, Pearle Vision
Wisner Plaza Blockbuster
- -------------
(1) Based on October 1, 1998 property rent rolls except that information for
the Oak Forest property is based on September 17, 1998 rent roll.
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Aggregate Lease Expiration Schedule for the Inland Properties(1)
Year Expiring Square Feet As a % of Total GLA(2)
- ---- -------------------- ----------------------
1998, including month-to-
month leases 24,251 2.0%
1999 204,080 17.1%
2000 90,684 7.6%
2001 86,006 7.2%
2002 92,759 7.8%
2003 171,540 14.3%
2004 35,437 3.0%
2005 13,026 1.1%
2006 57,872 4.8%
2007 30,873 2.6%
2008 & beyond 370,066 30.9%
Vacant 19,957 1.7%
--------- ------
Total 1,196,551 100.0%
5 Year Avg. Rollover 99,556 8.3%
7 Year Avg. Rollover 100,680 8.4%
- --------------
(1) Based on October 1, 1998 property rent rolls except that information for
the Oak Forest property is based on September 17, 1998 rent roll.
(2) May not sum to total due to rounding.
Property Management. The Inland Properties are managed by Inland
Commercial Property Management, Inc. The management agreements may be terminated
by the mortgagee under the Inland Loan if an event of default occurs and the
Inland Loan is accelerated by the lender.
Appraised Value. The Inland Properties had an aggregate appraised value as
of August/September 1998 of $105,995,000, and the Inland Loan has a Cut-off Date
LTV Ratio of 51.51%.
DSC Ratio. The Inland Loan has a Debt Service Coverage Ratio of 2.74x.
Lock Box. If the current DSCR at any time is less than 1.50x for a 12
month period or the Inland Loan has not been repaid in full on or prior to the
Anticipated Repayment Date, the Inland Borrower must establish a lock box
account and instruct all tenants to make all payments of rents and revenues to
the lock box account. If such a lock box account is established prior to the
Anticipated Repayment Date, its operation will be suspended (until the
Anticipated Repayment Date) if the current DSCR exceeds 1.50x for three
consecutive quarters but may be reimposed if (among other events) the current
DSCR falls to 1.50x or lower.
Releases of Properties. After the second anniversary of the Closing Date,
the Inland Borrower has the right to defease a portion of the Inland Loan and,
in connection therewith, to obtain the release of an individual property from
the lien of the related Mortgage, subject to specified conditions, including,
but not limited to, that following the release of a property, the current DSCR
of the remaining properties shall be the greater of (1) 2.89x, or (2) the
current DSCR of the remaining properties and the property to be released, and
taking into account the amount of the defeased loan amount relating to property
to be released, for the 12 calendar months prior to the proposed release.
Reserves and Escrows. The Inland Borrower must make monthly escrow
payments relating to real estate taxes, with the exception of taxes payable by
Kmart Corporation for Bergen Plaza. For as long as the Inland Borrower maintains
an insurance policy acceptable to the mortgagee under the Inland Loan, the
Inland Borrower does not have to reserve for insurance premiums. During the
existence of the lock box account, the Inland Borrower must make monthly
deposits to a reserve account for replacements and repairs and other capital
improvements in a monthly amount determined by the mortgagee under the Inland
Loan, and to a tenant improvements and leasing commissions reserve account in a
monthly amount of $17,339.
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Assignment of the Mortgage Loans
On the Closing Date, the Depositor will acquire the Mortgage Loans from
the Originator or another of its affiliates and will transfer the Mortgage
Loans, without recourse, to the Trustee.
In connection with its transfer of the Mortgage Loans to the Trustee, the
Depositor must deliver or cause to be delivered thereto the following documents,
among others, with respect to each Mortgage Loan--
o the original Mortgage Note, endorsed (without recourse) to the order
of the Trustee (or, if such original Mortgage Note has been lost, a
copy thereof, together with a lost note affidavit);
o the original or a copy of the related Mortgage(s), together with
originals or copies of any intervening assignments of such
document(s), in each case (unless the particular document has not
been returned from the applicable recording office) with evidence of
recording thereon;
o the original or a copy of any related assignment(s) of leases and
rents, together with originals or copies of any intervening
assignments of such document(s), in each case (unless the particular
document has not been returned from the applicable recording office)
with evidence of recording thereon;
o a completed assignment of each related Mortgage in favor of the
Trustee, in recordable form (or a certified copy of such assignment
as sent for recording);
o a completed assignment of any related assignment(s) of leases and
rents in favor of the Trustee, in recordable form (or a certified
copy of such assignment as sent for recording);
o an original or copy of all the written modification agreements in
those instances in which the terms or provisions of a Mortgage or
Mortgage Note have been modified;
o an original or copy of the related lender's title insurance policy
(or, if a title insurance policy has not yet been issued, a
commitment for title insurance "marked-up" at the closing of such
Mortgage Loan);
o an assignment in favor of the Trustee of each effective UCC
financing statement in the possession of the transferor (or a
certified copy of such assignment as sent for filing);
o if applicable, the original or a copy of the related ground lease;
and
o if applicable, the lease enhancement policy and any residual value
insurance policy.
The Pooling Agreement will require the Trustee to hold all of the
documents so delivered to it with respect to the Mortgage Loans in trust for the
benefit of the Certificateholders and, within a specified period of time
following such delivery, to conduct a review of such documents. If any of the
above-described documents required to be delivered to the Trustee in respect of
each Mortgage Loan is not so delivered or is otherwise defective, and such
omission or defect materially and adversely affects the value of the related
Mortgage Loan or the interests of the Certificateholders therein, such omission
or defect, as the case may be, will constitute a "Material Document Defect" with
respect to the related Mortgage Loan. The rights of the Trust against the
Depositor with respect to any Material Document Defect are described under
"--Cures and Repurchases" below. All of the above-described documents actually
delivered to the Trustee in respect of any Mortgage Loan will collectively
constitute the "Mortgage File" for such Mortgage Loan.
The Pooling Agreement will further require the Trustee at the expense of
the Depositor, within a specified period following the later of the Closing Date
and receipt of the item, to submit for recording in the real property records of
the appropriate jurisdiction each assignment of Mortgage and assignment of
assignment of leases and rents in its favor delivered by the Depositor with
respect to a Mortgage Loan as described above.
See "The Trust Agreement--Assignment of Mortgage Assets" in the
Prospectus.
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Representations and Warranties
The Depositor will make, as to each Mortgage Loan, the following
representations and warranties (subject to certain exceptions), among others, as
of the Closing Date or as of such other date specified in the particular
representation and warranty:
o The information pertaining to such Mortgage Loan set forth in the
schedule of Mortgage Loans (the "Mortgage Loan Schedule") attached
to the Pooling Agreement was true and correct in all material
respects as of the Cut-off Date.
o To the best of the Depositor's knowledge after having performed the
type of due diligence customarily performed by prudent institutional
commercial and multifamily mortgage lenders, as of the date of its
origination, such Mortgage Loan complied in all material respects
with, or was exempt from, all requirements of federal, state or
local law relating to the origination of such Mortgage Loan.
o The Depositor owns the Mortgage Loan, has good title thereto, has
full right and authority to sell, assign and transfer the Mortgage
Loan and is transferring the Mortgage Loan free and clear of any and
all liens, pledges, charges or security interests.
o The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder.
o To the actual knowledge of the Depositor, the related Mortgage Note,
each related Mortgage, each related assignment of leases and rents,
if any, and each other agreement executed in connection therewith is
the legal, valid and binding obligation of the maker thereof
(subject to any non-recourse provisions therein and any state
anti-deficiency legislation), enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
o As of the date of its origination, there was no valid offset,
defense, counterclaim or right to rescission with respect to the
related Mortgage Note or any related Mortgage or other agreement
executed in connection with such Mortgage Loan.
o As of the Cut-off Date, to the actual knowledge of the Depositor,
there is no valid offset, defense, counterclaim or right of
rescission with respect to the related Mortgage Note or any related
Mortgage or other agreement.
o The assignment of the related Mortgage in favor of the Trustee
constitutes the legal, valid and binding assignment of such Mortgage
to the Trustee (subject to customary bankruptcy and creditors'
rights limitations).
o Except to the extent described under "--Significant Mortgage
Loans--The Bayside Loan" above, each related Mortgage is a valid and
enforceable first lien on the related Mortgaged Property, which
Mortgaged Property is free and clear of all encumbrances and liens
having priority over or on a parity with the first lien of such
Mortgage, except for
(i) liens for real estate taxes and special assessments not yet
due and payable,
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of
record being customarily acceptable to mortgage lending
institutions generally or specifically reflected in the
appraisal of such Mortgaged Property made in connection with
the origination of such Mortgage Loan, and
(iii) other matters to which like properties are commonly subject
which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be
provided by such Mortgage or materially affect the value or
marketability of such Mortgaged Property.
o To the actual knowledge of the Depositor, all taxes and governmental
assessments that prior to the Cut-off Date became due or owing in
respect of, and affect, the related Mortgaged Property or Properties
have been paid, or an escrow of funds in an amount sufficient to
cover such payments has been established.
o As of the date of its origination, there was no proceeding pending
for the total or partial condemnation of the related Mortgaged
Property or Properties that materially affects the value thereof,
and such Mortgaged Property was free of material damage.
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o As of the Cut-off Date, the Depositor has not received any notice of
the commencement of any proceeding for the total or partial
condemnation of the related Mortgaged Property or Properties that
materially affects the value thereof, and such Mortgaged Property is
free of material damage.
o As of the date of its origination, all insurance required under the
related Mortgage for such Mortgage Loan was in full force and effect
with respect to the related Mortgaged Property or Properties.
o As of the Cut-off Date, the Mortgage Loan is not, and in the prior
12 months (or, if originated during such 12-month period, since the
date of origination), has not been, 30 days or more past due in
respect of any Scheduled P&I Payment.
o One or more environmental site assessments were performed with
resect to the related Mortgaged Property or Properties during the
13-month period preceding the Cut-off Date, and the Depositor,
having made no independent inquiry other than to review the
report(s) prepared in connection with the assessment(s) referenced
in this Prospectus Supplement, has no knowledge of any material and
adverse environmental condition or circumstance affecting such
Mortgaged Property that was not disclosed in such report(s).
If there exists a breach of any of the above-described representations and
warranties made by the Depositor, and such breach materially and adversely
affects the value of the subject Mortgage Loan or the interests of the
Certificateholders therein, such breach will constitute a "Material Breach" of
such representation and warranty. The rights of the Trust against the Depositor
with respect to any such Material Breach are described under "--Cures and
Repurchases" below.
Cures and Repurchases
If the Depositor discovers or receives notice of (i) a Material Document
Defect with respect to any of its Mortgage Loans as described under
"--Assignment of the Mortgage Loans" above or (ii) a Material Breach of any
representation and warranty made by it as described under "--Representations and
Warranties" above, then the Depositor will be obligated to--
o remedy such Material Document Defect or Material Breach in all
material respects, or
o repurchase the affected Mortgage Loan at a price (the "Purchase
Price") generally equal to the sum of (i) the unpaid principal
balance of such Mortgage Loan at the time of purchase, plus (ii) all
unpaid interest (other than Additional Interest and Default
Interest) due in respect of such Mortgage Loan through the Due Date
in the Collection Period of purchase, plus (iii) all unreimbursed
Servicing Advances in respect of such Mortgage Loan.
The time period within which the Depositor must complete such remedy or
repurchase will generally be limited to 90 days (or, if it is diligently
attempting to correct the problem and certain other conditions are satisfied,
180 days) following the earlier of its discovery or receipt of notice of the
subject Material Document Defect or Material Breach, as the case may be.
However, if any Material Document Defect arises solely out of the failure of the
applicable recording office to return a recorded Mortgage Loan document, and if
the Depositor is diligently attempting to retrieve such document, such time
period may be extended for up to two years following the Closing Date.
The foregoing cure/repurchase obligations of the Depositor will constitute
the sole remedy available to the Certificateholders in connection with a
Material Document Defect or a Material Breach of representations or warranties
with respect to any Mortgage Loan. No other person will be obligated to
repurchase any affected Mortgage Loan in connection with a Material Document
Defect or a Material Breach of representations and warranties if the Depositor
defaults on its obligation to do so.
Changes in Mortgage Pool Characteristics
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as it is expected to be
constituted at the time the Offered Certificates are issued, with adjustments
for the scheduled principal payments due on the Mortgage Loans on or before the
Cut-off Date. Prior to the issuance of the Offered Certificates, a Mortgage Loan
may be removed from the Mortgage Pool if the Depositor deems such removal
necessary or appropriate or if it is prepaid. A limited number of other mortgage
loans may be included in the Mortgage Pool prior to the issuance of the Offered
Certificates, unless including such mortgage loans would materially alter the
characteristics of the Mortgage Pool as described in this Prospectus Supplement.
The Depositor believes that the information set forth in this Prospectus
Supplement will be representative of the characteristics of the Mortgage Pool as
it will be constituted at the time the Offered Certificates are issued, although
the range of Mortgage Rates and maturities, as well as the other characteristics
of the Mortgage Loans described in this Prospectus Supplement, may vary.
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A Current Report on Form 8-K will be available to purchasers of the
Offered Certificates on or shortly after the Closing Date. Such Current Report
on Form 8-K will be filed, together with the Pooling Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. In the event Mortgage Loans are removed
from or added to the Mortgage Pool such removal or addition will be noted in
such Current Report on Form 8-K.
SERVICING OF THE MORTGAGE LOANS
General
The servicing of the Mortgage Loans and any REO Properties will be
governed by the Pooling Agreement. The following summaries describe certain
provisions of the Pooling Agreement relating to the servicing and administration
of the Mortgage Loans and any REO Properties. The summaries do not purport to be
complete and are subject, and qualified in their entirety by reference, to the
provisions of the Pooling Agreement. Reference is made to the Prospectus for
additional information regarding the terms of the Pooling Agreement relating to
the servicing and administration of the Mortgage Loans and any REO Properties
and to the rights and obligations of the Master Servicer and the Special
Servicer thereunder, provided that the information in this Prospectus Supplement
supersedes any contrary information set forth in the Prospectus. See "Servicing
of Mortgage Loans" and "The Trust Agreement" in the Prospectus. For purposes of
the Prospectus, the Pooling Agreement constitutes a Trust Agreement, a Master
Servicing Agreement and a Special Servicing Agreement.
The Pooling Agreement provides that the Master Servicer and Special
Servicer must each service and administer the Mortgage Loans for which it is
responsible, directly or through sub-servicers, on behalf of the Trustee for the
benefit of the Certificateholders, in accordance with all applicable laws, the
express terms of the Pooling Agreement and the respective Mortgage Loans and, to
the extent consistent with the foregoing, the Servicing Standard. The "Servicing
Standard" requires that the Master Servicer and Special Servicer must each
service and administer the Mortgage Loans and other assets for which it is
responsible:
o with the same care, skill and diligence as is normal and usual in
its general mortgage servicing and asset management activities with
respect to comparable mortgage loans that either are part of other
third party portfolios (giving due consideration to customary and
usual standards of practice of prudent institutional commercial
mortgage lenders) or are held as part of its own portfolio,
whichever servicing procedures are a higher standard;
o with a view to the timely collection of all Scheduled P&I Payments
due under the Mortgage Loans (or, in the case of the Special
Servicer, if a Mortgage Loan comes into and continues in default and
if, in the good faith and reasonable judgment of the Special
Servicer, no satisfactory arrangements can be made for the
collection of the delinquent payments, with a view to the
maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value
basis); and
o without regard to:
(a) any known relationship that the Master Servicer or the Special
Servicer, as the case may be, or any affiliate thereof may
have with any related Borrower;
(b) the ownership of any Certificate by the Master Servicer or the
Special Servicer, as the case may be, or any affiliate
thereof;
(c) the obligation of the Master Servicer or the Special Servicer,
as the case may be, to make Advances;
(d) the right of the Master Servicer or the Special Servicer, as
the case may be, or any affiliate thereof to receive
reimbursement of costs, or the compensation payable to it
under the Pooling Agreement generally or with respect to any
particular transaction; and
(e) the ownership, servicing or management of other loans or
properties not included in or securing, as the case may be,
the Mortgage Loans.
In general, the Master Servicer will be responsible for the servicing and
administration of--
o all Mortgage Loans as to which no Servicing Transfer Event (as
defined below) has occurred, and
o all Corrected Mortgage Loans (also as defined below).
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The Special Servicer, on the other hand, will be responsible for the
servicing and administration of--
o each Mortgage Loan (other than a Corrected Mortgage Loan) as to
which a Servicing Transfer Event has occurred (each, a "Specially
Serviced Mortgage Loan"), and
o each Mortgaged Property that has been acquired by the Trust in
respect of a defaulted Mortgage Loan through foreclosure,
deed-in-lieu of foreclosure or otherwise (each, upon acquisition, an
"REO Property").
Specially Serviced Mortgage Loans and REO Properties collectively
constitute "Specially Serviced Assets".
Despite the foregoing, the Pooling Agreement will require the Master
Servicer to continue to collect information and prepare all reports to the
Trustee required to be collected or prepared by the Master Servicer thereunder
with respect to any Specially Serviced Mortgage Loans and REO Properties and,
otherwise, to render certain incidental services with respect to any Specially
Serviced Mortgage Loans and REO Properties. Neither the Master Servicer nor the
Special Servicer will have any responsibility for the performance by the other
of its respective obligations and duties under the Pooling Agreement.
A Mortgage Loan will become a Specially Serviced Mortgage Loan (if it has
not already done so) upon the occurrence of a Servicing Transfer Event. Each of
the following events will constitute a "Servicing Transfer Event" in respect of
any Mortgage Loan:
(1) any Scheduled P&I Payment shall be delinquent 60 or more days (or,
in the case of a delinquent Balloon Payment, if it is determined
that the related Borrower has obtained a binding commitment to
refinance the subject Mortgage Loan, such Balloon Payment shall be
delinquent for such longer period of delinquency (not to exceed 120
days) within which such refinancing is expected to occur);
(2) the Master Servicer shall have determined that (a) a default in
making a Scheduled P&I Payment is likely to occur within 30 days,
(b) such default is likely to remain unremedied for at least 60
days, and (c) in the case of a Balloon Payment, the related Borrower
is not likely to refinance the subject Mortgage Loan within 120 days
after the maturity date;
(3) there shall have occurred a default (other than as described in
clause (1) above) that materially impairs the value of the Mortgaged
Property as security for the Mortgage Loan or otherwise materially
adversely affects the interests of Certificateholders and that
continues unremedied for the applicable grace period under the terms
of the Mortgage Loan (or, if no grace period is specified, for 30
days);
(4) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings in respect of or
pertaining to the related Borrower and certain actions by or on
behalf of the related Borrower indicating its insolvency or
inability to pay its obligations; or
(5) the Master Servicer shall have received notice of the commencement
of foreclosure or similar proceedings with respect to the related
Mortgaged Property or Properties.
So long as no other Servicing Transfer Event exists, a Mortgage Loan will
cease to be a Specially Serviced Mortgage Loan (and will become a "Corrected
Mortgage Loan" as to which the Master Servicer will re-assume servicing
responsibilities) if and when:
(a) with respect to the circumstances described in clause (1) of the
preceding paragraph, the related Borrower has made three consecutive
full and timely Scheduled P&I 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 Borrower or by reason of a written modification, waiver or
amendment granted or agreed to by the Special Servicer);
(b) with respect to any of the circumstances described in clauses (2)
and (4) of the preceding paragraph, such circumstances cease to
exist in the good faith, reasonable judgment of the Special
Servicer, but, with respect to any bankruptcy or insolvency
proceedings contemplated by clause (4), no later than the entry of
an order or decree dismissing such proceeding;
(c) with respect to the circumstances described in clause (3) of the
preceding paragraph, when such default is cured as determined by the
Special Servicer; and
(d) with respect to the circumstances described in clause (5) of the
preceding paragraph, when such proceedings are terminated.
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The Master Servicer and the Special Servicer
The Master Servicer. First Union National Bank ("FUNB"), a national
banking association, will act as Master Servicer with respect to the Mortgage
Pool. FUNB is a wholly owned subsidiary of First Union Corporation. Its
principal servicing offices are located at Charlotte Plaza, 23rd Floor, 201
South College Street, Charlotte, North Carolina 28288-1075.
As of June 30, 1998, FUNB and its affiliates were responsible for
servicing approximately 3,522 commercial and multifamily loans, totaling
approximately $16.6 billion in aggregate outstanding principal amounts,
including loans securitized in mortgage-backed securitization transactions.
The information set forth in this Prospectus Supplement concerning the
Master Servicer has been provided by it. Neither the Depositor nor the
Underwriter makes any representation or warranty as to the accuracy or
completeness of such information.
The Special Servicer. Lennar Partners, Inc. ("Lennar"), a Florida
corporation and a subsidiary of LNR Property Corporation ("LNR"), will act as
Special Servicer with respect to the Mortgage Pool. The principal executive
offices of Lennar are located at 760 N.W. 107th Avenue, Miami, Florida 33172,
and its telephone number is (305) 485-2000. LNR, its subsidiaries and affiliates
are involved in the real estate investment and management business and engage
principally in (i) developing, acquiring and actively managing commercial and
residential multi-family rental real estate, (ii) acquiring portfolios of
commercial mortgage loans and properties and providing workout, property
management and asset sale services with regard to the portfolio assets, (iii)
acting as special servicer with regard to commercial mortgage pools which are
the subject of commercial mortgage pools which are the subject of commercial
mortgage backed securities ("CMBS"), (iv) acquiring unrated and rated CMBS
issued with regard to commercial mortgage pools as to which the Special Servicer
acts as special servicer, and (v) making mortgage loans to companies and
individuals engaged in commercial real estate activities and to developers and
builders of residential communities. Lennar has regional offices located across
the country in Florida, Georgia, Oregon and California. As of September 1, 1998,
Lennar and its affiliates were managing a portfolio with an original asset count
of over 8,900 assets in most states with an original face value of over $30.0
billion, most of which are commercial real estate assets. Included in this
managed portfolio is $23.6 billion of commercial real estate assets representing
44 securitization transactions, for which Lennar is the master servicer or
special servicer. Lennar and its affiliates own and are in the business of
acquiring assets similar in type to the assets of the Trust Fund. Accordingly,
the assets of Lennar and its affiliates may, depending upon the particular
circumstances, including, the nature and location of such assets, compete with
the Mortgaged Properties for tenants, purchasers, financing and so forth.
The information set forth in this Prospectus Supplement concerning the
Special Servicer has been provided by it. 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 Master Servicing Fee. The principal compensation to be paid to the
Master Servicer in respect of its master servicing activities will be the Master
Servicing Fee.
In general, the "Master Servicing Fee" will--
o be earned in respect of each and every Mortgage Loan (including each
Specially Serviced Mortgage Loan, if any, and each Mortgage Loan, if
any, as to which the related Mortgaged Property has become an REO
Property (an "REO Mortgage Loan")),
o be computed on a 30/360 Basis (except in the case of partial
periods, when it will be computed on the basis of the actual number
of days elapsed in such period and a 360-day year) and accrue at the
applicable Master Servicing Fee Rate on the same principal amount as
interest periodically accrues or is deemed to accrue, as the case
may be, in respect of each Mortgage Loan, and
o be payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan.
The "Master Servicing Fee Rate" will be a per annum rate determined on a
loan-by-loan basis. The weighted average Master Servicing Fee Rate for the
Mortgage Loans as of the Cut-off Date was 0.09% per annum.
Additional Master Servicing Compensation. As additional servicing
compensation, the Master Servicer will be entitled to receive--
o All Prepayment Interest Excesses, if any, collected in respect of
the entire Mortgage Pool. If a Borrower prepays its Mortgage Loan,
in whole or in part, after the related Due Date during any
Collection Period, the amount of interest (less
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the amount of related Master Servicing Fees payable therefrom and
any Additional Interest included therein) will, to the extent
actually collected, constitute a "Prepayment Interest Excess".
o All late payment charges and Default Interest, if any, collected in
respect of the Mortgage Loans that, in each such case, accrued in
respect of the related Mortgage Loan during a period when it was not
a Specially Serviced Mortgage Loan or REO Mortgage Loan (but only to
the extent that such late payment charges and Default Interest have
not otherwise been applied to pay the Master Servicer, Special
Servicer, Trustee or Fiscal Agent, as applicable, interest on
Advances made thereby with respect to the related Mortgage Loan as
described in this Prospectus Supplement). "Default Interest" is any
interest that (i) accrues on a defaulted Mortgage Loan solely by
reason of the subject default and (ii) is in excess of all interest
at the related Mortgage Rate and any Additional Interest accrued on
such Mortgage Loan.
Modification fees, assumption fees and certain other fees and charges
collected on the Mortgage Loans will be allocated between the Master Servicer
and the Special Servicer as additional servicing compensation.
The Master Servicer will be authorized to invest or direct the investment
of funds held in the Custodial Account (as defined under "--The Custodial
Account" below), the Collection Account (as defined under "Description of the
Offered Certificates--Collection Account" in this Prospectus Supplement), the
Interest Reserve Account (as defined under "Description of the Offered
Certificates--Distributions" in this Prospectus Supplement), any escrow accounts
and reserve accounts with respect to the Mortgage Loans, in certain government
securities and other investment grade obligations specified in the Pooling
Agreement ("Permitted Investments"). The Master Servicer will be entitled to
retain any interest or other income earned on such funds, subject, however, to
any rights of the Borrowers thereto in the case of interest or other income
earned on funds in escrow accounts and reserve accounts. However, the Master
Servicer will be required to cover losses of principal on such investments out
of its own funds.
Prepayment Interest Shortfalls. If a Borrower prepays a Mortgage Loan, in
whole or in part, prior to the related Due Date during any Collection Period and
does not pay interest on such prepayment through such Due Date, then the
shortfall in a full month's interest (less the amount of related Master
Servicing Fees and any Additional Interest) on such prepayment will constitute a
"Prepayment Interest Shortfall".
The Pooling Agreement will provide that, if any Prepayment Interest
Shortfalls are incurred during any Collection Period with respect to Mortgage
Loans that are neither Specially Serviced Mortgage Loans nor REO Mortgage Loans,
the Master Servicer must make a non-reimbursable payment (a "Compensating
Interest Payment") with respect to the related Distribution Date in an amount
equal to the lesser of:
(a) the aggregate of all such Prepayment Interest Shortfalls incurred
during such Collection Period with respect to such Mortgage Loans
that are neither Specially Serviced Mortgage Loans nor REO Mortgage
Loans, and
(b) the sum of the following components of the Master Servicer's
aggregate servicing compensation for such Collection Period--
(i) the aggregate of all Prepayment Interest Excesses, if any,
collected with respect to the entire Mortgage Pool during such
Collection Period, and
(ii) with respect to each and every Mortgage Loan for which the
Master Servicer receives Master Servicing Fees during such
Collection Period, the portion of such fees calculated at an
annual rate of 0.05% per annum.
To the extent that the Compensating Interest Payment made by the Master
Servicer for the related Distribution Date is less than the amount described in
clause (a) of the preceding sentence, such difference, together with the
aggregate of all Prepayment Interest Shortfalls, if any, incurred during the
subject Collection Period in respect of any Specially Serviced Mortgage Loans,
will constitute the "Net Aggregate Prepayment Interest Shortfall" for the
related Distribution Date.
Any Compensating Interest Payment made by the Master Servicer with respect
to any Distribution Date will be included among the amounts distributable as
principal and interest on the Certificates on such Distribution Date as
described under "Description of the Offered Certificates--Distributions" in this
Prospectus Supplement. Any Net Aggregate Prepayment Interest Shortfall for any
Distribution Date will be allocated among the respective Classes of
interest-bearing Certificates, in reduction of the interest distributable
thereon, in the amounts and priorities described under "Description of the
Offered Certificates--Allocation of Realized Losses and Certain Other Shortfalls
and Expenses" in this Prospectus Supplement.
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Principal Special Servicing Compensation. The principal compensation to be
paid to the Special Servicer in respect of its special servicing activities will
be--
o the Special Servicing Fee,
o the Workout Fee, and
o the Liquidation Fee.
The Special Servicing Fee. In general, the "Special Servicing Fee" will--
o be earned in respect of each and every Specially Serviced Mortgage
Loan, if any, and each and every REO Mortgage Loan, if any,
o be computed on a 30/360 Basis (except in the case of partial
periods, when it will be computed on the basis of the actual number
of days elapsed in such period and a 360-day year) and accrue at
0.25% per annum (the "Special Servicing Fee Rate") on the same
principal amount as interest periodically accrues or is deemed to
accrue, as the case may be, in respect of each Specially Serviced
Mortgage Loan or REO Mortgage Loan, if any, and
o be payable monthly from general collections on all the Mortgage
Loans and any REO Properties on deposit in the Custodial Account
from time to time.
The Workout Fee. The Special Servicer will, in general, be entitled to
receive a Workout Fee with respect to each Corrected Mortgage Loan. As to each
Corrected Mortgage Loan, with limited exception, the "Workout Fee" will be
payable out of, and will be calculated by application of a "Workout Fee Rate" of
1.0% to, each collection of interest (other than Default Interest and Additional
Interest), principal (including scheduled payments, prepayments and Balloon
Payments at maturity) and Prepayment Consideration 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 loan
again becomes a Specially Serviced Mortgage Loan or if the related Mortgaged
Property becomes an REO Property. Nevertheless, 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 with respect
to Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and remained Corrected Mortgage Loans at the time of
such termination or resignation. The successor Special Servicer will not be
entitled to any portion of such Workout Fees.
The Liquidation Fee. The Special Servicer will be entitled to receive a
Liquidation Fee with respect to each Specially Serviced Mortgage Loan as to
which the Special Servicer obtains a full or discounted payoff from the related
Borrower and, except as otherwise described below, with respect to any Specially
Serviced Mortgage Loan or REO Property as to which the Special Servicer receives
any Liquidation Proceeds (as defined under "--Custodial Account" below). As to
each such Specially Serviced Mortgage Loan and REO Property, the "Liquidation
Fee" will be payable from, and will be calculated by application of a
"Liquidation Fee Rate" of 1.0% to, the related payment or proceeds (other than
any portion thereof that represents a recovery of Default Interest or Additional
Interest). Notwithstanding anything to the contrary described above, no
Liquidation Fee will be payable based on, or out of, Liquidation Proceeds
received in connection with:
o the repurchase of any Mortgage Loan by the Depositor for a breach of
representation or warranty or for defective or deficient Mortgage
Loan documentation so long as such repurchase occurs within the
180-day cure period (see "Description of the Mortgage Pool--Cures
and Repurchases" in this Prospectus Supplement).
o the purchase of any Specially Serviced Mortgage Loan or REO Property
by the Master Servicer, the Special Servicer or the Holder of
Certificates evidencing a majority interest (or, if no one holds a
majority interest, the single largest interest) in the Controlling
Class (the "Dominant Controlling Class Certificateholder") (see
"--Realization upon Defaulted Mortgage Loans; Sale of Defaulted
Mortgage Loans and REO Properties" below); or
o the purchase of all of the Mortgage Loans and REO Properties by the
Depositor, the Master Servicer, the Special Servicer, the
Underwriter or the Dominant Controlling Class Certificateholder in
connection with the termination of the Trust (see "Description of
the Offered Certificates--Termination" in this Prospectus
Supplement).
Additional Special Servicing Compensation. As additional special servicing
compensation, the Special Servicer will be entitled to receive all late payment
charges and Default Interest, if any, collected in respect of the Mortgage Loans
that, in each such case, accrued in respect of the related Mortgage Loan during
a period when it was a Specially Serviced Mortgage Loan or an REO Mortgage Loan
(but only to the extent that such late payment charges and Default Interest have
not otherwise been applied to pay the Master Servicer, Special
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Servicer, Trustee or Fiscal Agent, as applicable, interest on Advances made
thereby with respect to the related Mortgage Loan as described in this
Prospectus Supplement).
Modification fees, assumption fees and certain other fees and charges
collected on the Mortgage Loans will be allocated between the Master Servicer
and the Special Servicer as additional servicing compensation.
The Special Servicer will be authorized to invest or direct the investment
of funds held in the REO Account (as defined under "--REO Properties" below) in
Permitted Investments. The Special Servicer will be entitled to retain any
interest or other income earned on such funds. However, the Special Servicer
will be required to cover losses of principal on such investments out of its own
funds.
Payment of Expenses; Servicing Advances. Each of the Master Servicer and
Special Servicer will, in general, be required to pay 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. However, each of the Master Servicer will be permitted to
pay, and the Special Servicer will be permitted to direct payment of, certain of
such expenses (including certain expenses incurred as a result of a Mortgage
Loan default) directly out of the Custodial Account and at times without regard
to the relationship between the expense and the funds from which it is being
paid. See "--The Custodial Account" and "Description of the Offered
Certificates--Collection Account" in this Prospectus Supplement.
In general, customary, reasonable and necessary "out of pocket" costs and
expenses required to be incurred by the Master 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 will be
reimbursable from future payments and other collections, including in the form
of Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds (each as
defined under "--Custodial Account" below), on or in respect of the related
Mortgage Loan or REO Property ("Related Proceeds").
The Special Servicer may request the Master Servicer to make Servicing
Advances in respect of a Specially Serviced Mortgage Loan or REO Property (in
lieu of the Special Servicer making such Advances). Any such request is to be
made, in writing, at least five (5) business days (or two (2) business days in
an emergency situation) in advance of the date on which the Servicing Advance is
required to be made. The Master Servicer must make any such Servicing Advance
that it is requested by the Special Servicer to so make within ten days of the
Master Servicer's receipt of such request. If the request is timely and properly
made, the Special Servicer will be relieved of any obligations with respect to
an Advance that it timely requests the Master Servicer to make (regardless of
whether or not the Master Servicer makes that Advance).
If the Master Servicer or Special Servicer is required under the Pooling
Agreement to make a Servicing Advance, but neither does so within 15 days after
such Servicing Advance is required to be made, then the Trustee will be
required: (a) if it has actual knowledge of such failure, to give the defaulting
party notice of its failure; and (b) if such failure continues for three more
business days, to make such Servicing Advance. The Pooling Agreement will
obligate the Fiscal Agent to make any Servicing Advance that the Trustee was
obligated (but failed) to make.
Notwithstanding the foregoing discussion or anything else to the contrary
in this Prospectus Supplement, the Master Servicer, the Special Servicer, the
Trustee and the Fiscal Agent will not be obligated to make Servicing Advances
that, in the reasonable and good faith judgment of the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as the case may be, would not
be ultimately recoverable from Related Proceeds (any Servicing Advance not so
recoverable, a "Nonrecoverable Servicing Advance"). If the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent makes any Servicing Advance
that it subsequently determines is a Nonrecoverable Servicing Advance, it may
obtain reimbursement for such Servicing Advance out of general funds on deposit
in the Custodial Account from time to time. See "--Custodial Account" below.
The Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent will each be entitled to receive interest on Servicing Advances made
thereby. Such interest will accrue on the amount of each Servicing Advance for
so long as it is outstanding at a rate per annum equal to the "prime rate" as
published in the "Money Rates" section of The Wall Street Journal, as such
"prime rate" may change from time to time. Interest so accrued with respect to
any Servicing Advance will compound annually and be payable--
o out of Default Interest and late payment charges collected on or in
respect of the related Mortgage Loan during the Collection Period in
which such Servicing Advance is reimbursed, and
o if such Servicing Advance has been reimbursed, then (to the extent
that the Default Interest and late payment charges described in the
prior bullet point are insufficient) out of any amounts then on
deposit in the Certificate Account.
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Evidence as to Compliance
On or before April 30 of each year, beginning April 30, 1999, each of the
Master Servicer and the Special Servicer must--
o at its expense, cause a firm of independent public accountants, that
is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee, among others, to
the effect that (i) such firm has obtained a letter of
representation regarding certain matters from the management of the
Master Servicer or Special Servicer, as applicable, which includes
an assertion that the Master Servicer or Special Servicer, as
applicable, has complied with certain minimum mortgage loan
servicing standards (to the extent applicable to commercial and
multifamily mortgage loans), identified in the Uniform Single
Attestation program for Mortgage Bankers established by the Mortgage
Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to
such exceptions and other qualifications that may be appropriate
(except that, in rendering its report such firm may rely, as to
matters relating to the direct servicing of commercial and
multifamily mortgage loans by sub-servicers, upon comparable reports
of firms of independent certified public accountants rendered on the
basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to
those sub-servicers); and
o deliver to the Trustee, among others, a statement signed by one or
more officers thereof to the effect that, to the best knowledge of
such officer or officers, the Master Servicer or Special Servicer,
as the case may be, has fulfilled its material obligations under the
Pooling Agreement in all material respects throughout the preceding
calendar year (or the portion thereof during which the Certificates
were outstanding).
Copies of the foregoing annual accountants' statement and officer's
certificate of each of the Master Servicer and the Special Servicer will be made
available to Certificateholders (at their expense) upon written request to the
Trustee.
Modifications, Waivers, Amendments and Consents
In the case of any Mortgage Loan other than a Specially Serviced Mortgage
Loan and subject to the rights of the Special Servicer described below, the
Master Servicer will be responsible for responding to any request by a Mortgagor
for the consent of the mortgagee with respect to a modification, waiver or
amendment which would not (with limited exceptions involving the waiver of
Default Interest and late payment charges) affect the amount or timing of any of
the payment terms of such Mortgage Loan, result in the release of the related
Borrower from any material terms of such Mortgage Loan, result in the release of
the related Borrower from any material term thereunder, waive any rights
thereunder with respect to any guarantor thereof, relate to the release or
substitution of any material collateral for such Mortgage Loan or relate to any
waiver of or granting of consent under a "due-on-sale" or "due-on-encumbrance"
clause. To the extent consistent with the foregoing, the Master Servicer will
also be responsible for providing or withholding mortgagee consent with respect
to certain routine matters. Except as described above and in other limited
matters, the Master Servicer may not agree to waive, modify or amend any term of
any Mortgage Loan. Furthermore, the Master Servicer may not agree to any
modification, waiver or amendment of any term of any Mortgage Loan that would
cause any REMIC created under the Pooling Agreement 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 day under the REMIC
Provisions (as defined in the Prospectus).
The Pooling Agreement will permit the Special Servicer to modify, waive or
amend any term of any Mortgage Loan if such modification, waiver or amendment
(a) is consistent with the Servicing Standard, and (b) except under the
circumstances described below, will not--
(i) affect the amount or timing of any scheduled payments of principal,
interest or other amount (including Prepayment Premiums and Yield
Maintenance Charges but excluding Default Interest and other amounts
payable as additional servicing compensation) payable under the
Mortgage Loan,
(ii) affect the obligation of the related Borrower to pay a Prepayment
Premium or Yield Maintenance Charge or permit a principal prepayment
during the applicable Lockout Period,
(iii) except as expressly provided by the related Mortgage or in
connection with a material adverse environmental condition at the
related Mortgaged Property, result in a release of the lien of the
related Mortgage on any material portion of such Mortgaged Property
without a corresponding principal prepayment, or
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(iv) in the reasonable, good faith judgment of the Special Servicer,
materially impair the security for the Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph, but subject to the
following paragraph and the discussion under "--Controlling Class
Representative" below, the Special Servicer may--
(i) reduce the amounts owing under any Specially Serviced Mortgage Loan
by forgiving principal, accrued interest and/or any Prepayment
Premium or Yield Maintenance Charge,
(ii) reduce the amount of the Scheduled P&I Payment on any Specially
Serviced Mortgage Loan, including by way of a reduction in the
related Mortgage Rate,
(iii) forbear in the enforcement of any right granted under any Mortgage
Note or Mortgage relating to a Specially Serviced Mortgage Loan,
(iv) accept a principal prepayment on a Specially Serviced Mortgage Loan
during any Lockout Period, or
(v) extend the date on which any Balloon Payment is scheduled to be due
in respect of a Specially Serviced Mortgage Loan;
provided that (w) the related Borrower is in default with respect to the
Specially Serviced Mortgage Loan or, in the reasonable, good faith judgment of
the Special Servicer, such default is reasonably foreseeable, (x) in the
reasonable, good faith judgment of the Special Servicer, such modification,
waiver or amendment would increase the recovery to Certificateholders on a net
present value basis, (y) such modification, waiver or amendment does not result
in a tax being imposed on the Trust Fund or cause any REMIC created pursuant to
the Pooling Agreement to fail to qualify as a REMIC at any time the Certificates
are outstanding and (z) in connection with extending for more than six months
the date on which any Balloon Payment is scheduled to be due in respect of a
Specially Serviced Mortgage Loan, the Special Servicer has obtained an
appraisal, in accordance with the standards of the Appraisal Institute, of the
related Mortgaged Property, performed by an independent appraiser, in connection
with such extension, which appraisal supports the determination of the Special
Servicer contemplated by clause (x) of this proviso.
In no event, however, will the Special Servicer be permitted to
(i) extend the maturity date of a Mortgage Loan beyond a date that is
two years prior to the Rated Final Distribution Date,
(ii) extend the maturity date of any Mortgage Loan which has a Mortgage
Rate below the then prevailing interest rate for comparable loans,
as determined by the Special Servicer, unless such Mortgage Loan is
a Balloon Loan as to which the Borrower has failed to make the
Balloon Payment at its scheduled maturity and such Balloon Loan is
not a Specially Serviced Mortgage Loan (other than by reason of
failure to make the Balloon Payment) and has not been delinquent in
the preceding 12 months (other than with respect to the Balloon
Payment), in which case the Special Servicer may make up to three
one-year extensions at the then-existing Mortgage Rate for such
Mortgage Loan (provided that such limitation of extensions made at a
below market rate will not limit the ability of the Special Servicer
to extend the maturity date of any Mortgage Loan at an interest rate
at or in excess of the prevailing rate for comparable loans at the
time of such modification),
(iii) if the Mortgage Loan is secured by a ground lease (but not the
related fee interest), extend the maturity date of such Mortgage
Loan beyond a date which is less than 10 years prior to the
expiration of the term of such ground lease,
(iv) reduce the Mortgage Rate to a rate below the then-prevailing
interest rate for comparable loans, as determined by the Special
Servicer, or
(v) defer interest due on any Mortgage Loan in excess of 10% of the
unpaid principal balance of such Mortgage Loan or defer the
collection of interest on any Mortgage Loan without accruing
interest on such deferred interest at a rate at least equal to the
Mortgage Rate of such Mortgage Loan.
The Special Servicer and Master Servicer will each be required to notify
the Trustee and the Master Servicer of any modification, waiver or amendment of
any term of any Mortgage Loan, and to deliver to the Trustee (with a copy to be
delivered to or retained by, as applicable, the Master Servicer), for deposit in
the related Mortgage File, an original counterpart of the agreement related to
such modification, waiver or amendment, promptly (and in any event within 10
business days) following the execution thereof. Upon reasonable prior written
notice to the Trustee, copies of each agreement whereby any such modification,
waiver or amendment of any term of any
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Mortgage Loan is effected are required to be available for review during normal
business hours at the offices of the Trustee. See "Description of the Offered
Certificates--Reports to Certificateholders; Available Information" in this
Prospectus Supplement.
Custodial Account
General. The Master Servicer will be required to establish and maintain
one or more separate accounts for purposes of holding payments and other
collections in respect of the Mortgage Loans (collectively, the "Custodial
Account"). The Custodial Account must be established in such a manner and/or
with such a depository as are specified in the Pooling Agreement or, as
confirmed in writing by each Rating Agency, as would not cause a qualification,
downgrade or withdrawal of any of the ratings then assigned by such Rating
Agency to any Class of Certificates (any account meeting such criteria, an
"Eligible Account"). The funds held in the Custodial Account may be held as cash
or invested in Permitted Investments.
Any interest or other income earned on funds in the Custodial Account will
be paid to the Master Servicer as additional compensation subject to the
limitations set forth in the Pooling Agreement. See "--Servicing and Other
Compensation and Payment of Expenses" above.
Deposits. Under the Pooling Agreement, the Master Servicer must deposit or
cause to be deposited in the Custodial Account within one business day following
receipt (in the case of payments and other collections on the Mortgage Loans) or
as otherwise required under the Pooling Agreement, the following payments and
collections received or made by or on behalf of the Master Servicer subsequent
to the Closing Date (other than in respect of Scheduled P&I Payments due on the
Mortgage Loans on or before the Cut-off Date, which belong to the Depositor):
(i) all payments on account of principal on the Mortgage Loans,
including principal prepayments;
(ii) all payments on account of interest on the Mortgage Loans, including
Default Interest and Additional Interest;
(iii) all Prepayment Premiums, Yield Maintenance Charges and late payment
charges collected in respect of the Mortgage Loans;
(iv) (A) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to a Mortgaged
Property or the related Mortgage Loan (collectively with any
comparable amounts received with respect to an REO Property,
"Insurance Proceeds"), other than any such proceeds applied to the
restoration of the property or otherwise released to the related
Borrower or another appropriate person, (B) all proceeds received in
connection with the condemnation or the taking by right of eminent
domain of a Mortgaged Property (collectively with any comparable
amounts received with respect to an REO Property, "Condemnation
Proceeds"), other than any such proceeds applied to the restoration
of the property or otherwise released to the related Borrower or
another appropriate person, and (C) all other amounts received and
retained in connection with the liquidation of defaulted Mortgage
Loans by foreclosure or otherwise (collectively with any amounts
received in connection with the sale of an REO Property and the
amounts described in clause (v) below, "Liquidation Proceeds");
(v) all cash proceeds paid in connection with (A) the repurchase of any
Mortgage Loan by the Depositor as described under "Description of
the Mortgage Pool--Cures and Repurchases" in this Prospectus
Supplement, (B) the purchase of any defaulted Mortgage Loan by any
party as described under "--Realization Upon Defaulted Mortgage
Loans; Sale of Defaulted Mortgage Loans and REO Properties" below
and (C) the purchase of all remaining Mortgage Loans and REO
Properties by the Depositor, the Master Servicer, the Special
Servicer, the Underwriter or the Dominant Controlling Class
Certificateholder as described under "Description of the Offered
Certificates--Termination" in this Prospectus Supplement;
(vi) any amounts required to be deposited by the Master Servicer in
connection with losses incurred with respect to Permitted
Investments of funds held in the Custodial Account;
(vii) all payments required to be deposited by the Master Servicer or the
Special Servicer in the Custodial Account with respect to any
deductible clause in any blanket insurance policy described under
"--Maintenance of Insurance" below;
(viii) any amount required to be transferred from the REO Account (if
established); and
(ix) any other amounts required to be so deposited under the Pooling
Agreement.
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Upon receipt of any of the amounts described in clauses (i) through (v)
above with respect to any Specially Serviced Mortgage Loan, the Special Servicer
is generally required to promptly remit such amounts to the Master Servicer for
deposit in the Custodial Account.
Withdrawals. The Master Servicer may make withdrawals from the Custodial
Account for any of the following purposes (the order set forth below not
constituting an order of priority for such withdrawals):
(i) to remit to the Trustee on or before the Distribution Date each
month an amount generally equal to that portion of the Available
Distribution Amount (as defined under "Description of the Offered
Certificates--Distributions" in this Prospectus Supplement) for the
related Distribution Date then on deposit in the Custodial Account,
together with certain amounts to be paid or reimbursed to the
Trustee from the Collection Account and any Prepayment Premiums,
Yield Maintenance Charges and/or Additional Interest received during
the related Collection Period;
(ii) to apply amounts held for future distribution on the Certificates to
make P&I Advances;
(iii) to reimburse the Fiscal Agent, the Trustee or itself (in that
order), as applicable, for unreimbursed P&I Advances (other than P&I
Advances that constitute Nonrecoverable Advances (as defined below),
which are reimbursable as described in clause (viii) below) made
thereby (in each case, with its own funds), such reimbursement to be
made out of Related Proceeds;
(iv) to pay itself earned and unpaid Master Servicing Fees in respect of
each Mortgage Loan (including each Specially Serviced Mortgage Loan
and each REO Mortgage Loan), such payment being limited to amounts
received on or in respect of such Mortgage Loan that are allocable
as a recovery of interest thereon (or, if there has been a final
liquidation of such Mortgage Loan and any related REO Property, such
payment to be made out of general collections on the other Mortgage
Loans and REO Properties);
(v) to pay the Special Servicer, out of general collections on the
Mortgage Loans and any REO Properties, Special Servicing Fees in
respect of each Specially Serviced Mortgage Loan and each REO
Mortgage Loan;
(vi) to pay the Special Servicer (or, if applicable, a predecessor
thereto) earned and unpaid Workout Fees and Liquidation Fees to
which it is entitled as and from the sources described under
"--Servicing and Other Compensation and Payment of Expenses" above;
(vii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, for any unreimbursed
Servicing Advances made thereby (in each case, with its own funds),
such reimbursement to be made out of Related Proceeds;
(viii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, out of general collections
on the Mortgage Loans and REO Properties, for any unreimbursed
Advances made thereby (in each case, with its own funds) that have
been determined not to be ultimately recoverable from Related
Proceeds (any such Advance, a "Nonrecoverable Advance");
(ix) to pay the Fiscal Agent, the Trustee, the Special Servicer or itself
(in that order), as applicable, unpaid interest on any Advance made
thereby, such payment to be made out of Default Interest and late
payment charges received (A) in respect of the Mortgage Loan as to
which such Advance was made and (B) during the Collection Period in
which such Advance is reimbursed;
(x) following such time as it reimburses the Fiscal Agent, the Trustee,
the Special Servicer or itself, as applicable, for any unreimbursed
Advance as described in clause (iii), (vii) or (viii) above, to pay
the Fiscal Agent, the Trustee, the Special Servicer or itself (in
that order), as the case may be, out of general collections on the
Mortgage Loans and any REO Properties, any interest accrued and
payable on such Advance and not otherwise payable pursuant to clause
(ix) above;
(xi) to pay, out of general collections on the Mortgage Loans and any REO
Properties, for costs and expenses incurred by the Trust Fund in
connection with environmental remediation as described under
"--Realization Upon Defaulted Mortgage Loans; Sale of Defaulted
Mortgage Loans and REO Properties" below;
(xii) to pay itself, as additional servicing compensation, (A) interest
and investment income earned in respect of amounts held in the
Custodial Account, (B) any Prepayment Interest Excesses collected in
respect of the Mortgage Loans and (C) to the extent not otherwise
applied to cover interest on Advances, any Default Interest and late
payment charges received in respect of Mortgage Loans that are not
Specially Serviced Mortgage Loans or REO Mortgage Loans;
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(xiii) to pay the Special Servicer, as additional servicing compensation,
any Default Interest and late payment charges received in respect of
Specially Serviced Mortgage Loans and REO Mortgage Loans and not
otherwise applied to cover interest on Advances;
(xiv) to pay, out of general collections on the Mortgage Loans and any REO
Properties, for the cost of an independent appraiser or other expert
in real estate matters as required under the Pooling Agreement;
(xv) to pay itself, the Special Servicer, the Depositor, or any of their
respective directors, officers, employees and agents, as the case
may be, out of general collections on the Mortgage Loans and any REO
Properties, amounts payable to any such person as described under
"--Certain Matters Regarding the Depositor, the Master Servicer and
the Special Servicer" below;
(xvi) to pay, out of general collections on the Mortgage Loans and any REO
Properties, for the cost of certain advice of counsel and tax
accountants, the cost of certain opinions of counsel, the cost of
recording the Pooling Agreement and the cost of the Trustee's
transferring Mortgage Files to a successor after having been
terminated by Certificateholders without cause, all as set forth in
the Pooling Agreement;
(xvii) with respect to each Mortgage Loan purchased pursuant to or as
contemplated by the Pooling Agreement, to pay to the purchaser
thereof all amounts received thereon subsequent to the date of
purchase;
(xviii) to pay certain servicing expenses that would, if advanced,
constitute Nonrecoverable Advances, but the payment of which is
determined nonetheless to be in the best interests of the
Certificateholders; and
(xix) to clear and terminate the Custodial Account upon the termination of
the Pooling Agreement.
The Controlling Class Representative
Selection. The Pooling Agreement permits the Holder or Holders of the
majority of the Voting Rights (as defined under "Description of the Offered
Certificates--Voting Rights" in this Prospectus Supplement) allocated to the
Controlling Class of Certificates to select a representative (the "Controlling
Class Representative") from whom the Special Servicer will seek advice and
approval and take direction under certain circumstances. In addition, if the
Controlling Class of Certificates is held in book-entry form and confirmation of
the identities of the related beneficial owners has been provided to the
Trustee, such beneficial owners entitled to a majority of the Voting Rights
allocated to the Controlling Class will be entitled to directly select a
Controlling Class Representative. The "Controlling Class" of Certificates is the
Class of Principal Balance Certificates with the latest alphabetical Class
designation that has a Certificate Balance that is greater than 25% of its
original Certificate Balance. However, if no Class of Principal Balance
Certificates has a Certificate Balance that is greater than 25% of its original
Certificate Balance, the then outstanding Class of Principal Balance Certificate
with the latest alphabetical Class designation will be the "Controlling Class"
of Certificates. The Class A-1-a, Class A-1-b and Class A-2 Certificates will be
treated as one Class for determining the Controlling Class of Certificates.
Certain Rights and Powers. The Controlling Class Representative will be
entitled to advise the Special Servicer with respect to the following actions of
the Special Servicer, and except as otherwise described below, the Special
Servicer will not be permitted to take any of the following actions as to which
the Controlling Class Representative has objected in writing within 10 business
days of having been notified thereof and having been provided with all
reasonably requested information with respect thereto:
(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, amendment or waiver of a monetary term (including
the timing of payments) or any material non-monetary term of a
Mortgage Loan;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust as
described under "Description of the Offered
Certificates--Termination" in this Prospectus Supplement) for less
than the applicable Purchase Price;
(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
material located at an REO Property;
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(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 waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
(ix) any acceptance of an assumption agreement releasing a Borrower from
liability under a Mortgage Loan.
In addition, except as otherwise described below, the Controlling Class
Representative may direct 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.
Notwithstanding the foregoing, no such advise, direction or objection
contemplated by either of the two preceding paragraphs may require or cause the
Special Servicer to violate any provision of the Pooling Agreement, including
the Special Servicer's obligation to act in accordance with the Servicing
Standard.
Limitation on Liability of Controlling Class Representative. The
Controlling Class Representative will not be liable 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
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of 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 grossly 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.
Realization Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and
REO Properties
A Borrower'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 Borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payments of taxes and to otherwise maintain and insure the
related Mortgaged Property. In general, the 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 Borrower if cure is likely, inspect the related Mortgaged
Property and take such other actions as are consistent with the Servicing
Standard. 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 may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the Borrower, 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 Borrower files a bankruptcy
petition, the Special Servicer may not be permitted to accelerate the maturity
of the related Mortgage Loan or to foreclose on the Mortgaged Property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans" in
the Prospectus.
The Pooling Agreement grants to the Master Servicer, the Special Servicer
and the Dominant Controlling Class Certificateholder a right to purchase from
the Trust certain defaulted Mortgage Loans in the priority described below. If
the Special Servicer has determined, in its good faith and reasonable judgment,
that any defaulted Mortgage Loan will become subject to foreclosure or similar
proceedings, the Special Servicer will be required to give prompt written notice
of such determination to the Trustee and the Master Servicer. The Trustee will
be required, within 10 days after receipt of such notice, to provide a similar
notice to the Dominant Controlling Class Certificateholder. Upon receipt of such
notice and for a period of 30 days thereafter, the Dominant Controlling Class
Certificateholder may (but will not be obligated to) purchase any such defaulted
Mortgage Loan from the Trust, at a price equal to the applicable Purchase Price.
If such Certificateholder has not purchased such defaulted Mortgage Loan within
30 days of its having received notice in respect thereof, either the Special
Servicer or the Master Servicer, in that order of priority, may (but is not
obligated to) purchase such defaulted Mortgage Loan from the Trust, at a price
equal to the applicable Purchase Price. Despite the right of the Master
Servicer, the Special Servicer and/or the
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Dominant Controlling Class Certificateholder to purchase any defaulted Mortgage
Loan, the Special Servicer need not delay foreclosure or similar proceedings
with respect to such Mortgage Loan.
The Special Servicer, at any time, may offer to sell any defaulted
Mortgage Loan that has not otherwise been purchased as described in the prior
paragraph, if such a sale would be in the best economic interests of the Trust.
Such offer is to be made in a commercially reasonable manner for a period of not
less than 10 days. Subject to any rights that the Controlling Class
Representative may have to object if the winning bid is not at least equal to
the applicable Purchase Price, the Special Servicer will be permitted to accept
any cash offer that constitutes a "fair price" (determined in accordance with
the Pooling Agreement) for the particular Mortgage Loan. See "--Controlling
Class Representative--Certain Rights and Powers" above.
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). In
addition, subject to any rights that the Controlling Class Representative may
have to object if the winning bid is not at least equal to the applicable
Purchase Price, 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.
The Special Servicer will be required to exercise reasonable efforts,
consistent with the Servicing Standard and the discussion under "--Controlling
Class Representative--Certain Rights and Powers" above, to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments and
which are not sold as described above. Notwithstanding the foregoing, the
Special Servicer may not, on behalf of the Trust, obtain title to a Mortgaged
Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any
other action with respect to any Mortgaged Property, if, as a result of any such
action, the Trustee, on behalf of the Certificateholders, could, in the
reasonable, good faith judgment of the Special Servicer exercised in accordance
with the Servicing Standard, be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of CERCLA or any comparable law, unless:
(i) the Special Servicer has previously determined in accordance
with the Servicing Standard, 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, (A) 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, and
(B) the Controlling Class Representative has not objected to the Special
Servicer's doing so (or, if the Controlling Class Representative has
objected, such objection is, in the Special Servicer's judgment, contrary
to the Servicing Standard). See "--Controlling Class
Representative--Certain Rights and Powers" above and "Certain Legal
Aspects of Mortgage Loans--Environmental Matters" in the Prospectus.
The cost of any environmental testing will be covered by, and reimbursable
as, a Servicing Advance, and the cost of any remedial, corrective or other
further action contemplated by clause (ii) of the preceding paragraph will be
payable directly out of the Custodial Account.
If neither of the conditions set forth in clauses (i) and (ii) of the
second preceding paragraph has been satisfied with respect to any Mortgaged
Property securing a defaulted Mortgage Loan, the Special Servicer will be
required to take such action as is in accordance with the Servicing Standard
(other than proceeding against the Mortgaged Property). In connection therewith,
the Special Servicer may, on behalf of the Trust, release all or a portion of
such Mortgaged Property from the lien of the related Mortgage; provided that, if
such Mortgage Loan has a then outstanding principal balance greater than $1
million, then prior to effecting such release, (i) the Special Servicer must
have notified the Trustee, among others, (ii) the Trustee must have notified the
Certificateholders, (iii) the Holders of Certificates entitled to a
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majority of the Voting Rights must not have objected to such release within 30
days of their having been so notified thereof and (iv) the Controlling Class
Representative must not have objected to such release or, if it did, such
objection was, in the Special Servicer's judgment, inconsistent with the
Servicing Standard.
REO Properties
If title to any Mortgaged Property is acquired by the Special Servicer on
behalf of the Trust, the Special Servicer will be required to sell such
Mortgaged Property not later than the end of the third calendar year following
the year of acquisition, unless--
o the Internal Revenue Service grants an extension of time to sell
such property (an "REO Extension"), or
o the Special Servicer obtains an opinion of independent counsel
generally to the effect that the holding of such property subsequent
to the end of the third calendar year following the year in which
such acquisition occurred will not result in the imposition of a tax
on the Trust or cause any REMIC created under the Pooling Agreement
to fail to qualify as a REMIC under the Code.
Subject to the foregoing, the Special Servicer will generally be required
to solicit cash offers for any REO Property in such a manner as will be
reasonably likely to realize a fair price for such property. The Special
Servicer may retain an independent contractor to operate and manage any REO
Property. The retention of an independent contractor will not relieve the
Special Servicer of its obligations with respect to such REO Property.
In general, the Special Servicer or an independent contractor employed by
the Special Servicer at the expense of the Trust will be obligated to operate
and manage any Mortgaged Property acquired as REO Property in a manner that (i)
maintains its status as "foreclosure property" under the REMIC Provisions (as
defined in the Prospectus) and (ii) would, to the extent commercially reasonable
and consistent with the foregoing clause (i), maximize the Trust's net after-tax
proceeds from such property. After the Special Servicer reviews the operation of
such property and consults with the Trustee (or any person appointed thereby to
act as REMIC administrator) to determine the Trust's federal income tax
reporting position with respect to the income it is anticipated that the Trust
would derive from such property, the Special Servicer could determine
(particularly in the case of an REO Property that is a hotel or residential
health-care facility) 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", within the meaning of Section
857(b)(4)(B) of the Code, or a tax on "prohibited transactions" under Section
860F of the Code (either such tax referred to in this Prospectus Supplement as
an "REO Tax"). To the extent that income the Trust receives from an REO Property
is subject to--
o (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%), or
o (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". Any REO Tax imposed on the
Trust's income from an REO Property would reduce the amount available for
distribution to Certificateholders. See "Federal Income Tax Consequences" in
this Prospectus Supplement and "Federal Income Tax Considerations" in the
Prospectus. The reasonable "out-of-pocket" costs and expenses of obtaining
professional tax advice in connection with the foregoing will be payable out of
the Custodial Account.
One Mortgage Loan, representing 0.27% of the Initial Loan Balance, is
secured by a Mortgaged Property located in Puerto Rico. In the case of an REO
Property located in Puerto Rico, if the Trust were engaged in a trade or
business in Puerto Rico, the Trust would be subject to Puerto Rican income tax
with respect to income from such REO Property. If the Trust were not engaged in
a trade or business in Puerto Rico, it would not be subject to Puerto Rican
income tax on income from an REO Property located in Puerto Rico; however,
income received from such REO Property, such as rental payments, would be
subject to a Puerto Rican withholding tax at a rate of 29%. Gain on a sale by
the Trust of REO Property located in Puerto Rico may be subject to Puerto Rican
income tax at a rate of 29%, which may be collected through withholding. For
purposes of computing gain on the sale of such property, the Trust's tax basis
in the property will reflect its original cost to the Trust plus the cost of any
permanent improvements. The imposition of any of these Puerto Rican taxes on the
Trust could reduce the net proceeds available for distribution with respect to
the Certificates. In addition, holders of Certificates would not be entitled to
claim foreign tax credits for federal income tax purposes with respect to any
such Puerto Rican tax imposed on the Trust.
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The Special Servicer will be required to segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Property is acquired, the
Special Servicer will be required to establish and maintain one or more accounts
(collectively, the "REO Account"), to be held on behalf of the Trustee in trust
for the benefit of the Certificateholders, for the retention of revenues and
other proceeds derived from each REO Property. The REO Account is to be an
Eligible Account. The Special Servicer will be required to deposit, or cause to
be deposited, in the REO Account, upon receipt, all net income, Insurance
Proceeds, Condemnation Proceeds and Liquidation Proceeds received in respect of
an REO Property. The funds held in the REO Account may be held as cash or
invested in Permitted Investments. Any interest or other income earned on funds
in the REO Account will be payable to the Special Servicer, subject to the
limitations set forth in the Pooling Agreement.
The Special Servicer will be required to withdraw from the REO Account
funds necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. Promptly following the end of
each Collection Period, the Special Servicer will be required to withdraw from
the REO Account and deposit, or deliver to the Master Servicer for deposit, into
the Custodial Account the aggregate of all amounts received in respect of each
REO Property during such Collection Period, net of (i) any withdrawals made out
of such amounts as described in the preceding sentence and (ii) any portion of
such amounts that may be retained as reserves as described in the next sentence.
The Special Servicer may, subject to certain limitations set forth in the
Pooling Agreement, retain in the REO Account such portion of such proceeds and
collections as may be necessary to maintain a reserve of sufficient funds for
the proper operation, management, leasing, maintenance and disposition of the
related REO Property (including the creation of a reasonable reserve for
repairs, replacements, necessary capital improvements and other related
expenses).
Inspections; Collection of Operating Information
The Special Servicer will be required at its expense to perform or cause
to be performed a physical inspection of a Mortgaged Property as soon as
practicable after the related Mortgage Loan becomes a Specially Mortgage Loan
and periodically thereafter for so long as the related Mortgage Loan remains a
Specially Serviced Mortgage Loan. In addition, the Special Servicer must at its
expense perform or cause to be performed a physical inspection of each of the
REO Properties at least once per calendar year. The Master Servicer will be
required at its expense to perform or cause to be performed a physical
inspection of each Mortgaged Property securing a non-Specially Serviced Mortgage
Loan (i) at least once every three calendar years in the case of Mortgaged
Properties securing Credit Lease Loans, (ii) at least once every two calendar
years in the case of Mortgage Loans that have outstanding principal balances of
$2,000,000 or less and (iii) at least once every calendar year in the case of
all other such Mortgaged Properties. The Master Servicer and the Special
Servicer will each be required to prepare or cause to be prepared and deliver to
the Trustee a written report of each such inspection performed by it that
generally describes the condition of the Mortgaged Property and that specifies
the existence of any sale, transfer or abandonment of the Mortgaged Property or
any material change in its condition or value.
The Special Servicer, in the case of any Specially Serviced Mortgage
Loans, and the Master Servicer, in the case of all other Mortgage Loans, will
also be required to use reasonable efforts to collect from the related Borrowers
(and, in the case of the Special Servicer, to deliver to the Master Servicer)
and review the quarterly and annual operating statements and rent rolls with
respect to each of the Mortgaged Properties and REO Properties. In connection
therewith, with respect to each Mortgaged Property and REO Property, the Master
Servicer will be required to prepare (based on reports generated by itself and
the Special Servicer) and deliver to the Trustee a Comparative Financial Status
Report for, or as of the end of, the applicable period. See "Description of the
Offered Certificates--Reports to Certificateholders; Available Information" in
this Prospectus Supplement. Each of the Mortgages requires the related Borrower
to deliver an annual property operating statement. However, there can be no
assurance that any operating statements required to be delivered will in fact be
delivered, nor are the Master Servicer and the Special Servicer likely to have
any practical means of compelling such delivery in the case of an otherwise
performing Mortgage Loan.
Replacement of the Master Servicer or the Special Servicer
The Pooling Agreement will permit the Depositor to terminate the initial
Master Servicer and appoint a successor thereto at any time before the third
anniversary of the Closing Date, subject to certain conditions. The Pooling
Agreement will also 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 termination and appointment of a successor master servicer or
special servicer will be subject to, among other things, the Trustee's receipt
of--
o written confirmation from each Rating Agency that the appointment of
such successor will not result in a qualification, downgrade or
withdrawal of any of the ratings then assigned thereby to the
respective Classes of Certificates, and
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<PAGE>
o the written agreement of the proposed Master Servicer or 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 thereof.
If the Controlling Class of Certificates is held in book-entry form and
confirmation of the identities of the related beneficial owners has been
provided to the Trustee, such beneficial owners entitled to a majority of the
Voting Rights allocated to the Controlling Class will be entitled to directly
replace the Special Servicer.
Maintenance of Insurance
The Pooling Agreement will require the Master Servicer (with respect to
Mortgage Loans other than Specially Serviced Loans) and the Special Servicer
(with respect to Specially Serviced Mortgage Loans) to use reasonable efforts,
consistent with the Servicing Standard, to cause to be maintained for each
Mortgaged Property all insurance coverage as is required under the related
Mortgage. The Pooling Agreement will further provide that--
o if and to the extent that any such Mortgage permits the holder
thereof any discretion (by way of consent, approval or otherwise) as
to the insurance coverage that the related Borrower is required to
maintain, the Master Servicer or the Special Servicer, as the case
may be, must exercise such discretion in a manner consistent with
the Servicing Standard; and
o if and to the extent that a Mortgage so permits, the Master Servicer
or the Special Servicer, as the case may be, must use reasonable
efforts to cause the related Borrower to obtain the required
insurance coverage from insurance companies or security or bonding
companies qualified to write the related insurance policy in the
relevant jurisdiction ("Qualified Insurers") that have a "claims
paying ability" or "financial strength" rating meeting the
requirements of the Pooling Agreement.
The Dominant Controlling Class Certificateholder may request that earthquake
insurance be secured for one or more Mortgaged Properties at its expense, to the
extent such insurance may reasonably be obtained.
The Special Servicer will be required, consistent with the Servicing
Standard, to cause to be maintained for each REO Property no less insurance
coverage than was previously required of the applicable Borrower under the
related Mortgage.
If either the Master Servicer or the Special Servicer obtains and
maintains a blanket policy insuring against hazard losses on all of the Mortgage
Loans and/or REO Properties that it is required to service and administer, then,
to the extent such policy (i) is obtained from a Qualified Insurer having a
"claims-paying ability" or "financial strength" rating that meets (or the
obligations of which are guaranteed by an entity having such a rating that
meets) the requirements of the Pooling Agreement and (ii) provides protection
equivalent to the individual policies otherwise required, the Master Servicer or
the Special Servicer, as the case may be, will be deemed to have satisfied its
obligation to cause hazard insurance to be maintained on the related Mortgaged
Properties and/or REO Properties. Such blanket policy may contain a customary
deductible clause, except that if there has not been maintained on the related
Mortgaged Property or REO Property an individual hazard insurance policy
complying with the requirements described in the preceding two paragraphs, and
there occur one or more losses that would have been covered by such individual
policy, then the Master Servicer or Special Servicer, as appropriate, must
promptly deposit into the Custodial Account from its own funds the amount of
such losses that would have been so covered by an individual policy but are not
covered under the blanket policy because of such deductible clause.
Certain Matters Regarding the Depositor, the Master Servicer and the Special
Servicer
Any entity serving as Master Servicer or Special Servicer under the
Pooling Agreement may have other normal business relationships with the
Depositor or the Depositor's affiliates. The Pooling Agreement will permit each
of the Master Servicer and the Special Servicer to resign from its obligations
thereunder (in such capacity) upon 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. Unless otherwise
required by applicable law, no such resignation will become effective until the
Trustee or other successor has assumed the obligations and duties of the
resigning Master Servicer or Special Servicer, as the case may be, under the
Pooling Agreement. The Master Servicer and the Special Servicer will each also
have the right to resign at any other time provided that--
(i) a willing successor thereto has been found,
(ii) each of the Rating Agencies confirms in writing that the successor's
appointment will not result in a qualification, downgrade or
withdrawal of any rating or ratings then assigned to any Class of
Certificates,
(iii) the resigning party pays all costs and expenses in connection with
such transfer, and
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(iv) the successor accepts appointment prior to the effectiveness of such
resignation.
Unless the long-term debt obligations thereof satisfy the ratings criteria
specified in the Pooling Agreement, the Master Servicer and Special Servicer
will each 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
Pooling Agreement.
The Pooling Agreement will provide that none of the Depositor, the Master
Servicer or the Special Servicer will be under any liability to the Trust, the
Trustee, the Fiscal Agent or the Certificateholders for any action taken, or not
taken, in good faith pursuant to the Pooling Agreement or for errors in
judgment, except that no such entity will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of obligations or duties thereunder. The Pooling
Agreement will further provide that the Depositor, the Master Servicer, the
Special Servicer and any director, officer, employee or agent of any of them
will be entitled to indemnification by the Trust Fund against any loss,
liability or reasonable expense incurred in connection with the Pooling
Agreement or the Certificates, other than any loss, liability or expense --
(i) that satisfies the criteria of a Servicing Advance (and which will
be reimbursable out of Related Proceeds);
(ii) that constitutes allocable overhead;
(iii) that, under generally accepted servicing practices in the commercial
real estate loan servicing industry, constitutes a normal and
customary servicing expense with respect to non-defaulted Mortgage
Loans;
(iv) specifically required to be borne by such party, without right of
reimbursement, pursuant to the terms thereof;
(iii) incurred in connection with any breach of a representation, warranty
or covenant made therein; or
(iv) incurred by reason of willful misfeasance, bad faith or negligence
in the performance of obligations or duties thereunder.
In addition, the Pooling Agreement will provide that none of the Depositor, the
Master Servicer or the Special Servicer will be under an obligation to appear
in, prosecute or defend any legal action unless (a) such action is related to
its respective responsibilities thereunder and (b) either (i) it is specifically
required to bear the expense of such action or (ii) such action will not, in its
opinion, involve it in any ultimate expense or liability for which it would not
be reimbursed under the Pooling Agreement. However, each of the Depositor, the
Master Servicer and the Special Servicer will 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
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 Trust, and the Depositor, the Master Servicer or the Special
Servicer, as the case may be, will be entitled to charge the Custodial Account
therefor.
Any person into which the Depositor, the Master Servicer or the Special
Servicer may be merged or consolidated, or any person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or the Special
Servicer is a party, or any person succeeding to the business (which may, in the
case of the Master Servicer or Special Servicer, be limited to the commercial
loan servicing business) of the Depositor, the Master Servicer or the Special
Servicer, will be the successor of the Depositor, the Master Servicer or the
Special Servicer, as the case may be, under the Pooling Agreement; except that
no successor or surviving person will succeed to the rights of the Master
Servicer or the Special Servicer unless, among other things, such succession
will not result in any qualification, downgrade or withdrawal of the rating then
assigned by any Rating Agency to any Class of Certificates (as confirmed in
writing).
Events of Default
"Events of Default" under the Pooling Agreement will include each of the
following events, circumstances and conditions (and may include others):
(1) any failure by the Master Servicer or the Special Servicer to
deposit, or to remit to the appropriate party for deposit, into the
Custodial Account or REO Account, as applicable, any amount required
to be so deposited;
(2) any failure by the Master Servicer to remit to the Trustee for
deposit in the Collection Account any amount (other than a P&I
Advance) required to be so remitted, which continues unremedied as
of a specified time on the applicable Distribution Date;
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(3) any failure by the Master Servicer or the Special Servicer to timely
make any Servicing Advance required to be made by it under the
Pooling Agreement, which Servicing Advance remains unmade for a
period of three business days following the date on which notice has
been given to the Master Servicer or the Special Servicer, as the
case may be, by the Trustee as described under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of
Expenses" in this Prospectus Supplement;
(4) any failure by the Master Servicer or the Special Servicer duly to
observe or perform in any material respect any of its other
covenants or agreements under the Pooling Agreement, which failure
continues unremedied for 30 days after written notice of such
failure, requiring the same to be remedied, has been given to the
Master Servicer or the Special Servicer, as the case may be, by any
other party to the Pooling Agreement or to the Master Servicer or
the Special Servicer, as the case may be (with a copy to each other
party to the Pooling Agreement), by Certificateholders entitled to
not less than 25% of the Voting Rights, provided, however, that with
respect to any such failure which is not curable within such 30-day
period, the Master Servicer or the Special Servicer, as the case may
be, will be entitled to an additional cure period of thirty (30)
days to effect such cure so long as the Master Servicer or the
Special Servicer, as the case may be, has commenced to cure such
failure within the initial 30-day period and has provided the
Trustee with an officer's certificate certifying that it has
diligently pursued, and is continuing to pursue, a full cure;
(5) any breach by the Master Servicer or the Special Servicer of any of
its representations or warranties contained in the Pooling Agreement
that materially and adversely affects the interests of any Class of
Certificateholders and that continues unremedied for 30 days after
written notice of such breach, requiring the same to be remedied,
has been given to the Master Servicer or the Special Servicer, as
the case may be, by any other party to the Pooling Agreement, or to
the Master Servicer or the Special Servicer, as the case may be
(with a copy to each other party to the Pooling Agreement), by
Certificateholders entitled to not less than 25% of the Voting
Rights, provided, however, that with respect to any breach which is
not curable within such 30-day period, the Master Servicer or the
Special Servicer, as the case may be, will be entitled to an
additional cure period of thirty (30) days so long as the Master
Servicer or the Special Servicer, as the case may be, has commenced
to cure such breach within the initial 30-day period and has
provided the Trustee with an officer's certificate certifying that
it has diligently pursued, and is continuing to pursue, a full cure;
(6) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings in respect of or
relating to the Master Servicer or the Special Servicer and certain
actions by or on behalf of the Master Servicer or the Special
Servicer indicating its insolvency or inability to pay its
obligations;
(7) one or more ratings assigned by either Rating Agency to the
Certificates has been qualified, downgraded or withdrawn, or
otherwise made the subject of a "negative" credit watch, which such
Rating Agency has determined is a result of the Master Servicer or
Special Servicer, as the case may be, acting in such capacity; and
(8) the Master Servicer or the Special Servicer, as the case may be, is
no longer "approved" by either Rating Agency to act in such capacity
for pools of mortgage loans similar to the Mortgage Pool with
ratings similar to that of the Certificates.
When a single entity acts as Master Servicer and Special Servicer, an Event of
Default in one such capacity will constitute an Event of Default in the other
such capacity.
Rights Upon Event of Default
If an Event of Default described in clauses 1-6 under "--Events of
Default" above occurs with respect to the Master Servicer or the Special
Servicer and remains unremedied, the Trustee will be authorized, and at the
direction of Certificateholders entitled to not less than 25% of the Voting
Rights, the Trustee will be required, to terminate all of the rights and
obligations of the defaulting party under the Pooling Agreement and in and to
the Trust Fund other than any rights thereof as a Certificateholder (however,
termination based solely on an Event of Default described in clause 6 under
"--Events of Default" above may be unenforceable). If an Event of Default
described in clauses 7 and 8 under "--Events of Default" above occurs with
respect to the Master Servicer or the Special Servicer and remains unremedied,
the Trustee is required to terminate all of the rights and obligations of the
defaulting party under the Pooling Agreement and in and to the Trust Fund other
than any rights thereof as a Certificateholder. Upon any such termination, the
Trustee will succeed to all of the responsibilities, duties and liabilities of
the Master Servicer or Special Servicer, as the case may be, under the Pooling
Agreement and will be entitled to like compensation arrangements. If the Trustee
is unwilling to so act, it may (or, at the written request of Certificateholders
entitled to a majority of the Voting Rights, or if the Trustee is unable, or is
not approved by each Rating Agency, to act as a master servicer or special
servicer, as the case may be, the Trustee will be required to) appoint, or
petition a court of competent jurisdiction to appoint, an established mortgage
loan servicing institution to act as successor Master Servicer or Special
Servicer (subject in the case of successor Special Servicer, to the rights of
the Holders of Certificates evidencing a majority interest in the Controlling
Class to designate a successor
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Special Servicer), as the case may be, under the Pooling Agreement. Pending such
appointment, the Trustee will be obligated to act in such capacity.
Certificateholders entitled to at least 66-2/3% of the Voting Rights
allocated to each Class of Certificates affected by any Event of Default may
waive such Event of Default; except that an Event of Default described in
clauses 1, 2, 7 and 8 under "--Events of Default" above may only be waived by
all of the Certificateholders of the affected Classes. Upon any such waiver of
an Event of Default, such Event of Default will cease to exist and will be
deemed to have been remedied for every purpose under the Pooling Agreement.
No Certificateholder will have the right under the Pooling Agreement to
institute any proceeding with respect thereto unless such Holder previously has
given to the Trustee written notice of default and unless (except in the case of
a default by the Trustee) Certificateholders entitled to not less than 25% of
the Voting Rights shall have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and shall have offered to
the Trustee reasonable indemnity, and the Trustee for 60 days shall have
neglected or refused to institute any such proceeding. The Trustee, however,
will be under no obligation to exercise any of the trusts or powers vested in it
by the Pooling Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the
Certificateholders, unless in the Trustee's opinion, such Certificateholders
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
DESCRIPTION OF THE OFFERED CERTIFICATES
General
The Certificates will be issued on or about the Closing Date, pursuant to
the Pooling Agreement. They will represent in the aggregate the entire
beneficial ownership interest in the Trust. The assets of the Trust will
include:
o the Mortgage Loans;
o any and all payments under and proceeds of the Mortgage Loans
received after the Cut-off Date (exclusive of payments of principal,
interest and other amounts due thereon on or before the Cut-off
Date);
o the Mortgage Files for the Mortgage Loans;
o any REO Properties; and
o such funds or assets as from time to time are deposited in the
Collection Account (see "--Collection Account" below), the Custodial
Account, the Interest Reserve Account, and/or the REO Account.
The Certificates will include 19 separate Classes, eight (8) of which are
Classes of Offered Certificates and 11 of which are Classes of Private
Certificates. The tables below set forth the Class designation, the approximate
initial Certificate Balance or Notional Amount and the Pass-Through Rate (or, in
the case of the Class X Certificates, the initial Pass-Through Rate) for each
Class of Certificates.
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Offered Certificates
<TABLE>
<CAPTION>
Initial Approximate
Certificate Balance or Initial
Class Designation Notional Amount(1) Credit Support Pass-Through Rate
- ----------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
Class A-1-a $ 275,000,000 27.50% 5.870%
Class A-1-b $ 693,553,000 27.50% 6.210%
Class A-2 $ 500,000,000 27.50% 6.300%
Class B $ 106,343,000 22.25% 6.360%
Class C $ 106,344,000 17.00% 6.500%
Class D $ 121,535,000 11.00% 6.500%
Class E $ 30,384,000 9.50% 6.500%
Class X $2,025,590,706(2) N/A 0.564%(3)
</TABLE>
- ------------
(1) The initial Certificate Balance or Notional Amount of any Class of Offered
Certificates may be as much as 5% larger or smaller than the aggregate
principal balance or notional amount, as the case may be, shown above.
(2) Notional Amount. The Class X Certificates will not have a Certificate
Balance.
(3) The Pass-Through Rate shown above for the Class X Certificates is the rate
applicable for the Distribution Date in December 1998. The Pass-Through
Rate for the Class X Certificates is variable and will be calculated
pursuant to a formula described under "--Distributions--Calculations of
Pass-Through Rates" below.
Private Certificates(1)
Approximate
Initial Initial
Class Designation Certificate Balance(2) Credit Support Pass-Through Rate
- ----------------- ---------------------- -------------- -----------------
Class F $50,640,000 7.00% 6.000%
Class G $45,576,000 4.75% 5.600%
Class H $15,192,000 4.00% 5.600%
Class J $20,255,000 3.00% 5.600%
Class K $10,128,000 2.50% 5.600%
Class L $15,192,000 1.75% 5.600%
Class M $10,128,000 1.25% 5.600%
Class N $25,320,706 N/A 5.600%
- -------------
(1) The Private Certificates will also include three Classes of REMIC Residual
Certificates, designated as the Class R-I, Class R-II and Class R-III
Certificates. The Class R-I, Class R-II and Class R-III Certificates do
not have Certificate Balances, Notional Amounts or Pass-Through Rates.
(2) The initial Certificate Balance of any Class of Private Certificates may
be as much as 5% larger or smaller than the aggregate principal balance
shown above.
The "Certificate Balance" of any Class of Principal Balance Certificates
will represent the aggregate distributions of principal to which the Holders of
such Certificates are entitled over time out of payments (or Advances in lieu
thereof) and other collections on the assets of the Trust. On each Distribution
Date, the Certificate Balance of each Class of Principal Balance Certificates
will be permanently reduced by any distributions of principal actually made with
respect to such Class of Certificates on such Distribution Date. On any
particular Distribution Date, the Certificate Balance of a Class of Principal
Balance Certificates may also be permanently reduced as and to the extent
described under "--Allocations of Realized Losses and Certain Other Shortfalls
and Expenses" below, in connection with Realized Losses and Additional Trust
Fund Expenses (each as defined in such section).
The Class X Certificates will not have a Certificate Balance or entitle
the holders thereof to receive distributions of principal. The "Notional Amount"
of the Class X Certificates will represent the principal amount on which
interest will accrue in respect of such Class from time to time. The Notional
Amount of the Class X Certificates will equal the aggregate of the Certificate
Balances of the respective Classes of Principal Balance Certificates outstanding
from time to time. Each such Certificate Balance will constitute a separate
component (a "Component") of the Class Notional Amount of the Class X
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 Principal Balance Certificates (e.g., the Certificate Balance
of the Class A-1-a Certificates outstanding from time to time will constitute
Component A-1-a of the Notional Amount of the Class X Certificates)).
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A Class of Offered Certificates will be considered to be outstanding until
its Certificate Balance or Notional Amount, as the case may be, is reduced to
zero. Under very limited circumstances, however, the prior Holders thereof may
thereafter be entitled to certain payments in reimbursement of any reductions
made in the Certificate Balance, if any, of such Class of Certificates as
described under "--Allocations of Realized Losses and Certain Other Shortfalls
and Expenses" below, in connection with Realized Losses and Additional Trust
Fund Expenses.
As described under "Federal Income Tax Consequences" in this Prospectus
Supplement, the Class R-I, Class R-II and Class R-III Certificates will
constitute REMIC residual interests and are referred to in this Prospectus
Supplement as the "Residual Interest Certificates". The remaining Certificates
will evidence REMIC regular interests and are referred to in this Prospectus
Supplement as the "Regular Interest Certificates".
The Depositor is only offering the Offered Certificates pursuant to this
Prospectus Supplement and the accompanying Prospectus. The Private Certificates
have not been registered under the Securities Act and are not being offered to
you. Accordingly, to the extent that this Prospectus Supplement contains
information regarding the terms of the Private Certificates, the Depositor has
provided such information because of its potential relevance to you as a
prospective purchaser of Offered Certificates.
Registration and Denominations
The Offered Certificates will be issued in book-entry form in original
denominations of:
o in the case of the Class X Certificates, $250,000 initial notional
amount and in any whole dollar denomination in excess thereof; and
o in the case of the other Offered Certificates, $10,000 initial
principal amount and in any whole dollar denomination in excess
thereof.
Each Class of Offered Certificates will initially be represented by one or
more Certificates registered in the name of the Cede & Co., as nominee of DTC.
You will not be entitled to receive a fully registered physical
certificate (a "Definitive Certificate") representing your interest in the
Offered Certificates, except under the limited circumstances described under
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates" in the Prospectus. Unless and until Definitive Certificates are
issued in respect of the Offered Certificates, beneficial ownership interests in
such Certificates will be maintained and transferred on the book-entry records
of DTC and its participating organizations (the "DTC Participants").
All references in this Prospectus Supplement to actions by Holders of the
Offered Certificates will refer to actions taken by DTC upon instructions
received from the related beneficial owners through their respective DTC
Participants in accordance with DTC procedures. In addition, all references in
this Prospectus Supplement to payments, notices, reports and statements to
Holders of the Offered Certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder thereof, for
distribution to the related beneficial owners through their respective DTC
Participants in accordance with DTC procedures.
As a result of the foregoing, you may experience certain delays in the
receipt of payments on your Certificates and may have difficulty in pledging
your Certificates. See "Description of the Securities--Book-Entry Registration"
in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Certificate Registrar") for purposes of providing for the registration of the
Offered Certificates and, if and to the extent Definitive Certificates are
issued in respect thereof, the registration of transfers and exchanges of the
Offered Certificates.
Collection Account
General. The Trustee will be required to establish and maintain one or
more accounts (collectively, the "Collection Account") for the distribution of
payments to the Certificateholders. Each such account is to be an Eligible
Account. The funds held in the Collection Account may be invested at the
direction of the Master Servicer (or as otherwise provided in the Pooling
Agreement) in Permitted Investments.
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Deposits. On or before the business day prior to each Distribution Date,
the Master Servicer will be required to deliver to the Trustee, for deposit in
the Collection Account, in immediately available funds, the amounts described in
clause (i) under "Servicing of the Mortgage Loans--Custodial
Account--Withdrawals". In addition, the Master Servicer will be required, as and
when provided in the Pooling Agreement, to deliver to the Trustee for deposit in
the Collection Account, any P&I Advances and/or Compensating Interest Payment
with respect to each Distribution Date. Furthermore, during March of each year,
the Trustee will transfer Interest Reserve Amounts in respect of the Actual/360
Mortgage Loans from the Interest Reserve Account to the Collection Account as
described under "--Distributions--Interest Reserve Account" below.
Withdrawals. The Trustee may, from time to time, make withdrawals from the
Collection Account for any of the following purposes, among others:
1. to make distributions to the Certificateholders on each Distribution
Date;
2. to pay itself the Trustee Fee (as defined under "--The Trustee"
below) each month;
3. to reimburse and/or indemnify itself and certain related persons as
described under "--The Trustee" below and to make certain comparable
reimbursements and/or indemnifications with respect to the Fiscal
Agent;
4. to pay the Master Servicer, as additional servicing compensation,
interest and other investment income earned in respect of amounts
held in the Collection Account;
5. to pay for the cost of certain opinions of counsel required under
the Pooling Agreement;
6. to pay any federal, state and local taxes imposed on the Trust, its
assets and/or transactions, together with all incidental costs and
expenses, to the extent required to be borne by the Trust Fund, all
as described under "Federal Income Tax Consequences--Possible Taxes
on Income from Foreclosure Property and Other Taxes" and "Servicing
of the Mortgage Loans--REO Properties" in this Prospectus Supplement
and as provided in the Pooling Agreement;
7. to transfer, during January (except in a leap year) and February of
each calendar year, Interest Reserve Amounts in respect of the
Actual/360 Mortgage Loans to the Interest Reserve Account as
described under "--Distributions--Interest Reserve Account" below;
and
8. to clear and terminate the Collection Account upon termination of
the Trust.
Seniority
The following chart sets forth the relative seniority of the respective
Classes of Certificates for purposes of--
o making distributions of interest and, if and when applicable,
distributions of principal, and
o allocating Realized Losses, Additional Trust Fund Expenses and Net
Aggregate Prepayment Interest Shortfalls.
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In general, each identified Class of Certificates will, for the
above-specified purposes, be subordinate to each other Class of Certificates, if
any, listed above it in the following chart.
Expanded Seniority Chart
----------------- ------------------
Class A-1-a,
Most Senior Class A-1-b -------------- Class A-2 Most Senior
and Class X | and Class X
----------------- | ------------------
|
|
-----------------
Class B
-----------------
|
-----------------
Class C
-----------------
|
-----------------
Class D
-----------------
|
-----------------
Class E
-----------------
|
-----------------
Class F
-----------------
|
-----------------
Class G
-----------------
|
-----------------
Class H
-----------------
|
-----------------
Class J
-----------------
|
-----------------
Class K
-----------------
|
-----------------
Class L
-----------------
|
-----------------
Class M
-----------------
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Class N
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Most Subordinate Classes of Residual Interest Certificates Most Subordinate
-----------------------------------------
The only form of credit support for any Class of Offered Certificates will
be the above-referenced subordination of the other Classes of Certificates
listed below it in the Expanded Seniority Chart, including all of the Private
Certificates.
Certain Relevant Characteristics of the Mortgage Loans
The following characteristics of the Mortgage Loans are, in addition to
those described elsewhere in this Prospectus Supplement, relevant to the
following discussions in this "Description of the Offered Certificates" section.
Mortgage Pass-Through Rate. The "Mortgage Pass-Through Rate" in respect of
any Mortgage Loan for any Distribution Date will, in general, equal--
o in the case of each 30/360 Mortgage Loan, the Mortgage Rate for such
Mortgage Loan as of the Cut-off Date minus the Administrative Cost
Rate for such Mortgage Loan, and
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o in the case of each Actual/360 Mortgage Loan, an annual rate
generally equal to (a) a fraction (expressed as a percentage), the
numerator of which is twelve (12) times the aggregate amount of
interest accrued (or, in the event of prepayments, that would have
accrued) in respect of such Mortgage Loan during the calendar month
immediately preceding the month in which such Distribution Date
occurs, and the denominator of which is the Stated Principal Balance
of such Mortgage Loan immediately prior to such Distribution Date,
minus (b) the Administrative Cost Rate for such Mortgage Loan;
provided that the numerator of the fraction described in clause (a)
above will, when the accrual of interest occurs during the calendar
months of December (except in a year preceding a leap year) and
January, be decreased by the amount of any Interest Reserve Amount
transferred from the Collection Account to the Interest Reserve
Account in respect of such Mortgage Loan in the following calendar
month and will, when the accrual of interest occurs during the
calendar month of February, be increased by the Interest Reserve
Amounts to be transferred from the Interest Reserve Account to the
Collection Account in respect of such Mortgage Loan in the following
calendar month. See "--Distributions--Interest Reserve Account"
below.
Stated Principal Balance. The "Stated Principal Balance" of each Mortgage
Loan will initially equal its Cut-off Date Balance and will permanently be
reduced on each Distribution Date (to not less than zero) by--
o that portion, if any, of the Principal Distribution Amount for such
Distribution Date that is attributable to such Mortgage Loan (see
"--Distributions--Calculation of the Principal Distribution Amount"
below), and
o the principal portion of any Realized Loss incurred in respect of
such Mortgage Loan during the related Collection Period (see
"--Allocation of Realized Losses and Certain Other Shortfalls and
Expenses" below).
Distributions
General. Subject to available funds, the Trustee will, in general, make
all distributions required to be made on the Certificates on each Distribution
Date to the Certificateholders of record as of the close of business on the
related Record Date. Notwithstanding the foregoing, the final distribution of
principal and/or interest on any Regular Interest 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.
In order to receive its distributions by wire transfer, a
Certificateholder must provide the Trustee with written wiring instructions no
less than five business days prior to the related Record Date. Otherwise, such
Certificateholder will receive its distributions by check mailed to it.
Until Definitive Certificates are issued, Cede & Co. will be the
registered holder of your Certificates, and you will receive distributions on
your Certificates through your DTC Participant. See "--Registration and
Denominations" above.
Loan Groups. For purposes of calculating distributions on the Senior
Certificates, the Mortgage Pool has been divided into Loan Group 1 and Loan
Group 2. Loan Group 1 consists of 229 Mortgage Loans (the "Group 1 Mortgage
Loans"), representing 84.7% of the Initial Pool Balance, and Loan Group 2
consists of 56 Mortgage Loans (the "Group 2 Mortgage Loans"), representing 15.3%
of the Initial Pool Balance. Loan Group 2 includes all but eight of the
Multifamily Rental Properties, and Loan Group 1 includes all the Mortgaged
Properties not otherwise included in Loan Group 2.
The Available Distribution Amount. The aggregate amount available to make
distributions of interest and principal on the Certificates on each Distribution
Date is referred to in this Prospectus Supplement as the "Available Distribution
Amount". The Available Distribution Amount for any Distribution Date will
include--
(a) all payments and other collections on the Mortgage Loans and any REO
Properties that are on deposit in the Collection Account, the
Custodial Account and the REO Account 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) Scheduled P&I Payments due on a Due Date subsequent to the end
of the related Collection Period;
(ii) Prepayment Premiums, Yield Maintenance Charges and Additional
Interest (which are separately distributable on the
Certificates as described below in this Prospectus
Supplement);
(iii) all amounts that are payable or reimbursable to any person
other than the Certificateholders as described
under"--Collection Account--Withdrawals" above and "Servicing
of the Mortgage Loans--Custodial Account--Withdrawals" and
"--REO Properties" in this Prospectus Supplement.
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(iv) 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 Actual/360
Mortgage Loans that are to be transferred from the Custodial
Account to the Interest Reserve Account during such month and
held for future distribution; and
(v) amounts deposited in the Collection Account, the Custodial
Account and/or the REO Account in error;
(b) any P&I Advances and Compensating Interest Payments made with
respect to such Distribution Date; and
(c) if such Distribution Date occurs during March of any year, the
Interest Reserve Amounts with respect to the Actual/360 Mortgage
Loans that are transferred from the Interest Reserve Account to the
Certificate Account during such month.
See "--Distributions--Interest Reserve Account" and "--Allocations of
Realized Losses and Certain Other Shortfalls and Expenses" below.
For purposes of making distributions on the Senior Certificates on any
Distribution Date, the Available Distribution Amount for such date will be
divided into the "Loan Group 1 Distribution Amount" and the "Loan Group 2
Distribution Amount". The Loan Group 1 Distribution Amount for any Distribution
Date will consist of all amounts included in the Available Distribution Amount
for such date that are attributable to the Mortgage Loans constituting Loan
Group 1, and the Loan Group 2 Distribution Amount for any Distribution Date will
consist of all amounts included in the Available Distribution Amount for such
date that are attributable to the Mortgage Loans constituting Loan Group 2.
Interest Reserve Account. The Trustee will establish and maintain an
"Interest Reserve Account" in its name for the benefit of the
Certificateholders. During January (except in a leap year) and February of each
calendar year, beginning in 1999, the Trustee will, on or before the
Distribution Date in such month, withdraw from the Collection Account and
deposit in the Interest Reserve Account the Interest Reserve Amount with respect
to each Actual/360 Mortgage Loan as to which the Scheduled P&I Payment due in
such month was either received or advanced. The "Interest Reserve Amount" in
respect of any such Mortgage Loan for either such month will, in general, equal
one day's interest accrued at a per annum rate equal to 31/30 of the related
Mortgage Rate (net of the Administrative Cost Rate) on the Stated Principal
Balance of such Mortgage Loan immediately following the Distribution Date in the
preceding calendar month. During March of each calendar year, beginning in 1999,
the Trustee will, on or before the Distribution Date in such month, withdraw
from the Interest Reserve Account and deposit in the Collection Account any and
all Interest Reserve Amounts then on deposit in the Interest Reserve Account
with respect to the Actual/360 Mortgage Loans. All such Interest Reserve Amounts
that are so transferred from the Interest Reserve Account to the Collection
Account will be included in the Available Distribution Amount for the
Distribution Date during the month of transfer.
Calculations of Interest. Each Class of Regular Interest Certificates will
bear interest, such interest to accrue during each Interest Accrual Period based
upon--
o The Pass-Through Rate for such Class for the related Distribution
Date.
o The Certificate Balance or Notional Amount, as the case may be, of
such Class outstanding immediately prior to the related Distribution
Date.
o The assumption that each year consists of twelve 30-day months.
The total amount of interest accrued from time to time with respect to
each Class of Regular Interest Certificates is referred to in this Prospectus
Supplement as "Accrued Certificate Interest". However, less than the full amount
of Accrued Certificate Interest in respect of any Class of Regular Interest
Certificates for any Interest Accrual Period may be distributable thereon as a
result of the allocation of any Net Aggregate Prepayment Interest Shortfall for
the related Distribution Date. The portion of the Accrued Certificate Interest
in respect of any Class of Regular Interest Certificates for any Interest
Accrual Period that is actually distributable thereon is referred to in this
Prospectus Supplement as the "Distributable Certificate Interest" for such
Class. The Distributable Certificate Interest in respect of any Class of Regular
Interest Certificates for any Interest Accrual Period will equal the Accrued
Certificate Interest in respect of such Class for such Interest Accrual Period,
reduced (to not less than zero) by any portion of the Net Aggregate Prepayment
Interest Shortfall for the related Distribution Date that has been allocated to
such Class as described under "--Allocation of Realized Losses and Certain Other
Shortfalls and Expenses" below.
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Calculation of Pass-Through Rates. The Pass-Through Rate for each Class of
Principal Balance Certificates will be fixed at the rate per annum set forth
with respect to such Class in the tables under "--General" above.
The Pass-Through Rate applicable to the Class X Certificates for each
subsequent Distribution Date will equal the weighted average of the then
applicable Class X Strip Rates for the respective Components of the Class
Notional Amount of the Class X Certificates (weighted on the basis of the
relative sizes of such Components immediately prior to such Distribution Date).
The "Class X Strip Rate" in respect of any Component of the Class Notional
Amount of the Class X Certificates for any Distribution Date will equal the
excess, if any, of (i) the Weighted Average Mortgage Pass-Through Rate for such
Distribution Date, over (ii) the Pass-Through Rate then applicable to the Class
of Principal Balance Certificates whose Class Principal Balance constitutes such
Component.
The Residual Interest Certificates will not have Pass-Through Rates.
The "Weighted Average Mortgage Pass-Through Rate" for each Distribution
Date will, in general, equal the weighted average of the Mortgage Pass-Through
Rates in effect for all the Mortgage Loans for such Distribution Date (weighted
on the basis of such Mortgage Loans' respective Stated Principal Balances
immediately prior to such Distribution Date).
Calculation of the Principal Distribution Amount. The "Principal
Distribution Amount" for any Distribution Date represents the maximum amount of
principal distributable in respect of the Principal Balance Certificates for
such Distribution Date. The Principal Distribution Amount for any Distribution
Date will, in general, equal the aggregate (without duplication) of the
following:
(a) the aggregate of all payments of principal (other than voluntary
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 Scheduled P&I Payment due on or
before the Cut-off Date or on a Due Date subsequent to the end of the
related Collection Period;
(b) the aggregate of the principal portions of all Scheduled P&I
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) the aggregate of all voluntary principal prepayments received on
the Mortgage Loans during the related Collection Period;
(d) the aggregate of all other collections (including Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds) that were received
on or in respect of the Mortgage Loans during the related Collection
Period and that were identified and applied by the Master Servicer as
recoveries of principal thereof, in each case net of any portion of the
particular 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 aggregate of the principal portions of all P&I Advances made
in respect of the Mortgage Loans for such Distribution Date.
For purposes of making distributions of principal on the Class A-1-a,
Class A-1-b and Class A-2 Certificates on any Distribution Date, the Principal
Distribution Amount for such date will be divided into the "Loan Group 1
Principal Amounts" and the "Loan Group 2 Principal Amounts". The Loan Group 1
Principal Amounts for any Distribution Date will consist of all amounts
constituting the Principal Distribution Amount for such date that are
attributable to the Mortgage Loans included in Loan Group 1, and the Loan Group
2 Principal Amounts for any Distribution Date will consist of all amounts
included in the Principal Distribution Amount for such date that are
attributable to the Mortgage Loans constituting Loan Group 2.
Priority of Payments.
General. In general, distributions of interest and principal are to be
made to the Holders of the various Classes of Regular Interest Certificates
sequentially based on their relative seniority as depicted in the Expanded
Seniority Chart under "--Seniority" above. Accordingly, the Trustee will make
distributions of interest and principal on the Senior Certificates (that is, the
Class A-1-a, Class A-1-b, Class A-2 and Class X Certificates) prior to making
such distributions in respect of any other Class of Regular Interest
Certificates.
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Distributions of Interest and Principal on the Senior Certificates. On
each Distribution Date prior to the earlier of the Class A Principal
Distribution Cross-Over Date and the final Distribution Date in connection with
the termination of the Trust, the Trustee will (except as described below) apply
84% of the Loan Group 1 Distribution Amount for such date for the following
purposes and in the following order of priority:
(1) to pay interest to the Holders of the Class A-1-a, Class A-1-b
and Class X Certificates, up to an amount equal to, and pro rata as among
such Classes in accordance with, all unpaid Distributable Certificate
Interest accrued in respect of such Class of Certificates (or, in the case
of the Class X Certificates, the portion thereof that accrued on
Components A-1-a and A-1-b of such Class' Notional Amount) through the end
of the related Interest Accrual Period;
(2) to pay principal to the Holders of the Class A-1-a Certificates,
up to an amount equal to the lesser of (a) the then outstanding
Certificate Balance of such Class of Certificates and (b) 84% of the Loan
Group 1 Principal Amounts for such Distribution Date;
(3) if the Certificate Balance of the Class A-1-a Certificates has
been reduced to zero, to pay principal to the Holders of the Class A-1-b
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
excess, if any, of (i) 84% of the Loan Group 1 Principal Amounts for such
Distribution Date over (ii) any distributions of principal made with
respect to the Class A-1-a Certificates on such Distribution Date in
accordance with clause (2) of this paragraph;
(4) if and to the extent not otherwise paid out of the Loan Group 2
Distribution Amount and/or the other 16% of the Loan Group 1 Distribution
Amount, to pay interest to the Holders of the Class A-2 and Class X
Certificates, up to an amount equal to, and pro rata as between such
Classes in accordance with, all unpaid Distributable Certificate Interest
accrued in respect of each such Class of Certificates (or, in the case of
the Class X Certificates, the portion thereof that accrued on Components
A-2, B, C, D, E, F, G, H, J, K, L, M and N of such Class' Notional Amount)
through the end of the related Interest Accrual Period; and
(5) if the Certificate Balances of the Class A-1-a and Class A-1-b
Certificates have been reduced to zero, to pay principal to the Holders of
the Class A-2 Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Classes of Certificates
(taking into account distributions of principal thereon made out of the
Loan Group 2 Distribution Amount and/or the other 16% of the Loan Group 1
Distribution Amount) and (b) the excess, if any, of (i) 84% of the Loan
Group 1 Principal Amounts for such Distribution Date over (ii) any
distributions of principal made with respect to the Class A-1-a and/or
Class A-1-b Certificates on such Distribution Date in accordance with
clause (2) and/or clause (3) of this paragraph.
Also on each Distribution Date prior to the earlier of the Class A
Principal Distribution Cross-Over Date and the final Distribution Date in
connection with the termination of the Trust, the Trustee will (except as
described below) apply 100% of the Loan Group 2 Distribution Amount for such
date and 16% of the Loan Group 1 Distribution Amount for such date for the
following purposes and in the following order of priority:
(1) to pay interest to the Holders of the Class A-2 and Class X
Certificates, up to an amount equal to, and pro rata as among such Classes
in accordance with, all unpaid Distributable Certificate Interest accrued
in respect of each such Class of Certificates (or, in the case of the
Class X Certificates, the portion thereof that accrued on Components A-2,
B, C, D, E, F, G, H, J, K, L, M and N of such Class' Notional Amount)
through the end of the related Interest Accrual Period;
(2) to pay principal to the Holders of the Class A-2 Certificates,
up to an amount equal to the lesser of (a) the then outstanding
Certificate Balance of such Class of Certificates and (b) the aggregate of
100% of the Loan Group 2 Principal Amounts for such Distribution Date and
16% of the Loan Group 1 Principal Amounts for such Distribution Date;
(3) if and to the extent not otherwise paid out of the other 84% of
the Loan Group 1 Distribution Amount, to pay interest to the Holders of
the Class A-1-a, Class A-1-b and Class X Certificates, up to an amount
equal to, and pro rata as among such Classes in accordance with, all
unpaid Distributable Certificate Interest accrued in respect of each such
Class of Certificates (or, in the case of the Class X Certificates, the
portion thereof that accrued on Components A-1-a and A-1-b of such Class'
Notional Amount) through the end of the related Interest Accrual Period;
(4) if the Certificate Balance of the Class A-2 Certificates has
been reduced to zero, to pay principal to the Holders of the Class A-1-a
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates (taking into
account distributions of principal thereon made out of the other 84% of
the Loan Group 1 Distribution Amount) and (b) the excess, if any, of (i)
the aggregate of 100% of the Loan Group 2 Principal Amounts for such
Distribution Date and 16% of the Loan Group 1 Principal Amounts for such
Distribution Date over (ii) any distributions of principal made with
respect to the Class A-2 Certificates on such Distribution Date in
accordance with clause (2) of this paragraph; and
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(5) if the Certificate Balances of the Class A-2 and Class A-1-a
Certificates have been reduced to zero, to pay principal to the Holders of
the Class A-1-b Certificates, up to an amount equal to the lesser of (a)
the then outstanding Certificate Balance of such Class of Certificates
(taking into account distributions of principal thereon made out of the
other 84% of the Loan Group 1 Distribution Amount) and (b) the excess, if
any, of (i) the aggregate of 100% of the Loan Group 2 Principal Amounts
for such Distribution Date and 16% of the Loan Group 1 Principal Amounts
for such Distribution Date over (ii) any distributions of principal made
with respect to the Class A-2 and/or Class A-1-a Certificates on such
Distribution Date in accordance with clause (2) and/or clause (4) of this
paragraph; and
Notwithstanding the foregoing discussion under this "--Distributions of
Interest and Principal on the Senior Certificates" subsection, if for any
Distribution Date prior to the earlier of the Class A Principal Distribution
Cross-Over Date and the final Distribution Date in connection with a termination
of the Trust the application of the Group 1 Distribution Amount and the Group 2
Distribution Amount for such date in the manner described above would result in
a shortfall in the payment of Distributable Certificate Interest with respect to
any Class of Senior Certificates, then the Trustee will apply the entire
Available Distribution Amount for such date first to pay interest to the Holders
of the respective Classes of Senior Certificates, up to an amount equal to, and
pro rata as among such Classes in accordance with, all unpaid Distributable
Certificate Interest accrued in respect of each such Class of Certificates
through the end of the related Interest Accrual Period. The Trustee will then
apply any remaining portion of such Available Distribution Amount (up to the
Principal Distribution Amount for the subject Distribution Date) to make
distributions of principal on the Class A-1-a, Class A-1-b and Class A-2
Certificates as follows:
(1) an amount equal to the lesser of (a) 84% of the Group 1
Principal Amounts for the subject Distribution Date and (b) the product of
(i) such entire remaining portion of such Available Distribution Amount,
multiplied by (ii) a fraction, the numerator of which is equal to 84% of
the Group 1 Principal Amounts for the subject Distribution Date, and the
denominator of which is equal to the Principal Distribution Amount for the
subject Distribution Date, will be applied to make distributions of
principal on the Class A-1-a Certificates, the Class A-1-b Certificates
and the Class A-2 Certificates, in that order, in each case until the
related Certificate Balance is reduced to zero; and
(2) an amount equal to the lesser of (a) 16% of the Group 1
Principal Amounts and 100% of the Group 2 Principal Amounts for the
subject Distribution Date and (b) the product of (i) such entire remaining
portion of such Available Distribution Amount, multiplied by (ii) a
fraction, the numerator of which is equal to 16% of the Group 1 Principal
Amounts and 100% of the Group 2 Principal Amounts for the subject
Distribution Date, and the denominator of which is equal to the Principal
Distribution Amount for the subject Distribution Date, will be applied to
make distributions of principal on the Class A-2 Certificates, the Class
A-1-a Certificates and the Class A-1-b Certificates, in that order, in
each case until the related Certificate Balance is reduced to zero.
On each Distribution Date coinciding with or following the occurrence of
any Class A Principal Distribution Cross-Over Date, and in any event on the
final Distribution Date in connection with a termination of the Trust, the
Trustee will apply the entire Available Distribution Amount for such date for
the following purposes and in the following order of priority:
(1) to pay interest to the Holders of the respective Classes of
Senior Certificates, up to an amount equal to, and pro rata as among such
Classes in accordance with, all unpaid Distributable Certificate Interest
accrued in respect of each such Class of Certificates through the end of
the related Interest Accrual Period;
(2) to pay principal to the Holders of the Class A-1-a, Class A-1-b
and Class A-2 Certificates, up to an amount equal to, and pro rata as
among such Classes in accordance with, the then outstanding Class
Principal Balance of each such Class of Certificates; and
(3) if applicable, to reimburse the Holders of the Class A-1-a,
Class A-1-b and Class A-2 Certificates, up to an amount equal to, and pro
rata as among such Classes in accordance with, the aggregate of all
unreimbursed reductions, if any, made to the Certificate Balance of each
such Class of Certificates as described under "--Allocation of Realized
Losses and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses.
The "Class A Principal Distribution Cross-Over Date" will be the first
Distribution Date as of the commencement of business on which (i) the Class
A-1-a, Class A-1-b and/or Class A-2 Certificates remain outstanding and (ii) the
Certificate Balances of all the Classes of the Subordinate Principal Balance
Certificates have previously been reduced to zero as described under
"--Allocation of Realized Losses and Certain Other Shortfalls and Expenses"
below.
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All Certificates, other than the Senior Certificates, collectively
constitute the "Subordinate Certificates". The portion, if any, of the Available
Distribution Amount for any Distribution Date that remains after the foregoing
distributions on the Senior Certificates is referred to in this Prospectus
Supplement as the "Subordinate Available Distribution Amount". The Subordinate
Available Distribution Amount for each Distribution Date will be applied to make
distributions on the Subordinate Certificates as described below.
Distributions of Interest and Principal on the Subordinate Certificates.
On each Distribution Date, the Trustee will apply the Subordinate Available
Distribution Amount for such date for the following purposes and in the
following order of priority:
(1) to pay interest to the Holders of the Class B Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(2) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class B Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(3) if applicable, to reimburse the Holders of the Class B
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(4) to pay interest to the Holders of the Class C Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(5) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class C Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(6) if applicable, to reimburse the Holders of the Class C
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(7) to pay interest to the Holders of the Class D Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(8) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class D Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(9) if applicable, to reimburse the Holders of the Class D
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(10) to pay interest to the Holders of the Class E Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(11) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class E Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
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(12) if applicable, to reimburse the Holders of the Class E
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(13) to pay interest to the Holders of the Class F Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(14) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class F Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(15) if applicable, to reimburse the Holders of the Class F
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(16) to pay interest to the Holders of the Class G Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(17) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class G Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(18) if applicable, to reimburse the Holders of the Class G
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(19) to pay interest to the Holders of the Class H Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(20) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class H Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(21) if applicable, to reimburse the Holders of the Class H
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(22) to pay interest to the Holders of the Class J Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(23) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class J Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(24) if applicable, to reimburse the Holders of the Class J
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(25) to pay interest to the Holders of the Class K Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
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(26) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class K Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(27) if applicable, to reimburse the Holders of the Class K
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(28) to pay interest to the Holders of the Class L Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(29) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class L Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(30) if applicable, to reimburse the Holders of the Class L
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(31) to pay interest to the Holders of the Class M Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(32) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class M Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(33) if applicable, to reimburse the Holders of the Class M
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses;
(34) to pay interest to the Holders of the Class N Certificates, up
to an amount equal to all unpaid Distributable Certificate Interest
accrued in respect of such Class of Certificates through the end of the
related Interest Accrual Period;
(35) if the Certificate Balances of all more senior Classes of
Principal Balance Certificates have been reduced to zero, to pay principal
to the Holders of the Class N Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(36) if applicable, to reimburse the Holders of the Class N
Certificates, up to an amount equal to the aggregate of all unreimbursed
reductions, if any, previously made to the Certificate Balance of such
Class of Certificates as described under "--Allocation of Realized Losses
and Certain Other Shortfalls and Expenses" below in connection with
Realized Losses and Additional Trust Fund Expenses; and
(37) to pay to the Holders of the Residual Interest Certificates,
the balance, if any, of the Subordinate Available Distribution Amount for
such Distribution Date;
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 (2),
(5), (8), (11), (14), (17), (20), (23), (26), (29), (32) and (35) above shall,
in each case, subject to the then remaining portion of the Subordinate Available
Distribution Amount for such date, be made to the Holders of the relevant Class
of Principal Balance Certificates otherwise entitled to distributions of
principal pursuant to such clause in an amount equal to the entire then
remaining Certificate Balance of such Class of Certificates outstanding
immediately prior to such final Distribution Date (and without regard to the
Principal Distribution Amount for such Distribution Date).
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Distributions of Prepayment Premiums and Yield Maintenance Charges. On
each Distribution Date, any Prepayment Consideration (whether in the form of a
Prepayment Premium or a Yield Maintenance Charge), or specified portions
thereof, net of any Workout Fees and Liquidation Fees payable therefrom, will be
distributed to the Holders of the respective Classes of Principal Balance
Certificates senior to the Class H Certificates, up to, and on a pro rata basis
in accordance with, their respective Prepayment Consideration Entitlements in
connection with such particular Prepayment Consideration or specified portion
thereof.
The Prepayment Consideration Entitlement of the Holders of any Class of
Principal Balance Certificates senior to the Class H Certificates with respect
to any Prepayment Consideration, or specified portion thereof, net of Workout
Fees and Liquidation Fees payable therefrom, will equal the following--
o For each of the Class A-1-a, Class A-1-b or Class A-2 Certificates
with respect to the portion of any Prepayment Consideration
collected in respect of a Group 1 Mortgage Loan that is attributable
to the Class A-1 Directed Principal Cash Flow Amounts distributable
on a particular Distribution Date (provided that the Class A
Principal Distribution Cross-Over Date has not occurred), the
product of:
(i) 84% of such Prepayment Consideration (net of any portion
thereof payable as a Workout Fee or Liquidation Fee);
multiplied by
(ii) a fraction (not greater than 1.0 or less than 0.0), the
numerator of which is the excess, if any, of the Pass-Through
Rate for the Class A-1-b Certificates (or, in the case of the
Class A-1-a Certificates, the Pass-Through Rate for the Class
A-1-a Certificates) over the relevant Discount Rate, and the
denominator of which is the excess, if any, of the Mortgage
Rate for such prepaid Mortgage Loan over the relevant Discount
Rate; multiplied by
(iii) a fraction, the numerator of which is a portion of such Class
A-1 Directed Principal Cash Flow Amounts payable to the
Holders of such Class of Certificates, and the denominator of
which is the entire amount of such Class A-1 Directed
Principal Cash Flow Amounts.
o For each of the Class A-1-a, Class A-1-b or Class A-2 Certificates
with respect to the portion of any Prepayment Consideration
collected in respect of any Mortgage Loan that is attributable to
the Class A-2 Directed Principal Cash Flow Amounts distributable on
a particular Distribution Date (provided that the Class A Principal
Distribution CrossOver Date has not occurred), the product of:
(i) 100% (if the prepaid Mortgage Loan is a Group 2 Mortgage Loan)
or 16% (if the prepaid Mortgage Loan is a Group 1 Mortgage
Loan), as applicable, of such Prepayment Consideration (net of
any portion thereof payable as a Workout Fee or Liquidation
Fee); multiplied by
(ii) a fraction (not greater than 1.0 or less than 0.0), the
numerator of which is the excess, if any, of the Pass-Through
Rate for the Class A-2 Certificates over the relevant Discount
Rate, and the denominator of which is the excess, if any, of
the Mortgage Rate for such prepaid Mortgage Loan over the
relevant Discount Rate; multiplied by
(iii) a fraction, the numerator of which is a portion of such Class
A-2 Directed Principal Cash Flow Amounts payable to the
Holders of such Class of Certificates, and the denominator of
which is the entire amount of such Class A-2 Directed
Principal Cash Flow Amounts.
o For each of the Class A-1-a, Class A-1-b or Class A-2 Certificates
with respect to any Prepayment Consideration collected in respect of
any Mortgage Loan that is attributable to any principal prepayment
distributable on a particular Distribution Date (provided that the
Class A Principal Distribution Cross-Over Date has occurred), the
product of:
(i) 100% of such Prepayment Consideration (net of any portion
thereof payable as a Workout Fee or Liquidation Fee);
multiplied by
(ii) a fraction (not greater than 1.0 or less than 0.0), the
numerator of which is the excess, if any, of the Pass-Through
Rate for such Class of Certificates over the relevant Discount
Rate, and the denominator of which is the excess, if any, of
the Mortgage Rate for such prepaid Mortgage Loan over the
relevant Discount Rate; multiplied by
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(iii) a fraction, the numerator of which is the distribution of
principal payable to the Holders of such Class of Certificates
on such Distribution Date, and the denominator of which is the
entire amount of the distribution of principal payable to the
Holders of all the Class A-1-a, Class A-1-b and Class A-2
Certificates on such Distribution Date.
o In the case of any Class of Subordinate Principal Balance
Certificates senior to the Class H Certificates with respect to any
Prepayment Consideration collected in respect of any Mortgage Loan
that is attributable to any principal prepayment distributable on a
particular Distribution Date, the product of:
(i) 100% of such Prepayment Consideration (net of any portion
thereof payable as a Workout Fee or Liquidation Fee);
multiplied by
(ii) a fraction (not greater than 1.0 or less than 0.0), the
numerator of which is the excess, if any, of the Pass-Through
Rate for such Class of Certificates over the relevant Discount
Rate, and the denominator of which is the excess, if any, of
the Mortgage Rate for such prepaid Mortgage Loan over the
relevant Discount Rate; multiplied by
(iii) a fraction, the numerator of which is the distribution of
principal payable to the Holders of such Class of Certificates
on such Distribution Date, and the denominator of which is the
entire amount of the Principal Distribution Amount for such
Distribution Date.
The "Discount Rate" applicable to any Class of Principal Balance
Certificates with respect to any prepaid Mortgage Loan will equal the yield
(when compounded monthly) on the U.S. Treasury issue (primary issue) with a
maturity date closest to the maturity date for the prepaid Mortgage Loan. In the
event that there are two such U.S. Treasury issues (a) with the same coupon, the
issue with the lower yield will be utilized, and (b) with maturity dates equally
close to the maturity date for the prepaid Mortgage Loan, the issue with the
earliest maturity date will be utilized.
For any Distribution Date, the "Class A-1 Directed Principal Cash Flow
Amounts" will equal 84% of the Loan Group 1 Principal Amounts.
For any Distribution Date, the "Class A-2 Directed Principal Cash Flow
Amounts" will equal the aggregate of 16% of the Loan Group 1 Principal Amounts
and 100% of the Loan Group 2 Principal Amounts.
The portion of any Prepayment Premium and/or Yield Maintenance Charge (net
of any portion thereof payable as a Workout Fee or Liquidation Fee) remaining
after distribution of the amounts calculated as described above to the Holders
of the respective Classes of Principal Balance Certificates senior to the Class
H Certificates will be distributed to the Holders of the Class X Certificates.
After the Distribution Date on which the Certificate Balances of all Classes of
Principal Balance Certificates senior to the Class H Certificates have been
reduced to zero, any Prepayment Premium and/or Yield Maintenance Charge
collected on the Mortgage Loans (net of any portion thereof payable as a Workout
Fee or Liquidation Fee) will be distributable entirely to the Holders of the
Class X Certificates.
The Depositor makes no representation as to the enforceability of the
provision of any Mortgage Note requiring the payment of a Prepayment Premium
and/or Yield Maintenance Charge or of the collectability of any Prepayment
Premium or Yield Maintenance Charge. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment Provisions"
and "Risk Factors--Risks Related to the Mortgage Loans--Limitations on
Enforceability and Collectability of Prepayment Premiums and Yield Maintenance
Charges" in this Prospectus Supplement.
Treatment of REO Properties. Notwithstanding that 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 be treated, for
purposes of, determining distributions on the Certificates, allocations of
Realized Losses and Additional Trust Fund Expenses to the Certificates, and the
amount of all fees payable under the Pooling Agreement, as having remained
outstanding until such REO Property is liquidated. The Mortgage Loan will be
taken into account when determining the Weighted Average Mortgage Pass-Through
Rate and the Principal Distribution Amount for each Distribution Date. Operating
revenues and other proceeds derived from such REO Property (after application
thereof to pay certain costs and taxes, including certain reimbursements payable
to the Master Servicer, the Special Servicer and/or the Trustee, incurred in
connection with the operation and disposition of such REO Property) will be
"applied" by the Master Servicer as principal, interest and other amounts "due"
on such Mortgage Loan. As and to the extent described under "--P&I Advances"
below, the Master Servicer, the Trustee and the Fiscal Agent will be required to
make P&I Advances in respect of such Mortgage Loan, in all cases as if such
Mortgage Loan had remained outstanding.
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Distributions of Additional Interest. On each Distribution Date, any
Additional Interest collected on an ARD Loan during the related Collection
Period will be distributed among the Class A-1-b, Class A-2, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates on a pro rata basis
in accordance with the respective initial Certificate Balances of such Classes
of Certificates. There can be no assurance as to what extent Additional Interest
will accrue or be collected on the ARD Loans, if at all.
Allocation of Realized Losses and Certain Other Shortfalls and Expenses
If Realized Losses and Additional Trust Fund Expenses are incurred, the
aggregate Stated Principal Balance of the Mortgage Pool may decline below the
aggregate Certificate Balance of the Principal Balance Certificates, thereby
resulting in a Mortgage Pool Deficit equal to the difference between such
aggregate balances. In general, if a Mortgage Pool Deficit exists following the
distributions made to Certificateholders on any Distribution Date, then the
respective Certificate Balances of the various Classes of Principal Balance
Certificates will be successively reduced, in reverse order of seniority as
depicted on the Expanded Seniority Chart under "--Seniority" above, until such
Mortgage Pool Deficit is eliminated. The first such Certificate Balance to be
reduced would be that of the most subordinate Class of Principal Balance
Certificates then outstanding, and no such reduction would be made to the
Certificate Balance of any Class of Principal Balance Certificates until the
Certificate Balance of each more subordinate Class of Principal Balance
Certificates, if any, is reduced to zero. If a Mortgage Pool Deficit exists at
any time after the Certificate Balances of the Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L, Class M and Class N
Certificates have all been reduced to zero, the Certificate Balances of the
Class A-1-a, Class A-1-b and Class A-2 Certificates will be reduced on a pro
rata basis in accordance with the relative sizes of the Certificate Balances of
such Classes of Certificates, until such Mortgage Pool Deficit is eliminated.
The foregoing reductions in the Certificate Balances of the respective
Classes of the Principal Balance Certificates will effectively constitute an
allocation of the Realized Losses and/or Additional Trust Fund Expenses that
caused any Mortgage Pool Deficit. Any such reduction in the Certificate Balance
of a Class of Principal Balance Certificates will result in a corresponding
reduction in the Notional Amount of the Class X Certificates.
"Realized Losses" are losses on or in respect of the Mortgage Loans
arising from the inability of the Master Servicer and/or the Special Servicer to
collect all amounts due and owing under any such Mortgage Loan, including by
reason of the fraud or bankruptcy of a Borrower or, to the extent not covered by
insurance, a casualty of any nature at a Mortgaged Property. The Realized Loss
in respect of a liquidated Mortgage Loan (or related REO Property) is an amount
generally equal to the excess, if any, of (a) the outstanding principal balance
of such Mortgage Loan as of the date of liquidation, together with (i) all
accrued and unpaid interest thereon to but not including the Due Date in the
Collection Period in which the liquidation occurred (exclusive, however, of any
such accrued and unpaid interest that constitutes Default Interest or Additional
Interest) and (ii) all related unreimbursed Servicing Advances and unpaid
liquidation expenses, over (b) the aggregate amount of Liquidation Proceeds, if
any, recovered in connection with such liquidation. If any portion of the debt
due under a Mortgage Loan is forgiven, whether in connection with a
modification, waiver or amendment granted or agreed to by the Master Servicer or
the Special Servicer or in connection with the bankruptcy or similar proceeding
involving the related Borrower, the amount so forgiven (other than Default
Interest and Additional Interest) also will be treated as a Realized Loss.
An "Additional Trust Fund Expense" is, in general, an expense of the Trust
that arises out of a default on a Mortgage Loan or an otherwise unanticipated
event and that is not covered by a Servicing Advance or a corresponding
collection from the related Borrower. Some examples of Additional Trust Fund
Expenses are:
o any Special Servicing Fees, Workout Fees and Liquidation Fees paid
to the Special Servicer;
o any interest paid to the Master Servicer, the Special Servicer
and/or the Trustee in respect of unreimbursed Advances;
o certain servicing and administrative expenses that have not been the
subject of Servicing Advances (including the costs of certain
required opinions of counsel);
o certain unanticipated, non-Mortgage Loan specific expenses of the
Trust, including certain reimbursements and indemnifications to the
Trustee and Fiscal Agent as described under "--Trustee" in this
Prospectus Supplement (the Fiscal Agent having the same rights to
indemnity and reimbursement as described with respect to the
Trustee), certain reimbursements to the Master Servicer, the Special
Servicer and the Depositor as described under "Servicing of the
Mortgage Loans--Certain Matters Regarding the Depositor, the Master
Servicer and the Special Servicer" in this Prospectus Supplement and
certain federal, state and local taxes, and certain tax-related
expenses, payable out of the Trust Fund as described under "Federal
Income Tax Consequences--Possible Taxes on Income From Foreclosure
Property and Other Taxes" and "Servicing of the Mortgage Loans--REO
Properties" in this Prospectus Supplement; and
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o any amounts expended on behalf of the Trust to remediate an adverse
environmental condition at any Mortgaged Property securing a
defaulted Mortgage Loan (see "Servicing of the Mortgage
Loans--Realization Upon Defaulted Mortgage Loans; Sale of Defaulted
Mortgage Loans and REO Properties" in this Prospectus Supplement.
The Net Aggregate Prepayment Interest Shortfall, if any, for each
Distribution Date will be allocated on such Distribution Date among the
respective Classes of Regular Interest Certificates (other than the Senior
Certificates) sequentially in reverse order of their seniority as depicted on
the Expanded Seniority Chart under "--Seniority" above, in each case up to an
amount equal to the lesser of any remaining unallocated portion of such Net
Aggregate Prepayment Interest Shortfall and any Accrued Certificate Interest in
respect of the particular Class of Certificates for the related Interest Accrual
Period. If and to the extent that the Net Aggregate Prepayment Interest
Shortfall for any Distribution Date exceeds the aggregate Accrued Certificate
Interest in respect of the Subordinate Certificates for the related Interest
Accrual Period, such portion will be allocated among the respective Classes of
Senior Certificates, up to, and pro rata in accordance with, the respective
amounts of Accrued Certificate Interest for each such Class of Senior
Certificates for the related Interest Accrual Period.
P&I Advances
The Master Servicer will be required to make for each Distribution Date
(either out of its own funds or, subject to the replacement thereof as and to
the extent provided in the Pooling Agreement, funds held in the Custodial
Account that are not required to be part of the Available Distribution Amount
for such Distribution Date) an aggregate amount of P&I Advances generally equal
to all Scheduled P&I Payments (other than Balloon Payments) and any Assumed P&I
Payments, in each case net of related Master Servicing Fees and Workout Fees,
that (a) were due or deemed due, as the case may be, in respect of the Mortgage
Loans during the related Collection Period and (b) were not paid by or on behalf
of the related Borrowers 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 (as defined below) exists with
respect to any Required Appraisal Mortgage Loan (also as defined below), then
the Master Servicer will reduce the interest portion (but not the principal
portion) of each P&I Advance that it must make in respect of such Required
Appraisal Loan during the period that such Appraisal Reduction Amount exists.
The interest portion of any P&I Advance required to be made in respect of a
Required Appraisal Loan, as to which there exists an Appraisal Reduction Amount,
will equal 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 and the prior sentence, multiplied by (ii) a
fraction, the numerator of which is equal to the Stated Principal Balance of
such Mortgage Loan, net of such Appraisal Reduction Amount, and the denominator
of which is equal to the Stated Principal Balance of such Mortgage Loan. See
"--Appraisal Reductions" below.
If the Master Servicer fails to make a required P&I Advance, the Trustee
will be obligated to make such Advance. If the Trustee fails to make a required
P&I Advance, the Fiscal Agent will be required to make such P&I Advance. See
"--The Trustee" and "--The Fiscal Agent" below.
The Master Servicer, the Trustee and the Fiscal Agent will each be
entitled to recover any P&I Advance made by it out of its own funds from Related
Proceeds. None of the Master Servicer, the Trustee or the Fiscal Agent will be
obligated to make any P&I Advance that, in its reasonable good faith judgment,
would not be ultimately recoverable out of Related Proceeds (any P&I Advance not
so recoverable, a "Nonrecoverable P&I Advance"). If the Master Servicer, the
Trustee or the Fiscal Agent makes any P&I Advance that it subsequently
determines is a Nonrecoverable P&I Advance, it may obtain reimbursement for such
P&I Advance out of general funds on deposit in the Custodial Account. See
"Servicing of the Mortgage Loans--Custodial Account" in this Prospectus
Supplement.
The Master Servicer, the Trustee and the Fiscal Agent will each be
entitled to receive interest on P&I Advances made thereby. Such interest will
accrue on the amount of each P&I Advance for so long as it is outstanding at a
rate per annum equal to the "prime rate" as published in the "Money Rates"
section of The Wall Street Journal, as such "prime rate" may change from time to
time. Interest so accrued with respect to any P&I Advance will be payable--
o out of Default Interest and late payment charges collected on the
related Mortgage Loan during the Collection Period in which such P&I
Advance is reimbursed, and
o if such P&I Advance has been reimbursed, then (to the extent that
the Default Interest and late payment charges described in the prior
bullet point were insufficient) out of any amounts then on deposit
in the Custodial Account.
Any delay between a Sub-Servicer's receipt of a late collection of a
Scheduled P&I Payment as to which a P&I Advance was made and the forwarding of
such late collection to the Master Servicer will increase the amount of interest
accrued and payable to the Master Servicer or the Trustee, as the case may be,
on such P&I Advance. To the extent not offset by Default Interest and/or late
payment charges accrued and actually collected as described above, interest
accrued on outstanding P&I Advances will result in a reduction in amounts
payable on the Certificates.
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An "Assumed P&I Payment" is an amount deemed due in respect of:
o each Mortgage Loan that is delinquent in respect of its Balloon
Payment beyond the first Determination Date that follows its most
recent maturity date and as to which no arrangements have been
agreed to for collection of the delinquent amounts, including an
extension of maturity; and
o each Mortgage Loan as to which the related Mortgaged Property has
become an REO Property.
The Assumed P&I Payment deemed due on any such Mortgage Loan that is delinquent
as to its Balloon Payment, for its stated maturity date and for each successive
Due Date that it remains outstanding, will equal the Scheduled P&I Payment that
would have been due on the Mortgage Loan on such date if the related Balloon
Payment had not come due (but instead the Mortgage Loan had continued to
amortize and accrue interest in accordance with its terms in effect prior to
such maturity date). The Assumed P&I Payment deemed due on any such Mortgage
Loan as to which the related Mortgaged Property has become an REO Property, for
each Due Date that such REO Property remains part of the Trust Fund, will equal
the Scheduled P&I Payment (or, in the case of a Mortgage Loan delinquent in
respect of its Balloon Payment, the Assumed P&I Payment) due on the last Due
Date prior to the acquisition of such REO Property. Assumed P&I Payments for ARD
Loans do not include Additional Interest or Accelerated Amortization Payments.
Appraisal Reductions
Within 60 days after the date on which any of the following events (each,
an "Appraisal Trigger Event") has occurred with respect to any Mortgage Loan
(upon the occurrence of any such event, a "Required Appraisal Loan"), the
Special Servicer must obtain an appraisal of the related Mortgaged Property from
an independent appraiser meeting certain specified qualifications (any such
appraisal, a "Required Appraisal"), unless such an appraisal had previously been
obtained within the prior twelve months--
o Such Mortgage Loan is sixty (60) days delinquent in respect of any
Scheduled P&I Payment.
o Such Mortgage Loan is modified by the Special Servicer to reduce the
amount of any Scheduled P&I Payment (other than a Balloon Payment).
o A Balloon Payment with respect to any Mortgage Loan has not been
paid within 20 days following its most recent scheduled maturity
date.
o A receiver is appointed and continues in such capacity in respect of
the Mortgaged Property securing such Mortgage Loan.
o The related Borrower becomes the subject of bankruptcy, insolvency
or similar proceedings.
o The Mortgaged Property securing such Mortgage Loan becomes an REO
Property.
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 upon the first Determination Date following the later
of the occurrence of the Appraisal Trigger Event (if no new appraisal is
required) and the receipt of a new appraisal (if one is required)) equal to the
excess, if any, of "x" over "y" where--
o "x" is equal to the sum of:
(i) the Stated Principal Balance of such Required Appraisal Loan;
(ii) to the extent not previously advanced by or on behalf of the
Master Servicer, the Trustee or the Fiscal Agent, all unpaid
interest on the Required Appraisal Loan through the most
recent Due Date prior to the date of calculation (net of
related Master Servicing Fees, and exclusive of any portion of
such accrued and unpaid interest that constitutes Additional
Interest and/or Default Interest);
(iii) all accrued but unpaid Master 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
Master Servicer, the Special Servicer, the Trustee or the
Fiscal Agent with respect to such Required Appraisal Loan,
together with interest thereon;
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(v) any other unpaid Additional Trust Fund Expenses in respect of
such Required Appraisal Loan; and
(vi) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable, ground
rents, and any unfunded improvement reserves, in respect of
the related Mortgaged Property (net of any escrow reserves
held by the Master Servicer or Special Servicer to cover any
such item); and
o "y" is equal to 90% of the resulting appraised value of the related
Mortgaged Property or REO Property (as such appraised value may be
reduced (to not less than zero) by the amount of any obligations
secured by liens on such property that are prior to the lien of the
Required Appraisal Loan and estimated liquidation expenses).
With respect to each Required Appraisal Loan (unless such Mortgage Loan
has become a Corrected Mortgage Loan and has remained current for at least
twelve consecutive Scheduled P&I Payments, and no other Servicing Transfer Event
has occurred during the preceding twelve months), the Special Servicer is
required, within 30 days of each anniversary of such loan's becoming a Required
Appraisal Loan, to order an updated appraisal. Based upon such update, the
Special Servicer must redetermine and report to the Trustee the new Appraisal
Reduction Amount, if any, with respect to such Mortgage Loan.
The cost of each Required Appraisal (and any update thereof) will be
advanced by the Special Servicer and will be reimbursable thereto as a Servicing
Advance.
If an Appraisal Reduction Amount exists with respect to any Required
Appraisal Loan, the Controlling Class Representative will be entitled to obtain
and deliver to the Master Servicer and the Trustee an appraisal meeting the
requirements for a Required Appraisal and, further, will be entitled to request
that the Appraisal Reduction Amount for such Required Appraisal Loan be
recalculated based upon such new appraisal.
Reports to Certificateholders; Certain Available Information
Certificateholder Reports. Based on information provided in monthly
reports prepared by the Master Servicer and the Special Servicer and delivered
to the Trustee, the Trustee will be required to prepare and deliver (or, if not
prepared by the Trustee, to forward) on each Distribution Date to the Holders of
each Class of Offered Certificates (and to each beneficial owner of an Offered
Certificate held in book-entry form that is identified to the reasonable
satisfaction of the Trustee):
(1) A "Distribution Date Statement" setting forth, among other things:
o the amount of distributions, if any, made on such Distribution
Date to the Holders of each Class of Principal Balance
Certificates and applied to reduce the respective Certificate
Balances thereof;
o the amount of distributions, if any, made on such Distribution
Date to the Holders of each Class of Regular Interest
Certificates allocable to Distributable Certificate Interest,
Prepayment Consideration and Additional Interest,
respectively;
o the Available Distribution Amount, Group 1 Distribution Amount
and Group 2 Distribution Amount for such Distribution Date;
o the aggregate amount of P&I Advances made in respect of the
immediately preceding Distribution Date;
o the aggregate amount of (i) unreimbursed P&I Advances (and the
aggregate amount of interest accrued and payable thereon) as
of the close of business on the related Determination Date and
(ii) unreimbursed Servicing Advances (and the aggregate amount
of interest accrued and payable thereon) outstanding as of the
close of business on the related Determination Date;
o the aggregate unpaid principal balance of the Mortgage Pool
outstanding as of the close of business on the related
Determination Date;
o the number, aggregate unpaid principal balance, weighted
average remaining term to maturity and weighted average
Mortgage Rate of the Mortgage Loans (other than REO Mortgage
Loans) as of the close of business on the related
Determination Date;
o the number, aggregate unpaid principal balance (as of the
close of business on the related Determination Date) and
aggregate Stated Principal Balance (immediately after such
Distribution Date) of Mortgage Loans (i)
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delinquent one month, (ii) delinquent two months, (iii)
delinquent three or more months, and (iv) as to which
foreclosure proceedings have been commenced;
o as to each Mortgage Loan referred to in the preceding bullet
point, (i) the loan number thereof, (ii) the Stated Principal
Balance thereof immediately following such Distribution Date,
(iii) whether the delinquency is in respect of its Balloon
Payment, (iv) whether a notice of acceleration has been sent
to the related Borrower and, if so, the date of such notice,
(v) whether a "Phase I" environmental assessment of the
related Mortgaged Property has been performed as contemplated
by the Pooling Agreement and (vi) a brief description of the
status of any foreclosure proceedings or any workout or loan
modification negotiations with the related Borrower;
o with respect to any Mortgage Loan as to which a liquidation
event occurred during the related Collection Period (other
than a payment in full), (i) the loan number thereof, (ii) the
nature of the liquidation event and, in the case of a
determination by the Special Servicer with respect to any
defaulted Mortgage Loan or REO Property that there has been a
recovery of all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries that the
Special Servicer has determined in accordance with the
Servicing Standard, will be ultimately recoverable (a "Final
Recovery Determination"), a brief description of the basis for
such Final Recovery Determination, (iii) the aggregate of all
Liquidation Proceeds and other amounts received in connection
with such liquidation event (separately identifying the
portion thereof allocable to distributions on the
Certificates) and (iv) the amount of any Realized Loss in
connection with such liquidation event;
o with respect to any REO Property included in the Trust Fund as
of the close of business on the related Determination Date,
the loan number of the related Mortgage Loan, the book value
of such REO Property and the amount of income and other
amounts, if any, received with respect to such REO Property
during the related Collection Period (separately identifying
the portion thereof allocable to distributions on the
Certificates);
o with respect to any Mortgage Loan as to which the related
Mortgaged Property became an REO Property during the related
Collection Period, the loan number of such Mortgage Loan and
the Stated Principal Balance of such Mortgage Loan as of the
related acquisition date of such REO Property;
o with respect to any REO Property included in the Trust Fund as
to which a Final Recovery Determination was made during the
related Collection Period, (i) the loan number of the related
Mortgage Loan, (ii) a brief description of the basis for the
Final Recovery Determination, (iii) the aggregate of all
Liquidation Proceeds and other amounts received in connection
with such Final Recovery Determination (separately identifying
the portion thereof allocable to distributions on the
Certificates), and (iv) the amount of any Realized Loss in
respect of the related REO Property in connection with such
Final Recovery Determination;
o the Accrued Certificate Interest and Distributable Certificate
Interest in respect of each Class of Regular Interest
Certificates for the related Interest Accrual Period;
o any unpaid Distributable Certificate Interest in respect of
each Class of Regular Interest Certificates after giving
effect to the distributions made on such Distribution Date,
and if the full amount of the Principal Distribution Amount
was not distributed on such Distribution Date, the portion of
the shortfall affecting each Class of Principal Balance
Certificates;
o the Pass-Through Rate for each Class of Regular Interest
Certificates for such Distribution Date;
o the Principal Distribution Amount, the Loan Group 1 Principal
Amounts and the Loan Group 2 Principal Amounts for such
Distribution Date, in each such case separately identifying
the respective components thereof (and, in the case of any
principal prepayment or other unscheduled collection of
principal received during the related Collection Period, the
loan number for the related Mortgage Loan and the amount of
such prepayment or other collection of principal);
o the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all
Additional Trust Fund Expenses incurred during the related
Collection Period;
o the Certificate Balance of each Class of Principal Balance
Certificates and the Notional Amount of the Class X
Certificates immediately before and immediately after such
Distribution Date, separately identifying any
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reduction therein due to the allocation of Realized Losses and
Additional Trust Fund Expenses on such Distribution Date;
o the aggregate amount of interest on Advances paid to the
Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent during the related Collection Period;
o the loan number for each Required Appraisal Loan and any
related Appraisal Reduction Amount as of the related
Determination Date;
o the original and then current credit support levels for each
Class of Regular Interest Certificates;
o the original and then current ratings for each Class of
Regular Interest Certificates;
o the aggregate amount of Prepayment Premiums and Yield
Maintenance Charges collected (i) during the related
Collection Period and (ii) since the Closing Date;
o the aggregate amount of servicing compensation (separately
identifying the amount of each category of compensation) paid
to the Master Servicer, the Special Servicer and, if payable
directly out of the Trust Fund without a reduction in the
servicing compensation otherwise payable to the Master
Servicer or the Special Servicer, to each sub-servicer, during
the related Collection Period; and
o such other information as the Trustee is required by the Code
or other applicable law to furnish to enable
Certificateholders to prepare their tax returns.
(2) A "CSSA Loan File" and a "CSSA Property File" setting forth certain
information with respect to the Mortgage Loans and the Mortgaged
Properties, respectively.
The Master Servicer or the Special Servicer (as specified in the Pooling
Agreement) is required to deliver to the Trustee monthly (and, on the first
Distribution Date following its receipt thereof, the Trustee is required to
deliver to each person that was sent a Distribution Date Statement) a copy of
each of the following reports (collectively with the Distribution Date
Statement, the "Certificateholder Reports"):
(a) A "Delinquent Loan Status Report" containing substantially the
information set forth in Annex D attached hereto and including,
among other things, those Mortgage Loans which, as of the
Determination Date immediately preceding the preparation of such
report, were delinquent 30-59 days, delinquent 60-89 days,
delinquent 90 days or more, current but specially serviced, or in
foreclosure but not REO Property.
(b) An "Historical Loan Modification Report" containing substantially
the information set forth in Annex E attached hereto and including,
among other things, those Mortgage Loans which, as of the close of
business on the Determination Date immediately preceding the
preparation of such report, have been modified pursuant to the
Pooling Agreement (i) during the Collection Period ending on such
Determination Date and (ii) since the Cut-off Date, showing the
original and the revised terms thereof.
(c) An "Historical Loss Estimate Report" containing substantially the
information set forth in Annex F attached hereto and including,
among other things, as of the close of business on the Determination
Date immediately preceding the preparation of such report, (i) the
aggregate amount of Liquidation Proceeds received, and liquidation
expenses incurred, both during the Collection Period ending on such
Determination Date and historically, and (ii) the amount of Realized
Losses occurring during such Collection Period and historically, set
forth on a Mortgage Loan-by-Mortgage Loan basis.
(d) An "REO Status Report" containing substantially the information set
forth in Annex G attached hereto and including, among other things,
with respect to each REO Property that was included in the Trust
Fund as of the close of business on the Determination Date
immediately preceding the preparation of such report (i) the
acquisition date of such REO Property, (ii) the amount of income
collected with respect to such REO Property (net of related
expenses) and other amounts, if any, received on such REO Property
during the Collection Period ending on such Determination Date and
(iii) the value of the REO Property based on the most recent
appraisal or other valuation thereof available to the Special
Servicer as of such Determination Date (including any prepared
internally by the Special Servicer).
(e) A "Watch List Report" containing substantially the content set forth
in Annex H attached hereto, prepared by the Master Servicer and
identifying each Mortgage Loan that is not a Specially Serviced
Mortgage Loan (i) with a debt service coverage ratio of less than
1.05x, (ii) that has a stated maturity date occurring in the next
sixty days, (iii) that is delinquent
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in respect of its real estate taxes, (iv) for which any outstanding
Advances exist, (v) that has been a Specially Serviced Mortgage Loan
in the past 90 days, (vi) for which the debt service coverage ratio
has decreased by more than 10% in the prior 12 months, (vii) for
which any lease relating to more than 25% of the related Mortgaged
Property has expired, been terminated, is in default or will expire
within the next three months, (viii) that is late in making its
Scheduled P&I Payment three or more times in the preceding 12
months, (ix) with material deferred maintenance at the related
Mortgaged Property or (x) that is 30 or more days delinquent.
(f) A "Loan Payoff Notification Report" setting forth, among other
things, for each Mortgage Loan where written notice of anticipated
payoff has been received as of the Determination Date immediately
preceding the preparation of such report, the control number, the
property name, the amount of principal expected to be paid, the
expected date of payment and the estimated amount of Yield
Maintenance Charges or Prepayment Premium due.
(g) A "Comparative Financial Status Report" containing substantially the
information set forth in Annex K attached hereto and including,
among other things, the occupancy, revenue, net operating income and
debt service coverage ratio for each Mortgage Loan or related
Mortgaged Property, as applicable, as of the end of the calendar
month immediately preceding the preparation of such report, and the
revenue and net operating income for each of the following three
periods (to the extent such information is in the Master Servicer's
or the Special Servicer's possession): (i) the most current
available year-to-date, (ii) each of the previous two full fiscal
years stated separately; and (iii) the "base year" (representing the
original analysis of information used as of the Cut-off Date).
In addition, upon the request of any Holder or, to the extent identified
to the reasonable satisfaction of the Trustee, beneficial owner of an Offered
Certificate, the Trustee will be required to request from the Master Servicer,
and, upon receipt, make available, during normal business hours at the offices
of the Trustee, to the requesting party, copies of the following reports
required to be prepared and maintained by the Master Servicer and/or Special
Servicer:
(x) with respect to any Mortgaged Property or REO Property, an
"Operating Statement Analysis" (containing substantially the information
set forth in Annex I), together with copies of the subject annual
operating statements attached thereto as an exhibit), and presenting the
computations made in accordance with the methodology described in the
Pooling Agreement to "normalize" the full year net operating income and
debt service coverage numbers used by the Master Servicer or Special
Servicer in the other reports referenced above; and
(y) with respect to any Mortgaged Property or REO Property, an "NOI
Adjustment Worksheet" containing substantially the content set forth in
Annex J for such property (with the related annual operating statements
attached thereto as an exhibit), presenting the computations made in
accordance with the methodology described in the Pooling Agreement to
"normalize" the full year net operating income and debt service coverage
numbers used by the Master Servicer or Special Servicer in the other
reports referenced above.
The reports identified in clauses (a), (b), (c), (d) and (f) above are
referred to in this Prospectus Supplement as the "Unrestricted Master Servicer
Reports", and the reports identified in clauses (e), (g), (x) and (y) above are
referred to in this Prospectus Supplement as the "Restricted Master Servicer
Reports".
At the direction of the Depositor, the Trustee will also be required to
make available monthly to, among others, the Holders and, to the extent
identified to the reasonable satisfaction of the Trustee, the beneficial owners
of the Offered Certificates an electronic file containing Mortgage Loan
information, based on reports provided to it by the Master Servicer and/or the
Special Servicer, in the "CSSA Loan periodic update file" and the "CSSA Property
File" with the Delinquent Loan Status Report, Historical Loan Modification
Report, Historical Loss Estimate Report, REO Status Report, Loan Payoff
Notification Report and Watch List Report attached (provided that these reports
are delivered to the Trustee in an electronic format acceptable to the Trustee)
via the Trustee's bulletin board. Access to the bulletin board can be obtained
by dialing (714) 282-3990. Those who have an account on the bulletin board may
retrieve the data file for each transaction in the directory. An account number
may be obtained by typing "NEW" upon logging into the bulletin board. In order
to access information from the bulletin board the user must have available their
assigned log-on ID. Certain information made available on the monthly
Certificateholder Reports may be accessed by calling LaSalle National Bank's
ASAP System. Investors may access the ASAP System by calling (312) 904-2200, and
requesting statement number 371. The Trustee may (with the consent of the
Depositor and the Underwriter) make the information that is available via its
bulletin board, also available via the Internet at www.LNBABS.com.
In addition, the Master Servicer may (with the consent of the Depositor
and the Underwriter) make available each month via the Master Servicer's
Internet Website, initially located at "www.firstunion.com", (i) to any
interested party, the Unrestricted Master Servicer Reports, the Distribution
Date Statement, the CSSA loan setup file, the CSSA Loan File, the Prospectus and
the Prospectus Supplement, and (ii) to any Holder or beneficial owner of a
Certificate, with the use of a password provided by the Master Servicer to such
person upon receipt by the Master Servicer from such person of a certification
in the form attached to the Pooling Agreement, the Restricted Master
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Servicer Reports and the CSSA Property File. For assistance with the Master
Servicer's Internet Website, investors may call (800) 326-1334.
Within a reasonable period of time after the end of each calendar year,
the Trustee is required to send to each person who at any time during the
calendar year was a Certificateholder of record, a report summarizing on an
annual basis (if appropriate) certain items of the monthly Distribution Date
Statements relating to amount distributed to such Certificateholder and such
other information as may be required to enable such Certificateholder to prepare
its federal income tax returns. Such information is required to include the
amount of original issue discount accrued on each Class of Certificates and
information regarding the expenses of the Trust Fund.
The information that pertains to Specially Serviced Assets reflected in
reports will be based solely upon the reports delivered by the Special Servicer
(directly or through the Master Servicer) to the Trustee prior to the related
Distribution Date. Absent manifest error, none of the Master Servicer, the
Special Servicer or the Trustee will be responsible for the accuracy or
completeness of any information supplied to it by a Borrower or third party that
is included in any reports, statements, materials or information prepared or
provided by the Master Servicer, the Special Servicer or the Trustee, as
applicable.
Other Information. The Pooling Agreement will obligate the Trustee to make
available at its Corporate Trust Office (as defined below), during normal
business hours, for review by any Holder or beneficial owner of an Offered
Certificate or any person identified to the Trustee as a prospective transferee
of an Offered Certificate or any interest therein, originals or copies of, among
other things, the following items:
o this Prospectus Supplement, the Prospectus and any other disclosure
document relating to the Offered Certificates and the Private
Certificates, in the form most recently provided to the Trustee by
the Depositor or by any person designated by the Depositor;
o the Pooling and Servicing Agreement, each sub-servicing agreement
delivered to the Trustee since the Closing Date and any amendments
thereto;
o all reports delivered to Certificateholders since the Closing Date
as described under "--Reports to Certificateholders; Certain
Available Information--Certificateholder Reports" above;
o all annual performance certifications delivered by the Master
Servicer and the Special Servicer, respectively, to the Trustee
since the Closing Date as described under "Servicing of the Mortgage
Loans--Evidence as to Compliance" in this Prospectus Supplement;
o all annual accountants' reports caused to be delivered by the Master
Servicer and the Special Servicer, respectively, to the Trustee
since the Closing Date as described under "Servicing of the Mortgage
Loans--Evidence as to Compliance" in this Prospectus Supplement;
o the most recent inspection report prepared by the Master Servicer or
Special Servicer, as applicable, and delivered to the Trustee in
respect of each Mortgaged Property as described under "Servicing of
the Mortgage Loans--Inspections; Collection of Operating
Information" in this Prospectus Supplement;
o any and all notices and reports delivered to the Trustee with
respect to any Mortgaged Property as to which the environmental
testing described under "Servicing of the Mortgage
Loans--Realization Upon Defaulted Mortgage Loan; Sale of Defaulted
Mortgage Loans and REO Properties" in this Prospectus Supplement
revealed that both of the conditions set forth therein were not
satisfied;
o each of the Mortgage Files, including any and all modifications,
waivers and amendments of the terms of a Mortgage Loan entered into
or consented to by the Special Servicer and delivered to the
Trustee;
o the most recent appraisal for each Mortgaged Property that has been
delivered to the Trustee by either the Master Servicer or the
Special Servicer; and
o any and all officer's certificates and other evidence delivered to
or by the Trustee to support its, the Master Servicer's, the Special
Servicer's or the Fiscal Agent's, as the case may be, determination
that any Advance was (or, if made, would be) a Nonrecoverable
Advance.
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Copies of any and all of the foregoing items will be available from the Trustee
upon written request; however, the Trustee will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing such
information, including, without limitation, copy charges and reasonable fees for
employee time and for space.
In connection with providing access to the items described above, the
Trustee will require:
(A) in the case of a beneficial owner of a Certificate held in
book-entry form, a written confirmation executed by the requesting
person or entity, in a form reasonably acceptable to the Trustee or
Master Servicer, as applicable, generally to the effect that such
person or entity is a beneficial owner of Offered Certificates and
will keep such information confidential; and
(B) in the case of a prospective purchaser of Certificates or interests
therein, confirmation executed by the requesting person or entity,
in a form reasonably acceptable to the Trustee or Master Servicer,
as applicable, generally to the effect that such person or entity is
a prospective purchaser of Certificates or an interest therein, is
requesting the information 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.
Book-Entry Certificates. Even if you hold your Certificates in book-entry
from through DTC, you may obtain direct access to Certificateholder Reports and
Operating Statement Analyses as if you were a Certificateholder, provided that
you deliver a written certification to the Trustee confirming your beneficial
ownership in the Offered Certificates. Otherwise, until such time as Definitive
Certificates are issued in respect of your Certificates, the foregoing
information will be available to you only to the extent that it is made
available through DTC and the DTC Participants. Conveyance of notices and other
communications by DTC to the DTC Participants, and by the DTC Participants to
beneficial owners of the 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. The Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent, the Depositor, the REMIC Administrator and the
Certificate Registrar 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.
Voting Rights
At all times during the term of the Pooling Agreement:
o 99% of the voting rights for the Certificates (the "Voting Rights")
will be allocated among the Holders of the various Classes of
Principal Balance Certificates in proportion to the respective
Certificate Balances of such Classes of Certificates; and
o 1% of the Voting Rights will be allocated to the Holders of the
Class X Certificates.
Voting Rights allocated to a Class of Certificateholders will be allocated
among such Certificateholders in proportion to the percentage interests in such
Class evidenced by their respective Certificates. See "Description of the
Certificates--Voting Rights" in the Prospectus.
Amendment
In general, the Pooling Agreement may be amended, under the circumstances
and subject to the conditions described in the Prospectus under "The Trust
Agreement--Amendment of the Trust Agreement". In addition, the Pooling Agreement
may be amended by the parties thereto if --
o the Rating Agencies have confirmed in writing that such amendment
will not result in a qualification, downgrade or withdrawal of any
of the ratings then assigned to the respective Classes of
Certificates; and
o the parties to the Pooling Agreement have obtained the consent of
100% of the Holders of each Class of non-rated Certificates that may
be materially and adversely affected by such amendment.
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Termination
The obligations created by the Pooling Agreement will terminate following
the earliest of :
o 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
o the purchase of all of the Mortgage Loans and REO Properties
remaining in the Trust Fund by (in the following order of priority)
the Depositor, the Underwriter, the Special Servicer, the Dominant
Controlling Class Certificateholder or the Master Servicer.
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 other location
specified in such notice of termination.
Any such purchase by the Depositor, the Underwriter, the Special Servicer,
the Dominant Controlling Class Certificateholder or the Master Servicer of all
the Mortgage Loans and any REO Properties remaining in the Trust Fund is
required to be made at a price equal to (1) the greater of (x) the aggregate
Purchase Price of all the Mortgage Loans and any REO Properties then included in
the Trust Fund and (y) the aggregate fair market value of such Mortgage Loans
and REO Properties then included in the Trust Fund (to be determined as mutually
agreed upon by the Master Servicer, the Special Servicer and the Trustee), minus
(2) if the purchaser is the Master Servicer or the Special Servicer, the
aggregate of amounts payable or reimbursable to such person under the Pooling
Agreement. Such purchase will effect early retirement of the then outstanding
Offered Certificates, but the right of the Depositor, the Underwriter, the
Special Servicer, the Dominant Controlling Class Certificateholder or the Master
Servicer 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 in connection with the purchase of all Mortgage
Loans and any REO Properties remaining in the Trust Fund, exclusive of any
portion thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date.
The Trustee
LaSalle National Bank, a national banking association, will act as Trustee
on behalf of the Certificateholders. See "The Trust Agreement--The Trustee",
"--Duties of the Trustee" and "--Resignation of the Trustee" in the Prospectus.
As of the Closing Date, the offices of the Trustee primarily responsible for
administration of the Trust Fund (the "Corporate Trust Office") is located at
135 South LaSalle Street, Chicago, Illinois 60603, Attention: Asset Backed
Securities Trust Services--LBCMT Series 1998-C4. As compensation for its
services, the Trustee will be entitled to receive monthly, from general funds on
deposit in the Collection Account, the Trustee Fee. The "Trustee Fee" for each
Mortgage Loan (including each REO Mortgage Loan) for any Distribution Date will
equal one month's interest for the most recently ended calendar month
(calculated on a 30/360 Basis), accrued at the per annum rate (the "Trustee Fee
Rate") set forth in the Pooling Agreement on the Stated Principal Balance of
such Mortgage Loan outstanding immediately following the prior Distribution Date
(or, in the case of the initial Distribution Date, as of the Closing Date).
The Trustee and any director, officer, employee or agent thereof will be
entitled to indemnification, from amounts held in the Trust Fund, for any loss,
liability or reasonable "out-of-pocket" expense arising in respect of the
Pooling Agreement or the Certificates; except that such indemnification will not
extend to any expense specifically required to be borne by the Trustee pursuant
to the terms of the Pooling Agreement, or to any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence on the part
of the Trustee in the performance of its obligations and duties thereunder.
The Trustee will also have certain duties with respect to REMIC
administration. See "Federal Income Tax Consequences--REMICs--Reporting and
Other Administrative Matters" in this Prospectus Supplement.
The Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation, will act as Fiscal
Agent pursuant to the Pooling Agreement. The Fiscal Agent's office is located at
135 South LaSalle Street, Chicago, Illinois 60603. The duties and obligations of
the Fiscal Agent consist only of making P&I Advances as described under "--P&I
Advances" above and Servicing Advances as described under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expenses" in
this Prospectus Supplement. The Fiscal Agent will not be liable except for the
performance of such duties and obligations. The Fiscal Agent will be entitled to
reimbursement for each Advance made by it (with interest) in the same manner and
to the same extent as the Trustee and the Master Servicer. The Fiscal Agent will
be
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entitled to various rights, protections and indemnities similar to those
afforded to the Trustee. The Trustee will be responsible for payment of the
compensation of the Fiscal Agent.
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:
o the Pass-Through Rate for such Certificate;
o the rate and timing of principal payments (including principal
prepayments) and other principal collections on or in respect of the
Mortgage Loans and the extent to which such amounts are to be
applied or otherwise result in reduction of the Certificate Balance
or Notional Amount of the Class of Certificates to which such
Certificate belongs;
o the rate, timing and severity of Realized Losses, Additional Trust
Fund Expenses and Net Aggregate Prepayment Interest Shortfalls and
the extent to which such losses, expenses and reductions result in
the nonpayment or deferred payment of interest on, or reduction of
the Certificate Balance or Notional Amount of, the Class of
Certificates to which such Certificate belongs; and
o the extent to which Prepayment Premiums, Yield Maintenance Charges
and Additional Interest are collected on the Mortgage Loans and, in
turn, distributed on the Class of Certificates to which such
Certificate belongs.
Pass-Through Rates. The Pass-Through Rates for the respective Classes of
the Principal Balance Certificates are, in each case, fixed. However, the
Pass-Through Rate applicable to the Class X Certificates will be variable and
will be calculated based in part on the Weighted Average Mortgage Pass-Through
Rate from time to time. Accordingly, the yield on such 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 the
Class X Certificates will vary with changes in the relative sizes of the
Certificate Balances of the respective Classes of Principal Balance
Certificates.
See "Description of the Offered Certificates--Distributions--Calculation
of Pass-Through Rates" and "Description of the Mortgage Pool" in this Prospectus
Supplement and "--Rate and Timing of Principal Payments" below.
Rate and Timing of Principal Payments. The yield to maturity on the Class
X Certificates will be extremely sensitive to, and the yield to maturity on any
other Class of Offered Certificates purchased at a discount or premium will be
affected by, the rate and timing of reductions of the Certificate Balance or
Notional Amount, as the case may be, of such Class of Certificates. As described
in this Prospectus Supplement, the Principal Distribution Amount for each
Distribution Date will be distributable entirely in respect of the Class A-1-a,
Class A-1-b and/or Class A-2 Certificates until the related Certificate Balances
thereof are reduced to zero. Following retirement of the Class A-1- a, Class
A-1-b and Class A-2 Certificates, the Principal Distribution Amount for each
Distribution Date will be distributable entirely in respect of the other Classes
of Principal Balance Certificates, sequentially based on their relative
seniority, in each such case until the related Certificate Balance is reduced to
zero. The Notional Amount of the Class X Certificates will equal the aggregate
of the Certificate Balances of all the Classes of Principal Balance Certificates
outstanding from time to time. Consequently, the rate and timing of reductions
of the Certificate Balance or Notional Amount, as the case may be, of each Class
of Offered Certificates will depend on the rate and timing of principal payments
on or in respect of the Mortgage Loans, which will in turn be affected by the
amortization schedules thereof, the respective dates on which any Balloon
Payments are due, the respective Anticipated Repayment Dates for the ARD Loans
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 of Mortgage Loans out of the
Trust Fund).
Prepayments and, assuming the respective stated maturity dates therefor
have not occurred, liquidations of the Mortgage Loans will result in
distributions on the Principal Balance 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 in the case of Balloon Loans at or near their
stated maturity dates, may result in significant delays in payments of principal
on the Mortgage Loans (and, accordingly, on the Principal Balance Certificates)
while workouts are negotiated or foreclosures are completed, and such delays
will tend to lengthen the weighted average lives of those Certificates. Failure
of the Borrower under any ARD Loan to repay its Mortgage Loan by or shortly
after the related Anticipated Repayment Date, for whatever reason, will also
tend to lengthen the weighted average lives
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of the Principal Balance Certificates. Although each ARD Loan includes
incentives for the related Borrower to repay the Mortgage Loan by its
Anticipated Repayment Date (e.g., an increase in the rate at which interest
accrues and the application of all excess cash (net of the minimum required debt
service, approved property expenses and any required reserves) from the related
Mortgaged Property to pay down the Mortgage Loan, in each case following the
passage of such date), there can be no assurance that the related Borrower will
want or be able to repay the Mortgage Loan in full. See "Servicing of the
Mortgage Loans--Modifications, Waivers, Amendments and Consents" and
"--Realization Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans
and REO Properties" in this Prospectus Supplement and "Certain Legal Aspects of
Mortgage Loans--Foreclosure" in the Prospectus.
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 or in respect of the Mortgage Loans are
distributed or otherwise result in a reduction of the Certificate Balance or
Notional Amount of such Certificates. If you purchase your Offered Certificates
at a discount, you should consider the risk that a slower than anticipated rate
of principal payments on the Mortgage Loans could result in an actual yield to
you that is lower than your anticipated yield. If you purchase a Class X
Certificate or if you purchase any other Offered Certificate at a premium, you
should consider the risk that a faster than anticipated rate of principal
payments on the Mortgage Loans could result in an actual yield to you that is
lower than your anticipated yield.
In general, assuming you purchased your Certificates at a discount or
premium, the earlier a payment of principal on or in respect of the Mortgage
Loans is distributed or otherwise results in reduction of the principal balance
or notional amount of your Certificates, the greater will be the effect on your
yield to maturity. As a result, the effect on your yield of principal payments
occurring at a rate higher (or lower) than you anticipated during any particular
period may not be fully offset by a subsequent like reduction (or increase) in
the rate of principal payments.
If you are considering the purchase of Class X Certificates, you should
fully consider the risk that an extremely rapid rate of principal payments on
the Mortgage Loans could result in your failure to recoup fully your initial
investment.
Because the rate of principal payments on or in respect of 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.
Even if they are available and distributable on your Certificates,
Prepayment Premiums and Yield Maintenance Charges may not be sufficient to
offset fully any loss in yield on your Certificates attributable to the related
prepayments of the Mortgage Loans.
Delinquencies and Defaults on the Mortgage Loans. The rate and timing of
delinquencies and defaults on the Mortgage Loans will affect the amount of
distributions on your Certificates, the yield to maturity of your Certificates,
the rate of principal payments on your Certificates and the weighted average
life of your Certificates. Delinquencies on the Mortgage Loans, unless covered
by P&I Advances, may result in shortfalls in distributions of interest and/or
principal on your Certificates for the current month. Although any such
shortfalls may be made up on future Distribution Dates, no interest would accrue
on any such shortfalls. Thus, any such shortfalls would adversely affect the
yield to maturity of your Certificates.
If you calculate the anticipated yield to maturity for your Certificates
based on an assumed rate of default and amount of losses on the Mortgage Loans
that is lower than the default rate and amount of losses actually experienced
and such additional losses result in a reduction of the distributions on or the
aggregate principal balance or notional amount of your Certificates, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. The timing of any loss on a liquidated Mortgage Loan
that results in a reduction of the distributions on or the aggregate principal
balance or notional amount of your Certificates will also affect the actual
yield to maturity of your Certificates, even if the rate of defaults and
severity of losses are consistent with your expectations. In general, the
earlier your loss occurs, the greater the effect on your yield to maturity.
Even if losses on the Mortgage Loans do not result in a reduction of the
distributions on or the aggregate principal balance or notional amount of your
Certificates, such losses may still affect the timing of distributions on (and,
accordingly, the weighted average life and yield to maturity of) your
Certificates.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on or in respect of the Mortgage Loans may
be affected by a number of factors, including:
o prevailing interest rates;
o the terms of the Mortgage Loans (for example, provisions requiring
Prepayment Consideration and/or Lockout Periods and amortization
terms that require Balloon Payments);
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o the demographics and relative economic vitality of the areas in
which the Mortgaged Properties are located;
o the general supply and demand for retail shopping space, rental
apartments, office space, hotel and motel rooms, industrial space,
health care facility beds or manufactured housing community pads, as
the case may be, in such areas;
o the quality of management of the Mortgaged Properties;
o the servicing of the Mortgage Loans;
o possible changes in tax laws; and
o other opportunities for investment.
See "Risk Factors--Risks Related to the Mortgage Loans", "Description of
the Mortgage Pool" and "Servicing of the Mortgage Loans" in this Prospectus
Supplement and "Yield and Prepayment Considerations" in the Prospectus.
The rate of prepayment on the 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 the Mortgage
Rate (or, in the case of an ARD Loan after its Anticipated Repayment Date, the
Revised Rate) at which a Mortgage Loan accrues interest, a Borrower may have an
increased incentive to refinance such Mortgage Loan. Conversely, to the extent
prevailing market interest rates exceed the applicable Mortgage Rate (or, for an
ARD Loan after its Anticipated Repayment Date, the Revised Rate) for any
Mortgage Loan, such Mortgage Loan may be less likely to prepay (other than, in
the case of an ARD Loan, out of certain net cash flow from the related Mortgaged
Property). Assuming prevailing market interest rates exceed the related Revised
Rate, the primary incentive to prepay an ARD Loan on or before its Anticipated
Repayment Date is to give the Borrower access to excess cash flow, all of which
(net of the minimum required debt service, approved property expenses and any
required reserves) must be applied to pay down principal of the Mortgage Loan.
Accordingly, there can be no assurance that any ARD Loan will be prepaid on or
before its Anticipated Repayment Date or on any other date prior to maturity.
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.
If a Mortgage Loan is not in a Lockout Period, any Prepayment Premium in
respect of such Mortgage Loan may not be sufficient economic disincentive to
prevent the related Borrower from voluntarily prepaying the loan as part of a
refinancing thereof or a sale of the related Mortgaged Property. See
"Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans" in this Prospectus Supplement.
The Depositor makes no representation or warranty 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.
Unpaid Distributable Certificate Interest. If the portion of the Available
Distribution Amount distributable in respect of interest on your Certificates on
any Distribution Date is less than the Distributable Certificate Interest then
payable to you, the shortfall will be distributable to you 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 on your Certificates for so long as it is outstanding. See "Description
of the Offered Certificates--Distributions--Priority of Payments" in this
Prospectus Supplement.
Delay in Payment of Distributions. Because monthly distributions will not
be made on the Certificates until several days after the Due Dates for the
Mortgage Loans during the related Collection Period, your effective yield will
be lower than the yield that would otherwise be produced by your Pass-Through
Rate and purchase price (assuming such price did not account for such delay).
Price/Yield Tables
The tables on Annex C-1 hereto (the "Yield Tables") show the pre-tax
corporate bond equivalent ("CBE") yield to maturity, modified duration (except
in the case of the Class X Certificates), weighted average life, first
Distribution Date on which principal is to be paid ("First Principal Payment
Date") and final Distribution Date on which principal is to be paid ("Last
Principal Payment Date") with respect to each Class of Offered Certificates,
prepared using the Modeling Assumptions (as described below) and, where
applicable, the specified assumed purchase prices (which prices do not include
accrued interest). Assumed purchase prices are expressed in 32nds (e.g.,
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100.04 means 100 4/32%) as a percentage of the initial Certificate Balance or
Notional Amount of each Class of Offered Certificates. For purposes of the Yield
Tables relating to the Class X Certificates, the information therein relating to
weighted average life, First Principal Payment Date and Last Principal Payment
Date is being calculated in respect of the Notional Amount of Class X
Certificates (as if it were a Certificate Balance).
The yields set forth in the Yield Tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates, would cause the
discounted present value of such assumed stream of cash flows to equal the
assumed purchase prices, plus accrued interest from and including November 1,
1998 to but excluding the Assumed Settlement Date (as defined below), and by
converting such monthly rates to semi-annual corporate bond equivalent rates.
Such calculation does 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 Offered Certificates and consequently does not purport
to reflect the return on any investment in such Classes of Offered Certificates
when such reinvestment rates are considered.
For purposes of the Yield Tables (except in the case of the Class X
Certificates), "modified duration" has been calculated using the modified
Macaulay Duration as specified in the "PSA Standard Formulas". The Macaulay
Duration is calculated as the present value weighted average time to receive
future payments of principal and interest, and the PSA Standard Formula modified
duration is calculated by dividing the Macaulay Duration by the appropriate
semi-annual compounding factor. The duration of a security may be calculated
according to various methodologies. Accordingly, no representation is made by
the Depositor or any other person that the "modified duration" approach used in
this Prospectus Supplement is appropriate. Duration, like yield, will be
affected by the prepayment rate of the Mortgage Loans and extensions in respect
of Balloon Payments that actually occur during the life of the Class A-1-a,
Class A-1-b, Class A-2, Class B, Class C, Class D and Class E Certificates and
by the actual performance of the Mortgage Loans, all of which may differ, and
may differ significantly, from the assumptions used in preparing the Yield
Tables.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of one or more mortgage loans.
The Yield Tables were derived from calculations based on the following
assumptions (collectively, the "Modeling Assumptions"):
o the Mortgage Loans have the characteristics set forth on Annex A-1
and the Initial Pool Balance is approximately $2,025,590,706;
o the initial Certificate Balance or Notional Amount, as the case may
be, of each Class of Regular Interest Certificates is as described
in this Prospectus Supplement;
o the Pass-Through Rate for each Class of Regular Interest
Certificates is as described in this Prospectus Supplement.
o there are no delinquencies or losses in respect of the Mortgage
Loans, there are no modifications, extensions, waivers or amendments
affecting the payment by Borrowers of principal or interest on the
Mortgage Loans, there are no Appraisal Reduction Amounts with
respect to the Mortgage Loans and there are no casualties or
condemnations affecting the Mortgaged Properties;
o scheduled interest and principal payments on the Mortgage Loans are
timely received;
o all Mortgage Loans have Due Dates on the first day of each month the
payments are due and accrue interest on the respective basis
described in this Prospectus Supplement (i.e., a 30/360 Basis or an
Actual/360 Basis);
o all prepayments are assumed to be accompanied by a full month's
interest;
o there are no breaches of the Depositor's representations and
warranties regarding the Mortgage Loans;
o Scheduled P&I Payments on the Mortgage Loans are timely received on
the first day of each month;
o no voluntary or involuntary prepayments are received as to any
Mortgage Loan during such Mortgage Loan's Lockout Period ("LOP"),
yield maintenance period ("YMP") or declining premium period
("Declining Premium"), in each case if any; each ARD Loan is paid in
full on its Anticipated Repayment Date; and, otherwise, prepayments
are made on each of the Mortgage Loans at the indicated CPRs set
forth in the tables (without regard to any limitations in such
Mortgage Loans on partial voluntary principal prepayments);
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o no person or entity entitled thereto exercises its right of optional
termination described in this Prospectus Supplement under
"Description of the Offered Certificates--Termination";
o no Mortgage Loan is required to be repurchased by the Depositor;
o no Prepayment Interest Shortfalls are incurred and no Prepayment
Premiums or Yield Maintenance Charges are collected;
o there are no Additional Trust Fund Expenses;
o distributions on the Offered Certificates are made on the 15th day
of each month, commencing in December 1998;
o the Offered Certificates are settled on November 24, 1998 (the
"Assumed Settlement Date"); and
o the Arden Loan is assumed to have an Anticipated Repayment Date of
May 1, 2008.
The characteristics of the Mortgage Loans differ in certain respects from
those assumed in preparing the Yield Tables, and the Yield Tables are presented
for illustrative purposes only. In particular, none of the Mortgage Loans permit
voluntary partial prepayments. Thus, neither the Mortgage Pool nor any Mortgage
Loan will prepay at any constant rate, and it is unlikely that the Mortgage
Loans will prepay in a manner consistent with any designated scenario for the
Yield Tables. In addition, there can be no assurance the Mortgage Loans will
prepay at any particular rate, that the Mortgage Loans will not prepay
(involuntarily or otherwise) during Lockout Periods, yield maintenance periods
and/or declining premium periods, that the ARD Loans will be paid in full on
their respective Anticipated Repayment Dates, that the actual pre-tax yields on,
or any other payment characteristics of, any Class of Offered Certificates will
correspond to any of the information shown in the Yield Tables, or that the
aggregate purchase prices of the Offered Certificates will be as assumed.
Accordingly, investors must make their own decisions as to the appropriate
assumptions (including prepayment assumptions) to be used in deciding whether to
purchase the Offered Certificates. For purposes of the Modeling Assumptions, a
"yield maintenance period" is any period during which a Mortgage Loan provides
that voluntary prepayments be accompanied by a Yield Maintenance Charge, and a
"declining premium period" is any period during which a Mortgage Loan provides
that voluntary prepayments be accompanied by a Prepayment Premium calculated as
a declining percentage of the principal amount prepaid.
Weighted Average Lives
The weighted average life of any Offered Certificate (other than a Class X
Certificate) refers to the average amount of time that will elapse from the date
of its issuance until each dollar to be applied in reduction of the principal
balance of such Certificate is distributed to the investor. For purposes of this
Prospectus Supplement, the weighted average life of any such Offered Certificate
is determined as follows:
o multiply the amount of each principal distribution on such
Certificate by the number of years from the Assumed Settlement Date
to the related Distribution Date;
o sum the results; and
o divide the sum by the aggregate amount of the reductions in the
principal balance of such Certificate.
Accordingly, the weighted average life of any such Offered Certificate will be
influenced by, among other things, the rate at which principal of the Mortgage
Loans is paid or otherwise collected or advanced and the extent to which such
payments, collections and/or advances of principal are in turn applied in
reduction of the Certificate Balance of the Class of Certificates to which such
Offered Certificate belongs.
As described in this Prospectus Supplement, the Principal Distribution
Amount for each Distribution Date will be distributable first in respect of the
Class A-1-a, Class A-1-b and/or Class A-2 Certificates until the Certificate
Balances thereof are reduced to zero, and will thereafter be distributable
entirely in respect of the other Classes of Principal Balance Certificates,
sequentially based upon their relative seniority, in each such case until the
related Certificate Balance is reduced to zero. As a consequence of the
foregoing, the weighted average lives of the Class A-1-a, Class A-1-b and Class
A-2 Certificates may be shorter, and the weighted average lives of the other
Classes of Principal Balance Certificates may be longer, than would otherwise be
the case if the Principal Distribution Amount for each Distribution Date was
being distributed on a pro rata basis among the respective Classes of Principal
Balance Certificates.
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The tables (the "Decrement Tables") set forth in Annex C-2 show with
respect to each Class of Offered Certificates (other than the Class X
Certificates) the weighted average life thereof, and the percentage of the
initial related Certificate Balance that would be outstanding after each of the
specified dates, based upon each of the indicated levels of CPR and the Modeling
Assumptions.
As used in each of the Decrement Tables, the column headed "0%" assumes
that none of the Mortgage Loans is prepaid before maturity (except that each ARD
Loan is paid in full on its Anticipated Repayment Date). The columns headed
"10%", "20%", "30%" and "50%" assume that no prepayments are made on any
Mortgage Loan during such Mortgage Loan's Lockout Period, yield maintenance
period or declining premium period, in each case if any, and are otherwise made
on each of the Mortgage Loans at the indicated CPRs (except that each ARD Loan
is paid in full on its Anticipated Repayment Date). There is no assurance,
however, that prepayments of the Mortgage Loans (whether or not in a Lockout
Period, a yield maintenance period or a declining premium period) will conform
to any particular CPR, and no representation is made that the Mortgage Loans
will prepay in accordance with the assumptions set forth in this Prospectus
Supplement at any of the CPRs shown or at any other particular prepayment rate,
that all the Mortgage Loans will prepay in accordance with the assumptions set
forth in this Prospectus Supplement at the same rate or that Mortgage Loans that
are in a Lockout Period, a yield maintenance period or declining premium period
will not prepay as a result of involuntary liquidations upon default or
otherwise.
To the extent that the Mortgage Loans have characteristics that differ
from those assumed in preparing the Decrement Tables, the Class A-1-a, Class
A-1-b, Class A-2, Class B, Class C, Class D and/or Class E Certificates may
mature earlier or later than indicated by such tables. It is highly unlikely
that the Mortgage Loans will prepay in accordance with the Modeling Assumptions
at any of the specified CPRs until maturity or that the Mortgage Loans will all
prepay at the same rate. In addition, variations in the actual prepayment
experience and the balance of the Mortgage Loans that prepay may increase or
decrease the percentages of initial Certificate Balances (and weighted average
lives) shown in the Decrement Tables. Such variations may occur even if the
average prepayment experience of the Mortgage Loans were to conform to the
assumptions and be equal to any of the specified CPRs. You are urged to conduct
your own analyses of the rates at which the Mortgage Loans may be expected to
prepay.
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered
Certificates will be used by the Depositor to purchase the Mortgage Loans and to
pay certain expenses in connection with the issuance of the Certificates.
FEDERAL INCOME TAX CONSEQUENCES
General
The Pooling Agreement will require the Trustee, as REMIC Administrator, to
make elections to treat designated portions of the Trust Fund as three separate
REMICs, with the designations "REMIC I", "REMIC II" and "REMIC III",
respectively. 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, REMIC I, REMIC II, and REMIC III,
respectively, will each qualify as a REMIC under the Code. For federal income
tax purposes, (i) the separate non-certificated regular interests in REMIC I
will be "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 "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 Regular Interest Certificates will
evidence the "regular interests" in, and generally will be treated as debt
obligations of, REMIC III, and (vi) the Class R-III Certificates will evidence
the sole class of residual interests in REMIC III.
For federal income tax purposes the Class X Certificates will evidence
multiple "regular interests" in REMIC III. See "Federal Income Tax
Considerations" in the Prospectus. The Class A-1-b, Class A-2, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates will represent pro
rata (based on their respective initial Certificate Balances) undivided
beneficial interests in the portion of the Trust Fund consisting of any
Additional Interest collected on the ARD Loans, and such portion will be treated
as part of 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 D, Class E and Class X Certificates will, 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 that subsequent to the date of any determination
the Mortgage Loans will not prepay (that is, a CPR of 0%), except that the ARD
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Loans will be repaid in full on their respective Anticipated Repayment Dates.
There can be no assurance, however, that the Mortgage Loans will not prepay or
that, if they do, they will prepay at any particular rate. See "Federal Income
Tax Considerations" in the Prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Internal Revenue Code of 1986
(the "Code") generally addressing the treatment of debt instruments issued with
original issue discount. You should be aware, however, 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. It is recommended that you consult your own tax advisor concerning
the tax treatment of your Certificates.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period, a possibility of
particular relevance to the Class X Certificates, the amount of original issue
discount allocable to such period would be zero and such Certificateholders will
be permitted to offset such negative amount only against future original issue
discount (if any) attributable to such Certificate. Although the matter is not
free from doubt, a Holder of a Class X 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 X 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. If you are contemplating the purchase of Class X
Certificates, it is recommended that you consult your own tax advisor 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 evidenced by the Class X 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. If you acquire an interest in any
such Class of Certificates, it is recommended that you consult your own tax
advisor regarding the possibility of making an election to amortize such
premium. See "Federal Income Tax Considerations--Taxation of Regular Interest
Securities--Market Discount and Premium" in the Prospectus.
Prepayment Premiums and Yield Maintenance Charges actually collected on
the Mortgage Loans will be distributed to the Holders of each Class of
Certificates entitled thereto as described in this Prospectus Supplement. It is
not entirely clear under the Code when the amount of a Prepayment Premium or
Yield Maintenance Charge should be taxed to the Holder of a Class of
Certificates entitled thereto. For federal income tax reporting purposes, a
Prepayment Premium or Yield Maintenance Charge will be treated as income to the
Holders of a Class of Certificates entitled thereto only after the Master
Servicer's actual receipt of such Prepayment Premium or Yield Maintenance
Charge. The Internal Revenue Service may nevertheless seek to require that an
assumed amount of Prepayment Premiums and Yield Maintenance Charges 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
Charges prior to their actual receipt. In the event that such projected
Prepayment Premiums and Yield Maintenance Charges 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 Charges had been projected to be received. Moreover, it appears that
Prepayment Premiums and Yield Maintenance Charges are to be treated as ordinary
income rather than capital gain. The correct characterization of such income is
not entirely clear, however, and it is recommended that you consider consulting
your own tax advisor concerning the treatment of Prepayment Premiums and Yield
Maintenance Charges.
Because Additional interest will arise on the ARD Loans only if (contrary
to the prepayment assumption) they do not prepay on their related Anticipated
Repayment Date, for federal income tax information reporting purposes it will be
assumed that no such Additional Interest will be paid. Consequently, Additional
Interest will not be reported as income in federal income tax information
reports sent to Holders of the Principal Balance Certificates until such
Additional Interest actually accrues. Similarly, no portion of such Holders'
purchase price of their Certificates will be treated as allocable to their right
to receive possible distributions of Additional Interest. However, the Internal
Revenue Service may disagree with this treatment and assert that additional
income should be accrued with respect to projected possible payments of
Additional Interest in advance of its actual accrual, that additional original
issue discount income should be accrued with respect to the REMIC regular
interests related to one or more Classes of Principal Balance Certificates, or
both. In either event, to the extent that any such projected possible payments
of Additional Interest were not actually made or were smaller in amount than the
portion of the Holder's purchase price allocated thereto, the Holder of such a
Certificate would be allowed to claim a loss, but the timing and capital or
ordinary character of such loss are unclear.
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Constructive Sales of Class X 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 (i) entitle the Holder to a specified principal amount, (ii) pay interest
at a fixed or variable rate and (iii) 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 X Certificates, which do not have a principal
balance, could be subject to this provision if a Holder of a Class X Certificate
were to engage in a constructive sale transaction.
Characterization of Investments in Offered Certificates
Generally, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(5)(B) of the Code
in the same proportion that the assets of the Trust would be so treated. In
addition, interest (including original issue discount, if any) on the Offered
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code.
Most of the Mortgage Loans are not secured by real estate used for
residential or certain other purposes prescribed in Section 7701(a)(19)(c) of
the Code, and consequently the Regular Interest Certificates will be treated as
assets qualifying under that section to only a limited extent. Accordingly,
investment in the Regular Interest Certificates may not be suitable for thrift
institutions seeking to be treated as a "domestic building and loan association"
under Section 7701(a)(19)(C) of the Code.
The Offered Certificates will be treated as "qualified mortgages" for
another REMIC under Section 860G(a)(3)(C) of the Code and "permitted assets" for
a "financial asset securitization investment trust" under Section 860L(c) of the
Code. To the extent an Offered Certificate represents ownership of an interest
in any Mortgage Loan that is secured in part by the related Borrower's interest
in an account containing any holdback of loan proceeds, a portion of 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)(5)(B)
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. See "Description of the Mortgage Pool" in this
Prospectus Supplement.
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 proceeds from
such property. 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 Provisions or a tax on "prohibited transactions"
under Section 860F of the Code. 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 health care facilities or 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.
To the extent permitted by then applicable laws, any tax on "prohibited
transactions", tax on non-permitted contributions or tax on "net income from
foreclosure property" that may be imposed on any of REMIC I, REMIC II or REMIC
III will be borne by the REMIC Administrator, the Trustee, the Master Servicer
or the Special Servicer, in any case out of its own funds, if (but only if)--
o such person has sufficient assets to do so, and
o such tax arises out of a breach of such person's obligations under
certain specified sections of the Pooling Agreement.
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Any such tax not borne by the REMIC Administrator, the Trustee, the Master
Servicer or the Special Servicer will be charged against the Trust resulting in
a reduction in amounts available for distribution to the Certificateholders. See
"Material Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax
and Other Taxes" in the Prospectus.
It is possible that a Puerto Rican withholding tax may be imposed at a
rate of 29% on interest payments received by the REMIC on a Mortgage Loan
secured by Mortgaged Property located in Puerto Rico if a Certificateholder owns
more than 50% of the related Borrower. In such a case, the withholding tax
imposed on the REMIC would be specially allocated to the Certificateholder
owning more than 50% of the Borrower, with the amount of tax treated as
distributed to such holder. The Certificateholder would not be entitled to claim
foreign tax credits for federal income tax purposes with respect to any such
Puerto Rican withholding tax imposed on the REMIC. Accordingly, investment in
the Certificates may not be suitable for investors that own more that 50% of a
Borrower under a Mortgage Loan secured by Mortgaged Property located in Puerto
Rico.
Reporting and Other Administrative Matters
Reporting of interest income, including original issue discount, if any,
with respect to Regular Interest 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 Regular Interest
Certificates and the IRS; Holders of Regular Interest 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 related REMIC
must also comply with rules requiring a Regular Interest 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 the Residual Interest Certificates, including
income, excess inclusions, investment expenses and relevant information
regarding qualification of the related REMIC's assets will be made as required
under the Treasury regulations, generally on a quarterly basis.
As applicable, the Regular Interest Certificate information reports will
include a statement of the adjusted issue price of the Regular Interest
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
a particular Holder's purchase price that the REMIC Administrator 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 "Federal Income Tax Considerations"
in the Prospectus.
CERTAIN 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 Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (each, a "Plan")
should carefully review with its legal advisors whether the purchase or holding
of Offered Certificates could constitute or 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. Certain fiduciary and prohibited transaction issues arise
only if the assets of the Trust constitute "plan assets" for purposes of Part 4
of Title I of ERISA and Section 4975 of the Code ("Plan Assets"). Whether the
assets of the Trust will constitute Plan Assets at any time will depend on a
number of factors, including the portion of any Class of Certificates that is
held by "benefit plan investors" (as defined in U.S. Department of Labor
Regulation Section 2510.3-101).
The U.S. Department of Labor has issued an individual prohibited
transaction exemption (a "PTE") to The Underwriter (PTE 91- 14). Subject to the
satisfaction of certain conditions set forth therein, PTE 91-14 (the
"Exemption") generally exempts from the application of the prohibited
transaction provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the
excise taxes imposed on such prohibited transactions pursuant to Sections
4975(a) and (b) of the Code, certain transactions relating to, among other
things, the servicing and operation of mortgage pools, such as the Mortgage
Pool, and the purchase, sale and holding of mortgage pass-through certificates,
such as the Senior Certificates, that are underwritten by one of the following
parties (collectively, the "Exemption Favored Parties")--
(a) the Underwriter,
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(b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control
with the Underwriter, and
(c) any member of the underwriting syndicate or selling group of which a
person described in (a) or (b) is a manager or co-manager with
respect to the Offered Certificates.
The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of a Senior
Certificate to be eligible for exemptive relief thereunder. The conditions are
as follows:
o first, the acquisition of such Senior Certificate by a Plan must be
on terms that are at least as favorable to the Plan as they would be
in an arm's-length transaction with an unrelated party;
o second, the rights and interests evidenced by such Senior
Certificate must not be subordinated to the rights and interests
evidenced by the other Certificates;
o third, at the time of its acquisition by the Plan such Senior
Certificate must be rated in one of the three highest generic rating
categories by Moody's, S&P, Fitch, IBCA, Inc. ("Fitch") or Duff &
Phelps Credit Rating Co. ("DCR").
o fourth, the Trustee cannot be an affiliate of any other member of
the "Restricted Group", which (in addition to the Trustee) consists
of the Exemption-Favored Parties, the Depositor, the Trustee, the
Master Servicer, the Special Servicer, any sub-servicers, the
Originator, each Borrower, if any, 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 Certificates and any and all affiliates of any of the
aforementioned persons;
o fifth, the sum of all payments made to and retained by the
Exemption-Favored Parties must represent not more than reasonable
compensation for underwriting the Senior Certificates; the sum of
all payments made to and retained by the Depositor pursuant to the
assignment of the Mortgage Loans to the Trust must represent not
more than the fair market value of such obligations; and the sum of
all payments made to and retained by the Master Servicer, the
Special Servicer and any sub-servicer must represent not more than
reasonable compensation for such person's services under the Pooling
Agreement and reimbursement of such person's reasonable expenses in
connection therewith; and
o sixth, the investing Plan must be an accredited investor as defined
in Rule 501(a)(1) of Regulation D of the SEC under the Securities
Act.
Because the Senior Certificates are not subordinated to any other Class of
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-1-a, Class A-1-b and Class A-2 Certificates be rated not lower than "Aaa" by
Moody's and "AAA" by S&P and that the Class X Certificates be rated not lower
than "Aaa" by Moody's and "AAAr" by S&P. Furthermore, upon initial issuance of
the Certificates, the Trustee will not be affiliated with any other member of
the Restricted Group. Accordingly, as of the Closing Date, the third and fourth
general conditions 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. A fiduciary of a Plan
contemplating purchasing 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 as of the date of such purchase. A
Plan's authorizing fiduciary will be deemed to make a representation regarding
satisfaction of the sixth general condition set forth above in connection with
the purchase of a Senior Certificate.
The Exemption also requires that the Trust meet the following
requirements:
o the Trust Fund must consist solely of assets of the type that have
been included in other investment pools;
o certificates evidencing interests in such other investment pools
must have been rated in one of the three highest generic categories
of Moody's, Fitch, DCR or S&P for at least one year prior to the
Plan's acquisition of Senior Certificates and
o certificates evidencing interests 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.
The Depositor has confirmed to its satisfaction that such requirements have been
satisfied as of the date of this Prospectus Supplement.
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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 in the initial issuance of Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the
Depositor, an Exemption-Favored Party, the Trustee, the Master
Servicer, the Special Servicer, a sub-servicer, the Originator, or a
Borrower is a party in interest (within the meaning of Section 3(14)
of ERISA) or a disqualified person (within the meaning of Section
4975(e)(2) of the Code) (a "Party in Interest") 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 next
sentence) by any person who has discretionary authority or renders investment
advice with respect to the assets of such Excluded Plan. For purposes of this
Prospectus Supplement, an "Excluded Plan" is a Plan sponsored by any member of
the Restricted Group.
In addition, if the general conditions of the Exemption, as well as
certain other specific 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 excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code, in
connection with--
(1) the direct or indirect sale, exchange or transfer of Senior
Certificates in the initial issuance of 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;
(2) the direct or indirect acquisition or disposition in the secondary
market of Senior Certificates by a Plan; and
(3) the continued 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 Sections 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.
Before purchasing a Senior Certificate, a fiduciary of a Plan should
itself confirm that:
o the Senior Certificates constitute "certificates" for purposes of
the Exemption; and
o the specific and general conditions and the other requirements set
forth in the Exemption would be satisfied at the time of such
purchase.
In addition to determining the availability of the exemptive relief
provided in the Exemption, a Plan fiduciary should consider the availability of
any other prohibited transaction class 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 the Senior 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. A purchaser of a
Senior Certificate 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.
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The characteristics of the Class B, Class C, Class D and Class E
Certificates do not meet the requirements of the Exemption. As a result, no
transfer of a Class B, Class C, Class D or Class E 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 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 will be deemed to have
represented to the Depositor, the Underwriter, the Master Servicer, the Special
Servicer, the Trustee, any sub-servicer and any mortgagor with respect to the
Mortgage Loans, the 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, or with assets of a Plan or (ii) the purchase and holding of
such Certificate or interest therein is so exempt on the basis of Prohibited
Transaction Class Exemption 95-60.
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust) in which an insurance company general account has an
interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase certain Classes
of Certificates (such as the Class B, Class C, Class D and Class E Certificates)
that do not meet the requirements of the Exemption solely because they (a) are
subordinated to other Classes of Certificates in the Trust or (b) have not
received a rating at the time of the purchase in one of the three highest rating
categories from Moody's, Fitch, DCR and S&P. All other conditions of the
Exemption would have to be satisfied in order for PTCE 95-60 to be available.
Before purchasing Class B, Class C, Class D and Class E Certificates, an
insurance company general account seeking to rely on Section III of PTCE 95-60
should itself confirm that all applicable conditions and other requirements have
been satisfied.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Code. However, such a governmental plan
may be subject to a federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code ("Similar Law"). A
fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
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.
The sale of Offered Certificates to a Plan is in no respect a
representation or warranty by the Depositor or the Underwriter that this
investment meets all relevant legal requirements with respect to investments by
Plans generally or by any particular Plan, or that this investment is
appropriate for Plans generally or for any particular Plan.
LEGAL INVESTMENT
Upon issuance, the Senior Certificates and Class B Certificates
(collectively, the "SMMEA Certificates") will constitute "mortgage related
securities" for purposes of SMMEA. However, in order to remain "mortgage related
securities", the SMMEA Certificates must, among other things, continue to be
rated in one of the two highest rating categories by at least one nationally
recognized statistical rating organization. In addition, the SMMEA Certificates
will constitute "mortgage related securities" in part because they evidence
interest in notes secured by first (or effectively first) mortgage liens on one
or more parcels of real estate upon which is located a residential, commercial
or mixed residential and commercial structure. No representation is made as to
the effect on their status as "mortgage related securities" if any of the
Borrowers entitled to do so elects to defease their respective Mortgage Loans.
Such defeasance may not occur within two years of the Closing Date.
The Class C, Class D and Class E Certificates will not upon issuance 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 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.
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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.
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.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement dated as of the date of this Prospectus Supplement (the "Underwriting
Agreement"), between the Depositor and the Underwriter, the Depositor has agreed
to sell to the Underwriter, and the Underwriter has agreed to purchase all of
the Offered Certificates. Proceeds to the Depositor from the sale of the Offered
Certificates, before deducting expenses payable by the Depositor, will be an
amount equal to approximately 104.0% of the initial aggregate Certificate
Balance of the Class A-1-a, Class A-1-b, Class A-2, Class B, Class C, Class D
and Class E Certificates, plus accrued interest on all the Offered Certificates
from the Cut-off Date.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. 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. In connection with the purchase and sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. The
Underwriter and any dealers that participate with the 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.
Purchasers of the 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. You should consult with your legal advisors in
this regard prior to any such reoffer or sale.
The Underwriter has advised the Depositor that it, through one or more of
their affiliates, presently intends to make a market in the Offered
Certificates, but it 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--Risks
Related to the Offered Certificates--Risks Associated with Liquidity and Market
Value" in this Prospectus Supplement and "Risk Factors--Limited Liquidity" in
the Prospectus.
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or to make contributions to the Underwriter and each
such controlling person with respect to, certain liabilities, including certain
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriter by Sidley & Austin, New York, New York.
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RATINGS
It is a condition to their issuance that the respective Classes of Offered
Certificates be rated as follows:
Class Moody's S&P
- ----- ------- ---
Class A-1-a Aaa AAA
Class A-1-b Aaa AAA
Class A-2 Aaa AAA
Class B Aa2 AA
Class C A2 A
Class D Baa2 BBB
Class E Baa3 BBB-
Class X Aaa AAAr
The ratings of 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, except in the case of the Class X
Certificates, the ultimate receipt by Holders thereof of all payments of
principal to which they are entitled by the Rated Final Distribution 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 principal and/or interest, as applicable, required under the Offered
Certificates. The ratings of the Offered Certificates do not, however, represent
any assessments of:
o the tax attributes of the Offered Certificates or of the Trust;
o the likelihood or frequency of voluntary or involuntary principal
prepayments on the Mortgage Loans;
o the degree to which such prepayments might differ from those
originally anticipated;
o whether and to what extent Prepayment Premiums and Yield Maintenance
Charges will be collected on the Mortgage Loans in connection with
such prepayments or the corresponding effect on yield to investors;
or
o whether and to what extent Additional Interest will accrue or be
collected on the ARD Loans.
Also, a security rating does not represent any assessment of the yield to
maturity that you may experience or, if you are purchasing Class X Certificates,
the possibility that you might not fully recover your investment in the event of
rapid prepayments and/or other liquidations of the Mortgage Loans (including
both voluntary and involuntary prepayments).
In general, the ratings on the Offered Certificates address credit risk
and not prepayment risk. As described in this Prospectus Supplement, the amounts
payable with respect to the Class X Certificates do not include principal. Thus,
if the Mortgage Pool were to prepay in the initial month, the Holders of the
Class X Certificates would receive only a single month's interest. Although such
Holders may have suffered a nearly complete loss of their investment, such
result is consistent with the ratings received on the Class X Certificates
because all amounts "due" to such Certificateholders would have been paid. The
Notional Amount upon which interest is calculated with respect to the Class X
Certificates is subject to reduction in connection with each reduction in the
Certificate Balance of a Class of Principal Balance Certificates, whether as a
result of principal payments or in connection with Realized Losses and
Additional Trust Fund Expenses. The ratings on the Class X Certificates do not
address the timing or magnitude of any reduction of such Notional Amount, but
only the obligation to pay interest timely on such Notional Amount as so reduced
from time to time. Accordingly, the ratings on the Class X Certificates should
be evaluated independently from similar ratings on other types of securities.
The "r" subscript on the rating assigned by S&P to the Class X
Certificates denotes that there are noncredit risks associated with the
securities and that the securities may experience increased volatility or
fluctuations in expected returns.
There is no assurance that any rating assigned to the Offered Certificates
by a Rating Agency will not be downgraded, qualified or withdrawn by such Rating
Agency, if, in its judgment, circumstances so warrant. 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 ratings assigned thereto by S&P and/or Moody's.
S-128
<PAGE>
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "Risk
Factors--Limited Nature of Credit Ratings" in the Prospectus.
S-129
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
30/360 Basis............................................................S-42
30/360 Mortgage Loans...................................................S-42
ABR.....................................................................S-60
Accelerated Amortization Payments.......................................S-42
Accrued Certificate Interest............................................S-96
ACMs....................................................................S-36
Actual/360 Basis........................................................S-42
Actual/360 Mortgage Loans...............................................S-42
ADA.....................................................................S-40
Additional Interest.....................................................S-42
Additional Interest Rate................................................S-42
Additional Rights.......................................................S-47
Additional Trust Fund Expense..........................................S-105
Administrative Cost Rate................................................S-52
Advances................................................................S-18
Anticipated Repayment Date..............................................S-25
Appraisal Reduction Amount.............................................S-107
Appraisal Trigger Event................................................S-107
Appraisal Trigger Events................................................S-18
ARD.....................................................................S-25
ARD Loan................................................................S-42
ARD Loans...............................................................S-25
Arden Borrower..........................................................S-58
Arden Loan..............................................................S-58
Arden Properties........................................................S-58
Arden Realty............................................................S-58
Assumed Final Distribution Date..........................................S-9
Assumed P&I Payment....................................................S-107
Assumed Settlement Date................................................S-119
Available Distribution Amount...........................................S-95
Balloon Loan............................................................S-43
Balloon Loans...........................................................S-25
Balloon Payment.........................................................S-25
Bayside Borrower........................................................S-64
Bayside Loan............................................................S-64
Bayside Mortgage........................................................S-64
Bayside Property........................................................S-64
Bond-Type Leases........................................................S-47
Borrower................................................................S-18
Capital Imp. Reserve....................................................S-53
Casualty or Condemnation Rights.........................................S-47
CBE....................................................................S-117
CERCLA..................................................................S-37
Certificate Balance.....................................................S-91
Certificate Registrar...................................................S-92
Certificateholder Reports..............................................S-110
Certificateholders.......................................................S-7
Certificates.............................................................S-7
Chicago Omni Property...................................................S-55
Class....................................................................S-7
Class A Principal Distribution Cross-Over Date..........................S-99
Class A-1 Directed Principal Cash Flow Amounts.........................S-104
Class A-2 Directed Principal Cash Flow Amounts.........................S-104
Class X Strip Rate......................................................S-97
Closing Date.............................................................S-8
CMBS....................................................................S-74
Code...................................................................S-121
Collection Account......................................................S-92
Collection Period........................................................S-8
Comparative Financial Status Report....................................S-111
Compensating Interest Payment...........................................S-75
Component...............................................................S-91
Condemnation Proceeds...................................................S-80
Constant Prepayment Rate...............................................S-118
Controlling Class.......................................................S-82
Controlling Class Representative........................................S-82
Corporate Trust Office.................................................S-114
Corrected Mortgage Loan.................................................S-73
CPR....................................................................S-118
Credit Lease............................................................S-33
Credit Lease Default....................................................S-47
Credit Lease Guarantor..................................................S-33
Credit Lease Loan.......................................................S-33
Credit Lease Loans......................................................S-24
Credit Tenant...........................................................S-33
Cross-Collateralized Mortgage Loans...............................S-38, S-45
CSSA Loan File.........................................................S-110
CSSA Property File.....................................................S-110
Custodial Account.......................................................S-80
Cut-off Date.............................................................S-8
Cut-off Date Balance....................................................S-40
Cut-off Date DSC Ratio..................................................S-50
Cut-off Date Loan-to-Value Ratio........................................S-52
Cut-off Date LTV Ratio..................................................S-52
D.......................................................................S-53
DCR....................................................................S-124
Debt Service Coverage Ratio.............................................S-50
Declining Premium......................................................S-118
Decrement Tables.......................................................S-120
Default Interest........................................................S-75
Defeasance Collateral...................................................S-44
Defeasance Loan.........................................................S-44
Defeasance Loans........................................................S-26
Definitive Certificate..................................................S-92
Delinquent Loan Status Report..........................................S-110
Depositor...........................................................S-1, S-7
Determination Date.......................................................S-8
Discount Rate..........................................................S-104
Distributable Certificate Interest......................................S-96
Distribution Date........................................................S-8
Distribution Date Statement............................................S-108
Dominant Controlling Class Certificateholder............................S-76
Double Net Leases.......................................................S-47
DSC Ratio...............................................................S-50
DTC.....................................................................S-10
DTC Participants........................................................S-92
Due Date................................................................S-25
Eligible Account........................................................S-80
Enhancement Insurer.....................................................S-47
ERISA..................................................................S-123
Events of Default.......................................................S-88
Excluded Plan..........................................................S-125
S-130
<PAGE>
Exemption................................................................S-123
Exemption Favored Parties................................................S-123
FF&E......................................................................S-54
Final Recovery Determination.............................................S-109
First Principal Payment Date.............................................S-117
Fiscal Agent...............................................................S-8
Fitch....................................................................S-124
Form 8-K...................................................................S-7
Fresno Borrower...........................................................S-61
Fresno Loan...............................................................S-61
Fresno Property...........................................................S-61
Fully Amortizing Loan.....................................................S-43
Fully Amortizing Loans....................................................S-25
FUNB......................................................................S-74
GLA.......................................................................S-56
Grantor Trust.............................................................S-11
Group 1 Mortgage Loans....................................................S-95
Group 2 Mortgage Loans....................................................S-95
Historical Loan Modification Report......................................S-110
Historical Loss Estimate Report..........................................S-110
Holders....................................................................S-7
Hospitality Properties....................................................S-32
Initial Pool Balance......................................................S-20
Inland Borrower...........................................................S-66
Inland Loan...............................................................S-66
Inland Properties.........................................................S-66
Inland Real Estate........................................................S-66
Insurance Proceeds........................................................S-80
Interest Accrual Period....................................................S-9
Interest Reserve Account..................................................S-96
Interest Reserve Amount...................................................S-96
IRS......................................................................S-121
Last Principal Payment Date..............................................S-117
Lease Enhancement Policy..................................................S-47
Lennar....................................................................S-74
Liquidation Fee...........................................................S-76
Liquidation Fee Rate......................................................S-76
Liquidation Proceeds......................................................S-80
LNR.......................................................................S-74
Loan Group................................................................S-15
Loan Group 1..............................................................S-15
Loan Group 1 Distribution Amount..........................................S-96
Loan Group 1 Principal Amounts............................................S-97
Loan Group 2..............................................................S-15
Loan Group 2 Distribution Amount..........................................S-96
Loan Group 2 Principal Amounts............................................S-97
Loan Payoff Notification Report..........................................S-111
Loan per Bed..............................................................S-52
Loan per Pad..............................................................S-52
Loan per Room.............................................................S-52
Loan per Sq. Ft...........................................................S-52
Loan per Unit.............................................................S-52
Lockbox Account...........................................................S-42
Lockout Period............................................................S-44
LOP......................................................................S-118
LUSTs.....................................................................S-37
Macerich..................................................................S-61
Maintenance Rights........................................................S-47
Major Anchors.............................................................S-56
Managers..................................................................S-65
Master Servicer............................................................S-7
Master Servicing Fee......................................................S-74
Master Servicing Fee Rate.................................................S-74
Material Breach...........................................................S-71
Material Document Defect..................................................S-69
Maturity Loan-to-Value Ratio..............................................S-52
Maturity LTV Ratio........................................................S-52
Miami Bonds...............................................................S-65
Modeling Assumptions.....................................................S-118
Moody's....................................................................S-2
Mortgage..................................................................S-41
Mortgage File.............................................................S-69
Mortgage Loan Deficit.....................................................S-17
Mortgage Loan Schedule....................................................S-70
Mortgage Loans.............................................................S-7
Mortgage Note.............................................................S-41
Mortgage Pass-Through Rate................................................S-94
Mortgage Pool.............................................................S-18
Mortgage Rate.............................................................S-25
Mortgaged Property........................................................S-18
Multifamily Rental Properties.............................................S-32
NAP.......................................................................S-53
NAV.......................................................................S-53
Net Aggregate Prepayment Interest Shortfall...............................S-75
Net Cash Flow.............................................................S-50
NOI.......................................................................S-61
Non-REMIC Assets..........................................................S-11
Nonrecoverable Advance....................................................S-81
Nonrecoverable P&I Advance...............................................S-106
Nonrecoverable Servicing Advance..........................................S-77
Notional Amount...........................................................S-91
NRA.......................................................................S-58
NY Omni Property..........................................................S-54
Occupancy Percentage......................................................S-53
Occupancy Rate............................................................S-53
Offered Certificates.......................................................S-1
Office Properties.........................................................S-33
OID Regulations..........................................................S-121
Omni Borrower.............................................................S-54
Omni Loan.................................................................S-54
Omni Properties...........................................................S-54
Ontario Mills Borrower....................................................S-55
Ontario Mills Loan........................................................S-55
Ontario Mills Property....................................................S-55
Open Period...............................................................S-44
Operating Statement Analysis.............................................S-111
Original Amortization Term................................................S-52
Original Interest-Only Period.............................................S-53
Original Term to Maturity.................................................S-53
Originator................................................................S-41
P&I Advance...............................................................S-18
Party in Interest........................................................S-125
Pass-Through Rate.........................................................S-10
Permitted Investments.....................................................S-75
Plan.....................................................................S-123
Plan Assets..............................................................S-123
Pooling Agreement..........................................................S-7
Prepayment Consideration..................................................S-38
S-131
<PAGE>
Prepayment Consideration Period.........................................S-44
Prepayment Interest Excess..............................................S-75
Prepayment Interest Shortfall...........................................S-75
Prepayment Premium......................................................S-38
Primary Term............................................................S-46
Principal Balance Certificates..........................................S-16
Principal Distribution Amount...........................................S-97
Private Certificates.....................................................S-1
Prospectus...............................................................S-2
Prospectus Supplement....................................................S-2
PTCE....................................................................S-29
PTCE 95-60.............................................................S-126
PTE....................................................................S-123
Purchase Price..........................................................S-71
Qualified Insurers......................................................S-87
Rated Final Distribution Date............................................S-9
Rating Agencies..........................................................S-2
Realized Losses........................................................S-105
Record Date..............................................................S-8
Regular Interest Certificates...........................................S-92
REITs...................................................................S-55
Related Proceeds........................................................S-77
Remaining Amortization Term.............................................S-52
Remaining Interest-Only Period..........................................S-53
Remaining Term to Maturity..............................................S-53
REMIC...................................................................S-11
REMIC Administrator......................................................S-8
REMIC I................................................................S-120
REMIC II...............................................................S-120
REMIC III..............................................................S-120
Rental Property.........................................................S-50
REO Account.............................................................S-86
REO Extension...........................................................S-85
REO Mortgage Loan.......................................................S-74
REO Property............................................................S-73
REO Status Report......................................................S-110
REO Tax.................................................................S-85
Replacement Reserve.....................................................S-53
Required Appraisal.....................................................S-107
Required Appraisal Loan................................................S-107
Reserve Letter of Credit................................................S-54
Residual Interest Certificates..........................................S-92
Restricted Group.......................................................S-124
Restricted Master Servicer Reports.....................................S-111
Retail Properties.......................................................S-31
Revised Rate............................................................S-42
Rouse...................................................................S-64
S&P......................................................................S-2
Scheduled P&I Payments..................................................S-25
SEC......................................................................S-2
Securities Act...........................................................S-9
Senior Certificates.....................................................S-14
Servicing Advance.......................................................S-18
Servicing Standard......................................................S-72
Servicing Transfer Event................................................S-73
Shadow..................................................................S-53
Similar Law............................................................S-126
SMMEA...................................................................S-12
SMMEA Certificates.....................................................S-126
Special Servicer.........................................................S-7
Special Servicing Fee...................................................S-76
Special Servicing Fee Rate..............................................S-76
Specially Serviced Assets...............................................S-73
Specially Serviced Mortgage Loan........................................S-73
Stated Principal Balance................................................S-95
Subordinate Available Distribution Amount..............................S-100
Subordinate Certificates...............................................S-100
Subordinate Principal Balance Certificates..............................S-16
Substitute Property.....................................................S-61
TI/LC Reserve...........................................................S-53
Triple Net Leases.......................................................S-47
TRT Holdings............................................................S-54
Trust....................................................................S-7
Trust Fund...............................................................S-7
Trustee..................................................................S-8
Trustee Fee............................................................S-114
Trustee Fee Rate.......................................................S-114
Underwriter..............................................................S-1
Underwriting Agreement.................................................S-127
Underwriting Reserves...................................................S-52
Unrestricted Master Servicer Reports...................................S-111
Voting Rights..........................................................S-113
Watch List Report......................................................S-110
Weighted Average........................................................S-52
Weighted Average Mortgage Pass-Through Rate.............................S-97
Workout Fee.............................................................S-76
Workout Fee Rate........................................................S-76
Year Built/Renovated....................................................S-52
Yield Maintenance Charge................................................S-38
Yield Tables...........................................................S-117
YMP....................................................................S-118
S-132
<PAGE>
Annex A-1
AGGREGATE POOL
ALL MORTGAGE PROPERTIES BY STATE
Aggregate % by aggregate
Number Cut-off Date Cut-off Date
State of Loans Balance Balance
- ---------------------- -------- ---------------- --------------
CA ................... 34 $ 401,108,232 19.8%
TX ................... 37 233,832,858 11.5
NY ................... 35 213,094,260 10.5
IL ................... 27 191,465,787 9.5
FL ................... 30 168,134,019 8.3
IN ................... 9 74,557,424 3.7
PA ................... 9 74,379,266 3.7
VA ................... 19 68,016,326 3.4
AZ ................... 14 66,909,620 3.3
AL ................... 4 61,478,266 3.0
GA ................... 12 59,565,965 2.9
NC ................... 15 53,112,031 2.6
TN ................... 7 50,541,759 2.5
WA ................... 7 47,044,752 2.3
CT ................... 7 32,283,549 1.6
NV ................... 4 26,407,307 1.3
OH ................... 6 22,450,744 1.1
CO ................... 6 20,767,769 1.0
MD ................... 5 18,786,383 0.9
OK ................... 2 18,478,584 0.9
MI ................... 3 17,521,359 0.9
MN ................... 2 14,081,430 0.7
WI ................... 3 13,996,449 0.7
NJ ................... 5 13,782,722 0.7
MA ................... 4 11,229,214 0.6
MO ................... 3 10,031,242 0.5
OR ................... 2 9,442,111 0.5
SC ................... 3 6,120,005 0.3
PR ................... 1 5,600,000 0.3
RI ................... 5 5,489,976 0.3
KS ................... 2 4,996,497 0.2
LA ................... 1 2,625,000 0.1
MS ................... 1 2,593,980 0.1
ND ................... 1 2,494,604 0.1
KY ................... 1 1,771,992 0.1
WY ................... 1 1,399,225 0.1
-------- -------------- -----
Total: 327 $2,025,590,706 100.0%
======================== ======== ============== =====
<PAGE>
AGGREGATE POOL
MORTGAGE LOANS BY PROPERTY TYPE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Property Type of Loans Date Balance Balance Balance Balance LTV (1) DSCR (1) Rate (2) Rate
- ------------- -------- ------------ ------- ------- ------- ------- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail 108 $ 812,726,976 40.1% $ 7,525,250 $145,000,000 66.3% 1.62x 97.00% 6.825%
Multifamily 64 363,314,293 17.9 5,676,786 45,871,866 75.3 1.39 94.28 6.885
Hotel 16 362,572,315 17.9 22,660,770 249,347,368 54.9 2.09 NAP 6.598
Office 44 191,679,298 9.5 4,356,348 17,689,266 72.6 1.36 96.50 7.130
Office/Industrial 1 111,200,000 5.5 111,200,000 111,200,000 47.3 2.35 93.99 6.610
CTL 26 78,758,016 3.9 3,029,154 10,377,575 NAP NAP 100.00 7.145
Industrial/Whse 16 67,464,779 3.3 4,216,549 13,963,957 72.4 1.37 96.00 7.093
Self Storage 5 15,393,022 0.8 3,078,604 5,886,611 69.2 1.51 95.55 7.130
Health Care 1 14,138,000 0.7 14,138,000 14,138,000 74.8 1.37 90.80 7.150
Mobile Home Park 3 5,107,564 0.3 1,702,521 2,514,914 76.1 1.32 90.87 7.107
Parking Garage 1 3,236,444 0.2 3,236,444 3,236,444 51.4 1.49 94.07 7.260
- ------------------- --- --------------- ----- ------------ ------------ ---- ---- ----- -----
Total/Avg./Wtd.Avg: 285 $ 2,025,590,706 100.0% $ 7,107,336 $249,347,368 65.7% 1.67x 96.16% 6.840%
=================== === =============== ===== ============ ============ ==== ==== ===== =====
</TABLE>
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(2) Occupancy rates are calculated without reference to hospitality
properties.
<PAGE>
AGGREGATE POOL
CUT-OFF DATE DSC RATIO
(ALL MORTGAGE LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Cut-off Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Date DSC Ratios(x) of Loans Date Balance Balance Balance Balance LTV DSCR Rate (1) Rate
- ------------------ -------- ------------ ------- ------- ------- --- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 1.20 ........ 1 $ 9,794,148 0.5% $ 9,794,148 $ 9,794,148 79.0% 1.20x 87.01% 7.150%
1.21- 1.25 ..... 7 28,290,641 1.5 4,041,520 7,991,787 76.5 1.24 95.69 7.127
1.26- 1.30 ..... 32 160,855,985 8.3 5,026,750 18,073,694 76.3 1.27 96.33 7.099
1.31- 1.35 ..... 66 320,569,851 16.5 4,857,119 17,732,659 75.4 1.33 96.03 7.060
1.36- 1.40 ..... 47 242,303,233 12.4 5,155,388 45,871,866 75.6 1.37 95.13 7.051
l.41- 1.45 ..... 31 104,303,465 5.4 3,364,628 9,286,153 71.9 1.42 97.35 7.103
1.46- 1.50 ..... 32 199,487,893 10.2 6,233,997 47,643,694 69.6 1.47 95.68 7.111
1.51- 1.55 ..... 15 52,116,514 2.7 3,474,434 8,471,798 71.4 1.52 96.27 7.132
1.56- 1.60 ..... 10 64,805,712 3.3 6,480,571 22,984,600 61.1 1.57 93.73 6.822
1.61- 1.65 ..... 2 4,576,523 0.2 2,288,261 2,395,067 71.5 1.61 96.40 6.826
1.66- 1.70 ..... 2 11,934,901 0.6 5,967,451 6,995,368 72.4 1.66 94.76 7.058
1.71- 1.75 ..... 3 220,485,303 11.3 73,495,101 145,000,000 59.0 1.74 98.41 6.687
1.76- 1.80 ..... 1 62,936,317 3.2 62,936,317 62,936,317 61.7 1.80 95.74 5.920
1.86- 1.90 ..... 2 4,184,189 0.2 2,092,095 2,186,160 40.9 1.87 85.98 6.978
1.91- 1.95 ..... 1 27,481,479 1.4 27,481,479 27,481,479 57.3 1.92 88.20 6.750
2.06- 2.10 ..... 1 7,481,918 0.4 7,481,918 7,481,918 52.0 2.08 100.00 6.420
2.11- 2.20 ..... 1 3,400,000 0.2 3,400,000 3,400,000 40.0 2.15 NAP 7.050
2.31- 2.50 ..... 3 365,535,313 18.8 121,845,104 249,347,368 49.0 2.34 94.25 6.362
2.51- 3.00 ..... 1 54,600,000 2.8 54,600,000 54,600,000 51.5 2.74 98.40 6.360
3.01- 3.60 ..... 1 1,689,305 0.1 1,689,305 1,689,305 18.0 3.59 100.00 6.730
- ------------------ ----- --------------- ----- ------------ ------------ ---- ---- ----- -----
Totat/Avg./Wtd.Avg.: 259 $ 1,946,832,691 100.0% $ 7,516,729 $249,347,368 65.7% 1.67x 95.97% 6.827%
================== ===== =============== ===== ============ ============ ==== ==== ===== =====
</TABLE>
Weighted Average UW NCF DSCR: 1.67x
- ----------
(1) Occupancy Rates are calculated without reference to hospitality
properties.
<PAGE>
AGGREGATE POOL
CUT-OFF DATE LOAN-TO-VALUE RATIOS
(ALL MORTGAGE LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Cut-off Date Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Loan-to-Value Ratios(%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate (1) Rate
- ----------------------- -------- ------------ ------- ------- ------- --- ---- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15.00- 19.99 ........ 1 $ 1,689,305 0.1% $ 1,689,305 $ 1,689,305 18.0% 3.59x 100.00% 6.730%
25.00- 29.99 ........ 1 2,186,160 0.1 2,186,160 2,186,160 25.1 1.86 75.00 6.730
40.00- 44.99 ........ 2 8,387,945 0.4 4,193,973 4,987,945 41.6 2.29 100.00 6.675
45.00- 49.99 ........ 3 363,230,821 18.7 121,076,940 249,347,368 49.1 2.34 94.03 6.367
50.00- 54.99 ........ 4 66,816,250 3.4 16,704,063 54,600,000 51.6 2.57 98.41 6.427
55.00- 59.99 ........ 8 222,556,269 11.4 27,819,534 145,000,000 57.5 1.72 95.92 6.779
60.00- 64.99 ........ 12 173,514,880 8.9 14,459,573 69,000,000 61.7 1.71 96.71 6.447
65.00- 69.99 ........ 29 186,312,143 9.6 6,424,557 47,643,694 67.5 1.44 96.76 7.160
70.00- 74.99 ........ 111 419,410,659 21.5 3,778,474 17,689,266 73.4 1.39 96.21 7.133
75.00- 79.99 ........ 86 498,980,489 25.6 5,802,099 45,871,866 78.2 1.33 95.47 6.989
80.00- 84.99 ........ 2 3,747,769 0.2 1,873,884 2,200,000 81.0 1.25 98.71 7.159
- --------------------- --- -------------- ----- ------------- -------------- ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 259 $1,946,832,691 100.0% $ 7,516,729 $ 249,347,368 65.7% 1.67x 95.97% 6.827%
===================== === ============== ===== ============= ============== ==== ==== ===== =====
</TABLE>
Weighted Average Cut-Off Date LW Ratio: 65.69%
- ----------
(1) Occupancy Rates are calculated without reference to hospitality
properties.
<PAGE>
AGGREGATE POOL
MATURITY DATE LTV RATIOS
(ALL BALLOON AND ARD LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Date LTV Ratios(%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate (1) Rate
- ------------------- -------- ------------ ------- ------- ------- --- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 14.99 ......... 2 $ 3,875,465 0.2% $ 1,937,732 $ 2,186,160 22.0% 2.62x 85.90% 6.730%
35.00-39.99 ....... 2 254,335,313 13.2 127,167,657 249,347,368 49.7 2.34 100.00 6.253
40.00-44.99 ....... 7 146,544,881 7.6 20,934,983 111,200,000 49.7 2.18 94.63 6.668
45.00-49.99 ....... 17 104,697,854 5.4 6,158,697 27,481,479 64.4 1.57 92.32 7.014
50.00-54.99 ....... 17 354,128,001 18.4 20,831,059 145,000,000 60.1 1.83 97.15 6.698
55.00-59.99 ....... 32 178,120,442 9.2 5,566,264 69,000,000 66.1 1.53 96.38 6.854
60.00-64.99 ....... 67 270,474,711 14.0 4,036,936 47,643,694 72.5 1.41 97.67 7.029
65.00-69.99 ....... 95 506,965,596 26.3 5,336,480 18,073,694 76.7 1.35 95.90 7.034
70.00-74.99 ....... 12 103,724,006 5.4 8,643,667 45,871,866 78.1 1.34 92.94 7.018
75.00-79.99 ....... 1 3,193,249 0.2 3,193,249 3,193,249 79.8 1.33 96.88 6.950
- ------------------- --- -------------- ----- -------------- ------------ ---- ---- ----- -----
Total/Avg/Wtd. Avg.: 252 $1,926,059,520 100.0% $ 7,643,093 $249,347,368 65.7% 1.67x 95.93% 6.821%
=================== === ============== ===== ============== ============ ==== ==== ===== =====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 56.42%
- ----------
(1) Occupancy Rates are calculated without reference to hospitality
properties.
<PAGE>
AGGREGATE POOL
MORTGAGE RATES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Mortgage Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Rates(%) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate (2) Rate
- -------------------- -------- ------------ ------- ------- ------- ------ ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 6.499 ....... 15 $ 412,821,656 20.4% $ 27,521,444 $ 249,347,368 53.7% 2.24x 96.70% 6.222%
6.500- 6.749 ....... 24 271,823,966 13.4 11,325,999 111,200,000 57.1 1.96 96.33 6.606
6.750- 6.999 ....... 65 607,246,264 30.0 9,342,250 145,000,000 68.9 1.50 95.90 6.840
7.000- 7.249 ....... 122 460,208,010 22.7 3,772,197 17,689,266 73.7 1.37 95.53 7.107
7.250- 7.499 ....... 38 148,376,871 7.3 3,904,655 17,510,145 72.9 1.39 97.82 7.308
7.500- 7.749 ....... 12 56,045,385 2.8 4,670,449 15,150,000 72.6 1.42 96.39 7.598
7.750- 7.999 ....... 7 51,324,303 2.5 7,332,043 30,818,758 68.0 1.42 98.06 7.856
8.000- 8.249 ....... 1 7,366,676 0.4 7,368,676 7,366,676 72.6 1.27 98.00 8.100
8.750- 8.999 ....... 1 10,377,575 0.5 10,377,575 10,377,575 NAP NAP 100.00 8.940
- -------------------- --- -------------- ----- -------------- -------------- ---- ---- ------ -----
Total/Avg/Wtd. Avg.: 285 $2,025,590,706 100.0% $ 7,107,336 $ 249,347,368 65.7% 1.67x 96.16% 6.840%
==================== === ============== ===== ============== ============== ==== ==== ====== =====
</TABLE>
Weighted Average Mortgage Rate: 6.840%
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(2) Occupancy Rates are calculated without reference to hospitality
properties.
<PAGE>
AGGREGATE POOL
ORIGINAL TERM TO MATURITY
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Range of Original Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Terms to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60 .............. 9 $ 56,669,159 2.8% $ 6,296,573 $ 17,689,266 73.0% 1.38x 92.46% 6.881%
73-96 .............. 19 181,263,486 8.9 9,540,183 47,643,694 73.5 1.39 95.51 6.905
97-108 ............. 2 11,581,535 0.6 5,790,768 7,366,676 74.3 1.25 98.00 8.005
109-120 ............ 203 1,541,492,774 76.1 7,593,560 249,347,368 64.2 1.73 96.14 6.818
121-132 ............ 1 62,936,317 3.1 62,936,317 62,936,317 61.7 1.80 95.74 5.920
133-144 ............ 1 3,992,223 0.2 3,992,223 3,992,223 72.3 1.39 100.00 7.260
169-180 ............ 13 50,793,901 2.5 3,907,223 10,566,533 71.6 1.39 96.25 7.072
181-192 ............ 1 745,925 * 745,925 745,925 67.8 1.26 100.00 7.500
205-216 ............ 1 10,377,575 0.5 10,377,575 10,377,575 NAP NAP 100.00 8.940
217-228 ............ 1 1,278,688 0.1 1,278,688 1,278,688 NAP NAP 100.00 7.050
229-240 ............ 33 97,873,438 4.8 2,965,682 8,471,798 74.3 1.43 98.85 7.050
289-300 ............ 1 6,585,686 0.3 6,585,686 6,585,686 62.1 1.41 100.00 7.830
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ------ -----
Total/Avg/Wtd. Avg.: 285 $2,025,590,706 100.0% $ 7,107,336 $249,347,368 65.7% 1.67x 96.16% 6.840%
===================== === ============== ===== =========== ============ ==== ==== ====== =====
</TABLE>
Weighted Average Original Term to Maturity: 123 months
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
* Denotes a percentage less than 0.05% but greater than 0.0%
<PAGE>
AGGREGATE POOL
REMAINING TERM TO MATURITY
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Range of Original Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Terms to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60 ............... 9 $ 56,669,159 2.8% $ 6,296,573 $ 17,689,266 73.0% 1.38x 92.46% 6.881%
73-96 ............... 19 181,263,486 8.9 9,540,183 47,643,694 73.5 1.39 95.51 6.905
97-108 .............. 3 16,741,076 0.8 5,580,359 7,366,676 75.9 1.28 96.95 7.828
109-120 ............. 203 1,599,269,551 79.0 7,878,175 249,347,368 64.1 1.73 96.12 6.781
133-144 ............. 1 3,992,223 0.2 3,992,223 3,992,223 72.3 1.39 100.00 7.260
169-180 ............. 13 50,793,901 2.5 3,907,223 10,566,533 71.6 1.39 96.25 7.072
181-192 ............. 1 745,925 * 745,925 745,925 67.8 1.26 100.00 7.500
205-216 ............. 2 11,656,263 0.6 5,828,131 10,377,575 NAP NAP 100.00 8.733
229-240 ............. 33 97,873,438 4.8 2,965,862 8,471,798 74.3 1.43 98.85 7.050
289-300 ............. 1 6,585,686 0.3 6,585,686 6,585,686 62.1 1.41 100.00 7.830
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 285 $2,025,590,706 100.0% $ 7,107,336 $249,347,368 65.7% 1.67x 96.16% 6.840%
===================== === ============== ===== =========== ============ ==== ==== ====== =====
</TABLE>
Weighted Average Remaining Term to Maturity: 121 months
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
* Denotes a percentage less than 0.O5% but greater than 0.0%
<PAGE>
AGGREGATE POOL
CUT-OFF DATE BALANCES
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg.
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF
Range of Cut-off Date Balances ($) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1)
- ----------------------------------- -------- ------------ -------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
0.01 - 2,000,000.00 68 $ 101,084,175 5.0% $ 1,486,532 $ 1,998,922 70.5% 1.44x
2,000,000.01 - 4,000,000.00 110 320,064,653 15.8 2,909,679 3,995,822 73.0 1.41
4,000,000.01 - 6,000,000.00 48 242,077,283 12.0 5,043,277 6,000,000 73.4 1.41
6,000,000.01 - 8,000,000.00 18 126,443,884 6.2 7,024,660 7,991,787 72.6 1.43
8,000,000.01 - 10,000,000.00 10 88,116,886 4.4 8,811,689 9,794,148 77.8 1.34
10,000,000.01 - 15,000,000.00 13 159,057,621 7.9 12,235,202 15,000,000 74.9 1.36
15,000,000.01 - 20,000,000.00 7 121,862,121 6.0 17,408,874 18,480,470 71.6 1.36
20,000,000.01 - 30,000,000.00 2 50,466,079 2.5 25,233,040 27,481,479 56.6 1.76
30,000.000.01 - 40,000,000.00 1 30,818,758 1.5 30,818,758 30,818,758 66.3 1.47
40,000,000.01 - 50,000,000.00 2 93,515,560 4.6 46,757,780 47,643,694 72.7 1.42
50,000,000.01 - 60,000,000.00 1 54,600,000 2.7 54,600,000 54,600,000 51.5 2.74
60,000,000.01 - 70,000,000.00 2 131,936,317 6.5 65,968,159 69,000,000 61.2 1.77
110,000,000.01 - 112,000,000.00 1 111,200,000 5.5 111,200,000 111,200,000 47.3 2.35
144,000,000.01 - 248,000,000.00 1 145,000,000 7.2 145,000,000 145,000,000 58.0 1.73
248,000,000.0l>= 1 249,347,368 12.3 249,347,368 249,347,368 49.9 2.34
- ----------------------------------- --- -------------- ----- ------------ ------------ ---- ----
Total/Avg./Wtd. Avg.: 285 $2,025,590,706 100.0% $ 7,107,336 $249,347,368 65.7% 1.67x
=================================== === ============== ===== ============ ============ ==== ====
<CAPTION>
Wtd. Avg. Wtd. Avg.
Occupancy Mortgage
Range of Cut-off Date Balances ($) Rate(2) Rate
- ----------------------------------- --------- ---------
<S> <C> <C>
0.01 - 2,000,000.00 97.36% 7.090%
2,000,000.01 - 4,000,000.00 97.18 7.065
4,000,000.01 - 6,000,000.00 96.74 6.998
6,000,000.01 - 8,000,000.00 95.97 7.041
8,000,000.01 - 10,000,000.00 95.27 7.020
10,000,000.01 - 15,000,000.00 95.73 7.178
15,000,000.01 - 20,000,000.00 93.46 7.104
20,000,000.01 - 30,000,000.00 88.84 6.759
30,000.000.01 - 40,000,000.00 NAP 7.875
40,000,000.01 - 50,000,000.00 95.30 6.849
50,000,000.01 - 60,000,000.00 98.40 6.360
60,000,000.01 - 70,000,000.00 97.07 6.234
110,000,000.01 - 112,000,000.00 93.99 6.610
144,000,000.01 - 248,000,000.00 98.47 6.750
248,000,000.0l>= NAP 6.250
- ----------------------------------- ------ -----
Total/Avg./Wtd. Avg.: 96.16% 6.840%
=================================== ====== =====
</TABLE>
Weighted Average Maturity Date Balance: $7,107,335.81
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
AGGREGATE POOL
REMAINING AMORTIZATION TERMS
(ALL MORTGAGE LOANS OTHER THAN INTEREST-ONLY MORTGAGE LOANS (1))
<TABLE>
<CAPTION>
Range of Remaining Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Amortization Terms Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
170-181 ......... 7 $ 18,271,038 0.9% $ 2,610,148 $ 3,650,000 35.4% 2.14x 95.56% 7.012%
182-193 ......... 2 4,878,407 0.2 2,439,203 4,132,482 67.8 1.26 100.00 6.729
206-217 ......... 1 2,640,770 0.1 2,640,770 2,640,770 NAP NAP 100.00 6.650
230-241 ......... 20 47,536,069 2.4 2,376,803 4,985,461 73.2 1.35 98.42 6.962
254-265 ......... 1 1,278,688 0.1 1,278,688 1,278,688 NAP NAP 100.00 7.050
266-277 ......... 5 27,821,235 1.4 5,564,247 10,377,575 NAP NAP 100.00 7.524
278-289 ......... 2 4,872,820 0.2 2,436,410 2,970,449 NAP NAP 100.00 7.485
290-301 ......... 58 621,920,820 31.6 10,722,773 249,347,368 57.8 1.96 95.57 6.715
314-325 ......... 3 7,221,453 0.4 2,407,151 3,347,172 75.7 1.32 100.00 7.155
326-349 ......... 4 20,827,319 1.1 5,206,830 7,366,676 75.6 1.28 96.84 7.691
350 >= .......... 181 1,213,722,087 61.6 6,705,647 145,000,000 70.3 1.48 95.94 6.884
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 284 $1,970,990,706 100.0% $ 6,940,108 $249,347,368 66.1% 1.64x 96.08% 6.853%
===================== === ============== ===== =========== ============ ==== ==== ====== =====
</TABLE>
Weighted Average Remaining Amortization Term: 332 months
- ----------
(1) Refers to Mortgage Loans that have payments of Interest-only to maturity or
ARD.
(2) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the Initial Pool Balance.
(3) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
AGGREGATE POOL
AMORTIZATION TYPES
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Amortization Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Types of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon ............. 252 $1,256,189,168 62.0% $ 4,984,878 $ 62,936,317 72.2% 1.43x 95.59% 7.006%
ARD ................. 11 712,163,637 35.2 64,742,149 249,347,368 54.7 2.08 97.15 6.526
Fully Amortizing .... 22 57,237,902 2.8 2,601,723 6,585,686 60.3 1.54 99.79 7.091
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 285 $2,025,590,706 100% $ 7,107,336 $249,347,368 65.7% 1.67x 96.16% 6.840%
===================== === ============== ===== =========== ============ ==== ==== ====== =====
</TABLE>
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the initial Pool Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
AGGREGATE POOL
OCCUPANCY RATES
(ALL MORTGAGE LOANS OTHER THAN THOSE SECURED BY HOSPITALITY PROPERTY)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Occupancy Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Mortgage
Rates (%) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate
- ------------------ -------- ------------ -------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
70.01-75.00 ......... 2 $ 3,482,183 0.2% $ 1,741,092 $ 2,186,160 42.0% 1.72x 6.994%
75.01-80.00 ......... 1 4,596,530 0.3 4,596,530 4,596,530 61.3 1.48 6.350
80.01-85.00 ......... 3 28,259,506 1.7 9,419,835 17,689,266 71.9 1.34 7.192
85.01-90.00 ......... 16 110,328,667 6.6 6,895,542 27,481,479 66.8 1.52 6.920
90.01-95.00 ......... 51 397,574,682 23.9 7,795,582 111,200,000 67.6 1.65 6.902
95.01 >= ............ 196 1,118,776,822 67.3 5,708,045 145,000,000 68.5 1.56 6.881
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- -----
Total/Avg./Wtd. Avg.: 269 $1,663,018,391 100.0% $ 6,182,225 $145,000,000 68.2% 1.57x 6.892%
===================== === ============== ===== =========== ============ ==== ==== =====
</TABLE>
Weighted Average Occupancy Rate: 96.16%
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 3.89% of the initial Pool Balance.
<PAGE>
GROUP 1
MORTGAGE PROPERTIES BY STATE
Aggregate % by Aggregate
Number of Cut-off Date Cut-off Date
State Loans Balance Balance
- -------------------- --------- -------------- --------------
CA ................. 29 $ 378,218,811 22.0%
NY ................. 32 199,911,508 11.6
IL ................. 27 191,465,787 11.2
TX ................. 25 188,414,822 11.0
FL ................. 25 153,382,215 8.9
VA ................. 19 68,016,326 4.0
AL ................. 4 61,478,266 3.6
PA ................. 6 55,107,724 3.2
WA ................. 7 47,044,752 2.7
NC ................. 14 43,317,883 2.5
GA ................. 9 42,888,913 2.5
AZ ................. 9 42,447,094 2.5
TN ................. 6 41,301,338 2.4
CT ................. 6 30,687,623 1.8
CO ................. 6 20,767,769 1.2
IN ................. 6 19,099,717 1.1
MD ................. 5 18,786,383 1.1
MI ................. 3 17,521,359 1.0
MN ................. 2 14,081,430 0.8
WI ................. 3 13,996,449 0.8
MA ................. 4 11,229,214 0.7
NJ ................. 3 8,948,645 0.5
OH ................. 2 8,483,107 0.5
NV ................. 3 8,333,614 0.5
PR ................. 1 5,600,000 0.3
OR ................. 1 4,086,243 0.2
SC ................. 2 3,198,553 0.2
LA ................. 1 2,625,000 0.2
MS ................. 1 2,593,980 0.2
KS ................. 1 2,500,000 0.1
RI ................. 1 2,495,230 0.1
ND ................. 1 2,494,604 0.1
MO ................. 1 2,048,757 0.1
KY ................. 1 1,771,992 0.1
WY ................. 1 1,399,225 0.1
OK ................. 1 745,925 *
--- -------------- ------
Total .............. 268 $1,716,490,256 100.00%
==================== === ============== ======
* Denotes a percentage less than 0.05% but greater than 0.0%
<PAGE>
GROUP 1
MORTGAGE LOANS BY PROPERTY TYPE
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Property Type of Loans Date Balance Balance Balance Balance LTV(1) DSCR Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail ............. 108 $ 812,726,976 47.3% $ 7,525,250 $145,000,000 66.3% 1.62x 97.00% 6.825%
Hotel .............. 16 362,572,315 21.1 22,660,770 249,347,368 54.9 2.09 NAP 6.598
Office ............. 44 191,679,298 11.2 4,356,348 17,689,266 72.6 1.36 96.50 7.130
Office/Industrial .. 1 111,200,000 6.5 111,200,000 111,200,000 47.3 2.35 93.99 6.610
CTL ................ 26 78,758,016 4.6 3,029,154 10,377,575 NAP NAP 100.00 7.145
Industrial/W'hse ... 16 67,464,779 3.9 4,216,549 13,963,957 72.4 1.37 96.00 7.093
Multifamily ........ 8 54,213,843 3.2 6,776,730 22,984,600 61.3 1.64 94.62 6.730
Self Storage ....... 5 15,393,022 0.9 3,078,604 5,886,611 69.2 1.51 95.55 7.130
Health Care ........ 1 14,138,000 0.8 14,138,000 14,138,000 74.8 1.37 90.80 7.150
Mobile Home Park ... 3 5,107,564 0.3 1,702,521 2,514,914 76.1 1.32 90.87 7.107
Parking Garage ..... 1 3,236,444 0.2 3,236,444 3,236,444 51.4 1.49 94.07 7.260
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x 96.60% 6.827%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
CUT-OFF DATE DSC RATIO
(GROUP 1 MORTGAGE LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Range of Cut-off Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date DSC Ratios Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(x) of Loans Date Balance Balance Balance Balance LTV(1) DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.21-1.25 ........... 3 $ 16,291,574 1.0% $ 5,430,525 $ 7,991,787 75.1% 1.24x 95.87% 7.237%
1.26-1.30 ........... 24 100,986,431 6.2 4,207,768 11,492,142 74.8 1.28 98.35 7.171
1.31-1.35 ........... 47 233,903,309 14.3 4,976,666 17,689,266 74.3 1.33 95.93 7.110
1.36-1.40 ........... 36 155,291,581 9.5 4,313,655 15,150,000 74.3 1.37 96.26 7.151
1.41-1.45 ........... 28 86,513,678 5.3 3,089,774 6,585,686 70.7 1.42 98.12 7.197
1.46-1.50 ........... 29 191,004,873 11.7 6,586,375 47,643,694 69.2 1.47 95.66 7.120
1.51-1.55 ........... 10 38,970,237 2.4 3,897,024 8,471,798 70.5 1.52 96.48 7.150
1.56-1.60 ........... 9 57,460,676 3.5 6,384,520 22,984,600 60.3 1.57 93.28 6.832
1.61-1.65 ........... 2 4,576,523 0.3 2,288,261 2,395,067 71.5 1.61 96.40 6.826
1.66-1.70 ........... 1 4,939,533 0.3 4,939,533 4,939,533 74.8 1.68 NAP 7.410
1.71-1.75 ........... 3 220,485,303 13.5 73,495,101 145,000,000 59.0 1.74 98.41 6.687
1.76-1.80 ........... 1 62,936,317 3.8 62,936,317 62,936,317 61.7 1.80 95.74 5.920
1.86-1.90 ........... 2 4,184,189 0.3 2,092,095 2,186,160 40.9 1.87 85.98 6.978
1.91-1.95 ........... 1 27,481,479 1.7 27,481,479 27,481,479 57.3 1.92 88.20 6.750
2.06-2.10 ........... 1 7,481,918 0.5 7,481,918 7,481,918 52.0 2.08 100.00 6.420
2.11-2.20 ........... 1 3,400,000 0.2 3,400,000 3,400,000 40.0 2.15 NAP 7.050
2.31-2.50 ........... 3 365,535,313 22.3 121,845,104 249,347,368 49.0 2.34 94.25 6.362
2.51-3.00 ........... 1 54,600,000 3.3 54,600,000 54,600,000 51.5 2.74 98.40 6.360
3.01-3.60 ........... 1 1,689,305 0.1 1,689,305 1,689,305 18.0 3.59 100.00 6.730
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 203 $1,637,732,241 100.0% $ 8,067,647 $249,347,368 63.4% 1.73x 96.39% 6.811%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average UW NCF DSCR: 1.73x
- ----------
(1) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
CUT-OFF DATE LOAN-TO-VALUE RATIOS
(ALL GROUP 1 MORTGAGE LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Range of Cut-off Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date Loan-to-Value Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Ratios (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate(1) Rate
- ------------------ -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15.00-19.99 ......... 1 $ 1,689,305 0.1% $ 1,689,305 $ 1,689,305 18.0% 3.59x 100.00% 6.730%
25.00-29.99 ......... 1 2,186,160 0.1 2,186,160 2,186,160 25.1 1.86 75.00 6.730
40.00-44.99 ......... 2 8,387,945 0.5 4,193,973 4,987,945 41.6 2.29 100.00 6.675
45.00-49.99 ......... 3 363,230,821 22.2 121,076,940 249,347,368 49.1 2.34 94.03 6.367
50.00-54.99 ......... 4 66,816,250 4.1 16,704,063 54,600,000 51.6 2.57 98.41 6.427
55.00-59.99 ......... 8 222,556,269 13.6 27,819,534 145,000,000 57.5 1.72 95.92 6.779
60.00-64.99 ......... 12 173,514,880 10.6 14,459,573 69,000,000 61.7 1.71 96.71 6.447
65.00-69.99 ......... 26 174,422,174 10.7 6,708,545 47,643,694 67.4 1.44 96.95 7.188
70.00-74.99 ......... 99 382,818,233 23.4 3,866,851 17,689,266 73.4 1.39 96.12 7.150
75.00-79.99 ......... 46 239,910,203 14.6 5,215,439 17,510,145 77.6 1.34 97.31 7.071
80.00-84.99 ......... 1 2,200,000 0.1 2,200,000 2,200,000 80.0 1.28 100.00 7.250
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 203 $1,637,732,241 100.0% $ 8,067,647 $249,347,368 63.4% 1.73x 96.39% 6.811%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Cut-off Date LTV Ratio: 63.42%
- ----------
(1) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
MATURITY DATE LOAN-TO-VALUE
(ALL GROUP 1 BALLOON AND ARD LOANS OTHER THAN CREDIT LEASE LOANS)
<TABLE>
<CAPTION>
Range of Maturity Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date Loan-to-Value Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Ratios (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate(1) Rate
- ------------------ -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 14.99 ............ 2 $ 3,875,465 0.2% $ 1,937,732 $ 2,186,160 22.0% 2.62x 85.90% 6.730%
35.00- 39.99 ........ 2 254,335,313 15.7 127,167,657 249,347,368 49.7 2.34 100.00 6.253
40.00 - 44.99 ....... 7 146,544,881 9.1 20,934,983 111,200,000 49.7 2.18 94.63 6.668
45.00 - 49.99 ..... 17 104,697,854 6.5 6,158,697 27,481,479 64.4 1.57 92.32 7.014
50.00- 54.99 ..... 15 345,032,961 21.3 23,002,197 145,000,000 59.5 1.84 97.39 6.688
55.00 - 59.99 ..... 26 160,258,554 9.9 6,163,791 69,000,000 65.7 1.54 96.29 6.847
60.00 - 64.99 ..... 56 229,824,333 14.2 4,104,006 47,643,694 72.0 1.41 98.12 7.045
65.00 - 69.99 ..... 64 343,146,670 21.2 5,361,667 17,689,266 75.7 1.36 96.33 7.116
70.00 - 74.99 ..... 7 29,243,039 1.8 4,177,577 10,178,868 76.7 1.38 96.39 7.114
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 196 $1,616,959,070 100.0% $ 8,249,791 $249,347,368 63.5% 1.73x 96.35% 6.804%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 54.24%.
- ----------
(1) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP I
MORTGAGE RATES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Mortgage Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Rates (%) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 6.499 ......... 11 $ 400,414,679 23.3% $ 36,401,334 $249,347,368 52.9% 2.26x 96.89% 6.218%
6.500-6.749 ......... 20 253,684,454 14.8 12,684,223 111,200,000 55.8 2.01 96.29 6.601
6.750-6.999 ......... 39 402,786,081 23.5 10,327,848 145,000,000 64.0 1.58 96.84 6.814
7.000-7.249 ......... 101 391,273,772 22.8 3,873,998 17,689,266 73.0 1.38 95.86 7.109
7.250-7.499 ......... 37 143,217,331 8.3 3,870,739 17,510,145 72.7 1.39 97.96 7.303
7.500-7.749 ......... 12 56,045,385 3.3 4,670,449 15,150,000 72.6 1.42 96.39 7.598
7.750-7.999 ......... 7 51,324.303 3.0 7,332,043 30,818,758 68.0 1.42 98.06 7.856
8.000-8.249 ......... 1 7,366,676 0.4 7,366,676 7,366,676 72.6 1.27 98.00 8.100
8.750-8.999 ......... 1 10,377,575 0.6 10,377,575 10,377,575 NAP NAP 100.00 8.940
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x 96.60% 6.827%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Mortgage Rate: 6.827%
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Initial Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
Range of Original Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Term to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60 ............... 7 $ 50,180,847 2.9% $ 7,168,692 $ 17,689,266 72.7% 1.39x 91.88% 6.877%
73-96 ............... 12 103,378,205 6.0 8,614,850 47,643,694 70.0 1.43 98.69 6.878
97-108 .............. 2 11,581,535 0.7 5,790,768 7,366,676 74.3 1.25 98.00 8.005
109-120 ............. 158 1,324,413,981 77.2 8,382,367 249,347,368 62.0 1.79 96.32 6 806
121-132 ............. 1 62,936,317 3.7 62,936,317 62,936,317 61.7 1.80 95.74 5.920
133-144 ............. 1 3,992,223 0.2 3,992,223 3,992,223 72.3 1.39 100.00 7.260
169-180 ............. 11 43,145,837 2.5 3,922,349 10,566,533 69.8 1.42 98.02 7.058
181-192 ............. 1 745,925 * 745,925 745,925 67.8 1.26 100.00 7.500
205-216 ............. 1 10,377,575 0.6 10,377,575 10,377,575 NAP NAP 100.00 8.940
217-228 ............. 1 1,278,688 0.1 1,278,688 1,278,688 NAP NAP 100.00 7.050
229-240 ............. 33 97,873,438 5.7 2,965,862 8,471,798 74.3 1.43 98.85 7.050
289-300 ............. 1 6,585,686 0.4 6,585,686 6,585,686 62.1 1.41 100.00 7.830
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x 96.60% 6.827%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Original Term to Maturity: 125 months
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
* Denotes a Percentage less than 0.05% but greater than 0.0%
<PAGE>
GROUP 1
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
Range of Remaining Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Term to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ------------------ -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60 ............... 7 $ 50,180,847 2.9% $ 7,168,692 $ 17,689,266 72.7% 1.39x 91.88% 6.877%
73-96 ............... 12 103,378,205 6.0 8,614,850 47,643,694 70.0 1.43 98.69 6.878
97-108 .............. 2 11,581,535 0.7 5,790,768 7,366,676 74.3 1.25 98.00 8.005
109-120 ............. 159 1,387,350,298 80.8 8,725,474 249,347,368 62.0 1.79 96.28 6.766
133-144 ............. 1 3,992,223 0.2 3,992,223 3,992,223 72.3 1.39 100.00 7.260
169-180 ............. 11 43,145,837 2.5 3,922,349 10,566,533 69.8 1.42 98.02 7.058
181-192 ............. 1 745,925 * 745,925 745,925 67.8 1.26 100.00 7.500
205-216 ............. 2 11,656,263 0.7 5,828,131 10,377,575 NAP NAP 100.00 8.733
229-240 ............. 33 97,873,438 5.7 2,965,862 8,471,798 74.3 1.43 98.85 7.050
289-300 ............. 1 6,585,686 0.4 6,585,686 6,585,686 62.1 1.41 100.00 7.830
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x 96.60% 6.827%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Remaining Term to Maturity: 123 months.
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the initial Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
* Denotes a percentage less than 0.05% but greater than 0.0%
<PAGE>
GROUP 1
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg,
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF
Range of Cut-off Date Balances ($) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1)
- ----------------------------------- -------- ------------ -------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 2,000,000.00 ..... 60 $ 88,856,135 5.2% $ 1,480,936 $ 1,998,922 69.7% 1.45x
2,000,000.01- 4,000,000.00 ..... 87 253,569,655 14.8 2,914,594 3,995,822 72.0 1.42
4,000,000.01- 6,000,000.00 ..... 37 188,883,256 11.0 5,104,953 6,000,000 72.0 1.43
6,000,000.01- 8,000,000.00 ..... 13 90,726,130 5.3 6,978,933 7,991,787 71.6 1.43
8,000,000.01- 10,000,000.00 ..... 5 42,009,026 2.4 8,401,805 8,587,890 76.1 1.39
10,000,000.01- 15,000,000.00 ..... 12 145,378,067 8.5 12,114,839 15,000,000 74.4 1.35
15,000,000.01- 20,000,000.00 ..... 5 86,055,769 5.0 17,211,154 18,480,470 68.4 1.39
20,000,000.01- 30,000,000.00 ..... 2 50,466,079 2.9 25,233,040 27,481,479 56.6 1.76
30,000,000.01- 40,000,000.00 ..... 1 30,818,758 1.8 30,818,758 30,818,758 66.3 1.47
40,000,000.01- 50,000,000.00 ..... 1 47,643,694 2.8 47,643,694 47,643,694 67.1 1.48
50,000,000.01- 60,000,000.00 ..... 1 54,600,000 3.2 54,600,000 54,600,000 51.5 2.74
60,000,000.01- 70,000,000.00 ..... 2 131,936,317 7.7 65,968,159 69,000,000 61.2 1.77
1l0,OOO,000.01-112,000,000.00 ..... 1 111,200,000 6.5 111,200,000 111,200,000 47.3 2.35
144,000,000.01-248,000,000.00 ..... 1 145,000,000 8.4 145,000,000 145,000,000 58.0 1.73
248,000,000.01>= .................. 1 249,347,368 14.5 249,347,368 249,347,368 49.9 2.34
- ----------------------------------- --- -------------- ----- ------------ ------------ ---- ----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x
=================================== === ============== ===== ============ ============ ==== ====
<CAPTION>
Wtd. Avg. Wtd. Avg.
Occupancy Mortgage
Range of Cut-off Date Balances ($) Rate(2) Rate
- ----------------------------------- --------- ---------
<S> <C> <C>
0.01- 2,000,000.00 ..... 97.82% 7.107%
2,000,000.01- 4,000,000.00 ..... 97.69 7.103
4,000,000.01- 6,000,000.00 ..... 96.97 7.026
6,000,000.01- 8,000,000.00 ..... 97.21 7.104
8,000,000.01- 10,000,000.00 ..... 97.37 7.O7O
10,000,000.01- 15,000,000.00 ..... 95.75 7.206
15,000,000.01- 20,000,000.00 ..... 93.17 7.201
20,000,000.01- 30,000,000.00 ..... 88.84 6.759
30,000,000.01- 40,000,000.00 ..... NAP 7.875
40,000,000.01- 50,000,000.00 ..... 98.48 6.790
50,000,000.01- 60,000,000.00 ..... 98.40 6.360
60,000,000.01- 70,000,000.00 ..... 97.07 6.234
1l0,OOO,000.01-112,000,000.00 ..... 93.99 6.610
144,000,000.01-248,000,000.00 ..... 98.47 6.750
248,000,000.01>= .................. NAP 6.250
- ----------------------------------- ----- -----
Total/Avg./Wtd. Avg.: 96.60% 6.827%
=================================== ===== =====
</TABLE>
Average Cut-Off Date Balance: $ 7,495,590.64.
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
REMAINING AMORTIZATION TERMS
(ALL GROUP 1 MORTGAGE LOANS OTHER THAN INTEREST-ONLY MORTGAGE LOANS (1))
<TABLE>
<CAPTION>
Range of Remaining Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Amortization Terms Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV(2) DSCR(2) Rate(3) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
170-181 ............. 7 $ 18,271,038 1.1% $ 2,610,148 $ 3,650,000 35.4% 2.14x 95.56% 7.012%
182-193 ............. 2 4,878,407 0.3 2,439.203 4,132,482 67.8 1.26 100.00 6.729
206-217 ............. 1 2,640,770 0.2 2,640,770 2,640,770 NAP NAP 100.00 6.650
230-241 ............. 19 44,54l,323 2.7 2,344,280 4,985,461 72.1 1.36 98.38 6.966
254-265 ............. 1 1,278,688 0.1 1,278,688 1,278,688 NAP NAP 100.00 7.050
266-277 ............. 5 27,821,235 1.7 5,564,247 10,377,575 NAP NAP 100.00 7.524
278-289 ............. 2 4,872,820 0.3 2,436,410 2,970,449 NAP NAP 100.00 7.485
290-301 ............. 49 591,705,351 35.6 12,075,619 249,347,368 56.8 1.99 95.82 6.697
314-325 ............. 3 7,221,453 0.4 2,407,151 3,347,172 75.7 1.32 100.00 7.155
326-349 ............. 3 15,667,779 0.9 5,222,593 7,366,676 74.3 1.27 97.58 7.777
350 >= .............. 136 942,991,392 56.7 6,933,760 145,000,000 68.1 1.52 96.43 6.883
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 228 $1,661,890,256 100.0% $ 7,288,992 $249,347,368 63.8% 1.70x 96.53% 6.842%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Remaining Amortization Term: 329 months
- ----------
(1) Refers to Mortgage Loans that have payments of interest-only to maturity or
ARD.
(2) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Initial Group 1 Balance.
(3) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP I
AMORTIZATION TYPES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Amortization Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Types of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate(2) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon ............. 197 $ 951,457,976 55.4% $ 4,829,736 $ 62,936,317 70.4% 1.46x 96.08% 7.036%
ARD ................. 10 707,794,378 41.2 70,779,438 249,347,368 54.6 2.09 97.18 6.524
Fully Amortizing .... 22 57,237,902 3.3 2,601,723 6,585,686 60.3 1.54 99.79 7.091
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 229 $1,716,490,256 100.0% $ 7,495,591 $249,347,368 63.4% 1.73x 96.60% 6.827%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the Initial Group 1 Balance.
(2) Occupancy Rates are calculated without reference to hospitality properties.
<PAGE>
GROUP 1
OCCUPANCY RATES
(ALL GROUP 1 MORTGAGE LOANS OTHER THAN THOSE SECURED BY HOSPITALITY PROPERTIES)
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Occupancy Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Mortgage
Rates (%) of Loans Date Balance Balance Balance Balance LTV(1) DSCR(1) Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
70.01-75.00 ......... 2 $ 3,482,183 0.3% $ 1,741,092 $ 2,186.160 42.0% 1.72x 6.994%
75.01-80.00 ......... 1 4,596,530 0.3 4,596,530 4,596,530 61.3 1.48 6.350
80.01-85.00 ......... 2 22,159,211 1.6 11,079,606 17,689,266 69.7 1.37 7.195
85.01-90.00 ......... 11 88,286,959 6.5 8,026,087 27,481,479 63.8 1.57 6.911
90.01-95.00 ......... 33 265,290,826 19.6 8,039,116 111,200,000 62.6 1.79 6.892
95.01 >= ............ 164 970,102,231 71.7 5,915,258 145,000,000 67.1 1.59 6.880
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- -----
Total/Avg./Wtd. Avg.: 213 $1,353,917,941 100.0% $ 6,356,422 $145,000,000 65.9% 1.63x 6.888%
===================== === ============== ===== =========== ============ ==== ==== =====
</TABLE>
Weighted Average Occupancy Rate: 96.60%
- ----------
(1) The Cut-off Date LTV and UW NCF DSCR information does not reflect the 26
Credit Lease Loans representing 4.59% of the initial Group 1 Balance.
<PAGE>
GROUP 2
MORTGAGE PROPERTIES BY STATE
Aggregate % by Aggregate
Number of Cut-off Date Cut-off Date
State Loans Balance Balance
- -------------------- --------- -------------- --------------
IN ................. 3 $ 55,457,707 17.9%
TX ................. 12 45,418,036 14.7
AZ ................. 5 24,462,526 7.9
CA ................. 5 22,889,422 7.4
PA ................. 3 19,271,541 6.2
NV ................. 1 18,073,694 5.8
OK ................. 1 17,732,659 5.7
GA ................. 3 16,677,053 5.4
FL ................. 5 14,751,803 4.8
OH ................. 4 13,967,637 4.5
NY ................. 3 13,182,752 4.3
NC ................. 1 9,794,148 3.2
TN ................. 1 9,240,421 3.0
MO ................. 2 7,982,485 2.6
OR ................. 1 5,355,867 1.7
NJ ................. 2 4,834,077 1.6
RI ................. 4 2,994,746 1.0
SC ................. 1 2,921,453 0.9
KS ................. 1 2,496,497 0.8
CT ................. 1 1,595,926 0.5
--- -------------- ------
Total .............. 59 $309,100,450 100.0%
==================== === ============== ======
<PAGE>
GROUP 2
MORTGAGE LOANS BY PROPERTY TYPE
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Property Types of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily ......... 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
<PAGE>
GROUP 2
CUT-OFF DATE DSC RATIO
<TABLE>
<CAPTION>
Range of Cut-off Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date DSC Ratios Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(x) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 1.20 ........... 1 $ 9,794,148 3.2% $ 9,794,148 $ 9,794,148 79.0% 1.20x 87.01% 7.150%
1.21-1.25 ........... 4 11,999,067 3.9 2,999,767 4,369,259 78.3 1.24 95.44 6.979
1.26-1.30 ........... 8 59,869,554 19.4 7,483,694 18,073,694 78.9 1.27 92.93 6.976
1.31-1.35 ........... 19 86,666,542 28.0 4,561,397 17,732,659 78.4 1.33 96.31 6.925
1.36-1.40 ........... 11 87,011,652 28.1 7,910,150 45,871,866 78.1 1.36 93.10 6.873
1.41-1.45 ........... 3 17,789,787 5.8 5,929,929 9,286,153 77.5 1.41 94.07 6.647
1.46-1.50 ........... 3 8,483,020 2.7 2,827,673 4,989,037 76.6 1.48 96.05 6.899
1.51-1.55 ........... 5 13,146,277 4.3 2,629,255 3,673,898 74.2 1.51 95.77 7.076
1.56-1.60 ........... 1 7,345,035 2.4 7,345,035 7,345,035 67.5 1.60 95.96 6.740
1.61-1.65 ........... 1 6,995,368 2.3 6,995,368 6,995,368 70.7 1.65 94.76 6.810
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average UW NCF DSCR: 1.35x.
<PAGE>
GROUP 2
CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
Range of Cut-off Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date Loan-to-Value Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Ratios (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ------------------ -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
65.00-69.99 ......... 3 $ 11,889,968 3.8% $ 3,963,323 $ 7,345,035 68.1% 1.51x 94.72% 6.738%
70.00-74.99 ......... 12 36,592,426 11.8 3,049,369 6,995,368 72.6 1.43 97.09 6.961
75.00-79.99 ......... 40 259,070,287 83.8 6,476,757 45,871,866 78.9 1.33 93.78 6.913
80.00-84.99 ......... 1 1,547,769 0.5 1,547,769 1,547,769 82.3 1.21 96.88 7.030
- --------------------- --- -------------- ----- ------------ ------------ ---- ---- ------ -----
Total/Avg./Wtd. Avg.: 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============== ===== ============ ============ ==== ==== ====== =====
</TABLE>
Weighted Average Cut-off Date LTV: 77.71%
<PAGE>
GROUP 2
MATURITY DATE LTV RATIOS
(ALL MATURITY DATE BALLOON AND ARD LOANS)
<TABLE>
<CAPTION>
Range of Maturity Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Date Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
LTV Ratios (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50.00-54.99.......... 2 $ 9,095,040 2.9% $ 4,547,520 $ 6,100,295 79.4% 1.29x 89.35% 7.088%
55.00-59.99.......... 6 17,861,889 5.8 2,976,981 7,345,035 70.2 1.48 97.21 6.919
60.00-64.99.......... 11 40,650,379 13.2 3,695,489 9,240,421 74.9 1.39 95.35 6.941
65.00-69.99.......... 31 163,818,926 53.0 5,284,481 18,073,694 78.7 1.34 95.03 6.863
70.00-74.99.......... 5 74,480,967 24.1 14,896,193 45,871,866 78.6 1.33 91.58 6.980
75.00-79.99.......... 1 3,193,249 1.0 3,193,249 3,193,249 79.8 1.33 96.88 6.950
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============== ===== =========== ============ ==== ==== ===== =====
</TABLE>
Weighted Average Maturity Date LTV Ratio: 67.84%
<PAGE>
GROUP 2
MORTGAGE RATES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Mortgage Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Rates (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=< 6.499......... 4 $12,406,977 4.0% $ 3,101,744 $ 5,355,867 78.3% 1.40x 94.31% 6.356%
6.500- 6.749......... 4 18,139,512 5.9 4,534,878 7,345,035 72.7 1.45 96.85 6.677
6.750- 6.999......... 26 204,460,183 66.1 7,863,853 45,871,866 78.3 1.34 94.15 6.891
7.000- 7.249......... 21 68,934,238 22.3 3,282,583 9,794,148 76.9 1.33 93.71 7.099
7.250- 7.499......... 1 5,159,540 1.7 5,159,540 5,159,540 79.4 1.33 94.60 7.430
- --------------------- --- -------------- ----- ----------- ------------ ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============== ===== =========== ============ ==== ==== ====== =====
</TABLE>
Weighted Average Mortgage Rate: 6.912%.
<PAGE>
GROUP 2
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
Range of Original Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Terms to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60................ 2 $ 6,488,312 2.1% $ 3,244,156 $ 3,295,063 75.3% 1.34x 96.93% 6.909%
73-96................ 7 77,885,281 25.2 11,126,469 45,871,866 78.0 1.34 91.60 6.941
109-120.............. 45 217,078,793 70.2 4,823,973 18,073,694 77.6 1.36 95.33 6.894
169-180.............. 2 7,648,064 2.5 3,824,032 6,100,295 80.3 1.26 87.09 7.150
- --------------------- --- ------------- ----- ----------- ------------ ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============= ===== =========== ============ ==== ==== ===== =====
</TABLE>
Weighted Average Original Term to Maturity: 111 months
<PAGE>
GROUP 2
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
Range of Remaining Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Terms to Maturity Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- ----------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49-60................ 2 $ 6,488,312 2.1% $ 3,244,156 $ 3,295,063 75.3% 1.34x 96.93% 6.909%
73-96................ 7 77,885,281 25.2 11,126,469 45,871,866 78.0 1.34 91.60 6.941
97-108............... 1 5,159,540 1.7 5,159,540 5,159,540 79.4 1.33 94.60 7.430
109-120.............. 44 211,919,253 68.6 4,816,347 18,073,694 77.6 1.36 95.35 6.881
169-180.............. 2 7,648,064 2.5 3,824,032 6,100,295 80.3 1.26 87.09 7.150
- --------------------- --- ------------- ----- ----------- ------------ ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $ 309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============= ===== =========== ============ ==== ==== ===== =====
</TABLE>
Weighted Average Original Term to Maturity: 109 months
<PAGE>
GROUP 2
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg.
Range of Cut-Off Date Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF
Balances ($) of Loans Date Balance Balance Balance Balance LTV DSCR
- ------------------------------- -------- ------------ -------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 2,000,000.00.... 8 $ 12,228,040 4.0% $ 1,528,505 $ 1,943,385 75.1% 1.35x
2,000,000.01- 4,000,000.00.... 23 66,494,997 21.5 2,891,087 3,894,332 76.6 1.37
4,000,000.01- 6,000,000.00.... 11 53,194,027 17.2 4,835,821 5,587,721 78.0 1.34
6,000,000.0l- 8,000,000.00.... 5 35,717,754 11.6 7,143,551 7,738,378 75.3 1.42
8,000,000.01-10,000,000.00.... 5 46,107,861 14.9 9,221,572 9,794,148 79.3 1.29
10,000,000.01-15,000,000.00.... 1 13,679,553 4.4 13,679,553 13,679,553 79.5 1.40
15,000,000.01-20,000,000.00.... 2 35,806,353 11.6 17,903,176 18,073,694 79.1 1.30
40,000,000.01-50,000,000.00.... 1 45,871,866 14.8 45,871,866 45,871,866 78.5 1.35
- ------------------------------- --- ------------ ----- ----------- ------------ ---- ----
Total/Avg./Wtd. Avg.: 56 $309,100,450 100.0% $ 5,519,651 $ 45,871,866 77.7% 1.35x
=============================== === ============ ===== =========== ============ ==== ====
<CAPTION>
Wtd. Avg. Wtd. Avg.
Range of Cut-Off Date Occupancy Mortgage
Balances ($) Rate Rate
- ------------------------------- --------- ---------
<S> <C> <C>
0.01- 2,000,000.00.... 93.99% 6.964%
2,000,000.01- 4,000,000.00.... 95.44 6.919
4,000,000.01- 6,000,000.00.... 95.99 6.898
6,000,000.0l- 8,000,000.00.... 93.05 6.880
8,000,000.01-10,000,000.00.... 93.35 6.975
10,000,000.01-15,000,000.00.... 95.61 6.880
15,000,000.01-20,000,000.00.... 94.00 6.871
40,000,000.01-50,000,000.00.... 92.00 6.910
- ------------------------------- ----- -----
Total/Avg./Wtd. Avg.: 94.22% 6.912%
=============================== ===== =====
</TABLE>
Average Cut-off Date Balance: $5,519,651
<PAGE>
GROUP 2
REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
Range of Remaining Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Amortization Terms Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
(months) of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- -------------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
230-241.............. 1 $2,994,746 1.0% $2,994,746 $2,994,746 78.8% 1.32x 99.00% 6.900%
290-301.............. 9 30,215,469 9.8 3,357,274 9,240,421 77.2 1.33 93.67 7.071
326-349.............. 1 5,159,540 1.7 5,159,540 5,159,540 79.4 1.33 94.60 7.430
350 >=............... 45 270,730,695 87.6 6,016,238 45,871,866 77.7 1.35 94.22 6.885
- --------------------- --- ------------ ----- ---------- ----------- ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $309,100,450 100.0% $5,519,651 $45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============ ===== ========== =========== ==== ==== ===== =====
</TABLE>
Weighted Average Remaining Amortization Term: 350 months
<PAGE>
GROUP 2
AMORTIZATION TYPES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg.
Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Occupancy Mortgage
Balloon Types of Loans Date Balance Balance Balance Balance LTV DSCR Rate Rate
- -------------------- -------- ------------ -------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon.............. 55 $304,731,191 98.6% $5,540,567 $45,871,866 77.7% 1.35x 94.23% 6.911%
ARD.................. 1 4,369,259 1.4 4,369,259 4,369,259 77.7 1.24 93.51 6.990
- --------------------- --- ------------ ----- ---------- ----------- ---- ---- ----- -----
Total/Avg./Wtd. Avg.: 56 $309,100,450 100.0% $5,519,651 $45,871,866 77.7% 1.35x 94.22% 6.912%
===================== === ============ ===== ========== =========== ==== ==== ===== =====
</TABLE>
<PAGE>
GROUP 2
OCCUPANCY RATES
<TABLE>
<CAPTION>
Aggregate % by Aggregate Average Highest Wtd. Avg. Wtd. Avg. Wtd. Avg.
Range of Number Cut-off Cut-off Date Cut-off Date Cut-off Date Cut-off Date UW NCF Mortgage
Occupancy Rates (%) of Loans Date Balance Balance Balance Balance LTV DSCR Rate
- -------------------- -------- ------------ -------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
80.01-85.00.......... 1 $6,100,295 2.0% $ 6,100,295 $ 6,100,295 79.7% 1.27x 7.180%
85.01-90.00.......... 5 22,041,708 7.1 4,408,342 9,794,148 78.6 1.31 6.957
90.01-95.00.......... 18 132,283,856 42.8 7,349,103 45,871,866 77.7 1.35 6.921
95.01>=........... 32 148,674,591 48.1 4,646,081 17,732,659 77.5 1.36 6.887
- --------------------- --- ------------ ----- ---------- ----------- ---- ---- -----
Total/Avg./Wtd. Avg.: 56 $309,100,450 100.0% $5,519,651 $45,871,866 77.7% 1.35x 6.912%
===================== === ============ ===== ========== =========== ==== ==== =====
</TABLE>
Weighted Average Occupancy Rate: 94.22%
<PAGE>
Lehman Brothers Commercial Mortgage Trust 98 - C4
ITALICS indicate mortgage loans secured by multiple properties.
<TABLE>
<CAPTION>
Control
No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
1 1 TRT Holdings Various
1a 1 Chicago Office & Retail 676 North Michigan Avenue
1b 1 NY 21 East 52nd Street
1c 1 Irving 221 East Las Colinas
- ------------------------------------------------------------------------------------------------------------------------------------
1d 1 Dallas 1590 LBJ Freeway
1e 1 Houston Four Riverway
2 1 Mills NEQ/Interstate 10 and Interstate 15
- ------------------------------------------------------------------------------------------------------------------------------------
3 1 Arden II Various
3a 1 600 Corporate Pointe 600 Corporate Pointe
3b 1 1950 Sawtelle 1950 Sawtelle Boulevard
3c 1 16000 Ventura 16000 Ventura Blvd.
3d 1 Centerpointe La Palma 1, 4, 5, 6, 18, 20, 22, 24, 26, 28, 30 Centerpointe Drive
- ------------------------------------------------------------------------------------------------------------------------------------
3e 1 Governor Park Plaza 6333-6363 Greenwich Drive
3f 1 Huntington Beach Plaza I & II 5762 & 5772 Bolsa Avenue
3g 1 Huntington Commerce Center 5445 Oceanus Drive and 15121 Graham Street
3h 1 Poway Industrial 13350 Stowe Drive
3i 1 Sunset Pointe 25129 The Old Road
- ------------------------------------------------------------------------------------------------------------------------------------
3j 1 Via Frontera 10965-93 Via Frontera
3k 1 Von Karman Corporate Center 2121 Alton Parkway & 16969-16715 Von Karman Ave.
3l 1 Yorba Linda Business Center 22343-22349 and 22833 La Palma Avenue
4 1 Fresno 645 Shaw Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
5 1 Bayside 401 Biscayne Boulevard
6 1 Inland Various
6a 1 Homewood Plaza 935 West 175th Street
6b 1 Oak Forest Commons Shopping Center NEC of 159th Street and Central Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
6c 1 St. James Crossing Shopping Center 800-844 East Ogden Avenue
6d 1 Naper West Plaza SEC of Route 59 and Aurora Avenue
6e 1 Bergen Plaza 7101 10th Street North
6f 1 Wauconda Shopping Center 620 West Liberty
6g 1 Lake Park Plaza 4301 Franklin Street (Route 421)
- ------------------------------------------------------------------------------------------------------------------------------------
6h 1 Chestnut Court Shopping Center 7511 Lemont Road
6i 1 Elmhurst City (City Centre and Ruby's) 1 City Centre/Ruby's
6j 1 Western Howard Plaza 2341-57 West Howard Street
6k 1 Wisner/Milwaukee 2847-2865 North Milwaukee Avenue
6l 1 High Point Shopping Center SEC of Mineral Point Road and D'Onofrio Drive
- ------------------------------------------------------------------------------------------------------------------------------------
7 1 Montgomery Mall South Boulevard (Hwy 82) & McGhee Road
8 2 Mansards Apartment Community 1818 Mansard Boulevard
9 1 Best Western President Hotel 234 West 48th Street
10 1 Hundred Oaks Shopping Center 719 Thompson Lane
- ------------------------------------------------------------------------------------------------------------------------------------
11 1 Sterling Apartments 1815 John F. Kennedy Boulevard
12 1 Warwick Hotel 401 Lenora Street
13 2 Avion at Sunrise Mountain Apartments 6901 E. Lake Mead Boulevard
14 2 Park at Memorial Apartments 4201 West Memorial Road
15 1 Lee Farm Corporate Park 83 Wooster Heights Road
- ------------------------------------------------------------------------------------------------------------------------------------
16 1 Rodin Place 2000 Hamilton Street and 2001 Pennsylvania Avenue
17 1 MacArthur Properties2 Various
17a 1 MacArthur Properties 301 East 69th Street
17b 1 MacArthur Properties 233 East 69th Street
- ------------------------------------------------------------------------------------------------------------------------------------
17c 1 MacArthur Properties 305 East 72nd Street
17d 1 MacArthur Properties 205 East 78th Street
17e 1 MacArthur Properties 125-10 Queens Blvd.
18 1 University Place 3260 & 3300 University Place
- ------------------------------------------------------------------------------------------------------------------------------------
19 1 Milburn NYC 242 West 76th Street
21 1 Savannah Square One Savannah Square Drive
22 1 Winston Salem Industrial Various
23 1 Covington Portfolio Various
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
23a 1 Covington Portfolio - Westgate Shopping Center 556 Blue Ridge Avenue
23b 1 Covington Portfolio - Rocky Mount Pell Avenue (Route 40)
23c 1 Covington Portfolio - Southgate Shopping Center Main Street at Griffin Boulevard
24 2 Glen Hollow Apartments 1100 Newportville Road and 1701 Newport Road
- ------------------------------------------------------------------------------------------------------------------------------------
25 1 Holiday Office Park Various
26 1 Gateway Business Center 1680 Lyell Avenue
27 1 Motorola 5201 Tollview Drive
28 1 Ellis Building 1605 Main Street
29 1 Super K-Mart 1800 West Valencia Road
- ------------------------------------------------------------------------------------------------------------------------------------
30 1 Hospital Professional Bldg II 1585 North Barrington Road
31 1 Garden Ridge - Stockbridge 5000 Mount Zion Parkway
32 1 Jefferson Square 4700 42nd Avenue
33 2 Wellington Farms Apartments 4700 Twisted Oaks Road
34 2 Arbor Ridge Apartments 330 East Enos Drive
- ------------------------------------------------------------------------------------------------------------------------------------
35 2 L'Atriums on the Creek 1676 Carter Drive
36 2 Country Oaks Apartments 4631 Papermill Road
37 1 Garden Ridge 1287 Central Park Drive
38 1 Riverwalk Plaza 1608 South Federal Highway
39 1 Pinnacle Center 550 Thornton Parkway
- ------------------------------------------------------------------------------------------------------------------------------------
40 1 Yaohan Plaza 100 East Algonquin Road
41 1 Fullerton University Shopping Center SWC Yorba Linda Boulevard and Placentia Avenue
42 2 Presidential Estates Apartments 1808 Century Way
43 1 5 La-Z-Boy Retail Locations Various
- ------------------------------------------------------------------------------------------------------------------------------------
43a 1 5 La-Z-Boy Retail Locations 4515 South Cooper Street
43b 1 5 La-Z-Boy Retail Locations 450 East Round Grove Road
43c 1 5 La-Z-Boy Retail Locations 8633 Airport Freeway
43d 1 5 La-Z-Boy Retail Locations 1708 North Central Expressway
43e 1 5 La-Z-Boy Retail Locations 6329-B FM 1960 West
- ------------------------------------------------------------------------------------------------------------------------------------
44 2 Promenade Apartments 6233 West Thomas Road
45 1 Miramonte Apartments 8025 East Lincoln Drive
46 2 Ashton Meadows Apartments 7351 East Speedway Boulevard
47 1 Sullivan Street 97, 107-109, 111, 113, 115, 117 & 119 Sullivan St.
- ------------------------------------------------------------------------------------------------------------------------------------
48 1 Market at Cedar Hill Shopping Center 229-235 FM 1382
49 2 Grant Village Apartments 110 Edtim Road, 222 & 300 Grant Boulevard and 101-104
Village Drive
50 1 11 East Adams 11 East Adams Street
51 2 Southgate Towers Apartments 5303-5305 Northfield Road
52 1 Chesterfield Meadows Shopping Center 6401-6501 Centralia Road & 6411-6439 Chesterfield
Meadows Road
- ------------------------------------------------------------------------------------------------------------------------------------
53 1 Northgate Shopping Center Fieldstown Road
54 1 45 Executive Drive 45 Executive Drive
55 1 Cipriano Square 8829 Greenbelt Road
56 1 Cineplex Multiplex 37 Wall Street
57 1 Black & Decker 195 Polk Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
58 1 Staten Island Hotel 1415 Richmond Avenue
59 1 Cloverleaf Shopping Center 3001 South Cannon Boulevard
60 2 Deer Park Apartments 300 Deer Park Drive
61 1 Kmart Town Center 6030-6050 Burke Commons Road
62 1 Kash and Karry - Tampa 4317 Gandy Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
63 1 River Place 329 W. 18th Street
64 1 Security Public Storage 110 East 25th Street
65 1 Newcastle Motel 1201 Atlantic Avenue
66 1 Aventura Medical Plaza 21150 Biscayne Boulevard
67 1 Southgate Village Shopping Center US Highway 31
- ------------------------------------------------------------------------------------------------------------------------------------
68 1 Brewery District Office 555 & 551 South Front Street, & 111 West Liberty Street
69 1 Kent Business Center 25316-25530 74th Avenue South
70 1 Villa Maria SWC Route 2 & Clemente Ramirez De Arellano Street
71 1 Kash and Karry - Hudson 9017 State Road 52
72 1 Forest Hill Shopping Center 6750 Forest Hill Drive
- ------------------------------------------------------------------------------------------------------------------------------------
73 2 Wyntree Apartments 2203 Plaster Road
74 1 Keebler Krossing Shopping Center 1099 Beltline Road
75 1 Havasu North Shopping Center 1799 North Kiowa Boulevard North
76 1 Valencia Entertainment Center 23460 Cinema Drive
77 1 444 Saw Mill River Road 444 Saw Mill River Road
- ------------------------------------------------------------------------------------------------------------------------------------
78 2 Twin Lakes Apartments 201 Monroe Street
79 1 Little Prairie Shopping Center College Street & Yelm Highway
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
80 2 JJ Court Apartments 900 NE Butler Market Road
81 1 Citadel 8700 East Pinnacle Peak Road
82 2 Roanoke West Apartments 4440 Roanoke Parkway
- ------------------------------------------------------------------------------------------------------------------------------------
83 1 Foothills Center 3930 East Ray Road
84 1 Ardsley Plaza 875 Saw Mill River Road
85 2 Wyngrove Apartments 5100 Welcome All Road
86 1 450 Village Company 446-454 Avenue of the Americas
87 1 Lone Mountain Plaza Shopping Center 4810-4860 W. Lone Mountain Road
- ------------------------------------------------------------------------------------------------------------------------------------
88 1 Kmart Store No. 4219 - Ashwaubenon, WI 1109 Lombardi Access Road
89 1 Holiday Inn Express - Minnetonka 10985 Red Circle Drive
90 1 335-355 Franklin Street 335-355 Franklin Street
91 2 Fountain Park Apartments 12525 Kirkwood
92 2 Brittany Court Apartments 9000 East Speedway Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
93 1 Sully Square Shopping Center 13957-13999 Metrotech Drive
94 1 Capitol View Office Building 150 West State Street
95 2 The Oaks Apartments 3301 Providence Avenue
96 1 Hampshire Place 7485-7495, 7505, 7511-7527 New Hampshire Avenue
97 1 Shops at Butler Creek SE/Q of Hwy 41 at Acworth-Due West Rd.
- ------------------------------------------------------------------------------------------------------------------------------------
98 1 Mosside Village 2644 Mosside Boulevard
99 1 River North Concourse 750 North Orleans Avenue
100 1 Quality Suites 1406 Richmond Road
101 2 Huntington Pointe Apartments 6801 Wolflin Avenue
102 1 St. Lawrence Plaza South Side of State Highway 37, West side of Highway 131
- ------------------------------------------------------------------------------------------------------------------------------------
103 1 Days Inn - San Diego 3350 Rosecrans Street
104 2 Beechwood South Apartments 155 Piccadilly Square
105 1 Bell Atlantic of Virginia Various
105a 1 Bell Atlantic of Virginia 3850 Jermantown Road
- ------------------------------------------------------------------------------------------------------------------------------------
105b 1 Bell Atlantic of Virginia 2046 Enfield
105c 1 Bell Atlantic of Virginia 5425 Port Royal Road
106 1 Sunnyslope Shopping Centre 4555 Liberty Road South
107 1 Uptown Shopping Center 700 Division Street
- ------------------------------------------------------------------------------------------------------------------------------------
108 2 Woodman Lassen Apartments 9933 Woodman Avenue
109 1 Comfort Inn - Blacksburg 3075 South Main Street
110 1 Castle Rockland 100 Route 59
111 1 K-Mart Plaza 2600 Yakima Valley Highway
112 1 Lock It Up - San Jose 2170 O'Toole Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
113 1 Holiday Inn - Ashland 810 England Street
114 1 Grandland Shopping Center 18600 Fenkell Avenue
115 1 North County Plaza 2216 & 2224 El Camino Real
116 1 Christiansburg Hills Plaza Shopping Center 1540 Roanoke Street
117 2 Forest Village Apartments 1325-1345 North Forest Road
- ------------------------------------------------------------------------------------------------------------------------------------
118 1 Bronxville West 42-50 Palmer Ave & 133-147 Parkway (a.k.a. 66 Palmer Ave)
119 1 Days Inn - Laurel 13700 Baltimore Avenue
120 1 Stratford Executive Park 555 Lordship Blvd & 150 Long Beach Boulevard
121 2 Chenault Creek 2900 Dilido Road
122 1 Greenbriar Market Place 2975 Headland Drive SW
- ------------------------------------------------------------------------------------------------------------------------------------
123 2 Alston Arms Apartments 10-26 Lehigh Street & 13-31 Newman Street
124 1 Citi Centre 290 NW 165th Street
125 1 Kmart - La Crosse 2415 East State Highway 33
126 1 Walgreen - Camp Bowie 6332 Camp Bowie Boulevard
127 2 Sun Ridge Apartments 4885 North Chestnut Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
128 1 410-420 Tarrytown Road 410-420 Tarrytown Road
129 1 New York Plaza 1909 & 1915 East Park Row Drive & 1930 Marilyn Road
130 1 Lake Arbor Shopping Center 7503-7561 West 80th Avenue
131 1 Eckerd Drug Store SEC of Thousand Oaks Drive and Jones Maltsberger Road
132 1 Sleep Inn 40 North Front Street
- ------------------------------------------------------------------------------------------------------------------------------------
133 1 Hall of Fame Marina 515 Seabreeze Boulevard
134 2 Contemporary Village Apartments 100 East Glenolden Avenue
135 1 Commerce Exchange Business Park 580 Commerce Street
136 1 428 Tolland Turnpike 428 Tolland Road
- ------------------------------------------------------------------------------------------------------------------------------------
137 1 Tropicana Center and Flamingo Jones Various
137a 1 Flamingo Jones Shopping Center 6115 Flamingo Road
137b 1 Tropicana Lucky Shopping Center 5955 West Tropicana Avenue
</TABLE>
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<TABLE>
<CAPTION>
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No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
138 2 Cameron Ridge Apartments 3441 Mira Loma Drive, 3430 & 3440 Virada Road
- ------------------------------------------------------------------------------------------------------------------------------------
139 1 Loudon Plaza 359 Northern Boulevard
140 1 Smartpark 575 Washington Street
141 1 One North Penn Office Building One North Pennsylvania Avenue
142 1 Kmart 1801 West Jefferson
143 1 125 Canal Street 125-31 Canal Street
- ------------------------------------------------------------------------------------------------------------------------------------
144 1 Alton Circle 1751 Homer Adams Parkway
145 2 Country Club Apartments 17610 Cali Drive
146 2 Trailing Vine Place Apartment 2812 Trailing Vine Road
147 1 Bayway Shopping Center 1141-1211 West NASA Road 1
148 2 Park Row East Apartments 3201 E. Park Row
- ------------------------------------------------------------------------------------------------------------------------------------
149 1 Thunderbird Square SEC Thunderbird Rd. and 35th Ave.
150 1 Walgreens 8600 US Hwy 80 West (Las Vegas Trail)
151 1 Sherwood Gardens Apts. 2000 New Rodgers Road
152 1 Star Plaza 10055 Slater Avenue
153 2 Stratford Place Apartments 3207 East Airline
- ------------------------------------------------------------------------------------------------------------------------------------
154 1 Morrell Plaza Shopping Center 9900 Frankford Avenue
155 1 Fountain Hills Plaza Shopping Center 16605 East Palisades Boulevard
156 2 La Quinta Apartments 6110 East Fifth Street
157 2 Franklin Properties Various
- ------------------------------------------------------------------------------------------------------------------------------------
157a 2 Franklin Manor 29-31 Knight Street
157b 2 Franklin Woods 1792 New Loudon Tpke
157c 2 Franklin Terrace 100 Pawtucket
157d 2 Franklin Place 31-33 Nellie Street
- ------------------------------------------------------------------------------------------------------------------------------------
158 1 Foot Hills Shopping Center 13111 West Alameda Parkway
159 1 Walgreen - Portage SWC of US Hwy. 6 & Willowcreek Road
160 2 Riverchase Apartments 3421 Kay Street
161 1 Quality Inn 1402 Richmond Road
162 1 350-360 Tarrytown Road 350-360 Tarrytown Road
- ------------------------------------------------------------------------------------------------------------------------------------
163 1 Kings Bay Plaza U.S. 19 and Kings Bay Drive
164 2 Hidden Valley Apartments 9333-9351 Bales Drive
165 1 Warlick Plaza 415 West A Street
166 1 Upland Plaza 1610-1640 West Foothill Boulevard
167 1 Sharon Lakes Plaza 7631 Sharon Lakes Drive
- ------------------------------------------------------------------------------------------------------------------------------------
168 1 Randolph Plaza 8441 North Main Street
169 1 Orangewood Business Plaza 1717 & 1745 Orangewood Avenue & 571 Poplar
170 1 Guilford Village 601 Milner Drive & 435 Dolley Madison Road
171 1 North County Office 2204 El Camino Real
172 1 1 Ethel Blvd 1 Ethel Blvd
- ------------------------------------------------------------------------------------------------------------------------------------
173 1 The Embassy Cinema 14-26 Pine Street
174 1 Staples - Galesburg 2383 North Henderson Street
175 1 Pinebrook Village 3123 Louisiana Highway 28 East
176 1 Studio Inn 1001 Highway 90
177 1 Plaza 114 Grafton Street & State Route No. 114
- ------------------------------------------------------------------------------------------------------------------------------------
178 1 201 Federal Road 201 Federal Road
179 1 Eckerd 7354 East Brainerd Road
180 1 Glen Ellen Mobile Home Park 2882 Gulf to Bay Boulevard
181 1 Plaza West Strip Center 3003 West Anderson Avenue
182 1 Atrium at Delk Center 2759 Delk Road
- ------------------------------------------------------------------------------------------------------------------------------------
183 1 3650 Industrial Avenue 3650 Industrial Avenue
184 2 Jacksonville Apartments 700 A-W Monterey Way
185 1 West Bay Office Park 30-110 Quaker Lane
186 1 Sav-On Drug Store 12618 Studebaker Road
187 1 Holiday Inn Express - Fargo 1040 40th Street, South
- ------------------------------------------------------------------------------------------------------------------------------------
188 1 Smokey Hill Plaza Shopping Center 16601-16695 East Smoky Hill Road
189 2 Rue Granville Apartments 7000 Rue Granville
190 1 Revco - Savannah 712 Stephenson Avenue
191 1 Turnberry Crossing Shopping Center 12638 Jefferson Avenue
192 1 Rite Aid - Walkill 1 Fitzgerald Drive
- ------------------------------------------------------------------------------------------------------------------------------------
193 1 Lucky Industrial Park 8545-8575 N.W. 79th Street
194 1 Target Center 1895-1999 North Congress Avenue
195 1 Golfsmith 1001 West IH-20
196 1 70 Garden Court 70 Garden Court
197 2 Bonita Harbor Apartments 7000-7001-7050-7080-7090 Bonita Drive
- ------------------------------------------------------------------------------------------------------------------------------------
198 2 Caputo 1045-65 West 76th Street
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
199 1 Heather Ridge Village 2045 North SH-360
200 1 Leviner Office Building 10203 Birchridge
201 1 Shoppes of Avon 8101 East US Highway 36
202 2 Buckner Village Apartments 1810 John West Road
- ------------------------------------------------------------------------------------------------------------------------------------
203 2 San Marco Village 2165 Dunsford Terrace
204 1 Staples 3600 Commerce Drive
205 1 Transcor 1120 NW 165th Street
206 2 Vista Park Apartments 1447 Petaluma Hill Road
207 2 Windsor Estates 1441-47 West 70th Avenue, 7011-41 North 15th Street
- ------------------------------------------------------------------------------------------------------------------------------------
208 1 Roland Park Shopping Center 4800-4816 Roland Avenue
209 1 Pathmark Shopping Center Southeast Corner Route 347 and Canal Road
210 1 Old Lake Place Shopping Center 10479 Roswell Road
211 1 West Flagler Shops 7101 W. Flagler Drive
212 1 3128 North Ashland Avenue 3128 North Ashland Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
213 1 Westgate Plaza 1347 West Broad Street (Highway 87-Business at Peanut Rd.)
214 1 Hillsboro Shoppes 27-81 South Federal Highway
215 1 Kmart - Tacoma 5401-5409 100th Street S.W.
216 1 Post Office Annex Building 700 St. Louis Union Station
217 1 Eckerd - Greensboro 2100 North Elm Street
- ------------------------------------------------------------------------------------------------------------------------------------
218 2 Regal Pointe Apartments 6111 Willowbend
219 1 Clarksville Crossing 916 Virginia Avenue (US Route 58 at Russell Street)
220 1 Merchants Plaza 230-240 A1A North
221 1 Statewide Self Storage 1901 Verne Roberts Circle
222 1 25227 Grogans Mill Office Building 25227 Grogan's Mill Road
- ------------------------------------------------------------------------------------------------------------------------------------
223 1 Florida Space Center 1830 Hypoluxo Road
224 2 Fairway Gardens 10-68 Park Hill Avenue, 30-48 Park Hill Court,
31-49 Park Hill Lane, 15-33 Fairway Avenue
225 1 Rite Aid - West Haven 70 Elm Street
226 1 Staples 2630 South Western Drive
227 1 Commerce Point 3511 West Commercial Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
228 1 93 Broadway 93 Broadway
229 1 Arvada Square Shopping Center 9215 Ralston Road
230 1 Battlefield Center 3500 Plank Road, Suites A1-F1
231 1 CVS - Asheboro 285 North Fayetteville Street
232 1 NFC Office Plaza 9400 Williamsburg Plaza
- ------------------------------------------------------------------------------------------------------------------------------------
233 2 Oakwood Terrace Apartments 917 Coury Street
234 1 CVS - Ballentine NEC of U.S. Hwy #76 and Bickley Road
235 1 Jackson's Landing Apartments 53 Newnan Estates Drive
236 1 Centergate 5540-5590 Bee Ridge Road
237 1 King Kullen Shopping Center 600 North Wellwood Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
238 1 Anaheim Springs Office 181 Old Springs Road
239 1 AUS Building 155 Gaither Drive
240 1 Queens West Industrial 5-05, 5-15, 5-17, 5-19, 5-25 48th Avenue & 5-28 47th Rd.
241 2 Forest Hill Park Apartment Complex 13995 Superior Road
242 1 West Brandon Square 9931 & 9935 State Road 60
- ------------------------------------------------------------------------------------------------------------------------------------
243 1 CVS - Stanley 542 South Main Street
244 2 Deer Park 87 Ruby Road
245 1 Fairmont Building 4936 Fairmont Avenue
246 1 Papago Place 1122 North Seventh Street
247 1 Humble Office Building 20202 Eastex Freeway
- ------------------------------------------------------------------------------------------------------------------------------------
248 2 Golden Oak Village Apartments 5150 Hamlin Court
249 1 CVS - Denver Corner of NC Hwys 150 & 16
250 1 Free State Self Storage 681 West Dallas Street
251 1 Brookmeade Plaza 1255 Route 376
252 1 80 Garden Court 80 Garden Court
- ------------------------------------------------------------------------------------------------------------------------------------
253 1 CVS - Sunset Beach 1701 Seaside Road SW
254 1 Centenial Mall 1111 West Victory Way
255 1 CVS - King's Mountain 1101 Shelby Highway
256 1 Southland (7-11) 5000 NW Minton Road
257 1 North Grove Plaza 707-787 State Road 574
- ------------------------------------------------------------------------------------------------------------------------------------
258 1 Thomas Center 111 Smith Hines Road
259 1 4708 North Milwaukee 4708 N. Milwaukee Avenue
260 1 9255 South Western Avenue 9255 South Western Avenue
261 1 Greenwich/Laguardia 355-361 Greenwich Street/496 LaGuardia Place
262 1 Kmart - Rock Springs Plaza 2540 Foothill Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
263 1 Rockwood Plaza Shopping Center 3501 Courthouse Road
264 2 Sierra Carmichael Apartments 800 South Carmichael Avenue
265 1 1501 Estes Avenue 1501 Estes Avenue
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Group Property Name Address
====================================================================================================================================
<S> <C> <C> <C>
266 1 581 Wolcott Street 581 Wolcott Street
267 1 Dixie Commerce Center 3395-3595 North Dixie Highway
- ------------------------------------------------------------------------------------------------------------------------------------
268 1 IHOP 3400 Clarendon Boulevard
269 1 Ridge at White Oak Apartments 123 The Ridge Court
270 1 388 Tarrytown Road 388 Tarrytown Road
271 1 Governors Park Office Park 2600 East South Boulevard
272 1 Remax Building 6801 Falls of the Neuse Road
- ------------------------------------------------------------------------------------------------------------------------------------
273 1 Ferndale Mobile Village 2350 Douglas Road
274 1 Lions Lair Travel Park 58950 Overseas Highway
275 1 Rite Aid - Richmond 66711 Gratiot Avenue
276 2 Hartstown Village Apartment Complex 7155 Hart Street
277 1 6300 Richmond 6300 Richmond Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
278 2 Pindle East Apartments 270-272 Pindle Street
279 1 Lake of 610 9000 Kirby Drive
280 1 Ames - Palmer Plaza 1178 Thorndike Road
281 1 Grogan's Forest Shopping Center 25114 Grogan's Mill Road
282 1 Bearden Place Shopping Center 5803-5809 Kingston Pike
- ------------------------------------------------------------------------------------------------------------------------------------
283 1 56th Street Warehouse 11105-11119 E. 56th Street
284 1 Frys In-Line Space 1379 East Florence Boulevard
285 1 2120 South Oak Park Ave 2120 South Oak Park Avenue
286 1 Shops on Cumberland 1903 - 1911 Cumberland Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 Various Various Various LB-28 $ 250,000,000 $249,347,368
1a Chicago IL 60611
1b New York NY 10022
1c Irving TX 75039
- ------------------------------------------------------------------------------------------------------------------------------------
1d Dallas TX 75234
1e Houston TX 77056
2 Ontario CA 91730 No 145,000,000 145,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
3 Various CA Various LB-27 111,200,000 111,200,000
3a Culver City CA 90230
3b Los Angeles CA 90025
3c Encino CA 91436
3d La Palma CA 90623
- ------------------------------------------------------------------------------------------------------------------------------------
3e San Diego CA 92122
3f Huntington Beach CA 92649
3g Huntington Beach CA 92649
3h Poway CA 92064
3i Newhall CA 91381
- ------------------------------------------------------------------------------------------------------------------------------------
3j Rancho Bernardo CA 92129
3k Irvine CA 92714
3l Yorba Linda CA 92687
4 Fresno CA 93710 No 69,000,000 69,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
5 Miami FL 33132 No 63,000,000 62,936,317
6 Various Various Various LB-29 54,600,000 54,600,000
6a Homewood IL 60430
6b Oak Forest IL 60452
- ------------------------------------------------------------------------------------------------------------------------------------
6c Westmont IL 60559
6d Naperville IL 60563
6e Oakdale MN 55128
6f Wauconda IL 60084
6g Michigan City IN 46360
- ------------------------------------------------------------------------------------------------------------------------------------
6h Darien IL 60561
6i Elmhurst City IL 60126
6j Chicago IL 60645
6k Chicago IL 60618
6l Madison WI 53717
- ------------------------------------------------------------------------------------------------------------------------------------
7 Montgomery AL 36116 No 47,750,000 47,643,694
8 Griffith IN 46319 No 46,000,000 45,871,866
9 New York NY 10036 No 30,818,758 30,818,758
10 Nashville TN 37204 No 27,500,000 27,481,479
- ------------------------------------------------------------------------------------------------------------------------------------
11 Philadelphia PA 19103 No 23,000,000 22,984,600
12 Seattle WA 98121 No 18,500,000 18,480,470
13 Las Vegas NV 89115 No 18,100,000 18,073,694
14 Oklahoma City OK 73134 No 17,760,000 17,732,659
15 Danbury CT 6810 No 17,700,000 17,689,266
- ------------------------------------------------------------------------------------------------------------------------------------
16 Philadelphia PA 19130 No 17,535,597 17,510,145
17 New York NY Various LB-26 17,250,000 17,225,889
17a New York NY 10021
17b New York NY 10021
- ------------------------------------------------------------------------------------------------------------------------------------
17c New York NY 10021
17d New York NY 10021
17e New York NY 11415
18 Orlando FL 32792 No 15,150,000 15,150,000
- ------------------------------------------------------------------------------------------------------------------------------------
19 New York NY 10023 No 15,000,000 15,000,000
21 Savannah GA 31406 No 14,175,000 14,138,000
22 Winston-Salem NC 27106 No 14,000,000 13,963,957
23 Various VA Various LB-17 13,920,000 13,891,086
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
23a Bedford VA 24523
23b Rocky Mount VA 24151
23c Farmville VA 23901
24 Croydon PA 19021 No 13,700,000 13,679,553
- ------------------------------------------------------------------------------------------------------------------------------------
25 Lansing MI 48911 No 12,350,000 12,342,671
26 Rochester NY 14606 No 12,000,000 11,968,591
27 Rolling Meadows IL 60008 No 11,500,000 11,492,142
28 Sarasota FL 34236 No 11,100,000 11,074,203
29 Tucson AZ 85746 No 10,600,000 10,566,533
- ------------------------------------------------------------------------------------------------------------------------------------
30 Hoffman Estates IL 60194 No 10,400,000 10,384,441
31 Stockbridge GA 30281 No 10,377,575 10,377,575
32 Seattle WA 98116 No 10,200,000 10,178,868
33 Charlotte NC 28212 No 9,800,000 9,794,148
34 Santa Maria CA 93454 No 9,770,000 9,749,066
- ------------------------------------------------------------------------------------------------------------------------------------
35 Arlington TX 76010 No 9,300,000 9,286,153
36 Knoxville TN 37909 No 9,250,000 9,240,421
37 O'Fallon IL 62269 No 8,600,000 8,587,890
38 Boynton Beach FL 33435 No 8,544,000 8,531,461
39 Thornton CO 80229 No 8,487,177 8,471,798
- ------------------------------------------------------------------------------------------------------------------------------------
40 Arlington Heights IL 60005 No 8,250,000 8,224,477
41 Fullerton CA 92631 No 8,200,000 8,193,399
42 Indianapolis IN 46260 No 8,050,000 8,038,072
43 Various TX Various LB-20 8,000,000 7,991,787
- ------------------------------------------------------------------------------------------------------------------------------------
43a Arlington TX 76017
43b Lewisville TX 75067
43c North Richland Hills TX 76180
43d Plano TX 75074
43e Houston TX 77069
- ------------------------------------------------------------------------------------------------------------------------------------
44 Phoenix AZ 85033 No 7,750,000 7,738,378
45 Scottsdale AZ 85250 No 7,650,000 7,644,893
46 Tucson AZ 85710 No 7,550,000 7,538,678
47 New York NY 10012 No 7,500,000 7,481,918
- ------------------------------------------------------------------------------------------------------------------------------------
48 Cedar Hill TX 75104 No 7,379,302 7,366,676
49 Syracuse NY 13206 No 7,350,000 7,345,035
50 Chicago IL 60603 No 7,180,000 7,163,405
51 Bedford Heights OH 44146 No 7,000,000 6,995,368
52 Richmond VA 23832 No 6,900,000 6,890,520
- ------------------------------------------------------------------------------------------------------------------------------------
53 Gardendale AL 35071 No 6,850,000 6,842,598
54 Plainview NY 11803 No 6,725,000 6,721,157
55 Greenbelt MD 20706 No 6,720,000 6,715,501
56 Huntington NY 11743 No 6,600,000 6,585,686
57 Nashville TN 37210 No 6,560,000 6,553,178
- ------------------------------------------------------------------------------------------------------------------------------------
58 Staten Island NY 10314 No 6,500,000 6,485,303
59 Kannapolis NC 28083 No 6,300,000 6,283,510
60 Athens GA 30605 No 6,120,000 6,100,295
61 Burke VA 22015 No 6,000,000 6,000,000
62 Tampa FL 33611 No 6,000,000 5,997,685
- ------------------------------------------------------------------------------------------------------------------------------------
63 Chicago IL 60618 No 6,000,000 5,979,956
64 San Mateo CA 94403 No 5,900,000 5,886,611
65 Virginia Beach VA 23451 No 5,775,000 5,769,717
66 Aventura FL 33180 No 5,715,000 5,711,693
67 Pelham AL 35244 No 5,700,000 5,693,841
- ------------------------------------------------------------------------------------------------------------------------------------
68 Columbus OH 43215 No 5,700,000 5,692,246
69 Kent WA 98032 No 5,645,000 5,636,555
70 Manati PR 674 No 5,600,000 5,600,000
71 Hudson FL 33562 No 5,600,000 5,597,347
72 Forest Hill TX 76140 No 5,600,000 5,591,979
- ------------------------------------------------------------------------------------------------------------------------------------
73 Atlanta GA 30345 No 5,600,000 5,587,721
74 Collinsville IL 62234 No 5,550,000 5,542,204
75 Lake Havasu City AZ 86403 No 5,520,000 5,516,228
76 Valencia CA 91355 No 5,500,000 5,492,256
77 Elmsford NY 10523 No 5,500,000 5,488,665
- ------------------------------------------------------------------------------------------------------------------------------------
78 Orlando FL 32751 No 5,400,000 5,388,696
79 Lacey WA 98513 No 5,400,000 5,361,172
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
80 Bend OR 97701 No 5,360,000 5,355,867
81 Scottsdale AZ 85255 No 5,200,000 5,191,745
82 Kansas City MO 64111 No 5,170,074 5,159,541
- ------------------------------------------------------------------------------------------------------------------------------------
83 Phoenix AZ 85044 No 5,150,000 5,147,214
84 Ardsley NY 10502 No 5,128,991 5,128,991
85 College Park GA 30349 No 5,000,000 4,989,037
86 New York NY 10011 No 5,000,000 4,987,945
87 Las Vegas NV 89130 No 5,000,000 4,986,441
- ------------------------------------------------------------------------------------------------------------------------------------
88 Village of Ashwaubenon WI 54304 No 4,985,461 4,985,461
89 Minnetonka MN 55343 No 4,950,000 4,939,533
90 Cambridge MA 2139 No 4,950,000 4,939,353
91 Stafford TX 77477 No 4,800,000 4,797,026
92 Tucson AZ 85710 No 4,800,000 4,792,802
- ------------------------------------------------------------------------------------------------------------------------------------
93 Chantilly VA 22102 No 4,600,000 4,596,530
94 Trenton NJ 8608 No 4,600,000 4,590,912
95 Bryan TX 77803 No 4,600,000 4,581,215
96 Takoma Park MD 20783 No 4,500,000 4,489,561
97 Kennesaw GA 30152 No 4,500,000 4,469,945
- ------------------------------------------------------------------------------------------------------------------------------------
98 Monroeville PA 10588 No 4,400,000 4,391,003
99 Chicago IL 60610 No 4,400,000 4,388,859
100 Williamsburg VA 23185 No 4,387,500 4,373,095
101 Amarillo TX 79106 No 4,400,000 4,369,259
102 Massena NY 13662 No 4,220,390 4,214,860
- ------------------------------------------------------------------------------------------------------------------------------------
103 San Diego CA 92110 No 4,200,000 4,200,000
104 Cincinnati OH 45255 No 4,150,000 4,138,655
105 Various VA Various LB-25 4,156,559 4,132,482
105a Fairfax VA 22030
- ------------------------------------------------------------------------------------------------------------------------------------
105b Hampton VA 23666
105c Springfield VA 22151
106 Salem OR 97302 No 4,100,000 4,086,243
107 Harrisburg PA 17110 No 4,100,000 4,084,927
- ------------------------------------------------------------------------------------------------------------------------------------
108 Los Angeles CA 91345 No 4,037,000 4,034,209
109 Blacksburg VA 24060 No 4,000,000 3,995,822
110 Ramapo NY 10901 No 4,000,000 3,994,450
111 Sunnyside WA 98944 No 4,000,000 3,992,223
112 San Jose CA 95131 No 4,000,000 3,991,121
- ------------------------------------------------------------------------------------------------------------------------------------
113 Ashland VA 23005 No 3,975,000 3,966,388
114 Detroit MI 48233 No 3,900,000 3,900,000
115 Oceanside CA 92054 No 3,900,000 3,894,562
116 Christiansburg VA 24073 No 3,900,000 3,894,508
117 Amherst NY 14221 No 3,900,000 3,894,332
- ------------------------------------------------------------------------------------------------------------------------------------
118 Bronxville NY 10708 No 3,800,000 3,792,432
119 Laurel MD 20707 No 3,800,000 3,791,881
120 Stratford CT 6947 No 3,750,000 3,737,878
121 Dallas TX 75228 No 3,740,000 3,729,721
122 Atlanta GA 30311 No 3,700,000 3,697,405
- ------------------------------------------------------------------------------------------------------------------------------------
123 Hackensack NJ 7601 LB-3 3,686,000 3,673,898
124 Miami FL 33169 No 3,664,246 3,662,054
125 La Crosse WI 54601 No 3,650,000 3,650,000
126 Fort Worth TX 76116 No 3,644,585 3,637,119
127 Fresno CA 93726 No 3,615,000 3,612,501
- ------------------------------------------------------------------------------------------------------------------------------------
128 White Plains NY 10607 No 3,600,000 3,597,722
129 Arlington TX 76010 No 3,500,000 3,492,692
130 Arvada CO 80003 No 3,500,000 3,490,560
131 San Antonio TX 48029 No 3,412,721 3,407,706
132 Memphis TN 38103 No 3,400,000 3,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
133 Fort Lauderdale FL 33316 No 3,400,000 3,398,051
134 Glenolden PA 19036 No 3,400,000 3,395,070
135 Southlake TX 76092 No 3,400,000 3,391,027
136 Manchester CT 6040 LB-14 3,400,000 3,380,752
- ------------------------------------------------------------------------------------------------------------------------------------
137 Las Vegas NV Various LB-16 3,350,000 3,347,172
137a Las Vegas NV 88901
137b Las Vegas NV 89103
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
138 Cameron Park CA 95682 No 3,300,000 3,295,063
- ------------------------------------------------------------------------------------------------------------------------------------
139 Albany NY 12204 No 3,275,000 3,268,667
140 New York NY 10014 No 3,250,000 3,236,444
141 Indianapolis IN 46204 No 3,225,000 3,220,369
142 Joliet IL 60436 No 3,199,473 3,199,473
143 New York NY 10002 No 3,200,000 3,198,195
- ------------------------------------------------------------------------------------------------------------------------------------
144 Alton IL 62002 No 3,200,000 3,198,029
145 Houston TX 77090 No 3,200,000 3,197,926
146 Houston TX 77373 No 3,200,000 3,193,249
147 Webster TX 77598 No 3,200,000 3,184,932
148 Arlington TX 76010 No 3,150,000 3,147,766
- ------------------------------------------------------------------------------------------------------------------------------------
149 Phoenix AZ 85053 No 3,100,000 3,100,000
150 Fort Worth TX 76116 No 3,103,956 3,097,451
151 Middletown PA 19058 No 3,100,000 3,091,525
152 Fountain Valley CA 92708 No 3,082,000 3,077,564
153 Victoria TX 77901 No 3,050,000 3,048,023
- ------------------------------------------------------------------------------------------------------------------------------------
154 Philadelphia PA 19114-1900 No 3,050,000 3,045,524
155 Fountain Hills AZ 85268 No 3,000,000 2,998,101
156 Tucson AZ 85711 No 3,000,000 2,995,501
157 Various RI Various LB-18 3,000,000 2,994,746
- ------------------------------------------------------------------------------------------------------------------------------------
157a West Warwick RI 2893
157b West Warwick RI 2893
157c West Warwick RI 2893
157d Providence RI 2904
- ------------------------------------------------------------------------------------------------------------------------------------
158 Lakewood CO 80228 No 3,000,000 2,991,909
159 Portage IN 46386 No 2,974,173 2,970,449
160 Columbia SC 29205 No 2,928,000 2,921,453
161 Williamsburg VA 23185 No 2,925,000 2,915,397
162 Greenburgh NY 10607 No 2,850,000 2,848,196
- ------------------------------------------------------------------------------------------------------------------------------------
163 Crystal River FL 34429 LB-24 2,830,000 2,830,000
164 Kansas City MO 64132 No 2,825,000 2,822,945
165 Newton NC 28658 No 2,800,000 2,800,000
166 Upland CA 91786 No 2,800,000 2,800,000
167 Charlotte NC 28210 No 2,800,000 2,794,585
- ------------------------------------------------------------------------------------------------------------------------------------
168 Randolph Township OH 44265 No 2,800,000 2,790,861
169 Orange CA 92668 No 2,775,000 2,773,275
170 Greensboro NC 27410 No 2,700,000 2,700,000
171 Oceanside CA 92054 No 2,700,000 2,696,235
172 Wood-Ridge NJ 7075 No 2,700,000 2,683,453
- ------------------------------------------------------------------------------------------------------------------------------------
173 Waltham MA 2154 No 2,650,000 2,646,597
174 Galesburg IL 61401 No 2,646,619 2,640,770
175 Pineville LA 71360 No 2,625,000 2,625,000
176 Bay St. Louis MS 39520 No 2,600,000 2,593,980
177 Lawrence MA 1843 No 2,595,447 2,593,845
- ------------------------------------------------------------------------------------------------------------------------------------
178 Brookfield CT 6804 LB-14 2,600,000 2,585,281
179 Chattanooga TN 37421 No 2,530,034 2,520,704
180 Clearwater FL 34619 No 2,520,000 2,514,914
181 Manhattan KS 66502 No 2,500,000 2,500,000
182 Marietta GA 30067 No 2,500,000 2,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
183 Rolling Meadows IL 60008 No 2,500,000 2,498,475
184 Lawrence KS 66049 No 2,500,000 2,496,497
185 Warwick RI 2886 No 2,500,000 2,495,230
186 Norwalk CA 90650 No 2,500,000 2,494,928
187 Fargo ND 58103 No 2,500,000 2,494,604
- ------------------------------------------------------------------------------------------------------------------------------------
188 Aurora CO 80046 No 2,500,000 2,494,441
189 Miami Beach FL 33139 No 2,480,000 2,478,165
190 Savannah GA 31406 No 2,440,922 2,440,922
191 Newport News VA 23602 No 2,400,000 2,395,067
192 Wallkill NY 10940 No 2,383,816 2,379,613
- ------------------------------------------------------------------------------------------------------------------------------------
193 Medley FL 33166 No 2,382,000 2,378,613
194 Boynton Beach FL 33436 No 2,375,000 2,368,784
195 Arlington TX 76017 No 2,350,000 2,348,513
196 Monterey CA 93940 LB-23 2,350,000 2,346,691
197 Miami Beach FL 33141 No 2,350,000 2,342,225
- ------------------------------------------------------------------------------------------------------------------------------------
198 Hialeah FL 33014 No 2,300,000 2,298,639
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
199 Grand Prairie TX 75050 No 2,300,000 2,296,801
200 Humble TX 77338 No 2,300,000 2,296,706
201 Avon IN 46168 No 2,300,000 2,296,706
202 Dallas TX 75228 No 2,300,000 2,296,681
- ------------------------------------------------------------------------------------------------------------------------------------
203 Jacksonville FL 32207 No 2,250,000 2,244,078
204 Warsaw IN 46580 No 2,225,000 2,223,692
205 Miami FL 33169 No 2,200,000 2,200,000
206 Santa Rosa CA 95404 No 2,200,000 2,198,582
207 Philadelphia PA 19126 No 2,200,000 2,196,917
- ------------------------------------------------------------------------------------------------------------------------------------
208 Baltimore MD 21210 No 2,200,000 2,194,383
209 Port Jefferson NY 11777 No 2,200,000 2,186,160
210 Roswell GA 30075 No 2,183,000 2,181,456
211 Miami FL 33144 No 2,175,000 2,173,409
212 Chicago IL 60657 No 2,175,000 2,170,714
- ------------------------------------------------------------------------------------------------------------------------------------
213 Elizabethtown NC 28337 No 2,150,000 2,148,841
214 Deerfield Beach FL 33441 No 2,137,500 2,136,065
215 Lakewood WA 98499 No 2,100,000 2,098,838
216 St. Louis MO 63103 No 2,050,000 2,048,757
217 Greensboro NC 27612 No 2,050,000 2,045,996
- ------------------------------------------------------------------------------------------------------------------------------------
218 Houston TX 77096 No 2,025,000 2,021,018
219 Clarksville VA 23927 No 2,000,000 1,998,922
220 Ponte Vedra FL 32082 No 2,000,000 1,998,813
221 Antioch CA 94509 No 2,000,000 1,998,030
222 The Woodlands TX 77380 No 1,975,000 1,970,624
- ------------------------------------------------------------------------------------------------------------------------------------
223 Lantana FL 33462 No 1,975,000 1,970,624
224 Staten Island NY 10304 No 1,950,000 1,943,385
225 West Haven CT 6516 No 1,909,482 1,902,371
226 Marion IN 46953 No 1,900,000 1,898,883
227 Fort Lauderdale FL 33309 No 1,850,000 1,847,793
- ------------------------------------------------------------------------------------------------------------------------------------
228 Menands NY 12204 No 1,850,000 1,847,439
229 Arvada CO 80002 No 1,825,000 1,823,873
230 Fredericksburg VA 22407 No 1,800,000 1,798,749
231 Asheboro NC 27203 No 1,776,000 1,776,000
232 Louisville KY 40222 No 1,776,000 1,771,992
- ------------------------------------------------------------------------------------------------------------------------------------
233 Everman TX 76140 No 1,750,000 1,750,000
234 Ballentine SC 29002 No 1,750,000 1,750,000
235 Newnan GA 30263 LB-21 1,720,000 1,717,554
236 Sarasota FL 34233 No 1,700,000 1,696,686
237 North Lindenhurst NY 11757 No 1,700,000 1,689,305
- ------------------------------------------------------------------------------------------------------------------------------------
238 Anaheim CA 92808 No 1,680,000 1,676,250
239 Mount Laurel Township NJ 8054 No 1,680,000 1,674,281
240 Long Island City NY 11101 No 1,650,000 1,648,927
241 East Cleveland OH 44118 No 1,640,000 1,636,312
242 Brandon FL 33509 No 1,625,000 1,622,644
- ------------------------------------------------------------------------------------------------------------------------------------
243 Stanley NC 28164 No 1,600,000 1,597,097
244 Willington CT 64097 No 1,600,000 1,595,926
245 Bethesda MD 20814 No 1,600,000 1,595,057
246 Phoenix AZ 85006 No 1,575,000 1,572,782
247 Humble TX 77338 No 1,550,000 1,547,780
- ------------------------------------------------------------------------------------------------------------------------------------
248 South Bend IN 46637 No 1,550,000 1,547,769
249 Denver NC 28037 No 1,550,000 1,547,289
250 Canton TX 75103 No 1,550,000 1,546,635
251 East Fishkill NY 12590 No 1,500,000 1,498,545
252 Monterey CA 93940 LB-23 1,500,000 1,497,888
- ------------------------------------------------------------------------------------------------------------------------------------
253 Sunset Beach NC 28468 No 1,500,000 1,497,089
254 Craig CO 81625 No 1,500,000 1,495,189
255 King's Mountain NC 28086 No 1,500,000 1,491,080
256 Palm Bay FL 32907 No 1,466,286 1,462,648
257 Seffner FL 33584 LB-24 1,450,000 1,450,000
- ------------------------------------------------------------------------------------------------------------------------------------
258 Greenville SC 29607 No 1,450,000 1,448,553
259 Chicago IL 60630 No 1,450,000 1,447,143
260 Chicago IL 60620 No 1,450,000 1,447,143
261 New York NY 10012, 10013 No 1,425,000 1,422,863
262 Rock Springs WY 82401 No 1,400,000 1,399,225
- ------------------------------------------------------------------------------------------------------------------------------------
263 Richmond VA 23236 No 1,400,000 1,398,043
264 Sierra Vista AZ 85635 No 1,400,000 1,397,167
265 Elk Grove Village IL 60007 No 1,400,000 1,397,122
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cross
Control Collateralized Original Balance Cut-off Date
No. City State Zip Code Groups ($) Balance ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
266 Waterbury CT 6705 LB-14 1,400,000 1,392,074
267 Boca Raton FL 33431 No 1,380,000 1,376,388
- ------------------------------------------------------------------------------------------------------------------------------------
268 New Bern NC 28562 No 1,375,000 1,375,000
269 Newnan GA 30265 LB-21 1,368,000 1,366,055
270 Greenburgh NY 10607 No 1,300,000 1,299,209
271 Montgomery AL 36111 No 1,300,000 1,298,133
272 Raleigh NC 27615 No 1,300,000 1,297,438
- ------------------------------------------------------------------------------------------------------------------------------------
273 Ferndale WA 98248 No 1,297,500 1,296,626
274 Marathon FL 33050 No 1,300,000 1,296,024
275 Richmond MI 48062 No 1,281,016 1,278,688
276 Mentor OH 44060 No 1,200,000 1,197,302
277 Houston TX 77057 No 1,200,000 1,196,106
- ------------------------------------------------------------------------------------------------------------------------------------
278 Englewood NJ 7631 LB-3 1,164,000 1,160,178
279 Houston TX 77054 No 1,100,000 1,097,536
280 Palmer MA 1069 No 1,050,000 1,049,419
281 Spring TX 77380 No 900,000 898,388
282 Knoxville TN 37919 No 750,000 747,765
- ------------------------------------------------------------------------------------------------------------------------------------
283 Tulsa OK 74146 No 750,000 745,925
284 Casa Grande AZ 85222 No 710,000 709,597
285 Berwyn IL 60402 No 700,000 698,621
286 Knoxville TN 37916 No $ 600,000 $ 598,212
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 12.31% 12.31% 6.250% 0.058% Act/360 ARD
1a
1b
1c
- ------------------------------------------------------------------------------------------------------------------------------------
1d
1e
2 7.16 19.47 6.750 0.058 Act/360 ARD
- ------------------------------------------------------------------------------------------------------------------------------------
3 5.49 24.96 6.610 0.058 Act/360 Interest-Only, ARD
3a
3b
3c
3d
- ------------------------------------------------------------------------------------------------------------------------------------
3e
3f
3g
3h
3i
- ------------------------------------------------------------------------------------------------------------------------------------
3j
3k
3l
4 3.41 28.36 6.520 0.058 Act/360 Interest-Only, ARD
- ------------------------------------------------------------------------------------------------------------------------------------
5 3.11 31.47 5.920 0.058 Act/360 Balloon
6 2.70 34.17 6.360 0.058 Act/360 Interest-Only
6a
6b
- ------------------------------------------------------------------------------------------------------------------------------------
6c
6d
6e
6f
6g
- ------------------------------------------------------------------------------------------------------------------------------------
6h
6i
6j
6k
6l
- ------------------------------------------------------------------------------------------------------------------------------------
7 2.35 36.52 6.790 0.103 Act/360 Step
8 2.26 38.78 6.910 0.103 Act/360 Balloon
9 1.52 40.31 7.875 0.103 Act/360 Balloon
10 1.36 41.66 6.750 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
11 1.13 42.80 6.770 0.103 Act/360 Balloon
12 0.91 43.71 6.930 0.103 Act/360 Balloon
13 0.89 44.60 6.990 0.103 Act/360 Balloon
14 0.88 45.48 6.750 0.103 Act/360 Balloon
15 0.87 46.35 7.100 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
16 0.86 47.21 7.250 0.103 Act/360 ARD
17 0.85 48.06 7.150 0.103 Act/360 Balloon
17a
17b
- ------------------------------------------------------------------------------------------------------------------------------------
17c
17d
17e
18 0.75 48.81 7.650 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
19 0.74 49.55 7.250 0.103 Act/360 Balloon
21 0.70 50.25 7.150 0.153 Act/360 Balloon
22 0.69 50.94 7.200 0.103 Act/360 Balloon
23 0.69 51.63 7.010 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
23a
23b
23c
24 0.68 52.30 6.880 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
25 0.61 52.91 7.170 0.103 Act/360 Balloon
26 0.59 53.50 7.140 0.103 Act/360 Balloon
27 0.57 54.07 6.700 0.103 Act/360 Balloon
28 0.55 54.62 6.900 0.103 Act/360 Balloon
29 0.52 55.14 7.280 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
30 0.51 55.65 6.870 0.103 Act/360 Balloon
31 0.51 56.16 8.940 0.103 30/360 Balloon
32 0.50 56.67 7.020 0.103 Act/360 Balloon
33 0.48 57.15 7.150 0.103 Act/360 Balloon
34 0.48 57.63 6.890 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
35 0.46 58.09 6.890 0.153 Act/360 Balloon
36 0.46 58.54 7.020 0.103 Act/360 Balloon
37 0.42 58.97 7.120 0.103 Act/360 Balloon
38 0.42 59.39 6.950 0.103 Act/360 Balloon
39 0.42 59.81 7.613 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
40 0.41 60.21 7.540 0.153 Act/360 Balloon
41 0.40 60.62 6.110 0.153 Act/360 Balloon
42 0.40 61.02 6.910 0.103 Act/360 Balloon
43 0.39 61.41 7.060 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
43a
43b
43c
43d
43e
- ------------------------------------------------------------------------------------------------------------------------------------
44 0.38 61.79 6.860 0.103 Act/360 Balloon
45 0.38 62.17 6.780 0.153 Act/360 Balloon
46 0.37 62.54 6.860 0.103 Act/360 Balloon
47 0.37 62.91 6.420 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
48 0.36 63.27 8.100 0.103 Act/360 Balloon
49 0.36 63.64 6.740 0.103 Act/360 Balloon
50 0.35 63.99 6.930 0.103 Act/360 Balloon
51 0.35 64.34 6.810 0.103 Act/360 Balloon
52 0.34 64.68 7.220 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
53 0.34 65.01 6.820 0.153 Act/360 Balloon
54 0.33 65.35 7.290 0.153 Act/360 Balloon
55 0.33 65.68 6.770 0.103 Act/360 Balloon
56 0.33 66.00 7.830 0.103 30/360 Fully Amortizing
57 0.32 66.33 7.000 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
58 0.32 66.65 7.050 0.103 Act/360 Balloon
59 0.31 66.96 7.140 0.153 Act/360 Balloon
60 0.30 67.26 7.180 0.103 Act/360 Balloon
61 0.30 67.55 6.740 0.103 Act/360 Balloon
62 0.30 67.85 6.610 0.103 Act/360 Step
- ------------------------------------------------------------------------------------------------------------------------------------
63 0.30 68.15 6.990 0.103 Act/360 Balloon
64 0.29 68.44 7.030 0.103 Act/360 Balloon
65 0.28 68.72 7.580 0.103 Act/360 Balloon
66 0.28 69.00 7.250 0.103 Act/360 Balloon
67 0.28 69.28 6.820 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
68 0.28 69.56 7.260 0.103 Act/360 Balloon
69 0.28 69.84 6.870 0.103 Act/360 Balloon
70 0.28 70.12 7.000 0.103 Act/360 Balloon
71 0.28 70.40 6.610 0.103 Act/360 Step
72 0.28 70.67 7.050 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
73 0.28 70.95 6.800 0.103 Act/360 Balloon
74 0.27 71.22 7.130 0.103 Act/360 Balloon
75 0.27 71.49 6.700 0.153 Act/360 Balloon
76 0.27 71.76 7.120 0.153 Act/360 Balloon
77 0.27 72.04 7.040 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
78 0.27 72.30 6.980 0.103 Act/360 Balloon
79 0.26 72.57 6.860 0.103 Act/360 ARD
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
80 0.26 72.83 6.270 0.103 Act/360 Balloon
81 0.26 73.09 6.620 0.153 Act/360 Balloon
82 0.25 73.34 7.430 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
83 0.25 73.60 7.460 0.103 Act/360 Balloon
84 0.25 73.85 7.200 0.103 Act/360 Balloon
85 0.25 74.10 6.800 0.103 Act/360 Balloon
86 0.25 74.34 6.420 0.103 Act/360 Balloon
87 0.25 74.59 7.010 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
88 0.25 74.83 7.100 0.103 30/360 Step
89 0.24 75.08 7.410 0.103 Act/360 Balloon
90 0.24 75.32 6.875 0.103 Act/360 Balloon
91 0.24 75.56 7.030 0.103 Act/360 Balloon
92 0.24 75.80 6.860 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
93 0.23 76.02 6.350 0.103 Act/360 Balloon
94 0.23 76.25 7.200 0.103 Act/360 Balloon
95 0.23 76.47 7.110 0.103 Act/360 Balloon
96 0.22 76.70 6.910 0.103 Act/360 Balloon
97 0.22 76.92 7.570 0.103 Act/360 ARD
- ------------------------------------------------------------------------------------------------------------------------------------
98 0.22 77.13 7.070 0.103 Act/360 Balloon
99 0.22 77.35 7.260 0.103 Act/360 Balloon
100 0.22 77.57 7.080 0.103 Act/360 Balloon
101 0.22 77.78 6.990 0.103 Act/360 ARD
102 0.21 77.99 7.840 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
103 0.21 78.20 7.560 0.103 Act/360 Balloon
104 0.20 78.40 6.980 0.153 Act/360 Balloon
105 0.20 78.61 6.590 0.103 30/360 Balloon
105a
- ------------------------------------------------------------------------------------------------------------------------------------
105b
105c
106 0.20 78.81 7.130 0.153 Act/360 Balloon
107 0.20 79.01 6.960 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
108 0.20 79.21 6.660 0.103 Act/360 Balloon
109 0.20 79.41 6.980 0.133 Act/360 Balloon
110 0.20 79.60 7.180 0.103 Act/360 Balloon
111 0.20 79.80 7.260 0.153 Act/360 Balloon
112 0.20 80.00 7.150 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
113 0.20 80.19 7.280 0.103 Act/360 Balloon
114 0.19 80.39 7.000 0.103 Act/360 Balloon
115 0.19 80.58 7.160 0.153 Act/360 Balloon
116 0.19 80.77 7.120 0.103 Act/360 Balloon
117 0.19 80.96 6.990 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
118 0.19 81.15 7.170 0.103 Act/360 Balloon
119 0.19 81.34 7.355 0.103 Act/360 Balloon
120 0.18 81.52 7.160 0.103 Act/360 Balloon
121 0.18 81.71 6.960 0.153 Act/360 Balloon
122 0.18 81.89 6.610 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
123 0.18 82.07 7.080 0.103 Act/360 Balloon
124 0.18 82.25 7.350 0.103 Act/360 ARD
125 0.18 82.43 7.100 0.103 30/360 Interest-Only, Fully Amortizing
126 0.18 82.61 6.650 0.103 30/360 Fully Amortizing
127 0.18 82.79 6.660 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
128 0.18 82.97 6.960 0.103 Act/360 Balloon
129 0.17 83.14 6.990 0.103 Act/360 Balloon
130 0.17 83.31 7.030 0.153 Act/360 Balloon
131 0.17 83.48 6.730 0.103 30/360 Step
132 0.17 83.65 7.050 0.103 Act/360 Fully Amortizing
- ------------------------------------------------------------------------------------------------------------------------------------
133 0.17 83.81 7.280 0.103 Act/360 Balloon
134 0.17 83.98 7.000 0.103 Act/360 Balloon
135 0.17 84.15 7.110 0.103 Act/360 Balloon
136 0.17 84.32 7.190 0.103 30/360 Fully Amortizing
- ------------------------------------------------------------------------------------------------------------------------------------
137 0.17 84.48 7.030 0.103 Act/360 Balloon
137a
137b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
138 0.16 84.64 6.870 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
139 0.16 84.81 7.280 0.153 Act/360 Balloon
140 0.16 84.97 7.260 0.103 Act/360 Balloon
141 0.16 85.12 7.040 0.153 Act/360 Balloon
142 0.16 85.28 7.100 0.103 30/360 Interest-Only, Fully Amortizing
143 0.16 85.44 7.330 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
144 0.16 85.60 7.050 0.103 Act/360 Balloon
145 0.16 85.76 6.880 0.103 Act/360 Balloon
146 0.16 85.91 6.950 0.153 Act/360 Balloon
147 0.16 86.07 7.280 0.153 Act/360 Balloon
148 0.16 86.23 6.570 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
149 0.15 86.38 7.500 0.103 Act/360 Balloon
150 0.15 86.53 6.650 0.103 30/360 Fully Amortizing
151 0.15 86.68 6.980 0.153 Act/360 Balloon
152 0.15 86.84 7.030 0.103 Act/360 Balloon
153 0.15 86.99 6.880 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
154 0.15 87.14 6.950 0.103 Act/360 Balloon
155 0.15 87.29 6.960 0.153 Act/360 Balloon
156 0.15 87.43 6.860 0.103 Act/360 Balloon
157 0.15 87.58 6.900 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
157a
157b
157c
157d
- ------------------------------------------------------------------------------------------------------------------------------------
158 0.15 87.73 7.030 0.153 Act/360 Balloon
159 0.15 87.88 7.680 0.103 30/360 Balloon
160 0.14 88.02 7.110 0.103 Act/360 Balloon
161 0.14 88.16 7.080 0.103 Act/360 Balloon
162 0.14 88.30 6.960 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
163 0.14 88.44 7.850 0.103 Act/360 Balloon
164 0.14 88.58 6.480 0.103 Act/360 Balloon
165 0.14 88.72 6.800 0.153 Act/360 Balloon
166 0.14 88.86 7.750 0.153 Act/360 Balloon
167 0.14 89.00 7.280 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
168 0.14 89.14 7.110 0.103 Act/360 Balloon
169 0.14 89.27 7.020 0.103 Act/360 Balloon
170 0.13 89.41 6.660 0.153 Act/360 Balloon
171 0.13 89.54 7.160 0.153 Act/360 Balloon
172 0.13 89.67 7.210 0.103 Act/360 Fully Amortizing
- ------------------------------------------------------------------------------------------------------------------------------------
173 0.13 89.80 7.490 0.103 Act/360 Balloon
174 0.13 89.93 6.650 0.103 Act/360 Balloon
175 0.13 90.06 7.850 0.103 Act/360 Balloon
176 0.13 90.19 6.920 0.153 Act/360 Balloon
177 0.13 90.32 7.130 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
178 0.13 90.45 7.190 0.103 30/360 Fully Amortizing
179 0.12 90.57 6.710 0.103 30/360 Step
180 0.12 90.69 7.120 0.103 Act/360 Balloon
181 0.12 90.82 7.370 0.153 Act/360 Balloon
182 0.12 90.94 6.450 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
183 0.12 91.06 7.080 0.103 Act/360 Balloon
184 0.12 91.19 7.140 0.153 Act/360 Balloon
185 0.12 91.31 7.330 0.103 Act/360 Balloon
186 0.12 91.43 7.100 0.153 Act/360 Balloon
187 0.12 91.56 7.300 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
188 0.12 91.68 7.140 0.153 Act/360 Balloon
189 0.12 91.80 6.420 0.103 Act/360 Balloon
190 0.12 91.92 6.950 0.103 30/360 Step
191 0.12 92.04 7.050 0.103 Act/360 Balloon
192 0.12 92.16 7.010 0.103 30/360 Step
- ------------------------------------------------------------------------------------------------------------------------------------
193 0.12 92.28 7.080 0.103 Act/360 Balloon
194 0.12 92.39 7.140 0.153 Act/360 Balloon
195 0.12 92.51 6.960 0.103 Act/360 Balloon
196 0.12 92.63 7.120 0.153 Act/360 Balloon
197 0.12 92.74 7.040 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
198 0.11 92.85 7.180 0.103 Act/360 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
199 0.11 92.97 7.170 0.153 Act/360 Balloon
200 0.11 93.08 7.050 0.153 Act/360 Balloon
201 0.11 93.19 7.050 0.103 Act/360 Balloon
202 0.11 93.31 7.020 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
203 0.11 93.42 7.120 0.103 Act/360 Balloon
204 0.11 93.53 7.200 0.103 Act/360 Balloon
205 0.11 93.64 7.250 0.103 Act/360 Balloon
206 0.11 93.75 6.900 0.103 Act/360 Balloon
207 0.11 93.85 7.140 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
208 0.11 93.96 7.230 0.103 Act/360 Balloon
209 0.11 94.07 6.730 0.103 Act/360 Balloon
210 0.11 94.18 6.580 0.103 Act/360 Balloon
211 0.11 94.29 6.460 0.103 Act/360 Balloon
212 0.11 94.39 7.210 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
213 0.11 94.50 7.470 0.103 Act/360 Balloon
214 0.11 94.60 6.760 0.103 Act/360 Balloon
215 0.10 94.71 7.390 0.103 Act/360 Balloon
216 0.10 94.81 7.100 0.153 Act/360 Balloon
217 0.10 94.91 7.050 0.103 30/360 Fully Amortizing
- ------------------------------------------------------------------------------------------------------------------------------------
218 0.10 95.01 7.220 0.103 Act/360 Balloon
219 0.10 95.11 7.470 0.103 Act/360 Balloon
220 0.10 95.21 7.170 0.103 Act/360 Balloon
221 0.10 95.31 7.250 0.103 Act/360 Balloon
222 0.10 95.40 7.160 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
223 0.10 95.50 7.160 0.103 Act/360 Balloon
224 0.10 95.60 6.910 0.103 Act/360 Balloon
225 0.09 95.69 7.180 0.103 30/360 Balloon
226 0.09 95.78 7.200 0.103 Act/360 Balloon
227 0.09 95.88 6.340 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
228 0.09 95.97 7.190 0.103 Act/360 Balloon
229 0.09 96.06 7.040 0.103 Act/360 Balloon
230 0.09 96.15 6.640 0.103 Act/360 Balloon
231 0.09 96.23 7.010 0.103 30/360 Step
232 0.09 96.32 7.060 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
233 0.09 96.41 6.330 0.153 Act/360 Balloon
234 0.09 96.49 5.970 0.103 30/360 Fully Amortizing
235 0.08 96.58 7.080 0.103 Act/360 Balloon
236 0.08 96.66 7.250 0.103 Act/360 Balloon
237 0.08 96.74 6.730 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
238 0.08 96.83 7.120 0.103 Act/360 Balloon
239 0.08 96.91 7.280 0.103 Act/360 Balloon
240 0.08 96.99 6.870 0.103 Act/360 Balloon
241 0.08 97.07 7.080 0.103 Act/360 Balloon
242 0.08 97.15 7.000 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
243 0.08 97.23 7.660 0.103 30/360 Fully Amortizing
244 0.08 97.31 7.240 0.103 Act/360 Balloon
245 0.08 97.39 7.390 0.153 Act/360 Balloon
246 0.08 97.47 7.120 0.153 Act/360 Balloon
247 0.08 97.54 7.050 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
248 0.08 97.62 7.030 0.103 Act/360 Balloon
249 0.08 97.70 6.910 0.103 Act/360 Balloon
250 0.08 97.77 7.270 0.103 Act/360 Balloon
251 0.07 97.85 7.320 0.153 Act/360 Balloon
252 0.07 97.92 7.120 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
253 0.07 97.99 6.910 0.103 30/360 Fully Amortizing
254 0.07 98.07 7.200 0.153 Act/360 Balloon
255 0.07 98.14 6.910 0.103 30/360 Fully Amortizing
256 0.07 98.21 6.900 0.103 30/360 Step
257 0.07 98.29 7.850 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
258 0.07 98.36 7.190 0.153 Act/360 Balloon
259 0.07 98.43 7.210 0.103 Act/360 Balloon
260 0.07 98.50 7.210 0.103 Act/360 Balloon
261 0.07 98.57 6.860 0.103 Act/360 Balloon
262 0.07 98.64 7.390 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
263 0.07 98.71 7.150 0.103 Act/360 Balloon
264 0.07 98.78 7.110 0.153 Act/360 Balloon
265 0.07 98.85 7.050 0.103 Act/360 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cumulative
% of % of
Aggregate Aggregate Interest
Control Cut-off Date Cut-off Date Mortgage Administrative Accrual
No. Balance (%) Balance (%) Rate (%) Cost Rate (%) Method Amortization Type
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
266 0.07 98.91 7.190 0.103 30/360 Fully Amortizing
267 0.07 98.98 7.140 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
268 0.07 99.05 7.100 0.103 30/360 Step
269 0.07 99.12 7.080 0.103 Act/360 Balloon
270 0.06 99.18 7.090 0.103 Act/360 Balloon
271 0.06 99.25 7.040 0.153 Act/360 Balloon
272 0.06 99.31 7.210 0.153 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
273 0.06 99.37 6.750 0.103 Act/360 Balloon
274 0.06 99.44 7.440 0.103 Act/360 Balloon
275 0.06 99.50 7.050 0.103 30/360 Step
276 0.06 99.56 7.080 0.103 Act/360 Balloon
277 0.06 99.62 7.140 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
278 0.06 99.68 7.080 0.103 Act/360 Balloon
279 0.05 99.73 7.100 0.103 Act/360 Balloon
280 0.05 99.78 7.390 0.103 Act/360 Balloon
281 0.04 99.83 6.750 0.103 Act/360 Balloon
282 0.04 99.86 7.570 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
283 0.04 99.90 7.500 0.103 30/360 Fully Amortizing
284 0.04 99.94 7.310 0.153 Act/360 Balloon
285 0.03 99.97 7.210 0.103 Act/360 Balloon
286 0.03 100.00 7.570 0.103 Act/360 Balloon
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 120 118 300 298 8/28/98
1a
1b
1c
- ------------------------------------------------------------------------------------------------------------------------------------
1d
1e
2 120 120 360 360 11/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
3 57 53 118 114 300 300 6/8/98
3a
3b
3c
3d
- ------------------------------------------------------------------------------------------------------------------------------------
3e
3f
3g
3h
3i
- ------------------------------------------------------------------------------------------------------------------------------------
3j
3k
3l
4 35 32 120 117 360 360 8/7/98
- ------------------------------------------------------------------------------------------------------------------------------------
5 121 120 360 359 10/2/98
6 120 119 120 119 0 0 9/25/98
6a
6b
- ------------------------------------------------------------------------------------------------------------------------------------
6c
6d
6e
6f
6g
- ------------------------------------------------------------------------------------------------------------------------------------
6h
6i
6j
6k
6l
- ------------------------------------------------------------------------------------------------------------------------------------
7 84 81 360 357 7/15/98
8 84 80 360 356 6/16/98
9 114 114 294 294 4/6/98
10 120 119 360 359 9/22/98
- ------------------------------------------------------------------------------------------------------------------------------------
11 120 119 360 359 9/25/98
12 120 119 300 299 10/1/98
13 120 118 360 358 8/28/98
14 120 118 360 358 8/19/98
15 60 59 360 359 10/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
16 112 110 352 350 12/11/97
17 120 118 360 358 8/18/98
17a
17b
- ------------------------------------------------------------------------------------------------------------------------------------
17c
17d
17e
18 120 120 360 360 9/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
19 120 120 300 300 10/8/98
21 120 116 360 356 6/16/98
22 120 116 360 356 6/26/98
23 120 117 360 357 7/29/98
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
23a
23b
23c
24 120 118 360 358 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
25 120 119 360 359 9/22/98
26 120 116 360 356 6/10/98
27 84 83 360 359 9/14/98
28 120 118 300 298 8/18/98
29 180 177 300 297 7/9/98
- ------------------------------------------------------------------------------------------------------------------------------------
30 84 82 360 358 8/28/98
31 214 214 267 267 10/7/98
32 60 57 360 357 7/24/98
33 84 83 360 359 9/30/98
34 120 117 360 357 7/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
35 84 82 360 358 8/14/98
36 120 119 300 299 9/17/98
37 120 118 360 358 8/3/98
38 120 118 360 358 7/31/98
39 237 234 357 354 4/8/98
- ------------------------------------------------------------------------------------------------------------------------------------
40 120 115 360 355 5/5/98
41 60 59 360 359 9/23/98
42 120 118 360 358 8/14/98
43 120 119 300 299 9/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
43a
43b
43c
43d
43e
- ------------------------------------------------------------------------------------------------------------------------------------
44 120 118 360 358 8/25/98
45 120 119 360 359 9/4/98
46 120 118 360 358 8/25/98
47 120 117 360 357 7/16/98
- ------------------------------------------------------------------------------------------------------------------------------------
48 108 105 349 346 7/9/98
49 120 119 360 359 9/21/98
50 120 118 300 298 8/17/98
51 120 119 360 359 9/2/98
52 240 238 360 358 8/5/98
- ------------------------------------------------------------------------------------------------------------------------------------
53 120 119 300 299 9/2/98
54 120 119 360 359 9/9/98
55 120 119 360 359 10/1/98
56 300 298 300 298 8/7/98
57 120 119 300 299 9/18/98
- ------------------------------------------------------------------------------------------------------------------------------------
58 120 118 300 298 8/27/98
59 120 116 360 356 6/30/98
60 180 177 300 297 7/14/98
61 120 120 360 360 10/2/98
62 239 238 278 277 9/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
63 84 81 300 297 7/22/98
64 120 118 300 298 8/18/98
65 120 119 300 299 9/16/98
66 120 119 360 359 10/1/98
67 120 119 300 299 9/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
68 120 118 360 358 8/10/98
69 60 58 360 358 8/11/98
70 120 120 360 360 10/7/98
71 239 238 271 270 9/15/98
72 180 178 360 358 8/6/98
- ------------------------------------------------------------------------------------------------------------------------------------
73 120 117 360 357 7/2/98
74 120 118 360 358 8/14/98
75 120 119 360 359 9/11/98
76 120 118 360 358 8/5/98
77 84 81 360 357 7/10/98
- ------------------------------------------------------------------------------------------------------------------------------------
78 120 117 360 357 7/6/98
79 120 111 360 351 1/15/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
80 120 119 360 359 9/21/98
81 84 82 360 358 8/28/98
82 109 106 349 346 8/21/97
- ------------------------------------------------------------------------------------------------------------------------------------
83 120 119 360 359 9/18/98
84 113 113 353 353 3/17/98
85 120 117 360 357 7/2/98
86 120 117 360 357 7/16/98
87 120 116 360 356 6/24/98
- ------------------------------------------------------------------------------------------------------------------------------------
88 240 240 240 240 10/13/98
89 120 118 300 298 8/4/98
90 60 57 360 357 7/23/98
91 120 119 360 359 9/10/98
92 120 118 360 358 8/25/98
- ------------------------------------------------------------------------------------------------------------------------------------
93 120 119 360 359 10/1/98
94 120 117 360 357 7/20/98
95 120 114 360 354 4/30/98
96 120 118 300 298 8/25/98
97 120 110 360 350 12/24/97
- ------------------------------------------------------------------------------------------------------------------------------------
98 120 117 360 357 7/13/98
99 120 116 360 356 6/30/98
100 120 117 300 297 7/9/98
101 84 75 360 351 1/22/98
102 107 105 347 345 8/21/98
- ------------------------------------------------------------------------------------------------------------------------------------
103 120 120 300 300 10/2/98
104 120 116 360 356 6/25/98
105 180 178 195 193 8/20/98
105a
- ------------------------------------------------------------------------------------------------------------------------------------
105b
105c
106 120 116 330 326 7/1/98
107 120 118 240 238 8/12/98
- ------------------------------------------------------------------------------------------------------------------------------------
108 120 119 360 359 9/30/98
109 120 119 300 299 9/24/98
110 120 118 360 358 8/24/98
111 144 141 360 357 7/14/98
112 180 178 300 298 8/13/98
- ------------------------------------------------------------------------------------------------------------------------------------
113 84 82 300 298 8/24/98
114 120 120 360 360 10/2/98
115 120 118 360 358 8/13/98
116 240 238 360 358 8/20/98
117 120 118 360 358 8/18/98
- ------------------------------------------------------------------------------------------------------------------------------------
118 120 117 360 357 7/31/98
119 84 82 300 298 8/24/98
120 120 117 300 297 7/22/98
121 120 116 360 356 6/23/98
122 240 239 360 359 10/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
123 120 117 300 297 7/29/98
124 113 112 353 352 2/17/98
125 60 60 240 240 180 180 10/13/98
126 237 236 237 236 9/2/98
127 120 119 360 359 9/14/98
- ------------------------------------------------------------------------------------------------------------------------------------
128 120 119 360 359 9/16/98
129 120 117 360 357 7/16/98
130 180 176 360 356 6/11/98
131 239 238 267 266 9/29/98
132 180 180 180 180 10/7/98
- ------------------------------------------------------------------------------------------------------------------------------------
133 120 119 360 359 9/22/98
134 84 82 360 358 8/14/98
135 120 116 360 356 6/22/98
136 240 237 240 237 7/7/98
- ------------------------------------------------------------------------------------------------------------------------------------
137 84 83 324 323 9/8/98
137a
137b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
138 60 58 360 358 8/18/98
- ------------------------------------------------------------------------------------------------------------------------------------
139 120 117 360 357 7/13/98
140 120 116 300 296 6/24/98
141 120 118 360 358 8/26/98
142 60 60 240 240 180 180 10/13/98
143 120 119 360 359 9/18/98
- ------------------------------------------------------------------------------------------------------------------------------------
144 120 119 360 359 9/30/98
145 120 119 360 359 10/1/98
146 60 57 360 357 7/17/98
147 120 113 360 353 3/25/98
148 84 83 360 359 9/8/98
- ------------------------------------------------------------------------------------------------------------------------------------
149 120 120 360 360 10/9/98
150 234 233 234 233 9/2/98
151 120 116 360 356 6/24/98
152 120 118 360 358 8/27/98
153 120 119 360 359 10/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
154 120 118 360 358 8/13/98
155 120 119 360 359 9/3/98
156 120 118 360 358 8/25/98
157 120 119 240 239 9/25/98
- ------------------------------------------------------------------------------------------------------------------------------------
157a
157b
157c
157d
- ------------------------------------------------------------------------------------------------------------------------------------
158 180 176 360 356 6/11/98
159 239 238 284 283 9/23/98
160 120 118 300 298 8/31/98
161 120 117 300 297 7/9/98
162 120 119 360 359 9/16/98
- ------------------------------------------------------------------------------------------------------------------------------------
163 120 120 360 360 10/14/98
164 120 119 360 359 9/30/98
165 120 120 360 360 10/6/98
166 120 120 360 360 10/9/98
167 84 81 360 357 6/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
168 120 117 300 297 7/22/98
169 120 119 360 359 9/10/98
170 120 120 360 360 10/9/98
171 120 118 360 358 8/13/98
172 180 178 180 178 8/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
173 120 118 360 358 8/13/98
174 175 174 217 216 9/10/98
175 120 120 360 360 10/14/98
176 120 118 300 298 8/31/98
177 117 116 357 356 6/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
178 240 237 240 237 7/7/98
179 237 235 237 235 8/31/98
180 120 117 360 357 7/24/98
181 120 120 240 240 10/6/98
182 120 120 300 300 10/5/98
- ------------------------------------------------------------------------------------------------------------------------------------
183 120 119 360 359 9/22/98
184 120 118 360 358 8/2/98
185 120 117 360 357 7/8/98
186 120 117 360 357 7/28/98
187 120 118 300 298 8/19/98
- ------------------------------------------------------------------------------------------------------------------------------------
188 120 118 300 298 8/11/98
189 120 119 360 359 9/9/98
190 239 239 275 275 10/15/98
191 120 117 360 357 7/17/98
192 237 236 237 236 9/9/98
- ------------------------------------------------------------------------------------------------------------------------------------
193 120 118 360 358 8/3/98
194 120 116 360 356 6/8/98
195 120 119 360 359 9/22/98
196 120 118 360 358 8/27/98
197 120 117 300 297 7/20/98
- ------------------------------------------------------------------------------------------------------------------------------------
198 120 119 360 359 9/10/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
199 120 118 360 358 8/19/98
200 120 118 360 358 8/17/98
201 120 118 360 358 8/19/98
202 120 118 360 358 8/13/98
- ------------------------------------------------------------------------------------------------------------------------------------
203 120 116 360 356 6/11/98
204 120 119 360 359 9/10/98
205 84 84 324 324 10/7/98
206 120 119 360 359 9/16/98
207 120 118 360 358 8/12/98
- ------------------------------------------------------------------------------------------------------------------------------------
208 180 176 360 356 6/30/98
209 120 118 180 178 8/24/98
210 120 119 360 359 10/1/98
211 120 119 360 359 9/21/98
212 120 117 360 357 7/22/98
- ------------------------------------------------------------------------------------------------------------------------------------
213 240 239 360 359 9/10/98
214 120 119 360 359 9/4/98
215 240 239 360 359 9/15/98
216 120 119 360 359 8/28/98
217 237 236 237 236 9/29/98
- ------------------------------------------------------------------------------------------------------------------------------------
218 84 81 360 357 7/30/98
219 240 239 360 359 9/10/98
220 120 119 360 359 9/11/98
221 120 119 300 299 9/3/98
222 60 58 300 298 8/3/98
- ------------------------------------------------------------------------------------------------------------------------------------
223 120 118 300 298 9/1/98
224 120 117 300 297 7/7/98
225 238 235 282 279 7/7/98
226 120 119 360 359 9/10/98
227 120 119 300 299 9/29/98
- ------------------------------------------------------------------------------------------------------------------------------------
228 120 118 360 358 8/24/98
229 120 119 360 359 9/11/98
230 120 119 360 359 9/17/98
231 237 237 237 237 10/9/98
232 120 118 300 298 8/20/98
- ------------------------------------------------------------------------------------------------------------------------------------
233 120 120 360 360 10/2/98
234 240 240 240 240 10/2/98
235 120 118 360 358 8/17/98
236 120 117 360 357 7/27/98
237 120 118 180 178 8/24/98
- ------------------------------------------------------------------------------------------------------------------------------------
238 120 118 300 298 8/12/98
239 120 116 324 320 6/30/98
240 120 119 360 359 9/16/98
241 120 118 300 298 9/1/98
242 120 118 360 358 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
243 237 236 237 236 9/16/98
244 120 116 360 356 7/1/98
245 120 117 300 297 7/8/98
246 60 58 360 358 8/25/98
247 120 118 360 358 8/17/98
- ------------------------------------------------------------------------------------------------------------------------------------
248 180 178 360 358 8/10/98
249 240 239 240 239 3/5/98
250 120 118 300 298 8/26/98
251 120 119 300 299 9/3/98
252 120 118 360 358 8/27/98
- ------------------------------------------------------------------------------------------------------------------------------------
253 240 239 240 239 3/5/98
254 120 117 300 297 7/30/98
255 238 235 238 235 7/8/98
256 177 176 177 176 9/17/98
257 120 120 360 360 10/14/98
- ------------------------------------------------------------------------------------------------------------------------------------
258 120 119 300 299 9/23/98
259 120 117 360 357 7/22/98
260 120 117 360 357 7/22/98
261 120 118 360 358 9/1/98
262 240 239 360 359 9/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
263 120 118 360 358 8/19/98
264 120 117 360 357 7/14/98
265 120 117 360 357 7/24/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest- Interest- Original Remaining
Only Only Term to Term to Original Remaining
Control Period Period Maturity Maturity Amortization Amortization Origination
No. (Mos.) (Mos.) (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
266 240 237 240 237 7/7/98
267 120 116 360 356 6/17/98
- ------------------------------------------------------------------------------------------------------------------------------------
268 237 237 237 237 10/16/98
269 120 118 360 358 8/17/98
270 120 119 360 359 9/21/98
271 120 118 360 358 8/25/98
272 120 117 360 357 7/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
273 120 119 360 359 9/30/98
274 120 117 300 297 7/30/98
275 218 216 257 255 8/18/98
276 120 118 300 298 9/1/98
277 120 117 300 297 7/9/98
- ------------------------------------------------------------------------------------------------------------------------------------
278 120 117 300 297 7/29/98
279 84 82 300 298 8/12/98
280 240 239 360 359 9/15/98
281 120 119 240 239 9/4/98
282 120 117 300 297 7/8/98
- ------------------------------------------------------------------------------------------------------------------------------------
283 192 190 192 190 8/24/98
284 120 119 360 359 10/1/98
285 120 117 360 357 7/22/98
286 120 117 300 297 7/8/98
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
1 9/1/08 $ 195,225,103 Hotel L(2.25),D(7.75) $ 19,790,000
1a Hotel
1b Hotel
1c Hotel
- ------------------------------------------------------------------------------------------------------------------------------------
1d Hotel
1e Hotel
2 12/1/08 125,623,449 Retail L(1.917),D(8),O(.083) 11,285,604
- ------------------------------------------------------------------------------------------------------------------------------------
3 4/16/08 101,284,797 Office/Industrial L(2.417),D(7.416) 7,452,408
3a Office/Industrial
3b Office/Industrial
3c Office/Industrial
3d Office/Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
3e Office/Industrial
3f Office/Industrial
3g Office/Industrial
3h Office/Industrial
3i Office/Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
3j Office/Industrial
3k Office/Industrial
3l Office/Industrial
4 8/10/08 62,890,459 Retail L(2.25),D(7.75) 5,244,420
- ------------------------------------------------------------------------------------------------------------------------------------
5 11/1/08 53,186,796 Retail L(2.083),D(8) 4,493,796
6 10/1/08 54,600,000 Retail L(2.083),D(7.667),O(.25) 3,520,790
6a Retail
6b Retail
- ------------------------------------------------------------------------------------------------------------------------------------
6c Retail
6d Retail
6e Retail
6f Retail
6g Retail
- ------------------------------------------------------------------------------------------------------------------------------------
6h Retail
6i Retail
6j Retail
6k Retail
6l Retail
- ------------------------------------------------------------------------------------------------------------------------------------
7 8/1/05 43,790,880 Retail L(2.333),D(4.667) 3,731,621
8 7/1/05 42,277,571 Multi-Family L(4),D(2.75),O(.25) 3,639,166
9 5/1/08 25,430,657 Hotel L(2),D(7.25),O(.25) 2,842,417
10 10/1/08 23,825,825 Retail L(4),D(5.75),O(.25) 2,140,374
- ------------------------------------------------------------------------------------------------------------------------------------
11 10/1/08 19,937,901 Multi-Family L(4),D(6) 1,793,802
12 10/1/08 14,768,276 Hotel L(4),D(5.75),O(.25) 1,559,150
13 9/1/08 15,781,492 Multi-Family L(5),D(4.75),O(.25) 1,443,579
14 9/1/08 15,385,526 Multi-Family L(4),D(5.75),O(.25) 1,382,292
15 10/1/03 16,785,415 Office L(2.167),D(2.833) 1,427,396
- ------------------------------------------------------------------------------------------------------------------------------------
16 1/1/08 15,465,930 Retail L(3.333),D(5.5),O(.5) 1,444,693
17 9/1/08 15,103,797 Retail L(4),D(5.75),O(.25) 1,398,092
17a Retail
17b Retail
- ------------------------------------------------------------------------------------------------------------------------------------
17c Retail
17d Retail
17e Retail
18 11/1/08 13,434,112 Office L(4),D(5.75),O(.25) 1,289,897
- ------------------------------------------------------------------------------------------------------------------------------------
19 11/1/08 12,091,418 Hotel L(4),D(5.75),O(.25) 1,301,052
21 7/1/08 12,415,097 Health Care L(4),D(5.75),O(.25) 1,148,867
22 7/1/08 12,277,831 Industrial L(3),D(6.667),O(.333) 1,140,364
23 8/1/08 12,145,114 Retail L(4),D(5.75),O(.25) 1,112,443
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
23a Retail
23b Retail
23c Retail
24 9/1/08 11,910,103 Multi-Family L(4),D(5.75),O(.25) 1,080,540
- ------------------------------------------------------------------------------------------------------------------------------------
25 10/1/08 10,820,361 Office L(4),D(5.75),O(.25) 1,002,956
26 7/1/08 10,507,386 Industrial L(4),D(5.75),O(.25) 971,613
27 10/1/05 10,529,258 Office L(4),D(2.917),O(.083) 890,484
28 9/1/08 8,851,490 Office L(4),D(5.75),O(.25) 932,950
29 8/1/13 6,805,935 Retail L(4),D(10.75),O(.25) 921,870
- ------------------------------------------------------------------------------------------------------------------------------------
30 9/1/05 9,550,159 Office L(4),D(2.75),O(.25) 819,430
31 9/1/16 3,883,837 CTL L(4),D(13.833) 1,076,770
32 8/1/03 9,664,093 Retail L(2.33),D(2.42),O(.25) 815,975
33 10/1/05 9,043,225 Multi-Family L(4),D(2.75),O(.25) 794,278
34 8/1/08 8,497,022 Multi-Family L(4),D(5.667),O(.333) 771,359
- ------------------------------------------------------------------------------------------------------------------------------------
35 9/1/05 8,543,028 Multi-Family L(3),D(3.667),O(.333) 734,251
36 10/1/08 7,404,943 Multi-Family L(4),D(6) 785,942
37 9/1/08 7,524,112 Retail L(4),D(5.75),O(.25) 694,929
38 9/1/08 7,441,645 Retail L(4),YM1%(5.75),O(.25) 678,682
39 5/1/18 5,430,991 Retail L(10.25),YM1%(9),O(.5) 721,600
- ------------------------------------------------------------------------------------------------------------------------------------
40 6/1/08 7,297,346 Retail L(4),D(5.75),O(.25) 694,936
41 10/1/03 7,681,880 Retail L(3),D(1.75),O(.25) 596,935
42 9/1/08 7,003,899 Multi-Family L(4),D(5.75),O(.25) 636,854
43 10/1/08 6,412,247 Retail L(4),YM3%(5.75),O(.25) 682,187
- ------------------------------------------------------------------------------------------------------------------------------------
43a Retail
43b Retail
43c Retail
43d Retail
43e Retail
- ------------------------------------------------------------------------------------------------------------------------------------
44 9/1/08 6,733,848 Multi-Family L(3),D(6.75),O(.25) 610,012
45 10/1/08 6,633,322 Multi-Family L(4),D(5.75),O(.25) 597,245
46 9/1/08 6,560,071 Multi-Family L(3),D(6.75),O(.25) 594,270
47 8/1/08 6,438,960 Multi-Family L(4),D(5.75),O(.25) 564,134
- ------------------------------------------------------------------------------------------------------------------------------------
48 8/1/07 6,627,203 Retail L(3),D(5.5),O(.5) 661,164
49 10/1/08 6,366,259 Multi-Family L(4),D(5.75),O(.25) 571,477
50 9/1/08 5,730,951 Office L(4),D(5.75),O(.25) 605,119
51 10/1/08 6,074,644 Multi-Family L(4),D(5.5),O(.5) 548,177
52 9/1/18 4,291,614 Retail L(4),D(15.75),O(.25) 563,158
- ------------------------------------------------------------------------------------------------------------------------------------
53 10/1/08 5,449,334 Retail L(4),D(5.75),O(.25) 571,568
54 10/1/08 5,910,393 Office L(4),D(5.75),O(.25) 552,707
55 10/1/08 5,825,334 Retail L(4),D(5.75),O(.25) 524,102
56 9/1/23 -- Retail L(12),D(12.5),O(.5) 602,386
57 10/1/08 5,248,231 Industrial L(4),D(5.75),O(.25) 556,377
- ------------------------------------------------------------------------------------------------------------------------------------
58 9/1/08 5,207,642 Hotel L(4),D(5.75),O(.25) 553,778
59 7/1/08 5,516,377 Retail L(4),D(5.75),O(.25) 510,097
60 8/1/13 3,908,694 Multi-Family L(7),D(7.75),O(.25) 527,522
61 11/1/08 5,196,248 Retail L(4),D(5.75),O(.25) 466,512
62 9/1/18 1,997,999 CTL L(4),D(15.917) 437,598
- ------------------------------------------------------------------------------------------------------------------------------------
63 8/1/05 5,251,755 Industrial L(4),D(2.75),O(.25) 508,422
64 9/1/08 4,724,000 Self-Storage L(4),D(5.75),O(.25) 501,755
65 10/1/08 4,702,647 Hotel L(4),D(5.75),O(.25) 515,733
66 10/1/08 5,017,559 Office L(3),D(6.75),O(.25) 467,836
67 10/1/08 4,534,482 Retail L(4),D(5.75),O(.25) 475,611
- ------------------------------------------------------------------------------------------------------------------------------------
68 9/1/08 5,005,073 Office L(4),D(5.75),O(.25) 467,073
69 9/1/03 5,338,671 Industrial L(2.25),D(2.5),O(.25) 444,777
70 11/1/08 4,883,814 Retail L(4),D(5.75),O(.25) 447,083
71 9/1/18 1,584,999 CTL L(4),D(15.917) 414,330
72 9/1/13 4,293,591 Retail L(7),D(7.5),O(.5) 449,342
- ------------------------------------------------------------------------------------------------------------------------------------
73 8/1/08 4,858,542 Multi-Family L(4),D(5.75),O(.25) 438,094
74 9/1/08 4,856,946 Retail L(4),D(5.75),O(.25) 448,921
75 10/1/08 4,775,968 Retail L(4),D(5.75),O(.25) 427,432
76 9/1/08 4,811,931 Retail L(4),D(5.75),O(.25) 444,432
77 8/1/05 5,065,877 Industrial L(4),D(2.75),O(.25) 440,874
- ------------------------------------------------------------------------------------------------------------------------------------
78 8/1/08 4,707,716 Multi-Family L(4),D(5.5),O(.5) 430,246
79 2/1/08 4,689,805 Retail L(4),D(5.5),O(.5) 425,041
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
80 10/1/08 4,582,012 Multi-Family L(4),D(5.917),O(.083) 396,866
81 9/1/05 4,753,938 Retail L(4),D(2.917),O(.083) 399,348
82 9/1/07 4,588,747 Multi-Family L(2.083),YM1%(6.5),O(.5) 434,542
- ------------------------------------------------------------------------------------------------------------------------------------
83 10/1/08 4,545,837 Office L(2.083),D(7.750),O(.167) 430,423
84 4/1/08 4,512,537 Retail L(3.417),D(5.75),O(.25) 420,304
85 8/1/08 4,337,983 Multi-Family L(4),D(5.75),O(.25) 391,155
86 8/1/08 4,292,640 Multi-Family L(4),D(5.75),O(.25) 376,090
87 7/1/08 4,363,097 Retail L(4),D(5.75),O(.25) 399,585
- ------------------------------------------------------------------------------------------------------------------------------------
88 11/1/18 -- CTL L(4),D(16) 388,833
89 9/1/08 4,009,752 Hotel L(4),D(5.75),O(.25) 435,489
90 8/1/03 4,681,914 Multi-Family L(2.33),D(2.17),O(.5) 390,216
91 10/1/08 4,190,058 Multi-Family L(4),D(5.75),O(.25) 384,375
92 9/1/08 4,170,641 Multi-Family L(3),D(6.75),O(.25) 377,814
- ------------------------------------------------------------------------------------------------------------------------------------
93 10/1/08 3,941,308 Retail L(4),D(6) 343,474
94 8/1/08 4,033,534 Office L(4),D(5.75),O(.25) 374,691
95 5/1/08 4,024,784 Multi-Family L(4),D(5.5),O(.5) 371,334
96 9/1/08 3,589,569 Office L(4),D(5.917),O(.083) 378,566
97 1/1/08 3,981,096 Retail L(3),D(6.75),O(.25) 380,168
- ------------------------------------------------------------------------------------------------------------------------------------
98 8/1/08 3,845,065 Retail L(4),D(5.75),O(.25) 353,765
99 7/1/08 3,864,757 Office L(4),D(5.75),O(.25) 360,547
100 8/1/08 3,519,029 Hotel L(7),D(3) 374,811
101 2/1/05 4,048,202 Multi-Family L(4),D(2.75),O(.25) 350,925
102 8/1/07 3,783,443 Retail L(4),D(4.417),O(.5) 369,442
- ------------------------------------------------------------------------------------------------------------------------------------
103 11/1/08 3,417,410 Hotel L(3),D(6.75),O(.25) 374,421
104 7/1/08 3,618,482 Multi-Family L(4),D(5.75),O(.25) 330,652
105 9/1/13 483,964 CTL L(4),D(11) 417,984
105a CTL
- ------------------------------------------------------------------------------------------------------------------------------------
105b CTL
105c CTL
106 7/1/08 3,458,973 Retail L(3),D(6.75),O(.25) 340,541
107 9/1/08 2,786,574 Retail L(4),D(5.5),O(.5) 380,267
- ------------------------------------------------------------------------------------------------------------------------------------
108 10/1/08 3,489,027 Multi-Family L(4),D(5.75),O(.25) 311,314
109 10/1/08 3,198,144 Hotel L(4),D(5.917),O(.083) 338,642
110 9/1/08 3,505,067 Office L(4),D(5.75),O(.25) 325,169
111 8/1/10 3,364,291 Retail L(5),D(6.75),O(.25) 327,770
112 9/1/13 2,549,595 Self-Storage L(7),D(7.75),O(.25) 343,861
- ------------------------------------------------------------------------------------------------------------------------------------
113 9/1/05 3,499,258 Hotel L(3),D(3.75),O(.25) 345,701
114 11/1/08 3,401,227 Retail L(4),D(5.75),O(.25) 311,362
115 9/1/08 3,415,661 Retail L(4),D(5.75),O(.25) 316,407
116 9/1/18 2,408,534 Retail L(4),D(15.75),O(.25) 315,142
117 9/1/08 3,400,432 Multi-Family L(4),D(5.75),O(.25) 311,047
- ------------------------------------------------------------------------------------------------------------------------------------
118 8/1/08 3,329,451 Office L(4),D(5.75),O(.25) 308,602
119 9/1/05 3,350,155 Hotel L(3),5(1),4(1),3(1),2(.75),O(.25) 332,691
120 8/1/08 3,015,165 Office L(4),D(5.5),O(.5) 322,658
121 7/1/08 3,259,256 Multi-Family L(5),D(4.75),O(.25) 297,383
122 10/1/18 2,203,665 Retail L(4),D(15.75),O(.25) 283,858
- ------------------------------------------------------------------------------------------------------------------------------------
123 8/1/08 2,956,386 Multi-Family L(4),YM1%(5.75),O(.25) 314,883
124 3/1/08 3,237,690 Office L(3.33),D(5.834),O(.25) 304,608
125 11/1/18 -- CTL L(4),D(16) 259,150
126 7/1/18 -- CTL L(4),D(15.75) 331,956
127 10/1/08 3,124,309 Multi-Family L(4),D(5.75),O(.25) 278,772
- ------------------------------------------------------------------------------------------------------------------------------------
128 10/1/08 3,136,710 Retail L(4),D(5.75),O(.25) 286,251
129 8/1/08 3,052,108 Retail L(4),D(5.75),O(.25) 279,145
130 7/1/13 2,682,695 Retail L(7),D(7.5),O(.5) 280,274
131 9/1/18 654,451 CTL L(4),D(15.917) 289,861
132 11/1/13 -- Hotel L(5),D(9.75),O(.25) 370,184
- ------------------------------------------------------------------------------------------------------------------------------------
133 10/1/08 2,987,385 Office L(4),D(5.75),O(.25) 279,159
134 9/1/05 3,129,215 Multi-Family L(4),D(2.75),O(.25) 271,443
135 7/1/08 2,974,750 Office L(4),D(5.75),O(.25) 274,464
136 8/1/18 -- Retail L(19.75),O(.25) 320,992
- ------------------------------------------------------------------------------------------------------------------------------------
137 10/1/05 3,003,354 Retail L(4),D(2.917),O(.083) 277,288
137a Retail
137b Retail
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
138 9/1/03 3,120,923 Multi-Family L(2.5),D(2.083),O(.417) 260,012
- ------------------------------------------------------------------------------------------------------------------------------------
139 8/1/08 2,877,651 Retail L(4),D(5.75),O(.25) 268,895
140 7/1/08 2,621,640 Parking Garage L(4),D(5.75),O(.25) 282,146
141 9/1/08 2,815,618 Office L(4),D(5.75),O(.25) 258,513
142 11/1/18 -- CTL L(4),D(16) 227,163
143 10/1/08 2,815,269 Office L(4),D(5.75),O(.25) 264,043
- ------------------------------------------------------------------------------------------------------------------------------------
144 10/1/08 2,794,849 Retail L(5),D(4.75),O(.25) 256,767
145 10/1/08 2,782,227 Multi-Family L(3),D(6.917),O(.083) 252,389
146 8/1/03 3,029,383 Multi-Family L(2.333),D(2.417),O(.25) 254,188
147 4/1/08 2,811,927 Retail L(4),D(5.75),O(.25) 262,737
148 10/1/05 2,877,358 Multi-Family L(3),D(3.67),O(.33) 240,665
- ------------------------------------------------------------------------------------------------------------------------------------
149 11/1/08 2,738,638 Retail L(4),D(5.917),O(.083) 260,108
150 4/1/18 - CTL L(4),D(15.5) 284,472
151 7/1/08 2,702,962 Multi-Family L(4),D(5.75),O(.25) 246,993
152 9/1/08 2,690,059 Retail L(4),D(6) 246,801
153 10/1/08 2,651,810 Multi-Family L(3),D(6.917),O(.083) 240,558
- ------------------------------------------------------------------------------------------------------------------------------------
154 9/1/08 2,656,486 Retail L(4),D(5.5),O(.5) 242,273
155 10/1/08 2,613,925 Retail L(3),D(6.75),O(.25) 238,543
156 9/1/08 2,606,650 Multi-Family L(3),D(6.75),O(.25) 236,134
157 10/1/08 2,034,821 Multi-Family L(4),D(5.917),O(.083) 276,951
- ------------------------------------------------------------------------------------------------------------------------------------
157a Multi-Family
157b Multi-Family
157c Multi-Family
157d Multi-Family
- ------------------------------------------------------------------------------------------------------------------------------------
158 7/1/13 2,299,452 Retail L(7),D(7.5),O(.5) 240,235
159 9/1/18 883,036 CTL L(4),D(15.917) 273,103
160 9/1/08 2,350,205 Multi-Family L(4),D(5.75),O(.25) 250,805
161 8/1/08 2,346,018 Hotel L(7),D(3) 249,874
162 10/1/08 2,483,230 Retail L(4),D(5.75),O(.25) 226,615
- ------------------------------------------------------------------------------------------------------------------------------------
163 11/1/08 2,521,782 Retail L(2.083),D(7.667),O(.25) 245,645
164 10/1/08 2,429,372 Multi-Family L(4),D(5.5),O(.5) 213,825
165 11/1/08 2,428,867 Retail L(4),D(5.75),O(.25) 219,047
166 11/1/08 2,488,986 Retail L(3),D(6.917),O(.083) 240,714
167 8/1/05 2,589,472 Retail L(3),D(3.75),O(.25) 229,895
- ------------------------------------------------------------------------------------------------------------------------------------
168 8/1/08 2,247,850 Retail L(4),D(5.75),O(.25) 239,841
169 10/1/08 2,421,737 Office L(4),D(5.917),O(.083) 221,993
170 11/1/08 2,333,201 Retail L(3),D(6.75),O(.25) 208,211
171 9/1/08 2,364,689 Office L(4),D(5.75),O(.25) 219,051
172 9/1/13 -- Industrial L(4),D(10.75),O(.25) 296,882
- ------------------------------------------------------------------------------------------------------------------------------------
173 9/1/08 2,340,589 Retail L(4),D(5.75),O(.25) 222,132
174 5/1/13 830,409 CTL L(4),D(10.583) 252,051
175 11/1/08 2,339,109 Retail L(2.083),D(7.667),O(.25) 227,850
176 9/1/08 2,074,624 Hotel L(4),D(5.75),O(.25) 218,925
177 7/1/08 2,275,409 Retail L(3.75),D(5.75),O(.25) 210,445
- ------------------------------------------------------------------------------------------------------------------------------------
178 8/1/18 -- Retail L(19.75),O(.25) 245,464
179 6/1/18 -- CTL L(10),D(9.75) 225,588
180 8/1/08 2,205,068 Mobile Home Park L(4),D(5.75),O(.25) 203,630
181 11/1/08 1,724,406 Retail L(5),D(4.917),O(.083) 239,299
182 11/1/08 1,965,033 Office L(4),D(5.667),O(.333) 201,626
- ------------------------------------------------------------------------------------------------------------------------------------
183 10/1/08 2,185,201 Industrial L(4),D(5.75),O(.25) 201,205
184 9/1/08 2,188,385 Multi-Family L(5),D(4.75),O(.25) 202,419
185 8/1/08 2,199,504 Office L(4),D(5.75),O(.25) 206,283
186 8/1/08 2,186,420 Retail L(4),D(5.75),O(.25) 201,610
187 9/1/08 2,018,389 Hotel L(4),D(5.75),O(.25) 217,809
- ------------------------------------------------------------------------------------------------------------------------------------
188 9/1/08 2,008,523 Retail L(4),YM1%(5.75),O(.25) 214,721
189 10/1/08 2,129,093 Multi-Family L(4),D(5.75),O(.25) 186,540
190 10/1/18 613,071 CTL L(4),D(15.917) 201,070
191 8/1/08 2,096,203 Retail L(4),D(5.75),O(.25) 192,575
192 7/1/18 -- CTL L(4),D(15.75) 217,542
- ------------------------------------------------------------------------------------------------------------------------------------
193 9/1/08 2,081,820 Industrial L(4),D(5.75),O(.25) 191,708
194 7/1/08 2,079,586 Retail L(4),YM1%(5.75),O(.25) 192,298
195 10/1/08 2,047,575 Retail L(4),D(5.75),O(.25) 186,858
196 9/1/08 2,056,006 Office L(3),D(6.75),O(.25) 189,894
197 8/1/08 1,882,496 Multi-Family L(4),D(5.75),O(.25) 200,032
- ------------------------------------------------------------------------------------------------------------------------------------
198 10/1/08 2,015,653 Multi-Family L(4),D(5.75),O(.25) 186,972
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
199 9/1/08 2,014,889 Retail L(5),D(4.75),O(.25) 186,785
200 9/1/08 2,008,567 Office L(4),D(5.75),O(.25) 184,551
201 9/1/08 2,008,567 Retail L(4),D(5.75),O(.25) 184,551
202 9/1/08 2,006,977 Multi-Family L(4),D(5.75),O(.25) 183,994
- ------------------------------------------------------------------------------------------------------------------------------------
203 7/1/08 1,969,103 Multi-Family L(4),D(5.75),O(.25) 181,813
204 10/1/08 1,950,939 Retail L(4),D(6) 181,236
205 11/1/05 1,980,322 Industrial L(4),D(2.75),O(.25) 185,907
206 10/1/08 1,913,808 Multi-Family L(4),D(6) 173,870
207 9/1/08 1,925,779 Multi-Family L(4),D(5.917),O(.083) 178,129
- ------------------------------------------------------------------------------------------------------------------------------------
208 7/1/13 1,701,587 Retail L(4),D(10.75),O(.25) 179,737
209 9/1/08 1,012,475 Retail L(4),D(5.75),O(.25) 233,323
210 10/1/08 1,882,523 Retail L(4),D(5.666),O(.333) 166,957
211 10/1/08 1,869,353 Retail L(4),D(5.75),O(.25) 164,284
212 8/1/08 1,907,656 Retail L(4),D(5.75),O(.25) 177,340
- ------------------------------------------------------------------------------------------------------------------------------------
213 10/1/18 1,361,777 Retail L(4),D(15.75),O(.25) 179,868
214 10/1/08 1,852,420 Retail L(4),D(5.75),O(.25) 166,536
215 10/1/18 1,322,637 Retail L(4),D(15.75),O(.25) 174,308
216 10/1/08 1,792,807 Office L(5),D(4.75),O(.25) 165,320
217 7/1/18 -- CTL L(4),D(15.75) 185,271
- ------------------------------------------------------------------------------------------------------------------------------------
218 8/1/05 1,870,866 Multi-Family L(3),D(3.667),O(.333) 165,275
219 10/1/18 1,266,769 Retail L(4),D(15.75),O(.25) 167,319
220 10/1/08 1,752,285 Office L(4),D(5.75),O(.25) 162,422
221 10/1/08 1,612,476 Self-Storage L(4),D(5.75),O(.25) 173,474
222 9/1/03 1,815,879 Office L(3),D(1.75),O(.25) 169,933
- ------------------------------------------------------------------------------------------------------------------------------------
223 9/1/08 1,587,710 Self-Storage L(4),D(5.75),O(.25) 169,933
224 8/1/08 1,555,734 Multi-Family L(4),D(5.75),O(.25) 164,045
225 6/1/18 541,521 CTL L(4),D(15.58),O(.25) 168,418
226 10/1/08 1,665,970 Retail L(4),D(6) 154,764
227 10/1/08 1,449,107 Office L(4),D(5.75),O(.25) 147,684
- ------------------------------------------------------------------------------------------------------------------------------------
228 9/1/08 1,621,515 Industrial L(4),D(5.917),O(.083) 150,541
229 10/1/08 1,593,516 Retail L(4),D(5.75),O(.25) 146,290
230 10/1/08 1,554,815 Retail L(4),D(5.75),O(.25) 138,522
231 8/1/18 -- CTL L(10),D(9.75) 163,829
232 9/1/08 1,423,329 Office L(4),D(5.75),O(.25) 151,446
- ------------------------------------------------------------------------------------------------------------------------------------
233 11/1/08 1,498,379 Multi-Family L(4),D(5.75),O(.25) 130,395
234 11/1/18 -- CTL L(10),D(10) 150,087
235 9/1/08 1,503,246 Multi-Family L(4),D(5.75),O(.25) 138,429
236 8/1/08 1,492,586 Office L(4),D(5.75),O(.25) 139,164
237 9/1/08 782,366 Retail L(4),D(5.75),O(.25) 180,295
- ------------------------------------------------------------------------------------------------------------------------------------
238 9/1/08 1,348,894 Office L(4),D(5.75),O(.25) 144,034
239 7/1/08 1,411,176 Office L(4),D(5.75),O(.25) 142,364
240 10/1/08 1,434,201 Industrial L(4),D(5.75),O(.25) 130,006
241 9/1/08 1,315,151 Multi-Family L(4),D(5.75),O(.25) 140,100
242 9/1/08 1,417,222 Retail L(4),D(5.75),O(.25) 129,734
- ------------------------------------------------------------------------------------------------------------------------------------
243 7/1/18 -- CTL L(10),D(9.75) 157,399
244 7/1/08 1,404,639 Multi-Family L(4),D(5.75),O(.25) 130,848
245 8/1/08 1,295,537 Office L(4),D(5.75),O(.25) 140,515
246 9/1/03 1,493,897 Office L(2.167),D(2.583),O(.25) 127,269
247 9/1/08 1,353,599 Office L(4),D(5.75),O(.25) 124,371
- ------------------------------------------------------------------------------------------------------------------------------------
248 9/1/13 1,187,326 Multi-Family L(4),D(10.75),O(.25) 124,121
249 10/1/18 48,956 CTL L(10),D(10) 143,202
250 9/1/08 1,250,257 Self-Storage L(4),D(5.75),O(.25) 134,682
251 10/1/08 1,211,943 Retail L(4),D(5.5),O(.5) 130,918
252 9/1/08 1,312,344 Office L(3),D(6.75),O(.25) 121,209
- ------------------------------------------------------------------------------------------------------------------------------------
253 10/1/18 -- CTL L(10),D(10) 138,583
254 8/1/08 1,207,551 Retail L(3),YM1%(6.5),O(.5) 129,526
255 6/1/18 -- CTL L(10),D(9.83) 139,125
256 7/1/13 -- CTL L(4),D(10.75) 144,836
257 11/1/08 1,292,079 Retail L(2.083),D(7.667),O(.25) 125,860
- ------------------------------------------------------------------------------------------------------------------------------------
258 10/1/08 1,166,897 Office L(4),D(5.75),O(.25) 125,097
259 8/1/08 1,271,770 Retail L(4),D(5.75),O(.25) 118,227
260 8/1/08 1,271,770 Retail L(4),D(5.75),O(.25) 118,227
261 9/1/08 1,238,159 Retail L(4),D(5.75),O(.25) 112,164
262 10/1/18 881,756 Retail L(4),D(15.75),O(.25) 116,205
- ------------------------------------------------------------------------------------------------------------------------------------
263 9/1/08 1,225,816 Retail L(4),D(5.75),O(.25) 113,468
264 8/1/08 1,224,717 Multi-Family L(4),D(5.75),O(.25) 113,015
265 8/1/08 1,222,785 Industrial L(4),D(5.75),O(.25) 112,335
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity of
Anticipated
Control Repayment Balloon Balance Annual Debt
No. Date ($) Property Type Prepayment Provisions Service ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
266 8/1/18 -- Retail L(19.75),O(.25) 132,173
267 7/1/08 1,208,350 Industrial L(4),D(5.75),O(.25) 111,735
- ------------------------------------------------------------------------------------------------------------------------------------
268 8/1/18 -- CTL L(4),D(15.75) 124,157
269 9/1/08 1,195,603 Multi-Family L(4),D(5.75),O(.25) 110,100
270 10/1/08 1,136,604 Retail L(4),D(5.75),O(.25) 104,732
271 9/1/08 1,134,978 Office L(4),D(5.75),O(.25) 104,207
272 8/1/08 1,140,208 Office L(4),D(5.75),O(.25) 105,997
- ------------------------------------------------------------------------------------------------------------------------------------
273 10/1/08 1,124,146 Mobile Home Park L(4),D(5.75),O(.25) 100,987
274 8/1/08 1,054,215 Mobile Home Park L(4),D(5.75),O(.25) 114,675
275 11/1/16 375,480 CTL L(10),D(8.167) 104,240
276 9/1/08 962,305 Multi-Family L(4),D(5.75),O(.25) 102,512
277 8/1/08 964,256 Office L(4),D(2),3(2),2(1),1(.75),O(.25) 103,066
- ------------------------------------------------------------------------------------------------------------------------------------
278 8/1/08 933,595 Multi-Family L(4),D(5.75),O(.25) 99,437
279 9/1/05 964,876 Industrial L(4),D(2.75),O(.25) 94,139
280 10/1/18 661,316 Retail L(4),D(15.75),O(.25) 87,154
281 10/1/08 607,081 Retail L(4),D(5.75),O(.25) 82,119
282 8/1/08 610,576 Retail L(4),D(5.75),O(.25) 66,920
- ------------------------------------------------------------------------------------------------------------------------------------
283 9/1/14 -- Industrial L(4),D(11.75),O(.25) 80,625
284 10/1/08 624,318 Retail L(4),D(5.917),O(.083) 58,469
285 8/1/08 613,958 Retail L(4),D(5.75),O(.25) 57,075
286 8/1/08 $ 488,462 Retail L(4),D(5.75),O(.25) $ 53,536
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 46,315,573 2.34x $ 499,800,000 N/A 49.9% 39.1%
1a 119,800,000 8/12/98 187
1b 172,300,000 8/21/98 260
1c 87,700,000 8/10/98 154
- --------------------------------------------------------------------------------------------------------------------------
1d 53,800,000 8/10/98 120
1e 66,200,000 8/10/98 129
2 19,563,151 1.73 250,000,000 9/23/98 58.0 50.2
- --------------------------------------------------------------------------------------------------------------------------
3 17,527,688 2.35 235,000,000 N/A 47.3 43.1
3a - N/A
3b - N/A
3c - N/A
3d - N/A
- --------------------------------------------------------------------------------------------------------------------------
3e - N/A
3f - N/A
3g - N/A
3h - N/A
3i - N/A
- --------------------------------------------------------------------------------------------------------------------------
3j - N/A
3k - N/A
3l - N/A
4 9,126,053 1.74 113,693,000 N/A 60.7 55.3
- --------------------------------------------------------------------------------------------------------------------------
5 8,073,460 1.80 101,980,000 6/10/98 61.7 52.2
6 9,641,221 2.74 105,995,000 N/A 51.5 51.5
6a 1,975,000 9/1/98
6b 12,465,000 9/1/98
- --------------------------------------------------------------------------------------------------------------------------
6c 7,500,000 8/20/98
6d 15,000,000 8/22/98
6e 17,820,000 9/20/98
6f 2,600,000 9/1/98
6g 12,650,000 9/1/98
- --------------------------------------------------------------------------------------------------------------------------
6h 16,800,000 9/1/98
6i 4,900,000 9/1/98
6j 1,935,000 8/13/98
6k 1,900,000 8/26/98
6l 10,450,000 8/24/98
- --------------------------------------------------------------------------------------------------------------------------
7 5,530,670 1.48 71,000,000 7/11/98 67.1 61.7
8 4,915,280 1.35 58,450,000 4/24/98 78.5 72.3
9 4,187,613 1.47 46,500,000 3/15/98 66.3 54.7 133
10 4,102,882 1.92 48,000,000 6/17/98 57.3 49.6
- --------------------------------------------------------------------------------------------------------------------------
11 2,810,845 1.57 41,200,000 6/30/98 55.8 48.4
12 2,446,423 1.57 33,500,000 9/1/98 55.2 44.1 114
13 1,832,472 1.27 23,100,000 7/22/98 78.2 68.3
14 1,842,407 1.33 22,200,000 6/1/98 79.9 69.3
15 1,909,760 1.34 25,000,000 8/12/98 70.8 67.1
- --------------------------------------------------------------------------------------------------------------------------
16 1,942,163 1.34 22,800,000 5/1/98 76.8 67.8
17 1,818,552 1.30 25,700,000 6/22/98 67.0 58.8
17a 4,500,000 6/22/98
17b 4,200,000 6/22/98
- --------------------------------------------------------------------------------------------------------------------------
17c 7,700,000 6/22/98
17d 5,500,000 6/22/98
17e 3,800,000 6/22/98
18 1,778,178 1.38 20,500,000 4/28/98 73.9 65.5
- --------------------------------------------------------------------------------------------------------------------------
19 1,902,318 1.46 22,000,000 7/1/98 68.2 55.0 142
21 1,571,001 1.37 18,900,000 5/20/98 74.8 65.7
22 1,558,636 1.37 17,960,000 6/8/98 77.8 68.4
23 1,468,966 1.32 17,550,000 N/A 79.2 69.2
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
23a 5,450,000 4/30/98
23b 7,200,000 4/30/98
23c 4,900,000 4/27/98
24 1,510,121 1.40 17,200,000 7/22/98 79.5 69.2
- --------------------------------------------------------------------------------------------------------------------------
25 1,309,614 1.31 16,300,000 6/29/98 75.7 66.4
26 1,303,804 1.34 16,250,000 4/21/98 73.7 64.7
27 1,132,227 1.27 15,500,000 8/20/98 74.1 67.9
28 1,212,242 1.30 14,700,000 7/9/98 75.3 60.2
29 1,165,087 1.26 14,500,000 6/18/98 72.9 46.9
- --------------------------------------------------------------------------------------------------------------------------
30 1,134,830 1.38 14,500,000 3/6/98 71.6 65.9
31 1,080,000 NAP 11,500,000 8/15/98 NAP NAP
32 1,189,451 1.46 13,600,000 5/1/98 74.8 71.1
33 952,100 1.20 12,400,000 7/29/98 79.0 72.9
34 989,113 1.28 12,300,000 4/17/98 79.3 69.1
- --------------------------------------------------------------------------------------------------------------------------
35 1,030,788 1.40 11,750,000 4/3/98 79.0 72.7
36 990,146 1.26 11,600,000 8/19/98 79.7 63.8
37 928,205 1.34 11,100,000 6/19/98 77.4 67.8
38 898,471 1.32 10,680,000 4/1/98 79.9 69.7
39 1,098,642 1.52 11,500,000 6/1/98 73.7 47.2
- --------------------------------------------------------------------------------------------------------------------------
40 940,490 1.35 11,000,000 3/26/98 74.8 66.3
41 833,496 1.40 11,000,000 3/23/98 74.5 69.8
42 834,435 1.31 10,100,000 8/3/98 79.6 69.3
43 852,157 1.25 10,550,000 N/A 75.8 60.8
- --------------------------------------------------------------------------------------------------------------------------
43a 1,850,000 7/1/98
43b 2,250,000 7/20/98
43c 1,980,000 7/1/98
43d 2,300,000 7/12/98
43e 2,170,000 7/20/98
- --------------------------------------------------------------------------------------------------------------------------
44 812,056 1.33 9,700,000 7/7/98 79.8 69.4
45 752,743 1.26 9,650,000 7/21/98 79.2 68.7
46 751,240 1.26 9,550,000 7/3/98 78.9 68.7
47 1,172,205 2.08 14,400,000 6/1/98 52.0 44.7
- --------------------------------------------------------------------------------------------------------------------------
48 838,420 1.27 10,150,000 6/16/98 72.6 65.3
49 913,840 1.60 10,875,000 8/4/98 67.5 58.5
50 877,886 1.45 10,900,000 6/25/98 65.7 52.6
51 905,016 1.65 9,900,000 2/13/98 70.7 61.4
52 761,451 1.35 8,700,000 5/28/98 79.2 49.3
- --------------------------------------------------------------------------------------------------------------------------
53 763,360 1.34 8,900,000 5/1/98 76.9 61.2
54 738,839 1.34 9,200,000 6/2/98 73.1 64.2
55 762,818 1.46 8,400,000 7/1/98 79.9 69.3
56 846,539 1.41 10,600,000 7/1/97 62.1
57 726,470 1.31 8,750,000 7/14/98 74.9 60.0
- --------------------------------------------------------------------------------------------------------------------------
58 957,976 1.73 10,000,000 5/1/98 64.9 52.1 94
59 700,245 1.37 8,400,000 1/21/98 74.8 65.7
60 670,388 1.27 7,650,000 6/17/98 79.7 51.1
61 677,790 1.45 7,800,000 7/1/98 76.9 66.6
62 463,108 NAP 6,000,000 8/18/98 NAP NAP
- --------------------------------------------------------------------------------------------------------------------------
63 755,845 1.49 9,400,000 6/5/98 63.6 55.9
64 754,018 1.50 8,500,000 6/23/98 69.3 55.6
65 748,500 1.45 7,700,000 7/28/98 74.9 61.1 107
66 607,690 1.30 8,200,000 6/9/98 69.7 61.2
67 638,934 1.34 7,450,000 5/1/98 76.4 60.9
- --------------------------------------------------------------------------------------------------------------------------
68 650,328 1.39 7,550,000 9/1/98 75.4 66.3
69 632,234 1.42 7,625,000 6/25/98 73.9 70.0
70 581,992 1.30 7,700,000 7/24/98 72.7 63.4
71 430,289 NAP 5,600,000 8/18/98 NAP NAP
72 598,101 1.33 7,000,000 6/1/98 79.9 61.3
- --------------------------------------------------------------------------------------------------------------------------
73 576,958 1.32 7,000,000 4/15/98 79.8 69.4
74 588,414 1.31 7,025,000 5/1/98 78.9 69.1
75 622,307 1.46 6,900,000 5/26/98 79.9 69.2
76 628,519 1.41 7,375,000 6/18/98 74.5 65.2
77 635,102 1.44 8,000,000 2/27/98 68.6 63.3
- --------------------------------------------------------------------------------------------------------------------------
78 590,322 1.37 7,280,000 4/24/98 74.0 64.7
79 562,773 1.32 7,050,000 11/1/97 76.0 66.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
80 569,050 1.43 6,760,000 6/24/98 79.2 67.8
81 574,105 1.44 7,000,000 7/31/98 74.2 67.9
82 576,374 1.33 6,500,000 7/1/97 79.4 70.6
- --------------------------------------------------------------------------------------------------------------------------
83 598,707 1.39 7,240,000 8/10/98 71.1 62.8
84 559,502 1.33 6,800,000 9/10/98 75.4 66.4
85 578,030 1.48 6,475,000 4/15/98 77.1 67.0
86 898,977 2.39 11,700,000 6/1/98 42.6 36.7
87 599,379 1.50 7,750,000 2/6/98 64.3 56.3
- --------------------------------------------------------------------------------------------------------------------------
88 390,000 NAP 5,000,000 4/3/98 NAP NAP
89 732,761 1.68 6,600,000 5/18/98 74.8 60.8 75
90 532,773 1.37 7,000,000 12/31/97 70.6 66.9
91 510,154 1.33 6,000,000 7/15/98 80.0 69.8
92 516,047 1.37 6,050,000 6/23/98 79.2 68.9
- --------------------------------------------------------------------------------------------------------------------------
93 506,873 1.48 7,500,000 9/15/98 61.3 52.6
94 469,898 1.25 6,000,000 6/1/98 76.5 67.2
95 488,048 1.31 6,250,000 2/11/98 73.3 64.4
96 503,796 1.33 6,000,000 7/6/98 74.8 59.8
97 560,004 1.47 6,800,000 8/1/97 65.7 58.5
- --------------------------------------------------------------------------------------------------------------------------
98 510,471 1.44 6,000,000 5/14/98 73.2 64.1
99 468,609 1.30 5,900,000 5/19/98 74.4 65.5
100 537,596 1.43 5,850,000 1/1/98 74.8 60.2 94
101 436,097 1.24 5,625,000 12/29/97 77.7 72.0
102 454,770 1.23 5,450,000 6/22/98 77.3 69.4
- --------------------------------------------------------------------------------------------------------------------------
103 540,887 1.44 6,500,000 8/11/98 64.6 52.6 58
104 412,153 1.25 5,235,000 2/26/98 79.1 69.1
105 419,238 NAP 5,000,000 N/A NAP NAP
105a 1,705,000 8/6/98
- --------------------------------------------------------------------------------------------------------------------------
105b 1,565,000 8/8/98
105c 1,730,000 8/7/98
106 448,253 1.32 5,500,000 4/15/98 74.3 62.9
107 470,538 1.24 5,700,000 5/1/98 71.7 48.9
- --------------------------------------------------------------------------------------------------------------------------
108 411,360 1.32 5,100,000 8/18/98 79.1 68.4
109 511,638 1.51 5,750,000 7/1/98 69.5 55.6 56
110 437,660 1.35 5,300,000 2/19/98 75.4 66.1
111 456,340 1.39 5,525,000 5/18/98 72.3 60.9
112 507,972 1.48 5,380,000 7/29/98 74.2 47.4
- --------------------------------------------------------------------------------------------------------------------------
113 514,064 1.49 5,300,000 6/1/98 74.8 66.0 58
114 415,255 1.33 4,980,000 7/15/98 78.3 68.3
115 471,894 1.49 5,750,000 5/19/98 67.7 59.4
116 404,803 1.28 5,200,000 4/7/98 74.9 46.3
117 418,969 1.35 4,900,000 7/6/98 79.5 69.4
- --------------------------------------------------------------------------------------------------------------------------
118 422,798 1.37 5,400,000 5/7/98 70.2 61.7
119 498,068 1.50 5,100,000 6/1/98 74.4 65.7 63
120 455,576 1.41 5,450,000 7/8/98 68.6 55.3
121 406,035 1.37 4,750,000 5/14/98 78.5 68.6
122 450,709 1.59 4,950,000 7/1/98 74.7 44.5
- --------------------------------------------------------------------------------------------------------------------------
123 475,414 1.51 5,100,000 4/21/98 72.0 58.0
124 384,954 1.26 4,600,000 9/1/98 79.6 70.4
125 220,078 NAP 3,650,000 4/3/98 NAP NAP
126 341,915 NAP 4,000,000 6/30/98 NAP NAP
127 367,622 1.32 4,600,000 8/20/98 78.5 67.9
- --------------------------------------------------------------------------------------------------------------------------
128 420,873 1.47 4,700,000 7/30/98 76.5 66.7
129 355,910 1.28 4,500,000 6/25/98 77.6 67.8
130 371,789 1.33 4,550,000 1/13/98 76.7 59.0
131 290,731 NAP 3,420,000 10/1/98 NAP NAP
132 795,310 2.15 8,500,000 7/24/98 40.0 NAP 67
- --------------------------------------------------------------------------------------------------------------------------
133 404,527 1.45 5,500,000 7/9/98 61.8 54.3
134 413,913 1.52 4,500,000 6/29/98 75.4 69.5
135 359,859 1.31 4,550,000 5/13/98 74.5 65.4
136 490,617 1.53 4,700,000 5/20/98 71.9 NAP
- --------------------------------------------------------------------------------------------------------------------------
137 365,003 1.32 4,550,000 8/11/98 73.6 66.0
137a 2,150,000 8/25/98
137b 2,400,000 8/11/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
138 349,446 1.34 4,650,000 7/14/98 70.9 67.1
- --------------------------------------------------------------------------------------------------------------------------
139 361,221 1.34 4,475,000 5/7/98 73.0 64.3
140 420,704 1.49 6,300,000 6/1/98 51.4 41.6
141 350,617 1.36 4,500,000 5/22/98 71.6 62.6
142 199,000 NAP 3,200,000 3/27/98 NAP NAP
143 341,992 1.30 4,000,000 5/22/98 80.0 70.4
- --------------------------------------------------------------------------------------------------------------------------
144 340,678 1.33 4,100,000 7/31/98 78.0 68.2
145 321,970 1.28 4,070,000 8/24/98 78.6 68.4
146 338,603 1.33 4,000,000 4/3/98 79.8 75.7
147 366,656 1.40 4,300,000 1/14/98 74.1 65.4
148 339,209 1.41 4,500,000 4/3/98 70.0 63.9
- --------------------------------------------------------------------------------------------------------------------------
149 344,221 1.32 4,150,000 6/9/98 74.7 66.0
150 293,006 NAP 3,400,000 7/1/98 NAP NAP
151 381,946 1.55 4,000,000 4/14/98 77.3 67.6
152 336,149 1.36 4,000,000 3/1/98 76.9 67.3
153 311,175 1.29 3,882,000 8/17/97 78.5 68.3
- --------------------------------------------------------------------------------------------------------------------------
154 311,564 1.29 4,600,000 4/20/98 66.2 57.7
155 323,241 1.36 4,000,000 7/10/98 75.0 65.3
156 322,471 1.37 3,850,000 7/1/98 77.8 67.7
157 365,678 1.32 3,800,000 9/3/98 78.8 53.5
- --------------------------------------------------------------------------------------------------------------------------
157a - N/A
157b - N/A
157c - N/A
157d - N/A
- --------------------------------------------------------------------------------------------------------------------------
158 328,691 1.37 4,000,000 1/13/98 74.8 57.5
159 279,385 NAP 3,300,000 7/31/98 NAP NAP
160 313,729 1.25 3,750,000 7/6/98 77.9 62.7
161 355,051 1.42 3,900,000 1/1/98 74.8 60.2 54
162 337,324 1.49 4,100,000 7/30/98 69.5 60.6
- --------------------------------------------------------------------------------------------------------------------------
163 309,234 1.26 3,800,000 7/26/98 74.5 66.4
164 294,166 1.38 3,650,000 6/17/98 77.3 66.6
165 313,226 1.43 3,600,000 5/11/98 77.8 67.5
166 320,201 1.33 3,800,000 7/15/98 73.7 65.5
167 310,975 1.35 3,500,000 7/2/98 79.8 74.0
- --------------------------------------------------------------------------------------------------------------------------
168 315,483 1.32 3,945,000 6/15/98 70.7 57.0
169 310,555 1.40 3,900,000 7/27/98 71.1 62.1
170 309,912 1.49 3,760,000 6/9/98 71.8 62.1
171 307,742 1.40 3,460,000 5/19/98 77.9 68.3
172 430,270 1.45 5,500,000 5/5/98 48.8 91
- --------------------------------------------------------------------------------------------------------------------------
173 311,195 1.40 3,800,000 7/10/98 69.6 61.6
174 259,612 NAP 2,800,000 7/23/98 NAP NAP
175 319,726 1.40 3,500,000 7/29/98 75.0 66.8
176 330,509 1.51 4,340,000 7/1/98 59.8 47.8 90
177 316,023 1.50 3,500,000 5/1/98 74.1 65.0
- --------------------------------------------------------------------------------------------------------------------------
178 340,235 1.39 3,600,000 5/7/98 71.8
179 232,355 NAP 2,600,000 7/1/98 NAP NAP
180 256,409 1.26 3,185,000 6/16/98 79.0 69.2
181 309,148 1.29 3,350,000 9/1/98 74.6 51.5
182 322,219 1.60 3,900,000 9/1/98 64.1 50.4
- --------------------------------------------------------------------------------------------------------------------------
183 263,240 1.31 3,150,000 9/1/98 79.3 69.4
184 271,539 1.34 3,300,000 7/29/98 75.7 66.3
185 291,858 1.41 3,400,000 5/20/98 73.4 64.7
186 253,047 1.26 3,240,000 5/20/98 77.0 67.5
187 343,133 1.58 3,350,000 5/20/98 74.5 60.3 50
- --------------------------------------------------------------------------------------------------------------------------
188 293,752 1.37 3,400,000 4/15/98 73.4 59.1
189 257,919 1.38 3,100,000 8/6/98 79.9 68.7
190 201,791 NAP 2,520,000 8/1/98 NAP NAP
191 308,610 1.60 3,350,000 6/29/98 71.5 62.6
192 222,546 NAP 2,700,000 7/2/98 NAP NAP
- --------------------------------------------------------------------------------------------------------------------------
193 247,002 1.29 3,000,000 7/1/98 79.3 69.4
194 256,364 1.33 4,015,000 3/5/98 59.0 51.8
195 261,530 1.40 3,200,000 8/29/98 73.4 64.0
196 266,606 1.40 3,250,000 7/15/98 72.2 63.3
197 272,159 1.36 3,200,000 5/18/98 73.2 58.8
- --------------------------------------------------------------------------------------------------------------------------
198 250,388 1.34 2,900,000 4/6/98 79.3 69.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
199 274,018 1.47 3,250,000 2/10/98 70.7 62.0
200 247,604 1.34 3,250,000 6/5/98 70.7 61.8
201 272,853 1.48 3,080,000 8/1/98 74.6 65.2
202 275,595 1.50 3,000,000 7/15/98 76.6 66.9
- --------------------------------------------------------------------------------------------------------------------------
203 273,735 1.51 3,200,000 5/5/98 70.1 61.5
204 238,725 1.32 2,790,000 7/8/98 79.7 69.9
205 238,041 1.28 2,750,000 9/4/98 80.0 72.0
206 227,063 1.31 2,750,000 7/20/98 79.9 69.6
207 267,707 1.50 2,850,000 1/9/98 77.1 67.6
- --------------------------------------------------------------------------------------------------------------------------
208 236,424 1.32 2,940,000 1/30/98 74.6 57.9
209 434,842 1.86 8,700,000 5/29/98 25.1 11.6
210 271,597 1.63 3,050,000 9/1/98 71.5 61.7
211 258,856 1.58 2,900,000 3/30/98 74.9 64.5
212 270,512 1.53 3,000,000 6/19/98 72.4 63.6
- --------------------------------------------------------------------------------------------------------------------------
213 252,183 1.40 2,870,000 4/6/98 74.9 47.4
214 259,727 1.56 2,850,000 8/1/98 74.9 65.0
215 245,613 1.41 2,800,000 3/30/98 75.0 47.2
216 216,537 1.31 2,800,000 1/22/98 73.2 64.0
217 194,162 NAP 2,250,000 7/27/98 NAP
- --------------------------------------------------------------------------------------------------------------------------
218 216,497 1.31 2,700,000 7/1/98 74.9 69.3
219 232,794 1.39 2,670,000 4/7/98 74.9 47.4
220 227,736 1.40 2,800,000 9/9/98 71.4 62.6
221 326,907 1.88 3,430,000 4/22/98 58.3 47.0
222 236,059 1.39 2,700,000 3/24/98 73.0 67.3
- --------------------------------------------------------------------------------------------------------------------------
223 227,652 1.34 2,950,000 7/10/98 66.8 53.8
224 204,706 1.25 2,600,000 4/14/98 74.7 59.8
225 184,779 NAP 2,000,000 6/12/98 NAP NAP
226 215,456 1.39 2,550,000 7/23/98 74.5 65.3
227 214,464 1.45 2,520,000 8/25/98 73.3 57.5
- --------------------------------------------------------------------------------------------------------------------------
228 211,202 1.40 2,525,000 7/25/98 73.2 64.2
229 200,523 1.37 2,700,000 7/23/98 67.6 59.0
230 211,633 1.53 2,470,000 7/7/98 72.8 62.9
231 169,594 NAP 1,930,000 9/17/98 NAP NAP
232 205,135 1.35 2,320,000 7/7/98 76.4 61.4
- --------------------------------------------------------------------------------------------------------------------------
233 179,088 1.37 2,350,000 4/27/98 74.5 63.8
234 157,444 NAP 1,900,000 8/25/98 NAP NAP
235 192,964 1.39 2,150,000 7/13/98 79.9 69.9
236 217,726 1.56 2,315,000 5/15/98 73.3 64.5
237 646,822 3.59 9,400,000 5/29/98 18.0 8.3
- --------------------------------------------------------------------------------------------------------------------------
238 194,347 1.35 2,350,000 3/10/98 71.3 57.4
239 193,700 1.36 2,250,000 6/11/98 74.4 62.7
240 175,318 1.35 2,900,000 7/15/98 56.9 49.5
241 214,863 1.53 2,100,000 5/1/98 77.9 62.6
242 185,554 1.43 2,175,000 5/5/98 74.6 65.2
- --------------------------------------------------------------------------------------------------------------------------
243 175,163 NAP 1,900,000 8/26/98 NAP NAP
244 175,177 1.34 2,100,000 6/3/98 76.0 66.9
245 182,860 1.30 2,140,000 6/9/98 74.5 60.5
246 179,404 1.41 2,100,000 4/10/98 74.9 71.1
247 169,050 1.36 2,150,000 6/5/98 72.0 63.0
- --------------------------------------------------------------------------------------------------------------------------
248 150,798 1.21 1,880,000 3/27/98 82.3 63.2
249 165,544 NAP 2,000,000 7/29/98 NAP NAP
250 178,383 1.32 2,100,000 7/27/98 73.6 59.5
251 181,820 1.39 2,050,000 6/8/98 73.1 59.1
252 159,070 1.31 2,850,000 7/15/98 52.6 46.0
- --------------------------------------------------------------------------------------------------------------------------
253 170,100 NAP 2,000,000 8/25/98 NAP NAP
254 174,282 1.35 2,250,000 2/2/98 66.5 53.7
255 150,733 NAP 1,700,000 6/2/98 NAP NAP
256 149,181 NAP 1,700,000 7/29/98 NAP NAP
257 162,005 1.29 2,125,000 7/26/98 68.2 60.8
- --------------------------------------------------------------------------------------------------------------------------
258 183,368 1.47 2,400,000 6/10/98 60.4 48.6
259 174,974 1.48 2,000,000 6/19/98 72.4 63.6
260 166,488 1.41 2,000,000 6/19/98 72.4 63.6
261 153,830 1.37 2,050,000 5/27/98 69.4 60.4
262 155,591 1.34 2,100,000 3/27/98 66.6 42.0
- --------------------------------------------------------------------------------------------------------------------------
263 161,079 1.42 2,200,000 7/20/98 63.5 55.7
264 147,628 1.31 2,100,000 5/19/98 66.5 58.3
265 145,532 1.30 2,000,000 5/29/98 69.9 61.1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DSCR Scheduled Underwritten
Net Cut-off Maturity/AR Hospitality
Control Cash Appraised Value Appraisal Date Date Average Daily
No. Net Cash Flow ($) Flow (x) ($) Date LTV (%) LTV (%) Rate ($)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
266 175,985 1.33 2,000,000 5/4/98 69.6
267 157,599 1.41 1,845,000 5/15/98 74.6 65.5
- --------------------------------------------------------------------------------------------------------------------------
268 131,000 NAP 1,390,000 3/17/98 NAP NAP
269 146,290 1.33 1,710,000 7/13/98 79.9 69.9
270 147,569 1.41 1,800,000 7/30/98 72.2 63.1
271 138,623 1.33 1,750,000 6/17/98 74.2 64.9
272 168,065 1.59 1,770,000 4/27/98 73.3 64.4
- --------------------------------------------------------------------------------------------------------------------------
273 130,181 1.29 1,700,000 7/22/98 76.3 66.1
274 169,337 1.48 1,840,000 6/18/98 70.4 57.3
275 107,680 NAP 1,350,000 4/18/98 NAP NAP
276 149,562 1.46 1,600,000 5/1/98 74.8 60.1
277 149,871 1.45 1,700,000 3/2/98 70.4 56.7
- --------------------------------------------------------------------------------------------------------------------------
278 138,948 1.40 1,600,000 4/21/98 72.5 58.3
279 128,760 1.37 1,500,000 7/21/98 73.2 64.3
280 112,815 1.29 1,500,000 4/2/98 70.0 44.1
281 114,936 1.40 1,250,000 7/30/98 71.9 48.6
282 87,247 1.30 1,030,000 5/25/98 72.6 59.3
- --------------------------------------------------------------------------------------------------------------------------
283 101,215 1.26 1,100,000 5/28/98 67.8
284 80,295 1.37 945,000 8/4/98 75.1 66.1
285 84,583 1.48 1,000,000 6/19/98 69.9 61.4
286 $ 80,211 1.50x $ 805,000 5/25/98 74.3% 60.7%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1 N/A N/A 1,858 Rooms $ 134,202 74.1% N/A
1a 1990 N/A 347 Rooms 78.6 7/31/98
1b 1926 1995 396 Rooms 73.7 7/31/98
1c 1982 N/A 410 Rooms 73.9 7/31/98
- ---------------------------------------------------------------------------------------------------------------------------
1d 1990 N/A 337 Rooms 71.9 7/31/98
1e 1981 N/A 368 Rooms 72.3 7/31/98
2 1996 N/A 1,220,625 Sq Feet 119 98.5 10/1/98
- ---------------------------------------------------------------------------------------------------------------------------
3 1981-1991 1995-1997 2,239,948 Sq Feet 50 94.0 N/A
3a 1989 N/A 273,339 Sq Feet 99.6 4/1/98
3b 1988 1995 103,772 Sq Feet 95.0 4/1/98
3c 1981 N/A 174,841 Sq Feet 89.0 4/1/98
3d 1990 N/A 597,550 Sq Feet 92.9 4/1/98
- ---------------------------------------------------------------------------------------------------------------------------
3e 1986 N/A 104,065 Sq Feet 90.5 4/1/98
3f 1984 N/A 52,186 Sq Feet 87.9 4/1/98
3g 1987 N/A 67,551 Sq Feet 100.0 4/1/98
3h 1991 1996 112,000 Sq Feet 100.0 4/1/98
3i 1988 N/A 58,105 Sq Feet 97.0 4/1/98
- ---------------------------------------------------------------------------------------------------------------------------
3j 1978 1997 77,920 Sq Feet 93.4 4/1/98
3k 1981-85 N/A 451,477 Sq Feet 91.8 4/1/98
3l 1989 N/A 167,142 Sq Feet 97.8 4/1/98
4 1970 1983, 1996 881,413 Sq Feet 78 98.3 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
5 1987 N/A 230,781 Sq Feet 273 95.7 9/25/98
6 N/A N/A 1,196,551 Sq Feet 46 98.4 N/A
6a 1993 N/A 19,000 Sq Feet 100.0 10/1/98
6b 1997 N/A 108,360 Sq Feet 95.9 9/17/98
- ---------------------------------------------------------------------------------------------------------------------------
6c 1988 N/A 49,992 Sq Feet 100.0 10/1/98
6d 1985 N/A 165,311 Sq Feet 93.6 10/1/98
6e 1979 1989 270,283 Sq Feet 100.0 10/1/98
6f 1988 N/A 31,157 Sq Feet 100.0 10/1/98
6g 1990-1991 N/A 229,639 Sq Feet 100.0 10/1/98
- ---------------------------------------------------------------------------------------------------------------------------
6h 1986 N/A 170,027 Sq Feet 98.7 10/1/98
6i 1945, 1994 1969, 81, 94 39,117 Sq Feet 100.0 10/1/98
6j 1985 N/A 12,784 Sq Feet 100.0 10/1/98
6k 1994 N/A 14,677 Sq Feet 100.0 10/1/98
6l 1984-87 N/A 86,204 Sq Feet 100.0 10/1/98
- ---------------------------------------------------------------------------------------------------------------------------
7 1970 1988 729,575 Sq Feet 65 98.5 6/23/98
8 1968-1976 N/A 1,342 Units 34,182 92.0 6/2/98
9 1929 1994-95, 98 354 Rooms 87,059 81.2 12/31/97
10 1960s 1995-96, 98 703,574 Sq Feet 39 88.2 8/31/98
- ---------------------------------------------------------------------------------------------------------------------------
11 1962 N/A 536 Units 42,882 89.6 8/10/98
12 1981 N/A 229 Rooms 80,701 74.3 6/30/98
13 1997 N/A 352 Units 51,346 90.9 8/21/98
14 1998 N/A 316 Units 56,116 97.2 8/20/98
15 1988 N/A 215,936 Sq Feet 82 83.1 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
16 1930/96 1998 272,915 Sq Feet 64 98.5 8/31/98
17 Various N/A 47,688 Sq Feet 361 92.2 N/A
17a 1963 N/A 7,798 Sq Feet 100.0 7/1/98
17b 1954 N/A 5,681 Sq Feet 100.0 7/1/98
- ---------------------------------------------------------------------------------------------------------------------------
17c 1961 N/A 12,263 Sq Feet 100.0 7/1/98
17d 1931 N/A 7,466 Sq Feet 100.0 7/1/98
17e 1960 N/A 14,480 Sq Feet 74.2 7/1/98
18 1986, 1988 N/A 183,349 Sq Feet 83 100.0 10/1/98
- ---------------------------------------------------------------------------------------------------------------------------
19 1925 1994-1997 133 Rooms 112,782 90.0 6/30/98
21 1987-1996 N/A 196 Units 72,133 90.8 9/1/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
22 1980-1987 N/A 676,884 Sq Feet 21 90.1 6/17/98
23 N/A N/A 377,245 Sq Feet 37 99.0 N/A
- ---------------------------------------------------------------------------------------------------------------------------
23a 1973, 1996 1998 132,684 Sq Feet 99.3 5/29/98
23b 1987, 93, 97 N/A 132,777 Sq Feet 97.8 4/1/98
23c 1980 N/A 111,784 Sq Feet 99.9 4/1/98
24 1970 1986 615 Units 22,243 95.6 8/4/98
- ---------------------------------------------------------------------------------------------------------------------------
25 1970s N/A 398,012 Sq Feet 31 89.7 9/15/98
26 1960, 1988 1997-1998 595,771 Sq Feet 20 95.6 6/24/98
27 1976 1988 120,797 Sq Feet 95 100.0 8/25/98
28 1969 N/A 130,189 Sq Feet 85 97.0 8/11/98
29 1994 N/A 191,008 Sq Feet 55 100.0 3/1/93
- ---------------------------------------------------------------------------------------------------------------------------
30 1991 N/A 77,897 Sq Feet 133 100.0 8/1/98
31 1998 N/A 141,284 Sq Feet 73 100.0 9/22/97
32 1987 N/A 142,950 Sq Feet 71 94.1 7/20/98
33 1988 N/A 254 Units 38,560 87.0 9/21/98
34 1986 N/A 208 Units 46,871 97.6 7/23/98
- ---------------------------------------------------------------------------------------------------------------------------
35 1967-1969 1995-1996 484 Units 19,186 91.7 4/26/98
36 1980 N/A 350 Units 26,401 95.7 8/21/98
37 1998 N/A 141,284 Sq Feet 61 100.0 9/10/97
38 1971 N/A 112,374 Sq Feet 76 98.1 4/30/98
39 1987 N/A 229,468 Sq Feet 37 91.1 6/1/98
- ---------------------------------------------------------------------------------------------------------------------------
40 1991 N/A 60,080 Sq Feet 137 100.0 5/5/98
41 1973 N/A 161,014 Sq Feet 51 97.8 9/24/98
42 1979 N/A 244 Units 32,943 95.1 8/13/98
43 Various N/A 73,520 Sq Feet 109 100.0 N/A
- ---------------------------------------------------------------------------------------------------------------------------
43a 1992 N/A 15,080 Sq Feet 100.0 7/1/98
43b 1998 N/A 13,200 Sq Feet 100.0 7/1/98
43c 1995 N/A 15,080 Sq Feet 100.0 7/1/98
43d 1994 N/A 15,080 Sq Feet 100.0 7/1/98
43e 1995 N/A 15,080 Sq Feet 100.0 7/1/98
- ---------------------------------------------------------------------------------------------------------------------------
44 1987 N/A 300 Units 25,795 94.0 6/30/98
45 1983 N/A 151 Units 50,628 94.7 7/21/98
46 1979 N/A 272 Units 27,716 94.5 7/31/98
47 Early 1900s Various 152 Units 49,223 100.0 7/7/98
- ---------------------------------------------------------------------------------------------------------------------------
48 1986 N/A 128,383 Sq Feet 57 98.0 6/22/98
49 1950 1996 520 Units 14,125 96.0 9/2/98
50 1962 N/A 156,613 Sq Feet 46 98.6 8/26/98
51 1968-1971 N/A 382 Units 18,312 94.8 6/18/98
52 1986, 1989 N/A 69,803 Sq Feet 99 98.4 6/22/98
- ---------------------------------------------------------------------------------------------------------------------------
53 1988 N/A 150,755 Sq Feet 45 100.0 6/9/98
54 1984 N/A 66,801 Sq Feet 101 100.0 6/30/98
55 1987 N/A 35,793 Sq Feet 188 93.1 6/30/98
56 1997 N/A 48,217 Sq Feet 137 100.0 9/25/97
57 1956/1963 N/A 280,981 Sq Feet 23 93.5 8/12/98
- ---------------------------------------------------------------------------------------------------------------------------
58 1974 N/A 187 Rooms 34,681 65.8 6/30/98
59 1965, 88, 89 N/A 244,128 Sq Feet 26 88.9 6/1/98
60 1996/1997 N/A 104 Units 58,657 84.6 6/9/98
61 1984 N/A 38,463 Sq Feet 156 94.8 10/7/98
62 1985 N/A 55,956 Sq Feet 107 100.0 8/3/98
- ---------------------------------------------------------------------------------------------------------------------------
63 1912 N/A 412,576 Sq Feet 14 95.7 7/8/98
64 1985 N/A 84,653 Sq Feet 70 99.5 5/20/98
65 1966, 1987 1990 83 Rooms 69,515 57.0 6/30/98
66 1996 N/A 48,203 Sq Feet 118 100.0 8/20/98
67 1988 N/A 75,158 Sq Feet 76 100.0 6/8/98
- ---------------------------------------------------------------------------------------------------------------------------
68 1998 N/A 68,901 Sq Feet 83 100.0 8/1/98
69 1986 1996-1997 91,487 Sq Feet 62 100.0 7/1/98
70 1979 N/A 69,640 Sq Feet 80 99.2 9/15/98
71 1985 N/A 55,547 Sq Feet 101 100.0 3/13/85
72 1997 N/A 74,756 Sq Feet 75 96.4 4/15/98
- ---------------------------------------------------------------------------------------------------------------------------
73 1971 1998 164 Units 34,071 95.1 4/22/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
74 1989 N/A 109,379 Sq Feet 51 100.0 9/16/98
75 1992-1993 1998 148,088 Sq Feet 37 94.3 9/15/98
76 1997 N/A 32,343 Sq Feet 170 92.4 6/1/98
77 1964 1974/97 118,976 Sq Feet 46 100.0 3/1/98
- ---------------------------------------------------------------------------------------------------------------------------
78 1971 1994-1998 247 Units 21,817 98.8 5/12/98
79 1986 1997 56,352 Sq Feet 95 100.0 7/13/98
80 1993-1997 N/A 146 Units 36,684 98.6 7/31/98
81 1986 N/A 40,842 Sq Feet 127 98.4 8/1/98
82 1948 1997 222 Units 23,241 94.6 5/17/98
- ---------------------------------------------------------------------------------------------------------------------------
83 1997-98 N/A 43,030 Sq Feet 120 97.4 8/26/98
84 1966/83 1996 37,558 Sq Feet 137 100.0 9/8/98
85 1975 1997-1998 240 Units 20,788 95.4 4/19/98
86 1891 1981 36 Units 138,554 100.0 7/6/98
87 1993 N/A 61,450 Sq Feet 81 98.5 5/1/98
- ---------------------------------------------------------------------------------------------------------------------------
88 1968 N/A 104,000 Sq Feet 48 100.0 10/13/98
89 1997 N/A 93 Rooms 53,113 72.6 3/31/98
90 1989 N/A 40 Units 123,484 97.5 4/6/98
91 1969 1997 176 Units 27,256 96.6 6/25/98
92 1989 N/A 160 Units 29,955 89.4 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
93 1991 N/A 50,721 Sq Feet 91 79.2 8/27/98
94 1985 N/A 43,099 Sq Feet 107 100.0 6/29/98
95 1972/1973 1995-1997 248 Units 18,473 98.0 9/9/98
96 1988 N/A 55,073 Sq Feet 82 93.2 8/13/98
97 1997 N/A 56,856 Sq Feet 79 80.5 12/1/97
- ---------------------------------------------------------------------------------------------------------------------------
98 1984 1984 55,191 Sq Feet 80 95.9 5/22/98
99 1915 1987 73,879 Sq Feet 59 100.0 6/1/98
100 1986 N/A 118 Rooms 37,060 56.1 4/30/98
101 1985 N/A 216 Units 20,228 93.5 9/25/98
102 1991, 1994 N/A 166,157 Sq Feet 25 98.0 6/8/98
- ---------------------------------------------------------------------------------------------------------------------------
103 1986 N/A 158 Rooms 26,582 79.5 6/30/98
104 1980 N/A 200 Units 20,693 96.0 5/31/98
105 1975 N/A 46,982 Sq Feet 88 100.0 N/A
105a 1975 N/A 13,170 Sq Feet 100.0 8/20/98
- ---------------------------------------------------------------------------------------------------------------------------
105b 1975 N/A 12,812 Sq Feet 100.0 8/20/98
105c 1975 N/A 21,000 Sq Feet 100.0 8/20/98
106 1959/1966 1981-1986 78,351 Sq Feet 52 96.4 7/6/98
107 1958, 1966 N/A 141,557 Sq Feet 29 85.6 8/12/98
- ---------------------------------------------------------------------------------------------------------------------------
108 1987 N/A 91 Units 44,332 100.0 8/31/98
109 1990 N/A 80 Rooms 49,948 78.0 5/31/98
110 1990 N/A 53,479 Sq Feet 75 100.0 8/11/98
111 1993 N/A 94,841 Sq Feet 42 100.0 1/1/93
112 1973 N/A 638 Units 6,256 91.1 5/21/98
- ---------------------------------------------------------------------------------------------------------------------------
113 1972 1995 166 Rooms 23,894 63.7 5/31/98
114 1959 1995-1998 51,320 Sq Feet 76 98.7 9/15/98
115 1983, 1994 N/A 47,087 Sq Feet 83 100.0 6/24/98
116 1969 1998 158,522 Sq Feet 25 96.2 8/14/98
117 1965 N/A 76 Units 51,241 93.4 6/10/98
- ---------------------------------------------------------------------------------------------------------------------------
118 1926-1928 N/A 80,801 Sq Feet 47 97.2 7/31/98
119 1988 N/A 109 Rooms 34,788 65.4 5/31/98
120 1985, 1986 N/A 85,148 Sq Feet 44 100.0 7/21/98
121 1984 N/A 228 Units 16,358 96.1 5/26/98
122 1974 N/A 142,720 Sq Feet 26 100.0 9/29/98
- ---------------------------------------------------------------------------------------------------------------------------
123 1930 1978 104 Units 35,326 100.0 6/24/98
124 1986 1998 45,558 Sq Feet 80 97.3 8/1/98
125 1965 N/A 90,000 Sq Feet 41 100.0 10/13/98
126 1998 N/A 13,905 Sq Feet 262 100.0 8/22/98
127 1984 N/A 120 Units 30,104 98.3 8/31/98
- ---------------------------------------------------------------------------------------------------------------------------
128 1985 N/A 20,850 Sq Feet 173 100.0 7/29/98
129 1982 N/A 93,799 Sq Feet 37 100.0 9/10/98
130 1972 N/A 81,953 Sq Feet 43 100.0 1/21/98
131 1998 N/A 10,908 Sq Feet 312 100.0 9/4/98
132 1996 N/A 124 Rooms 27,419 71.9 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
133 1986 1991 18,540 Sq Feet 183 100.0 7/29/98
134 1966 N/A 126 Units 26,945 94.4 8/1/98
135 1995-1998 N/A 73,257 Sq Feet 46 92.6 5/31/98
136 1986 1993 72,210 Sq Feet 47 100.0 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
137 19881997 N/A 19,546 Sq Feet 171 100.0 N/A
137a 1988 N/A 10,713 Sq Feet 100.0 8/1/98
137b 1997 N/A 8,833 Sq Feet 100.0 6/10/98
138 1985 N/A 99 Units 33,283 97.0 6/25/98
- ---------------------------------------------------------------------------------------------------------------------------
139 1950s, 1985 1986-87 53,112 Sq Feet 62 86.7 8/1/98
140 1930s N/A 253 Spaces 12,792 94.1 4/30/98
141 1912 1993 80,912 Sq Feet 40 93.5 8/25/98
142 1965 1997 97,000 Sq Feet 33 100.0 10/13/98
143 1920 N/A 22,145 Sq Feet 144 100.0 4/24/98
- ---------------------------------------------------------------------------------------------------------------------------
144 1965 N/A 97,474 Sq Feet 33 100.0 9/1/98
145 1977-1980 N/A 134 Units 23,865 94.0 7/8/98
146 1984 N/A 96 Units 33,263 96.9 3/31/98
147 1979 N/A 70,375 Sq Feet 45 100.0 3/24/98
148 1970 1994, 1995 205 Units 15,355 93.2 8/25/98
- ---------------------------------------------------------------------------------------------------------------------------
149 1972, 1975 N/A 79,362 Sq Feet 39 98.9 10/5/98
150 1997 N/A 13,905 Sq Feet 223 100.0 4/29/97
151 1967 1996 106 Units 29,165 100.0 5/1/98
152 1989 N/A 38,305 Sq Feet 80 87.8 10/15/98
153 1976 N/A 110 Units 27,709 94.6 8/19/98
- ---------------------------------------------------------------------------------------------------------------------------
154 1976 N/A 108,229 Sq Feet 28 93.4 5/4/98
155 1986 N/A 64,704 Sq Feet 46 88.4 8/1/98
156 1972 N/A 96 Units 31,203 88.5 6/27/98
157 1967, 1970 1996, 97, 98 100 Units 29,947 99.0 N/A
- ---------------------------------------------------------------------------------------------------------------------------
157a 1970 1997 8 Units 100.0 9/1/98
157b 1970 1996 60 Units 100.0 9/1/98
157c 1967 1998 12 Units 100.0 9/1/98
157d 1970 1997 20 Units 95.0 9/1/98
- ---------------------------------------------------------------------------------------------------------------------------
158 1977 N/A 78,418 Sq Feet 38 96.2 8/15/98
159 1998 N/A 13,905 Sq Feet 214 100.0 11/11/97
160 1978 N/A 176 Units 16,599 91.5 7/22/98
161 1982 N/A 149 Rooms 19,566 52.2 4/30/98
162 1983 N/A 18,156 Sq Feet 157 100.0 8/1/98
- ---------------------------------------------------------------------------------------------------------------------------
163 1976, 1980 N/A 118,001 Sq Feet 24 98.5 7/1/98
164 1986 N/A 150 Units 18,820 89.3 5/26/98
165 1984 1997 60,102 Sq Feet 47 100.0 10/5/98
166 1997 N/A 18,070 Sq Feet 155 100.0 8/19/98
167 1989/1990 N/A 51,732 Sq Feet 54 93.4 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
168 1982, 1985 N/A 62,790 Sq Feet 44 97.5 7/9/98
169 1976 N/A 50,495 Sq Feet 55 93.1 8/10/98
170 1988, 1989 N/A 36,406 Sq Feet 74 100.0 8/11/98
171 1984 N/A 29,854 Sq Feet 90 100.0 6/23/98
172 1975 N/A 110,000 Sq Feet 24 95.8 8/27/98
- ---------------------------------------------------------------------------------------------------------------------------
173 1998 N/A 19,736 Sq Feet 134 100.0 7/14/97
174 1998 N/A 23,965 Sq Feet 110 100.0 7/15/97
175 1986 N/A 61,640 Sq Feet 43 92.2 7/1/98
176 1995 N/A 127 Rooms 20,425 90.4 5/31/98
177 1988 N/A 40,169 Sq Feet 65 93.8 8/21/98
- ---------------------------------------------------------------------------------------------------------------------------
178 1983 1997 28,600 Sq Feet 90 100.0 6/30/98
179 1998 N/A 10,908 Sq Feet 231 100.0 2/20/98
180 1960 N/A 116 Pads 21,680 98.3 6/30/98
181 1983 N/A 41,100 Sq Feet 61 94.7 9/1/98
182 1975 1996, 1997 51,572 Sq Feet 48 100.0 6/17/98
- ---------------------------------------------------------------------------------------------------------------------------
183 1997 N/A 60,200 Sq Feet 42 100.0 8/1/98
184 1996 N/A 88 Units 28,369 97.7 6/24/98
185 1976 N/A 58,861 Sq Feet 42 94.5 7/1/98
186 1998 N/A 16,854 Sq Feet 148 100.0 5/14/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
187 1994 N/A 77 Rooms 32,397 71.0 3/31/98
- ---------------------------------------------------------------------------------------------------------------------------
188 1986 N/A 35,107 Sq Feet 71 100.0 8/31/98
189 1987 N/A 77 Units 32,184 93.5 8/18/98
190 1998 N/A 10,125 Sq Feet 241 100.0 7/11/97
191 1988 N/A 53,775 Sq Feet 45 100.0 7/1/98
192 1998 N/A 11,180 Sq Feet 213 100.0 12/5/97
- ---------------------------------------------------------------------------------------------------------------------------
193 1997 N/A 66,500 Sq Feet 36 100.0 6/19/98
194 1991, 93, 96 N/A 30,997 Sq Feet 76 86.3 6/2/98
195 1998 N/A 25,046 Sq Feet 94 100.0 3/20/97
196 1983 N/A 31,066 Sq Feet 76 100.0 6/25/98
197 1950-1958, 81 1996-1997 78 Units 30,029 100.0 5/1/98
- ---------------------------------------------------------------------------------------------------------------------------
198 1970 N/A 76 Units 30,245 96.1 4/29/98
199 1986 N/A 43,747 Sq Feet 53 100.0 7/31/98
200 1984 N/A 48,485 Sq Feet 47 99.9 8/1/98
201 1997 N/A 26,736 Sq Feet 86 100.0 8/4/98
202 1972 N/A 172 Units 13,353 95.4 8/6/98
- ---------------------------------------------------------------------------------------------------------------------------
203 1973 1991 106 Units 21,171 98.1 5/8/98
204 1998 N/A 23,990 Sq Feet 93 100.0 11/1/98
205 1981 N/A 75,757 Sq Feet 29 100.0 9/2/98
206 1990 1997 50 Units 43,972 100.0 6/1/98
207 1960s N/A 82 Units 26,792 96.3 2/1/98
- ---------------------------------------------------------------------------------------------------------------------------
208 1896 1960s 26,629 Sq Feet 82 100.0 5/20/98
209 1972 N/A 101,210 Sq Feet 22 75.0 6/30/98
210 1984 N/A 31,820 Sq Feet 69 92.4 9/2/98
211 1980 N/A 34,790 Sq Feet 62 100.0 9/17/98
212 1995 N/A 24,025 Sq Feet 90 100.0 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
213 1987 N/A 45,273 Sq Feet 47 100.0 8/10/98
214 1978 N/A 26,784 Sq Feet 80 100.0 7/13/98
215 1972 N/A 104,000 Sq Feet 20 100.0 8/20/98
216 1904 1985 34,975 Sq Feet 59 95.7 9/9/98
217 1998 N/A 10,908 Sq Feet 188 100.0 9/2/97
- ---------------------------------------------------------------------------------------------------------------------------
218 1978 N/A 140 Units 14,436 92.9 6/29/98
219 1985 N/A 51,900 Sq Feet 39 94.2 4/17/98
220 1997-1998 N/A 17,500 Sq Feet 114 100.0 9/1/98
221 1989 N/A 429 Units 4,657 98.0 6/1/98
222 1982 N/A 35,784 Sq Feet 55 100.0 7/31/98
- ---------------------------------------------------------------------------------------------------------------------------
223 1985 N/A 390 Sq Feet 5,053 93.4 8/5/98
224 1945 1984 78 Units 24,915 97.4 4/8/98
225 1998 N/A 11,180 Sq Feet 170 100.0 9/1/97
226 1997 N/A 23,925 Sq Feet 79 100.0 9/10/98
227 1987 N/A 28,307 Sq Feet 65 100.0 8/19/98
- ---------------------------------------------------------------------------------------------------------------------------
228 1949 1992 66,000 Sq Feet 28 100.0 7/17/98
229 1964 N/A 80,702 Sq Feet 23 88.2 8/1/98
230 1986 1996 19,254 Sq Feet 93 93.5 8/21/98
231 1998 N/A 10,125 Sq Feet 175 100.0 10/17/97
232 1989 N/A 28,486 Sq Feet 62 100.0 8/13/98
- ---------------------------------------------------------------------------------------------------------------------------
233 1969 1994 144 Units 12,153 90.3 9/19/98
234 1988 N/A 10,125 Sq Feet 173 100.0 2/16/98
235 1975 1998 53 Units 32,407 100.0 6/30/98
236 1978 N/A 32,124 Sq Feet 53 96.3 7/1/98
237 1972 N/A 102,076 Sq Feet 17 100.0 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
238 1991 N/A 15,646 Sq Feet 107 100.0 6/16/98
239 1979 1991 21,000 Sq Feet 80 100.0 6/25/98
240 1898-1936 N/A 51,887 Sq Feet 32 100.0 10/2/98
241 1948 1994 174 Units 9,404 85.1 5/1/98
242 1993 N/A 22,750 Sq Feet 71 100.0 4/7/98
- ---------------------------------------------------------------------------------------------------------------------------
243 1997 N/A 10,125 Sq Feet 158 100.0 7/29/97
244 1976 N/A 45 Units 35,465 95.6 4/23/98
245 1960s 1974, 94, 98 13,850 Sq Feet 115 100.0 6/8/98
246 1964 1988, 1990 23,089 Sq Feet 68 89.2 9/2/98
247 1982 N/A 35,358 Sq Feet 44 98.6 8/1/98
- ---------------------------------------------------------------------------------------------------------------------------
248 1994-95 N/A 64 Units 24,184 96.9 5/27/98
249 1997 N/A 10,125 Sq Feet 153 100.0 9/10/97
250 1983-1998 N/A 525 Units 2,946 91.6 5/29/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sq. Ft., Occupancy
Control Year Bed, Pad, Loan Per Perentage Rent Roll
No. Year Built Renovated or Room Unit Unit (%) Date
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
251 1975 1991 37,075 Sq Feet 40 100.0 9/1/98
252 1983 N/A 38,636 Sq Feet 39 100.0 6/25/98
- ---------------------------------------------------------------------------------------------------------------------------
253 1997 N/A 10,125 Sq Feet 148 100.0 10/29/97
254 1979 N/A 109,344 Sq Feet 14 92.6 8/4/98
255 1997 N/A 10,722 Sq Feet 139 100.0 1/13/97
256 1996 N/A 2,960 Sq Feet 494 100.0 7/27/98
257 1978 N/A 70,040 Sq Feet 21 95.4 8/1/98
- ---------------------------------------------------------------------------------------------------------------------------
258 1988-1990 N/A 36,222 Sq Feet 40 93.4 9/22/98
259 1996 N/A 23,005 Sq Feet 63 100.0 7/31/98
260 1996 N/A 18,000 Sq Feet 80 100.0 6/30/98
261 1893, 1909 N/A 5,810 Sq Feet 245 100.0 6/3/98
262 1978 N/A 87,355 Sq Feet 16 100.0 8/20/98
- ---------------------------------------------------------------------------------------------------------------------------
263 1990 N/A 39,000 Sq Feet 36 92.4 7/10/98
264 1986 N/A 120 Units 11,643 91.7 4/1/98
265 1989 1997 30,500 Sq Feet 46 100.0 10/4/95
266 1988 N/A 25,695 Sq Feet 54 100.0 6/30/98
267 1985 1997 34,352 Sq Feet 40 100.0 5/31/98
- ---------------------------------------------------------------------------------------------------------------------------
268 1998 N/A 5,247 Sq Feet 262 100.0 3/18/98
269 1996 N/A 25 Units 54,642 100.0 6/30/98
270 1987 N/A 12,250 Sq Feet 106 100.0 7/29/98
271 1976-1979 N/A 33,317 Sq Feet 39 96.6 7/1/98
272 1995 N/A 16,656 Sq Feet 78 100.0 8/6/98
- ---------------------------------------------------------------------------------------------------------------------------
273 1969, 91, 92 N/A 55 Pads 23,575 96.4 9/1/98
274 mid 1970s N/A 69 Pads 18,783 71.0 7/13/98
275 1996 N/A 11,180 Sq Feet 114 100.0 6/29/95
276 1968 N/A 48 Units 24,944 100.0 7/11/98
277 1975 1986, 1997 34,863 Sq Feet 34 93.1 5/1/98
- ---------------------------------------------------------------------------------------------------------------------------
278 1930 1995 33 Units 35,157 97.0 4/8/98
279 1985 N/A 30,271 Sq Feet 36 100.0 8/10/98
280 1985 N/A 43,820 Sq Feet 24 100.0 3/2/98
281 1998 N/A 7,098 Sq Feet 127 100.0 8/24/98
282 1960, 1972 1996 8,598 Sq Feet 87 100.0 7/1/98
- ---------------------------------------------------------------------------------------------------------------------------
283 1977 N/A 43,200 Sq Feet 17 100.0 6/22/98
284 1998 N/A 7,195 Sq Feet 99 100.0 8/1/98
285 1958 1996 10,000 Sq Feet 70 100.0 5/29/98
286 1920s 1996, 1997 7,871 Sq Feet $ 76 100.0% 7/1/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
1
1a Limited Express 24,680 1/31/11
1b
1c
- ---------------------------------------------------------------------------------------
1d
1e
2 JC Penny 105,028 7/31/11
- ---------------------------------------------------------------------------------------
3
3a Sony 88,916 4/30/04
3b Jewish Federation of L.A. 17,463 5/20/03
3c Barrister Executive Suites I 16,142 8/31/99
3d ARCO 82,358 4/30/06
- ---------------------------------------------------------------------------------------
3e Document Sciences 33,102 2/28/02
3f Marina Medical Billing Services 13,667 2/28/02
3g Everlasting Gardens 8,260 4/30/02
3h Executone Info Systems 112,000 10/31/05
3i Greystone Homes 5,783 12/31/99
- ---------------------------------------------------------------------------------------
3j GDE Systems, Inc. 39,260 10/31/98
3k Interplay Productions 50,379 6/14/06
3l A.J. Oster Company 50,282 12/31/98
4 Macy's 176,410 9/20/33
- ---------------------------------------------------------------------------------------
5 Hard Rock Cafe 19,200 11/30/23
6
6a Super Trak Auto 10,000 1/1/04
6b Dominick's Finer Foods 72,385 9/30/17
- ---------------------------------------------------------------------------------------
6c Nevada Bob's 7,562 3/1/02
6d TJ Maxx 33,260 11/1/99
6e K-Mart 87,680 1/1/03
6f Sears Hardware 21,600 9/1/06
6g Walmart 114,557 8/1/10
- ---------------------------------------------------------------------------------------
6h Steinmart 36,266 9/1/08
6i Walgreens 13,687 4/1/44
6j Super Gap 7,944 1/1/01
6k Blockbuster 6,600 11/1/99
6l Pier 1 Imports 8,976 2/1/05
- ---------------------------------------------------------------------------------------
7 J.C. Penney 176,279 4/30/00
8
9
10 Cobb Theatres 107,014 8/31/18
- ---------------------------------------------------------------------------------------
11
12
13
14
15 First Brands 77,741 7/31/05
- ---------------------------------------------------------------------------------------
16 Fresh Fields 33,055 12/31/17
17 CVS Center Inc. 6,478 1/31/07
17a Scarcella Florist 2,269 9/30/07
17b Spartis Power 2,762 2/28/07
- ---------------------------------------------------------------------------------------
17c CVS Center Inc. 6,478 1/31/07
17d Carlyle 2,565 7/20/03
17e Silver Tower Supermarket 4,358 7/31/06
18 Full Sail 116,763 5/31/17
- ---------------------------------------------------------------------------------------
19
21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
22 Supermarket Information Systems 158,400 5/31/01
23 Roses 52,500 9/30/05
- ---------------------------------------------------------------------------------------
23a Winn-Dixie 48,900 1/31/17
23b Roses 45,495 10/21/06
23c Roses 52,500 9/30/05
24
- ---------------------------------------------------------------------------------------
25 State of Michigan 110,695 10/31/00
26 Menlo #1 ( Emery Air Freight ) 156,560 3/5/02
27 Motorola 120,797 3/31/03
28 Nationsbank N.A. (South) 54,048 3/9/01
29 K-mart corporation 191,008 7/31/19
- ---------------------------------------------------------------------------------------
30 The Care Center 6,764 2/28/17
31 Garden Ridge 141,284 8/31/18
32 Safeway Stores 39,556 2/28/07
33
34
- ---------------------------------------------------------------------------------------
35
36
37 Garden Ridge 141,284 9/10/17
38 Winn Dixie 55,550 2/1/18
39 Hobby Lobby 49,337 6/8/99
- ---------------------------------------------------------------------------------------
40 Yaohan 5/30/18
41 Target 114,975 1/1/05
42
43 La-Z-Boy 73,520 8/30/13
- ---------------------------------------------------------------------------------------
43a La-Z-Boy 15,080 8/30/13
43b La-Z-Boy 13,200 8/30/13
43c La-Z-Boy 15,080 8/30/13
43d La-Z-Boy 15,080 8/30/13
43e La-Z-Boy 15,080 8/30/13
- ---------------------------------------------------------------------------------------
44
45
46
47 97 Restaurant Corp. 2,173 7/31/06
- ---------------------------------------------------------------------------------------
48 Kmart 79,965 6/30/12
49
50 LaSalle Talman Corportation 34,809 12/31/02
51
52 People's Drug 11,297 12/31/06
- ---------------------------------------------------------------------------------------
53 Walmart 81,922 8/5/08
54 Titleserv, Inc. 27,640 9/30/02
55 Kmart (Shadow)
56 RKO/Cineplex Odeon 48,217
57 Black & Decker 172,000 6/30/04
- ---------------------------------------------------------------------------------------
58
59 Concord Tribune 34,945 12/31/00
60
61 Kmart (Shadow)
62 Kash n' Karry Food Stores, Inc. 55,956 1/31/32
- ---------------------------------------------------------------------------------------
63 North American Bear Company, Inc. 69,130 1/31/01
64
65
66 Miami Beach Healthcare Group 11,250 3/31/02
67 Delchamps 46,733 7/31/08
- ---------------------------------------------------------------------------------------
68 Title First 22,821 3/31/08
69 Dept. of Social & Health Services 30,732 11/30/98
70 Grande Supermarket 20,350 12/13/99
71 Kash n' Karry Food Stores, Inc. 55,547 1/31/32
72 Winn-Dixie Texas, Inc. 58,406 11/25/17
- ---------------------------------------------------------------------------------------
73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
74 K-Mart 86,479 10/31/13
75 Basha's 53,574
76 Advanced Ent. 10,400 6/1/07
77 Extra Space 88,178 12/31/08
- ---------------------------------------------------------------------------------------
78
79 Payless\Rite Aid 20,122 5/31/17
80
81 Peak Restaurant Group 9,541 9/30/07
82
- ---------------------------------------------------------------------------------------
83 Iridium 19,804 12/31/03
84 Genovese Drug 10,000 6/30/13
85
86 Jefferson Market, Inc. 7,533 6/30/10
87 America's Best Furniture Store 19,205 6/14/06
- ---------------------------------------------------------------------------------------
88 Kmart Corporation 104,000 12/1/18
89
90
91
92
- ---------------------------------------------------------------------------------------
93 C.T. Cycles 6,000 2/28/03
94 LMC Properties, Inc. (Lockheed) 8,206 4/30/99
95
96 Salvation Army Store 10,514 7/31/03
97 Acworth Pharmacy 10,000 10/31/02
- ---------------------------------------------------------------------------------------
98 Health South of PGH, Inc. 9,324 3/31/99
99 Center for Human Reproduction 43,877 12/31/09
100
101
102 BJ's Wholesale Club 68,160 11/30/19
- ---------------------------------------------------------------------------------------
103
104
1105 Bell Atlantic 49,982 8/31/13
105a Bell Atlantic 13,170 8/31/13
- ---------------------------------------------------------------------------------------
105b Bell Atlantic 12,812 8/31/13
105c Bell Atlantic 21,000 8/31/13
106 Roth's IGA 25,380 11/4/03
107 Sav-A-Lot 13,680 8/31/02
- ---------------------------------------------------------------------------------------
108
109
110 Temtec 21,218 1/31/02
111 K-Mart Corporation 94,841 1/1/18
112
- ---------------------------------------------------------------------------------------
113
114 Rite-Aid Drug 12,750 10/31/02
115 Blockbuster Video 5,075 1/31/04
116 Hills Department Store 81,864 10/31/99
117
- ---------------------------------------------------------------------------------------
118 Bronxville Garage & Service Corp. 40,000 8/31/04
119
120 Oriel Instruments Corp. 31,700 1/31/08
121
122 Kmart 95,810 1/31/00
- ---------------------------------------------------------------------------------------
123
124 Oxford Publishing 4,930 7/31/01
125 Kmart 90,000 10/31/18
126 Walgreens Co. 13,905 6/30/18
127
- ---------------------------------------------------------------------------------------
128 Mandees 10,800 2/28/08
129 Minyard Food Stores, Inc. 43,853 6/30/04
130 Safeway Stores, Inc. 43,646 8/31/02
131 Eckerd 10,908 9/3/18
132
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
133 Ships Cafe 7,500 8/30/08
134
135 Advanced Floors 10,800 2/28/02
136 Bob's Discount Furniture 72,210 6/30/18
- ---------------------------------------------------------------------------------------
137
137a Blockbuster Video 6,000 6/1/03
137b Lucky's (Shadow) 62,070
138
- ---------------------------------------------------------------------------------------
139 Norrell Health Care 3,495 11/30/00
140
141 Wash Penn II Corp (Benvenuti) 6,351 7/31/01
142 Kmart 97,000 1/31/18
143 Professional Business Institute 11,250 3/31/00
- ---------------------------------------------------------------------------------------
144 Shop N Save 51,100 6/30/05
145
146
147 MacFrugal's 26,064 10/31/08
148
- ---------------------------------------------------------------------------------------
149 MacFrugals 26,550 5/31/12
150 Walgreens 13,905 11/30/57
151
152 Star Real Estate 14,391 12/31/03
153
- ---------------------------------------------------------------------------------------
154 A&P 29,400 10/31/01
155 Paul's Scottsdale Hardware 16,800 3/1/07
156
157
- ---------------------------------------------------------------------------------------
157a
157b
157c
157d
- ---------------------------------------------------------------------------------------
158 Safeway 56,674 7/12/04
159 Walgreens Co. 13,905 6/30/18
160
161
162 Fabric Bonanza 7,280 8/31/00
- ---------------------------------------------------------------------------------------
163 K-Mart 43,018 11/30/05
164
165 Winn Dixie 42,452 8/30/13
166 Carl's Junior 3,200 9/1/17
167 Niagra of America 7,270 6/30/99
- ---------------------------------------------------------------------------------------
168 Bally's 20,000 6/30/01
169 General Rehab 7,647 4/30/00
170 J&S Cafeteria 12,115 11/30/08
171 University of Phoenix 9,400 1/31/00
172 Reddy Raw 49,445 7/31/00
- ---------------------------------------------------------------------------------------
173 Landmark Theatre Corporation 19,736 6/1/23
174 Staples 23,965 4/30/13
175 Winn Dixie 35,000 2/28/06
176
177 Family Dollar Stores of MA 7,500 6/30/08
- ---------------------------------------------------------------------------------------
178 Bob's Discount Furniture 28,600 6/30/18
179 Eckerd 10,908 6/16/18
180
181 Craig Smith 12,960 8/30/03
182 Premier Lending Corporation 24,090 12/31/02
- ---------------------------------------------------------------------------------------
183 Aaron Rents, Inc. 30,127 6/30/05
184
185 IRS 14,420 7/12/99
186 American Drug Stores, Inc. 16,584 1/28/18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
187
- ---------------------------------------------------------------------------------------
188 U. S. Postal Service 13,618 12/31/01
189
190 Revco Discount Drug Centers, Inc. 10,125 9/30/18
191 Aaron Rents 19,600 7/31/06
192 Rite Aid of New York, Inc. 11,180 6/30/18
- ---------------------------------------------------------------------------------------
193 J.B. Power, LTD 20,000 11/30/02
194 Target (Shadow) 124,729
195 Golfsmith International, Inc. 25,046 5/31/10
196 Sequoia Insurance Co. 20,040 2/22/03
197
- ---------------------------------------------------------------------------------------
198
199 FF Development, L.P. 32,785 3/31/03
200 Meridian Health 6,490 5/31/01
201 DentLease, Inc. 3,850 8/26/03
202
- ---------------------------------------------------------------------------------------
203
204 Staples 23,990 9/25/32
205 Transcor of Miami 75,757 8/31/03
206
207
- ---------------------------------------------------------------------------------------
208 Long and Foster 4,995 9/30/00
209 Pathmark 48,904 2/28/08
210 Trovato's 4,294 9/30/01
211 Nick's Cigar Corp 14,760 1/6/02
212 Hollywood Entertainment Corp. 8,640 6/18/06
- ---------------------------------------------------------------------------------------
213 Food Lion 26,171 12/5/07
214 Pet Supermarket 6,335 2/27/99
215 Kmart 84,000 1/31/03
216 Fox Sports Midwest 6,712 12/31/00
217 Eckerd 10,908 7/3/18
- ---------------------------------------------------------------------------------------
218
219 Winn Dixie 26,000 4/9/06
220 Legg Mason 4,500 3/31/03
221
222 Innovative Office 11,588 5/31/02
- ---------------------------------------------------------------------------------------
223
224
225 Rite Aid of CT, Inc. 11,180 5/31/18
226 Staples 23,925 5/2/12
227 Radiation Centers Inc. 8,120 9/14/03
- ---------------------------------------------------------------------------------------
228 NYS Office of Temporary & Disability Assistance 66,000 10/31/07
229 Chuck E. Cheese 11,145 3/31/02
230 Mt. Vernon Sleep Center/ Team Sports 5,200 7/31/99
231 CVS 10,125 1/31/19
232 LCA Leasing Corp. 7,500 2/28/99
- ---------------------------------------------------------------------------------------
233
234 CVS 10,125 1/31/19
235
236 Giannini 4,200 1/31/01
237 King Kullen 43,802 8/31/08
- ---------------------------------------------------------------------------------------
238 Polygon Construction, Inc. 10,186 3/31/05
239 AUS, Inc. 21,000 6/30/05
240 Asia Tex 10,000 6/30/01
241
242 Carolina Sofa Factory of America 15,750 9/30/02
- ---------------------------------------------------------------------------------------
243 Revco Discount Drug Centers, Inc. 10,125 6/30/18
244
245 Politics, Inc. 8,850 12/31/07
246 United States Social Security 11,956 9/22/07
247 Texas AM Tiltle 3,382 5/31/01
- ---------------------------------------------------------------------------------------
248
249 Revco Discount Drug Centers, Inc. 10,125 1/31/19
250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
251 Club Concepts II 6,280 12/31/09
252 Starlight International 25,392 7/31/01
- ---------------------------------------------------------------------------------------
253 Revco Discount Drug Centers, Inc. 10,125 9/30/18
254 Stage 16,259 8/31/01
255 CVS 10,722 5/31/18
256 The Southland Corporation 2,960 6/30/13
257 Winn Dixie 34,590 8/19/03
- ---------------------------------------------------------------------------------------
258 Entergy 8,157 12/31/99
259 Murray's Discount Auto 11,712 7/10/06
260 Murray's Discount Auto 10,000 3/14/06
261 Sunflower Restaurant 2,302 6/30/06
262 Kmart 87,355 3/31/04
- ---------------------------------------------------------------------------------------
263 Shoe Forum 11,200 8/31/02
264
265 Dal-Tile Corporation 30,500 3/31/06
266 Bob's Discount furniture 25,695 6/30/18
267 American Sport Line 6,762 12/31/00
- ---------------------------------------------------------------------------------------
268 IHOP 5,247 7/31/23
269
270 Kinko's 6,125 5/31/07
271 Guildford Partners/ Capital 12,897 12/31/02
272 Remax 11,247 9/30/08
- ---------------------------------------------------------------------------------------
273
274
275 Rite Aid 11,180 10/31/16
276
277 Crawford 13,350 3/31/02
- ---------------------------------------------------------------------------------------
278
279 Uarco 15,607 11/30/00
280 Ames 43,820 1/23/11
281 Castle Dental Centers of Texas 2,508 5/25/03
282 Kenny Siao/Mango 2,430 7/31/07
- ---------------------------------------------------------------------------------------
283 Nathan Hostaller 6,900 3/31/01
284 Dobson Communications 2,527 4/12/03
285 Murray's Discount Auto 10,000 4/14/06
286 Prima Pizza 2,260 9/30/01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
1
1a MBNA Marketing Systems 11,283 12/31/03
1b
1c
- ---------------------------------------------------------------------------------------
1d
1e
2 Burlington Coat Factory 79,989 1/31/12
- ---------------------------------------------------------------------------------------
3
3a Karl Storz Endoscopy 56,324 3/31/99
3b You Bet 9,465 8/4/98
3c Encino State Bank 8,723 11/5/07
3d Kaiser Foundation Health Pla 42,051 10/30/03
- ---------------------------------------------------------------------------------------
3e DPR Construction 15,636 5/31/02
3f Cash & Associates 6,307 8/31/01
3g California Faucets 7,152 12/31/98
3h
3i Centex Homes 5,755 5/31/98
- ---------------------------------------------------------------------------------------
3j Xpress Data Imaging 15,120 8/31/02
3k Chicago Title Company 46,446 5/15/04
3l Home Centers 8,896 10/14/00
4 Gottschalk's 154,052 4/30/16
- ---------------------------------------------------------------------------------------
5 Dick's Last Resort 10,432 8/31/08
6
6a Blockbuster 7,500 12/1/03
6b Murray's Discount Auto 10,000 12/31/07
- ---------------------------------------------------------------------------------------
6c Luciano's 5,954 9/1/01
6d Douglas TV 23,764 12/1/02
6e Rainbow Foods 64,189 7/1/09
6f Spasso, LTC 4,667 12/1/00
6g Jondex (BDA Value-Mart) Dark Space 52,882 12/11/98
- ---------------------------------------------------------------------------------------
6h Irv's Menswear 15,679 10/1/99
6i Ruby's 13,250 7/1/99
6j Payless Shoe 2,840 10/1/01
6k Spincycle Coin 5,139 7/1/01
6l Salon 2000 7,525 10/1/06
- ---------------------------------------------------------------------------------------
7 Gayfers 171,062 1/31/01
8
9
10 Burlington 85,870 5/31/08
- ---------------------------------------------------------------------------------------
11
12
13
14
15 Cendant aka HFS Mobility Services, Inc. 15,546 1/31/99
- ---------------------------------------------------------------------------------------
16 City of Philadelphia (Library) 28,996 9/1/00
17 Silver Tower Supermarket 4,358 7/31/06
17a O.T.B. 1,978 3/31/03
17b Ephesus Inc. 1,184 5/31/06
- ---------------------------------------------------------------------------------------
17c 72nd Street Hardware 1,974 2/28/03
17d S-Nails 1,852 6/30/07
17e Pizza Hut 3,516 2/28/11
18 Humana 35,154 6/14/02
- ---------------------------------------------------------------------------------------
19
21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
22 Triad Packaging 70,562 12/31/00
23 Winn-Dixie 48,900 1/31/17
- ---------------------------------------------------------------------------------------
23a Schewell Furniture 17,634 4/1/08
23b Food Lion 32,455 1/21/07
23c Harris Teeter 22,638 8/31/99
24
- ---------------------------------------------------------------------------------------
25 State of Michigan 43,862 1/31/01
26 Fritz Co. #1 94,365 1/31/01
27
28 Sarasota University Club, Inc. 13,407 4/28/01
29
- ---------------------------------------------------------------------------------------
30 Center for Human Reproduction 5,515 11/30/17
31
32 Prudential Benton 14,212 12/31/04
33
34
- ---------------------------------------------------------------------------------------
35
36
37
38 Walgreens 20,000 2/1/18
39 Super Saver Cinema 26,468 11/30/10
- ---------------------------------------------------------------------------------------
40
41 Roderick Fraser 7,084 5/31/01
42
43
- ---------------------------------------------------------------------------------------
43a
43b
43c
43d
43e
- ---------------------------------------------------------------------------------------
44
45
46
47 Yemma Bar Corp. 840 5/31/03
- ---------------------------------------------------------------------------------------
48 Cato of Texas, LP 6,000 1/31/00
49
50 Chicago College of Commerce 15,868 7/31/05
51
52 Murphy's Law 5,800 4/30/99
- ---------------------------------------------------------------------------------------
53 Delchamps 46,733 9/30/08
54 H.J. Meyers & Co. 7,559 10/31/02
55 Jennifer Convertibles, Inc. 5,680 1/31/99
56
57 First American 69,377 6/30/03
- ---------------------------------------------------------------------------------------
58
59 Drug Emporium 30,688 5/31/00
60
61 Planet Play Amusement Center 8,000 10/31/04
62
- ---------------------------------------------------------------------------------------
63 Cosmographics 53,091 4/30/04
64
65
66 Uro-Care 7,200 3/20/02
67 Harco Drugs 10,125 6/30/03
- ---------------------------------------------------------------------------------------
68 Claremont Consulting 19,797 2/28/03
69 Impression Graphix 6,995 1/31/01
70 El Amal 8,875 11/30/09
71
72 Hollywood Entertainment Corp. 7,500 11/3/07
- ---------------------------------------------------------------------------------------
73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
74 Blockbuster Video 6,100 5/31/00
75 J C Penney 34,688 8/4/07
76 Val-Surf 4,750 5/1/07
77 Mechanical Plastics 22,800 6/30/99
- ---------------------------------------------------------------------------------------
78
79 Steve Sanderson 4,900 3/31/01
80
81 Giant Industries Az., Inc. 8,177 6/30/03
82
- ---------------------------------------------------------------------------------------
83 Resource Marketing 3,753 9/30/08
84 Chase Manhattan Bank 8,200 12/31/11
85
86 Village Vintners/Association 954 12/31/99
87 Spence Gymnastics 5,995 1/31/99
- ---------------------------------------------------------------------------------------
88
89
90
91
92
- ---------------------------------------------------------------------------------------
93 Chantilly Muffler 4,825 1/31/00
94 United Jersey Bank (Summit) 5,700 9/30/00
95
96 Carribean Market II 5,628 3/31/99
97 Hollywood Video 6,656 12/31/06
- ---------------------------------------------------------------------------------------
98 Parts America 8,520 5/18/01
99 Breslow, Morrison & Terzian 11,645 3/31/03
100
101
102 Sun Foods 56,717 8/31/11
- ---------------------------------------------------------------------------------------
103
104
105
105a
- ---------------------------------------------------------------------------------------
105b
105c
106 AM Family Video 8,149 6/30/02
107 Penn Employment Security 10,743 4/30/00
- ---------------------------------------------------------------------------------------
108
109
110 Ramapo Orthopedic 6,420 1/31/05
111
112
- ---------------------------------------------------------------------------------------
113
114 Ace Hardware 10,500 4/30/08
115 Rookies 3,780 6/30/01
116 Food Lion 29,000 12/31/17
117
- ---------------------------------------------------------------------------------------
118 Medicom International 4,343 5/1/01
119
120 Nature Plus Inc. 9,610 3/31/02
121
122 MacFrugals 25,050 8/31/09
- ---------------------------------------------------------------------------------------
123
124 Brittany Imports 3,954 7/31/00
125
126
127
- ---------------------------------------------------------------------------------------
128 Moovies 6,050 4/30/00
129 Goodwill Industries of Fort Worth 25,542 8/31/04
130 Hancock Fabrics 11,200 12/31/02
131
132
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
133 Pro Dive 4,000 6/30/08
134
135 Pioneer Electronics 9,000 10/31/02
136
- ---------------------------------------------------------------------------------------
137
137a Style 5 2,210 3/1/03
137b Sav-On-Drugs (Shadow) 17,278
138
- ---------------------------------------------------------------------------------------
139 A. Celli 3,226 10/31/99
140
141 Principal Health 6,331 4/30/01
142
143 Shanghai Xinshuo 2,704 3/31/05
- ---------------------------------------------------------------------------------------
144 Big Lots 25,099 1/31/02
145
146
147 NAL Men's Supercenter 13,988 9/30/98
148
- ---------------------------------------------------------------------------------------
149 Only Oak 15,480 10/31/00
150
151
152 Star Real Estate 5,250 12/31/99
153
- ---------------------------------------------------------------------------------------
154 Diamond Furniture 23,984 6/30/04
155 Sasparilla's 8,450 5/30/03
156
157
- ---------------------------------------------------------------------------------------
157a
157b
157c
157d
- ---------------------------------------------------------------------------------------
158 Neighborhood Computer Store 3,642
159
160
161
162 Rockaway Bedding 3,768 5/31/03
- ---------------------------------------------------------------------------------------
163 Publix 41,883 12/31/01
164
165 Revco/ CVS 8,450 1/31/00
166 Tasty Goody 2,700 2/4/10
167 Yellow Rose 4,701 9/30/00
- ---------------------------------------------------------------------------------------
168 Supreme Drycleaners 8,000 5/31/01
169 Edit Bay 3,928 10/15/01
170 Hahna Korean Restaurant 5,338 2/28/03
171 GMAC Mortgage 4,670 5/31/01
172 All-Media Leasing 38,115 9/30/00
- ---------------------------------------------------------------------------------------
173
174
175 Eckerd's 8,640 2/28/06
176
177 Bank Boston, N.A. 6,855 12/31/01
- ---------------------------------------------------------------------------------------
178
179
180
181 R.L. Polk Publishing 8,700 12/31/99
182 Aqua Sun Investment 8,528 5/31/99
- ---------------------------------------------------------------------------------------
183 Modern Tuxedo 15,780 5/31/05
184
185 Social Security Administration 10,024 3/31/04
186
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
187
- ---------------------------------------------------------------------------------------
188 7-11 The Southland Co. 2,585 11/30/06
189
190
191 Penisula Pro Golf 7,200 11/30/01
192
- ---------------------------------------------------------------------------------------
193 Carribean Ocean Corp. 15,000 12/31/01
194 Barnes & Noble 11,772 3/30/06
195
196 Harcourt Brace & Co. 11,046 12/31/01
197
- ---------------------------------------------------------------------------------------
198
199 Chapps Hamburgers 2,580 7/10/06
200 Enterprise 6,490 5/31/01
201 Avon Liquors 3,730 1/1/02
202
- ---------------------------------------------------------------------------------------
203
204
205
206
207
- ---------------------------------------------------------------------------------------
208 Chase Fitzgerald 4,010 6/30/02
209 Sears Paint & Hardware 27,000 10/31/12
210 Fit For Life (PFT), Inc. 3,000 5/31/00
211 Sunny Day Treatment 3,490 2/28/03
212 Pet Care Plus, Inc. 8,125 6/20/00
- ---------------------------------------------------------------------------------------
213 Cato 5,600 1/31/03
214 Vitamin Wholesalers 3,520 5/31/01
215 Post Office 20,000 10/31/03
216 Emmis Broadcasting Corporation 5,788 9/30/07
217
- ---------------------------------------------------------------------------------------
218
219 CVS 9,100 2/28/01
220 Chef's Market 3,000 10/31/02
221
222 Montgomery County Title 10,324 1/31/99
- ---------------------------------------------------------------------------------------
223
224
225
226
227 Atlas Specialty Underwriters 6,214 9/30/00
- ---------------------------------------------------------------------------------------
228
229 Family Dollar Store 10,704 12/31/01
230 McNew Culligen Water Treatment 2,899 1/31/02
231
232 Freibert 3,650 2/28/99
- ---------------------------------------------------------------------------------------
233
234
235
236 Gindoff 3,911 12/31/03
237 Sears Paint and Hardware 29,346 6/30/12
- ---------------------------------------------------------------------------------------
238 Communities SW 5,460 3/31/05
239
240 Fashion Corp. 7,750 9/30/01
241
242 Boaters World Discount Marine Centers 7,000 3/31/03
- ---------------------------------------------------------------------------------------
243
244
245 H & M Enterprises 5,000 12/31/17
246 AZ Dept. of Juvenile Corrections 5,759 10/31/99
247 W.D. Hamm, III 2,451 12/31/99
- ---------------------------------------------------------------------------------------
248
249
250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2nd Largest Tenant
--------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
251 All County Insulation Plus 5,200 2/28/99
252 R.K. Harray 3,202 11/30/02
- ---------------------------------------------------------------------------------------
253
254 Big O Tires 8,743 6/30/01
255
256
257 Eckerd's 10,800 8/19/03
- ---------------------------------------------------------------------------------------
258 Frankl & Thomas 6,054 12/31/03
259 Stanton Hobby Shop 6,200 1/31/99
260 ChildServ 8,000 7/14/02
261 CSK 2,108 2/28/04
262
- ---------------------------------------------------------------------------------------
263 Wolf Gangs' Gym 10,400 5/31/03
264
265
266
267 Spot Cooler 2,704 7/31/00
- ---------------------------------------------------------------------------------------
268
269
270 Nova Lighting 3,115 3/31/03
271 Checkcare Systems, Inc. 2,195 7/31/98
272 Piedmont Foot Clinic 3,202 4/30/01
- ---------------------------------------------------------------------------------------
273
274
275
276
277 PC People 5,805 8/31/00
- ---------------------------------------------------------------------------------------
278
279 Lincare Inc. 7,390 4/30/99
280
281 Wolf Camera, Inc. 2,000 7/31/03
282 Brad Copeland/ Heavenly Cheesecake 2,409 9/30/02
- ---------------------------------------------------------------------------------------
283 Shannon's Crating 4,500 9/30/98
284 Household Finance Corp. 1,445 7/31/08
285
286 Kenny Siao 2,030 4/30/00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
1
1a Northwestern University 11,274 5/31/10
1b
1c
- ---------------------------------------------------------------------------------------
1d
1e
2 Marshalls 50,895 1/31/12
- ---------------------------------------------------------------------------------------
3
3a Protection One 23,520 8/16/03
3b New Times, Inc. 8,841 10/6/01
3c Information Technology 8,665 12/31/01
3d ADP, Inc. 37,904 12/31/02
- ---------------------------------------------------------------------------------------
3e Mitsui Vendor Leasing 10,338 1/31/04
3f Konica 4,755 8/31/98
3g A Table for Five 5,902 1/31/00
3h
3i Huntway Partners 5,385 8/12/01
- ---------------------------------------------------------------------------------------
3j Sony Electronics 8,064 2/14/00
3k Pacific Thrift & Loan Co. 39,273 3/31/00
3l Specialty Motions, Inc. 7,544 12/31/99
4 JC Penney 153,769 11/30/02
- ---------------------------------------------------------------------------------------
5 The Limited 8,269 7/31/99
6
6a Red Wing Shoes 1,500 5/1/02
6b Hollywood Video 6,931 10/21/07
- ---------------------------------------------------------------------------------------
6c Morean Perris 3,840 3/1/99
6d American Oak Design 11,122 8/1/00
6e Petco 19,513 4/1/06
6f Mr. E's Bagels 2,445 9/1/00
6g Fabri Centers 15,000 1/1/03
- ---------------------------------------------------------------------------------------
6h Just ducky (specialty gifts, crafts etc.) 14,136 1/1/03
6i Famous Footwear 5,115 9/1/99
6j Pearle Vision 2,000 5/1/05
6k Giordano's Restaurant 1,500 12/1/99
6l Dimagio's 6,360 3/1/00
- ---------------------------------------------------------------------------------------
7 Lerner New York 15,089 1/31/08
8
9
10 Mars Music 39,987 7/13/13
- ---------------------------------------------------------------------------------------
11
12
13
14
15 Pinney, Payne, van Lenten 15,508 2/29/04
- ---------------------------------------------------------------------------------------
16 WGPS UPN -57 22,420 9/30/00
17 Pizza Hut 3,516 2/28/11
17a Crest Cleaners 1,807 12/31/02
17b Show Fair 500 12/14/02
- ---------------------------------------------------------------------------------------
17c Bistro LLC 1,641 4/30/06
17d Bambini By Marco 1,084 2/24/04
17e Bagel Store 1,200 10/31/07
18 Florida Power 10,830 3/31/99
- ---------------------------------------------------------------------------------------
19
21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
22 Triad Packaging 44,625 8/31/98
23 Roses 45,495 10/21/06
- ---------------------------------------------------------------------------------------
23a Greens Drug 8,400 12/31/03
23b Revco Drugs 8,470 1/31/02
23c Peoples 10,500 5/31/04
24
- ---------------------------------------------------------------------------------------
25 Jackson National Life Ins. Co. 38,404 10/31/00
26 Fritz Co. #2 78,078 10/31/02
27
28 PaineWebber, Inc. 13,306 5/31/04
29
- ---------------------------------------------------------------------------------------
30 Suburban Plastic Surgeons 5,269 2/28/17
31
32 Bartell Drug Company 13,327 9/30/02
33
34
- ---------------------------------------------------------------------------------------
35
36
37
38 FCA of Ohio (Jo-Ann) 15,000 1/31/07
39 Adams District 12 18,000 8/31/03
- ---------------------------------------------------------------------------------------
40
41 Sizzler Restaurant 5,805 10/31/06
42
43
- ---------------------------------------------------------------------------------------
43a
43b
43c
43d
43e
- ---------------------------------------------------------------------------------------
44
45
46
47 Flexible Fish Co. 800 1/30/06
- ---------------------------------------------------------------------------------------
48 Blockbuster Videos 5,242 2/28/01
49
50 Loop Lab School 11,607 11/30/05
51
52 Movie Gallery 5,200 10/31/98
- ---------------------------------------------------------------------------------------
53 Pic 'N Pay 2,800 8/31/03
54 American Home Mo. 6,188 8/31/00
55 Hunan Village Restaurant 3,160 6/30/98
56
57 Can Do National Tape 21,275 10/31/02
- ---------------------------------------------------------------------------------------
58
59 Ben Franklin 15,000 7/31/01
60
61 Blockbuster Video 6,429 4/30/99
62
- ---------------------------------------------------------------------------------------
63 Northwestern Memorial Hospital 25,880 1/14/02
64
65
66 Lifetime Healthcare 4,000 2/28/02
67 Gun & Pawn Shop 2,600 3/31/00
- ---------------------------------------------------------------------------------------
68 MRI 12,805 2/28/08
69 Morton & Assoc. 4,979 10/31/02
70 Western Auto 8,463 12/31/98
71
72 Chief Auto Parts 4,950 10/31/02
- ---------------------------------------------------------------------------------------
73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
74 Westcorp Financial 2,800 12/14/00
75 Staples, Inc. 24,000 8/31/13
76 Maria's Italian 2,800 6/1/07
77 Best Salon Equipment, Inc. 8,000 6/15/99
- ---------------------------------------------------------------------------------------
78
79 Melaque Restaurant 4,800 3/31/04
80
81 Johnson Bank 6,704 1/30/99
82
- ---------------------------------------------------------------------------------------
83 Kerrin & Assoc. 2,505 7/31/05
84 Ardsley Golden Wok II 3,900 4/30/08
85
86 O.J. Art Gallery 726 1/31/07
87 Lake Mead Hosp. Med Ctr. 5,600 9/14/03
- ---------------------------------------------------------------------------------------
88
89
90
91
92
- ---------------------------------------------------------------------------------------
93 Backyard Steakhouse 4,671 3/14/06
94 NJ College Governing BD 3,814 11/30/05
95
96 Michael Darden, MD 3,200 6/30/00
97 Mexico Tipico 3,600 7/31/02
- ---------------------------------------------------------------------------------------
98 Blockbuster Video 6,000 12/12/06
99 Torchia Assoc. 7,750 2/28/04
100
101
102 Office Max 25,200 1/31/13
- ---------------------------------------------------------------------------------------
103
104
105
105a
- ---------------------------------------------------------------------------------------
105b
105c
106 Sylvan Learning Center 3,894 2/28/02
107 CVS Pharmacy 10,500 5/21/03
- ---------------------------------------------------------------------------------------
108
109
110 Tele Vue 5,568 4/30/02
111
112
- ---------------------------------------------------------------------------------------
113
114 Sibley Shoes 5,250 6/30/99
115 Bruno's 3,115 3/30/99
116 Central Tractor 20,000 5/31/00
117
- ---------------------------------------------------------------------------------------
118 Houlihan Appr. 3,475 12/31/03
119
120 Wray Tech Instruments 8,000 12/31/98
121
122 Aaron Rents 6,000 3/31/99
- ---------------------------------------------------------------------------------------
123
124 N. Miami Nuclear Medicine 2,742 8/31/03
125
126
127
- ---------------------------------------------------------------------------------------
128 Home Savings of America 4,000 6/30/02
129 U.S. Postal Service 13,200 12/31/01
130 Plates, Etc. 2,534 11/30/98
131
132
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
133 Financial Grp. 2,000 5/31/99
134
135 Giftec Filter 7,250 1/31/01
136
- ---------------------------------------------------------------------------------------
137 3,500
137a Flamingo Cleaners 1,302 7/1/01
137b Del Taco 3,600 12/1/16
138
- ---------------------------------------------------------------------------------------
139 Stewart's Convenience 3,039 6/30/01
140
141 Alpha Tau Omega Fraternity 6,318 8/31/05
142
143 Kiu King Import & Co. 1,830 12/31/01
- ---------------------------------------------------------------------------------------
144 Goodwill Industries 18,000 3/31/03
145
146
147 La-Z-Boy 9,614 2/28/99
148
- ---------------------------------------------------------------------------------------
149 Lord's Vineyard 11,400 5/31/00
150
151
152 Health Objects 4,706 12/31/00
153
- ---------------------------------------------------------------------------------------
154 Eckerd 17,000 5/31/02
155 FTN Hills Medical Clinic 2,560 10/31/99
156
157
- ---------------------------------------------------------------------------------------
157a
157b
157c
157d
- ---------------------------------------------------------------------------------------
158 Mountain High Cleaners 3,584 10/31/01
159
160
161
162 Casual Male/Big & Tall 2,700 10/31/03
- ---------------------------------------------------------------------------------------
163 Eckerds Drugs 10,800 12/31/01
164
165 Family Dollar 1,800 12/31/03
166 Computer Solutions 2,408 4/30/03
167 Keith Clinic Rehab 4,323 8/31/02
- ---------------------------------------------------------------------------------------
168 Diet Workshop 3,000 2/28/03
169 Pacific Clinics 3,280 6/29/01
170 Once Upon a Child 4,365 10/31/99
171 Morwell Corp. 3,500 2/28/99
172 Schratter Foods 17,784 5/31/99
- ---------------------------------------------------------------------------------------
173
174
175 Chinese Kitchen 2,750 9/30/04
176
177 Blockbuster Videos, Inc. 5,895 12/31/02
- ---------------------------------------------------------------------------------------
178
179
180
181 El Cazador 5,240 3/31/01
182 Newspaper Services of America 4,617 9/30/01
- ---------------------------------------------------------------------------------------
183 Duron, Inc. 14,293 2/28/03
184
185 U.S. Dept. of Agriculture 9,991 9/30/00
186
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
187
- ---------------------------------------------------------------------------------------
188 Girlfriend 2,544 5/31/01
189
190
191 Printing Plus 2,575 1/31/03
192
- ---------------------------------------------------------------------------------------
193 Consolidated Industries, Inc. 14,000 11/30/99
194 Carrabba's Italian Grill 6,200 3/30/06
195
196
197
- ---------------------------------------------------------------------------------------
198
199 Texas Apartment Locators 1,830 3/31/00
200 Sterling Medical 5,586 6/30/99
201 A.J.'s Accents 2,521 2/1/99
202
- ---------------------------------------------------------------------------------------
203
204
205
206
207
- ---------------------------------------------------------------------------------------
208 Nationsbank 3,534 7/1/02
209
210 A Book Deal 2,610 12/31/98
211 International Cafeteria 2,810 6/30/01
212 Northwestern Memorial Management Corp. 6,060 5/31/04
- ---------------------------------------------------------------------------------------
213 Movie Max 3,500 11/30/00
214 Carpets Plus 3,000 11/30/02
215
216 Ralph Korts Construction Co. 5,100 12/31/00
217
- ---------------------------------------------------------------------------------------
218
219 Variety Wholesalers 6,000 2/4/01
220 Front & Centre 2,000 10/31/02
221
222 Ted Bates- Remax 8,820 5/31/99
- ---------------------------------------------------------------------------------------
223
224
225
226
227 Daniel Goldberg Esq. 2,417 5/31/00
- ---------------------------------------------------------------------------------------
228
229 Excel 8,760 8/31/03
230 Einstein Noah Bagel Corp. 2,800 9/30/01
231
232 Secure Louisville 3,500 8/31/00
- ---------------------------------------------------------------------------------------
233
234
235
236 HME Builders 3,013 1/31/99
237 Courtesy Drugs 17,296 9/30/04
- ---------------------------------------------------------------------------------------
238
239
240 McGraime Woodworking 6,000 4/30/01
241
242
- ---------------------------------------------------------------------------------------
243
244
245 Federal Mortgage
246 AZ Dept. of Economic Security 2,874 10/31/00
247 Cappadonna 2,225 4/30/99
- ---------------------------------------------------------------------------------------
248
249
250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3rd Largest Tenant
-------------------------------------------------------------------------
Tenant
Area
Control Leased Lease
No. Tenant Name (Sq. Ft.) Exp. Date
=======================================================================================
<S> <C> <C> <C>
251 Hardwood Flooring Showroom & Warehouse 3,800 2/28/00
252 Robert A. Hewitt, Jr./ Royal Alliance 3,183 4/30/00
- ---------------------------------------------------------------------------------------
253
254 JC Flicks, Inc. 8,469 11/30/99
255
256
257 Dollar General 6,500 8/31/00
- ---------------------------------------------------------------------------------------
258 Priority One 4,000 10/31/01
259 Mid America Title Company 1,033 5/31/99
260
261 Number One Sun Noodle Shop 1,400 1/17/99
262
- ---------------------------------------------------------------------------------------
263 Cary Clarke Dance Academy, Inc. 4,200 10/31/04
264
265
266
267 The Carpet Connection 2,704 6/30/00
- ---------------------------------------------------------------------------------------
268
269
270 Four Star Beauty Supply 1,990 4/14/07
271 Administrative Services 1,886 11/30/98
272 Skin Sense, Inc. 2,207 4/30/01
- ---------------------------------------------------------------------------------------
273
274
275
276
277 Mystery Shoppers 3,390 10/22/98
- ---------------------------------------------------------------------------------------
278
279 Sharps Compliance 7,274 7/31/02
280
281 Great Clips 1,184 6/30/03
282 Gift & Gormet 1,313 4/15/00
- ---------------------------------------------------------------------------------------
283 OK Posi Tension 3,900 6/30/99
284 Hastings & Hastings 1,133 4/30/03
285
286 J.M. Smith/Cup of Joe's Coffee 1,245 8/30/02
</TABLE>
<PAGE>
Lehman Brothers Commercial Mortgage Trust 98 - C4 Annex A-2
<TABLE>
<CAPTION>
Original Remaining
Interest-Only Interest-Only
Control Period Period Amortization Cut-off Date Monthly
No. Property Name (months) (months) Type Balance ($) P&I ($)
=============================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
1 TRT Holdings ARD $249,347,368 $1,649,167
2 Mills ARD 145,000,000 940,467
3 Arden II 57 53 ARD 111,200,000 621,034
4 Fresno 35 32 ARD 69,000,000 437,035
5 Bayside Balloon 62,936,317 374,483
6 Inland 120 119 ARD 54,600,000 293,399
7 Montgomery Mall ARD 47,643,694 Step*
8 Mansards Apartment Community Balloon 45,871,866 303,264
9 Best Western President Hotel Balloon 30,818,758 236,868
10 Hundred Oaks Shopping Center Balloon 27,481,479 178,364
11 Sterling Apartments Balloon 22,984,600 149,483
12 Warwick Hotel Balloon 18,480,470 129,929
13 Avion at Sunrise Mountain Apartments Balloon 18,073,694 120,298
14 Park at Memorial Apartments Balloon 17,732,659 115,191
15 Lee Farm Corporate Park Balloon 17,689,266 118,950
16 Rodin Place ARD 17,510,145 120,391
17 MacArthur Properties2 Balloon 17,225,889 116,508
18 University Place Balloon 15,150,000 107,491
19 Milburn NYC Balloon 15,000,000 108,421
21 Savannah Square Balloon 14,138,000 95,739
22 Winston Salem Industrial Balloon 13,963,957 95,030
23 Covington Portfolio Balloon 13,891,086 92,704
24 Glen Hollow Apartments Balloon 13,679,553 90,045
25 Holiday Office Park Balloon 12,342,671 83,580
26 Gateway Business Center Balloon 11,968,591 80,968
27 Motorola Balloon 11,492,142 74,207
28 Ellis Building Balloon 11,074,203 77,746
29 Super K-Mart Balloon 10,566,533 76,823
30 Hospital Professional Bldg II Balloon 10,384,441 68,286
31 Garden Ridge - Stockbridge Balloon 10,377,575 89,731
32 Jefferson Square Balloon 10,178,868 67,998
33 Wellington Farms Apartments Balloon 9,794,148 66,190
34 Arbor Ridge Apartments Balloon 9,749,066 64,280
35 L'Atriums on the Creek Balloon 9,286,153 61,188
36 Country Oaks Apartments Balloon 9,240,421 65,495
37 Garden Ridge Balloon 8,587,890 57,911
38 Riverwalk Plaza Balloon 8,531,461 56,557
39 Pinnacle Center Balloon 8,471,798 60,133
40 Yaohan Plaza Balloon 8,224,477 57,911
41 Fullerton University Shopping Center Balloon 8,193,399 49,745
42 Presidential Estates Apartments Balloon 8,038,072 53,071
43 5 La-Z-Boy Retail Locations Balloon 7,991,787 56,849
44 Promenade Apartments Balloon 7,738,378 50,834
45 Miramonte Apartments Balloon 7,644,893 49,770
46 Ashton Meadows Apartments Balloon 7,538,678 49,522
47 Sullivan Street Balloon 7,481,918 47,011
48 Market at Cedar Hill Shopping Center Balloon 7,366,676 55,097
49 Grant Village Apartments Balloon 7,345,035 47,623
50 11 East Adams Balloon 7,163,405 50,427
51 Southgate Towers Apartments Balloon 6,995,368 45,681
52 Chesterfield Meadows Shopping Center Balloon 6,890,520 46,930
53 Northgate Shopping Center Balloon 6,842,598 47,631
54 45 Executive Drive Balloon 6,721,157 46,059
55 Cipriano Square Balloon 6,715,501 43,675
56 Cineplex Multiplex Fully Amortizing 6,585,686 50,199
57 Black & Decker Balloon 6,553,178 46,365
58 Staten Island Hotel Balloon 6,485,303 46,148
59 Cloverleaf Shopping Center Balloon 6,283,510 42,508
60 Deer Park Apartments Balloon 6,100,295 43,960
61 Kmart Town Center Balloon 6,000,000 38,876
62 Kash and Karry - Tampa Balloon 5,997,685 Step*
63 River Place Balloon 5,979,956 42,368
64 Security Public Storage Balloon 5,886,611 41,813
65 Newcastle Motel Balloon 5,769,717 42,978
<CAPTION>
Original
Balloon/ Amortization
Control ARD Mortgage Term
No. Property Name Balance ($) ARD Maturity Rate (%) (months)
==========================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
1 TRT Holdings $195,225,103 9/1/08 9/1/23 6.250 300
2 Mills 125,623,449 12/1/08 12/1/28 6.750 360
3 Arden II 101,284,797 4/16/08 4/16/28 6.610 300
4 Fresno 62,890,459 8/10/08 8/10/31 6.520 360
5 Bayside 53,186,796 11/1/08 5.920 360
6 Inland 54,600,000 10/1/08 10/1/33 6.360 0
7 Montgomery Mall 43,790,880 8/1/05 8/1/28 6.790 360
8 Mansards Apartment Community 42,277,571 7/1/05 6.910 360
9 Best Western President Hotel 25,430,657 5/1/08 7.875 294
10 Hundred Oaks Shopping Center 23,825,825 10/1/08 6.750 360
11 Sterling Apartments 19,937,901 10/1/08 6.770 360
12 Warwick Hotel 14,768,276 10/1/08 6.930 300
13 Avion at Sunrise Mountain Apartments 15,781,492 9/1/08 6.990 360
14 Park at Memorial Apartments 15,385,526 9/1/08 6.750 360
15 Lee Farm Corporate Park 16,785,415 10/1/03 7.100 360
16 Rodin Place 15,465,930 1/1/08 1/1/28 7.250 352
17 MacArthur Properties2 15,103,797 9/1/08 7.150 360
18 University Place 13,434,112 11/1/08 7.650 360
19 Milburn NYC 12,091,418 11/1/08 7.250 300
21 Savannah Square 12,415,097 7/1/08 7.150 360
22 Winston Salem Industrial 12,277,831 7/1/08 7.200 360
23 Covington Portfolio 12,145,114 8/1/08 7.010 360
24 Glen Hollow Apartments 11,910,103 9/1/08 6.880 360
25 Holiday Office Park 10,820,361 10/1/08 7.170 360
26 Gateway Business Center 10,507,386 7/1/08 7.140 360
27 Motorola 10,529,258 10/1/05 6.700 360
28 Ellis Building 8,851,490 9/1/08 6.900 300
29 Super K-Mart 6,805,935 8/1/13 7.280 300
30 Hospital Professional Bldg II 9,550,159 9/1/05 6.870 360
31 Garden Ridge - Stockbridge 3,883,837 9/1/16 8.940 267
32 Jefferson Square 9,664,093 8/1/03 7.020 360
33 Wellington Farms Apartments 9,043,225 10/1/05 7.150 360
34 Arbor Ridge Apartments 8,497,022 8/1/08 6.890 360
35 L'Atriums on the Creek 8,543,028 9/1/05 6.890 360
36 Country Oaks Apartments 7,404,943 10/1/08 7.020 300
37 Garden Ridge 7,524,112 9/1/08 7.120 360
38 Riverwalk Plaza 7,441,645 9/1/08 6.950 360
39 Pinnacle Center 5,430,991 5/1/18 7.613 357
40 Yaohan Plaza 7,297,346 6/1/08 7.540 360
41 Fullerton University Shopping Center 7,681,880 10/1/03 6.110 360
42 Presidential Estates Apartments 7,003,899 9/1/08 6.910 360
43 5 La-Z-Boy Retail Locations 6,412,247 10/1/08 7.060 300
44 Promenade Apartments 6,733,848 9/1/08 6.860 360
45 Miramonte Apartments 6,633,322 10/1/08 6.780 360
46 Ashton Meadows Apartments 6,560,071 9/1/08 6.860 360
47 Sullivan Street 6,438,960 8/1/08 6.420 360
48 Market at Cedar Hill Shopping Center 6,627,203 8/1/07 8.100 349
49 Grant Village Apartments 6,366,259 10/1/08 6.740 360
50 11 East Adams 5,730,951 9/1/08 6.930 300
51 Southgate Towers Apartments 6,074,644 10/1/08 6.810 360
52 Chesterfield Meadows Shopping Center 4,291,614 9/1/18 7.220 360
53 Northgate Shopping Center 5,449,334 10/1/08 6.820 300
54 45 Executive Drive 5,910,393 10/1/08 7.290 360
55 Cipriano Square 5,825,334 10/1/08 6.770 360
56 Cineplex Multiplex NAP 9/1/23 7.830 300
57 Black & Decker 5,248,231 10/1/08 7.000 300
58 Staten Island Hotel 5,207,642 9/1/08 7.050 300
59 Cloverleaf Shopping Center 5,516,377 7/1/08 7.140 360
60 Deer Park Apartments 3,908,694 8/1/13 7.180 300
61 Kmart Town Center 5,196,248 11/1/08 6.740 360
62 Kash and Karry - Tampa 1,997,999 9/1/18 6.610 278
63 River Place 5,251,755 8/1/05 6.990 300
64 Security Public Storage 4,724,000 9/1/08 7.030 300
65 Newcastle Motel 4,702,647 10/1/08 7.580 300
<CAPTION>
Remaining Scheduled
term Maturity
to ARD Remaining Cut-off Cut-off or ARD
Control Seasoning or Maturity Lockout Date Date Date Loan
No. Property Name (months) (months) Months DSCR (x) LTV (%) LTV (%) Group
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
1 TRT Holdings 2 118 25 2.34 49.9 39.1 1
2 Mills 0 120 23 1.73 58.0 50.2 1
3 Arden II 4 114 25 2.35 47.3 43.1 1
4 Fresno 3 117 24 1.74 60.7 55.3 1
5 Bayside 1 120 24 1.80 61.7 52.2 1
6 Inland 1 119 24 2.74 51.5 51.5 1
7 Montgomery Mall 3 81 25 1.48 67.1 61.7 1
8 Mansards Apartment Community 4 80 44 1.35 78.5 72.3 2
9 Best Western President Hotel 0 114 24 1.47 66.3 54.7 1
10 Hundred Oaks Shopping Center 1 119 47 1.92 57.3 49.6 1
11 Sterling Apartments 1 119 47 1.57 55.8 48.4 1
12 Warwick Hotel 1 119 47 1.57 55.2 44.1 1
13 Avion at Sunrise Mountain Apartments 2 118 58 1.27 78.2 68.3 2
14 Park at Memorial Apartments 2 118 46 1.33 79.9 69.3 2
15 Lee Farm Corporate Park 1 59 25 1.34 70.8 67.1 1
16 Rodin Place 2 110 37 1.34 76.8 67.8 1
17 MacArthur Properties2 2 118 46 1.30 67.0 58.8 1
18 University Place 0 120 48 1.38 73.9 65.5 1
19 Milburn NYC 0 120 48 1.46 68.2 55.0 1
21 Savannah Square 4 116 44 1.37 74.8 65.7 1
22 Winston Salem Industrial 4 116 32 1.37 77.8 68.4 1
23 Covington Portfolio 3 117 45 1.32 79.2 69.2 1
24 Glen Hollow Apartments 2 118 46 1.40 79.5 69.2 2
25 Holiday Office Park 1 119 47 1.31 75.7 66.4 1
26 Gateway Business Center 4 116 44 1.34 73.7 64.7 1
27 Motorola 1 83 47 1.27 74.1 67.9 1
28 Ellis Building 2 118 46 1.30 75.3 60.2 1
29 Super K-Mart 3 177 45 1.26 72.9 46.9 1
30 Hospital Professional Bldg II 2 82 46 1.38 71.6 65.9 1
31 Garden Ridge - Stockbridge 0 214 48 NAP NAP NAP 1
32 Jefferson Square 3 57 25 1.46 74.8 71.1 1
33 Wellington Farms Apartments 1 83 47 1.20 79.0 72.9 2
34 Arbor Ridge Apartments 3 117 45 1.28 79.3 69.1 2
35 L'Atriums on the Creek 2 82 34 1.40 79.0 72.7 2
36 Country Oaks Apartments 1 119 47 1.26 79.7 63.8 2
37 Garden Ridge 2 118 46 1.34 77.4 67.8 1
38 Riverwalk Plaza 2 118 46 1.32 79.9 69.7 1
39 Pinnacle Center 3 234 120 1.52 73.7 47.2 1
40 Yaohan Plaza 5 115 43 1.35 74.8 66.3 1
41 Fullerton University Shopping Center 1 59 35 1.40 74.5 69.8 1
42 Presidential Estates Apartments 2 118 46 1.31 79.6 69.3 2
43 5 La-Z-Boy Retail Locations 1 119 47 1.25 75.8 60.8 1
44 Promenade Apartments 2 118 34 1.33 79.8 69.4 2
45 Miramonte Apartments 1 119 47 1.26 79.2 68.7 1
46 Ashton Meadows Apartments 2 118 34 1.26 78.9 68.7 2
47 Sullivan Street 3 117 45 2.08 52.0 44.7 1
48 Market at Cedar Hill Shopping Center 3 105 33 1.27 72.6 65.3 1
49 Grant Village Apartments 1 119 47 1.60 67.5 58.5 2
50 11 East Adams 2 118 46 1.45 65.7 52.6 1
51 Southgate Towers Apartments 1 119 47 1.65 70.7 61.4 2
52 Chesterfield Meadows Shopping Center 2 238 46 1.35 79.2 49.3 1
53 Northgate Shopping Center 1 119 47 1.34 76.9 61.2 1
54 45 Executive Drive 1 119 47 1.34 73.1 64.2 1
55 Cipriano Square 1 119 47 1.46 79.9 69.3 1
56 Cineplex Multiplex 2 298 142 1.41 62.1 NAP 1
57 Black & Decker 1 119 47 1.31 74.9 60.0 1
58 Staten Island Hotel 2 118 46 1.73 64.9 52.1 1
59 Cloverleaf Shopping Center 4 116 44 1.37 74.8 65.7 1
60 Deer Park Apartments 3 177 81 1.27 79.7 51.1 2
61 Kmart Town Center 0 120 48 1.45 76.9 66.6 1
62 Kash and Karry - Tampa 1 238 47 NAP NAP NAP 1
63 River Place 3 81 45 1.49 63.6 55.9 1
64 Security Public Storage 2 118 46 1.50 69.3 55.6 1
65 Newcastle Motel 1 119 47 1.45 74.9 61.1 1
</TABLE>
Annex A-2 - 1
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest-Only Interest-Only
Control Period Period Amortization Cut-off Date Monthly
No. Property Name (months) (months) Type Balance ($) P&I ($)
=============================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
66 Aventura Medical Plaza Balloon 5,711,693 38,986
67 Southgate Village Shopping Center Balloon 5,693,841 39,634
68 Brewery District Office Balloon 5,692,246 38,923
69 Kent Business Center Balloon 5,636,555 37,065
70 Villa Maria Balloon 5,600,000 37,257
71 Kash and Karry - Hudson Balloon 5,597,347 Step*
72 Forest Hill Shopping Center Balloon 5,591,979 37,445
73 Wyntree Apartments Balloon 5,587,721 36,508
74 Keebler Krossing Shopping Center Balloon 5,542,204 37,410
75 Havasu North Shopping Center Balloon 5,516,228 35,619
76 Valencia Entertainment Center Balloon 5,492,256 37,036
77 444 Saw Mill River Road Balloon 5,488,665 36,740
78 Twin Lakes Apartments Balloon 5,388,696 35,854
79 Little Prairie Shopping Center ARD 5,361,172 35,420
80 JJ Court Apartments Balloon 5,355,867 33,072
81 Citadel Balloon 5,191,745 33,279
82 Roanoke West Apartments Balloon 5,159,541 36,212
83 Foothills Center Balloon 5,147,214 35,869
84 Ardsley Plaza Balloon 5,128,991 35,025
85 Wyngrove Apartments Balloon 4,989,037 32,596
86 450 Village Company Balloon 4,987,945 31,341
87 Lone Mountain Plaza Shopping Center Balloon 4,986,441 33,299
88 Kmart Store No. 4219 - Ashwaubenon, WI Fully Amortizing 4,985,461 Step*
89 Holiday Inn Express - Minnetonka Balloon 4,939,533 36,291
90 335-355 Franklin Street Balloon 4,939,353 32,518
91 Fountain Park Apartments Balloon 4,797,026 32,031
92 Brittany Court Apartments Balloon 4,792,802 31,484
93 Sully Square Shopping Center Balloon 4,596,530 28,623
94 Capitol View Office Building Balloon 4,590,912 31,224
95 The Oaks Apartments Balloon 4,581,215 30,944
96 Hampshire Place Balloon 4,489,561 31,547
97 Shops at Butler Creek ARD 4,469,945 31,681
98 Mosside Village Balloon 4,391,003 29,480
99 River North Concourse Balloon 4,388,859 30,046
100 Quality Suites Balloon 4,373,095 31,234
101 Huntington Pointe Apartments ARD 4,369,259 29,244
102 St. Lawrence Plaza Balloon 4,214,860 30,787
103 Days Inn - San Diego Balloon 4,200,000 31,202
104 Beechwood South Apartments Balloon 4,138,655 27,554
105 Bell Atlantic of Virginia Balloon 4,132,482 34,832
106 Sunnyslope Shopping Centre Balloon 4,086,243 28,378
107 Uptown Shopping Center Balloon 4,084,927 31,689
108 Woodman Lassen Apartments Balloon 4,034,209 25,943
109 Comfort Inn - Blacksburg Balloon 3,995,822 28,220
110 Castle Rockland Balloon 3,994,450 27,097
111 K-Mart Plaza Balloon 3,992,223 27,314
112 Lock It Up - San Jose Balloon 3,991,121 28,655
113 Holiday Inn - Ashland Balloon 3,966,388 28,808
114 Grandland Shopping Center Balloon 3,900,000 25,947
115 North County Plaza Balloon 3,894,562 26,367
116 Christiansburg Hills Plaza Shopping Center Balloon 3,894,508 26,262
117 Forest Village Apartments Balloon 3,894,332 25,921
118 Bronxville West Balloon 3,792,432 25,717
119 Days Inn - Laurel Balloon 3,791,881 27,724
120 Stratford Executive Park Balloon 3,737,878 26,888
121 Chenault Creek Balloon 3,729,721 24,782
122 Greenbriar Market Place Balloon 3,697,405 23,655
123 Alston Arms Apartments Balloon 3,673,898 26,240
124 Citi Centre ARD 3,662,054 25,384
125 Kmart - La Crosse 60 60 Fully Amortizing 3,650,000 21,596
126 Walgreen - Camp Bowie Fully Amortizing 3,637,119 27,663
127 Sun Ridge Apartments Balloon 3,612,501 23,231
128 410-420 Tarrytown Road Balloon 3,597,722 23,854
129 New York Plaza Balloon 3,492,692 23,262
130 Lake Arbor Shopping Center Balloon 3,490,560 23,356
131 Eckerd Drug Store Balloon 3,407,706 Step*
132 Sleep Inn Fully Amortizing 3,400,000 30,849
<CAPTION>
Original
Balloon/ Amortization
Control ARD Mortgage Term
No. Property Name Balance ($) ARD Maturity Rate (%) (months)
==========================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
66 Aventura Medical Plaza 5,017,559 10/1/08 7.250 360
67 Southgate Village Shopping Center 4,534,482 10/1/08 6.820 300
68 Brewery District Office 5,005,073 9/1/08 7.260 360
69 Kent Business Center 5,338,671 9/1/03 6.870 360
70 Villa Maria 4,883,814 11/1/08 7.000 360
71 Kash and Karry - Hudson 1,584,999 9/1/18 6.610 271
72 Forest Hill Shopping Center 4,293,591 9/1/13 7.050 360
73 Wyntree Apartments 4,858,542 8/1/08 6.800 360
74 Keebler Krossing Shopping Center 4,856,946 9/1/08 7.130 360
75 Havasu North Shopping Center 4,775,968 10/1/08 6.700 360
76 Valencia Entertainment Center 4,811,931 9/1/08 7.120 360
77 444 Saw Mill River Road 5,065,877 8/1/05 7.040 360
78 Twin Lakes Apartments 4,707,716 8/1/08 6.980 360
79 Little Prairie Shopping Center 4,689,805 2/1/08 2/1/28 6.860 360
80 JJ Court Apartments 4,582,012 10/1/08 6.270 360
81 Citadel 4,753,938 9/1/05 6.620 360
82 Roanoke West Apartments 4,588,747 9/1/07 7.430 349
83 Foothills Center 4,545,837 10/1/08 7.460 360
84 Ardsley Plaza 4,512,537 4/1/08 7.200 353
85 Wyngrove Apartments 4,337,983 8/1/08 6.800 360
86 450 Village Company 4,292,640 8/1/08 6.420 360
87 Lone Mountain Plaza Shopping Center 4,363,097 7/1/08 7.010 360
88 Kmart Store No. 4219 - Ashwaubenon, WI NAP 11/1/18 7.100 240
89 Holiday Inn Express - Minnetonka 4,009,752 9/1/08 7.410 300
90 335-355 Franklin Street 4,681,914 8/1/03 6.875 360
91 Fountain Park Apartments 4,190,058 10/1/08 7.030 360
92 Brittany Court Apartments 4,170,641 9/1/08 6.860 360
93 Sully Square Shopping Center 3,941,308 10/1/08 6.350 360
94 Capitol View Office Building 4,033,534 8/1/08 7.200 360
95 The Oaks Apartments 4,024,784 5/1/08 7.110 360
96 Hampshire Place 3,589,569 9/1/08 6.910 300
97 Shops at Butler Creek 3,981,096 1/1/08 1/1/28 7.570 360
98 Mosside Village 3,845,065 8/1/08 7.070 360
99 River North Concourse 3,864,757 7/1/08 7.260 360
100 Quality Suites 3,519,029 8/1/08 7.080 300
101 Huntington Pointe Apartments 4,048,202 2/1/05 2/1/28 6.990 360
102 St. Lawrence Plaza 3,783,443 8/1/07 7.840 347
103 Days Inn - San Diego 3,417,410 11/1/08 7.560 300
104 Beechwood South Apartments 3,618,482 7/1/08 6.980 360
105 Bell Atlantic of Virginia 483,964 9/1/13 6.590 195
106 Sunnyslope Shopping Centre 3,458,973 7/1/08 7.130 330
107 Uptown Shopping Center 2,786,574 9/1/08 6.960 240
108 Woodman Lassen Apartments 3,489,027 10/1/08 6.660 360
109 Comfort Inn - Blacksburg 3,198,144 10/1/08 6.980 300
110 Castle Rockland 3,505,067 9/1/08 7.180 360
111 K-Mart Plaza 3,364,291 8/1/10 7.260 360
112 Lock It Up - San Jose 2,549,595 9/1/13 7.150 300
113 Holiday Inn - Ashland 3,499,258 9/1/05 7.280 300
114 Grandland Shopping Center 3,401,227 11/1/08 7.000 360
115 North County Plaza 3,415,661 9/1/08 7.160 360
116 Christiansburg Hills Plaza Shopping Cente 2,408,534 9/1/18 7.120 360
117 Forest Village Apartments 3,400,432 9/1/08 6.990 360
118 Bronxville West 3,329,451 8/1/08 7.170 360
119 Days Inn - Laurel 3,350,155 9/1/05 7.355 300
120 Stratford Executive Park 3,015,165 8/1/08 7.160 300
121 Chenault Creek 3,259,256 7/1/08 6.960 360
122 Greenbriar Market Place 2,203,665 10/1/18 6.610 360
123 Alston Arms Apartments 2,956,386 8/1/08 7.080 300
124 Citi Centre 3,237,690 3/1/08 3/1/28 7.350 353
125 Kmart - La Crosse NAP 11/1/18 7.100 180
126 Walgreen - Camp Bowie NAP 7/1/18 6.650 237
127 Sun Ridge Apartments 3,124,309 10/1/08 6.660 360
128 410-420 Tarrytown Road 3,136,710 10/1/08 6.960 360
129 New York Plaza 3,052,108 8/1/08 6.990 360
130 Lake Arbor Shopping Center 2,682,695 7/1/13 7.030 360
131 Eckerd Drug Store 654,451 9/1/18 6.730 267
132 Sleep Inn NAP 11/1/13 7.050 180
<CAPTION>
Remaining Scheduled
term Maturity
to ARD Remaining Cut-off Cut-off or ARD
Control Seasoning or Maturity Lockout Date Date Date Loan
No. Property Name (months) (months) Months DSCR (x) LTV (%) LTV (%) Group
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
66 Aventura Medical Plaza 1 119 35 1.30 69.7 61.2 1
67 Southgate Village Shopping Center 1 119 47 1.34 76.4 60.9 1
68 Brewery District Office 2 118 46 1.39 75.4 66.3 1
69 Kent Business Center 2 58 25 1.42 73.9 70.0 1
70 Villa Maria 0 120 48 1.30 72.7 63.4 1
71 Kash and Karry - Hudson 1 238 47 NAP NAP NAP 1
72 Forest Hill Shopping Center 2 178 82 1.33 79.9 61.3 1
73 Wyntree Apartments 3 117 45 1.32 79.8 69.4 2
74 Keebler Krossing Shopping Center 2 118 46 1.31 78.9 69.1 1
75 Havasu North Shopping Center 1 119 47 1.46 79.9 69.2 1
76 Valencia Entertainment Center 2 118 46 1.41 74.5 65.2 1
77 444 Saw Mill River Road 3 81 45 1.44 68.6 63.3 1
78 Twin Lakes Apartments 3 117 45 1.37 74.0 64.7 2
79 Little Prairie Shopping Center 9 111 39 1.32 76.0 66.5 1
80 JJ Court Apartments 1 119 47 1.43 79.2 67.8 2
81 Citadel 2 82 46 1.44 74.2 67.9 1
82 Roanoke West Apartments 3 106 22 1.33 79.4 70.6 2
83 Foothills Center 1 119 24 1.39 71.1 62.8 1
84 Ardsley Plaza 0 113 41 1.33 75.4 66.4 1
85 Wyngrove Apartments 3 117 45 1.48 77.1 67.0 2
86 450 Village Company 3 117 45 2.39 42.6 36.7 1
87 Lone Mountain Plaza Shopping Center 4 116 44 1.50 64.3 56.3 1
88 Kmart Store No. 4219 - Ashwaubenon, WI 0 240 48 NAP NAP NAP 1
89 Holiday Inn Express - Minnetonka 2 118 46 1.68 74.8 60.8 1
90 335-355 Franklin Street 3 57 25 1.37 70.6 66.9 1
91 Fountain Park Apartments 1 119 47 1.33 80.0 69.8 2
92 Brittany Court Apartments 2 118 34 1.37 79.2 68.9 2
93 Sully Square Shopping Center 1 119 47 1.48 61.3 52.6 1
94 Capitol View Office Building 3 117 45 1.25 76.5 67.2 1
95 The Oaks Apartments 6 114 42 1.31 73.3 64.4 2
96 Hampshire Place 2 118 46 1.33 74.8 59.8 1
97 Shops at Butler Creek 10 110 26 1.47 65.7 58.5 1
98 Mosside Village 3 117 45 1.44 73.2 64.1 1
99 River North Concourse 4 116 44 1.30 74.4 65.5 1
100 Quality Suites 3 117 81 1.43 74.8 60.2 1
101 Huntington Pointe Apartments 9 75 39 1.24 77.7 72.0 2
102 St. Lawrence Plaza 2 105 46 1.23 77.3 69.4 1
103 Days Inn - San Diego 0 120 36 1.44 64.6 52.6 1
104 Beechwood South Apartments 4 116 44 1.25 79.1 69.1 2
105 Bell Atlantic of Virginia 2 178 46 NAP NAP NAP 1
106 Sunnyslope Shopping Centre 4 116 32 1.32 74.3 62.9 1
107 Uptown Shopping Center 2 118 46 1.24 71.7 48.9 1
108 Woodman Lassen Apartments 1 119 47 1.32 79.1 68.4 2
109 Comfort Inn - Blacksburg 1 119 47 1.51 69.5 55.6 1
110 Castle Rockland 2 118 46 1.35 75.4 66.1 1
111 K-Mart Plaza 3 141 57 1.39 72.3 60.9 1
112 Lock It Up - San Jose 2 178 82 1.48 74.2 47.4 1
113 Holiday Inn - Ashland 2 82 34 1.49 74.8 66.0 1
114 Grandland Shopping Center 0 120 48 1.33 78.3 68.3 1
115 North County Plaza 2 118 46 1.49 67.7 59.4 1
116 Christiansburg Hills Plaza Shopping Cente 2 238 46 1.28 74.9 46.3 1
117 Forest Village Apartments 2 118 46 1.35 79.5 69.4 2
118 Bronxville West 3 117 45 1.37 70.2 61.7 1
119 Days Inn - Laurel 2 82 34 1.50 74.4 65.7 1
120 Stratford Executive Park 3 117 45 1.41 68.6 55.3 1
121 Chenault Creek 4 116 56 1.37 78.5 68.6 2
122 Greenbriar Market Place 1 239 47 1.59 74.7 44.5 1
123 Alston Arms Apartments 3 117 45 1.51 72.0 58.0 2
124 Citi Centre 1 112 39 1.26 79.6 70.4 1
125 Kmart - La Crosse 0 240 48 NAP NAP NAP 1
126 Walgreen - Camp Bowie 1 236 47 NAP NAP NAP 1
127 Sun Ridge Apartments 1 119 47 1.32 78.5 67.9 2
128 410-420 Tarrytown Road 1 119 47 1.47 76.5 66.7 1
129 New York Plaza 3 117 45 1.28 77.6 67.8 1
130 Lake Arbor Shopping Center 4 176 80 1.33 76.7 59.0 1
131 Eckerd Drug Store 1 238 47 NAP NAP NAP 1
132 Sleep Inn 0 180 60 2.15 40.0 NAP 1
</TABLE>
Annex A-2 - 2
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest-Only Interest-Only
Control Period Period Amortization Cut-off Date Monthly
No. Property Name (months) (months) Type Balance ($) P&I ($)
=============================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
133 Hall of Fame Marina Balloon 3,398,051 23,263
134 Contemporary Village Apartments Balloon 3,395,070 22,620
135 Commerce Exchange Business Park Balloon 3,391,027 22,872
136 428 Tolland Turnpike Fully Amortizing 3,380,752 26,749
137 Tropicana Center and Flamingo Jones Balloon 3,347,172 23,107
138 Cameron Ridge Apartments Balloon 3,295,063 21,668
139 Loudon Plaza Balloon 3,268,667 22,408
140 Smartpark Balloon 3,236,444 23,512
141 One North Penn Office Building Balloon 3,220,369 21,543
142 Kmart 60 60 Fully Amortizing 3,199,473 18,930
143 125 Canal Street Balloon 3,198,195 22,004
144 Alton Circle Balloon 3,198,029 21,397
145 Country Club Apartments Balloon 3,197,926 21,032
146 Trailing Vine Place Apartment Balloon 3,193,249 21,182
147 Bayway Shopping Center Balloon 3,184,932 21,895
148 Park Row East Apartments Balloon 3,147,766 20,055
149 Thunderbird Square Balloon 3,100,000 21,676
150 Walgreens Fully Amortizing 3,097,451 23,706
151 Sherwood Gardens Apts. Balloon 3,091,525 20,583
152 Star Plaza Balloon 3,077,564 20,567
153 Stratford Place Apartments Balloon 3,048,023 20,047
154 Morrell Plaza Shopping Center Balloon 3,045,524 20,189
155 Fountain Hills Plaza Shopping Center Balloon 2,998,101 19,879
156 La Quinta Apartments Balloon 2,995,501 19,678
157 Franklin Properties Balloon 2,994,746 23,079
158 Foot Hills Shopping Center Balloon 2,991,909 20,020
159 Walgreen - Portage Balloon 2,970,449 22,759
160 Riverchase Apartments Balloon 2,921,453 20,900
161 Quality Inn Balloon 2,915,397 20,823
162 350-360 Tarrytown Road Balloon 2,848,196 18,885
163 Kings Bay Plaza Balloon 2,830,000 20,470
164 Hidden Valley Apartments Balloon 2,822,945 17,819
165 Warlick Plaza Balloon 2,800,000 18,254
166 Upland Plaza Balloon 2,800,000 20,060
167 Sharon Lakes Plaza Balloon 2,794,585 19,158
168 Randolph Plaza Balloon 2,790,861 19,987
169 Orangewood Business Plaza Balloon 2,773,275 18,499
170 Guilford Village Balloon 2,700,000 17,351
171 North County Office Balloon 2,696,235 18,254
172 1 Ethel Blvd Fully Amortizing 2,683,453 24,740
173 The Embassy Cinema Balloon 2,646,597 18,511
174 Staples - Galesburg Balloon 2,640,770 21,004
175 Pinebrook Village Balloon 2,625,000 18,988
176 Studio Inn Balloon 2,593,980 18,244
177 Plaza 114 Balloon 2,593,845 17,537
178 201 Federal Road Fully Amortizing 2,585,281 20,455
179 Eckerd Fully Amortizing 2,520,704 Step*
180 Glen Ellen Mobile Home Park Balloon 2,514,914 16,969
181 Plaza West Strip Center Balloon 2,500,000 19,942
182 Atrium at Delk Center Balloon 2,500,000 16,802
183 3650 Industrial Avenue Balloon 2,498,475 16,767
184 Jacksonville Apartments Balloon 2,496,497 16,868
185 West Bay Office Park Balloon 2,495,230 17,190
186 Sav-On Drug Store Balloon 2,494,928 16,801
187 Holiday Inn Express - Fargo Balloon 2,494,604 18,151
188 Smokey Hill Plaza Shopping Center Balloon 2,494,441 17,893
189 Rue Granville Apartments Balloon 2,478,165 15,545
190 Revco - Savannah Balloon 2,440,922 Step*
191 Turnberry Crossing Shopping Center Balloon 2,395,067 16,048
192 Rite Aid - Walkill Fully Amortizing 2,379,613 Step*
193 Lucky Industrial Park Balloon 2,378,613 15,976
194 Target Center Balloon 2,368,784 16,025
195 Golfsmith Balloon 2,348,513 15,572
196 70 Garden Court Balloon 2,346,691 15,824
197 Bonita Harbor Apartments Balloon 2,342,225 16,669
198 Caputo Balloon 2,298,639 15,581
199 Heather Ridge Village Balloon 2,296,801 15,565
<CAPTION>
Original
Balloon/ Amortization
Control ARD Mortgage Term
No. Property Name Balance ($) ARD Maturity Rate (%) (months)
==========================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
133 Hall of Fame Marina 2,987,385 10/1/08 7.280 360
134 Contemporary Village Apartments 3,129,215 9/1/05 7.000 360
135 Commerce Exchange Business Park 2,974,750 7/1/08 7.110 360
136 428 Tolland Turnpike NAP 8/1/18 7.190 240
137 Tropicana Center and Flamingo Jones 3,003,354 10/1/05 7.030 324
138 Cameron Ridge Apartments 3,120,923 9/1/03 6.870 360
139 Loudon Plaza 2,877,651 8/1/08 7.280 360
140 Smartpark 2,621,640 7/1/08 7.260 300
141 One North Penn Office Building 2,815,618 9/1/08 7.040 360
142 Kmart NAP 11/1/18 7.100 180
143 125 Canal Street 2,815,269 10/1/08 7.330 360
144 Alton Circle 2,794,849 10/1/08 7.050 360
145 Country Club Apartments 2,782,227 10/1/08 6.880 360
146 Trailing Vine Place Apartment 3,029,383 8/1/03 6.950 360
147 Bayway Shopping Center 2,811,927 4/1/08 7.280 360
148 Park Row East Apartments 2,877,358 10/1/05 6.570 360
149 Thunderbird Square 2,738,638 11/1/08 7.500 360
150 Walgreens NAP 4/1/18 6.650 234
151 Sherwood Gardens Apts. 2,702,962 7/1/08 6.980 360
152 Star Plaza 2,690,059 9/1/08 7.030 360
153 Stratford Place Apartments 2,651,810 10/1/08 6.880 360
154 Morrell Plaza Shopping Center 2,656,486 9/1/08 6.950 360
155 Fountain Hills Plaza Shopping Center 2,613,925 10/1/08 6.960 360
156 La Quinta Apartments 2,606,650 9/1/08 6.860 360
157 Franklin Properties 2,034,821 10/1/08 6.900 240
158 Foot Hills Shopping Center 2,299,452 7/1/13 7.030 360
159 Walgreen - Portage 883,036 9/1/18 7.680 284
160 Riverchase Apartments 2,350,205 9/1/08 7.110 300
161 Quality Inn 2,346,018 8/1/08 7.080 300
162 350-360 Tarrytown Road 2,483,230 10/1/08 6.960 360
163 Kings Bay Plaza 2,521,782 11/1/08 7.850 360
164 Hidden Valley Apartments 2,429,372 10/1/08 6.480 360
165 Warlick Plaza 2,428,867 11/1/08 6.800 360
166 Upland Plaza 2,488,986 11/1/08 7.750 360
167 Sharon Lakes Plaza 2,589,472 8/1/05 7.280 360
168 Randolph Plaza 2,247,850 8/1/08 7.110 300
169 Orangewood Business Plaza 2,421,737 10/1/08 7.020 360
170 Guilford Village 2,333,201 11/1/08 6.660 360
171 North County Office 2,364,689 9/1/08 7.160 360
172 1 Ethel Blvd NAP 9/1/13 7.210 180
173 The Embassy Cinema 2,340,589 9/1/08 7.490 360
174 Staples - Galesburg 830,409 5/1/13 6.650 217
175 Pinebrook Village 2,339,109 11/1/08 7.850 360
176 Studio Inn 2,074,624 9/1/08 6.920 300
177 Plaza 114 2,275,409 7/1/08 7.130 357
178 201 Federal Road NAP 8/1/18 7.190 240
179 Eckerd NAP 6/1/18 6.710 237
180 Glen Ellen Mobile Home Park 2,205,068 8/1/08 7.120 360
181 Plaza West Strip Center 1,724,406 11/1/08 7.370 240
182 Atrium at Delk Center 1,965,033 11/1/08 6.450 300
183 3650 Industrial Avenue 2,185,201 10/1/08 7.080 360
184 Jacksonville Apartments 2,188,385 9/1/08 7.140 360
185 West Bay Office Park 2,199,504 8/1/08 7.330 360
186 Sav-On Drug Store 2,186,420 8/1/08 7.100 360
187 Holiday Inn Express - Fargo 2,018,389 9/1/08 7.300 300
188 Smokey Hill Plaza Shopping Center 2,008,523 9/1/08 7.140 300
189 Rue Granville Apartments 2,129,093 10/1/08 6.420 360
190 Revco - Savannah 613,071 10/1/18 6.950 275
191 Turnberry Crossing Shopping Center 2,096,203 8/1/08 7.050 360
192 Rite Aid - Walkill NAP 7/1/18 7.010 237
193 Lucky Industrial Park 2,081,820 9/1/08 7.080 360
194 Target Center 2,079,586 7/1/08 7.140 360
195 Golfsmith 2,047,575 10/1/08 6.960 360
196 70 Garden Court 2,056,006 9/1/08 7.120 360
197 Bonita Harbor Apartments 1,882,496 8/1/08 7.040 300
198 Caputo 2,015,653 10/1/08 7.180 360
199 Heather Ridge Village 2,014,889 9/1/08 7.170 360
<CAPTION>
Remaining Scheduled
term Maturity
to ARD Remaining Cut-off Cut-off or ARD
Control Seasoning or Maturity Lockout Date Date Date Loan
No. Property Name (months) (months) Months DSCR (x) LTV (%) LTV (%) Group
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
133 Hall of Fame Marina 1 119 47 1.45 61.8 54.3 1
134 Contemporary Village Apartments 2 82 46 1.52 75.4 69.5 2
135 Commerce Exchange Business Park 4 116 44 1.31 74.5 65.4 1
136 428 Tolland Turnpike 3 237 234 1.53 71.9 NAP 1
137 Tropicana Center and Flamingo Jones 1 83 47 1.32 73.6 66.0 1
138 Cameron Ridge Apartments 2 58 28 1.34 70.9 67.1 2
139 Loudon Plaza 3 117 45 1.34 73.0 64.3 1
140 Smartpark 4 116 44 1.49 51.4 41.6 1
141 One North Penn Office Building 2 118 46 1.36 71.6 62.6 1
142 Kmart 0 240 48 NAP NAP NAP 1
143 125 Canal Street 1 119 47 1.30 80.0 70.4 1
144 Alton Circle 1 119 59 1.33 78.0 68.2 1
145 Country Club Apartments 1 119 35 1.28 78.6 68.4 2
146 Trailing Vine Place Apartment 3 57 25 1.33 79.8 75.7 2
147 Bayway Shopping Center 7 113 41 1.40 74.1 65.4 1
148 Park Row East Apartments 1 83 35 1.41 70.0 63.9 2
149 Thunderbird Square 0 120 48 1.32 74.7 66.0 1
150 Walgreens 1 233 47 NAP NAP NAP 1
151 Sherwood Gardens Apts. 4 116 44 1.55 77.3 67.6 1
152 Star Plaza 2 118 46 1.36 76.9 67.3 1
153 Stratford Place Apartments 1 119 35 1.29 78.5 68.3 2
154 Morrell Plaza Shopping Center 2 118 46 1.29 66.2 57.7 1
155 Fountain Hills Plaza Shopping Center 1 119 35 1.36 75.0 65.3 1
156 La Quinta Apartments 2 118 34 1.37 77.8 67.7 2
157 Franklin Properties 1 119 47 1.32 78.8 53.5 2
158 Foot Hills Shopping Center 4 176 80 1.37 74.8 57.5 1
159 Walgreen - Portage 1 238 47 NAP NAP NAP 1
160 Riverchase Apartments 2 118 46 1.25 77.9 62.7 2
161 Quality Inn 3 117 81 1.42 74.8 60.2 1
162 350-360 Tarrytown Road 1 119 47 1.49 69.5 60.6 1
163 Kings Bay Plaza 0 120 25 1.26 74.5 66.4 1
164 Hidden Valley Apartments 1 119 47 1.38 77.3 66.6 2
165 Warlick Plaza 0 120 48 1.43 77.8 67.5 1
166 Upland Plaza 0 120 36 1.33 73.7 65.5 1
167 Sharon Lakes Plaza 3 81 33 1.35 79.8 74.0 1
168 Randolph Plaza 3 117 45 1.32 70.7 57.0 1
169 Orangewood Business Plaza 1 119 47 1.40 71.1 62.1 1
170 Guilford Village 0 120 36 1.49 71.8 62.1 1
171 North County Office 2 118 46 1.40 77.9 68.3 1
172 1 Ethel Blvd 2 178 46 1.45 48.8 NAP 1
173 The Embassy Cinema 2 118 46 1.40 69.6 61.6 1
174 Staples - Galesburg 1 174 47 NAP NAP NAP 1
175 Pinebrook Village 0 120 25 1.40 75.0 66.8 1
176 Studio Inn 2 118 46 1.51 59.8 47.8 1
177 Plaza 114 1 116 44 1.50 74.1 65.0 1
178 201 Federal Road 3 237 234 1.39 71.8 NAP 1
179 Eckerd 2 235 118 NAP NAP NAP 1
180 Glen Ellen Mobile Home Park 3 117 45 1.26 79.0 69.2 1
181 Plaza West Strip Center 0 120 60 1.29 74.6 51.5 1
182 Atrium at Delk Center 0 120 48 1.60 64.1 50.4 1
183 3650 Industrial Avenue 1 119 47 1.31 79.3 69.4 1
184 Jacksonville Apartments 2 118 58 1.34 75.7 66.3 2
185 West Bay Office Park 3 117 45 1.41 73.4 64.7 1
186 Sav-On Drug Store 3 117 45 1.26 77.0 67.5 1
187 Holiday Inn Express - Fargo 2 118 46 1.58 74.5 60.3 1
188 Smokey Hill Plaza Shopping Center 2 118 46 1.37 73.4 59.1 1
189 Rue Granville Apartments 1 119 47 1.38 79.9 68.7 2
190 Revco - Savannah 0 239 48 NAP NAP NAP 1
191 Turnberry Crossing Shopping Center 3 117 45 1.60 71.5 62.6 1
192 Rite Aid - Walkill 1 236 47 NAP NAP NAP 1
193 Lucky Industrial Park 2 118 46 1.29 79.3 69.4 1
194 Target Center 4 116 44 1.33 59.0 51.8 1
195 Golfsmith 1 119 47 1.40 73.4 64.0 1
196 70 Garden Court 2 118 34 1.40 72.2 63.3 1
197 Bonita Harbor Apartments 3 117 45 1.36 73.2 58.8 2
198 Caputo 1 119 47 1.34 79.3 69.5 2
199 Heather Ridge Village 2 118 58 1.47 70.7 62.0 1
</TABLE>
Annex A-2 - 3
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest-Only Interest-Only
Control Period Period Amortization Cut-off Date Monthly
No. Property Name (months) (months) Type Balance ($) P&I ($)
=============================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
200 Leviner Office Building Balloon 2,296,706 15,379
201 Shoppes of Avon Balloon 2,296,706 15,379
202 Buckner Village Apartments Balloon 2,296,681 15,333
203 San Marco Village Balloon 2,244,078 15,151
204 Staples Balloon 2,223,692 15,103
205 Transcor Balloon 2,200,000 15,492
206 Vista Park Apartments Balloon 2,198,582 14,489
207 Windsor Estates Balloon 2,196,917 14,844
208 Roland Park Shopping Center Balloon 2,194,383 14,978
209 Pathmark Shopping Center Balloon 2,186,160 19,444
210 Old Lake Place Shopping Center Balloon 2,181,456 13,913
211 West Flagler Shops Balloon 2,173,409 13,690
212 3128 North Ashland Avenue Balloon 2,170,714 14,778
213 Westgate Plaza Balloon 2,148,841 14,989
214 Hillsboro Shoppes Balloon 2,136,065 13,878
215 Kmart - Tacoma Balloon 2,098,838 14,526
216 Post Office Annex Building Balloon 2,048,757 13,777
217 Eckerd - Greensboro Fully Amortizing 2,045,996 Step*
218 Regal Pointe Apartments Balloon 2,021,018 13,773
219 Clarksville Crossing Balloon 1,998,922 13,943
220 Merchants Plaza Balloon 1,998,813 13,535
221 Statewide Self Storage Balloon 1,998,030 14,456
222 25227 Grogans Mill Office Building Balloon 1,970,624 14,161
223 Florida Space Center Balloon 1,970,624 14,161
224 Fairway Gardens Balloon 1,943,385 13,670
225 Rite Aid - West Haven Balloon 1,902,371 14,035
226 Staples Balloon 1,898,883 12,897
227 Commerce Point Balloon 1,847,793 12,307
228 93 Broadway Balloon 1,847,439 12,545
229 Arvada Square Shopping Center Balloon 1,823,873 12,191
230 Battlefield Center Balloon 1,798,749 11,543
231 CVS - Asheboro Fully Amortizing 1,776,000 Step*
232 NFC Office Plaza Balloon 1,771,992 12,620
233 Oakwood Terrace Apartments Balloon 1,750,000 10,866
234 CVS - Ballentine Fully Amortizing 1,750,000 12,507
235 Jackson's Landing Apartments Balloon 1,717,554 11,536
236 Centergate Balloon 1,696,686 11,597
237 King Kullen Shopping Center Balloon 1,689,305 15,025
238 Anaheim Springs Office Balloon 1,676,250 12,003
239 AUS Building Balloon 1,674,281 11,864
240 Queens West Industustrial Balloon 1,648,927 10,834
241 Forest Hill Park Apartment Complex Balloon 1,636,312 11,675
242 West Brandon Square Balloon 1,622,644 10,811
243 CVS - Stanley Fully Amortizing 1,597,097 13,117
244 Deer Park Balloon 1,595,926 10,904
245 Fairmont Building Balloon 1,595,057 11,710
246 Papago Place Balloon 1,572,782 10,606
247 Humble Office Building Balloon 1,547,780 10,364
248 Golden Oak Village Apartments Balloon 1,547,769 10,343
249 CVS - Denver Balloon 1,547,289 11,934
250 Free State Self Storage Balloon 1,546,635 11,223
251 Brookmeade Plaza Balloon 1,498,545 10,910
252 80 Garden Court Balloon 1,497,888 10,101
253 CVS - Sunset Beach Fully Amortizing 1,497,089 11,549
254 Centenial Mall Balloon 1,495,189 10,794
255 CVS - King's Mountian Fully Amortizing 1,491,080 11,594
256 Southland (7-11) Fully Amortizing 1,462,648 Step*
257 North Grove Plaza Balloon 1,450,000 10,488
258 Thomas Center Balloon 1,448,553 10,425
259 4708 North Milwaukee Balloon 1,447,143 9,852
260 9255 South Western Avenue Balloon 1,447,143 9,852
261 Greenwich/Laguardia Balloon 1,422,863 9,347
262 Kmart - Rock Springs Plaza Balloon 1,399,225 9,684
263 Rockwood Plaza Shopping Center Balloon 1,398,043 9,456
264 Sierra Carmichael Apartments Balloon 1,397,167 9,418
265 1501 Estes Avenue Balloon 1,397,122 9,361
266 581 Wolcott Street Fully Amortizing 1,392,074 11,014
<CAPTION>
Original
Balloon/ Amortization
Control ARD Mortgage Term
No. Property Name Balance ($) ARD Maturity Rate (%) (months)
==========================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
200 Leviner Office Building 2,008,567 9/1/08 7.050 360
201 Shoppes of Avon 2,008,567 9/1/08 7.050 360
202 Buckner Village Apartments 2,006,977 9/1/08 7.020 360
203 San Marco Village 1,969,103 7/1/08 7.120 360
204 Staples 1,950,939 10/1/08 7.200 360
205 Transcor 1,980,322 11/1/05 7.250 324
206 Vista Park Apartments 1,913,808 10/1/08 6.900 360
207 Windsor Estates 1,925,779 9/1/08 7.140 360
208 Roland Park Shopping Center 1,701,587 7/1/13 7.230 360
209 Pathmark Shopping Center 1,012,475 9/1/08 6.730 180
210 Old Lake Place Shopping Center 1,882,523 10/1/08 6.580 360
211 West Flagler Shops 1,869,353 10/1/08 6.460 360
212 3128 North Ashland Avenue 1,907,656 8/1/08 7.210 360
213 Westgate Plaza 1,361,777 10/1/18 7.470 360
214 Hillsboro Shoppes 1,852,420 10/1/08 6.760 360
215 Kmart - Tacoma 1,322,637 10/1/18 7.390 360
216 Post Office Annex Building 1,792,807 10/1/08 7.100 360
217 Eckerd - Greensboro NAP 7/1/18 7.050 237
218 Regal Pointe Apartments 1,870,866 8/1/05 7.220 360
219 Clarksville Crossing 1,266,769 10/1/18 7.470 360
220 Merchants Plaza 1,752,285 10/1/08 7.170 360
221 Statewide Self Storage 1,612,476 10/1/08 7.250 300
222 25227 Grogans Mill Office Building 1,815,879 9/1/03 7.160 300
223 Florida Space Center 1,587,710 9/1/08 7.160 300
224 Fairway Gardens 1,555,734 8/1/08 6.910 300
225 Rite Aid - West Haven 541,521 6/1/18 7.180 282
226 Staples 1,665,970 10/1/08 7.200 360
227 Commerce Point 1,449,107 10/1/08 6.340 300
228 93 Broadway 1,621,515 9/1/08 7.190 360
229 Arvada Square Shopping Center 1,593,516 10/1/08 7.040 360
230 Battlefield Center 1,554,815 10/1/08 6.640 360
231 CVS - Asheboro NAP 8/1/18 7.010 237
232 NFC Office Plaza 1,423,329 9/1/08 7.060 300
233 Oakwood Terrace Apartments 1,498,379 11/1/08 6.330 360
234 CVS - Ballentine NAP 11/1/18 5.970 240
235 Jackson's Landing Apartments 1,503,246 9/1/08 7.080 360
236 Centergate 1,492,586 8/1/08 7.250 360
237 King Kullen Shopping Center 782,366 9/1/08 6.730 180
238 Anaheim Springs Office 1,348,894 9/1/08 7.120 300
239 AUS Building 1,411,176 7/1/08 7.280 324
240 Queens West Industustrial 1,434,201 10/1/08 6.870 360
241 Forest Hill Park Apartment Complex 1,315,151 9/1/08 7.080 300
242 West Brandon Square 1,417,222 9/1/08 7.000 360
243 CVS - Stanley NAP 7/1/18 7.660 237
244 Deer Park 1,404,639 7/1/08 7.240 360
245 Fairmont Building 1,295,537 8/1/08 7.390 300
246 Papago Place 1,493,897 9/1/03 7.120 360
247 Humble Office Building 1,353,599 9/1/08 7.050 360
248 Golden Oak Village Apartments 1,187,326 9/1/13 7.030 360
249 CVS - Denver 48,956 10/1/18 6.910 240
250 Free State Self Storage 1,250,257 9/1/08 7.270 300
251 Brookmeade Plaza 1,211,943 10/1/08 7.320 300
252 80 Garden Court 1,312,344 9/1/08 7.120 360
253 CVS - Sunset Beach NAP 10/1/18 6.910 240
254 Centenial Mall 1,207,551 8/1/08 7.200 300
255 CVS - King's Mountian NAP 6/1/18 6.910 238
256 Southland (7-11) NAP 7/1/13 6.900 177
257 North Grove Plaza 1,292,079 11/1/08 7.850 360
258 Thomas Center 1,166,897 10/1/08 7.190 300
259 4708 North Milwaukee 1,271,770 8/1/08 7.210 360
260 9255 South Western Avenue 1,271,770 8/1/08 7.210 360
261 Greenwich/Laguardia 1,238,159 9/1/08 6.860 360
262 Kmart - Rock Springs Plaza 881,756 10/1/18 7.390 360
263 Rockwood Plaza Shopping Center 1,225,816 9/1/08 7.150 360
264 Sierra Carmichael Apartments 1,224,717 8/1/08 7.110 360
265 1501 Estes Avenue 1,222,785 8/1/08 7.050 360
266 581 Wolcott Street NAP 8/1/18 7.190 240
<CAPTION>
Remaining Scheduled
term Maturity
to ARD Remaining Cut-off Cut-off or ARD
Control Seasoning or Maturity Lockout Date Date Date Loan
No. Property Name (months) (months) Months DSCR (x) LTV (%) LTV (%) Group
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
200 Leviner Office Building 2 118 46 1.34 70.7 61.8 1
201 Shoppes of Avon 2 118 46 1.48 74.6 65.2 1
202 Buckner Village Apartments 2 118 46 1.50 76.6 66.9 2
203 San Marco Village 4 116 44 1.51 70.1 61.5 2
204 Staples 1 119 47 1.32 79.7 69.9 1
205 Transcor 0 84 48 1.28 80.0 72.0 1
206 Vista Park Apartments 1 119 47 1.31 79.9 69.6 2
207 Windsor Estates 2 118 46 1.50 77.1 67.6 2
208 Roland Park Shopping Center 4 176 44 1.32 74.6 57.9 1
209 Pathmark Shopping Center 2 118 46 1.86 25.1 11.6 1
210 Old Lake Place Shopping Center 1 119 47 1.63 71.5 61.7 1
211 West Flagler Shops 1 119 47 1.58 74.9 64.5 1
212 3128 North Ashland Avenue 3 117 45 1.53 72.4 63.6 1
213 Westgate Plaza 1 239 47 1.40 74.9 47.4 1
214 Hillsboro Shoppes 1 119 47 1.56 74.9 65.0 1
215 Kmart - Tacoma 1 239 47 1.41 75.0 47.2 1
216 Post Office Annex Building 1 119 59 1.31 73.2 64.0 1
217 Eckerd - Greensboro 1 236 47 NAP NAP NAP 1
218 Regal Pointe Apartments 3 81 33 1.31 74.9 69.3 2
219 Clarksville Crossing 1 239 47 1.39 74.9 47.4 1
220 Merchants Plaza 1 119 47 1.40 71.4 62.6 1
221 Statewide Self Storage 1 119 47 1.88 58.3 47.0 1
222 25227 Grogans Mill Office Building 2 58 34 1.39 73.0 67.3 1
223 Florida Space Center 2 118 46 1.34 66.8 53.8 1
224 Fairway Gardens 3 117 45 1.25 74.7 59.8 2
225 Rite Aid - West Haven 3 235 45 NAP NAP NAP 1
226 Staples 1 119 47 1.39 74.5 65.3 1
227 Commerce Point 1 119 47 1.45 73.3 57.5 1
228 93 Broadway 2 118 46 1.40 73.2 64.2 1
229 Arvada Square Shopping Center 1 119 47 1.37 67.6 59.0 1
230 Battlefield Center 1 119 47 1.53 72.8 62.9 1
231 CVS - Asheboro 0 237 120 NAP NAP NAP 1
232 NFC Office Plaza 2 118 46 1.35 76.4 61.4 1
233 Oakwood Terrace Apartments 0 120 48 1.37 74.5 63.8 2
234 CVS - Ballentine 0 240 120 NAP NAP NAP 1
235 Jackson's Landing Apartments 2 118 46 1.39 79.9 69.9 1
236 Centergate 3 117 45 1.56 73.3 64.5 1
237 King Kullen Shopping Center 2 118 46 3.59 18.0 8.3 1
238 Anaheim Springs Office 2 118 46 1.35 71.3 57.4 1
239 AUS Building 4 116 44 1.36 74.4 62.7 1
240 Queens West Industustrial 1 119 47 1.35 56.9 49.5 1
241 Forest Hill Park Apartment Complex 2 118 46 1.53 77.9 62.6 2
242 West Brandon Square 2 118 46 1.43 74.6 65.2 1
243 CVS - Stanley 1 236 119 NAP NAP NAP 1
244 Deer Park 4 116 44 1.34 76.0 66.9 2
245 Fairmont Building 3 117 45 1.30 74.5 60.5 1
246 Papago Place 2 58 24 1.41 74.9 71.1 1
247 Humble Office Building 2 118 46 1.36 72.0 63.0 1
248 Golden Oak Village Apartments 2 178 46 1.21 82.3 63.2 2
249 CVS - Denver 1 239 119 NAP NAP NAP 1
250 Free State Self Storage 2 118 46 1.32 73.6 59.5 1
251 Brookmeade Plaza 1 119 47 1.39 73.1 59.1 1
252 80 Garden Court 2 118 34 1.31 52.6 46.0 1
253 CVS - Sunset Beach 1 239 119 NAP NAP NAP 1
254 Centenial Mall 3 117 33 1.35 66.5 53.7 1
255 CVS - King's Mountian 3 235 117 NAP NAP NAP 1
256 Southland (7-11) 1 176 47 NAP NAP NAP 1
257 North Grove Plaza 0 120 25 1.29 68.2 60.8 1
258 Thomas Center 1 119 47 1.47 60.4 48.6 1
259 4708 North Milwaukee 3 117 45 1.48 72.4 63.6 1
260 9255 South Western Avenue 3 117 45 1.41 72.4 63.6 1
261 Greenwich/Laguardia 2 118 46 1.37 69.4 60.4 1
262 Kmart - Rock Springs Plaza 1 239 47 1.34 66.6 42.0 1
263 Rockwood Plaza Shopping Center 2 118 46 1.42 63.5 55.7 1
264 Sierra Carmichael Apartments 3 117 45 1.31 66.5 58.3 2
265 1501 Estes Avenue 3 117 45 1.30 69.9 61.1 1
266 581 Wolcott Street 3 237 234 1.33 69.6 NAP 1
</TABLE>
Annex A-2 - 4
<PAGE>
<TABLE>
<CAPTION>
Original Remaining
Interest-Only Interest-Only
Control Period Period Amortization Cut-off Date Monthly
No. Property Name (months) (months) Type Balance ($) P&I ($)
=============================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
267 Dixie Commerce Center Balloon 1,376,388 9,311
268 IHOP Fully Amortizing 1,375,000 Step*
269 Ridge at White Oak Apartments Balloon 1,366,055 9,175
270 388 Tarrytown Road Balloon 1,299,209 8,728
271 Governors Park Office Park Balloon 1,298,133 8,684
272 Remax Building Balloon 1,297,438 8,833
273 Ferndale Mobile Village Balloon 1,296,626 8,416
274 Lions Lair Travel Park Balloon 1,296,024 9,556
275 Rite Aid - Richmond Balloon 1,278,688 Step*
276 Hartstown Village Apartment Complex Balloon 1,197,302 8,543
277 6300 Richmond Balloon 1,196,106 8,589
278 Pindle East Apartments Balloon 1,160,178 8,286
279 Lake of 610 Balloon 1,097,536 7,845
280 Ames - Palmer Plaza Balloon 1,049,419 7,263
281 Grogan's Forest Shopping Center Balloon 898,388 6,843
282 Bearden Place Shopping Center Balloon 747,765 5,577
283 56th Street Warehouse Fully Amortizing 745,925 6,719
284 Frys In-Line Space Balloon 709,597 4,872
285 2120 South Oak Park Ave Balloon 698,621 4,756
286 Shops on Cumberland Balloon 598,212 4,461
$2,025,590,706
==============
<CAPTION>
Original
Balloon/ Amortization
Control ARD Mortgage Term
No. Property Name Balance ($) ARD Maturity Rate (%) (months)
==========================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
267 Dixie Commerce Center 1,208,350 7/1/08 7.140 360
268 IHOP NAP 8/1/18 7.100 237
269 Ridge at White Oak Apartments 1,195,603 9/1/08 7.080 360
270 388 Tarrytown Road 1,136,604 10/1/08 7.090 360
271 Governors Park Office Park 1,134,978 9/1/08 7.040 360
272 Remax Building 1,140,208 8/1/08 7.210 360
273 Ferndale Mobile Village 1,124,146 10/1/08 6.750 360
274 Lions Lair Travel Park 1,054,215 8/1/08 7.440 300
275 Rite Aid - Richmond 375,480 11/1/16 7.050 257
276 Hartstown Village Apartment Complex 962,305 9/1/08 7.080 300
277 6300 Richmond 964,256 8/1/08 7.140 300
278 Pindle East Apartments 933,595 8/1/08 7.080 300
279 Lake of 610 964,876 9/1/05 7.100 300
280 Ames - Palmer Plaza 661,316 10/1/18 7.390 360
281 Grogan's Forest Shopping Center 607,081 10/1/08 6.750 240
282 Bearden Place Shopping Center 610,576 8/1/08 7.570 300
283 56th Street Warehouse NAP 9/1/14 7.500 192
284 Frys In-Line Space 624,318 10/1/08 7.310 360
285 2120 South Oak Park Ave 613,958 8/1/08 7.210 360
286 Shops on Cumberland 488,462 8/1/08 7.570 300
<CAPTION>
Remaining Scheduled
term Maturity
to ARD Remaining Cut-off Cut-off or ARD
Control Seasoning or Maturity Lockout Date Date Date Loan
No. Property Name (months) (months) Months DSCR (x) LTV (%) LTV (%) Group
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
267 Dixie Commerce Center 4 116 44 1.41 74.6 65.5 1
268 IHOP 0 237 48 NAP NAP NAP 1
269 Ridge at White Oak Apartments 2 118 46 1.33 79.9 69.9 1
270 388 Tarrytown Road 1 119 47 1.41 72.2 63.1 1
271 Governors Park Office Park 2 118 46 1.33 74.2 64.9 1
272 Remax Building 3 117 45 1.59 73.3 64.4 1
273 Ferndale Mobile Village 1 119 47 1.29 76.3 66.1 1
274 Lions Lair Travel Park 3 117 45 1.48 70.4 57.3 1
275 Rite Aid - Richmond 2 216 118 NAP NAP NAP 1
276 Hartstown Village Apartment Complex 2 118 46 1.46 74.8 60.1 2
277 6300 Richmond 3 117 45 1.45 70.4 56.7 1
278 Pindle East Apartments 3 117 45 1.40 72.5 58.3 2
279 Lake of 610 2 82 46 1.37 73.2 64.3 1
280 Ames - Palmer Plaza 1 239 47 1.29 70.0 44.1 1
281 Grogan's Forest Shopping Center 1 119 47 1.40 71.9 48.6 1
282 Bearden Place Shopping Center 3 117 45 1.30 72.6 59.3 1
283 56th Street Warehouse 2 190 46 1.26 67.8 NAP 1
284 Frys In-Line Space 1 119 47 1.37 75.1 66.1 1
285 2120 South Oak Park Ave 3 117 45 1.48 69.9 61.4 1
286 Shops on Cumberland 3 117 45 1.50 74.3 60.7 1
</TABLE>
* Refer to the sheet "Step" in the file named LB98C4.XLS contained in the back
cover of the Prospectus Supplement for detailed information on Monthly
Payments for the Mortgage Loan
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Annex A-3
Lehman Brothers Commercial Mortgage Trust 98 - C4 Group 2
Bold Italics Indicates Loans with Multiple Properties
<TABLE>
<CAPTION>
Control Cut-off Date
No. Property Name County Balance ($) Utilities Paid by Tenant
====================================================================================================================================
<C> <S> <C> <C> <C>
8 Mansards Apartment Community Lake 45,871,866 Cable
13 Avion at Sunrise Mountain Apartments Clark 18,073,694 Electricity, gas, cable
14 Park at Memorial Apartments Oklahoma 17,732,659 Electricity, cable
24 Glen Hollow Apartments Bucks 13,679,553 Electricity, cable, heat
33 Wellington Farms Apartments Mecklenburg 9,794,148 Electricity, gas, cable
34 Arbor Ridge Apartments Santa Barbara 9,749,066 Electricity, gas, cable
35 L'Atriums on the Creek Tarrant 9,286,153 Electricity, cable
36 Country Oaks Apartments Knox 9,240,421 Cable, gas, electric
42 Presidential Estates Apartments Marion 8,038,072 Electricity, gas, cable, water/sewer
44 Promenade Apartments Maricopa 7,738,378 Electricity, gas, trash, water, sewer, cable
46 Ashton Meadows Apartments Pima 7,538,678 Electricity, trash, cable
49 Grant Village Apartments Onondaga 7,345,035 Electricity, gas, cable
51 Southgate Towers Apartments Cuyahoga 6,995,368 Electricity, cable
60 Deer Park Apartments Clarke 6,100,295 Electricity, gas, cable
73 Wyntree Apartments DeKalb 5,587,721 Electricity, gas, cable
78 Twin Lakes Apartments Orange 5,388,696 Electricity, gas, cable
80 JJ Court Apartments Deschutes 5,355,867 Electricity, cable
82 Roanoke West Apartments Jackson 5,159,541 Electricity, gas, cable
85 Wyngrove Apartments Fulton 4,989,037 Electricity, gas, cable
91 Fountain Park Apartments Fort Bend 4,797,026 Electricity, cable
92 Brittany Court Apartments Pima 4,792,802 Electricity, gas, cable
95 The Oaks Apartments Brazos 4,581,215 Electricity, gas, cable
101 Huntington Pointe Apartments Potter 4,369,259 Electricity, gas, cable
104 Beechwood South Apartments Clermont 4,138,655 Electricity, gas, cable
108 Woodman Lassen Apartments Los Angeles 4,034,209 Electricity, gas, cable
117 Forest Village Apartments Erie 3,894,332 N/A
121 Chenault Creek Dallas 3,729,721 Electricity, cable
123 Alston Arms Apartments Bergen 3,673,898 Electricity, cable, cooking gas
127 Sun Ridge Apartments Fresno 3,612,501 Electricity, gas, cable
134 Contemporary Village Apartments Delaware 3,395,070 Electricity, cooking gas, cable
138 Cameron Ridge Apartments El Dorado 3,295,063 Electricity, gas, cable.
145 Country Club Apartments Harris 3,197,926 Electricity, gas, cable
146 Trailing Vine Place Apartment Harris 3,193,249 Electricity, cable, water/sewer
148 Park Row East Apartments Tarrant 3,147,766 Electricity, cable
153 Stratford Place Apartments Victoria 3,048,023 Electricity, gas, cable
156 La Quinta Apartments Pima 2,995,501 Cable
157 Franklin Properties Various 2,994,746 Electricity, cable
157a Franklin Manor Kent 239,580 Electricity, cable
157b Franklin Woods Kent 1,796,847 Electricity, cable
157c Franklin Terrace Kent 359,369 Electricity, cable
157d Franklin Place Providence 598,949 Electricity, cable
160 Riverchase Apartments Richland 2,921,453 Gas, electric
164 Hidden Valley Apartments Jackson 2,822,945 Electricity, gas, cable
184 Jacksonville Apartments Douglas 2,496,497 Electricity, gas, trash, water, sewer, cable
189 Rue Granville Apartments Dade 2,478,165 Electricity, gas, cable
197 Bonita Harbor Apartments Dade 2,342,225 Electricity, gas, cable
198 Caputo Dade 2,298,639 Electricity, cable
202 Buckner Village Apartments Dallas 2,296,681 Electricity, cable
203 San Marco Village Duval 2,244,078 Electricity, gas, water, sewer, cable
206 Vista Park Apartments Sonoma 2,198,582 Electricity, gas, trash, water, sewer, cable
207 Windsor Estates Philadelphia 2,196,917 Electricity, gas, cable
<CAPTION>
Control # of Avg Rent # of Avg Rent # of Avg Rent # of
No. Property Name Studios Studios ($) 1 Bed 1 Bed ($) 2 Bed 2 Bed ($) 3 Bed
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
8 Mansards Apartment Community 455 580 777 689 104
13 Avion at Sunrise Mountain Apartments 112 625 208 749 32
14 Park at Memorial Apartments 186 657 114 868 16
24 Glen Hollow Apartments 69 405 358 480 188 650
33 Wellington Farms Apartments 164 554 90 659
34 Arbor Ridge Apartments 88 580 88 668 32
35 L'Atriums on the Creek 160 388 226 513 98
36 Country Oaks Apartments 140 445 130 558 70
42 Presidential Estates Apartments 64 511 180 570
44 Promenade Apartments 192 424 108 555
46 Ashton Meadows Apartments 144 428 128 557
49 Grant Village Apartments 392 396 128 550
51 Southgate Towers Apartments 51 371 174 455 157 558
60 Deer Park Apartments 16 581 54
73 Wyntree Apartments 32 560 108 675 24
78 Twin Lakes Apartments 5 316 108 401 86 594 48
80 JJ Court Apartments 52 433 80 567 14
82 Roanoke West Apartments 78 365 82 450 62 525
85 Wyngrove Apartments 40 455 180 530 20
91 Fountain Park Apartments 110 489 48 625 16
92 Brittany Court Apartments 64 443 96 563
95 The Oaks Apartments 120 436 104 564 24
101 Huntington Pointe Apartments 120 405 96 535
104 Beechwood South Apartments 42 590 158 945
108 Woodman Lassen Apartments 2 550 26 637 63 753
117 Forest Village Apartments 41 688 7
121 Chenault Creek 156 367 72 510
123 Alston Arms Apartments 9 774 85 869
127 Sun Ridge Apartments 80 540 40
134 Contemporary Village Apartments 57 554 63 650 5
138 Cameron Ridge Apartments 3 540 60 590 36 690
145 Country Club Apartments 60 381 74 503
146 Trailing Vine Place Apartment 72 657 24
148 Park Row East Apartments 46 384 159 479
153 Stratford Place Apartments 20 415 74 541 16
156 La Quinta Apartments 36 556 60 674
157 Franklin Properties 2 400 32 531 66 584
157a Franklin Manor 2 462 6 507
157b Franklin Woods 10 491 50 600
157c Franklin Terrace 2 450 10 550
157d Franklin Place 2 400 18 569
160 Riverchase Apartments 152 387 24 483
164 Hidden Valley Apartments 36 345 90 402 24 485
184 Jacksonville Apartments 44 350 44 450
189 Rue Granville Apartments 56 537 21 717
197 Bonita Harbor Apartments 14 450 62 588 2 800
198 Caputo 68 489 8 598
202 Buckner Village Apartments 72 364 80 491 20
203 San Marco Village 63 420 43 525
206 Vista Park Apartments 50 596
207 Windsor Estates 1 450 80 575
<CAPTION>
Number
Control Avg Rent # of Avg Rent of
No. Property Name 3 Bed ($) 4 Bed 4 Bed ($) Elevators
==========================================================================================================
<C> <S> <C> <C> <C> <C>
8 Mansards Apartment Community 945 1 1,430
13 Avion at Sunrise Mountain Apartments 865
14 Park at Memorial Apartments 1,000
24 Glen Hollow Apartments
33 Wellington Farms Apartments
34 Arbor Ridge Apartments 734
35 L'Atriums on the Creek 629
36 Country Oaks Apartments 685 10 800
42 Presidential Estates Apartments
44 Promenade Apartments
46 Ashton Meadows Apartments
49 Grant Village Apartments
51 Southgate Towers Apartments 4
60 Deer Park Apartments 802 34 993
73 Wyntree Apartments 775
78 Twin Lakes Apartments 631
80 JJ Court Apartments 629
82 Roanoke West Apartments
85 Wyngrove Apartments 650
91 Fountain Park Apartments 725
92 Brittany Court Apartments
95 The Oaks Apartments 728
101 Huntington Pointe Apartments
104 Beechwood South Apartments
108 Woodman Lassen Apartments
117 Forest Village Apartments 871
121 Chenault Creek
123 Alston Arms Apartments 10 1,069
127 Sun Ridge Apartments 660
134 Contemporary Village Apartments 800 1 1,200
138 Cameron Ridge Apartments
145 Country Club Apartments
146 Trailing Vine Place Apartment 705
148 Park Row East Apartments
153 Stratford Place Apartments 635
156 La Quinta Apartments
157 Franklin Properties
157a Franklin Manor
157b Franklin Woods
157c Franklin Terrace
157d Franklin Place
160 Riverchase Apartments
164 Hidden Valley Apartments
184 Jacksonville Apartments
189 Rue Granville Apartments 2
197 Bonita Harbor Apartments
198 Caputo
202 Buckner Village Apartments 569
203 San Marco Village
206 Vista Park Apartments
207 Windsor Estates
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control Cut-off Date
No. Property Name County Balance ($) Utilities Paid by Tenant
====================================================================================================================================
<C> <S> <C> <C> <C>
218 Regal Pointe Apartments Harris 2,021,018 Electricity, cable
224 Fairway Gardens Richmond 1,943,385 Electricity, cable
233 Oakwood Terrace Apartments Tarrant 1,750,000 Electricity, gas, water, sewer, cable
241 Forest Hill Park Apartment Complex Cuyahoga 1,636,312 Electricity, cable
244 Deer Park Tolland 1,595,926 Electricity, cable.
248 Golden Oak Village Apartments St. Joseph 1,547,769 Electricity, gas, cable
264 Sierra Carmichael Apartments Cochise 1,397,167 Electricity
276 Hartstown Village Apartment Complex Lake 1,197,302 Electricity, gas, cable, heat
278 Pindle East Apartments Bergen 1,160,178 Electricity, cable, cooking gas
$309,100,450
============
<CAPTION>
Control # of Avg Rent # of Avg Rent # of Avg Rent # of
No. Property Name Studios Studios ($) 1 Bed 1 Bed ($) 2 Bed 2 Bed ($) 3 Bed
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C> <C> <C>
218 Regal Pointe Apartments 92 370 48 460
224 Fairway Gardens 36 697 42 805
233 Oakwood Terrace Apartments 1 300 48 360 94 455 1
241 Forest Hill Park Apartment Complex 32 427 113 491 29
244 Deer Park 10 575 34 660
248 Golden Oak Village Apartments 24 430 36 482 4
264 Sierra Carmichael Apartments 72 310 24 360 24 465
276 Hartstown Village Apartment Complex 36 565 12
278 Pindle East Apartments 23 793 10 892
<CAPTION>
Number
Control Avg Rent # of Avg Rent of
No. Property Name 3 Bed ($) 4 Bed 4 Bed ($) Elevators
==========================================================================================================
<C> <S> <C> <C> <C> <C>
218 Regal Pointe Apartments
224 Fairway Gardens
233 Oakwood Terrace Apartments 535
241 Forest Hill Park Apartment Complex 578 4
244 Deer Park
248 Golden Oak Village Apartments 550
264 Sierra Carmichael Apartments
276 Hartstown Village Apartment Complex 665
278 Pindle East Apartments
</TABLE>
<PAGE>
Annex A-4 - 1
Lehman Brothers Commercial Mortgage Trust 98 - C4
Reserve Account (All Mortgage Loans)
<TABLE>
<CAPTION>
Initial Deposit Annual Deposit
Capital To Replacement
Control Improvement Reserve
No. Property Name Property Type Account ($) Account ($)
===================================================================================================================================
<C> <S> <C> <C> <C>
1 TRT Holdings Hotel - Full Service - 4,830,000
2 Mills Retail - Regional Mall - -
3 Arden II Office/Industrial - Office/R&D - -
4 Fresno Retail - Regional Mall - -
5 Bayside Retail - Anchored 281,250 33,000
6 Inland Retail - Anchored - -
7 Montgomery Mall Retail - Regional Mall 150,000 145,800
8 Mansards Apartment Community Multi-Family - Conventional 8,438 334,250
9 Best Western President Hotel Hotel - Limited Service 470,000 -
10 Hundred Oaks Shopping Center Retail - Anchored 40,000 105,456
11 Sterling Apartments Multi-Family - Conventional 1,796,743 135,540
12 Warwick Hotel Hotel - Full Service 10,088 366,076
13 Avion at Sunrise Mountain Apartments Multi-Family - Conventional - 55,620
14 Park at Memorial Apartments Multi-Family - Conventional - 59,724
15 Lee Farm Corporate Park Office - 32,439
16 Rodin Place Retail - Anchored - 27,187
17 MacArthur Properties2 Retail - Anchored 1,500 10,280
18 University Place Office 37,906 57,691
19 Milburn NYC Hotel - Limited Service 55,000 215,929
21 Savannah Square Health Care - Assisted Living 10,000 72,520
22 Winston Salem Industrial Industrial 57,500 67,564
23 Covington Portfolio Retail - Anchored - 113,567
24 Glen Hollow Apartments Multi-Family - Conventional - 138,996
25 Holiday Office Park Office - 94,056
26 Gateway Business Center Industrial 51,250 89,366
27 Motorola Office 18,125 24,637
28 Ellis Building Office 423,750 51,915
29 Super K-Mart Retail - Anchored - -
30 Hospital Professional Bldg II Office - 11,685
31 Garden Ridge - Stockbridge CTL - -
32 Jefferson Square Retail - Anchored - 12,870
33 Wellington Farms Apartments Multi-Family - Conventional 143,450 51,048
34 Arbor Ridge Apartments Multi-Family - Conventional - 41,600
35 L'Atriums on the Creek Multi-Family - Conventional 190,325 105,648
36 Country Oaks Apartments Multi-Family - Conventional 223,525 98,350
37 Garden Ridge Retail - Anchored - -
38 Riverwalk Plaza Retail - Anchored - 14,424
39 Pinnacle Center Retail - Unanchored 25,000 34,420
40 Yaohan Plaza Retail - Anchored - 6,008
41 Fullerton University Shopping Center Retail - Anchored 99,688 24,152
42 Presidential Estates Apartments Multi-Family - Conventional 7,250 67,100
43 5 La-Z-Boy Retail Locations Retail - Unanchored 25,914 11,480
44 Promenade Apartments Multi-Family - Conventional 11,938 64,608
45 Miramonte Apartments Multi-Family - Conventional 11,288 36,427
46 Ashton Meadows Apartments Multi-Family - Conventional 18,438 65,280
47 Sullivan Street Multi-Family - Conventional - -
48 Market at Cedar Hill Shopping Center Retail - Anchored 35,823 36,186
49 Grant Village Apartments Multi-Family - Conventional 45,000 -
50 11 East Adams Office - 23,492
51 Southgate Towers Apartments Multi-Family - Conventional 10,312 87,860
52 Chesterfield Meadows Shopping Center Retail - Anchored 1,250 14,841
53 Northgate Shopping Center Retail - Anchored 10,375 28,888
54 45 Executive Drive Office - 10,020
55 Cipriano Square Retail - Anchored - 5,376
56 Cineplex Multiplex Retail - Unanchored - -
57 Black & Decker Industrial - 28,098
58 Staten Island Hotel Hotel - Full Service 27,000 190,236
59 Cloverleaf Shopping Center Retail - Unanchored 19,125 85,445
60 Deer Park Apartments Multi-Family - Conventional - 15,600
61 Kmart Town Center Retail - Anchored 26,000 110,652
62 Kash and Karry - Tampa CTL - -
63 River Place Industrial 244,938 61,886
64 Security Public Storage Self-Storage - 12,696
65 Newcastle Motel Hotel - Limited Service - 83,089
66 Aventura Medical Plaza Office - 4,820
<CAPTION>
Annual Current As of Date
Deposit Balance of
Control TILC TILC Reserve
No. Property Name Account ($) Account ($) Accounts ($)
==========================================================================================================
<C> <S> <C> <C> <C>
1 TRT Holdings - - 11/9/98
2 Mills - - 11/2/98
3 Arden II - 3,270,000 6/8/98
4 Fresno - - 11/9/98
5 Bayside - - 11/9/98
6 Inland - - 11/13/98
7 Montgomery Mall - - 10/26/98
8 Mansards Apartment Community - - 10/22/98
9 Best Western President Hotel - - 10/22/98
10 Hundred Oaks Shopping Center 250,008 250,000 10/22/98
11 Sterling Apartments 74,328 - 10/22/98
12 Warwick Hotel - - 10/22/98
13 Avion at Sunrise Mountain Apartments - - 10/22/98
14 Park at Memorial Apartments - - 10/23/98
15 Lee Farm Corporate Park 114,417 9,535 10/22/98
16 Rodin Place 125,000 94,845 10/22/98
17 MacArthur Properties2 122,130 10,178 10/22/98
18 University Place 58,899 4,908 10/22/98
19 Milburn NYC - - 10/22/98
21 Savannah Square - - 10/23/98
22 Winston Salem Industrial 123,756 127,302 10/22/98
23 Covington Portfolio 144,677 24,136 10/22/98
24 Glen Hollow Apartments - - 10/22/98
25 Holiday Office Park 500,000 12,500 10/22/98
26 Gateway Business Center - - 10/22/98
27 Motorola 225,000 18,757 10/22/98
28 Ellis Building 99,937 8,328 10/22/98
29 Super K-Mart - - 10/22/98
30 Hospital Professional Bldg II - - 10/22/98
31 Garden Ridge - Stockbridge - - 10/22/98
32 Jefferson Square - - 10/22/98
33 Wellington Farms Apartments - - 10/22/98
34 Arbor Ridge Apartments - - 10/22/98
35 L'Atriums on the Creek - - 10/21/98
36 Country Oaks Apartments - - 10/22/98
37 Garden Ridge - - 10/22/98
38 Riverwalk Plaza 13,500 - 10/22/98
39 Pinnacle Center 118,949 49,801 10/21/98
40 Yaohan Plaza - - 10/21/98
41 Fullerton University Shopping Center 30,069 - 10/21/98
42 Presidential Estates Apartments - - 10/22/98
43 5 La-Z-Boy Retail Locations - - 10/22/98
44 Promenade Apartments - - 10/22/98
45 Miramonte Apartments - - 10/21/98
46 Ashton Meadows Apartments - - 10/22/98
47 Sullivan Street - - 10/22/98
48 Market at Cedar Hill Shopping Center 47,502 95,658 10/22/98
49 Grant Village Apartments - - 10/22/98
50 11 East Adams 187,936 15,661 10/22/98
51 Southgate Towers Apartments - - 10/22/98
52 Chesterfield Meadows Shopping Center - - 10/22/98
53 Northgate Shopping Center 6,000 - 10/22/98
54 45 Executive Drive 45,000 - 10/29/98
55 Cipriano Square 37,956 - 10/22/98
56 Cineplex Multiplex - - 10/22/98
57 Black & Decker 50,000 - 10/22/98
58 Staten Island Hotel - - 10/22/98
59 Cloverleaf Shopping Center 89,935 22,484 10/23/98
60 Deer Park Apartments - - 10/26/98
61 Kmart Town Center - - 10/22/98
62 Kash and Karry - Tampa - - 10/22/98
63 River Place 114,945 28,797 10/22/98
64 Security Public Storage - - 10/22/98
65 Newcastle Motel - - 10/22/98
66 Aventura Medical Plaza - - 10/22/98
</TABLE>
<PAGE>
Annex A-4 - 2
<TABLE>
<CAPTION>
Initial Deposit Annual Deposit
Capital To Replacement
Control Improvement Reserve
No. Property Name Property Type Account ($) Account ($)
===================================================================================================================================
<C> <S> <C> <C> <C>
67 Southgate Village Shopping Center Retail - Anchored 11,000 21,712
68 Brewery District Office Office - 10,332
69 Kent Business Center Industrial 176,163 13,723
70 Villa Maria Retail - Anchored 27,500 20,892
71 Kash and Karry - Hudson CTL - -
72 Forest Hill Shopping Center Retail - Anchored - 7,476
73 Wyntree Apartments Multi-Family - Conventional 8,750 47,232
74 Keebler Krossing Shopping Center Retail - Anchored 4,500 16,380
75 Havasu North Shopping Center Retail - Anchored 29,875 8,506
76 Valencia Entertainment Center Retail - Unanchored - 3,234
77 444 Saw Mill River Road Industrial 7,700 17,946
78 Twin Lakes Apartments Multi-Family - Conventional 43,750 65,184
79 Little Prairie Shopping Center Retail - Anchored 5,531 8,453
80 JJ Court Apartments Multi-Family - Conventional - 30,132
81 Citadel Retail - Unanchored 1,860 -
82 Roanoke West Apartments Multi-Family - Conventional 22,500 55,944
83 Foothills Center Office - 8,400
84 Ardsley Plaza Retail - Anchored 31,250 9,014
85 Wyngrove Apartments Multi-Family - Conventional 38,375 72,960
86 450 Village Company Multi-Family - Conventional - -
87 Lone Mountain Plaza Shopping Center Retail - Unanchored - 11,676
88 Kmart Store No. 4219 - Ashwaubenon, WI CTL - -
89 Holiday Inn Express - Minnetonka Hotel - Limited Service 3,125 78,372
90 335-355 Franklin Street Multi-Family - Conventional 1,063 8,080
91 Fountain Park Apartments Multi-Family - Conventional 250 22,272
92 Brittany Court Apartments Multi-Family - Conventional 12,750 38,240
93 Sully Square Shopping Center Retail - Unanchored - 7,608
94 Capitol View Office Building Office 3,112 16,438
95 The Oaks Apartments Multi-Family - Conventional 39,900 62,004
96 Hampshire Place Office 3,125 8,261
97 Shops at Butler Creek Retail - Unanchored - 5,686
98 Mosside Village Retail - Unanchored 1,437 8,279
99 River North Concourse Office 13,750 11,082
100 Quality Suites Hotel - Limited Service - 97,250
101 Huntington Pointe Apartments Multi-Family - Conventional 103,750 51,408
102 St. Lawrence Plaza Retail - Anchored 5,938 6,192
103 Days Inn - San Diego Hotel - Limited Service 1,250 6,924
104 Beechwood South Apartments Multi-Family - Conventional 156,475 50,000
105 Bell Atlantic of Virginia CTL - -
106 Sunnyslope Shopping Centre Retail - Anchored 112,000 35,005
107 Uptown Shopping Center Retail - Anchored - 28,311
108 Woodman Lassen Apartments Multi-Family - Conventional 188,078 18,200
109 Comfort Inn - Blacksburg Hotel - Limited Service - 47,928
110 Castle Rockland Office - 13,905
111 K-Mart Plaza Retail - Anchored - 17,071
112 Lock It Up - San Jose Self-Storage - 11,801
113 Holiday Inn - Ashland Hotel - Limited Service 37,388 120,900
114 Grandland Shopping Center Retail - Anchored - 7,740
115 North County Plaza Retail - Unanchored - 9,417
116 Christiansburg Hills Plaza Shopping Center Retail - Anchored 21,500 19,428
117 Forest Village Apartments Multi-Family - Conventional 11,125 13,373
118 Bronxville West Office - 8,080
119 Days Inn - Laurel Hotel - Limited Service 2,000 69,311
120 Stratford Executive Park Office - 26,396
121 Chenault Creek Multi-Family - Conventional 37,063 57,469
122 Greenbriar Market Place Retail - Anchored 93,289 26,643
123 Alston Arms Apartments Multi-Family - Conventional 5,000 26,000
124 Citi Centre Office - 8,287
125 Kmart - La Crosse CTL - -
126 Walgreen - Camp Bowie CTL - 2,086
127 Sun Ridge Apartments Multi-Family - Conventional 96,000 30,304
128 410-420 Tarrytown Road Retail - Unanchored 3,438 3,132
129 New York Plaza Retail - Anchored 44,375 15,946
130 Lake Arbor Shopping Center Retail - Anchored 139,937 -
131 Eckerd Drug Store CTL - -
132 Sleep Inn Hotel - Limited Service - 91,327
133 Hall of Fame Marina Office 938 3,893
134 Contemporary Village Apartments Multi-Family - Conventional 10,438 28,980
135 Commerce Exchange Business Park Office 3,420 7,326
<CAPTION>
Annual Current As of Date
Deposit Balance of
Control TILC TILC Reserve
No. Property Name Account ($) Account ($) Accounts ($)
==========================================================================================================
<C> <S> <C> <C> <C>
67 Southgate Village Shopping Center 6,000 - 10/22/98
68 Brewery District Office 63,384 5,282 10/22/98
69 Kent Business Center 48,000 8,006 10/22/98
70 Villa Maria 204,000 1,700 10/22/98
71 Kash and Karry - Hudson - - 10/22/98
72 Forest Hill Shopping Center - - 10/21/98
73 Wyntree Apartments - - 10/22/98
74 Keebler Krossing Shopping Center 19,500 3,250 10/22/98
75 Havasu North Shopping Center 28,241 - 10/21/98
76 Valencia Entertainment Center 16,175 1,348 10/21/98
77 444 Saw Mill River Road 35,688 2,970 10/21/98
78 Twin Lakes Apartments - - 10/29/98
79 Little Prairie Shopping Center 20,000 13,333 1/16/98
80 JJ Court Apartments - - 10/22/98
81 Citadel - - 10/21/98
82 Roanoke West Apartments - - 10/22/98
83 Foothills Center 75,000 - 10/21/98
84 Ardsley Plaza 25,163 12,585 10/22/98
85 Wyngrove Apartments - - 10/22/98
86 450 Village Company - - 10/22/98
87 Lone Mountain Plaza Shopping Center 51,240 - 10/25/98
88 Kmart Store No. 4219 - Ashwaubenon, WI - - 10/22/98
89 Holiday Inn Express - Minnetonka - - 10/22/98
90 335-355 Franklin Street - - 10/22/98
91 Fountain Park Apartments - - 10/22/98
92 Brittany Court Apartments - - 10/22/98
93 Sully Square Shopping Center 16,738 1,395 10/22/98
94 Capitol View Office Building 36,000 3,000 10/22/98
95 The Oaks Apartments - - 10/21/98
96 Hampshire Place 41,304 43,442 10/29/98
97 Shops at Butler Creek 39,458 - 10/22/98
98 Mosside Village 33,276 8,319 10/22/98
99 River North Concourse 20,000 6,667 10/22/98
100 Quality Suites - - 10/22/98
101 Huntington Pointe Apartments - - 10/22/98
102 St. Lawrence Plaza 8,000 5,995 10/22/98
103 Days Inn - San Diego 33,852 - 10/22/98
104 Beechwood South Apartments - - 10/23/98
105 Bell Atlantic of Virginia - - 10/22/98
106 Sunnyslope Shopping Centre 26,725 6,696 10/21/98
107 Uptown Shopping Center 60,000 45,000 10/22/98
108 Woodman Lassen Apartments - - 10/22/98
109 Comfort Inn - Blacksburg - - 10/23/98
110 Castle Rockland 23,894 - 10/22/98
111 K-Mart Plaza - - 10/21/98
112 Lock It Up - San Jose - - 10/22/98
113 Holiday Inn - Ashland - - 10/22/98
114 Grandland Shopping Center 20,400 1,700 10/22/98
115 North County Plaza 40,173 3,348 10/21/98
116 Christiansburg Hills Plaza Shopping Center 38,148 3,179 10/22/98
117 Forest Village Apartments - - 10/22/98
118 Bronxville West 36,000 317,120 10/22/98
119 Days Inn - Laurel - - 10/22/98
120 Stratford Executive Park - - 10/22/98
121 Chenault Creek - - 10/22/98
122 Greenbriar Market Place 25,000 - 10/22/98
123 Alston Arms Apartments - - 10/22/98
124 Citi Centre 43,200 17,120 10/22/98
125 Kmart - La Crosse - - 10/22/98
126 Walgreen - Camp Bowie - - 10/22/98
127 Sun Ridge Apartments - - 10/22/98
128 410-420 Tarrytown Road 10,008 10,000 10/22/98
129 New York Plaza - - 10/22/98
130 Lake Arbor Shopping Center - 125,000 10/21/98
131 Eckerd Drug Store - - 10/22/98
132 Sleep Inn - - 10/22/98
133 Hall of Fame Marina 25,029 2,086 10/22/98
134 Contemporary Village Apartments - - 10/22/98
135 Commerce Exchange Business Park 30,000 10,000 10/22/98
</TABLE>
<PAGE>
Annex A-4 - 3
<TABLE>
<CAPTION>
Initial Deposit Annual Deposit
Capital To Replacement
Control Improvement Reserve
No. Property Name Property Type Account ($) Account ($)
===================================================================================================================================
<C> <S> <C> <C> <C>
136 428 Tolland Turnpike Retail - Unanchored 1,625 10,831
137 Tropicana Center and Flamingo Jones Retail - Anchored 4,375 3,889
138 Cameron Ridge Apartments Multi-Family - Conventional 7,438 19,800
139 Loudon Plaza Retail - Unanchored 38,525 13,428
140 Smartpark Parking 5,938 7,500
141 One North Penn Office Building Office 4,000 8,856
142 Kmart CTL - -
143 125 Canal Street Office 5,963 5,850
144 Alton Circle Retail - Anchored - 16,490
145 Country Club Apartments Multi-Family - Conventional 20,175 30,144
146 Trailing Vine Place Apartment Multi-Family - Conventional 36,875 21,600
147 Bayway Shopping Center Retail - Anchored 26,383 10,560
148 Park Row East Apartments Multi-Family - Conventional 53,500 51,521
149 Thunderbird Square Retail - Anchored 42,975 16,164
150 Walgreens CTL - 2,086
151 Sherwood Gardens Apts. Multi-Family - Conventional 6,250 6,250
152 Star Plaza Retail - Unanchored - -
153 Stratford Place Apartments Multi-Family - Conventional 29,250 24,750
154 Morrell Plaza Shopping Center Retail - Anchored 123,715 25,194
155 Fountain Hills Plaza Shopping Center Retail - Unanchored - 15,169
156 La Quinta Apartments Multi-Family - Conventional 5,375 21,504
157 Franklin Properties Multi-Family - Conventional 625 15,000
158 Foot Hills Shopping Center Retail - Anchored 15,875 -
159 Walgreen - Portage CTL - 3,615
160 Riverchase Apartments Multi-Family - Conventional 2,125 23,869
161 Quality Inn Hotel - Limited Service - 64,920
162 350-360 Tarrytown Road Retail - Unanchored 6,625 3,996
163 Kings Bay Plaza Retail - Anchored 28,750 17,700
164 Hidden Valley Apartments Multi-Family - Conventional 15,625 31,343
165 Warlick Plaza Retail - Anchored 6,250 5,358
166 Upland Plaza Retail - Unanchored - 3,374
167 Sharon Lakes Plaza Retail - Unanchored 1,500 7,725
168 Randolph Plaza Retail - Unanchored 16,667 11,302
169 Orangewood Business Plaza Office 49,994 7,801
170 Guilford Village Retail - Unanchored 3,125 5,460
171 North County Office Office 5,688 7,464
172 1 Ethel Blvd Industrial 26,875 16,500
173 The Embassy Cinema Retail - Unanchored - -
174 Staples - Galesburg CTL - 3,600
175 Pinebrook Village Retail - Anchored 18,125 9,246
176 Studio Inn Hotel - Limited Service 10,625 44,676
177 Plaza 114 Retail - Unanchored 5,625 6,022
178 201 Federal Road Retail - Unanchored - 4,290
179 Eckerd CTL - 1,963
180 Glen Ellen Mobile Home Park Multi-Family - Manufactured Housing 17,455 5,300
181 Plaza West Strip Center Retail - Unanchored 126,594 6,516
182 Atrium at Delk Center Office 625 9,832
183 3650 Industrial Avenue Industrial - 9,030
184 Jacksonville Apartments Multi-Family - Conventional 1,250 15,000
185 West Bay Office Park Office 20,500 8,841
186 Sav-On Drug Store Retail - Anchored - 2,610
187 Holiday Inn Express - Fargo Hotel - Full Service 250 49,200
188 Smokey Hill Plaza Shopping Center Retail - Unanchored 100,000 7,020
189 Rue Granville Apartments Multi-Family - Conventional - 23,100
190 Revco - Savannah CTL - -
191 Turnberry Crossing Shopping Center Retail - Unanchored - 5,378
192 Rite Aid - Walkill CTL - 2,236
193 Lucky Industrial Park Industrial - 6,650
194 Target Center Retail - Anchored - 13,290
195 Golfsmith Retail - Anchored - 3,750
196 70 Garden Court Office - 16,808
197 Bonita Harbor Apartments Multi-Family - Conventional - 19,500
198 Caputo Multi-Family - Conventional 3,938 19,000
199 Heather Ridge Village Retail - Unanchored 8,625 10,578
200 Leviner Office Building Office 55,188 17,615
201 Shoppes of Avon Retail - Unanchored 1,875 4,278
202 Buckner Village Apartments Multi-Family - Conventional 6,044 43,000
203 San Marco Village Multi-Family - Conventional - 28,296
204 Staples Retail - Anchored 888 3,599
<CAPTION>
Annual Current As of Date
Deposit Balance of
Control TILC TILC Reserve
No. Property Name Account ($) Account ($) Accounts ($)
==========================================================================================================
<C> <S> <C> <C> <C>
136 428 Tolland Turnpike 21,666 3,614 10/22/98
137 Tropicana Center and Flamingo Jones 10,215 - 10/22/98
138 Cameron Ridge Apartments - - 10/22/98
139 Loudon Plaza 11,500 - 10/29/98
140 Smartpark - - 10/22/98
141 One North Penn Office Building - 100,132 10/22/98
142 Kmart - - 10/22/98
143 125 Canal Street 24,000 250 10/22/98
144 Alton Circle - - 10/21/98
145 Country Club Apartments - - 10/22/98
146 Trailing Vine Place Apartment - - 10/21/98
147 Bayway Shopping Center 29,520 15,075 10/23/98
148 Park Row East Apartments - - 10/21/98
149 Thunderbird Square 15,000 - 10/22/98
150 Walgreens - - 10/22/98
151 Sherwood Gardens Apts. - - 10/29/98
152 Star Plaza - 100,333 10/22/98
153 Stratford Place Apartments - - 10/22/98
154 Morrell Plaza Shopping Center 41,147 5,000 10/22/98
155 Fountain Hills Plaza Shopping Center 33,039 35,040 10/21/98
156 La Quinta Apartments - - 10/22/98
157 Franklin Properties - - 10/22/98
158 Foot Hills Shopping Center - 125,000 10/21/98
159 Walgreen - Portage - - 10/22/98
160 Riverchase Apartments - - 10/22/98
161 Quality Inn - - 10/22/98
162 350-360 Tarrytown Road 10,008 10,000 10/22/98
163 Kings Bay Plaza 43,898 3,658 10/22/98
164 Hidden Valley Apartments - - 10/21/98
165 Warlick Plaza 15,000 - 10/22/98
166 Upland Plaza 8,853 - 10/21/98
167 Sharon Lakes Plaza 27,405 - 10/29/98
168 Randolph Plaza 38,679 9,670 10/22/98
169 Orangewood Business Plaza 30,000 - 10/22/98
170 Guilford Village 7,281 - 10/22/98
171 North County Office 27,770 2,314 10/21/98
172 1 Ethel Blvd 36,150 6,028 10/22/98
173 The Embassy Cinema - - 10/22/98
174 Staples - Galesburg - - 10/22/98
175 Pinebrook Village 16,019 1,335 10/22/98
176 Studio Inn - - 10/23/98
177 Plaza 114 25,377 8,477 10/22/98
178 201 Federal Road 8,580 1,430 10/22/98
179 Eckerd - - 10/22/98
180 Glen Ellen Mobile Home Park - - 10/22/98
181 Plaza West Strip Center 22,212 72,000 10/21/98
182 Atrium at Delk Center 30,000 2,500 10/22/98
183 3650 Industrial Avenue 425 425 10/22/98
184 Jacksonville Apartments - - 10/21/98
185 West Bay Office Park 60,000 85,619 10/22/98
186 Sav-On Drug Store - - 10/21/98
187 Holiday Inn Express - Fargo - - 10/22/98
188 Smokey Hill Plaza Shopping Center 24,000 - 10/21/98
189 Rue Granville Apartments - - 10/29/98
190 Revco - Savannah - - 10/22/98
191 Turnberry Crossing Shopping Center - - 10/29/98
192 Rite Aid - Walkill - - 10/22/98
193 Lucky Industrial Park 7,500 1,250 10/22/98
194 Target Center 18,188 4,547 10/22/98
195 Golfsmith - - 10/22/98
196 70 Garden Court 35,062 - 10/21/98
197 Bonita Harbor Apartments - - 10/22/98
198 Caputo - - 10/22/98
199 Heather Ridge Village 48,338 4,028 10/21/98
200 Leviner Office Building 42,088 3,507 10/21/98
201 Shoppes of Avon 1,114 2,228 10/22/98
202 Buckner Village Apartments - - 10/22/98
203 San Marco Village - - 10/29/98
204 Staples - - 10/22/98
</TABLE>
<PAGE>
Annex A-4 - 4
<TABLE>
<CAPTION>
Initial Deposit Annual Deposit
Capital To Replacement
Control Improvement Reserve
No. Property Name Property Type Account ($) Account ($)
===================================================================================================================================
<C> <S> <C> <C> <C>
205 Transcor Industrial - 9,077
206 Vista Park Apartments Multi-Family - Conventional - 11,256
207 Windsor Estates Multi-Family - Conventional 18,750 20,500
208 Roland Park Shopping Center Retail - Unanchored - 4,427
209 Pathmark Shopping Center Retail - Anchored 119,063 15,136
210 Old Lake Place Shopping Center Retail - Unanchored 1,875 6,658
211 West Flagler Shops Retail - Unanchored 1,935 5,596
212 3128 North Ashland Avenue Retail - Unanchored 1,250 4,821
213 Westgate Plaza Retail - Anchored 3,688 7,789
214 Hillsboro Shoppes Retail - Unanchored 2,250 5,357
215 Kmart - Tacoma Retail - Anchored - 15,600
216 Post Office Annex Building Office - 6,996
217 Eckerd - Greensboro CTL - -
218 Regal Pointe Apartments Multi-Family - Conventional 18,813 39,000
219 Clarksville Crossing Retail - Anchored - 13,494
220 Merchants Plaza Office - 2,613
221 Statewide Self Storage Self-Storage - 8,652
222 25227 Grogans Mill Office Building Office - 7,185
223 Florida Space Center Self-Storage 30,000 1,457
224 Fairway Gardens Multi-Family - Conventional 3,750 19,500
225 Rite Aid - West Haven CTL - 2,236
226 Staples Retail - Anchored 838 3,589
227 Commerce Point Office 18,688 4,275
228 93 Broadway Industrial - 6,600
229 Arvada Square Shopping Center Retail - Unanchored 42,125 9,600
230 Battlefield Center Retail - Unanchored 10,625 2,971
231 CVS - Asheboro CTL - 1,519
232 NFC Office Plaza Office 1,875 4,273
233 Oakwood Terrace Apartments Multi-Family - Conventional 97,813 36,000
234 CVS - Ballentine CTL - 1,519
235 Jackson's Landing Apartments Multi-Family - Conventional 2,063 12,349
236 Centergate Office 7,313 7,054
237 King Kullen Shopping Center Retail - Anchored 19,338 15,311
238 Anaheim Springs Office Office 1,188 2,347
239 AUS Building Office - 3,150
240 Queens West Industustrial Industrial 27,813 7,598
241 Forest Hill Park Apartment Complex Multi-Family - Conventional - 43,500
242 West Brandon Square Retail - Unanchored 1,875 3,413
243 CVS - Stanley CTL - 2,025
244 Deer Park Multi-Family - Conventional 12,906 11,250
245 Fairmont Building Office - 2,078
246 Papago Place Office - 6,254
247 Humble Office Building Office 20,281 18,242
248 Golden Oak Village Apartments Multi-Family - Conventional - 9,600
249 CVS - Denver CTL - 1,519
250 Free State Self Storage Self-Storage 30,625 16,932
251 Brookmeade Plaza Retail - Unanchored 8,188 5,561
252 80 Garden Court Office - 17,857
253 CVS - Sunset Beach CTL - 2,025
254 Centenial Mall Retail - Unanchored 5,250 28,446
255 CVS - King's Mountian CTL - 1,519
256 Southland (7-11) CTL - 459
257 North Grove Plaza Retail - Anchored 97,281 10,506
258 Thomas Center Office 6,688 3,233
259 4708 North Milwaukee Retail - Unanchored - 3,451
260 9255 South Western Avenue Retail - Unanchored 7,500 3,240
261 Greenwich/Laguardia Retail - Unanchored 1,375 630
262 Kmart - Rock Springs Plaza Retail - Anchored 775 20,965
263 Rockwood Plaza Shopping Center Retail - Unanchored - 3,900
264 Sierra Carmichael Apartments Multi-Family - Conventional 62,875 33,026
265 1501 Estes Avenue Industrial 875 3,050
266 581 Wolcott Street Retail - Unanchored - 6,414
267 Dixie Commerce Center Industrial 1,488 7,259
268 IHOP CTL - -
269 Ridge at White Oak Apartments Multi-Family - Conventional - 3,775
270 388 Tarrytown Road Retail - Unanchored 1,125 1,836
271 Governors Park Office Park Office 1,125 5,997
272 Remax Building Office 1,875 2,007
273 Ferndale Mobile Village Multi-Family - Manufactured Housing 1,250 1,925
<CAPTION>
Annual Current As of Date
Deposit Balance of
Control TILC TILC Reserve
No. Property Name Account ($) Account ($) Accounts ($)
==========================================================================================================
<C> <S> <C> <C> <C>
205 Transcor - 100,000 10/22/98
206 Vista Park Apartments - - 10/22/98
207 Windsor Estates - - 10/29/98
208 Roland Park Shopping Center 15,521 5,179 10/22/98
209 Pathmark Shopping Center 40,361 - 10/29/98
210 Old Lake Place Shopping Center 21,950 1,829 10/22/98
211 West Flagler Shops 25,000 - 10/22/98
212 3128 North Ashland Avenue 12,493 3,123 10/22/98
213 Westgate Plaza 21,636 - 10/22/98
214 Hillsboro Shoppes 3,333 1,667 10/22/98
215 Kmart - Tacoma - - 10/22/98
216 Post Office Annex Building 28,008 - 10/21/98
217 Eckerd - Greensboro - - 10/22/98
218 Regal Pointe Apartments - - 10/22/98
219 Clarksville Crossing 25,000 - 10/22/98
220 Merchants Plaza 18,197 - 10/22/98
221 Statewide Self Storage 9,756 - 10/22/98
222 25227 Grogans Mill Office Building 31,483 2,624 10/21/98
223 Florida Space Center - - 10/22/98
224 Fairway Gardens - - 10/22/98
225 Rite Aid - West Haven - - 10/22/98
226 Staples - - 10/22/98
227 Commerce Point 18,810 1,568 10/22/98
228 93 Broadway 3,000 25,000 10/29/98
229 Arvada Square Shopping Center 18,000 1,501 10/22/98
230 Battlefield Center 13,200 - 10/22/98
231 CVS - Asheboro - - 10/30/98
232 NFC Office Plaza 18,516 3,084 10/22/98
233 Oakwood Terrace Apartments - - 10/21/98
234 CVS - Ballentine - - 10/29/98
235 Jackson's Landing Apartments - - 10/26/98
236 Centergate 10,000 1,667 10/22/98
237 King Kullen Shopping Center 40,830 - 10/29/98
238 Anaheim Springs Office 7,667 639 10/22/98
239 AUS Building 12,600 4,200 10/22/98
240 Queens West Industustrial 17,143 1,429 10/22/98
241 Forest Hill Park Apartment Complex - - 10/21/98
242 West Brandon Square 14,174 - 10/21/98
243 CVS - Stanley - - 10/29/98
244 Deer Park - - 10/22/98
245 Fairmont Building 11,080 913 10/29/98
246 Papago Place 12,897 1,075 10/21/98
247 Humble Office Building 27,230 2,269 10/21/98
248 Golden Oak Village Apartments - - 10/21/98
249 CVS - Denver - - 10/29/98
250 Free State Self Storage - - 10/22/98
251 Brookmeade Plaza 18,537 - 10/29/98
252 80 Garden Court 32,980 - 10/21/98
253 CVS - Sunset Beach - - 10/29/98
254 Centenial Mall 35,285 6,055 10/21/98
255 CVS - King's Mountian - - 10/26/98
256 Southland (7-11) - - 10/22/98
257 North Grove Plaza 17,656 1,471 10/22/98
258 Thomas Center 30,000 - 10/22/98
259 4708 North Milwaukee 4,692 1,173 10/22/98
260 9255 South Western Avenue 10,620 2,655 10/22/98
261 Greenwich/Laguardia 6,768 564 10/22/98
262 Kmart - Rock Springs Plaza - - 10/22/98
263 Rockwood Plaza Shopping Center 12,000 2,000 10/22/98
264 Sierra Carmichael Apartments - - 10/21/98
265 1501 Estes Avenue - - 10/22/98
266 581 Wolcott Street 7,706 1,284 10/22/98
267 Dixie Commerce Center 13,741 4,581 10/22/98
268 IHOP - - 10/30/98
269 Ridge at White Oak Apartments - - 10/26/98
270 388 Tarrytown Road 36,000 3,000 10/22/98
271 Governors Park Office Park 14,007 1,167 10/23/98
272 Remax Building 15,000 2,501 10/22/98
273 Ferndale Mobile Village - - 10/22/98
</TABLE>
<PAGE>
Annex A-4 - 5
<TABLE>
<CAPTION>
Initial Deposit Annual Deposit
Capital To Replacement
Control Improvement Reserve
No. Property Name Property Type Account ($) Account ($)
===================================================================================================================================
<C> <S> <C> <C> <C>
274 Lions Lair Travel Park Multi-Family - Manufactured Housing 5,188 2,170
275 Rite Aid - Richmond CTL - 2,324
276 Hartstown Village Apartment Complex Multi-Family - Conventional - 12,000
277 6300 Richmond Office 19,938 7,518
278 Pindle East Apartments Multi-Family - Conventional 4,375 8,250
279 Lake of 610 Industrial 17,625 -
280 Ames - Palmer Plaza Retail - Anchored 3,063 -
281 Grogan's Forest Shopping Center Retail - Unanchored - -
282 Bearden Place Shopping Center Retail - Unanchored - -
283 56th Street Warehouse Industrial 48,935 7,601
284 Frys In-Line Space Retail - Unanchored - 1,140
285 2120 South Oak Park Ave Retail - Unanchored 7,062 1,440
286 Shops on Cumberland Retail - Unanchored - -
<CAPTION>
Annual Current As of Date
Deposit Balance of
Control TILC TILC Reserve
No. Property Name Account ($) Account ($) Accounts ($)
==========================================================================================================
<C> <S> <C> <C> <C>
274 Lions Lair Travel Park - - 10/29/98
275 Rite Aid - Richmond - - 10/22/98
276 Hartstown Village Apartment Complex - - 10/21/98
277 6300 Richmond 26,103 4,351 10/22/98
278 Pindle East Apartments - - 10/22/98
279 Lake of 610 - - 10/22/98
280 Ames - Palmer Plaza - - 10/22/98
281 Grogan's Forest Shopping Center - - 10/22/98
282 Bearden Place Shopping Center - - 10/21/98
283 56th Street Warehouse 10,368 1,728 10/22/98
284 Frys In-Line Space 7,104 - 10/21/98
285 2120 South Oak Park Ave 3,900 975 10/22/98
286 Shops on Cumberland - - 10/21/98
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX B
Lehman Brothers Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1998-C4
$1,833,159,000
(Approximate)
Offered Certificates
[MAP OMITTED]
LEHMAN BROTHERS
Page 1 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
Lehman Brothers Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1998-C4
% C/E
-----------------------------------------------
Class A-1-a
----------- Class A-2
27.50% Class A-1-b
---------------------------------
22.25% Class B
---------------------------------
17.00% Class C
---------------------------------
11.00% Class D
---------------------------------
9.50% Class E
---------------------------------
7.00% Class F
---------------------------------
4.75% Class G Class X
---------------------------------
4.00% Class H
---------------------------------
3.00% Class J
---------------------------------
2.50% Class K
---------------------------------
1.75% Class L
---------------------------------
1.25% Class M
---------------------------------
0.00% Class N
-----------------------------------------------
<TABLE>
<CAPTION>
==========================================================================================================================
Class Original Rating(1) Description Coupon Avg Life(2) Principal Legal
Face ($) (years) Window (2) Status
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
A-1-a $275,000,000 AAA/Aaa Fixed 5.870 5.085 12/98-08/06 Public
- --------------------------------------------------------------------------------------------------------------------------
A-1-b $693,553,000 AAA/Aaa Fixed 6.210 9.613 08/06-10/08 Public
- --------------------------------------------------------------------------------------------------------------------------
A-2 $500,000,000 AAA/Aaa Fixed 6.300 8.388 12/98-10/08 Public
- --------------------------------------------------------------------------------------------------------------------------
B $106,343,000 AA/Aa2 Fixed 6.360 9.892 10/08-10/08 Public
- --------------------------------------------------------------------------------------------------------------------------
C $106,344,000 A/A2 Fixed 6.500 9.916 10/08-11/08 Public
- --------------------------------------------------------------------------------------------------------------------------
D $121,535,000 BBB/Baa2 Fixed 6.500 9.999 11/08-12/08 Public
- --------------------------------------------------------------------------------------------------------------------------
E $30,384,000 BBB-/Baa3 Fixed 6.500 10.058 12/08-12/08 Public
- --------------------------------------------------------------------------------------------------------------------------
F $50,640,000 BB+/Ba1 Fixed 6.000 10.058 12/08-12/08 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
G $45,576,000 (5) Fixed 5.600 11.795 12/08-05/13 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
H $15,192,000 (5) Fixed 5.600 14.659 05/13-08/13 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
J $20,255,000 (5) Fixed 5.600 14.932 08/13-09/14 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
K $10,128,000 (5) Fixed 5.600 16.557 09/14-03/16 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
L $15,192,000 (5) Fixed 5.600 18.009 03/16-10/17 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
M $10,128,000 (5) Fixed 5.600 19.351 10/17-06/18 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
N $25,320,706 (5) Fixed 5.600 20.088 06/18-09/23 Private, 144A
- --------------------------------------------------------------------------------------------------------------------------
X $2,025,590,706(3) AAAr/Aaa WAC I/O 0.5638 9.185(4) 12/98-09/23 Public
==========================================================================================================================
Total $2,025,590,706 -- -- -- -- -- --
==========================================================================================================================
</TABLE>
(1) Anticipated ratings of Standard & Poor's and Moody's.
(2) Assuming among other things, 0% CPR, no losses and that ARD loans pay off
on their Anticipated Repayment Date.
(3) Represents notional amount on Class X.
(4) Represents average life of notional amount on Class X.
(5) Not offered hereby.
Page 2 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
CERTAIN OFFERING POINTS
o Newly Originated Collateral. The collateral consists of Mortgage
Loans with a principal balance (as of the Cut-off Date) of
approximately $2.025 billion. All the Mortgage Loans were
originated by an affiliate of Lehman Brothers or its approved
conduit originators.
o Call Protection. 100% of the Mortgage Loans contain call protection
provisions. As of the Cut-off Date, 100% of the Mortgage Loans
provide for initial lockout period. The weighted average
lockout and defeasance period for all loans is 9.96 years. The
Mortgage Loans are generally prepayable without penalty
between zero to three months from Mortgage Loan maturity or
Anticipated Repayment Date ("ARD"), with a weighted average
open period of 2 months.
o Weighted average lock-out and treasury defeasance of 9.96 years.
o No loan delinquent 30 days or more as of the Cut-off Date.
o $7,107,336 average loan balance as of the Cut-off Date.
o $4,959,482 average loan balance for Conduit component of the
mortgage pool as of the Cut-off Date.
o 1.67x Weighted Average Debt Service Coverage Ratio ("DSCR") as of
the Cut-off Date.(1)
o 65.69% Weighted Average Loan to Value ("LTV") as of the Cut-off
Date.(1)
o Property Type Diversification. 40.1% Retail (50.1% Anchored, 32.2%
Regional Mall, and 17.7% Unanchored), 17.9% Multifamily, 17.9%
Hotel, 9.5% Office, 5.5% Office/Industrial, 3.9% Credit Tenant
Lease ("CTL"), 3.3% Industrial/Warehouse, 0.8% Self Storage,
0.7% Health Care, 0.3% Manufactured Housing and 0.2% Parking
Garage.
o Geographic Distribution. The properties are distributed throughout
35 states and Puerto Rico. California (19.8%); Texas (11.5%);
New York (10.5%); Illinois (9.5%); Florida (8.3%), all other
states less than 4% each.
o Monthly Investor Reporting. Updated collateral summary information
will be part of the monthly remittance report in addition to
detailed P&I payment and delinquency information. Quarterly
NOI and Occupancy information to the extent delivered by
borrowers, will be available to Certificate holders.
o Cash Flows will be Modeled on BLOOMBERG.
(Except as otherwise indicated, percentages (%) represent the principal amount
of loan or loans as of the Cut-off Date (as to each loan the "Cut-off Date
Balance") compared to aggregate pool balance, as of the Cut-off Date (the
"Initial Pool Balance"); weighted averages are weighted using Cut-off Date B
balance; loans with properties in multiple states have been allocated to certain
states based upon "allocated loan amounts" or appraisal amount if the loan did
not have allocated loan amounts.)
(1) Weighted Averages for Cut-off Date LTV and DSC Ratio do not include Credit
Tenant Lease Loans.
Page 3 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
RATING AGENCIES: Moody's and Standard & Poor's.
TRUSTEE: LaSalle National Bank.
MASTER SERVICER: First Union National Bank
SPECIAL SERVICER: Lennar Partners, Inc.
CLOSING DATE: On or about November 24, 1998.
CUT-OFF DATE: November 1, 1998 (or for loans with due dates other than the
first and for loans originated in November 1998, their due
date or origination date in November 1998).
ERISA: Classes A-1-a, A-1-b, A-2 and X are expected to be eligible
for Lehman's individual prohibited transaction exemption
with respect to ERISA subject to certain conditions for
eligibility.
SMMEA: Classes A-1-a, A-1-b, A-2, B and X are "mortgage related
securities" for purposes of SMMEA.
PAYMENT: Pays on 15th of each month or, if such date is not a
business day, then the following business day, commencing
December 15, 1998.
THE CLASS X: The Class X is comprised of multiple components, one
relating to each class of Sequential Pay Certificates.
OPTIONAL CALL: 1% Clean-up Call.
MORTGAGE LOANS: The mortgage loans were originated by an affiliate of Lehman
Brothers, or its approved conduit originators. As of the
Cut-off Date, the Mortgage Loans have a weighted average
coupon ("WAC") of 6.84% and a remaining weighted average
maturity ("WAM") of 121 months (assuming that the ARD loans
mature on their ARD date). See the Collateral Overview
Tables at the end of this memo for more Mortgage Loan
details.
LOAN GROUPS: The collateral consists of two loan groups allocated by cash
flow:
Group 1 consists of 229 loans (totaling $1,716,490,256 of
Mortgage Loans secured by first liens on commercial and
multifamily properties). Group 2 consists of 56 loans
(totaling $309,100,450 of Mortgage Loans secured by first
liens on multifamily properties).
THE A-1 CLASSES: The A-1 Classes are backed by 84% of the cash flows of the
Group 1.
CLASS A-2: Class A-2 is backed by 100% of the cash flows from Group 2
and approximately 16% of the cash flows from Group 1.
CREDIT ENHANCEMENT: Credit enhancement for each class of Certificates will be
provided by the classes of Certificates which are
subordinate in priority with respect to payments of interest
and principal.
Page 4 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
DISTRIBUTIONS: Principal and interest payments will generally be made to
Certificate holders in the following order: Principal and
interest payments from Group 1 will be applied in the
following manner:
1) Interest to the A-1 Classes pro rata,
2) 84% of Principal to the A-1 Classes sequentially and
16% to the A-2 Class until retired *,
3) After the A-1 Classes are retired Principal to the
Class A-2 until all Class A Certificates are retired,
4) Interest to Class B, then Principal to Class B until
such Class is retired,
5) Interest to Class C, then Principal to Class C until
such Class is retired,
6) Interest to Class D, then Principal to Class D until
such Class is retired,
7) Interest to Class E, then Principal to Class E until
such Class is retired,
8) Interest and Principal to the Private Classes,
sequentially.
*Pro rata if Classes B through N are retired.
Principal and interest payments from Group 2 will be applied
in the following manner:
1) Interest to Class A-2,
2) Principal to Class A-2,
3) Upon the retirement of Class A-2, all remaining Group
2 cash flow will be combined with Group 1 cash flow
and will be applied as set forth above..
REALIZED LOSSES: Realized Losses from any Mortgage Loan will be allocated in
reverse sequential order (i.e. Classes N, M, L, K, J, H, G,
F, E, D, C and B, in that order). If Classes B through N
have been retired by losses, Realized Losses shall be
applied to the then existing A Classes pro-rata.
APPRAISAL
REDUCTIONS: With respect to certain specially serviced Mortgage Loans as
to which an appraisal is required; generally (including any
Mortgage Loan that becomes 90 days delinquent), an Appraisal
Reduction Amount may be created, in the amount, if any, by
which the Stated Principal Balance of such Mortgage Loan,
together with unadvanced interest, unreimbursed P&I advances
and certain other items, exceeds 90% of the appraised value
of the related Mortgaged Property. The Appraisal Reduction
Amount will reduce proportionately the interest portion of
any P&I Advance for such loan, which reduction may result in
a shortfall of interest to the most subordinate class of
Principal Balance Certificates outstanding. The Appraisal
Reduction Amount will be reduced to zero as of the date the
related Mortgage Loan has been brought current for twelve
months, paid in full, repurchased or otherwise liquidated,
and any shortfalls borne by the subordinate classes may be
paid from amounts recovered from the related borrower.
MINIMUM DENOMINATIONS:
Minimum Increments
Classes Denomination Thereafter Delivery
- --------------------------------------------------------------------------------
A-1-a, A-1-b, A-2, B, C, D, and E $10,000 $1 DTC
- --------------------------------------------------------------------------------
X $250,000 $1 DTC
Page 5 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
PREPAYMENT PREMIUMS FOR AGGREGATE POOL*
<TABLE>
<CAPTION>
=============================================================================================================================
Prepayment 12/98 12/99 12/00 12/01 12/02 12/03 12/04 12/05 12/06 12/07 12/08 12/09
Premium
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-out / Def. 100.0% 100.0% 99.7% 99.5% 98.3% 98.2% 97.9% 98.2% 98.2% 96.4% 94.3% 94.1%
- -----------------------------------------------------------------------------------------------------------------------------
YM 0.3% 0.3% 1.6% 1.6% 1.6% 1.8% 1.8% 1.5% 5.7% 5.9%
=============================================================================================================================
Sub Total: 100.0% 100.0% 100.0% 99.8% 99.8% 99.8% 99.5% 99.9% 99.9% 97.9% 100.0% 100.0%
=============================================================================================================================
=============================================================================================================================
5% 0.2%
- -----------------------------------------------------------------------------------------------------------------------------
4% 0.2%
- -----------------------------------------------------------------------------------------------------------------------------
3% 0.2% 0.1% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
2% 0.2% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
1% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
Open 0.2% 2.1%
=============================================================================================================================
Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=============================================================================================================================
</TABLE>
* % represents % of then outstanding balance as of the date shown utilizing
Cut-off Date balances.
PREPAYMENT PREMIUMS FOR GROUP 1*
<TABLE>
<CAPTION>
=============================================================================================================================
Prepayment 12/98 12/99 12/00 12/01 12/02 12/03 12/04 12/05 12/06 12/07 12/08 12/09
Premium
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-out / Def. 100.0% 100.0% 100.0% 99.7% 98.5% 98.4% 98.3% 98.5% 98.5% 96.4% 94.0% 93.8%
- -----------------------------------------------------------------------------------------------------------------------------
YM 0.1% 1.3% 1.4% 1.4% 1.5% 1.5% 1.5% 6.0% 6.2%
=============================================================================================================================
Sub Total: 100.0% 100.0% 100.0% 99.8% 99.8% 99.8% 99.7% 99.9% 99.9% 97.9% 100.0% 100.0%
=============================================================================================================================
=============================================================================================================================
5% 0.2%
- -----------------------------------------------------------------------------------------------------------------------------
4% 0.2%
- -----------------------------------------------------------------------------------------------------------------------------
3% 0.2% 0.1% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
2% 0.2% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
1% 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
Open 2.1%
=============================================================================================================================
Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=============================================================================================================================
</TABLE>
* % represents % of then outstanding balance as of the date shown utilizing
Cut-off Date balances.
PREPAYMENT PREMIUMS FOR GROUP 2*
<TABLE>
<CAPTION>
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Prepayment 12/98 12/99 12/00 12/01 12/02 12/03 12/04 12/05 12/06 12/07 12/08 12/09
Premium
- -----------------------------------------------------------------------------------------------------------------------------
Lock-out / Def. 100.0% 100.0% 98.3% 98.3% 97.2% 97.1% 95.7% 96.1% 96.1% 96.3% 100.0% 100.0%
- -----------------------------------------------------------------------------------------------------------------------------
YM 1.7% 1.7% 2.8% 2.9% 2.9% 3.9% 3.9% 1.6%
=============================================================================================================================
Sub Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 98.6% 100.0% 100.0% 97.9% 100.0% 100.0%
=============================================================================================================================
=============================================================================================================================
Open 1.4% 2.1%
=============================================================================================================================
Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=============================================================================================================================
</TABLE>
* % represents % of then outstanding balance as of the date shown utilizing
Cut-off Date balances.
Page 6 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
OPEN PREPAYMENT PERIOD AT END OF LOAN (i.e. Prior to Maturity Date or ARD, as
applicable) FOR AGGREGATE POOL:
======================================================================
Open Period at End Number of Loans % of Initial
Of Loan* Pool Balance
======================================================================
None 40 33.97%
----------------------------------------------------------------------
1 Month 17 10.07%
----------------------------------------------------------------------
2 Months 1 0.25%
----------------------------------------------------------------------
3 Months 199 48.22%
----------------------------------------------------------------------
4 Months 7 2.12%
----------------------------------------------------------------------
5 Months 1 0.16%
----------------------------------------------------------------------
6 Months 20 5.20%
======================================================================
Total: 285 100.00%
======================================================================
* Weighted average open period at end of loan is 2 months.
OPEN PREPAYMENT PERIOD AT END OF LOAN (i.e. Prior to Maturity Date or ARD, as
applicable) FOR GROUP 1:
======================================================================
Open Period at End Number of Loans % of Initial
Of Loan* Pool Balance
======================================================================
None 38 39.43%
----------------------------------------------------------------------
1 Month 12 10.91%
----------------------------------------------------------------------
2 Months 1 0.30%
----------------------------------------------------------------------
3 Months 160 43.60%
----------------------------------------------------------------------
4 Months 3 1.09%
----------------------------------------------------------------------
6 Months 15 4.68%
======================================================================
Total: 229 100.00%
======================================================================
* Weighted average open period at end of loan is 2 months.
OPEN PREPAYMENT PERIOD AT END OF LOAN (i.e. Prior to Maturity Date or ARD, as
applicable) FOR GROUP 2:
======================================================================
Open Period at End Number of Loans % of Initial
Of Loan* Pool Balance
======================================================================
None 2 3.70%
----------------------------------------------------------------------
1 Month 5 5.43%
----------------------------------------------------------------------
3 Months 39 73.90%
----------------------------------------------------------------------
4 Months 4 7.83%
----------------------------------------------------------------------
5 Months 1 1.07%
----------------------------------------------------------------------
6 Months 5 8.07%
======================================================================
Total: 56 100.00%
======================================================================
*Weighted average open period at end of loan is 3 months.
Page 7 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
PREPAYMENT PREMIUM ALLOCATION EXAMPLE:
The Yield Maintenance prepayment premium will generally be
equal to the present value of the reduction in interest
payments as a result of the prepayment through the maturity of
the prepaid Mortgage Loan, discounted at the yield of a
Treasury security of similar maturity in most cases (converted
from semi-annual to monthly pay). The following example
reflects that method.
General Yield Maintenance Example for Group 1 Mortgage Loan:
Assuming the structure presented in the beginning of this
memo, that a Group 1 Mortgage Loan prepays, so Class A-1-a and
Class A-2 are the only classes entitled to principal and the
following assumptions: Mortgage Loan Characteristics of Group
1 Mortgage Loan being prepaid:
Balance $10,000,000
Coupon 7.00%
Maturity 10 yrs (December 1, 2008)
Treasury Rate (monthly) 4.50%
Certificate Characteristics
Class A-1-a Coupon 6.35%
Class A-2 Coupon 6.35%
Discount Rate Fraction Example:
<TABLE>
<CAPTION>
=================================================================================================================================
Class A-1-a Class A-2 Class X
Certificates Certificates Certificates
=================================================================================================================================
<S> <C> <C> <C>
Principal Payment $8,400,000 $1,600,000 N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Discount Rate Fraction Calculation (ii) (6.35% - 4.50%) / (6.35% - 4.50%) /
(Class A-1-a Coupon - Reinvestment Yield) / (7.00% - 4.50%) = (7.00% - 4.50%) = (100% - 74%) =
(Gross Mortgage Rate - Reinvestment Yield) = 1.85% / 2.50% = 1.85% / 2.50% =
Discount Rate Fraction = 74.0% 74.0% 26%
- ---------------------------------------------------------------------------------------------------------------------------------
% of Total Principal Distribution (iii) 8,400,000 / 10,000,000 = 1,600,000 / 10,000,000 = N/A
84% 16%
- ---------------------------------------------------------------------------------------------------------------------------------
% of Premium allocated to Classes (ii * iii) 74% * 84% = 62.16% 74% * 16% = 11.84% 26.0%
=================================================================================================================================
</TABLE>
Page 8 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
PREPAYMENT PREMIUM ALLOCATION EXAMPLE:
The Yield Maintenance prepayment premium will generally be
equal to the present value of the reduction in interest
payments as a result of the prepayment through the maturity of
the prepaid Mortgage Loan, discounted at the yield of a
Treasury security of similar maturity in most cases (converted
from semi-annual to monthly pay). The following example
reflects that method.
General Yield Maintenance Example for Group 2 Mortgage Loan:
Assuming the structure presented in the beginning of this
memo, that a Group 2 Mortgage Loan prepays, so Class A-2 is
the only class entitled to principal and the following
assumptions: Mortgage Loan Characteristics of Group 2 Mortgage
Loan being prepaid:
Balance $10,000,000
Coupon 7.00%
Maturity 10 yrs (December 1, 2008)
Treasury Rate (monthly) 4.50%
Certificate Characteristics
Class A-1-a Coupon 6.35%
Class A-2 Coupon 6.35%
Discount Rate Fraction Example:
<TABLE>
<CAPTION>
===========================================================================================
Class A-2 Class X
Certificates Certificates
===========================================================================================
<S> <C> <C>
Principal Payment $10,000,000 N/A
- -------------------------------------------------------------------------------------------
Discount Rate Fraction Calculation (ii) (6.35% - 4.50%) /
(Class A-2 Coupon - Reinvestment Yield) / (7.00% - 4.50%) = (100% - 74%) =
(Gross Mortgage Rate - Reinvestment Yield) = 1.85% / 2.50% =
Discount Rate Fraction = 74.0% 26.0%
- -------------------------------------------------------------------------------------------
% of Total Principal Distribution (iii) 100% N/A
- -------------------------------------------------------------------------------------------
% of Premium allocated to Classes (ii * iii) 74% * 100% = 74% 26.0%
===========================================================================================
</TABLE>
Page 9 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
CREDIT TENANT LEASE LOANS:
Credit Tenant Lease Loans are secured by mortgages on
properties which are leased (each a "Credit Tenant Lease") to
a tenant which possesses (or whose parent or other affiliate
which guarantees the lease obligation possesses) the rating
indicated in the following table. Scheduled monthly rent
payments under the Credit Tenant Leases are generally
sufficient to pay in full and on a timely basis all interest
and principal scheduled to be paid with respect to the related
Credit Tenant Lease Loans.
The Credit Tenant Lease Loans generally provide that the
Tenant is responsible for all costs and expenses incurred in
connection with the maintenance and operation of the related
Credit Tenant Lease property and that, in the event of a
casualty or condemnation of a material portion of the related
Mortgaged Property:
(i) the Tenant is obligated to continue making
payments;
(ii) the Tenant must make an offer to purchase the
applicable property subject to the Credit Tenant
Lease for an amount not less than the unpaid
principal balance plus accrued interest on the
related Credit Tenant Lease Loan; or
(iii) the Trustee on behalf of the Certificate holders
will have the benefit of certain non-cancelable
credit lease enhancement policies obtained to
cover certain casualty and/or condemnation risks.
Approximately 3.9% of the Mortgage Loans and 4.6% of the Group
1 Mortgage Loans are Credit Tenant Lease Loans.
CREDIT TENANT LEASE LOANS:
<TABLE>
<CAPTION>
=========================================================================================================
Tenant / Guarantor Number of Cut-off Date Lease Credit Rating Credit Rating
Loans Balance ($) Type(1) (Moody's) (S&P)
=========================================================================================================
<S> <C> <C> <C> <C> <C>
Kmart 3 $11,834,934 NNN Ba2 BB
- ---------------------------------------------------------------------------------------------------------
Food Lion 2 $11,595,033 NNN A3 A-
- ---------------------------------------------------------------------------------------------------------
Garden Ridge 1 $10,377,575 NNN N/A(3) N/A(3)
- ---------------------------------------------------------------------------------------------------------
Walgreens 3 $9,705,019 NN Aa3 A+
- ---------------------------------------------------------------------------------------------------------
CVS 6 $9,658,555 NN A3 A-
- ---------------------------------------------------------------------------------------------------------
Eckerd(2) 3 $7,974,406 NNN A2 A
- ---------------------------------------------------------------------------------------------------------
Rite Aid 3 $5,560,672 NN Baa1 BBB+
- ---------------------------------------------------------------------------------------------------------
Bell Atlantic of Virginia 1 $4,132,482 B A1 AA
- ---------------------------------------------------------------------------------------------------------
Staples 1 $2,640,770 NN Baa2 BBB-
- ---------------------------------------------------------------------------------------------------------
Revco / CVS(4) 1 $2,440,922 NN A3 A-
- ---------------------------------------------------------------------------------------------------------
Southland (7-11)(5) 1 $1,462,648 NN Ba1 BB+
- ---------------------------------------------------------------------------------------------------------
IHOP 1 $1,375,000 NNN N/A(3) N/A(3)
=========================================================================================================
Total: 26 $78,758,016 -- --
=========================================================================================================
</TABLE>
Unless otherwise indicated, such ratings were the highest long term senior
unsecured rating assigned to the applicable tenant or guarantor, as applicable,
by Moody's and Standard & Poor's, respectively. See "Description of the Mortgage
Pool-Credit Tenant Lease Loans" in the Prospectus Supplement.
(1) "NNN" means triple net lease; "NN" means double net lease; "B" means bond
type lease.
(2) Based upon the rating of Eckerd's parent, J.C. Penney Corporation,
although it has made no explicit guaranty of Eckerd's obligations. Eckerd
Greensboro and Eckerd San Antonio, with a total Cut-Off Balance of
$5,453,702, are triple net leased and Eckerd Chattanooga, with a Cut-Off
Balance $2,520,704, is double leased.
(3) Not publicly available.
(4) Based upon the rating of Revco's parent, CVS, although it has made no
explicit guaranty of Revco's obligations.
(5) Senior unsecured credit facilities.
Page 10 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
RESERVES FOR AGGREGATE POOL:
The below table relates only to Conduit loans and excludes all CTL loans as well
as the Large Loans.
<TABLE>
<CAPTION>
=========================================================================================
% of Conduit Loans Current Balance Annual Deposit
w/Annual Escrows
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Replacement Reserves 95.6% $1,652,713 $6,854,795
- -----------------------------------------------------------------------------------------
Taxes 89.4% $8,924,206 $16,242,736
- -----------------------------------------------------------------------------------------
Insurance 84.9% $1,551,093 $2,859,848
- -----------------------------------------------------------------------------------------
T1 & LC (Retail) 67.8% $1,223,861 $2,562,776
- -----------------------------------------------------------------------------------------
TI & LC (Office) 89.7% $694,784 $2,188,497
- -----------------------------------------------------------------------------------------
TI & LC (Industrial/Warehouse) 78.6% $307,515 $460,716
=========================================================================================
</TABLE>
RESERVES FOR GROUP 1:
The below table relates only to Conduit loans and excludes all CTL loans as well
as the Large Loans.
<TABLE>
<CAPTION>
=========================================================================================
% of Conduit Loans Current Balance Annual Deposit
w/Annual Escrows
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Replacement Reserves 94.1% $927,639 $4,368,100
- -----------------------------------------------------------------------------------------
Taxes 86.0% $6,409,959 $11,482,854
- -----------------------------------------------------------------------------------------
Insurance 82.1% $1,052,057 $1,978,476
- -----------------------------------------------------------------------------------------
TI & LC (Retail) 67.8% $1,223,861 $2,562,776
- -----------------------------------------------------------------------------------------
TI & LC (Office) 89.7% $694,784 $2,188,497
- -----------------------------------------------------------------------------------------
TI & LC (Industrial/Warehouse) 78.6% $307,515 $460,716
=========================================================================================
</TABLE>
RESERVES FOR GROUP 2:
<TABLE>
<CAPTION>
=========================================================================================
% of Loans Current Balance Annual Deposit
w/Annual Escrows
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Replacement Reserves 100.0% $725,074 $2,486,695
- -----------------------------------------------------------------------------------------
Taxes 100.0% $2,514,247 $4,759,882
- -----------------------------------------------------------------------------------------
Insurance 93.3% $499,036 $881,372
=========================================================================================
</TABLE>
CASH MANAGEMENT:
<TABLE>
<CAPTION>
===============================================================================================================================
Aggregate Pool Group 1 Group 2
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hard Lockbox 11.0% of Initial Pool Balance 13.0% of Initial Group Balance N/A
- -------------------------------------------------------------------------------------------------------------------------------
Springing Lockbox 85.6% of Initial Pool Balance 83.7% of Initial Group Balance 95.8% of Initial Group Balance
- -------------------------------------------------------------------------------------------------------------------------------
N/A 3.4% of Initial Pool Balance 3.3% of Initial Group Balance 4.2% of Initial Group Balance
===============================================================================================================================
</TABLE>
Page 11 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
LARGE LOANS: There are 6 loans with a Cut-off Date principal balance in
excess of $50 million. The following table provides a
summary of 6 largest loans (the "Large Loans").
Large Loan Mortgage Loan Summary:
<TABLE>
<CAPTION>
============================================================================================================================
Mortgage Property # of Cut-off Date Coupon Original Amortization DSCR LTV
Loan Type Properties Balance Term Term
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Omni / TRT Hotel 5 $249,347,368 6.25% 120 300 2.34x 49.89%
- ----------------------------------------------------------------------------------------------------------------------------
Ontario Mills Regional 1 $145,000,000 6.75% 120 360 1.73x 58.00%
Mall
- ----------------------------------------------------------------------------------------------------------------------------
Arden Office/R&D/ 12 $111,200,000 6.61% 118 57 I/O / 300 2.35x 47.32%
Industrial
- ----------------------------------------------------------------------------------------------------------------------------
Fresno Fashion Regional 1 $69,000,000 6.52% 120 360 1.74x 60.69%
Fair Mall Mall
- ----------------------------------------------------------------------------------------------------------------------------
Bayside Retail 1 $62,936,317 5.92% 121 360 1.80x 61.71%
- ----------------------------------------------------------------------------------------------------------------------------
Inland Retail 12 $54,600,000 6.36% 120 I/O 2.74x 51.51%
============================================================================================================================
Total / -- 32 $692,083,685 6.42% 120 -- 2.14x 53.46%
Weighted Ave.:
============================================================================================================================
</TABLE>
Omni / TRT:
================================================================================
Cut-Off Date Balance: $249,347,368
- --------------------------------------------------------------------------------
Coupon: 6.25%
- --------------------------------------------------------------------------------
Term/Am: 120/300
- --------------------------------------------------------------------------------
Sponsor: TRT Holding Inc. / Omni Hotels
- --------------------------------------------------------------------------------
Properties: 5 Full Service Omni Hotels
- --------------------------------------------------------------------------------
Size: 1,858 rooms
- --------------------------------------------------------------------------------
Locations: IL, NY, TX
- --------------------------------------------------------------------------------
Appraised Value: $499,800,000
- --------------------------------------------------------------------------------
LTV: 49.89%
- --------------------------------------------------------------------------------
DSCR: 2.34x
- --------------------------------------------------------------------------------
Lockbox: Springing, if DSCR falls below 1.50x
- --------------------------------------------------------------------------------
Reserves: Ongoing taxes, insurance, and 3.5% FF&E and an
approximate $2.7 million letter of credit to cover one
month's payments for tax, insurance, FF&E and debt
service.
================================================================================
Page 12 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
Ontario Mills:
================================================================================
Cut-Off Date Balance: $145,000,000
- --------------------------------------------------------------------------------
Coupon: 6.75%
- --------------------------------------------------------------------------------
Term/Am: 120/360
- --------------------------------------------------------------------------------
Sponsor: Simon Property Group, The Mills Corporation, Kan Am
- --------------------------------------------------------------------------------
Anchors: AMC Entertainment, JC Penney, Sports Authority,
Burlington Coat Factory, Marshalls
- --------------------------------------------------------------------------------
Property: Super Regional Mall
- --------------------------------------------------------------------------------
Size: 1,220,625 SF
- --------------------------------------------------------------------------------
Location: Ontario, CA
- --------------------------------------------------------------------------------
Appraised Value: $250,000,000
- --------------------------------------------------------------------------------
LTV: 58.00%
- --------------------------------------------------------------------------------
DSCR: 1.73x
- --------------------------------------------------------------------------------
Lockbox: Springing, if DSCR falls below 1.25x
- --------------------------------------------------------------------------------
Reserves: Ongoing taxes and insurance reserves
================================================================================
Arden:
================================================================================
Cut-Off Date Balance: $111,200,000
- --------------------------------------------------------------------------------
Coupon: 6.61%
- --------------------------------------------------------------------------------
Term/Am: 118 / 57 I/O/300
- --------------------------------------------------------------------------------
Sponsor: Arden Realty, Inc.
- --------------------------------------------------------------------------------
Properties: 12 Suburban Office, R&D and Industrial Properties
- --------------------------------------------------------------------------------
Size: 2,239,948 SF
- --------------------------------------------------------------------------------
Location: CA
- --------------------------------------------------------------------------------
Value: $235,000,000 based upon 9.0% cap rate on Lehman
Underwritten NOI
- --------------------------------------------------------------------------------
LTV: 47.32%
- --------------------------------------------------------------------------------
DSCR(1): 2.35x
- --------------------------------------------------------------------------------
Lockbox: Springing, if DSCR falls below 1.50x
- --------------------------------------------------------------------------------
Reserves: Ongoing taxes, insurance, and a $3,270,000
replenishing capital expenditure, tenant improvement,
leasing commissions and capital expenditures reserve.
================================================================================
(1) DSCR shown is based upon the required debt service period during the
loan's IO period.
Fresno Fashion Fair Mall:
================================================================================
Cut-Off Date Balance: $69,000,000
- --------------------------------------------------------------------------------
Coupon: 6.52%
- --------------------------------------------------------------------------------
Term/Am: 120/360
- --------------------------------------------------------------------------------
Sponsor: The Macerich Company
- --------------------------------------------------------------------------------
Anchors: Macy's, JC Penney, Gottschalk's
- --------------------------------------------------------------------------------
Property: Regional Mall
- --------------------------------------------------------------------------------
Size: 881,413 SF
- --------------------------------------------------------------------------------
Location: Fresno, CA
- --------------------------------------------------------------------------------
Value: $113,693,000 based upon 8.5% cap rate on Lehman
Underwritten NOI
- --------------------------------------------------------------------------------
LTV: 60.69%
- --------------------------------------------------------------------------------
DSCR: 1.74x
- --------------------------------------------------------------------------------
Lockbox: Springing, if DSCR falls to or below 1.35x
- --------------------------------------------------------------------------------
Reserves: Taxes and insurance if lockbox triggered
================================================================================
Page 13 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
Bayside:
================================================================================
Cut-Off Date Balance: $62,936,317
- --------------------------------------------------------------------------------
Coupon: 5.92%
- --------------------------------------------------------------------------------
Term/Am: 121/360
- --------------------------------------------------------------------------------
Sponsor: The Rouse Company
- --------------------------------------------------------------------------------
Anchors: Hard Rock Cafe, The Limited, Warner Brothers Store
- --------------------------------------------------------------------------------
Property: Festival Marketplace and adjacent parking garage
- --------------------------------------------------------------------------------
Size: 230,781 SF
- --------------------------------------------------------------------------------
Location: Miami, FL
- --------------------------------------------------------------------------------
Value(1): $101,980,000
- --------------------------------------------------------------------------------
LTV(1): 61.71%
- --------------------------------------------------------------------------------
DSCR: 1.80x
- --------------------------------------------------------------------------------
Lockbox Hard
- --------------------------------------------------------------------------------
Reserves: Ongoing taxes, insurance, replacement reserves,
tenant improvements, and leasing commissions.
================================================================================
(1) Bayside has an appraised value of $116,000,000. For purposes of
calculating LTV this value has been adjusted to $101,980,000 to reflect
the existence of municipal bond financing on the adjacent parking garage.
Inland:
================================================================================
Cut-Off Date Balance: $54,600,000
- --------------------------------------------------------------------------------
Coupon: 6.36%
- --------------------------------------------------------------------------------
Term/Am: 120/IO
- --------------------------------------------------------------------------------
Sponsor: Inland Real Estate Company
- --------------------------------------------------------------------------------
Anchors: Wal-Mart, The Gap, Dominick's, Pier One
- --------------------------------------------------------------------------------
Properties: 12 Community and Neighborhood Shopping Centers
- --------------------------------------------------------------------------------
Size: 1,196,551 SF
- --------------------------------------------------------------------------------
Location: IL, MN, IN, WI
- --------------------------------------------------------------------------------
Appraised Value: $105,995,000
- --------------------------------------------------------------------------------
LTV: 51.51%
- --------------------------------------------------------------------------------
DSCR: 2.74x
- --------------------------------------------------------------------------------
Lockbox Springing, If DSCR falls below 1.50x
- --------------------------------------------------------------------------------
Reserves: Ongoing taxes. Tenant improvements and leasing
commissions if lockbox triggered
================================================================================
Page 14 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
ANTICIPATED REPAYMENT DATE LOANS:
Mortgage Loans representing 35.16% of the Initial Pool
Balance provided that if the unamortized principal amount
thereof is not repaid on a date (the "Anticipated Repayment
Date") set forth in the related Mortgage Note, the Mortgage
Loan will accrue additional interest at the rate set forth
therein and the borrower will be required to apply excess
monthly cash flow generated by the Mortgaged Property (as
determined in the related Mortgage) to the repayment of
principal outstanding on the Mortgage Loan. With respect to
such Mortgage Loans, no Prepayment Premiums or Yield
Maintenance Charges will be due in connection with any
principal prepayment on or after the Anticipated Repayment
Date. For purposes of analysis and presentation, such loans
are assumed to pay off at the ARD and are treated like
balloon loans that mature on the ARD.
DETAILED MONTHLY INVESTOR REPORTING:
Updated collateral summary information will be a part of the
monthly remittance report in addition to detailed P&I
payment and delinquency information. Quarterly NOI and
Occupancy data, to the extent delivered by the borrowers,
will be available to Certificate holders through the
Trustee. The following is a list of all the reports that
will be available to Certificate holders:
<TABLE>
<CAPTION>
Name of Report Description (information provided)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Remittance Report Principal and interest distributions, principal balances
- ----------------------------------------------------------------------------------------------------------------
2 Mortgage Loan Status Report Portfolio stratifications
- ----------------------------------------------------------------------------------------------------------------
3 Comparative Financial Status Report Revenue, NOI, DSCR to the extent available
- ----------------------------------------------------------------------------------------------------------------
4 Delinquent Loan Status Report Listing of delinquent mortgage loans
- ----------------------------------------------------------------------------------------------------------------
5 Historical Loan Modification Report Information on modified mortgage loans
- ----------------------------------------------------------------------------------------------------------------
6 Historical Loss Estimate Report Liquidation proceeds, expenses, and realized losses
- ----------------------------------------------------------------------------------------------------------------
7 REO Status Report NOI and value of REO
- ----------------------------------------------------------------------------------------------------------------
8 Watch List Listing of loans in jeopardy of becoming Specially Serviced
- ----------------------------------------------------------------------------------------------------------------
9 Loan Payoff Notification Report Listing of loans where borrower has requested a pay-off statement
</TABLE>
ADVANCING: The Master Servicer will be obligated to make advances of
scheduled principal and interest payments (excluding balloon
payments and subject to reduction for Appraisal Reduction
Amounts) and certain servicing expenses ("Advances"), to the
extent that such Advances are deemed to be recoverable out
of collections on the related loan. If the Master Servicer
fails to make a required Advance, the Trustee will be
obligated to make such advances.
CONTROLLING CLASS: A majority of Certificate holders of the Controlling Class,
which will generally be the most subordinate class with a
Certificate Balance outstanding that is at least 25% of the
initial Certificate Balance of such Class will, subject to
certain limitations, be entitled to replace the Special
Servicer.
Page 15 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
SPECIAL SERVICER
FLEXIBILITY: The Pooling and Servicing Agreement will generally permit
the Special Servicer to modify, waive or amend any term of
any Mortgage Loan if (a) it determines, in accordance with
the servicing standard, that it is appropriate to do so and
(b) among other things, such modification, waiver or
amendment will not, subject to certain exceptions:
(i) affect the amount or timing of any scheduled
payments of principal, interest or other amount
(including Prepayment Premiums and Yield
Maintenance Charges) payable under the Mortgage
Loan;
(ii) affect the obligation of the related borrower to
pay a Prepayment Premium or Yield Maintenance
Charge or permit a principal prepayment during the
applicable Lockout Period;
(iii) except as expressly provided by the related
Mortgage or in connection with a material adverse
environmental condition at the related Mortgaged
Property, result in a release of the lien of the
related Mortgage on any material portion of such
Mortgaged Property without a corresponding
principal prepayment, or;
(iv) in the judgment of the Special Servicer,
materially impair the security for the Mortgage
Loan or reduce the likelihood of timely payment of
amounts due thereon.
Page 16 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
AGGREGATE POOL
GENERAL CHARACTERISTICS
==========================================================
Characteristics
==========================================================
Initial Pool Balance $2,025,590,706
----------------------------------------------------------
Number of Loans 285
----------------------------------------------------------
Gross WAC 6.840%
----------------------------------------------------------
Original WAM 123 months
----------------------------------------------------------
Remaining WAM 121 months
----------------------------------------------------------
Avg. Loan Balance $7,107,336
----------------------------------------------------------
WA DSCR* 1.67x
----------------------------------------------------------
WA Cut-off Date LTV Ratio* 65.69%
----------------------------------------------------------
Balloon or ARD Loans 97.17%
==========================================================
* Excludes CTL loans
PROPERTY TYPES
==========================================================
Property % of Initial Pool
Types Balance
==========================================================
Retail 40.12%
----------------------------------------------------------
Multifamily 17.94%
----------------------------------------------------------
Hotel 17.90%
----------------------------------------------------------
Office 9.46%
----------------------------------------------------------
Office/Industrial 5.49%
----------------------------------------------------------
CTL 3.89%
----------------------------------------------------------
Industrial/Warehouse 3.33%
----------------------------------------------------------
Self Storage 0.76%
----------------------------------------------------------
Health Care 0.70%
----------------------------------------------------------
Manufactured Housing 0.25%
----------------------------------------------------------
Parking Garage 0.16%
==========================================================
Total: 100.00%
==========================================================
DEAL SUMMARY BY PROPERTY TYPE
<TABLE>
<CAPTION>
====================================================================================================================================
Property Type # of Aggregate % of Average Gross Rem. WA WA WA Balloon
Loans Cut-off Date Initial Pool Cut-off Date WAC WAM LTV DSCR(1) Occupancy %
Balance ($) Balance Balance ($) (%) (mos) Ratio(1) Rate(%)(2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail 108 $812,726,976 40.1% $7,525,250 6.83% 123 66.33% 1.62x 97.00% 39.43%
- ------------------------------------------------------------------------------------------------------------------------------------
Anchored 55 $407,508,749 20.1% $7,409,250 6.80% 125 68.26% 1.65x 96.62% 20.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Unanchored 50 $143,574,532 7.1% $2,871,491 7.13% 138 71.71% 1.43x 95.51% 6.40%
- ------------------------------------------------------------------------------------------------------------------------------------
Regional Mall 3 $261,643,694 12.9% $87,214,565 6.70% 112 60.37% 1.69x 98.42% 12.92%
- ------------------------------------------------------------------------------------------------------------------------------------
Multifamily 64 $363,314,293 17.9% $5,676,786 6.89% 109 75.26% 1.39x 94.28% 17.94%
- ------------------------------------------------------------------------------------------------------------------------------------
Hotel 16 $362,572,315 17.9% $22,660,770 6.60% 118 54.88% 2.09x NAP 17.73%
- ------------------------------------------------------------------------------------------------------------------------------------
Full Service 4 $276,807,744 13.7% $69,201,936 6.32% 118 50.81% 2.27x NAP 13.67%
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Service 12 $85,764,571 4.2% $7,147,048 7.48% 116 67.99% 1.51x NAP 4.07%
- ------------------------------------------------------------------------------------------------------------------------------------
Office 44 $191,679,298 9.5% $4,356,348 7.13% 108 72.60% 1.36x 96.50% 9.46%
- ------------------------------------------------------------------------------------------------------------------------------------
Office/Industrial 1 $111,200,000 5.5% $111,200,000 6.61% 114 47.32% 2.35x 93.99% 5.49%
- ------------------------------------------------------------------------------------------------------------------------------------
CTL 26 $78,758,016 3.9% $3,029,154 7.15% 228 NAP NAP 100.00% 2.09%
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/W'hse 16 $67,464,779 3.3% $4,216,549 7.09% 108 72.41% 1.37x 96.00% 3.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Self Storage 5 $15,393,022 0.8% $3,078,604 7.13% 134 69.23% 1.51x 95.55% 0.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care 1 $14,138,000 0.7% $14,138,000 7.15% 116 74.80% 1.37x 90.80% 0.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Manf'd Housing 3 $5,107,564 0.3% $1,702,521 7.11% 118 76.12% 1.32x 90.87% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Parking Garage 1 $3,236,444 0.2% $3,236,444 7.26% 116 51.37% 1.49x 94.07% 0.16%
====================================================================================================================================
Total / Avg / Wtd.Avg: 285 $2,025,590,706 100.0% $7,107,336 6.84% 121 65.69% 1.67x 96.16% 97.17%
====================================================================================================================================
</TABLE>
(1) Excludes credit tenant lease loans.
(2) Excludes hotels.
Page 17 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
AGGREGATE POOL
LOAN SIZE DISTRIBUTION
================================================================================
Cut-off Date Balance Ranges # of % of Initial
($) Loans Pool Balance
================================================================================
0.01 - 2,000,000.00 68 4.99%
- --------------------------------------------------------------------------------
2,000,000.01 - 4,000,000.00 110 15.80%
- --------------------------------------------------------------------------------
4,000,000.01 - 6,000,000.00 48 11.95%
- --------------------------------------------------------------------------------
6,000,000.01 - 8,000,000.00 18 6.24%
- --------------------------------------------------------------------------------
8,000,000.01 - 10,000,000.00 10 4.35%
- --------------------------------------------------------------------------------
10,000,000.01 - 15,000,000.00 13 7.85%
- --------------------------------------------------------------------------------
15,000,000.01 - 20,000,000.00 7 6.02%
- --------------------------------------------------------------------------------
20,000,000.01 - 30,000,000.00 2 2.49%
- --------------------------------------------------------------------------------
30,000,000.01 - 40,000,000.00 1 1.52%
- --------------------------------------------------------------------------------
40,000,000.01 - 50,000,000.00 2 4.62%
- --------------------------------------------------------------------------------
50,000,000.01 - 60,000,000.00 1 2.70%
- --------------------------------------------------------------------------------
60,000,000.01 - 70,000,000.00 2 6.51%
- --------------------------------------------------------------------------------
110,000,000.01 - 112,000,000.00 1 5.49%
- --------------------------------------------------------------------------------
144,000,000.01 - 248,000,000.00 1 7.16%
- --------------------------------------------------------------------------------
248,000,000.01 >= 1 12.31%
================================================================================
Total: 285 100.00%
================================================================================
GROSS RATE DISTRIBUTION
=========================================================
Gross Rate Ranges % of Initial
(%) Pool Balance
=========================================================
5.751 - 6.000 3.19%
---------------------------------------------------------
6.001 - 6.250 12.71%
---------------------------------------------------------
6.251 - 6.500 4.47%
---------------------------------------------------------
6.501 - 6.750 22.92%
---------------------------------------------------------
6.751 - 7.000 21.52%
---------------------------------------------------------
7.001 - 7.250 23.86%
---------------------------------------------------------
7.251 - 7.500 5.34%
---------------------------------------------------------
7.501 - 7.750 2.72%
---------------------------------------------------------
7.751 - 8.000 2.40%
---------------------------------------------------------
8.001 - 8.250 0.36%
---------------------------------------------------------
8.751 - 9.000 0.51%
=========================================================
Total: 100.00%
=========================================================
REMAINING TERM TO MATURITY (1)
===================================================
Months % of Initial
Pool Balance
===================================================
49 - 60 2.80%
---------------------------------------------------
73 - 84 8.95%
---------------------------------------------------
97 - 108 0.83%
---------------------------------------------------
109 - 120 78.95%
---------------------------------------------------
133 - 144 0.20%
---------------------------------------------------
169 - 180 2.51%
---------------------------------------------------
181 - 192 0.04%
---------------------------------------------------
205 - 216 0.58%
---------------------------------------------------
229 - 240 4.83%
---------------------------------------------------
289 - 300 0.33%
===================================================
Total: 100.00%
===================================================
(1) Assumes ARD Loans payoff on their Anticipated
Repayment Date
REMAINING AMORTIZATION TERM(1)
===================================================
Months % of Initial
Pool Balance
===================================================
I/O 2.70%
---------------------------------------------------
169 - 180 0.90%
---------------------------------------------------
181 - 192 0.04%
---------------------------------------------------
193 - 204 0.20%
---------------------------------------------------
205 - 216 0.13%
---------------------------------------------------
229 - 240 2.35%
---------------------------------------------------
253 - 264 0.06%
---------------------------------------------------
265 - 276 1.08%
---------------------------------------------------
277 - 288 0.54%
---------------------------------------------------
289 - 300 30.70%
---------------------------------------------------
313 - 324 0.36%
---------------------------------------------------
325 - 336 0.20%
---------------------------------------------------
337 - 348 0.83%
---------------------------------------------------
349 - 360 59.92%
===================================================
Total: 100.00%
===================================================
(1) Assumes ARD Loans payoff on their Anticipated
Repayment Date
Page 18 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
AGGREGATE POOL
DEBT SERVICE COVERAGE RATIOS (DSCR)(1)
=======================================================
Cut-off Date % of Initial
DSCR Ranges (x) Pool Balance
=======================================================
1.16 - 1.20 0.50%
-------------------------------------------------------
1.21 - 1.25 1.45%
-------------------------------------------------------
1.26 - 1.30 8.26%
-------------------------------------------------------
1.31 - 1.35 16.47%
-------------------------------------------------------
1.36 - 1.45 17.80%
-------------------------------------------------------
1.46 - 1.50 10.25%
-------------------------------------------------------
1.51 - 1.55 2.68%
-------------------------------------------------------
1.56 - 1.60 3.33%
-------------------------------------------------------
1.61 - 1.65 0.24%
-------------------------------------------------------
1.66 - 1.70 0.61%
-------------------------------------------------------
1.71 - 1.75 11.33%
-------------------------------------------------------
1.76 - 1.80 3.23%
-------------------------------------------------------
1.86 - 1.90 0.21%
-------------------------------------------------------
1.91 - 2.05 1.41%
-------------------------------------------------------
2.06 - 2.10 0.38%
-------------------------------------------------------
2.11 - 2.20 0.17%
-------------------------------------------------------
2.31 - 2.50 18.78%
-------------------------------------------------------
2.51 - 3.00 2.80%
-------------------------------------------------------
3.01 - 3.60 0.09%
=======================================================
Total: 100.00%
=======================================================
(1) Excludes CTL Loans
LOAN TO VALUE RATIOS (LTV)(1)
=======================================================
Cut-Off Date % of Initial
LTV Ranges (%) Pool Balance
=======================================================
15.01 - 20.00 0.09%
-------------------------------------------------------
25.01 - 30.00 0.11%
-------------------------------------------------------
35.01 - 40.00 0.17%
-------------------------------------------------------
40.01 - 45.00 0.26%
-------------------------------------------------------
45.01 - 50.00 18.66%
-------------------------------------------------------
50.01 - 55.00 3.43%
-------------------------------------------------------
55.01 - 60.00 11.43%
-------------------------------------------------------
60.01 - 65.00 8.91%
-------------------------------------------------------
65.01 - 70.00 9.57%
-------------------------------------------------------
70.01 - 75.00 21.68%
-------------------------------------------------------
75.01 - 80.00 25.61%
-------------------------------------------------------
80.01 - 85.00 0.08%(2)
=======================================================
Total: 100.00%
=======================================================
(1) Excludes CTL Loans
(2) Section 42 multifamily property
Page 19 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
AGGREGATE POOL
GEOGRAPHIC DISTRIBUTION
=========================================================
State % of Initial
Pool Balance
=========================================================
Alabama 3.04%
---------------------------------------------------------
Arizona 3.30%
---------------------------------------------------------
California 19.80%
---------------------------------------------------------
Colorado 1.03%
---------------------------------------------------------
Connecticut 1.59%
---------------------------------------------------------
Florida 8.30%
---------------------------------------------------------
Georgia 2.94%
---------------------------------------------------------
Illinois 9.45%
---------------------------------------------------------
Indiana 3.68%
---------------------------------------------------------
Kansas 0.25%
---------------------------------------------------------
Kentucky 0.09%
---------------------------------------------------------
Louisiana 0.13%
---------------------------------------------------------
Massachusetts 0.55%
---------------------------------------------------------
Maryland 0.93%
---------------------------------------------------------
Michigan 0.86%
---------------------------------------------------------
Minnesota 0.70%
---------------------------------------------------------
Missouri 0.50%
---------------------------------------------------------
Mississippi 0.13%
---------------------------------------------------------
Nevada 1.30%
---------------------------------------------------------
New Jersey 0.68%
---------------------------------------------------------
New York 10.52%
---------------------------------------------------------
North Carolina 2.62%
---------------------------------------------------------
North Dakota 0.12%
---------------------------------------------------------
Ohio 1.11%
---------------------------------------------------------
Oklahoma 0.91%
---------------------------------------------------------
Oregon 0.47%
---------------------------------------------------------
Pennsylvania 3.67%
---------------------------------------------------------
Puerto Rico 0.28%
---------------------------------------------------------
Rhode Island 0.27%
---------------------------------------------------------
South Carolina 0.30%
---------------------------------------------------------
Tennessee 2.50%
---------------------------------------------------------
Texas 11.54%
---------------------------------------------------------
Virginia 3.36%
---------------------------------------------------------
Washington 2.32%
---------------------------------------------------------
Wisconsin 0.69%
---------------------------------------------------------
Wyoming 0.07%
=========================================================
Total: 100.00%
=========================================================
===========================================
Loan Type % of Initial
Pool Balance
===========================================
Balloon 62.02%
-------------------------------------------
Fully Amortizing 2.83%
-------------------------------------------
ARD Loan 35.16%
===========================================
Total: 100.00%
===========================================
Page 20 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
GROUP 1
GENERAL CHARACTERISTICS
==========================================================
Characteristics
==========================================================
Initial Pool Balance $1,716,490,256
----------------------------------------------------------
Number of Loans 229
----------------------------------------------------------
Gross WAC 6.827%
----------------------------------------------------------
Original WAM 125 months
----------------------------------------------------------
Remaining WAM 123 months
----------------------------------------------------------
Avg. Loan Balance $7,495,591
----------------------------------------------------------
WA DSCR* 1.73x
----------------------------------------------------------
WA Cut-off Date LTV Ratio* 63.42%
----------------------------------------------------------
Balloon or ARD Loans 96.67%
==========================================================
* Excludes CTL loans
PROPERTY TYPES
==========================================================
Property % of Initial
Types Group Balance
==========================================================
Retail 47.35%
----------------------------------------------------------
Hotel 21.12%
----------------------------------------------------------
Office 11.17%
----------------------------------------------------------
Office/Industrial 6.48%
----------------------------------------------------------
CTL 4.59%
----------------------------------------------------------
Industrial/Warehouse 3.93%
----------------------------------------------------------
Multifamily 3.16%
----------------------------------------------------------
Self Storage 0.90%
----------------------------------------------------------
Health Care 0.82%
----------------------------------------------------------
Manufactured Housing 0.30%
----------------------------------------------------------
Parking Garage 0.19%
==========================================================
Total: 100.00%
==========================================================
LOAN SIZE DISTRIBUTION
=====================================================================
Cut-off Date Balance Ranges # of % of Initial
($) Loans Group
Balance
=====================================================================
0.01 - 2,000,000.00 60 5.18%
---------------------------------------------------------------------
2,000,000.01 - 4,000,000.00 87 14.77%
---------------------------------------------------------------------
4,000,000.01 - 6,000,000.00 37 11.00%
---------------------------------------------------------------------
6,000,000.01 - 8,000,000.00 13 5.29%
---------------------------------------------------------------------
8,000,000.01 - 10,000,000.00 5 2.45%
---------------------------------------------------------------------
10,000,000.01 - 15,000,000.00 12 8.47%
---------------------------------------------------------------------
15,000,000.01 - 20,000,000.00 5 5.01%
---------------------------------------------------------------------
20,000,000.01 - 30,000,000.00 2 2.94%
---------------------------------------------------------------------
30,000,000.01 - 40,000,000.00 1 1.80%
---------------------------------------------------------------------
40,000,000.01 - 50,000,000.00 1 2.78%
---------------------------------------------------------------------
50,000,000.01 - 60,000,000.00 1 3.18%
---------------------------------------------------------------------
60,000,000.01 - 70,000,000.00 2 7.69%
---------------------------------------------------------------------
110,000,000.01 - 112,000,000.00 1 6.48%
---------------------------------------------------------------------
144,000,000.01 - 248,000,000.00 1 8.45%
---------------------------------------------------------------------
248,000,000.01 >= 1 14.53%
=====================================================================
Total: 229 100.00%
=====================================================================
GROSS RATE DISTRIBUTION
==============================================
Gross Rate Ranges % of Initial
(%) Group
Balance
==============================================
5.751 - 6.000 3.77%
----------------------------------------------
6.001 - 6.250 15.00%
----------------------------------------------
6.251 - 6.500 4.56%
----------------------------------------------
6.501 - 6.750 24.96%
----------------------------------------------
6.751 - 7.000 14.32%
----------------------------------------------
7.001 - 7.250 24.34%
----------------------------------------------
7.251 - 7.500 6.00%
----------------------------------------------
7.501 - 7.750 3.20%
----------------------------------------------
7.751 - 8.000 2.83%
----------------------------------------------
8.001 - 8.250 0.43%
----------------------------------------------
8.751 - 9.000 0.60%
==============================================
Total: 100.00%
==============================================
Page 21 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
GROUP 1
REMAINING TERM TO MATURITY(1)
===============================================
Months % of Initial
Group Balance
===============================================
49 - 60 2.92%
-----------------------------------------------
73 - 84 6.02%
-----------------------------------------------
97 - 108 0.67%
-----------------------------------------------
109 - 120 80.82%
-----------------------------------------------
133 - 144 0.23%
-----------------------------------------------
169 - 180 2.51%
-----------------------------------------------
181 - 192 0.04%
-----------------------------------------------
205 - 216 0.68%
-----------------------------------------------
229 - 240 5.70%
-----------------------------------------------
289 - 300 0.38%
===============================================
Total: 100.00%
===============================================
(1) Assumes ARD Loans payoff on their
Anticipated Repayment Date
REMAINING AMORTIZATION TERM(1)
===============================================
Months % of Initial
Group Balance
===============================================
I/O 3.18%
-----------------------------------------------
169 - 180 1.06%
-----------------------------------------------
181 - 192 0.04%
-----------------------------------------------
193 - 204 0.24%
-----------------------------------------------
205 - 216 0.15%
-----------------------------------------------
229 - 240 2.59%
-----------------------------------------------
253 - 264 0.07%
-----------------------------------------------
265 - 276 1.27%
-----------------------------------------------
277 - 288 0.63%
-----------------------------------------------
289 - 300 34.47%
-----------------------------------------------
313 - 324 0.42%
-----------------------------------------------
325 - 336 0.24%
-----------------------------------------------
337 - 348 0.67%
-----------------------------------------------
349 - 360 54.94%
===============================================
Total: 100.00%
===============================================
(1) Assumes ARD Loans payoff on their
Anticipated Repayment Date
DEBT SERVICE COVERAGE RATIOS (DSCR)(1)
==================================================
Cut-off Date % of Initial
DSCR Ranges (x) Group Balance
==================================================
1.21 - 1.25 0.99%
--------------------------------------------------
1.26 - 1.30 6.17%
--------------------------------------------------
1.31 - 1.35 14.28%
--------------------------------------------------
1.36 - 1.45 14.76%
--------------------------------------------------
1.46 - 1.50 11.66%
--------------------------------------------------
1.51 - 1.55 2.38%
--------------------------------------------------
1.56 - 1.60 3.51%
--------------------------------------------------
1.61 - 1.65 0.28%
--------------------------------------------------
1.66 - 1.70 0.30%
--------------------------------------------------
1.71 - 1.75 13.46%
--------------------------------------------------
1.76 - 1.80 3.84%
--------------------------------------------------
1.86 - 1.90 0.26%
--------------------------------------------------
1.91 - 1.95 1.68%
--------------------------------------------------
2.06 - 2.10 0.46%
--------------------------------------------------
2.11 - 2.20 0.21%
--------------------------------------------------
2.31 - 2.50 22.32%
--------------------------------------------------
2.51 - 3.00 3.33%
--------------------------------------------------
3.01 - 3.60 0.10%
==================================================
Total: 100.00%
==================================================
(1) Excludes CTL Loans
LOAN TO VALUE RATIOS (LTV)(1)
==================================================
Cut-Off Date % of Initial
LTV Ranges (%) Group Balance
==================================================
15.01 - 20.00 0.10%
--------------------------------------------------
25.01 - 30.00 0.13%
--------------------------------------------------
35.01 - 40.00 0.21%
--------------------------------------------------
40.01 - 45.00 0.30%
--------------------------------------------------
45.01 - 50.00 22.18%
--------------------------------------------------
50.01 - 55.00 4.08%
--------------------------------------------------
55.01 - 60.00 13.59%
--------------------------------------------------
60.01 - 65.00 10.59%
--------------------------------------------------
65.01 - 70.00 10.65%
--------------------------------------------------
70.01 - 75.00 23.54%
--------------------------------------------------
75.01 - 80.00 14.62%
==================================================
Total: 100.00%
==================================================
(1) Excludes CTL Loans
Page 22 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
GROUP 1
GEOGRAPHIC DISTRIBUTION
=======================================================
State % of Initial
Group Balance
=======================================================
Alabama 3.58%
-------------------------------------------------------
Arizona 2.47%
-------------------------------------------------------
California 22.03%
-------------------------------------------------------
Colorado 1.21%
-------------------------------------------------------
Connecticut 1.79%
-------------------------------------------------------
Florida 8.94%
-------------------------------------------------------
Georgia 2.50%
-------------------------------------------------------
Illinois 11.15%
-------------------------------------------------------
Indiana 1.11%
-------------------------------------------------------
Kansas 0.15%
-------------------------------------------------------
Kentucky 0.10%
-------------------------------------------------------
Louisiana 0.15%
-------------------------------------------------------
Massachusetts 0.65%
-------------------------------------------------------
Maryland 1.09%
-------------------------------------------------------
Michigan 1.02%
-------------------------------------------------------
Minnesota 0.82%
-------------------------------------------------------
Missouri 0.12%
-------------------------------------------------------
Mississippi 0.15%
-------------------------------------------------------
Nevada 0.49%
-------------------------------------------------------
New Jersey 0.52%
-------------------------------------------------------
New York 11.65%
-------------------------------------------------------
North Carolina 2.52%
-------------------------------------------------------
North Dakota 0.15%
-------------------------------------------------------
Ohio 0.49%
-------------------------------------------------------
Oklahoma 0.04%
-------------------------------------------------------
Oregon 0.24%
-------------------------------------------------------
Pennsylvania 3.21%
-------------------------------------------------------
Puerto Rico 0.33%
-------------------------------------------------------
Rhode Island 0.15%
-------------------------------------------------------
South Carolina 0.19%
-------------------------------------------------------
Tennessee 2.41%
-------------------------------------------------------
Texas 10.98%
-------------------------------------------------------
Virginia 3.96%
-------------------------------------------------------
Washington 2.74%
-------------------------------------------------------
Wisconsin 0.82%
-------------------------------------------------------
Wyoming 0.08%
=======================================================
Total: 100.00%
=======================================================
===========================================
Loan Type % of Initial
Group Balance
===========================================
Balloon 55.43%
-------------------------------------------
Fully Amortizing 3.33%
-------------------------------------------
ARD Loan 41.23%
===========================================
Total: 100.00%
===========================================
Page 23 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
GROUP 2
GENERAL CHARACTERISTICS
==========================================================
Characteristics
==========================================================
Initial Pool Balance $309,100,450
----------------------------------------------------------
Number of Loans 56
----------------------------------------------------------
Gross WAC 6.912%
----------------------------------------------------------
Original WAM 111 months
----------------------------------------------------------
Remaining WAM 109 months
----------------------------------------------------------
Avg. Loan Balance $5,519,651
----------------------------------------------------------
WA DSCR* 1.35x
----------------------------------------------------------
WA Cut-off Date LTV Ratio* 77.7%
----------------------------------------------------------
Balloon or ARD Loans 100.0%
----------------------------------------------------------
Property Type Multifamily 100%
==========================================================
* Excludes CTL loans
LOAN SIZE DISTRIBUTION
====================================================================
Cut-off Date Balance Ranges # of % of Initial
($) Loans Group
Balance
====================================================================
0.01 - 2,000,000.00 8 3.96%
--------------------------------------------------------------------
2,000,000.01 - 4,000,000.00 23 21.51%
--------------------------------------------------------------------
4,000,000.01 - 6,000,000.00 11 17.21%
--------------------------------------------------------------------
6,000,000.01 - 8,000,000.00 5 11.56%
--------------------------------------------------------------------
8,000,000.01 - 10,000,000.00 5 14.92%
--------------------------------------------------------------------
10,000,000.01 - 15,000,000.00 1 4.43%
--------------------------------------------------------------------
15,000,000.01 - 20,000,000.00 2 11.58%
--------------------------------------------------------------------
40,000,000.01 - 50,000,000.00 1 14.84%
====================================================================
Total: 56 100.00%
====================================================================
GROSS RATE DISTRIBUTION
============================================
Gross Rate % of Initial
(%) Group
Balance
============================================
6.251 - 6.500 4.01%
--------------------------------------------
6.501 - 6.750 11.61%
--------------------------------------------
6.751 - 7.000 61.51%
--------------------------------------------
7.001 - 7.250 21.20%
--------------------------------------------
7.251 - 7.500 1.67%
============================================
Total: 100.00%
============================================
REMAINING TERM TO MATURITY(1)
============================================
Months % of Initial
Group Balance
============================================
49 - 60 2.10%
--------------------------------------------
73 - 84 25.20%
--------------------------------------------
97 - 108 1.67%
--------------------------------------------
109 - 120 68.56%
--------------------------------------------
169 - 180 2.47%
============================================
Total: 100.00%
============================================
(1) Assumes ARD Loans payoff on their
Anticipated Repayment Date
REMAINING AMORTIZATION TERM(1)
============================================
Months % of Initial
Group Balance
============================================
229 - 240 0.97%
--------------------------------------------
289 - 300 9.78%
--------------------------------------------
337 - 348 1.67%
--------------------------------------------
349 - 360 87.59%
============================================
Total: 100.00%
============================================
(1) Assumes ARD Loans payoff on their
Anticipated Repayment Date
Page 24 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
LBCMT 1998-C4 Structural and Collateral Term Sheet (continued):
GROUP 2
DEBT SERVICE COVERAGE RATIOS (DSCR)
==================================================
Cut-off Date % of Initial
DSCR Ranges (x) Group Balance
==================================================
1.16 - 1.20 3.17
--------------------------------------------------
1.21 - 1.25 3.88
--------------------------------------------------
1.26 - 1.30 19.37
--------------------------------------------------
1.31 - 1.35 28.04
--------------------------------------------------
1.36 - 1.45 33.91
--------------------------------------------------
1.46 - 1.50 2.74
--------------------------------------------------
1.51 - 1.55 4.25
--------------------------------------------------
1.56 - 1.60 2.38
--------------------------------------------------
1.66 - 1.70 2.26
==================================================
Total: 100.00%
==================================================
LOAN TO VALUE RATIOS (LTV)
==================================================
Cut-Off Date % of Initial
LTV Ranges (%) Group Balance
==================================================
65.01 - 70.00 3.85%
--------------------------------------------------
70.01 - 75.00 11.84%
--------------------------------------------------
75.01 - 80.00 83.81%
--------------------------------------------------
80.01 - 85.00(1) 0.50%
==================================================
Total: 100.00%
==================================================
(1) Section 42 multifamily property
GEOGRAPHIC DISTRIBUTION
=====================================================
State % of Initial
Group Balance
=====================================================
Arizona 7.91%
-----------------------------------------------------
California 7.41%
-----------------------------------------------------
Connecticut 0.52%
-----------------------------------------------------
Florida 4.77%
-----------------------------------------------------
Georgia 5.40%
-----------------------------------------------------
Indiana 17.94%
-----------------------------------------------------
Kansas 0.81%
-----------------------------------------------------
Missouri 2.58%
-----------------------------------------------------
New Jersey 1.56%
-----------------------------------------------------
Nevada 5.85%
-----------------------------------------------------
New York 4.26%
-----------------------------------------------------
North Carolina 3.17%
-----------------------------------------------------
Ohio 4.52%
-----------------------------------------------------
Oklahoma 5.74%
-----------------------------------------------------
Oregon 1.73%
-----------------------------------------------------
Pennsylvania 6.23%
-----------------------------------------------------
Rhode Island 0.97%
-----------------------------------------------------
South Carolina 0.95%
-----------------------------------------------------
Tennessee 2.99%
-----------------------------------------------------
Texas 14.69%
=====================================================
Total: 100.00%
=====================================================
=======================================
Loan Type % of Initial
Group Balance
=======================================
Balloon 98.59%
---------------------------------------
ARD Loan 1.41%
=======================================
Total: 100.00%
=======================================
Page 25 of 25
THIS INFORMATION DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES REFERRED TO HEREIN. OFFERS TO SELL AND
SOLICITATIONS OF OFFERS TO BUY SECURITIES ARE MADE ONLY BY, AND THIS INFORMATION
MUST BE READ IN CONJUNCTION WITH, THE FINAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS OR, IF NOT REGISTERED UNDER THE SECURITIES LAW, THE FINAL
OFFERING MEMORANDUM (THE "OFFERING DOCUMENT"). INFORMATION CONTAINED HEREIN DOES
NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO THE SAME QUALIFICATIONS AND
ASSUMPTIONS, AND SHOULD BE CONSIDERED BY INVESTORS ONLY IN THE LIGHT OF THE SAME
WARNINGS, LACK OF ASSURANCES AND REPRESENTATIONS AND OTHER PRECAUTIONARY
MATTERS, AS DISCLOSED IN THE OFFERING DOCUMENT. INFORMATION REGARDING THE
UNDERLYING ASSETS HAS BEEN PROVIDED BY THE ISSUER OF THE SECURITIES OR AN
AFFILIATE THEREOF AND HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE UNDERWRITERS OR
THEIR RESPECTIVE AFFILIATES. THE ANALYSES CONTAINED HEREIN HAVE BEEN PREPAIRED
AND DISSEMINATED BY THE UNDERWRITERS. THIS INFORMATION WAS PREPARED ON THE BASIS
OF CERTAIN ASSUMPTIONS (INCLUDING, IN CERTAIN CASE ASSUMPTIONS SPECIFIED BY THE
RECIPIENT HEREOF) REGARDING PAYMENTS, INTEREST RATES, WEIGHTED AVERAGE LIVES AND
WEIGHTED AVERAGE LOAN AGE, LOSS AND OTHER MATTERS, INCLUDING, BUT NOT LIMITED
TO, THE ASSUMPTIONS DESCRIBED IN THE OFFERING DOCUMENT. THE UNDERWRITERS, AND
ANY OF THEIR AFFILIATES, MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACTUAL
RATE OR TIMING OF PAYMENTS ON ANY OF THE UNDERLYING ASSETS OR THE PAYMENTS OR
YIELD ON THE SECURITIES. THIS INFORMATION SUPERSEDES ANY PRIOR VERSIONS HEREOF
AND WILL BE DEEMED TO BE SUPERSEDED BY ANY SUBSEQUENT VERSIONS (INCLUDING, WITH
RESPECT TO ANY DESCRIPTION OF THE SECURITIES OR THE UNDERLYING ASSETS, THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENT).
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Annex C-1-1
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class A-1-a Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24 5.947% 4.19 5.947% 4.19 5.947% 4.19 5.947% 4.19 5.947% 4.19
99.28 5.918% 4.19 5.918% 4.19 5.918% 4.19 5.918% 4.19 5.918% 4.19
100.00 5.888% 4.19 5.888% 4.19 5.888% 4.19 5.888% 4.19 5.888% 4.19
100.04 5.858% 4.19 5.858% 4.19 5.858% 4.19 5.858% 4.19 5.858% 4.19
100.08 5.829% 4.20 5.829% 4.20 5.829% 4.20 5.829% 4.20 5.828% 4.19
100.12 5.799% 4.20 5.799% 4.20 5.799% 4.20 5.799% 4.20 5.799% 4.20
100.16 5.769% 4.20 5.769% 4.20 5.769% 4.20 5.769% 4.20 5.769% 4.20
100.20 5.740% 4.20 5.740% 4.20 5.740% 4.20 5.740% 4.20 5.740% 4.20
100.24 5.711% 4.20 5.711% 4.20 5.711% 4.20 5.710% 4.20 5.710% 4.20
100.28 5.681% 4.21 5.681% 4.21 5.681% 4.21 5.681% 4.21 5.681% 4.20
101.00 5.652% 4.21 5.652% 4.21 5.652% 4.21 5.652% 4.21 5.652% 4.21
101.04 5.623% 4.21 5.623% 4.21 5.623% 4.21 5.622% 4.21 5.623% 4.21
101.08 5.593% 4.21 5.593% 4.21 5.593% 4.21 5.593% 4.21 5.593% 4.21
Weighted Average
Life (yrs.) 5.09 5.08 5.08 5.08 5.08
First
Principal
Payment
Date 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98
Last
Principal
Payment
Date 15-Aug-2006 15-Aug-2006 15-Aug-2006 15-Aug-2006 15-Aug-2006
</TABLE>
<PAGE>
Annex C-1-2
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class A-1-b Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.16 6.328% 7.02 6.328% 7.02 6.328% 7.02 6.328% 7.02 6.328% 7.02
99.24 6.292% 7.03 6.292% 7.03 6.292% 7.03 6.292% 7.02 6.292% 7.02
100.00 6.257% 7.03 6.257% 7.03 6.257% 7.03 6.257% 7.03 6.257% 7.03
100.08 6.221% 7.04 6.221% 7.04 6.221% 7.03 6.221% 7.03 6.221% 7.03
100.16 6.186% 7.04 6.186% 7.04 6.186% 7.04 6.186% 7.04 6.186% 7.03
100.24 6.151% 7.05 6.151% 7.05 6.151% 7.04 6.151% 7.04 6.151% 7.04
101.00 6.116% 7.05 6.116% 7.05 6.116% 7.05 6.116% 7.05 6.116% 7.04
101.08 6.081% 7.06 6.081% 7.05 6.081% 7.05 6.081% 7.05 6.081% 7.05
101.16 6.046% 7.06 6.046% 7.06 6.046% 7.06 6.046% 7.06 6.046% 7.05
101.24 6.011% 7.06 6.011% 7.06 6.011% 7.06 6.011% 7.06 6.011% 7.06
102.00 5.977% 7.07 5.977% 7.07 5.977% 7.07 5.977% 7.07 5.977% 7.06
102.08 5.942% 7.07 5.942% 7.07 5.942% 7.07 5.942% 7.07 5.942% 7.07
102.16 5.908% 7.08 5.908% 7.08 5.908% 7.08 5.908% 7.07 5.908% 7.07
Weighted Average
Life (yrs.) 9.61 9.61 9.61 9.61 9.60
First
Principal
Payment
Date 15-Aug-2006 15-Aug-2006 15-Aug-2006 15-Aug-2006 15-Aug-2006
Last
Principal
Payment
Date 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008
</TABLE>
<PAGE>
Annex C-1-3
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class A-2 Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.16 6.424% 6.23 6.424% 6.23 6.424% 6.22 6.424% 6.22 6.424% 6.22
99.24 6.384% 6.23 6.384% 6.23 6.384% 6.23 6.384% 6.23 6.384% 6.22
100.00 6.344% 6.24 6.344% 6.24 6.344% 6.23 6.344% 6.23 6.344% 6.23
100.08 6.304% 6.24 6.304% 6.24 6.304% 6.24 6.304% 6.24 6.304% 6.23
100.16 6.264% 6.25 6.264% 6.25 6.264% 6.24 6.264% 6.24 6.264% 6.24
100.24 6.225% 6.25 6.225% 6.25 6.225% 6.25 6.225% 6.25 6.225% 6.24
101.00 6.185% 6.26 6.185% 6.26 6.185% 6.25 6.185% 6.25 6.185% 6.25
101.08 6.146% 6.26 6.146% 6.26 6.146% 6.26 6.146% 6.26 6.146% 6.25
101.16 6.107% 6.27 6.107% 6.27 6.107% 6.26 6.107% 6.26 6.107% 6.26
101.24 6.068% 6.27 6.068% 6.27 6.068% 6.27 6.068% 6.27 6.067% 6.26
102.00 6.029% 6.28 6.029% 6.28 6.029% 6.27 6.029% 6.27 6.028% 6.27
102.08 5.990% 6.28 5.990% 6.28 5.990% 6.28 5.990% 6.28 5.990% 6.27
102.16 5.951% 6.29 5.951% 6.29 5.951% 6.28 5.951% 6.28 5.951% 6.28
Weighted Average
Life (yrs.) 8.39 8.39 8.38 8.38 8.37
First
Principal
Payment
Date 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98
Last
Principal
Payment
Date 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008
</TABLE>
<PAGE>
Annex C-1-4
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class B Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
98.16 6.622% 7.10 6.622% 7.10 6.622% 7.10 6.622% 7.10 6.622% 7.10
98.24 6.586% 7.11 6.586% 7.11 6.586% 7.11 6.586% 7.11 6.586% 7.11
99.00 6.551% 7.11 6.551% 7.11 6.551% 7.11 6.551% 7.11 6.551% 7.11
99.08 6.515% 7.12 6.515% 7.12 6.515% 7.12 6.515% 7.12 6.515% 7.12
99.16 6.480% 7.12 6.480% 7.12 6.480% 7.12 6.480% 7.12 6.480% 7.12
99.24 6.445% 7.13 6.445% 7.13 6.445% 7.13 6.445% 7.13 6.445% 7.13
100.00 6.410% 7.13 6.410% 7.13 6.410% 7.13 6.410% 7.13 6.410% 7.13
100.08 6.375% 7.14 6.375% 7.14 6.375% 7.14 6.375% 7.14 6.375% 7.14
100.16 6.341% 7.14 6.341% 7.14 6.341% 7.14 6.341% 7.14 6.341% 7.14
100.24 6.306% 7.14 6.306% 7.14 6.306% 7.14 6.306% 7.14 6.306% 7.14
101.00 6.271% 7.15 6.271% 7.15 6.271% 7.15 6.271% 7.15 6.271% 7.15
101.08 6.237% 7.15 6.237% 7.15 6.237% 7.15 6.237% 7.15 6.237% 7.15
100.16 6.203% 7.16 6.203% 7.16 6.203% 7.16 6.203% 7.16 6.203% 7.16
Weighted Average
Life (yrs.) 9.89 9.89 9.89 9.89 9.89
First
Principal
Payment
Date 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008
Last
Principal
Payment
Date 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008
</TABLE>
<PAGE>
Annex C-1-5
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class C Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
98.16 6.766% 7.06 6.766% 7.06 6.766% 7.06 6.766% 7.06 6.766% 7.06
98.24 6.730% 7.07 6.730% 7.07 6.730% 7.07 6.730% 7.07 6.730% 7.07
99.00 6.694% 7.07 6.694% 7.07 6.694% 7.07 6.694% 7.07 6.694% 7.07
99.08 6.659% 7.08 6.659% 7.08 6.659% 7.08 6.659% 7.08 6.659% 7.08
99.16 6.623% 7.08 6.623% 7.08 6.623% 7.08 6.623% 7.08 6.624% 7.08
99.24 6.588% 7.09 6.588% 7.09 6.588% 7.09 6.588% 7.09 6.588% 7.09
100.00 6.553% 7.09 6.553% 7.09 6.553% 7.09 6.553% 7.09 6.553% 7.09
100.08 6.518% 7.10 6.518% 7.10 6.518% 7.10 6.518% 7.10 6.518% 7.10
100.16 6.483% 7.10 6.483% 7.10 6.483% 7.10 6.483% 7.10 6.483% 7.10
100.24 6.448% 7.11 6.448% 7.11 6.448% 7.11 6.448% 7.11 6.448% 7.11
101.00 6.414% 7.11 6.414% 7.11 6.414% 7.11 6.414% 7.11 6.414% 7.11
101.08 6.379% 7.12 6.379% 7.12 6.379% 7.12 6.379% 7.12 6.379% 7.12
101.16 6.344% 7.12 6.344% 7.12 6.344% 7.12 6.344% 7.12 6.344% 7.12
Weighted Average
Life (yrs.) 9.92 9.92 9.91 9.91 9.91
First
Principal
Payment
Date 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008 15-Oct-2008
Last
Principal
Payment
Date 15-Nov-2008 15-Nov-2008 15-Nov-2008 15-Nov-2008 15-Nov-2008
</TABLE>
<PAGE>
Annex C-1-6
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class D Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- -------------------- --------------------- --------------------- --------------------- ---------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
92.00 7.731% 6.97 7.731% 6.97 7.731% 6.97 7.731% 6.97 7.731% 6.97
92.16 7.653% 6.98 7.653% 6.98 7.653% 6.98 7.653% 6.98 7.653% 6.98
93.00 7.576% 6.99 7.576% 6.99 7.576% 6.99 7.576% 6.99 7.576% 6.99
93.16 7.500% 7.00 7.500% 7.00 7.500% 7.00 7.500% 7.00 7.500% 7.00
94.00 7.424% 7.01 7.424% 7.01 7.424% 7.01 7.424% 7.01 7.424% 7.01
94.16 7.349% 7.02 7.349% 7.02 7.349% 7.02 7.349% 7.02 7.349% 7.02
95.00 7.274% 7.03 7.274% 7.03 7.274% 7.03 7.274% 7.03 7.274% 7.03
95.16 7.200% 7.04 7.200% 7.04 7.200% 7.04 7.200% 7.04 7.200% 7.04
96.00 7.126% 7.05 7.126% 7.05 7.126% 7.05 7.126% 7.05 7.126% 7.05
96.16 7.053% 7.07 7.053% 7.07 7.053% 7.07 7.053% 7.07 7.053% 7.07
97.00 6.980% 7.08 6.980% 7.08 6.980% 7.08 6.980% 7.08 6.980% 7.08
97.16 6.908% 7.09 6.908% 7.09 6.908% 7.09 6.908% 7.09 6.908% 7.09
98.00 6.836% 7.10 6.836% 7.10 6.836% 7.10 6.836% 7.10 6.836% 7.10
Weighted Average
Life (yrs.) 10.00 10.00 10.00 10.00 10.00
First
Principal
Payment
Date 15-Nov-2008 15-Nov-2008 15-Nov-2008 15-Nov-2008 15-Nov-2008
Last
Principal
Payment
Date 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008
</TABLE>
<PAGE>
Annex C-1-7
Weighted Average Life, First Principal Payment Date,
Last Principal Payment Date, Pre-Tax Yield to Maturity and
Modified Duration of Class E Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- ------------------- -------------------- -------------------- -------------------- --------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
--- ------ --- ------ --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
87.00 8.527% 6.88 8.527% 6.88 8.527% 6.88 8.527% 6.88 8.527% 6.88
87.16 8.445% 6.89 8.445% 6.89 8.445% 6.89 8.445% 6.89 8.445% 6.89
88.00 8.362% 6.90 8.362% 6.90 8.362% 6.90 8.362% 6.90 8.362% 6.90
88.16 8.281% 6.92 8.281% 6.92 8.281% 6.92 8.281% 6.92 8.281% 6.92
89.00 8.200% 6.93 8.200% 6.93 8.200% 6.93 8.200% 6.93 8.200% 6.93
89.16 8.119% 6.94 8.119% 6.94 8.119% 6.94 8.119% 6.94 8.119% 6.94
90.00 8.039% 6.95 8.039% 6.95 8.039% 6.95 8.039% 6.95 8.039% 6.95
90.16 7.960% 6.96 7.960% 6.96 7.960% 6.96 7.960% 6.96 7.960% 6.96
91.00 7.881% 6.97 7.881% 6.97 7.881% 6.97 7.881% 6.97 7.881% 6.97
91.16 7.803% 6.99 7.803% 6.99 7.803% 6.99 7.803% 6.99 7.803% 6.99
92.00 7.726% 7.00 7.726% 7.00 7.726% 7.00 7.726% 7.00 7.726% 7.00
92.16 7.649% 7.01 7.649% 7.01 7.649% 7.01 7.649% 7.01 7.649% 7.01
93.00 7.572% 7.02 7.572% 7.02 7.572% 7.02 7.572% 7.02 7.572% 7.02
Weighted Average
Life (yrs.) 10.06 10.06 10.06 10.06 10.06
First
Principal
Payment
Date 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008
Last
Principal
Payment
Date 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008 15-Dec-2008
</TABLE>
<PAGE>
Annex C-1-8
Weighted Average Life, First Principal Payment Date, Last Principal
Payment Date and Pre-Tax Yield to Maturity of Class X Certificates
0% CPR during LOP, YMP or Declining Premium - otherwise at indicated CPR
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ------------- --------- ---------- ---------- ---------- ----------
CBE CBE CBE CBE CBE
Yield Yield Yield Yield Yield
(%) (%) (%) (%) (%)
--- --- --- --- ---
<S> <C> <C> <C> <C> <C>
3.26 10.282% 10.279% 10.275% 10.271% 10.262%
3.27 10.082% 10.079% 10.076% 10.072% 10.062%
3.28 9.885% 9.882% 9.879% 9.875% 9.865%
3.29 9.691% 9.688% 9.684% 9.680% 9.671%
3.30 9.499% 9.496% 9.493% 9.489% 9.479%
3.31 9.310% 9.307% 9.303% 9.299% 9.290%
4.00 9.123% 9.120% 9.117% 9.113% 9.103%
4.01 8.939% 8.936% 8.932% 8.928% 8.919%
4.02 8.757% 8.754% 8.750% 8.746% 8.737%
4.03 8.578% 8.574% 8.571% 8.567% 8.557%
4.04 8.400% 8.397% 8.394% 8.390% 8.380%
4.05 8.225% 8.222% 8.218% 8.214% 8.205%
4.06 8.053% 8.049% 8.046% 8.042% 8.032%
Weighted Average
Life (yrs.) 9.18 9.18 9.18 9.18 9.18
First
Principal
Payment
Date 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98 15-Dec-98
Last
Principal
Payment
Date 15-Sep-2023 15-Sep-2023 15-Sep-2023 15-Sep-2023 15-Sep-2023
</TABLE>
<PAGE>
Annex C-2-1
Percentages of the Initial Certificate Balance of the Class A-1-a Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 95 95 95 95 95
November 2000 ........................... 89 89 89 89 89
November 2001 ........................... 82 82 82 82 82
November 2002 ........................... 75 75 75 75 75
November 2003 ........................... 53 53 53 53 53
November 2004 ........................... 45 45 45 45 45
November 2005 ........................... 7 7 7 7 7
November 2006 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 5.1 5.1 5.1 5.1 5.1
</TABLE>
<PAGE>
Annex C-2-2
Percentages of the Initial Certificate Balance of the Class A-1-b Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 100 100 100 100 100
November 2000 ........................... 100 100 100 100 100
November 2001 ........................... 100 100 100 100 100
November 2002 ........................... 100 100 100 100 100
November 2003 ........................... 100 100 100 100 100
November 2004 ........................... 100 100 100 100 100
November 2005 ........................... 100 100 100 100 100
November 2006 ........................... 99 99 99 99 99
November 2007 ........................... 94 94 94 94 93
November 2008 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 9.6 9.6 9.6 9.6 9.6
</TABLE>
<PAGE>
Annex C-2-3
Percentages of the Initial Certificate Balance of the Class A-2 Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 99 99 99 99 99
November 2000 ........................... 98 98 98 98 98
November 2001 ........................... 96 96 96 96 96
November 2002 ........................... 95 95 95 95 95
November 2003 ........................... 90 90 90 90 90
November 2004 ........................... 89 89 89 89 89
November 2005 ........................... 69 69 69 69 69
November 2006 ........................... 68 68 68 68 68
November 2007 ........................... 64 64 64 64 64
November 2008 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 8.4 8.4 8.4 8.4 8.4
</TABLE>
<PAGE>
Annex C-2-4
Percentages of the Initial Certificate Balance of the Class B Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 100 100 100 100 100
November 2000 ........................... 100 100 100 100 100
November 2001 ........................... 100 100 100 100 100
November 2002 ........................... 100 100 100 100 100
November 2003 ........................... 100 100 100 100 100
November 2004 ........................... 100 100 100 100 100
November 2005 ........................... 100 100 100 100 100
November 2006 ........................... 100 100 100 100 100
November 2007 ........................... 100 100 100 100 100
November 2008 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 9.9 9.9 9.9 9.9 9.9
</TABLE>
<PAGE>
Annex C-2-5
Percentages of the Initial Certificate Balance of the Class C Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 100 100 100 100 100
November 2000 ........................... 100 100 100 100 100
November 2001 ........................... 100 100 100 100 100
November 2002 ........................... 100 100 100 100 100
November 2003 ........................... 100 100 100 100 100
November 2004 ........................... 100 100 100 100 100
November 2005 ........................... 100 100 100 100 100
November 2006 ........................... 100 100 100 100 100
November 2007 ........................... 100 100 100 100 100
November 2008 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 9.9 9.9 9.9 9.9 9.9
</TABLE>
<PAGE>
Annex C-2-6
Percentages of the Initial Certificate Balance of the Class D Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 100 100 100 100 100
November 2000 ........................... 100 100 100 100 100
November 2001 ........................... 100 100 100 100 100
November 2002 ........................... 100 100 100 100 100
November 2003 ........................... 100 100 100 100 100
November 2004 ........................... 100 100 100 100 100
November 2005 ........................... 100 100 100 100 100
November 2006 ........................... 100 100 100 100 100
November 2007 ........................... 100 100 100 100 100
November 2008 ........................... 28 28 28 28 28
November 2009 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 10.0 10.0 10.0 10.0 10.0
</TABLE>
<PAGE>
Annex C-2-7
Percentages of the Initial Certificate Balance of the Class E Certificates
<TABLE>
<CAPTION>
0% CPR During LOP, YMP or Declining Premium -
Otherwise at Indicated CPR
==========================================================
Distribution Date 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date ............................ 100% 100% 100% 100% 100%
November 1999 ........................... 100 100 100 100 100
November 2000 ........................... 100 100 100 100 100
November 2001 ........................... 100 100 100 100 100
November 2002 ........................... 100 100 100 100 100
November 2003 ........................... 100 100 100 100 100
November 2004 ........................... 100 100 100 100 100
November 2005 ........................... 100 100 100 100 100
November 2006 ........................... 100 100 100 100 100
November 2007 ........................... 100 100 100 100 100
November 2008 ........................... 100 100 100 100 100
November 2009 and thereafter ............ 0 0 0 0 0
Weighted Average Life (in years) ........ 10.1 10.1 10.1 10.1 10.1
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex D
LB Commercial Mortgage Trust Series 1998-C4
DELINQUENT LOAN STATUS REPORT
as of ___________
<TABLE>
<CAPTION>
====================================================================================================================================
S62 or
S4 S55 S61 S57 S58 S63 P8 P7 P37 P39 P38
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d)
- ------------------------------------------------------------------------------------------------------------------------------------
Other
Short Name Sq Ft Paid Scheduled Total P&I Total Advances
(When Property or Thru Loan Advances Expenses (Taxes &
Prospectus ID Appropriate) Type City State Units Date Balance To Date To Date Escrow)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FCL - Foreclosure
- ------------------------------------------------------------------------------------------------------------------------------------
LTM - Latest 12 Months either Last Annual or Trailing 12 months
====================================================================================================================================
* Workout Strategy should match the CSSA Loan file using abreviated words in place of a code number such as (FCL - In
Foreclosure, MOD - Modification, DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, TBD - To Be
Determined etc...) It is possible to combine the status codes if the loan is going in more than one direction. (i.e. FCL/Mod,
BK/Mod, BK/FCL/DPO)
- ------------------------------------------------------------------------------------------------------------------------------------
** App - Appraisal, BPO - Broker opinion, Int. - Internal Value
- ------------------------------------------------------------------------------------------------------------------------------------
*** How to determine the cap rate is agreed upon by Underwriter and special servicer - to be provided by a third party.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================================================================
S4 P25 P10 P11 P58 P54 P55 P81
- -------------------------------------------------------------------------------------------------------------------
(e)=a+b+c+d (f)=P38/P81
- -------------------------------------------------------------------------------------------------------------------
Value
Current Current LTM ***Cap using
Total Monthly Interest Maturity NOI LTM LTM Rate NOI &
Prospectus ID Exposure P&I Rate Date Date NOI DSCR Assigned Cap Rate
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 + DAYS DELINQUENT
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex E
LB Commercial Mortgage Trust Series 1998-C4
HISTORICAL LOAN MODIFICATION REPORT
as of _________________
<TABLE>
<CAPTION>
=========================================================================================================================
S4 S57 S58 P49 P48 P7* P7* P50*
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Extension Balance Balance at
Mod / per Docs When Sent the Effective # Mths
Prospectus Extension or Effect to Special Date of for Rate
ID City State Flag Servicer Date Servicer Rehabilitation Old Rate Change
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
- -------------------------------------------------------------------------------------------------------------------------
Information is as of modification. Each line it should not change in the future. Only new modifications should be added.
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
=========================================================================================================================
Total For All Loans:
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Total For Loans in Current Month:
- -------------------------------------------------------------------------------------------------------------------------
# of Loans $ Balance
- -------------------------------------------------------------------------------------------------------------------------
Modifications:
- -------------------------------------------------------------------------------------------------------------------------
Maturity Date Extentions:
- -------------------------------------------------------------------------------------------------------------------------
Total:
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================
S4 P50* P25* P25* P11* P11* P47
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Future
Interest
Total # (1) Loss to
Mths for Realized Trust $
Prospectus New Old New Old New Change Loss to (Rate
ID Rate P&I P&I Maturity Maturity of Mod Trust $ Reduction) COMMENT
=================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
=================================================================================================
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
* The information in these columns is from a particular point in time and
should not change on this report once assigned.
- -------------------------------------------------------------------------------------------------
(1) Actual principal loss taken by bonds
- -------------------------------------------------------------------------------------------------
(2) Expected future loss due to a rate reduction. This is just an estimate
calculated at the time of the modification.
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex F
LB Commercial Mortgage Trust Series 1998-C4
HISTORICAL LOSS ESTIMATE REPORT (RE0-SOLD or DISCOUNTED PAYOFF)
as of _________________
<TABLE>
<CAPTION>
====================================================================================================================================
S4 S55 S61 S57 S58 P45/P7 P75 P45 P7 P37
- ------------------------------------------------------------------------------------------------------------------------------------
(c)=b/a (a) (b) (d) (e) (f)
- ------------------------------------------------------------------------------------------------------------------------------------
Latest
Short Name Appraisal Effect Net Amt Total
Prospectus (When Property % Received or Brokers Date of Sales Received Scheduled P&I
ID Appropriate) Type City State From Sale Opinion Sale Price from Sale Balance Advanced
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
- ------------------------------------------------------------------------------------------------------------------------------------
All information is from the liquidation date and does not need to be updated.
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Total all Loans:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Current Month Only:
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================================================
S4 P39+P38
- -----------------------------------------------------------------------------------------------------------------------------
(g) (h) (i)=d-(f+g+h) (k)=i-e (m) (n)=k+m (o)=n/e
- -----------------------------------------------------------------------------------------------------------------------------
Servicing Actual Minor Total Loss %
Prospectus Total Fees Losses Date Loss Adj to Minor Adj Loss with of Scheduled
ID Expenses Expense Net Proceeds Passed thru Passed thru Trust Passed thru Adjustment Balance
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex G
LB Commercial Mortgage Trust Series 1998-C4
REO STATUS REPORT
as of ___________
<TABLE>
<CAPTION>
===========================================================================================================================
S62 or
S4 S55 S61 S57 S58 S63 P8 P7 P37 P39 P38
- ---------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d)
- ---------------------------------------------------------------------------------------------------------------------------
Other
Short Name Sq Ft Paid Scheduled Total P&I Total Advances
(When Property or Thru Loan Advances Expenses (Taxes &
Prospectus ID Appropriate) Type City State Units Date Balance To Date To Date Escrow)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
(1) Use the following codes; App. - Appraisal, BPO - Brokers Opinion, Int - Internal Value
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================================================
S4 P25 P11 P58 P54 P81 P74 P75
- -----------------------------------------------------------------------------------------------------------------------------
(e)=a+b+c+d (k) (j) (f)=(k/j) (g) (h)=(.92*g)
- -----------------------------------------------------------------------------------------------------------------------------
Value Appraisal Loss
Current LTM LTM Cap using BPO or using 92%
Total Monthly Maturity NOI NOI/ Rate Valuation NOI & Internal Appr. or
Prospectus ID Exposure P&I Date Date DSC Assigned Date Cap Rate Value** BPO (f)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===============================================================================================================
S4 P35 P77 P82 P79
- ---------------------------------------------------------------------------------------------------------------
(i)=(g/a)
- ---------------------------------------------------------------------------------------------------------------
Total Appraisal REO Pending
Estimated Reduction Transfer Acquisition Resolution
Prospectus ID Recovery % Realized Date Date Date Comments
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex H
LB Commercial Mortgage Trust Series 1998-C4
SERVICER WATCH LIST
as of ___________
<TABLE>
<CAPTION>
====================================================================================================================================
S4 S55 S61 S57 S58 P7 P8 P11 P54
- ------------------------------------------------------------------------------------------------------------------------------------
Short Name Scheduled Paid
Prospectus (When Property Loan Thru Maturity LTM Comment / Reason on Watch List
ID Appropriate) Type City State Balance Date Date DSCR
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
List all loans on watch list and reason sorted in decending balance order.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $
- ------------------------------------------------------------------------------------------------------------------------------------
* LTM - Last 12 months either trailing or last annual
====================================================================================================================================
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex I
LB Commercial Mortgage Trust Series 1998-C4
OPERATING STATEMENT ANALYSIS REPORT
as of _____________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
---------------
LB Control Number
-----------------------------
Current Balance/Paid to Date
------------------------------------------------------------------------------------------
Property Name
------------------------------------------------------------------------------------------
Property Type
------------------------------------------------------------------------------------------
Property Address, City, State
------------------------------------------------------------------------------------------
Net Rentable Square Feet
-----------------------------
Year Built/Year Renovated
------------------------------------------------------------------
Year of Operations Underwriting 1994 1995 1996 Trailing
------------------------------------------------------------------
Occupancy Rate *
------------------------------------------------------------------
Average Rental Rate
------------------------------------------------------------------
* Occupancy rates are year end or the ending date of the financial statement for the
period.
<CAPTION>
INCOME: No. of Mos.
-------------
Number of Mos. Prior Year Current Yr.
------------------------------------------------------------------------------------------
Period Ended Underwriting 1994 1995 1996 97 Trailing** 1996-Base 1996-1995
Statement Classification Base Line Normalized Normalized Normalized as of / /97 Variance Variance
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
Rental Income (Category 1)
------------------------------------------------------------------------------------------
Rental Income (Category 2)
------------------------------------------------------------------------------------------
Rental Income (Category 3)
------------------------------------------------------------------------------------------
Pass Through/Escalations
------------------------------------------------------------------------------------------
Other Income
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Effective Gross Income $0.00 $0.00 $0.00 $0.00 $0.00 % %
------------------------------------------------------------------------------------------
Normalized - Full year Financial statements that have been reviewed by the underwriter or
Servicer
** Servicer will not be expected to "Normalize" these YTD numbers.
OPERATING EXPENSES:
------------------------------------------------------------------------------------------
Real Estate Taxes
------------------------------------------------------------------------------------------
Property Insurance
------------------------------------------------------------------------------------------
Utilities
------------------------------------------------------------------------------------------
General & Administration
------------------------------------------------------------------------------------------
Repairs and Maintenance
------------------------------------------------------------------------------------------
Management Fees
------------------------------------------------------------------------------------------
Payroll & Benefits Expense
------------------------------------------------------------------------------------------
Advertising & Marketing
------------------------------------------------------------------------------------------
Professional Fees
------------------------------------------------------------------------------------------
Other Expenses
------------------------------------------------------------------------------------------
Ground Rent
------------------------------------------------------------------------------------------
Total Operating Expenses $0.00 $0.00 $0.00 $0.00 $0.00 % %
------------------------------------------------------------------------------------------
Operating Expense Ratio
------------------------------------------------------------------------------------------
Net Operating Income $0.00 $0.00 $0.00 $0.00 $0.00
------------------------------------------------------------------------------------------
Leasing Commissions
------------------------------------------------------------------------------------------
Tenant Improvements
------------------------------------------------------------------------------------------
Replacement Reserve
------------------------------------------------------------------------------------------
Total Capital Items $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
N.O.I. After Capital Items $0.00 $0.00 $0.00 $0.00 $0.00
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Debt Service (per Servicer) $0.00 $0.00 $0.00 $0.00 $0.00
------------------------------------------------------------------------------------------
Cash Flow after debt service $0.00 $0.00 $0.00 $0.00 $0.00
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
(1) DSCR: (NOI/Debt Service)
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
DSCR: (after reserves\Cap exp.)
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Source of Financial Data:
------------------------------------------------------------------------------------------
(ie. operating statements, financial statements, tax return, other)
</TABLE>
Notes and Assumptions:
================================================================================
The years shown above will roll always showing a three year history. 1996 is the
current year financials; 1995 is the prior year financials.
This report may vary depending on the property type and because of the way
information may vary in each borrowers statement.
Rental Income needs to be broken down, differently whenever possible for each
property type as follows: Retail: 1) Base Rent 2) Percentage rents on cashflow
Hotel: 1) Room Revenue 2) Food/Beverage Nursing Home: 1) Private 2) Medicaid
3) Medicare
Income: Comment
Expense: Comment
Capital Items: Comment
(1) Used in the Comparative Financial Status Report
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
LB Commercial Mortgage Trust Series 1998-C4
Form of NOI ADJUSTMENT WORKSHEET for "year" Annex J
as of _____________
PROPERTY OVERVIEW
--------
LB Control Number
----------------------
Current Balance/Paid to Date
---------------------------------------------
Property Name
---------------------------------------------
Property Type
---------------------------------------------
Property Address, City, State
---------------------------------------------
Net Rentable Square Feet
----------------------
Year Built/Year Renovated
---------------------------------------
Year of Operations Borrower Adjustment Normalized
---------------------------------------
Occupancy Rate *
---------------------------------------
Average Rental Rate
---------------------------------------
*Occupancy rates are year end or the ending
date of the financial statement for the
period.
INCOME:
Number of Mos.Annualized "Year"
---------------------------------------------
Period Ended Borrower Adjustment Normalized
Statement Classification Actual
---------------------------------------------
Rental Income (Category 1)
---------------------------------------------
Rental Income (Category 2)
---------------------------------------------
Rental Income (Category 3)
---------------------------------------------
Pass Throughs/Escalations
---------------------------------------------
Other Income
---------------------------------------------
---------------------------------------------
Effective Gross Income $0.00 $0.00 $0.00
---------------------------------------------
Normalized - Full year financial statements
that have been reviewed by the Servicer.
OPERATING EXPENSES:
---------------------------------------------
Real Estate Taxes
---------------------------------------------
Property Insurance
---------------------------------------------
Utilities
---------------------------------------------
General & Administration
---------------------------------------------
Repairs and Maintenance
---------------------------------------------
Management Fees
---------------------------------------------
Payroll & Benefits Expense
---------------------------------------------
Advertising & Marketing
---------------------------------------------
Professional Fees
---------------------------------------------
Other Expenses
---------------------------------------------
Ground Rent
---------------------------------------------
Total Operating Expenses $0.00 $0.00 $0.00
---------------------------------------------
---------------------------------------------
Operating Expense Ratio
---------------------------------------------
---------------------------------------------
Net Operating Income $0.00 $0.00 $0.00
---------------------------------------------
---------------------------------------------
Leasing Commissions
---------------------------------------------
Tenant Improvements
---------------------------------------------
Replacement Reserve
---------------------------------------------
Total Capital Items $0.00 $0.00 $0.00
---------------------------------------------
---------------------------------------------
N.O.I. After Capital Items $0.00 $0.00 $0.00
---------------------------------------------
---------------------------------------------
Debt Service (per Servicer) $0.00 $0.00 $0.00
---------------------------------------------
Cash Flow after debt service $0.00 $0.00 $0.00
---------------------------------------------
---------------------------------------------
(1)DSCR: (NOI/Debt Service)
---------------------------------------------
---------------------------------------------
DSCR: (after reserves\Cap exp.)
---------------------------------------------
---------------------------------------------
Source of Financial Data:
---------------------------------------------
(ie. operating statements, financial
statements, tax return, other)
Notes and Assumptions:
================================================================================
This report should be completed by the Servicer for any "Normalization" of the
Borrower's numbers.
The "Normalized" column is used in the Operating Statement Analysis Report.
This report may vary depending on the property type and because of the way
information may vary in each borrower's statement.
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the Comparative Financial Status Report.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Annex K
LB Commercial Mortgage Trust Series 1998-C4
COMPARATIVE FINANCIAL STATUS REPORT
as of _______________
<TABLE>
<CAPTION>
============================================================================================================================
S4 S57 S58 P7 P8 S72 S69 S70 S65 S66
- ----------------------------------------------------------------------------------------------------------------------------
Original Underwriting
- ----------------------------------------------------------------------------------------------------------------------------
Information
- ----------------------------------------------------------------------------------------------------------------------------
Basis Year
- ----------------------------------------------------------------------------------------------------------------------------
Last Financial
Property Scheduled Paid Annual Info
Inspect Loan Thru Debt as of % Total % (1)
Prospectus ID City State Date Balance Date Service Date Occ Revenue NOI DSCR
- ----------------------------------------------------------------------------------------------------------------------------
yy/mm yy/mm
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
List all loans currently in deal with or without information largest to smallest loan
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total: $ $ WA $ $ WA
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
Received
- ----------------------------------------------------------------------------------------------------------------------------
Financial Information: Loans Balance
- ----------------------------------------------------------------------------------------------------------------------------
# % $ %
- ----------------------------------------------------------------------------------------------------------------------------
Current Full Year:
- ----------------------------------------------------------------------------------------------------------------------------
Current Full Yr. received with DSC < 1:
- ----------------------------------------------------------------------------------------------------------------------------
Prior Full Year:
- ----------------------------------------------------------------------------------------------------------------------------
Prior Full Yr. received with DSC < 1:
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(1) DSCR should match to Operating Statement and is normally calculated using
NOI / Debt Service.
- ----------------------------------------------------------------------------------------------------------------------------
(2) Net change should compare the latest year to the underwriting year
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
================================================================================================================================
S4 P65 P64 P59 P61 P63 P58 P57 P52 P54 P56 P72 P73 P66 P68 P70
- --------------------------------------------------------------------------------------------------------------------------------
2nd Preceding Annual Operating Preceding Annual Operating Trailing Financial
- --------------------------------------------------------------------------------------------------------------------------------
Information Information Information
- --------------------------------------------------------------------------------------------------------------------------------
as of _______ Normalized as of _______ Normalized Month Reported Actual
- --------------------------------------------------------------------------------------------------------------------------------
Financial Financial
Info Info FS FS
as of % Total $ (1) as of % Total $ (1) Start End Total $ (%)
Prospectus ID Date Occ Revenue NOI DSCR Date Occ Revenue NOI DSCR Date Date Revenue NOI DSC
- --------------------------------------------------------------------------------------------------------------------------------
yy/mm yy/mm yy/mm yy/mm
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total: WA $ $ WA WA $ $ WA WA $ $ WA
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
================================================================================================================================
Required
- --------------------------------------------------------------------------------------------------------------------------------
Financial Infor Loans Balance
- --------------------------------------------------------------------------------------------------------------------------------
# % $ %
- --------------------------------------------------------------------------------------------------------------------------------
Current Full Year:
- --------------------------------------------------------------------------------------------------------------------------------
Current Full Yr. received with DSC < 1:
- --------------------------------------------------------------------------------------------------------------------------------
Prior Full Year:
- --------------------------------------------------------------------------------------------------------------------------------
Prior Full Yr. received with DSC < 1:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
(1) DSCR should match to Operating Statement and is normally calculated using
NOI / Debt Service.
- --------------------------------------------------------------------------------------------------------------------------------
(2) Net change should compare the latest year to the underwriting year
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================
S4 (2)
- -------------------------------------------------------------
Net Change
- -------------------------------------------------------------
- -------------------------------------------------------------
Preceding & Basis
- -------------------------------------------------------------
%
% Total (1)
Prospectus ID Occ Revenue DSC
- -------------------------------------------------------------
- -------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
Total: WA $ WA
- -------------------------------------------------------------
- -------------------------------------------------------------
=============================================================
- -------------------------------------------------------------
Financial Information:
- -------------------------------------------------------------
- -------------------------------------------------------------
Current Full Year:
- -------------------------------------------------------------
Current Full Yr. received with DSC < 1:
- -------------------------------------------------------------
Prior Full Year:
- -------------------------------------------------------------
Prior Full Yr. received with DSC < 1:
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
(1) DSCR should match to Operating Statement and is normally
calculated using NOI / Debt Service.
- -------------------------------------------------------------
(2) Net change should compare the latest year to the
underwriting year
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
PROSPECTUS
Structured Asset Securities Corporation
Mortgage-Backed Securities, Issuable in Series
This Prospectus relates to Collateralized Mortgage Obligations (the
"Bonds") and Mortgage-Backed Certificates (the "Certificates," together with the
Bonds, the "Securities") which may be issued from time to time in one or more
series ("Series") under this Prospectus and the supplements hereto (each, a
"Prospectus Supplement"). As specified in the related Prospectus Supplement, the
Securities of each Series will be either Bonds issued pursuant to an Indenture
and representing indebtedness of Structured Asset Securities Corporation (the
"Company") or an owner trust (the "Owner Trust") established by it, or
Certificates which will evidence a beneficial ownership interest in assets
deposited into a trust (a "Trust Fund") by the Company as depositor pursuant to
a Trust Agreement, as described herein. The issuer (the "Issuer") with respect
to a Series of Bonds will be the Company or the Owner Trust established to issue
such Bonds, and, with respect to a Series of Certificates, will be the Trust
Fund established in respect of such Certificates. Capitalized terms not
otherwise defined herein or the related Prospectus Supplement have the meanings
specified in the Glossary attached hereto.
The Securities will be sold from time to time under this Prospectus on
terms determined for each Series at the time of the sale and as described in the
related Prospectus Supplement. Each Series will consist of one or more Classes,
one or more of which may be Compound Interest Securities, Variable Interest
Securities, Individual Investor Securities, Planned Amortization Class ("PAC")
Securities, Zero Coupon Securities, Principal Only Securities, Interest Only
Securities, Participating Securities or another particular Class of Securities,
if any, included in such Series of Securities. Zero Coupon Securities and
Principal Only Securities will not accrue and will not be entitled to receive
any interest. Payments or distributions of interest on each Class of Securities,
other than Zero Coupon Securities, Principal Only Securities and Compound
Interest Securities will be made on each Payment Date or Distribution Date as
specified in the related Prospectus Supplement. Interest will not be paid or
distributed on Compound Interest Securities on a current basis until all
Securities of the related Series having a Stated Maturity or Final Scheduled
Distribution Date prior to the Stated Maturity or Final Scheduled Distribution
Date of such Class of Compound Interest Securities have been paid in full or
until such other date or period as may be specified in the related Prospectus
Supplement. Prior to such time, interest on such Class of Compound Interest
Securities will accrue and the amount of interest so accrued will be added to
the principal thereof on each Payment Date or Distribution Date. The amount of
principal and interest available and payable on each Series on each Payment Date
or Distribution Date will be applied to the Classes of such Series in the order
and as otherwise specified in the related Prospectus Supplement. Principal
payments or distributions on each Class of a Series will be made on either a pro
rata or a random lot basis among Securities of such Class, as specified in the
related Prospectus Supplement Any Series may include one or more Classes of
"Subordinate Securities," which are subordinated in right and priority to the
extent described in the related Prospectus Supplement to payment of principal
and interest, and may be allocated losses and shortfalls prior to the allocation
thereof to all other Classes of Securities of such Series (the "Senior
Securities"). Securities of a Series will be subject to redemption or repurchase
only under the circumstances and according to the priorities described herein
and in the related Prospectus Supplement.
Each Series will be secured by or offer a beneficial interest in one or
more types of mortgage assets ("Mortgage Assets") and other assets, including
any reserve funds established with respect to such Series, insurance policies or
other enhancement described in the related Prospectus Supplement. The Mortgage
Assets may consist of a pool of multifamily or commercial mortgage loans or
participation interests therein (collectively, "Mortgage Loans") and may include
FHA Loans. Mortgage Assets may also consist of mortgage participations or
pass-through certificates or collateralized mortgage obligations ("Private
Mortgage-Backed Securities") issued with respect to or secured by a pool of
Mortgage Loans. The Private Mortgage-Backed Securities and Mortgage Loans
securing a Series will not be guaranteed or insured by any agency or
instrumentality of the United States Government unless otherwise stated in the
related Prospectus Supplement. Some Mortgage Loans comprising or underlying the
Mortgage Assets may be delinquent or non-performing as specified in the related
Prospectus
<PAGE>
Supplement. The Mortgage Assets securing a Series or comprising the Trust Fund
may consist of a single Mortgage Loan or obligations of a single obligor or
related obligors as specified in the related Prospectus Supplement. The Mortgage
Loans underlying or comprising the Mortgage Assets may be originated by or
acquired from an affiliate of the Issuer and an affiliate of the Issuer may be
an obligor with respect to any such Mortgage Loans. See "SECURITY FOR THE BONDS
AND CERTIFICATES."
Bonds of a Series constitute non-recourse obligations of the Issuer, and
Certificates of a Series evidence an interest in the related Trust Fund only.
Neither the Bonds or Certificates of a Series are insured or guaranteed by any
governmental agency or instrumentality, by any person or entity affiliated with
the Company or Issuer, or, unless otherwise specified in the related Prospectus
Supplement, by any other person or entity. The Issuer has no significant assets
other than the Mortgage Assets and certain other assets pledged to secure the
Bonds or in which the Certificates represent a beneficial interest. See "RISK
FACTORS."
An election may be made, with respect to any Series of Securities, to
treat all or a specified portion of the assets securing such Series or
comprising the Trust Fund as a "real estate mortgage investment conduit" (a
"REMIC"), or an election may be made to treat the arrangement by which a Series
of Securities is issued as a REMIC. If such an election is made, each Class of
Securities of a Series will be either Regular Interest or Residual Interest, as
specified in the related Prospectus Supplement. See "FEDERAL INCOME TAX
CONSIDERATIONS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities offered by this Prospectus and by the related Prospectus
Supplement are offered by Lehman Brothers and the other underwriters, if any,
subject to prior sale, to withdrawal, cancellation or modification of the offer
without notice, to delivery to and acceptance by Lehman Brothers and the other
underwriters, if any, and certain further conditions. Retain this Prospectus for
future reference. This Prospectus may not be used to consummate sales of the
securities offered hereby unless accompanied by a Prospectus Supplement.
Lehman Brothers
November 17, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT....................................................... 7
ADDITIONAL INFORMATION...................................................... 7
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 8
SUMMARY OF TERMS............................................................ 9
RISK FACTORS................................................................ 30
DESCRIPTION OF THE SECURITIES............................................... 36
General............................................................... 36
The Bonds--General.................................................... 36
The Certificates--General............................................. 37
Bearer Securities and Registered Securities........................... 38
Book-Entry Registration............................................... 39
Valuation of Mortgage Assets.......................................... 40
Payments or Distributions of Interest................................. 41
Payments or Distributions of Principal................................ 42
Special Redemption.................................................... 43
Optional Redemption................................................... 44
Mandatory Redemption.................................................. 44
Optional Termination.................................................. 44
Optional Repurchase of Certificates................................... 44
Other Repurchases..................................................... 45
YIELD AND PREPAYMENT CONSIDERATIONS......................................... 45
Timing of Payment or Distribution of Interest and Principal........... 45
Principal Prepayments................................................. 45
Prepayments and Weighted Average Life................................. 46
Other Factors Affecting Weighted Average Life......................... 47
SECURITY FOR THE BONDS AND CERTIFICATES..................................... 48
General............................................................... 48
Mortgage Loans........................................................ 49
Private Mortgage-Backed Securities.................................... 53
Substitution of Mortgage Assets....................................... 54
Collection Account.................................................... 55
Other Funds or Accounts............................................... 55
Investment of Funds................................................... 56
Guaranteed Investment Contract........................................ 56
Enhancement........................................................... 56
SERVICING OF MORTGAGE LOANS................................................. 56
General............................................................... 56
Collection Procedures................................................. 57
Payments on Mortgage Loans; Deposits to Custodial Accounts............ 58
3
<PAGE>
PAGE
----
Advances.............................................................. 58
Maintenance of Insurance Policies and Other Servicing Procedures...... 59
Enforcement of Due-On Sale Clauses.................................... 60
Modification; Waivers................................................. 60
Servicing Compensation and Payment of Expenses........................ 60
Evidence as to Compliance............................................. 60
Certain Matters Regarding the Master Servicer and Special Servicer.... 61
ENHANCEMENT................................................................. 61
General............................................................... 61
Subordinate Securities................................................ 62
Cross-Support Features................................................ 63
Insurance on the Mortgage Loans....................................... 63
Letter of Credit...................................................... 63
Bond Guarantee Insurance.............................................. 63
Reserve Funds......................................................... 63
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS.............................. 64
General............................................................... 64
Hazard Insurance on the Mortgage Loans................................ 64
FHA Insurance......................................................... 65
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS..................................... 65
Mortgages............................................................. 66
Interest in Real Property............................................. 66
Junior Mortgages; Rights of Senior Mortgages or Beneficiaries......... 66
Foreclosure of Mortgage............................................... 68
Leasehold Risks....................................................... 70
Rights of Redemption.................................................. 70
Environmental Matters................................................. 71
Certain Laws and Regulations.......................................... 73
Leases and Rents...................................................... 73
Personalty............................................................ 73
Anti-Deficiency Legislation and Other Limitations on Lenders.......... 74
Federal Bankruptcy and Other Laws Affecting Creditors' Rights......... 74
Due On-Sale Clauses in Mortgage Loans................................. 76
Enforceability of Prepayment and Late Payment Fees.................... 76
Equitable Limitations on Remedies..................................... 77
Applicability of Usury Laws........................................... 77
Alternative Mortgage Instruments...................................... 78
Secondary Financing; Due-On-Encumbrance Provisions.................... 78
Americans With Disabilities Act....................................... 78
Soldiers' and Sailors' Civil Relief Act of 1940....................... 79
Forfeitures in Drug and RICO Proceedings.............................. 79
THE INDENTURE............................................................... 79
Certain Covenants..................................................... 80
Modification of Indenture............................................. 80
Events of Default..................................................... 81
4
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PAGE
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Authentication and Delivery of Bonds.................................. 83
Satisfaction and Discharge of the Indenture........................... 83
Issuer's Annual Compliance Statement.................................. 83
List of Bondholders................................................... 83
Meetings of Bondholders............................................... 84
Fiscal Year........................................................... 84
Trustee's Annual Report............................................... 84
The Trustee........................................................... 84
THE TRUST AGREEMENT......................................................... 84
Assignment of Mortgage Assets......................................... 85
Repurchase of Non-Conforming Loans.................................... 85
Reports to Certificateholders......................................... 86
Event of Default...................................................... 87
Rights Upon Event of Default.......................................... 88
The Trustee........................................................... 89
Duties of the Trustee................................................. 89
Resignation of Trustee................................................ 89
Amendment of Trust Agreement.......................................... 90
Voting Rights......................................................... 90
List of Certificateholders............................................ 90
REMIC Administrator................................................... 90
Termination........................................................... 90
THE ISSUER.................................................................. 91
The Company........................................................... 91
Owner Trust........................................................... 91
Administrator......................................................... 92
USE OF PROCEEDS............................................................. 92
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES................................ 93
FEDERAL INCOME TAX CONSIDERATIONS........................................... 93
General............................................................... 93
Characterization of Securities........................................ 94
Taxation of Regular Interest Securities............................... 95
Sale or Exchange of Regular Interest Securities....................... 99
REMIC Expenses....................................................... 100
Taxation of the REMIC................................................ 100
Taxation of Holders of Residual Interest Securities.................. 102
Excess Inclusion Income.............................................. 103
Restrictions on Ownership and Transfer of Residual Interest
Securities .......................................................... 103
Administrative Matters............................................... 104
Tax Status as a Grantor Trust........................................ 104
Miscellaneous Tax Aspects............................................ 108
Tax Treatment of Foreign Investors................................... 108
STATE AND LOCAL TAX CONSIDERATIONS......................................... 109
5
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ERISA CONSIDERATIONS....................................................... 109
LEGAL INVESTMENT........................................................... 113
PLAN OF DISTRIBUTION....................................................... 115
LEGAL MATTERS.............................................................. 116
GLOSSARY................................................................... 117
6
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PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to such Series: (a)
whether such Securities are Bonds or Certificates, (b) the initial aggregate
principal amount, the Bond Interest Rate or Certificate Interest Rate (or method
for determining it) and authorized denominations of each Class of such Series;
(c) certain information concerning the Primary Assets securing such Series or
assets comprising the Trust Fund, including the principal amount, type and
characteristics of the Primary Assets securing such Bonds or assets comprising
the Trust Fund on the date of issue, and, if applicable, the amount of any
Reserve Funds for such Series; (d) in the case of Mortgage Assets consisting in
whole or in part of Private Mortgage-Backed Securities, information concerning
the issuer thereof or sponsor thereof, the PMBS Trustee, the Master Servicer, if
any, and the Underlying Collateral; (e) the circumstances, if any, under which
the Securities of such Series are subject to redemption prior to maturity or
repurchase prior to the Final Scheduled Distribution Date; (f) the Stated
Maturity of each Class of Bonds or Final Scheduled Distribution Date of the
Certificates; (g) the method used to calculate the aggregate amount of principal
available and required to be applied to the Securities of such Series on each
Payment Date or Distribution Date, as applicable, the timing of the application
of principal and the order of priority of the application of such principal to
the respective classes and the allocation of the principal to be so applied; (h)
the extent of subordination of any Subordinate Securities; (i) the identity of
each Class of Compound Interest Securities, Variable Interest Securities,
Planned Amortization Class Securities, Subordinate Securities, Individual
Investor Securities, Zero Coupon Securities, Principal Only Securities, Interest
Only Securities and Participating Securities included in such Series, if any, or
such other type of Class of Securities; (j) the principal amount of each Class
of such Series that would be outstanding on specified Payment Dates or
Distribution Dates, if the Mortgage Loans underlying or comprising the Mortgage
Assets pledged as security for such Series or comprising the Trust Fund were
prepaid at various assumed rates; (k) the Payment Dates or Distribution Dates,
as applicable for the respective Classes; (l) the Assumed Reinvestment Rate, if
any, and (if applicable) the percentage of Excess Cash Flow to be applied to
payments of principal of the Series; (m) relevant financial information with
respect to the Mortgagor(s) and the Mortgaged Property underlying the Mortgage
Assets, if applicable; (n) information with respect to any required Insurance
Policies relating to any Mortgage Loans comprising Mortgage Assets or Underlying
Collateral; (o) additional information with respect to any Enhancement,
Guaranteed Investment Contract or other agreement relating to the Series; (p)
the plan of distribution of such Series; and (q) whether the Securities are to
be issuable in registered form or bearer form or both, and if bearer securities
are issued, whether bearer securities may be exchanged for registered securities
and the circumstances and places for such exchange, if permitted.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Securities. This Prospectus, which forms a part of
the Registration Statement, omits certain information contained in such
Registration Statement pursuant to the Rules and Regulations of the Commission.
The Registration Statement and the exhibits thereto can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at certain of its Regional Offices
located as follows: Chicago Regional Office, Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York
Regional Office, 75 Park Place, 14th Floor, New York, New York 10007. 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.
The Issuer and Company do not intend to send any financial reports to holders of
Securities.
7
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the office of the Secretary, Structured Asset Securities
Corporation, 200 Vesey Street, New York, New York 10285, telephone number (212)
526-5594.
8
<PAGE>
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SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the Prospectus
Supplement with respect to the Series offered thereby and to the Trust Indenture
(the "Trust Indenture") or Trust Agreement (the "Trust Agreement"), as
applicable, and the supplemental or terms indenture or agreement with respect to
such Series (the "Series Supplement") between the Company or a trust established
by the Company and LaSalle National Bank, a national banking association, or
Marine Midland Bank, N.A., a national banking association (or another bank or
trust company qualified under the TIA and named in the Prospectus Supplement for
the related Series), as trustee (the "Trustee") or a Trust and the Trustee
(collectively, the Trust Indenture and any Series Supplement relating to Bonds
are sometimes referred to as the "Indenture," and the Trust Agreement and any
Series Supplement relating to Certificates are sometimes referred to as the
"Trust Agreement").
Securities Offered
A. The Bonds...................... Collateralized Mortgage Obligations (the
"Bonds"). The Bonds may be issued from time
to time in separately secured Series
pursuant to the Indenture and a related
Series Supplement. Each Series will consist
of one or more Classes, one or more of which
may be Classes of Compound Interest
Securities, Planned Amortization Class
("PAC") Securities, Variable Interest
Securities, Zero Coupon Securities,
Principal Only Securities, Interest Only
Securities, Participating Securities, Senior
Securities or Subordinate Securities. Each
Class may differ in, among other things, the
amounts allocated to and the priority of
principal and interest payments, maturity
date, Payment Dates and Bond Interest Rate.
Additionally, one or more Classes may
consist of Subordinate Securities which are
subordinated to other Classes of Bonds with
respect to the right to receive payments of
principal, interest, or both, and may be
allocated losses and shortfalls prior to the
allocation thereof to other Classes of Bonds
under the circumstances and in such amounts
as described herein and in the related
Prospectus Supplement. Unless otherwise
specified in the related Prospectus
Supplement, the Bonds of each Class will be
issued in fully registered form in the
minimum denominations specified in the
related Prospectus Supplement. If so
specified in the related Prospectus
Supplement, the Bonds or certain Classes of
such Bonds offered thereby may be available
in book-entry form only. The Bonds may be
issued in registered form or bearer form
with coupons attached. Bonds in bearer form
will be offered only outside the United
States to non-United States persons and to
offices located outside the United States of
certain United States financial
institutions. See "DESCRIPTION OF THE
SECURITIES--The Bonds--General" and
"ENHANCEMENT--Subordinate Securities."
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9
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B. The Certificates............... Mortgage-Backed Certificates (the
"Certificates"). The Certificates are
issuable from time to time in separate
Series pursuant to separate Trust Agreements
and a related Series Supplement. Each
Certificate of a Series will evidence a
beneficial ownership interest in the Trust
Fund for such Series. Each Series of
Certificates will consist of one or more
Classes of Certificates, one or more of
which may be Classes of Compound Interest
Securities, PAC Securities, Variable
Interest Securities, Zero Coupon Securities,
Principal Only Securities, Interest Only
Securities, Participating Securities,
Subordinate Securities or Senior Securities.
If a Series consists of multiple Classes,
the respective Classes may differ with
respect to the amount, percentage and timing
of distributions of principal, interest or
both. Additionally, one or more Classes may
consist of Subordinate Securities which are
subordinated to other Classes of
Certificates with respect to the right to
receive distributions of principal,
interest, or both under the circumstances
and in such amounts as described herein and
in the related Prospectus Supplement. The
Certificates will be issuable in fully
registered form in the authorized minimum
denominations and multiples thereof
specified in the related Prospectus
Supplement. If so specified in the related
Prospectus Supplement, the Certificates or
certain Classes of such Certificates offered
thereby may be available in book-entry form
only.
Issuer............................. The Issuer with respect to a Series of Bonds
will be Structured Asset Securities
Corporation (the "Company") or an owner
trust established by it ("Owner Trust") for
the purpose of issuing one or more Series of
Bonds. Each such Owner Trust will be created
by an agreement (the "Deposit Trust
Agreement") between the Company, acting as
depositor, and a bank, trust company or
other fiduciary, acting as owner trustee
(the "Owner Trustee"). The Bonds will be
non-recourse obligations of the Issuer. The
Series Supplement for a particular Series of
Bonds may permit the assets pledged to
secure the related Bonds to be transferred
by the Issuer to a trust or other limited
purpose affiliate of the Company, subject to
the obligations of the Bonds of such Series,
thereby relieving the Issuer of its
obligations with respect to such Bonds.
The Issuer with respect to a Series of
Certificates will be a trust fund (the
"Trust Fund") established by the Company for
the purpose of issuing one or more Series of
Certificates. Such Trust Fund will be
created by an agreement (the "Trust
Agreement") between the Company, acting as
depositor, and a bank, trust company or
other fiduciary, acting as trustee (the
"Trustee").
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10
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The Issuer will not have, nor be expected in
the future to have, any significant assets
available for payments on a Series of Bonds
or distributions on a Series of
Certificates, other than the assets pledged
as security for a specific Series of Bonds
issued by it, or assets deposited into a
Trust Fund, the Certificates issued by such
Trust Fund as Issuer representing a
beneficial ownership interest in such
assets. Unless otherwise specified in the
related Prospectus Supplement, (i) each
Series of Bonds will be separately secured
and no Series of Bonds will have any claim
against or security interest in the assets
pledged to secure any other Series, and (ii)
no Series of Certificates will have a
beneficial ownership interest in any other
Series.
The Company, a Delaware corporation, is a
limited-purpose finance subsidiary organized
for the purpose of issuing one or more
Series and other similar obligations
directly or through one or more Trust Funds
established by it. Although all of the
outstanding capital stock of the Company is
owned by Lehman Commercial Paper Inc.
("LCPI"), a wholly owned subsidiary of
Lehman Brothers Inc. ("Lehman Brothers"),
neither LCPI nor Lehman Brothers nor any of
their affiliates has guaranteed or is
otherwise obligated with respect to any
Series, except with respect to any
representations and warranties given by any
such affiliate as originator, seller or
servicer of Mortgage Assets relating to a
Series.
The Company's principal office is located at
200 Vesey Street, New York, New York 10285
and its telephone number is (212) 526-5594.
See "RISK FACTORS" and "THE ISSUER."
Interest Payments on
the Bonds.......................... Each Class of a Series of Bonds (other than
a Class of Zero Coupon Securities or
Principal Only Securities) will accrue
interest at the rate set forth in (or, in
the case of Variable Interest Securities, as
determined by the method described in) the
related Prospectus Supplement (the "Bond
Interest Rate"). Interest on all Bonds which
bear interest, other than Compound Interest
Securities, will be due and payable on the
Payment Dates specified in the related
Prospectus Supplement. However, failure to
pay interest on a current basis may not
necessarily be an Event of Default with
respect to a particular Series of Bonds.
Payments of interest on a Class of Variable
Interest Securities will be made on the
dates set forth in the related Prospectus
Supplement (the "Variable Interest Payment
Dates"). Interest on any Class of Compound
Interest Securities will not be paid
currently, but will accrue and the amount of
interest so accrued will be added to the
principal thereof on each Payment Date
through
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11
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the Accrual Termination Date specified in
the related Prospectus Supplement. Following
the applicable Accrual Termination Date,
interest payments on such Bonds will be made
on the Compound Value thereof. Interest Only
Bonds may be assigned a "Notional Amount"
which is used solely for convenience in
expressing the calculation of interest and
for certain other purposes. Unless otherwise
specified in the related Prospectus
Supplement, the Notional Amount will be
determined at the time of issuance of such
Bonds based on the principal balances or
Bond Value of the Mortgage Loans
attributable to the Bonds of a Series
entitled to receive principal, and will be
adjusted monthly over the life of the Bonds
based upon adjustments to the Bond Value of
such Mortgage Loans. Reference to the
Notional Amount is solely for convenience in
certain calculations and does not represent
the right to receive any distributions
allocable to principal. Zero Coupon
Securities and Principal Only Securities
will not accrue, and will not be entitled to
receive, any interest.
Each payment of interest on each Class of
Bonds (or addition to principal of a Class
of Compound Interest Securities) on a
Payment Date will include all interest
accrued during the Interest Accrual Period
specified in the related Prospectus
Supplement preceding such Payment Date. If
the Interest Accrual Period for a Series
ends on a date other than a Payment Date for
such Series, the yield realized by the
Holders of such Bonds may be lower than the
yield that would result if the Interest
Accrual Period ended on such Payment Date.
Additionally, if so specified in the related
Prospectus Supplement, interest accrued for
an Interest Accrual Period for one or more
Classes may be calculated on the assumption
that principal payments (and additions to
principal of the Bonds), and allocations of
losses on the Mortgage Assets (if so
specified in the related Prospectus
Supplement), are made on the first day of
the preceding Interest Accrual Period and
not on the Payment Date for such preceding
Interest Accrual Period when actually made
or added. Such method would produce a lower
effective yield than if interest were
calculated on the basis of the actual
principal amount outstanding. See "YIELD AND
PREPAYMENT CONSIDERATIONS."
With respect to any Class of Variable
Interest Securities, the related Prospectus
Supplement will set forth: (a) the initial
Bond Interest Rate (or the manner of
determining the initial Bond Interest Rate);
(b) the formula, index or other method by
which the Bond Interest Rate will be
determined from time to time; (c) the
periodic intervals at which such
determination will be made; (d) the interest
rate cap (the "Maximum Variable Interest
Rate") or the interest rate floor
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12
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(the "Minimum Variable Interest Rate") on
the Bond Interest Rate, if any, for such
Variable Interest Securities; and (e) the
Variable Interest Period and any other terms
relevant to such Class of Bonds. See
"DESCRIPTION OF THE SECURITIES--Payments or
Distributions of Interest."
Interest Distributions on
the Certificates................... Interest distributions on the Certificates
of a Series (other than Certificates that
are Zero Coupon Securities or Principal Only
Securities) will be made from amounts
available therefor on each Distribution Date
at the applicable rate specified in (or
determined in the manner set forth in) the
related Prospectus Supplement. The interest
rate on Certificates of a Series may be
variable or change with changes in the
mortgage rates or annual percentage rates of
the Mortgage Assets included in the related
Trust Fund and/or as prepayments occur with
respect to such Mortgage Assets. Zero Coupon
Securities and Principal Only Securities may
not be entitled to receive any interest
distributions or may be entitled to receive
only nominal interest distributions.
Compound Interest Securities will not
receive distributions of interest but
accrued interest will be added to the
principal balance thereof on each
Distribution Date until the Accrual
Termination Date. Following the Accrual
Termination Date, interest distributions
with respect to such Compound Interest
Securities will be made on the basis of
their Compound Value.
Principal Payments on the
Bonds.............................. All payments of principal of a Series will
be allocated among the Classes of such
Series in the order and amounts, and will be
applied either on a pro rata or a random lot
basis among all Bonds of any such Class, as
specified in the related Prospectus
Supplement.
Except with respect to Zero Coupon
Securities, Compound Interest Securities and
Interest Only Securities, unless specified
otherwise in the related Prospectus
Supplement, on each Payment Date principal
payments will be made on the Bonds of each
Series in an amount (the "Principal Payment
Amount") as determined by a formula
specified in the related Prospectus
Supplement. Unless otherwise specified in
the related Prospectus Supplement, if the
Series of Bonds has a Class of Compound
Interest Securities, additional principal
payments on the Bonds will be made on each
Payment Date in an amount equal to the
interest accrued, but not then payable, on
such Bonds for the related Interest Accrual
Period. If the Series of Bonds has a Class
of PAC Securities, such PAC Securities will
have certain priorities of payment with
respect to principal to the extent of
certain targeted
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13
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amounts with respect to each Payment Date,
as set forth in the related Prospectus
Supplement.
Principal Distributions on the
Certificates....................... Principal distributions on the Certificates
of a Series will be made from amounts
available therefor on each Distribution
Date, unless otherwise specified in the
related Prospectus Supplement, in an
aggregate amount determined as set forth in
the related Prospectus Supplement and will
be allocated among the respective Classes of
a Series of Certificates at the times, in
the manner and in the priority (which may,
in certain cases, include allocation by
random lot) set forth in the related
Prospectus Supplement.
Except with respect to Zero Coupon
Securities, Compound Interest Securities and
Interest Only Securities, unless specified
otherwise in the related Prospectus
Supplement, on each Distribution Date
principal payments will be made on the
Certificates of each Series in the Principal
Payment Amount as determined by a formula
specified in the related Prospectus
Supplement. Unless otherwise specified in
the related Prospectus Supplement, if the
Series of Certificates has a Class of
Compound Interest Securities, additional
principal payments on the Certificates will
be made on each Distribution Date in an
amount equal to the interest accrued, but
not then payable, on such Certificates for
the related Interest Accrual Period. If the
Series of Certificates has a Class of PAC
Securities, such PAC Securities will have
certain priorities of distribution with
respect to principal to the extent of
certain targeted amounts with respect to
each Distribution Date, as set forth in the
related Prospectus Supplement.
Allocation of Losses............... If so specified in the related Prospectus
Supplement, on any Payment Date or
Distribution Date, as applicable, on which
the principal balance of the Mortgage Assets
is reduced due to losses on the Mortgage
Assets, (i) the amount of such losses will
be allocated first, to reduce the Aggregate
Outstanding Principal of the Subordinate
Securities or other subordination, if any,
and, thereafter, to reduce the Aggregate
Outstanding Principal of the remaining
Securities in the priority and manner
specified in such Prospectus Supplement
until the Aggregate Outstanding Principal of
each Class of Securities so specified has
been reduced to zero or paid in full, thus
reducing the amount of principal payable or
distributable on each such Class of
Securities or (ii) such losses may be
allocated in any other manner set forth in
the related Prospectus Supplement. Unless
otherwise specified in the related
Prospectus Supplement, such reductions of
principal of a Class or Classes of
Securities shall be allocated to the Holders
of the Securities of such Class or Classes
pro
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14
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rata in the proportion which the outstanding
principal of each Bond or Certificate of
such Class or Classes bears to the Aggregate
Outstanding Principal of all Securities of
such Class. See "DESCRIPTION OF THE
SECURITIES--Payments or Distributions of
Principal."
Stated Maturity of the Bonds....... The "Stated Maturity" for each Class of a
Series is the date specified in the related
Prospectus Supplement no later than which
all the Bonds of such Class will be fully
paid, calculated on the basis of the
assumptions set forth in the related
Prospectus Supplement. However, the actual
maturity of the Bonds is likely to occur
earlier and may occur significantly earlier
than their Stated Maturity. The rate of
prepayments on the Mortgage Assets pledged
as security for any Series will depend on a
variety of factors, including the
characteristics of the Mortgage Loans
underlying or comprising the Mortgage Assets
and the prevailing level of interest rates
from time to time, as well as on a variety
of economic, demographic, geographic, tax,
legal and other factors. No assurance can be
given as to the actual prepayment experience
of such Mortgage Assets. See "YIELD AND
PREPAYMENT CONSIDERATIONS."
Final Scheduled Distribution
Date of the Certificates........... The Final Scheduled Distribution Date for
each Class of Certificates of a Series is
the date after which no Certificates of such
Class will remain outstanding, assuming
timely payments or distributions are made on
the Mortgage Assets in the related Trust
Fund in accordance with their terms. The
Final Scheduled Distribution Date of a Class
may equal the maturity date of the Mortgage
Asset in the related Trust Fund which has
the latest stated maturity or will be
determined as described herein and in the
related Prospectus Supplement.
The actual maturity date of the Certificates
of a Series will depend primarily upon the
level of prepayments with respect to the
Mortgage Loans comprising the Mortgage
Assets in the related Trust Fund. The actual
maturity of any Certificate is likely to
occur earlier and may occur substantially
earlier than its Final Scheduled
Distribution Date as a result of the
application of prepayments to the reduction
of the principal balances of the
Certificates. The rate of prepayments on the
Mortgage Loans comprising Mortgage Assets in
the Trust Fund for a Series will depend on a
variety of factors, including certain
characteristics of such Mortgage Loans and
the prevailing level of interest rates from
time to time, as well as on a variety of
economic, demographic, tax, legal, social
and other factors. No assurance can be given
as to the actual prepayment experience with
respect to a Series. See "RISK FACTORS"
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15
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and "YIELD AND PREPAYMENT
CONSIDERATIONS--Prepayments and Weighted
Average" herein.
Redemption of Bonds................ The Bonds will be redeemable only as
follows:
a. Special Redemption
If specified in the related Prospectus
Supplement, Bonds of a Series will be
subject to special redemption, in whole or
in part, if, as a result of principal
payments on the Mortgage Assets securing
such Series or low reinvestment yields or
both, the Trustee determines (based on
assumptions, if any, specified in the
Indenture and after giving effect to the
amounts, if any, available to be withdrawn
from any Reserve Fund for such Series) that
the amount anticipated to be available in
the Collection Account for such Series on
the date specified in the related Prospectus
Supplement will be insufficient to meet debt
service requirements on any portion of the
Bonds. Any such redemption would be limited
to the aggregate amount of all scheduled
principal payments and prepayments on the
Mortgage Assets received since the last
Payment Date or Special Redemption Date,
whichever is later, and may shorten the
maturity of any Bond so redeemed by no more
than the period between the date of such
special redemption and the next Payment
Date. Unless otherwise specified in the
related Prospectus Supplement, special
redemptions of Bonds of a Series will be
made in the same priority and manner as
principal payments are made on a Payment
Date. Bonds subject to special redemption
shall be redeemed on the applicable Special
Redemption Date at 100% of their unpaid
principal amount plus accrued interest on
such principal to the date specified in the
related Prospectus Supplement. To the extent
described in the related Prospectus
Supplement, Bonds of a Series may be subject
to special redemption in whole or in part
following certain defaults under an
Enhancement Agreement or other agreement,
and in certain other events at the
Redemption Price. See "DESCRIPTION OF THE
SECURITIES--Special Redemption."
b. Optional Redemption
To the extent specified in the related
Prospectus Supplement, one or more Classes
of any Series may be redeemed in whole, or
in part, at, unless otherwise specified in
the related Prospectus Supplement, the
Issuer's option on any Payment Date on or
after the date specified in the related
Prospectus Supplement and at the Redemption
Price. See "DESCRIPTION OF THE
SECURITIES--Optional Redemption."
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c. Mandatory Redemption
If specified in the related Prospectus
Supplement for a Series, the Bonds of one or
more Classes ("Individual Investor Bonds")
may be subject to mandatory redemptions by
lot or by such other method set forth in the
Prospectus Supplement. The related
Prospectus Supplement relating to a Series
of Bonds with Individual Investor Securities
will set forth Class priorities, if any, and
conditions with respect to redemptions.
Individual Investor Securities to be
redeemed shall be selected by random lot in
$1,000 units, after making all permitted
redemptions requested by holders of
Individual Investor Securities or by such
other method set forth in the Prospectus
Supplement. See "DESCRIPTION OF THE
SECURITIES--Mandatory Redemption."
Optional Termination of Trust
Fund............................... If so specified in the related Prospectus
Supplement, the Company, as depositor of the
Primary Assets into the Trust Fund (acting
in such capacity, and in such capacity in
respect of an Owner Trust, the "Depositor"),
the Servicer, or such other entity that is
specified in the related Prospectus
Supplement, may, at its option, cause an
early termination of the related Trust Fund
by repurchasing all of the Primary Assets
remaining in the Trust Fund on or after a
specified date, or on or after such time as
the aggregate principal balance of the
Certificates of any Class of the Series is
less than the amount or percentage specified
in the related Prospectus Supplement. See
"DESCRIPTION OF THE SECURITIES--Optional
Termination."
Repurchases of Certificates........ If so specified in the related Prospectus
Supplement, one or more classes of the
Certificates of such Series may be
repurchased, in whole or in part, at the
option of the Depositor, at such times and
under the circumstances specified in such
Prospectus Supplement and at the repurchase
price set forth therein. See "DESCRIPTION OF
THE SECURITIES--Optional Repurchase of
Certificates" herein.
If so specified in the related Prospectus
Supplement, any Class of the Certificates
may be subject to repurchase at the request
of the holders of such Class or to mandatory
repurchase by the Depositor (including by
random lot). See "DESCRIPTION OF THE
SECURITIES--Other Repurchases" herein.
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Security for the Bonds,
or the Trust Fund for the
Certificates....................... Each Series of Bonds will be separately
secured by Primary Assets consisting of one
or more of the assets described below, as
specified in the Prospectus Supplement. The
Trust Fund for a Series of Certificates will
consist of one or more of the assets
described below, as specified in the related
Prospectus Supplement.
a. Mortgage Assets
The Primary Assets for a Series may consist
of any combination of the following, to the
extent and as specified in the related
Prospectus Supplement:
(1) Mortgage Loans
Mortgage Assets for a Series may consist, in
whole or in part, of Mortgage Loans,
including participation interests therein
owned by the Issuer. Some Mortgage Loans or
Mortgage Loans underlying such participation
interests may be delinquent or
non-performing as specified in the related
Prospectus Supplement. The Mortgage Assets
may consist of a single Mortgage Loan or
obligations of a single obligor or related
obligors as specified in the related
Prospectus Supplement. Mortgage Loans
comprising or underlying the Mortgage Assets
may be originated by or acquired from an
affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to
any such Mortgage Loan. Payments on such
Mortgage Loans will be collected by the
Trustee or by the Servicer or Master
Servicer with respect to a Series and
remitted to the Trustee as described in the
related Prospectus Supplement and will be
available in the priority described in the
related Prospectus Supplement to make
payments on the Bonds of that Series. To the
extent specified in the related Prospectus
Supplement, Mortgage Loans owned by the
Issuer will be serviced by Servicers, and,
if applicable, a Master Servicer, either of
which may be affiliates or shareholders of
the Issuer.
Mortgaged Properties securing Mortgage Loans
may consist of multifamily residential
rental property or cooperatively owned
multifamily property consisting of five or
more dwelling units, mixed
multifamily/commercial property or
commercial property. Mortgage Loans secured
by Multifamily Property may consist of FHA
Loans. Mortgage Loans may, as specified in
the related Prospectus Supplement, have
various payment characteristics and may
consist of fixed rate loans or ARMs or
Mortgage Loans having balloon or other
irregular payment features. Unless otherwise
specified in the related Prospectus
Supplement, the
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Mortgage Loans will be secured by first
mortgages or deeds of trust or other similar
security instruments creating a first lien
on Mortgaged Property. If so specified in
the related Prospectus Supplement, Mortgage
Loans relating to real estate projects under
construction may be included in the Mortgage
Assets for a Series. The related Prospectus
Supplement will describe certain
characteristics of the Mortgage Loans
comprising the Mortgage Assets for a Series,
including, without limitation, (a) the
aggregate unpaid principal balance of the
Mortgage Loans comprising the Mortgage
Assets; (b) the weighted average Mortgage
Rate on the Mortgage Loans, and, in the case
of adjustable Mortgage Rates, the weighted
average of the current adjustable Mortgage
Rates, the minimum and maximum permitted
adjustable Mortgage Rates, if any, and the
weighted average thereof; (c) the average
outstanding principal balance of the
Mortgage Loans; (d) the weighted average
remaining scheduled term to maturity of the
Mortgage Loans and the range of remaining
scheduled terms to maturity; (e) the range
of Loan-to-Value Ratios of the Mortgage
Loans; (f) the relative percentage (by
principal balance as of the Cut-off Date) of
Mortgage Loans that are ARMs, fixed interest
rate, FHA Loans or other types of Mortgage
Loans; (g) any enhancement relating to the
Mortgage Assets; (h) the relative percentage
(by principal balance as of the Cut-Off
Date) of Mortgage Loans that are secured by
Multifamily Property or Commercial Property;
(i) the geographic dispersion of Mortgaged
Properties securing the Mortgage Loans; and
(j) the use or type of each Mortgaged
Property securing a Mortgage Loan.
If permitted by applicable law, the Mortgage
Pool may also include Mortgaged Properties
acquired by foreclosure or by deed-in-lieu
of foreclosure ("REO Property"). To the
extent specified in the related Prospectus
Supplement, the Servicer or the Master
Servicer or the Special Servicer, if any,
may establish and maintain a trust account
or accounts to be used in connection with
REO Properties and other Mortgaged
Properties being operated by it or on its
behalf on behalf of the Trust Estate, by the
mortgagor as debtor-in-possession or
otherwise. See "SECURITY FOR THE BONDS AND
CERTIFICATES--Mortgage Loans" and "SERVICING
OF MORTGAGE LOANS--Maintenance of Insurance
Policies and Other Servicing
Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans."
(2) Private Mortgage-Backed Securities
Private Mortgage-Backed Securities may
include (a) mortgage participations or
pass-through certificates representing
beneficial interests in certain Mortgage
Loans,
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(b) debt obligations interest payments on
which may be tax-exempt in whole or in part
secured by mortgages or (c) participations
or other interests in any of the foregoing.
Although individual Mortgage Loans
underlying a Private Mortgage-Backed
Security may be insured or guaranteed by the
United States or an agency or
instrumentality thereof, they need not be,
and the Private Mortgage-Backed Securities
themselves will not be, so insured or
guaranteed. Unless otherwise specified in
the Prospectus Supplement relating to a
Series, payments on the Private
Mortgage-Backed Securities will be
distributed directly to the Trustee (on
behalf of the Trust Estate) as registered
owner of such Private Mortgage-Backed
Securities. Unless otherwise specified in
the Prospectus Supplement relating to a
Series, if payments with respect to interest
on the underlying obligations are
tax-exempt, such Prospectus Supplement will
disclose the relevant federal income tax
characteristics relating to the tax-exempt
status of such obligations.
The related Prospectus Supplement for a
Series will specify, to the extent
applicable, (i) the aggregate approximate
principal amount and type of any Private
Mortgage-Backed Securities to be included in
the Trust Estate or Trust Fund for such
Series; (ii) certain characteristics of the
Mortgage Loans, participations or other
interests which comprise the underlying
assets for the Private Mortgage-Backed
Securities including (A) the payment
features of such Mortgage Loans,
participations or other interests (i.e.,
whether they are fixed interest rate or
adjustable rate and whether they provide for
fixed level payments, negative amortization,
or other payment features), (B) the
approximate aggregate principal amount, if
known, of the underlying Mortgage Loans,
participations or other interests which are
insured or guaranteed by a governmental
entity, (C) the servicing fee or range of
servicing fees with respect to the Mortgage
Loans, and (D) the stated maturities of the
Mortgage Loans, participations or other
interests at origination; (iii) the maximum
original term-to-stated maturity of the
Private Mortgage-Backed Securities; (iv) the
weighted average term-to-stated maturity of
the Private Mortgage-Backed Securities; (v)
the pass-through or bond rate or ranges
thereof for the Private Mortgage-Backed
Securities or formula therefor; (vi) the
weighted average pass-through or certificate
rate of the Private Mortgage-Backed
Securities or formula therefor; (vii) the
issuer of the Private Mortgage-Backed
Securities (the "PMBS Issuer"), the Servicer
or Master Servicer of the Private
Mortgage-Backed Securities and the trustee
of the Private Mortgage-Backed Securities
(the "PMBS Trustee"); (viii) certain
characteristics of credit support, if any,
such as reserve
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funds, insurance policies, letters of
credit, guarantees or overcollateralization,
relating to the Mortgage Loans underlying
the Private Mortgage-Backed Securities, or
to such Private Mortgage-Backed Securities
themselves; (ix) the terms on which
underlying Mortgage Loans, participations or
other interests for such Private
Mortgage-Backed Securities or the Private
Mortgage-Backed Securities themselves may,
or are required to, be repurchased prior to
maturity; and (x) the terms on which
substitute Mortgage Loans, participations or
other interests may be delivered to replace
those initially deposited with the PMBS
Trustee.
(3) Determination of Asset Value
If provided in the applicable Prospectus
Supplement, each item of Mortgage Assets for
a Series will be assigned an Asset Value.
Unless otherwise specified in the related
Prospectus Supplement, the aggregate of the
Asset Values of the Primary Assets securing
a Series of Bonds or comprising a Trust Fund
will equal not less than the original
Aggregate Outstanding Principal of such
Series. The Asset Value of an item of
Primary Assets securing any Series of Bonds
or comprising a Trust Fund is intended to
represent the principal amount of Securities
of such Series that, based on certain
assumptions stated in the related Series
Supplement, can be supported by payments on
such item of Primary Assets, irrespective of
prepayments thereon, together with,
depending on the type of Primary Assets and
method used to determine its Asset Value,
reinvestment earnings at the related Assumed
Reinvestment Rate, if any, and amounts in
any Reserve Fund established for that
Series. In such a case, the related
Prospectus Supplement will set forth the
method or methods and related assumptions
used to determine Asset Value, if such
method is used, for the Primary Assets
securing the related Series. See
"DESCRIPTION OF THE SECURITIES--Valuation of
Mortgage Assets."
b. Collection Account
Unless otherwise provided in the related
Prospectus Supplement, all payments on the
Primary Assets pledged as security for a
Series or comprising the assets of a Trust
Fund will be remitted to a Collection
Account to be established with the Trustee,
or if the Trustee is not also the Paying
Agent, with the Paying Agent, for such
Series. Unless otherwise provided in the
related Prospectus Supplement, such
payments, together with the Reinvestment
Income thereon, if any, the amount of cash,
if any, initially deposited in the
Collection Account by the Issuer together
with Reinvestment Income thereon, if any,
and any amounts
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withdrawn from any Reserve Fund established
for such Series, will be available to make
payments or distributions of principal of
and interest on such Series on the next
Payment Date or Distribution Date, as
applicable. Any funds remaining in the
Collection Account for a Series immediately
following a Payment Date or Distribution
Date, as applicable (unless required to be
deposited into one or more Reserve Funds, as
described below, or applied to pay certain
expenses or other payments provided for in
the Indenture or Trust Agreement, as
applicable) will be promptly paid as
provided in the Indenture or Trust Agreement
to the Issuer or, in certain circumstances,
to owners of residual interests and, upon
such payment, will be released from the lien
of the Indenture or Trust Agreement, as
applicable. See "SECURITY FOR THE BONDS AND
CERTIFICATES--Collection Account."
c. Guaranteed Investment Contracts and Other
Agreements
The Issuer may obtain and deliver to the
Trustee Guaranteed Investment Contracts
pursuant to which moneys held in the funds
and accounts established for such Series
will be invested at a specified rate for the
Series. The Issuer may also obtain and
deliver to the Trustee certain other
agreements such as interest rate swap
agreements, interest rate cap or floor
agreements or similar agreements issued by a
bank, insurance company, savings bank,
savings and loan association or other entity
which reduce the effects of interest rate
fluctuations on the Mortgage Assets or the
Securities. The principal terms of any such
Guaranteed Investment Contract or other
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 Prospectus
Supplement for the related Series.
Additionally, the related Prospectus
Supplement will provide certain information
with respect to the issuer of such
Guaranteed Investment Contract or other
agreement.
Enhancement........................ Enhancement in the form of reserve funds,
subordination, overcollateralization,
insurance policies, letters of credit or
other types of credit support may be
provided with respect to the Mortgage Assets
or with respect to one or more Classes of
Securities of a Series. If the Mortgage
Assets are divided into separate Mortgage
Groups, each securing or supporting a
separate Class or Classes of a Series,
credit support may be provided by a
cross-support feature which requires that
distributions be made with respect to
Securities secured by one Mortgage Group
prior to distributions to Subordinate
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Securities secured by another Mortgage Group
within the Trust Estate or Trust Fund.
The type, characteristics and amount of
enhancement will be determined based on the
characteristics of the Mortgage Loans
underlying or comprising the Mortgage Assets
and other factors and will be established on
the basis of requirements of each Rating
Agency rating the Securities of such Series.
If so specified in the related Prospectus
Supplement, any such enhancement may apply
only in the event of certain types of losses
or delinquencies and the protection against
losses or delinquencies provided by such
enhancement will be limited. See
"ENHANCEMENT" and "RISK FACTORS" herein.
a. Subordinate Securities
A Series of Securities may include one or
more Classes of Subordinate Securities. The
rights of holders of such Subordinate
Securities to receive distributions on any
Payment Date or Distribution Date, as
applicable, will be subordinate in right and
priority to the rights of holders of Senior
Securities of the Series, but only to the
extent described in the related Prospectus
Supplement. If so specified in the related
Prospectus Supplement, subordination may
apply only in the event of certain types of
losses not covered by other enhancement.
Unless otherwise specified in the related
Prospectus Supplement, such subordination
will be in lieu of providing insurance
policies or other credit support with
respect to losses arising from such events.
Unless otherwise specified in the related
Prospectus Supplement, the related Series
Supplement may require a trustee that is not
the Trustee to be appointed to act on behalf
of holders of Subordinate Securities.
The related Prospectus Supplement will set
forth information concerning the amount of
subordination of a Class or Classes of
Subordinate Securities in a Series, the
circumstances in which such subordination
will be applicable, the manner, if any, in
which the amount of subordination will
decrease over time, the manner of funding
any related Reserve Fund and the conditions
under which amounts in any related Reserve
Fund will be used to make distributions to
holders of Senior Securities and/or to
holders of Subordinate Securities or be
released from the related Trust Estate or
Trust Fund. If cash flows otherwise
distributable to holders of Subordinate
Securities secured by a Mortgage Group will
be used as credit support for Senior
Securities secured by another Mortgage Group
within the Trust Estate or Trust Fund, the
related Prospectus Supplement will specify
the manner and
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conditions for applying such a cross-support
feature. See "ENHANCEMENT--Subordinate
Securities."
b. Insurance
If so specified in the related Prospectus
Supplement, certain insurance policies will
be required to be maintained with respect to
the Mortgage Loans included in the Trust
Estate or Trust Fund for a Series. Such
insurance policies may include, but are not
limited to, a standard hazard insurance
policy or, with respect to FHA Loans, FHA
Insurance. See "ENHANCEMENT" and
"DESCRIPTION OF INSURANCE ON THE MORTGAGE
LOANS" herein. The Prospectus Supplement for
a Series will provide information concerning
any such insurance policies, including (a)
the types of coverage provided by each, (b)
the amount of such coverage and (c)
conditions to payment under each. To the
extent described in the related Prospectus
Supplement, certain insurance policies to be
maintained with respect to the Mortgage
Loans may be terminated, reduced or replaced
following the occurrence of certain events
affecting the authority or creditworthiness
of the insurer. Additionally, such insurance
policies may be terminated, reduced or
replaced by the Servicer or Master Servicer,
if any, provided that no rating assigned to
Securities of the related Series offered
hereby and by the related Prospectus
Supplement is adversely affected and such
insurance policies may apply only in the
event of certain types of losses, all as set
forth in the related Prospectus Supplement.
c. Letter of Credit
If so specified in the related Prospectus
Supplement, credit support may be provided
by one or more letters of credit. A letter
of credit may provide limited protection
against certain losses in addition to or in
lieu of other credit support. The issuer of
the letter of credit (the "L/C Bank") will
be obligated to honor demands with respect
to such letter of credit, to the extent of
the amount available thereunder, to provide
funds under the circumstances and subject to
such conditions as are specified in the
related Prospectus Supplement. The liability
of the L/C Bank under its letter of credit
may be reduced by the amount of unreimbursed
payments thereunder.
The maximum liability of an L/C Bank under
its letter of credit will be an amount equal
to a percentage specified in the related
Prospectus Supplement of the initial
aggregate outstanding principal balance of
the Mortgage Loans in the Trust Estate or
Trust Fund or one or more Classes of
Securities of the related Series (the "L/C
Percentage"). The
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maximum amount available at any time to be
paid under a letter of credit will be
determined in the manner specified therein
and in the related Prospectus Supplement.
See "ENHANCEMENT--Letter of Credit."
d. Bond Guarantee Insurance
If so specified in the related Prospectus
Supplement, credit support for a Series may
be provided by an insurance policy (the
"Bond Guarantee Insurance") issued by one or
more insurance companies. Such Bond
Guarantee Insurance may guarantee timely
distributions of interest and full
distributions of principal on the basis of a
schedule of principal distributions set
forth in or determined in the manner
specified in the related Prospectus
Supplement. See "ENHANCEMENT--Bond Guarantee
Insurance."
e. Reserve Funds
The Issuer may deposit in one or more
reserve funds (collectively, the "Reserve
Funds") for any Series cash, Eligible
Investments, demand notes or a combination
thereof in the aggregate amount, if any,
specified in the related Prospectus
Supplement. Any Reserve Funds for a Series
may also be funded over time through
application of a specified amount of cash
flow, to the extent described in the related
Prospectus Supplement. Such a Reserve Fund
may be established to increase the
likelihood of the timely distributions on
the Securities of such Series or to reduce
the likelihood of a special redemption with
respect to any Series. Reserve Funds may be
established to provide protection against
certain losses or delinquencies in addition
to or in lieu of other credit support.
Amounts on deposit in the Reserve Funds for
a Series, together with (unless otherwise
specified in the related Prospectus
Supplement) the reinvestment income thereon,
if any, will be applied for the purposes, in
the manner and to the extent provided by the
related Prospectus Supplement.
On each Payment Date or Distribution Date,
as applicable, for a Series, all amounts on
deposit in any Reserve Funds for the Series
in excess of the amounts required to be
maintained therein by the related Indenture
or Trust Agreement, as applicable, and
specified in the related Prospectus
Supplement may be released from the Reserve
Funds and will not be available for future
payments or distributions on the Securities
of such Series.
Additional information concerning any
Reserve Funds, including whether any such
Reserve Fund is a part of the Trust Estate
or Trust Fund, the circumstances under which
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moneys therein will be applied to make
distributions to Bondholders or
Certificateholders, the balance required to
be maintained in such Reserve Funds, the
manner in which such required balance will
decrease over time and the manner of funding
any such Reserve Fund, will be set forth in
the related Prospectus Supplement. See
"ENHANCEMENT--Reserve Funds."
f. Overcollateralization
To the extent applicable and as specified in
the related Prospectus Supplement, a Series
may be structured such that the outstanding
principal balances or Aggregate Asset Value
of the Mortgage Assets securing a Series may
exceed the Aggregate Outstanding Principal
of such Series, thereby resulting in
overcollateralization. See "DESCRIPTION OF
THE SECURITIES--Valuation of Mortgage
Assets."
Servicing Agreements............... Various Servicers will perform certain
servicing functions with respect to any
Mortgage Loans comprising Mortgage Assets or
Underlying Collateral for a Series. In
addition, if so specified in the related
Prospectus Supplement, a Master Servicer
identified in the related Prospectus
Supplement may service Mortgage Loans
directly or administer and supervise the
performance by the Servicers of their duties
and responsibilities under separate
servicing agreements. Each Servicer must
meet the requirements of the Master
Servicer, if any, and be approved by the
Issuer, and, if specified in the related
Prospectus Supplement, the Master Servicer
and each Servicer must be approved by either
FNMA or FHLMC as a seller-servicer of
mortgage loans and, in the case of FHA
Loans, by HUD as an FHA mortgagee. Each
Servicer will be obligated under a servicing
agreement to perform customary servicing
functions and may be obligated to advance
funds to cover certain payments not made by
the Mortgagors to the extent described
herein and in the related Prospectus
Supplement. The Master Servicer, if any,
may, if so specified in the related
Prospectus Supplement, be obligated to
advance funds to cover any required Advances
not made by the Servicers to the extent
that, in the judgment of the Master
Servicer, such Advances are recoverable
under the Insurance Policies, any
Enhancement or from the proceeds of
liquidation of the Mortgage Loans or as
provided in the related Prospectus
Supplement. The related Prospectus
Supplement will specify the conditions to
and any limitations on such Advances and the
conditions under which such Advances will be
recoverable. With respect to any such
Series, the Issuer may (i) enter into a
standby agreement with an independent
standby Servicer acceptable to each Rating
Agency rating such Securities providing that
such standby Servicer will assume the
Servicer's or Master Servicer's
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obligations in the event of a default by the
Master Servicer or Servicer or (ii) obtain a
servicer performance bond acceptable to each
Rating Agency rating such Securities that
will guarantee certain of the Servicer's or
Master Servicer's obligations. The Issuer
will assign to the Trustee its rights under
any Master Servicing Agreement and any
servicing agreements so provided with
respect to a Series as security for the
Series. See "SERVICING OF MORTGAGE LOANS"
and "SECURITY FOR THE BONDS AND
CERTIFICATES--Mortgage Loans" herein.
Special Servicer................... If so specified in the related Prospectus
Supplement, to the extent a Mortgage Loan on
or after the Closing Date meets certain
criteria set forth in the related Prospectus
Supplement, (i) all or a portion of the
servicing responsibilities with respect to
such Mortgage Loan may be transferred to a
Special Servicer or (ii) the Special
Servicer will provide advisory services with
respect to the servicing of such Mortgage
Loan. See "SERVICING OF MORTGAGE LOANS"
herein.
Federal Income Tax
Considerations..................... Unless otherwise stated in the applicable
Prospectus Supplement, a real estate
mortgage investment conduit (a "REMIC")
election will be made with respect to each
Series of Securities. Securities of such
Series will be designated as "regular
interests" in a REMIC ("Regular Interest
Securities") or as "residual interests" in a
REMIC ("Residual Interest Securities").
If the applicable Prospectus Supplement so
specifies with respect to a Series of
Securities, the Securities of such Series
will not be treated as regular or residual
interests in a REMIC for federal income tax
purposes but instead will be treated as (i)
indebtedness of the Issuer, (ii) an
undivided beneficial ownership interest in
the Mortgage Loans (and the arrangement
pursuant to which the Mortgage Loans will be
held and the Securities will be issued will
be treated as a grantor trust under Subpart
E, part I of subchapter J of the Code and
not as an association taxable as a
corporation for federal income tax
purposes); (iii) equity interests in an
association that will satisfy the
requirements for qualification as a real
estate investment trust; (iv) interests in
an entity that will be treated as a
partnership for federal income tax purposes;
or (v) interests in an entity or a pool of
assets that will satisfy the requirements
for qualification as a financial asset
securitization investment trust (a "FASIT")
for federal income tax purposes. Federal
income tax consequences to Bondholders or
Certificateholders of any such Series will
be described in the applicable Prospectus
Supplement.
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Compound Interest Securities, Interest
Weighted Securities and Zero Coupon
Securities will, and certain other Classes
of Securities may, be issued with original
issue discount that is not de minimis. In
such cases, the Bondholder or
Certificateholder will be required to
include the original issue discount in gross
income as it accrues, which may be prior to
the receipt of cash attributable to such
income. If a Security is issued at a
premium, the holder will be entitled to make
an election to amortize such premium on a
constant yield method. Securities
constituting regular or residual interests
in a REMIC will generally represent "loans
secured by an interest in real property" for
domestic building and loan associations and
"real estate assets" for real estate
investment trusts to the extent that the
underlying mortgage loans and interest
thereon qualify for such treatment.
Non-REMIC Securities (other than interests
in grantor trusts and certain interests in a
FASIT) will not qualify for such treatment.
A holder of a Residual Interest Security
will be required to include in its income
its pro rata share of the taxable income of
the REMIC. In certain circumstances, the
holder of a Residual Interest Security may
have REMIC taxable income or tax liability
attributable to REMIC taxable income for a
particular period in excess of cash
distributions for such period or have an
after-tax return that is less than the
after-tax return on comparable debt
instruments. Accordingly, a Residual
Interest Security may have a negative
"value". In addition, a portion (or all) of
the income from a Residual Interest Security
(i) is not subject to offset by losses from
other activities, (ii) for a holder that is
subject to tax under the Code on unrelated
business taxable income, is treated as
unrelated business taxable income and (iii)
for a foreign holder, does not qualify for
exemption from or reduction of withholding.
Further, individual holders are subject to
limitations on the deductibility of expenses
of the REMIC. See "FEDERAL INCOME TAX
CONSIDERATIONS."
ERISA Considerations............... A fiduciary of any employee benefit plan or
other retirement arrangement subject to
Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code, should
carefully review with its own legal advisors
whether the purchase or holding of
Securities could give rise to a transaction
prohibited or otherwise impermissible under
ERISA or the Code. See "ERISA
CONSIDERATIONS."
Legal Investment................... The related Prospectus Supplement will
specify whether any Class of the Securities
of the particular Series offered by this
Prospectus and the related Prospectus
Supplement will
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constitute "mortgage related securities"
under the Secondary Mortgage Market
Enhancement Act of 1984, as amended
("SMMEA"). Investors whose investment
authority is subject to legal restrictions
should consult their own legal advisors to
determine whether and to what extent the
Securities constitute legal investments for
them. See "LEGAL INVESTMENT."
The Issuer will use the net proceeds from
the sale of each Series to (i) purchase
Mortgage Loans and/or Private
Mortgage-Backed Securities comprising the
Mortgage Assets securing such Securities,
(ii) repay indebtedness which has been
incurred to acquire Mortgage Assets to be
pledged by the Issuer as security for the
Bonds or to be deposited into a Trust Fund,
(iii) establish any Reserve Funds described
in the related Prospectus Supplement, or
(iv) pay costs of structuring, guaranteeing
and issuing such Securities. If so specified
in the related Prospectus Supplement, the
purchase of the Mortgage Assets for a Series
may be effected by an exchange of Securities
with the seller of such Mortgage Assets. See
"USE OF PROCEEDS."
Ratings............................ It will be a condition to the issuance of
any Securities offered by this Prospectus
and the related Prospectus Supplement that
they be rated in one of the four highest
applicable rating categories by at least one
Rating Agency. The rating or ratings
applicable to Securities of each Series will
be as set forth in the related Prospectus
Supplement.
A security rating should be evaluated
independently of similar ratings of
different types of securities. A security
rating does not address the effect that the
rate of prepayment on Mortgage Loans
comprising or underlying the Mortgage Assets
or the effect that reinvestment rates may
have on the yield to investors in the
Securities. A 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 rating should be evaluated
independently of any other rating. See "RISK
FACTORS."
- --------------------------------------------------------------------------------
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RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Securities.
Limited Liquidity. There can be no assurance that a secondary market for
the Securities of any Series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue while Securities
of such Series remain outstanding. The market value of Securities will fluctuate
with changes in prevailing rates of interest. Consequently, sale of the
Securities by a holder in any secondary market which may develop may be at a
discount from par value or from their purchase price. Furthermore, secondary
purchasers may look only to the Prospectus Supplement attached hereto and to the
reports to Bondholders or Certificateholders, as applicable, delivered pursuant
to the Indenture or Trust Agreement, as applicable and as described herein under
the heading "DESCRIPTION OF THE SECURITIES--General," "--The Bonds--General,"
and "--The Certificates--General" for information concerning the Securities.
Except to the extent described in the related Prospectus Supplement, Bondholders
or Certificateholders, as applicable, will have no optional redemption or early
termination rights, respectively. The Bonds are subject to redemption, and the
Certificates are subject to early termination or repurchase, by the Issuer only
under certain specified circumstances described herein and in the related
Prospectus Supplement. See "DESCRIPTION OF THE SECURITIES--Special Redemption,"
"--Optional Redemption," "--Optional Termination," "--Optional Repurchase of
Certificates," and "--Other Repurchases." Lehman Brothers Inc. ("Lehman
Brothers"), through one or more of its affiliates, and the other underwriters,
if any, presently expect to make a secondary market in the Securities, but have
no obligation to do so.
Limited Assets. The Issuer will not have, nor be expected in the future to
have, any significant assets available for payments on a Series of Securities
other than the assets pledged as security or deposited into a Trust Fund for a
specific Series. The Bonds will be non-recourse obligations of the Issuer and
each Series of Bonds will be separately secured. Unless otherwise specified in
the related Prospectus Supplement, no Series will have any claim against or
security interest in the Primary Assets pledged to secure any other Series. If
the Primary Assets securing a Series of Bonds is insufficient to make payments
on such Bonds, no other assets of the Issuer will be available for payment of
the deficiency.
Unless otherwise set forth in the Prospectus Supplement for a Series of
Certificates, the Trust Fund for such Series will be the only available source
of funds to make distributions on the Certificates of such Series. The only
obligations, if any, of the Depositor with respect to the Certificates of any
Series will be pursuant to certain representation and warranties. The Depositor
does not have, and is not expected in the future to have, any significant assets
with which to meet any obligation to repurchase Mortgage Assets with respect to
which there has been a breach of any representation or warranty. If, for
example, the Depositor were required to repurchase a Mortgage Loan which
constitutes a Mortgage Asset, its only sources of funds to make such repurchase
would be from funds obtained from the enforcement of a corresponding obligation,
if any, on the part of the originator of the Mortgage Loans or the Servicer, as
the case may be, or from a reserve fund established to provide funds for such
repurchases.
Additionally, certain amounts remaining in certain funds or accounts,
including the Collection Account and any Reserve Funds, may be withdrawn under
certain conditions and circumstances described in the related Prospectus
Supplement. In the event of such withdrawal, such amounts will not be pledged
to, or available for, future payment or distribution of principal of or interest
on the Securities. If so specified in the related Prospectus Supplement, on any
Payment Date or Distribution Date on which the principal balance of the Mortgage
Assets is reduced due to losses on the Mortgage Assets, (i) the amount of such
losses will be allocated first, to reduce the Aggregate Outstanding Principal of
the Subordinate Securities or other subordination, if any, and, thereafter, to
reduce the Aggregate Outstanding Principal of the remaining Securities in the
priority and manner specified in such Prospectus Supplement until the Aggregate
Outstanding Principal of each Class of Securities so specified
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has been reduced to zero or paid in full, thus, reducing the amount of principal
payable on each such Class of Securities or (ii) such losses may be allocated in
any other manner set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, such reductions of
principal of a Class or Classes of Securities shall be allocated to the Holders
of the Securities of such Class or Classes pro rata in the proportion which the
outstanding principal of each Security of such Class or Classes bears to the
Aggregate Outstanding Principal of all Securities of such Class.
Yield and Prepayment Considerations. Prepayments on the Mortgage Loans
comprising or underlying the Mortgage Assets securing a Series or deposited into
a Trust Fund, as the case may be, generally will result in a faster rate of
principal payments on such Securities than if payments on such Mortgage Assets
were made as scheduled. Thus, the prepayment experience on the Mortgage Loans
comprising or underlying the Mortgage Assets will affect the average life of
each Class secured thereby and the extent to which each such Class is paid prior
to its Stated Maturity or Final Scheduled Distribution Date. The rate of
principal payments on pools of mortgage loans varies between pools and from time
to time is influenced by a variety of economic, demographic, geographic, social,
tax, legal and other factors. There can be no assurance as to the rate of
prepayment on the Mortgage Assets securing any Series of Bonds or deposited into
a Trust Fund, as the case may be, or that the rate of payments will conform to
any model described herein or in any Prospectus Supplement. If prevailing
interest rates fall significantly below the applicable mortgage rates, principal
prepayments are likely to be higher than if prevailing rates remain at or above
the rates borne by the Mortgage Loans comprising or underlying the Primary
Assets securing a Series of Bonds or deposited into a Trust Fund, as the case
may be. As a result, the actual maturity of or final distribution on any Class
could occur significantly earlier than its Stated Maturity or Final Scheduled
Distribution Date. The actual maturity of the Bonds or final distribution on the
Certificates will also be affected by the extent to which Excess Cash Flow is
applied to payments or distributions of principal on the Securities. A Series of
Securities may include Classes of PAC Securities or other Securities with
priorities of payment and, as a result, yields on other Classes of Securities of
such Series may be more sensitive to prepayments on Mortgage Loans. A Series may
include a Class offered at a significant premium or discount. Yields on such
Class of Securities will be sensitive, and in some cases extremely sensitive, to
prepayments on Mortgage Loans and, in the case of a premium Class, where the
amount of interest payable with respect to such Class is extremely
disproportionate to principal, a holder might, in some prepayment scenarios,
fail to recoup its original investment. See "YIELD AND PREPAYMENT
CONSIDERATIONS."
Limited Nature of Rating. Any rating assigned to the Securities by a
Rating Agency will reflect such Rating Agency's assessment solely of the
likelihood that holders of such Securities will receive payments required to be
made under the Indenture or Trust Agreement, as the case may be. Such rating
will not constitute an assessment of the likelihood that principal prepayments
on the Mortgage Loans underlying or comprising the Mortgage Assets will be made
by Mortgagors or of the degree to which the rate of such prepayments might
differ from that originally anticipated. Such rating will not address the
possibility that prepayment at higher or lower rates than anticipated by an
investor may cause such investor to experience a lower than anticipated yield or
that investors purchasing a Security at a significant premium might fail to
recoup their initial investment under certain prepayment scenarios.
The amount of Primary Assets, including any applicable Enhancement,
required to support a Series of Securities will be determined on the basis of
criteria established by each Rating Agency rating such Series. Such criteria are
sometimes based upon actuarial analysis of the behavior of mortgage loans in a
larger group. Such analysis is often the basis upon which each Rating Agency
determines the amount of Enhancement required with respect to each Series of
Securities. There can be no assurance that the historical data supporting such
actuarial analysis will accurately reflect future experience generally nor any
assurance that the data derived from a large pool of mortgages will accurately
predict the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Loans. In other cases, such analysis may be based upon the value of
the property underlying the Mortgage Assets. There can be no assurance that such
value will accurately reflect the future value of the property and, therefore,
whether or not the Securities will be paid in full.
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Certain Mortgage Loans and Mortgaged Property; Obligor Default. Mortgage
Loans made with respect to Multifamily or Commercial Property may entail risks
of loss in the event of delinquency and foreclosure that are greater than
similar risks associated with traditional single-family property. Many of the
Mortgage Loans may be nonrecourse loans as to which, in the event of an obligor
default, recourse may be had only against the specific Commercial or Multifamily
Property and such limited other assets as have been pledged to secure such
Mortgage Loan, and not against the obligor's other assets. Furthermore, the
repayment of loans secured by income producing properties is typically dependent
upon the successful operation of the related real estate project rather than
upon the liquidation value of the underlying real estate. If the net operating
income from the project is reduced (for example, if rental or occupancy rates
decline or real estate and personal property tax rates or other operating
expenses increase), the obligor's ability to repay the loan may be impaired. A
number of the Mortgage Loans may be secured by owner-occupied Mortgaged
Properties or Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the obligor or single tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the liquidation value
of any Mortgaged Property may be adversely affected by risks generally incident
to interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
and personal property tax rates and other operating expenses including energy
costs; changes in governmental rules, regulations and fiscal policies, including
environmental legislation; acts of God; and other factors which are beyond the
Master Servicer's or the Special Servicer's, if any, control. Although the
Servicer or the Master Servicer is obligated to cause standard hazard insurance
to be maintained with respect to each Mortgage Loan, insurance with respect to
extraordinary hazards such as earthquakes and floods is generally not required
to be maintained, and insurance is not available with respect to many of the
other risks listed above.
Certain of the Mortgage Loans as of the Cut-Off Date may not be fully
amortizing over their terms to maturity, and, thus, will have substantial
principal balances due at their stated maturity. Mortgage Loans with balloon
payments involve a greater degree of risk because the ability of an obligor 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 an
obligor to accomplish either of these goals will be affected by a number of
factors, including the level of available mortgage rates at the time of sale or
refinancing, the obligor's equity in the related Mortgaged Property, the
financial condition and operating history of the obligor and the related
Mortgaged Property, tax laws, prevailing general economic conditions and the
availability of credit for commercial or multifamily, as the case may be, real
estate projects generally.
If so specified in the related Prospectus Supplement, in order to maximize
recoveries on defaulted Mortgage Loans, the Special Servicer, if any, will have
considerable flexibility under the Special Servicing Agreement to extend and
modify Mortgage Loans which are in default or as to which a payment default is
reasonably foreseeable, including in particular with respect to balloon
payments. In addition, the Special Servicer may receive a workout fee based on
receipts from or proceeds of such Mortgage Loans. While the Special Servicer
generally will be required to determine that any such extension or modification
is likely to produce a greater recovery on a present value basis than
liquidation, there can be no assurance that such flexibility with respect to
extensions or modifications or payment of a workout fee to the Special Servicer
will increase the present value of receipts from or proceeds of Mortgage Loans
which are in default or as to which a default is reasonably foreseeable. To the
extent losses on such Mortgage Loans exceed levels of available enhancement, the
Holders of the Bonds of a Series may experience a loss. See "SERVICING OF
MORTGAGE LOANS--Maintenance of Insurance Policies and Other Servicing
Procedures" and "ENHANCEMENT."
Enhancement Limitations. The amount, type and nature of Insurance
Policies, subordination, Bond Guarantee Insurance, letters of credit,
overcollateralization, Reserve Funds and other enhancement, if any, required
with respect to a Series will be determined on the basis of criteria established
by each Rating Agency rating such Series. Such criteria are sometimes based upon
an actuarial analysis of the behavior of mortgage
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<PAGE>
loans in a larger group. Such analysis is often the basis upon which each Rating
Agency determines the amount of Enhancement required with respect to each Series
of Securities. There can be no assurance that the historical data supporting any
such actuarial analysis will accurately reflect future experience nor any
assurance that the data derived from a large pool of mortgage loans accurately
predicts the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Loans.
In addition, if principal payments on Securities of a Series are made in a
specified order of priority, any limits with respect to the aggregate amount of
claims under any related insurance policy, letters of credit or other
enhancement may be exhausted before the principal of the lower priority Classes
has been repaid. As a result, the impact of significant losses on the Mortgage
Loans may bear primarily upon the Securities of the later maturing Classes.
The Prospectus Supplement for a Series will describe any Reserve Funds,
Insurance Policies, letter of credit, subordination, Bond Guarantee Insurance,
over collateralization or other credit support relating to the Mortgage Assets
or to the Securities of such Series. Use of such Reserve Funds and payments
under such Insurance Policies, Bond Guarantee Insurance, letter of credit or
other third-party credit support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Reserve Funds, Insurance Policies, letter of credit or other credit support
may not cover all potential losses or risks; for example, Enhancement may or may
not cover fraud or negligence by the Issuer, the Master Servicer or other
parties. Moreover, if a form of enhancement covers more than one Series of
Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such credit support will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage. The obligations of the
issuers of any credit support will not be guaranteed or insured by the United
States, or by any agency or instrumentality thereof. A Series of Bonds may
include a Class or multiple Classes of Subordinate Securities to the extent
described in the related Prospectus Supplement. Although such subordination is
intended to reduce the risk of delinquent distributions or ultimate losses to
Holders of Senior Securities, the amount of subordination will be limited and
will decline under certain circumstances and any related Reserve Fund could be
depleted in certain circumstances. See "DESCRIPTION OF THE SECURITIES,"
"SECURITY FOR THE BONDS AND CERTIFICATES" and "ENHANCEMENT."
Overcollateralization and Subordination. To provide Bondholders and
Certificateholders with a degree of protection against loss, Mortgage Assets
having an Asset Value in excess of the aggregate principal amount of the
Securities may be pledged to secure a Series or deposited into the related Trust
Fund, as the case may be, or Excess Cash Flow may be applied to create
overcollateralization. Alternatively, a Series of Securities may include one or
more Classes of Subordinate Securities to the extent described in the related
Prospectus Supplement. Such overcollateralization or subordination will be at
amounts established by the Rating Agency rating the Series based on an assumed
level of defaults, delinquencies, other losses, application of Excess Cash Flow
or other factors. There can, however, be no assurance that the loss experience
on the Mortgage Assets securing the Securities will not exceed such assumed
levels, adversely affecting the ability of the Issuer to meet debt service or
distribution requirements on the Securities.
Although overcollateralization and subordination are intended to reduce
the risk of delinquent payments or losses to holders of Senior Securities, the
amount of overcollateralization or subordination, as the case may be, will be
limited and will decline under certain circumstances and any related Reserve
Fund could be depleted in certain circumstances.
Delinquent and Non-Performing Mortgage Loans. As set forth in the related
Prospectus Supplement, the Mortgage Pool for a particular Series may include, as
of the Cut-Off Date, REO Properties or Mortgage Loans that are past due or are
non-performing. If so specified in the related Prospectus Supplement, management
of such REO Properties or servicing with respect to such Mortgage Loans will be
transferred to the Special Servicer as of the Closing Date. Enhancement provided
with respect to a particular Series may not cover all
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losses related to such delinquent or non-performing Mortgage Loans or to such
REO Properties. Investors should consider the risk that the inclusion of such
Mortgage Loans or such REO Properties in the Mortgage Pool may affect the rate
of defaults and prepayments on such Mortgage Pool and the yield on the
Securities of such Series. See "SECURITY FOR THE BONDS AND
CERTIFICATES--Mortgage Loans."
Remedies Following Default. The market value of the Mortgage Assets
securing a Series will fluctuate as general interest rates fluctuate. Following
an Event of Default with respect to a Series of Bonds, there is no assurance
that the market value of the Mortgage Assets securing the Series, will be equal
to or greater than the unpaid principal and accrued interest due on the Bonds of
such Series, together with any other expenses or liabilities payable thereon. If
the Mortgage Assets securing a Series are sold by the Trustee following an Event
of Default, the proceeds of such sale may be insufficient to pay in full the
principal of and interest on such Bonds. However, in certain events the Trustee
may be restricted from selling the Mortgage Assets securing a Series. See "THE
INDENTURE--Events of Default."
In addition, upon an Event of Default with respect to a Series and a
resulting sale of the Mortgage Assets securing such Bonds, unless otherwise
specified in the related Prospectus Supplement, the proceeds of such sale will
be applied, first, to the payment of certain amounts due to the Trustee, second,
to the payment of accrued interest on, and then to the payment of the then
Aggregate Outstanding Principal of, such Bonds (including interest on and the
Aggregate Outstanding Principal of any Residual Interest Bond) (as specified in
the related Prospectus Supplement), third, to the payment of the remaining
Administration Fee, if any, and, fourth, to the payment of any additional
amounts due the Issuer or to the holders of the Residual Interest Bonds as
applicable. Consequently, in the event of any such Event of Default and sale of
Mortgage Assets, any Classes on which principal payments have previously been
made may have, in the aggregate, a greater proportion of their principal repaid
than will Classes on which principal payments have not previously been made.
In the event the principal of the Securities of a Series is declared due
and payable, the holders of any such Securities issued at a discount from par
("original issue discount") may be entitled, under applicable provisions of the
federal Bankruptcy Code, to receive no more than an amount equal to the unpaid
principal amount thereof less unamortized original issue discount ("accreted
value"). There is no assurance as to how such accreted value would be determined
if such event occurred.
Enforceability. As specified in the related Prospectus Supplement, the
Mortgages may contain due-on-sale clauses, which permit 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. Such
clauses are generally enforceable subject to certain exceptions.
As specified in the related Prospectus Supplement, the Mortgage Loans may
include a debt-acceleration clause, which permits the lender to accelerate the
debt upon a monetary or non-monetary default of the borrower. 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 to
foreclose 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.
To the extent specified in the related Prospectus Supplement, the Mortgage
Loans will be secured by an assignment of leases and rents pursuant to which the
obligor typically assigns its right, title and interest as landlord under the
leases on the related Mortgaged Property and the income derived therefrom to the
lender as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. In the event the
obligor defaults, the license terminates and the lender is entitled to collect
rents. Such assignments must usually be recorded to be perfected as security
interests. In addition, some state laws require that the lender take possession
of the Mortgaged Property and/or obtain a judicial appointment of a receiver
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before becoming entitled to collect the rents. See also "CERTAIN LEGAL ASPECTS
OF THE MORTGAGE LOANS--Anti-Deficiency Legislation and Other Limitations on
Lenders."
Environmental Risks. Real property pledged as security to a lender may be
subject to certain environmental risks. Under the laws of certain states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an existing mortgage against such property. In addition, under the laws of
some states and under the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), a lender may be liable, as
an "owner" or "operator," for costs of addressing releases or threatened
releases of hazardous substances that require remedy at a property, if agents or
employees of the lender have become sufficiently involved in the operations of
the borrower, regardless of whether or not the environmental damage or threat
was actually caused or exacerbated by the lender's agents or employees. A lender
also risks such liability on and following foreclosure of the Mortgaged
Property. Unless otherwise specified in the related Prospectus Supplement, the
Servicing Agreement, Master Servicing Agreement or Special Servicing Agreement,
as applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate, may not acquire
title to a Mortgaged Property underlying a Mortgage Loan or take over its
operation unless the Servicer, the Master Servicer or the Special Servicer, as
applicable, has previously determined, based upon a report prepared by a person
who regularly conducts environmental audits, that (i) the Mortgaged Property is
in compliance with applicable environmental laws and regulations or, if not,
that taking such actions as are necessary to bring the Mortgaged Property in
compliance therewith is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions and (ii) there are no
circumstances or conditions present that have resulted in any contamination or
if such circumstances or conditions are present for which sch action could be
required, taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions. See "CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS--Environmental Matters."
ERISA Considerations. Generally, ERISA applies to investments made by
employee benefit plans and transactions involving the assets of such plans. Due
to the complexity of regulations which govern such plans, prospective investors
that are subject to ERISA are urged to consult their own counsel regarding
consequences under ERISA of acquisition, ownership and disposition of the
Securities of any Series. See "ERISA CONSIDERATIONS."
Certain Federal Tax Considerations Regarding Residual Interest Bonds and
Residual Interest Certificates. Holders of Residual Interest Bonds and Residual
Interest Certificates will be required to report on their federal income tax
returns as ordinary income their pro rata share of the taxable income of the
REMIC regardless of the amount or timing of their receipt of cash payments as
described in "FEDERAL INCOME TAX CONSIDERATIONS--Taxation of Holders of Residual
Interest Securities." Accordingly, under certain circumstances, holders of
Securities which constitute Residual Interest Bonds and Residual Interest
Certificates may have taxable income and tax liabilities arising from such
investment during a taxable year in excess of the cash received during such
period. The requirement that holders of Residual Interest Bonds and Residual
Interest Certificates report their pro rata share of the taxable income and net
loss of the REMIC will continue until the principal balances of all Classes of
Bonds or Certificates of the related Series have been reduced to zero, even
though holders of Residual Interest Bonds and Residual Interest Certificates
have received full payment of their stated interest and principal (if any). A
portion (or all) of a holder of a Residual Interest Bond's or Residual Interest
Certificate's share of the REMIC 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. Individual holders of
Securities constituting Residual Interest Bonds and Residual Interest
Certificates may be limited in their ability to deduct servicing fees and other
expenses of the REMIC. In addition, Residual Interest Bonds and Residual
Interest Certificates are subject to certain restrictions on transfer. Because
of the special tax treatment of Residual Interest Bonds and Residual Interest
Certificates, the taxable income
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arising in a given year on a Residual Interest Bond or a Residual Interest
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Interest Bond and Residual Interest Certificates may be significantly
less than that of a corporate bond or stripped instrument having similar cash
flow characteristics, or may be negative.
DESCRIPTION OF THE SECURITIES
General
The following summaries describe certain provisions common to each Series.
The summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Indenture or
Trust Agreement and the Prospectus Supplement relating to each Series. When
particular provisions or terms used in the Indenture or Trust Agreement are
referred to, such provisions or terms shall be as specified in the Indenture or
Trust Agreement.
The Bonds--General
The Bonds will be issued in Series pursuant to a Trust Indenture between
the Company and LaSalle National Bank (or another bank or trust company
qualified under the TIA and named in the related Prospectus Supplement for a
Series), as Trustee, or a Trust and the Trustee, each as supplemented by or as
incorporated by reference by a Series Supplement with respect to each Series. A
copy of the form of Trust Indenture has been filed with the Commission as an
exhibit to the Registration Statement of which the Prospectus forms a part. A
copy of the Series Supplement for a Series, if any, will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed with the
Commission within 15 days of issuance of the Bonds of the related Series.
The Indenture does not limit the amount of Bonds that can be issued
thereunder and provides that any Series may be issued thereunder up to the
aggregate principal amount specified in the related Series Supplement that may
be authorized from time to time by the Issuer. Each Series will consist of one
or more Classes, one or more of which may be Compound Interest Securities,
Variable Interest Securities, Individual Investor Securities, Planned
Amortization Class Securities, Zero Coupon Securities, Principal Only
Securities, Interest Only Securities or Participating Securities. A Series may
also include one or more Classes of Subordinate Securities. If so specified in
related Prospectus Supplement, such Subordinate Securities may be offered hereby
and by the related Prospectus Supplement. Each Class of a Series will be issued
in registered or bearer form, as designated in the related Prospectus Supplement
for a Series, in the minimum denominations specified in the related Prospectus
Supplement. See "--Bearer Securities and Registered Securities." Bonds of a
Series may be issued in whole or part in book-entry form. The transfer of the
Bonds may be registered and the Bonds may be exchanged without the payment of
any service charge payable in connection with such registration of transfer or
exchange.
Payments of principal of and interest on the Bonds which are registered
securities will be made by the Trustee, or if the Trustee is not the paying
agent, the Paying Agent. Payments of principal of and interest on a Series will
be made on the Payment Dates specified in the related Prospectus Supplement, to
Bondholders of such Series registered as such on the close of business on the
record date specified in the related Prospectus Supplement at their addresses
appearing on the Bond Register. All payments will be made by check mailed to the
Bondholder or by wire transfer to accounts maintained by such Bondholder as
specified in the related Prospectus Supplement, except that final payments of
principal in retirement of each Bond will be made only upon presentation and
surrender of such Bond at the office of the New York Presenting Agent. Notice
will be mailed to the holder of such Bond before the Payment Date on which the
final principal payment in retirement of the Bond is expected to be made.
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The Trustee will include with each payment on a Bond a statement showing
among other things, the allocation of such payment to interest, if any, and
principal, if any, and the remaining unpaid principal amount of a Bond of each
Class having the minimum denomination for Bonds of such Class of that Series,
the amount of Advances made by the Primary Servicer, the amount of servicing
compensation paid with respect to the Mortgage Assets, the aggregate principal
balance of delinquent, foreclosed Mortgage Loans and REO Property, the realized
losses for the Mortgage Assets, if applicable, the number and aggregate
principal balance of Deleted and Substitute Mortgage Loans, and on each Payment
Date prior to the commencement of principal payments on a Class of Compound
Interest Bonds, the aggregate unpaid principal amount of each Class of Bonds,
the interest accrued since the prior Payment Date and added to the principal of
a Compound Interest Bond having the minimum denomination for Bonds of such Class
and the new principal balance of such Bond.
The Certificates--General
The Certificates will be issued in Series pursuant to separate Trust
Agreements between the Depositor and LaSalle National Bank (or another bank or
trust company named in the related Prospectus Supplement). A form of Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Trust Agreement relating to each Series of
Certificates will be filed as an exhibit to a report on Form 8-K to be filed
with the Commission within 15 days following the issuance of such Series of
Certificates. The following summaries describe certain provisions common to each
Series of Certificates. The summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the provisions
of the Trust Agreement and the Prospectus Supplement relating to each Series of
Certificates. When particular provisions or terms used in the Trust Agreement
are referred to, such provisions or terms shall be as specified in the Trust
Agreement.
Each Series of Certificates will consist of one or more Classes, one or
more of which may consist of Compound Interest Securities, Variable Interest
Securities, Interest Only Certificates, Principal Only Certificates, Zero Coupon
Securities or Planned Amortization Class Securities ("PACs"). A Series of
Certificates may also include one or more Classes of Subordinate Securities.
Each Series will be issued in fully registered form or bearer form, in the
minimum original amount or notional amount for Certificates of each Class
specified in the related Prospectus Supplement. The transfer of the Certificates
may be registered, and the Certificates may be exchanged, without the payment of
any service charge payable in connection with such registration of transfer or
exchange. If specified in the related Prospectus Supplement, one or more Classes
of a Series may be available in book-entry form only. See "--Bearer Securities
and Registered Securities."
Commencing on the date specified in the related Prospectus Supplement,
distributions of principal and interest on the Certificates will be made on each
Distribution Date as set forth in the related Prospectus Supplement.
Distributions of principal of and interest on Certificates of a Series in
registered form will be made by check mailed to Certificateholders of such
Series registered as such on the close of business on the record date specified
in the related Prospectus Supplement at their addresses appearing on the
Certificate Register, except that (a) distributions may be made by wire transfer
(at the expense of the Certificateholder requesting payment by wire transfer) in
certain circumstances described in the related Prospectus Supplement and (b) the
final distribution in retirement of a Certificate will be made only upon
presentation and surrender of such Certificate at the corporate trust office of
the Trustee for such Series or such other office of the Trustee as specified in
the Prospectus Supplement. Notice of the final distribution on a Certificate
will be mailed to the Holder of such Certificate before the Distribution Date on
which such final distribution in retirement of the Certificate is expected to be
made.
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The Trustee will include with each distribution on a Certificate a
statement showing among other things, the allocation of such payment to
interest, if any, and principal, if any, and the remaining unpaid principal
amount of a Certificate of each Class having the minimum denomination for
Certificates of such Class of that Series, the amount of Advances made by the
Primary Servicer, the amount of servicing compensation paid with respect to the
Mortgage Assets, the aggregate principal balance of delinquent, foreclosed
Mortgage Loans and REO Property, the realized losses for the Mortgage Assets, if
applicable, the number and aggregate principal balance of Deleted and Substitute
Mortgage Loans, and on each Distribution Date prior to the commencement of
principal payments on a Class of Compound Interest Securities, the aggregate
unpaid principal amount of each Class of Certificates, the interest accrued
since the prior Distribution Date and added to the principal of a Compound
Interest Certificate having the minimum denomination for Certificates of such
Class and the new principal balance of such Certificate. See "THE TRUST
AGREEMENT--Reports to Certificateholders."
Bearer Securities and Registered Securities
Unless otherwise provided with respect to a Series of Securities, the
Securities will be issuable as registered securities without coupons. If so
provided with respect to a Series of Securities, Securities of such Series will
be issuable solely as bearer securities with coupons attached or as both
registered securities and bearer securities. Any such bearer securities will be
issued in accordance with U.S. tax and securities laws then applicable to the
sale of such securities.
Unless applicable law at the time of issuance of any bearer securities
provides otherwise, in connection with the sale during the "restricted period"
as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury
Regulations (generally, the first 40 days after the Closing Date and, with
respect to unsold allotments, until sold) no bearer security shall be mailed or
otherwise delivered to any location in the United States (as defined under
"LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"). A bearer security in definitive
form may be delivered only if the Person entitled to receive such bearer
security furnishes written certification, in the form required by the Indenture,
to the effect that such bearer security is not owned by or on behalf of a United
States person (as defined under "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"),
or, if a beneficial interest in such bearer security is owned by or on behalf of
a United States person, that such United States person (i) acquired and holds
the bearer security through a foreign branch of a United States financial
institution, (ii) is a foreign branch of a United States financial institution
purchasing for its own account or resale (and in either case (i) or (ii), such
financial institution agreed to comply with the requirements of Section
165(j)(3)(A), (B), or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder) or (iii) is a financial institution purchasing for
resale during the restricted period only to non-United States persons outside
the United States. See "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES."
Registered securities of any Series (other than in book-entry form) will
be exchangeable for other registered securities of the same Series and of a like
aggregate principal amount and tenor but of different authorized denominations.
In addition, if specified in the related Prospectus Supplement, if Securities of
any Series are issuable as both registered securities and as bearer securities,
at the option of the Holder, upon request confirmed in writing, and subject to
the terms of the Indenture or Trust Agreement, as the case may be, bearer
securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such Series will be exchangeable into registered
securities of the same Series of any authorized denominations and of a like
aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between the relevant record date and the relevant date
for payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
registered security issued in exchange for such bearer security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the Indenture or Trust Agreement, as the case may be. Except as provided in
an applicable Prospectus Supplement, bearer securities will not be issued in
exchange for registered securities. If Securities of a Series are issuable as
bearer securities, the Issuer will be required to maintain a transfer agent for
such Series outside the United States.
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Unless otherwise indicated in an applicable Prospectus Supplement, payment
or distribution of principal of and interest on bearer securities will be
payable or distributable, subject to any applicable laws and regulations, at the
offices of such Paying Agents outside the United States as the Issuer may
designate from time to time by check or by wire transfer, at the option of the
holder, to an account maintained by the payee with a bank located outside the
United States. Unless otherwise indicated in an applicable Prospectus
Supplement, payment or distribution of interest on bearer securities on any
Payment Date or Distribution Date, as applicable, will be made only against
surrender of the coupon relating to such Payment Date or Distribution Date, as
applicable. No payment or distribution of interest on a bearer security will be
made unless on the earlier of the date of the first such payment by the Paying
Agent or the delivery by the Issuer of the bearer security in definitive form
(the "Certification Date"), a written certificate in the form and to the effect
described above is provided to the Issuer. No payment or distribution with
respect to any bearer security will be made at any office or agency in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payment or distribution of principal of and
interest on bearer securities denominated and payable in U.S. dollars will be
made at the office of the Issuer's Paying Agent in the Borough of Manhattan, The
City of New York if, and only if, payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
Book-Entry Registration
If so specified in the related Prospectus Supplement, the Securities will
be issued in book-entry form in the minimum denominations specified in such
Prospectus Supplement and integral multiples thereof, and each Class will be
represented by one or more single Securities registered in the name of the
nominee of the depository, The Depository Trust Company ("DTC"), a
limited-purpose trust company organized under the laws of the State of New York.
Unless otherwise specified in the related Prospectus Supplement, no person
acquiring an interest in book-entry Securities (a "Securities Owner") will be
entitled to receive Securities representing such person's interest in the
Securities except in the event that Definitive Securities (as defined herein)
are issued under the limited circumstances set forth below. Unless and until
Definitive Securities are issued, it is anticipated that the only holder of
book-entry Securities will be Cede & Co., as nominee of DTC. Securities Owners
will not be "Holders," "Bondholders" or "Certificateholders" under the Indenture
or Trust Agreement, as applicable, and Securities Owners will only be permitted
to exercise the rights of Bondholders or Certificateholders, as applicable,
indirectly through DTC and its Participants.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to entities that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Securities Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of book-entry
Securities may do so only through Participants and Indirect Participants.
Because DTC can only act on behalf of Participants and Indirect Participants,
the ability of a Securities Owner to pledge such owner's interest in a
book-entry Security to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest in a book-entry
Security, may be limited. In addition, under a book-entry format, Securities
Owners may experience some delay in their receipt of principal and interest
distributions with respect to the book-entry Securities since such distributions
will be forwarded to DTC and DTC will then forward such distributions to its
Participants which in turn will forward them to Indirect Participants or
Securities Owners.
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Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the book-entry Securities
and is required to receive and transmit principal and interest distributions and
other distributions with respect to the book-entry Securities. Participants and
Indirect Participants with which Securities Owners have accounts with respect to
book-entry Securities similarly are required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective Securities
Owners. Accordingly, although Securities Owners will not possess book-entry
Securities, the Rules provide a mechanism by which Securities Owners will
receive distributions and will be able to transfer their interests.
The Issuer understands that DTC will take any action permitted to be taken
by a Bondholder or Certificateholder under the Indenture or Trust Agreement, as
applicable, only at the direction of one or more Participants to whose account
with DTC ownership of the book-entry Securities is credited. Additionally, the
Issuer understands that DTC will take such actions with respect to Securities
Owners who are holders of a certain specified interest in book-entry Securities
or holders having a certain specified voting interest only at the direction of
and on behalf of Participants whose holdings represent that specified interest
or voting interest. DTC may take conflicting actions with respect to other
Securities Owners to the extent that such actions are taken on behalf of
Participants whose holdings represent that specified interest or voting
interest.
Unless otherwise specified in the related Prospectus Supplement,
Securities of a Series issued initially in book-entry form only will be issued
in fully registered, certificated form ("Definitive Securities") to Securities
Owners, rather than to DTC, only if (i) DTC advises the Trustee in writing that
DTC is no longer willing or able properly to discharge its responsibilities as
depository with respect to the Securities, and the Issuer is unable to locate a
qualified successor, (ii) the Issuer, at its sole option, elects to terminate
the book-entry system through DTC or (iii) after the occurrence of an Event of
Default under the Indenture or Trust Agreement, as applicable, Securities Owners
representing a majority of the aggregate outstanding principal amount of the
Securities advise DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Securities Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Securities. Upon surrender by DTC of the
Securities registered in the name of its nominee and instructions for
registration, the Trustee will issue all, but not less than all, of the
principal amount of the formerly DTC-held Securities then outstanding in the
form of Definitive Securities, and thereafter the Trustee will recognize the
holders of such Definitive Securities as Bondholders under the Indenture, or
Certificateholders under the Trust Agreement, as applicable.
Valuation of Mortgage Assets
If stated in the applicable Prospectus Supplement, each item of Mortgage
Assets securing a Series, or comprising the Trust Fund, as the case may be, will
be assigned an initial Asset Value determined in the manner and subject to the
assumptions specified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the aggregate of the Asset Values of the
Mortgage Assets pledged to secure a Series or comprising the Trust Fund, as the
case may be, will not be less than the initial Aggregate Outstanding Principal
of the related Series at the date of issuance thereof.
With respect to the Mortgage Assets pledged to collateralize the Bonds of
a Series, or comprising the Trust Fund, as the case may be, as of any date, the
Aggregate Asset Value, unless otherwise specified in the related Prospectus
Supplement, shall be equal to the aggregate of the Asset Values for each
Mortgage Loan or Private Mortgage-Backed Security or other Mortgage Assets in
the Trust Estate or Trust Fund, as applicable, for a Series of Securities plus
the amount, if any, remaining in the Collection Account and any other Pledged
Fund or Account subsequent to an initial deposit therein on the Delivery Date,
together with Reinvestment Income thereon, if any, at the Assumed Reinvestment
Rate, if any.
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There are a number of alternative means of determining Asset Value of the
Mortgage Assets, including determinations based on the discounted present value
of the remaining scheduled payments on such Mortgage Assets, determinations
based on the relationship between the interest rate borne by such Mortgage
Assets and the Bond Interest Rate or Rates or Certificate Interest Rate or Rates
for the related Classes of Securities, or based upon the aggregate outstanding
principal balances of the Mortgage Assets. If applicable, the Prospectus
Supplement for a Series will specify the method or methods and summarize the
related assumptions used to determine the Asset Values of the Mortgage Assets
for such Series of Securities.
The Assumed Reinvestment Rate, if any, for a Series will be the rate on
which amounts deposited in the Collection Account will be assumed to accrue
interest or a rate insured or guaranteed by means of a surety bond, Guaranteed
Investment Contract, or similar arrangement. If the Assumed Reinvestment Rate is
insured or guaranteed, the related Prospectus Supplement will set forth the
terms of such arrangement.
Payments or Distributions of Interest
Each Class of a Series (other than a Class of Zero Coupon Securities or
Principal Only Securities) will accrue interest at the rate per annum specified,
or in the manner determined and set forth, in the related Prospectus Supplement
(calculated on the basis of a 360-day year of twelve 30-day months, unless
otherwise specified in the related Prospectus Supplement). Interest on all
Securities which accrue interest, other than Compound Interest Securities, will
be due and payable on the Payment Dates or Distribution Dates specified in the
related Prospectus Supplement. However, failure to pay interest on a current
basis may not necessarily be an Event of Default with respect to a particular
Series of Securities. Unless otherwise specified in the related Prospectus
Supplement, payment of interest on a Class of Compound Interest Securities will
commence only following the Accrual Termination Date. Prior to such time,
interest on such Class of Compound Interest Securities will accrue and the
amount of interest so accrued will be added to the principal thereof on each
Payment Date or Distribution Date. Following the applicable Accrual Termination
Date, interest payments will be made on such Class on the Compound Value of such
Class. The Compound Value of a Class of Compound Interest Securities equals the
original principal amount of the Class, plus accrued and unpaid interest added
to such Class through the immediately preceding Payment Date or Distribution
Date, less any principal payments previously made on that Class, and if
specified in the related Prospectus Supplement, losses allocable thereto. Each
payment of interest on each Class of Securities (or addition to principal of a
Class of Compound Interest Securities) on a Payment Date or Distribution Date
will include all interest accrued during the related Interest Accrual Period
preceding such Payment Date or Distribution Date, which Interest Accrual Period
will end on the day preceding each Payment Date or Distribution Date or such
earlier date as may be specified in the related Prospectus Supplement. If the
Interest Accrual Period for a Series ends on a date other than a Payment Date or
Distribution Date for such Series, the yield realized by the holders of such
Securities may be lower than the yield that would result if the Interest Accrual
Period ended on such Payment Date or Distribution Date. Additionally, if so
specified in the related Prospectus Supplement, interest accrued for an Interest
Accrual Period for one or more Classes may be calculated on the assumption that
principal payments (and additions to principal of the Securities), and
allocations of losses on the Primary Assets (if so specified in the related
Prospectus Supplement), are made on the first day of the preceding Interest
Accrual Period and not on the Payment Date or Distribution Date for such
preceding Interest Accrual Period when actually made or added. Such method would
produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding.
To the extent provided in the related Prospectus Supplement, a Series may
include one or more Classes of Variable Interest Securities. The Variable
Interest Rate of Variable Interest Securities will be a variable or adjustable
rate, subject to a Maximum Variable Interest Rate and a Minimum Variable
Interest Rate. It is the Issuer's present intention, subject to changing market
conditions, that the Variable Interest Rate formula or index be based on an
established financial index in the national or international financial markets.
The Variable Interest Payment Dates or Variable Interest Distribution Dates, as
applicable, for Variable Interest Securities will be set forth in the related
Prospectus Supplement and need not be the same as the Payment Dates or
Distribution Dates
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for other Securities in such Series, but may be either more or less frequent.
Unless otherwise specified in the related Prospectus Supplement or herein,
references to Payment Date or Distribution Dates include Variable Interest
Payment Dates or Variable Interest Distribution Dates, as applicable. For each
Class of Variable Interest Securities, the related Prospectus Supplement will
set forth the initial Bond Interest Rate or Certificate Interest Rate, as
applicable, (or the method of determining it), the Variable Interest Period and
the formula, index or other method by which the Bond Interest Rate or
Certificate Interest Rate, as applicable, for each Variable Interest Period will
be determined.
Interest Only Securities or Interest Weighted Securities, among others,
may be assigned a "Notional Amount" which is used solely for convenience in
expressing the calculation of interest and for certain other purposes. Unless
otherwise specified in the related Prospectus Supplement, the Notional Amount
will be determined at the time of issuance of such Securities based on the
principal balances or Bond Value of the Mortgage Loans attributable to the
Securities of a Series entitled to receive principal, and will be adjusted
monthly over the life of the Securities based upon adjustments to the Asset
Value or principal amounts of such Mortgage Loans. Reference to the Notional
Amount is solely for convenience in certain calculations and does not represent
the right to receive any distributions allocable to principal.
If so specified in the related Prospectus Supplement, if funds in the
Collection Account are insufficient to make required payments of interest to
Bondholders or Certificateholders on any Payment Date or Distribution Date, as
applicable, amounts available for payment to the Bondholders or
Certificateholders of each Class will be allocated pro rata in the proportion in
which the outstanding principal balance of each Bond or Certificate bears to the
aggregate outstanding principal balance of all Bonds or Certificates of such
Class, except that Subordinate Bondholders or Subordinate Certificateholders, if
any, will not, unless otherwise specified in the related Prospectus Supplement,
receive any payments of interest on the Subordinate Bonds or Subordinate
Certificates until Senior Bondholders or Senior Certificateholders receive
payments of interest due them (in each case as described in the related
Prospectus Supplement).
Payments or Distributions of Principal
On each Payment Date or Distribution Date for a Series, the Issuer will
make principal payments to the holders of the Securities of such Series on which
principal is then due and payable. Payments of principal on a Series will be
allocated among Classes of such Series in the order of priority and amounts
specified in the related Prospectus Supplement. All payments or distributions of
principal of Securities of a Class will be applied either on a pro rata or
random lot basis, as specified in the related Prospectus Supplement.
Except as specified otherwise in the related Prospectus Supplement, the
total amount of principal payments or distributions required to be made on the
Securities of any Series on a Payment Date or Distribution Date (the "Principal
Payment Amount") will be determined as specified in the related Prospectus
Supplement. If the Series of Bonds has a Class of PAC Securities, such PAC
Securities will have certain priorities of payment with respect to principal to
the extent of certain targeted amounts with respect to each Payment Date or
Distribution Date, as set forth in the related Prospectus Supplement. There can
be no assurance that the Principal Payment Amount on any Payment Date or
Distribution Date will be sufficient to pay in full the PAC Amount payable on
such Payment Date or Distribution Date. The failure to pay in full the PAC
Amount payable on a Payment Date or Distribution Date shall not constitute an
Event of Default under the Indenture or Trust Agreement.
If so specified in the related Prospectus Supplement, on any Payment Date
or Distribution Date on which the principal balance of the Mortgage Assets is
reduced due to losses on the Mortgage Assets, (i) the amount of such losses will
be allocated first, to reduce the Aggregate Outstanding Principal of the
Subordinate Bonds or Subordinate Certificates or other subordination, if any,
and, thereafter, to reduce the Aggregate Outstanding Principal of the remaining
Securities in the priority and manner specified in such Prospectus Supplement
until
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the Aggregate Outstanding Principal of each Class of Securities so specified has
been reduced to zero or paid in full, thus, reducing the amount of principal
payable on each such Class of Securities or (ii) such losses may be allocated in
any other manner set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, such reductions of
principal of a Class or Classes of Securities shall be allocated to the holders
of the Securities of such Class or Classes pro rata in the proportion which the
outstanding principal of each Security of such Class or Classes bears to the
Aggregate Outstanding Principal of all Securities of such Class.
One or more Classes of a Series may consist of Subordinate Bonds or
Subordinate Certificates. Subordinate Bonds or Subordinate Certificates may be
included in a Series to provide credit support as described herein under
"ENHANCEMENT" in lieu of or in addition to other forms of credit support. The
extent of subordination of a Class of Subordinate Bonds or Subordinate
Certificates may be limited as described in the related Prospectus Supplement.
See "ENHANCEMENT." If the Mortgage Assets are divided into separate Mortgage
Groups securing separate Classes of a Series, credit support may be provided by
a cross-support feature which requires that distributions be made to Senior
Bonds or Senior Certificates secured by one Mortgage Group prior to making
distributions on Subordinate Bonds or Senior Certificates secured by another
Mortgage Group within the Trust Estate or Trust Fund. Subordinate Bonds or
Subordinate Certificates will be offered hereby and by the related Prospectus
Supplement so long as such Bonds or Certificates are rated in one of the four
highest rating categories by at least one Rating Agency.
Special Redemption
If specified in the related Prospectus Supplement, the Bonds of a Series
may be subject to special redemption on the day of any month specified therein
if, as a result of the prepayment experience on the Mortgage Assets securing
such Bonds or the low yield available for reinvestment or both, the Trustee
determines (based on assumptions specified in the Indenture and after giving
effect to the amounts, if any, available to be withdrawn from any Reserve Fund
for such Series) that the amount anticipated to be available in the Collection
Account on the date specified in the related Prospectus Supplement for such
Series, is anticipated to be insufficient to pay debt service on the Bonds of
such Series on such Payment Date. The principal amount of Bonds of such Series
required to be so redeemed will not exceed the Principal Payment Amount
otherwise required to be paid on the next Payment Date. Therefore, the primary
result of such a special redemption of Bonds is payment of principal prior to
the next scheduled Payment Date.
To the extent described in the related Prospectus Supplement, Bonds of a
Series may be subject to special redemption in whole or in part following
certain defaults under an Enhancement Agreement and, in certain other events, at
the Redemption Price.
All payments of principal pursuant to any special redemption will be made
in the order of priority and in the manner specified in the related Prospectus
Supplement. Notice of any special redemption will be mailed by the Issuer or the
Trustee prior to the Special Redemption Date. Unless otherwise specified in the
related Prospectus Supplement, the Redemption Price for any Bonds so redeemed
will be equal to 100% of the principal amount of such Bonds (or 100% of the
Compound Value of any Compound Interest Securities) or portions thereof so
redeemed, together with interest accrued thereon to the date specified in the
related Prospectus Supplement.
In the event that Mortgage Assets having an Aggregate Bond Value at least
equal to the original Aggregate Outstanding Principal of a Series is not pledged
and delivered to the Trustee on the related Closing Date, the Issuer will
deposit cash or Eligible Investments on an interim basis with the Trustee on
such Closing Date in lieu of such Undelivered Mortgage Assets. If Mortgage
Assets are not subsequently delivered within 90 days of issuance of the Bonds,
the amount of such deposit corresponding to principal may be used to pay a
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corresponding amount of principal of the Bonds to the extent set forth, and on
the Payment Dates specified, in the Prospectus Supplement.
Optional Redemption
The Issuer, or such other Person specified in the related Prospectus
Supplement, may, at its option and if so specified in the related Prospectus
Supplement, redeem, in whole or in part, one or more Classes of any Series on
any Payment Date for such Series on or after the dates, if any, specified in
such Prospectus Supplement. Notice of such redemption will be given by the
Issuer or Trustee prior to the Redemption Date. In the case of a REMIC, the
Issuer may effect an optional redemption only if it qualifies as a "qualified
liquidation" under Section 860F of the Code. The Redemption Price for any Bond
so redeemed will be equal to 100% of the outstanding principal amount of such
Bond, together with interest accrued thereon to the date specified in the
related Prospectus Supplement.
Mandatory Redemption
If specified in the related Prospectus Supplement, Bonds of one or more
Classes of a Series ("Individual Investor Bonds") may be subject to mandatory
redemption by lot or by such other method set forth in the Prospectus
Supplement. Except as otherwise specified in the related Prospectus Supplement,
no Bonds of a particular Class will be redeemed until all Bonds in each Class
having a higher priority of redemption have been paid in full. Residual Interest
Bonds will not be redeemed except in connection with the liquidation of the
applicable REMIC, in which event the Residual Interest Bonds of the applicable
Series will be redeemed in full.
Individual Investor Bonds within a Class will be selected for redemption
by random lot in $1,000 units after all redemptions requested by holders of
Individual Investor Bonds in the Class have been made or by such other method
set forth in the Prospectus Supplement. Procedures relating to optional
redemptions requested by holders of Individual Investor Bonds and to mandatory
redemptions by the Issuer of Individual Investor Bonds, and the Class
priorities, if any, and conditions with respect to such redemptions, will be
described in the related Prospectus Supplement.
Optional Termination
If so specified in the related Prospectus Supplement for a Series, the
Depositor, the Servicer, or another entity designated in the related Prospectus
Supplement may, at its option, cause an early termination of a Trust Fund by
repurchasing all of the Mortgage Assets from such Trust Fund on or after a date
specified in the related Prospectus Supplement, or on or after such time as the
aggregate outstanding principal amount of the Certificates is less than a
specified percentage of their initial aggregate principal amount. In the case of
a Trust Fund for which one or more REMIC elections have been made, the Trustee
must conduct the optional termination so as to constitute a "qualified
liquidation" under Section 860F of the Code. See "THE TRUST
AGREEMENT--Termination."
Optional Repurchase of Certificates
If so specified in the related Prospectus Supplement for a Series, one or
more Classes of the Certificates of such Series may be repurchased, in whole or
in part, at the option of the Depositor, at such times and under the
circumstances specified in such Prospectus Supplement. Notice of any such
repurchase must be given by the Trustee prior to the optional repurchase date,
as specified in the related Prospectus Supplement. The repurchase price for any
Certificate so repurchased will be set forth in the related Prospectus
Supplement.
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If so specified in the related Prospectus Supplement for a Series, any
Class of the Certificates of such Series may be subject to repurchase at the
request of the holders of such Class or to mandatory repurchase by the
Depositor. Any such redemption at the request of holders or mandatory repurchase
with respect to a Class of a Series of the Certificates will be described in the
related Prospectus Supplement and will be on such terms and conditions as
described therein.
YIELD AND PREPAYMENT CONSIDERATIONS
Timing of Payment or Distribution of Interest and Principal
Each payment or distribution of interest on the Securities (or addition to
principal of a Class of Compound Interest Securities) on a Payment Date or
Distribution Date will include all interest accrued during the Interest Accrual
Period specified in the related Prospectus Supplement preceding such Payment
Date or Distribution Date. If the Interest Accrual Period for a Series ends on a
date other than a Payment Date or Distribution Date for such Series, the yield
realized by the holders of such Securities may be lower than the yield that
would result if the Interest Accrual Period ended on such Payment Date or
Distribution Date. Additionally, if so specified in the related Prospectus
Supplement, interest accrued for an Interest Accrual Period for one or more
Classes may be calculated on the assumption that principal payments or
distributions (and additions to principal of the Securities) and allocations of
losses on the Mortgage Assets are made on the first day of the preceding
Interest Accrual Period and not on the Payment Date or Distribution Date with
respect to such preceding Interest Accrual Period. Such method would produce a
lower effective yield than if interest were calculated on the basis of the
actual principal amount outstanding during such Interest Accrual Period.
Principal Prepayments
The yield to maturity or final distribution on the Securities will be
affected by the rate of principal payments on the Mortgage Loans (including
principal prepayments resulting from both voluntary prepayments by the
Mortgagors and involuntary liquidations). The rate at which principal
prepayments occur on the Mortgage Loans will be affected by a variety of
factors, including, without limitation, the terms of the Mortgage Loans, the
level of prevailing interest rates, the availability of mortgage credit and
economic, tax, legal and other factors. The rate of principal payments or
distributions on the Securities will correspond to the rate of principal
payments on the Mortgage Assets. Principal prepayments on the Mortgage Assets
are likely to be affected by the existence of provisions prohibiting prepayment
of a Mortgage Loan underlying or comprising the Mortgage Assets for a defined
period of time (a "Lock-Out Period") or provisions requiring the payment of a
prepayment premium in the event of a prepayment (a "Yield Maintenance Payment"),
and by the extent to which the Primary Servicer is able to enforce such
provisions. Mortgage Loans with a Lock-Out Period or a Yield Maintenance
Payment, to the extent enforceable, generally would be expected to experience a
lower rate of principal prepayments than otherwise identical Mortgage Loans
without such provisions, with shorter Lock-Out Periods or with lower Yield
Maintenance Payments.
If the purchaser of a Security offered at a discount calculates its
anticipated yield to maturity or final distribution based on an assumed rate of
distributions of principal that is faster than that actually experienced on the
Mortgage Loans, the actual yield to maturity or final distribution will be lower
than that so calculated. Conversely, if the purchaser of a Security offered at a
premium calculates its anticipated yield to maturity or final distribution based
on an assumed rate of distributions of principal that is slower than that
actually experienced on the Mortgage Loans, the actual yield to maturity or
final distribution will be lower than that so calculated.
The timing of changes in the rate of principal prepayments on the Mortgage
Loans may significantly affect an investor's actual yield to maturity, even if
the average rate of distributions of principal is consistent with an investor's
expectation. In general, the earlier a principal prepayment is received on the
Mortgage Loans and
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paid on an investor's Securities, the greater the effect on such investor's
yield to maturity or final distribution. The effect on an investor's yield of
principal payments or distributions occurring at a rate higher (or lower) than
the rate anticipated by the investor during a given period may not be offset by
a subsequent like decrease (or increase) in the rate of principal payments or
distributions.
Prepayments and Weighted Average Life
The Stated Maturity for a Class is the date specified in the related
Prospectus Supplement, calculated on the basis of the assumptions applicable to
such Series set forth therein, no later than which the entire Aggregate
Outstanding Principal thereof will be fully paid.
The rate of return on reinvestment of distributions of principal and
interest on the Mortgage Assets securing a Series, the rates at which principal
payments are received on such Mortgage Assets and the rate at which payments are
made from any Reserve Fund or other Enhancement for such Series may affect the
ultimate maturity of each Class of such Series. Prepayments on the Mortgage
Assets will accelerate the rate at which principal is paid or distributed on the
Securities. High reinvestment rates tend to increase the amount of Excess Cash
Flow, which, to the extent applied to principal payments or distributions on the
Securities, will accelerate principal payments or distributions on such
Securities.
"Weighted average life" refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
such security will be repaid to the investor. The weighted average life of the
Securities of a Series will be influenced by the rate at which principal on the
Mortgage Loans comprising or underlying the Mortgage Assets pledged as security
for such Bonds, or deposited in the Trust Fund, as the case may be, is paid,
which may be in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes prepayments, in whole or in part, and
liquidations due to default).
The rate of principal prepayments on pools of mortgages is influenced by a
variety of economic, demographic, geographic, tax, legal and other factors. The
rate of prepayments of housing loans has fluctuated significantly in recent
years. In general, however, if prevailing interest rates fall significantly
below the interest rates on the Mortgage Loans comprising or underlying the
Mortgage Assets pledged as security for a Series, such Mortgage Loans are likely
to be the subject of higher principal prepayments than if prevailing rates
remain at or above the rates borne by such mortgages. In this regard, it should
be noted that certain Mortgage Assets pledged as security for a Series may be
backed by Mortgage Loans with different interest rates and the stated
pass-through or pay-through interest rate of certain Mortgage Assets may be a
number of percentage points less than the underlying Mortgage Loans. In
addition, the weighted average life of the Securities may be affected by the
varying maturities of the Mortgage Loans comprising or underlying the Mortgage
Assets. If any Mortgage Loans comprising or underlying the Mortgage Assets for a
Series have actual terms to maturity of less than those assumed in calculating
Stated Maturity or the Final Scheduled Distribution Date, one or more Classes of
the Series may be fully paid prior to their respective Stated Maturities or the
Final Scheduled Distribution Dates, even in the absence of prepayments and a
reinvestment return higher than the Assumed Reinvestment Rate, if any.
Accordingly, the prepayment experience of the Mortgage Assets will, to some
extent, be a function of the mix of interest rates and maturities of the
Mortgage Loans comprising or underlying such Mortgage Assets. See "SECURITY FOR
THE BONDS AND CERTIFICATES."
Prepayments on loans are also 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, each as
described below. CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. SPA represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans. 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
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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 pool of loans, including the Mortgage
Loans underlying or comprising the Mortgage Assets. Thus, it is likely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will not conform to any particular level of CPR or SPA.
The Issuer is not aware of any publicly available statistics that set
forth prepayment experience or prepayment forecasts of commercial or multifamily
mortgage loans over an extended period of time.
Except with respect to Interest Only Securities, the Prospectus Supplement
will contain tables setting forth the projected weighted average life of each
Class of such Series and the percentage of the original principal amount of each
Class of such Series that would be outstanding on specified Payment Dates or
Distribution Dates for such Series based on the assumptions stated in such
Prospectus Supplement, including assumptions that prepayments on the Mortgage
Loans comprising or underlying the related Mortgage Assets are made at rates
corresponding to various percentages of CPR, SPA or at such other rates
specified in such Prospectus Supplement. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
Securities to various prepayment rates and will not be intended to predict or to
provide information which will enable investors to predict the actual weighted
average life of the Securities or prepayment rates of the Mortgage Loans
comprising or underlying the related Mortgage Assets. It is unlikely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will conform to any particular level of CPR, SPA or any other
rate specified in the related Prospectus Supplement.
Other Factors Affecting Weighted Average Life
Type of Mortgage Loan. Mortgage Loans comprising or underlying the
Mortgage Assets may consist of ARMs. The rate of principal prepayments with
respect to ARMs has fluctuated in recent years. ARMs may be subject to a greater
rate of principal prepayments in a declining interest rate environment. For
example, if prevailing interest rates fall significantly below the then current
mortgage interest rates on the Mortgage Loans, the rate of prepayment on the
Mortgage Loans would be expected to increase. Conversely, if prevailing interest
rates rise significantly above the then current mortgage interest rates on the
Mortgage Loans, the rate of prepayment on the Mortgage Loans would be expected
to decrease. No assurances can be given as to the rate of prepayments on the
Mortgage Loans in stable or changing interest rate environments.
A number of Mortgage Loans may have balloon payments due at maturity, and
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 risk that a number of Mortgage Loans having
balloon payments may default at maturity, or that the Servicer, the Master
Servicer or the Special Servicer, if any, may extend the maturity of such a
Mortgage Loan 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 Servicer, the Master Servicer
or the Special Servicer, if any, may, to the extent and under the circumstances
set forth in the related Prospectus Supplement, be given considerable
flexibility to modify Mortgage Loans which are in default or as to which a
default is reasonably foreseeable. Any defaulted balloon payment or modification
which extends the maturity of a Mortgage Loan will tend to extend the weighted
average life of the Securities thereby lengthening the period of time elapsed
from the date of issuance of a Security until each dollar of principal will be
repaid or distributed to the investor.
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Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans comprising or underlying the Mortgage
Assets which are foreclosed in relation to the number of Mortgage Loans which
are repaid in accordance with their terms will affect the weighted average life
of the Mortgage Loans comprising or underlying the Mortgage Assets and that of
the related Series of Securities. 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,
may also have an impact upon the payment patterns of particular Mortgage Loans.
The return to Holders of Securities may be adversely affected by servicing
policies and decisions relating to foreclosures.
Due on Sale Clauses. Acceleration of mortgage payments as a result of
certain transfers of underlying Mortgaged Property is another factor affecting
prepayment rates that may not be reflected in the prepayment standards or models
used in the relevant Prospectus Supplement. A number of the Mortgage Loans
underlying Private Mortgage-Backed Securities and Mortgage Loans in a Mortgage
Pool may include "due-on-sale" clauses which allow the holder of the Mortgage
Loans to demand payment in full of the remaining principal balance of the
Mortgage Loans upon sale or certain other transfers of the underlying Mortgaged
Property. Except as otherwise described in the Prospectus Supplement for a
Series, the Primary Servicer of Mortgage Loans comprising or underlying Mortgage
Assets securing such Series will not exercise its right to enforce any
"due-on-sale" clause applicable to the related Mortgage Loan so long as the new
mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. The Primary Servicer will not enforce such
clause to the extent enforcement would be unlawful or would prejudice recovery
under any applicable Insurance Policy. If the Primary Servicer determines not to
enforce such "due-on-sale" clause, it will enter into an assumption and
modification agreement with the person to whom the Mortgaged Property is to be
conveyed. FHA Loans are not permitted to contain "due-on-sale" clauses and are
freely assumable by qualified persons.
Single Mortgage Loan or Single Obligor. The Mortgage Assets securing a
Series may consist of a single Mortgage Loan or obligations of a single obligor
or related obligors as specified in the related Prospectus Supplement.
Assumptions used with respect to the prepayment standards or models based upon
analysis of the behavior of mortgage loans in a larger group will not
necessarily be relevant in determining prepayment experience on a single
Mortgage Loan or with respect to a single obligor.
SECURITY FOR THE BONDS AND CERTIFICATES
General
Each Series of Bonds will be secured by a pledge by the Issuer to the
Trustee of all right, title and interest of the Issuer in the Primary Assets for
such Series, and each Series of Certificates will represent a beneficial
interest in a Trust Fund comprised of Primary Assets transferred to the Trustee
by the Depositor. The Primary Assets may include (a) Mortgage Assets directly
owned by the Issuer, (b) amounts payable under the Mortgage Assets, (c) funds,
instruments or securities deposited or held from time to time in any Reserve
Fund, (d) funds, instruments or securities initially deposited in the Collection
Account for such Series, (e) an assignment of leases and rents, if any, (f)
reinvestment income, if any, on moneys deposited in any Pledged Fund or Account,
(g) Enhancement Agreements, if any, (h) Servicing Agreements, if any, related to
the Mortgage Loans of such Series, and (i) other funds, instruments or
securities specified as Primary Assets in the related Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, certain
amounts received by the Trustee or a Servicer with respect to a Private
Mortgage-Backed Security or Mortgage Loan securing a Series may not be pledged
as Mortgage Assets for such Series or deposited into the Trust Fund for such
Series, as the case may
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be, but will be payable to the seller of such Private Mortgage-Backed Security
or Mortgage Loan or to a Servicer free and clear of the lien of the Indenture,
or interest granted under the Trust Agreement.
Mortgage Assets for a Series may consist of any combination of the
following to the extent and as specified in the related Prospectus Supplement:
(a) Mortgage Loans or participation interests therein and (b) Private
Mortgage-Backed Securities. Mortgage Loans for a Series will be purchased by the
Issuer directly or through an affiliate in the open market or in privately
negotiated transactions. Private Mortgage-Backed Securities will in turn be
secured by Underlying Collateral which will consist of Mortgage Loans.
Participation interests pledged as Mortgage Assets for a Series may be acquired
by the Issuer pursuant to a Participation Agreement or may be purchased in the
open market.
The Trustee or its agents or nominees will have possession of any Mortgage
Loans constituting Mortgage Assets and will be the registered owner of any
Private Mortgage-Backed Security which constitutes Mortgage Assets. The Trustee
will not, unless otherwise specified in the related Prospectus Supplement, be in
possession of or be the registered owner of any Underlying Collateral for any
Private Mortgage-Backed Security. See "--Private Mortgage-Backed Securities"
below.
Unless otherwise specified in the related Prospectus Supplement for a
Series, scheduled distributions of principal of and interest on the Mortgage
Assets pledged to secure a Series or deposited into the Trust Fund for such
Series, as the case may be, the amounts available to be withdrawn from any
related Reserve Fund, the amount of cash, if any, initially deposited in the
related Collection Account and any other Mortgage Assets pledged to secure such
Series or deposited into the Trust Fund for such Series, as the case may be,
together with the Reinvestment Income thereon at the Assumed Reinvestment Rate,
if any, will be sufficient irrespective of the rate of prepayments on the
Mortgage Assets to make required payments of interest on the Securities of such
Series and to retire each Class of such Series not later than its Stated
Maturity or Final Scheduled Distribution Date, as applicable. See "YIELD AND
PREPAYMENT CONSIDERATIONS." The Mortgage Assets for a Series will equally and
ratably secure each Class of such Series, or will represent beneficial interest
in the Trust Fund, as the case may be, without priority of one Class over the
other (subject to any subordination of Subordinate Securities of a Series as set
forth in the related Prospectus Supplement), and the Mortgage Assets securing
each Series, or comprising the Trust Fund, will serve as Mortgage Assets only
for that Series.
Mortgage Loans
General. Mortgage Loans for a Series may consist of Mortgage Loans or
participation interests therein. Mortgage Loans comprising the Mortgage Assets,
Mortgage Loans in which participation interests are conveyed to the Trustee, and
Mortgage Loans underlying Private Mortgage-Backed Securities are referred to
herein as the "Mortgage Loans." Some of the Mortgage Loans may have been
originated by or acquired from an affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to a Mortgage Loan. Mortgage Loans
may, as specified in the related Prospectus Supplement, consist of fixed rate,
level payment, fully amortizing Mortgage Loans, ARMs or Mortgage Loans having
balloon or other payment characteristics as described in the related Prospectus
Supplement. ARMs may have a feature which permits the borrower to convert the
rate thereon to a fixed rate. Unless otherwise specified in the applicable
Prospectus Supplement, the Mortgage Loans will be secured by first mortgages or
deeds of trust or other similar security instruments creating a first lien on
Mortgaged Property.
The Mortgaged Properties may include Multifamily Property (i.e.,
multifamily residential rental properties or cooperatively owned properties
consisting of five or more dwelling units) or Commercial Property. Multifamily
Property may include mixed commercial and residential structures and may consist
of property securing FHA-insured Mortgage Loans made by private lending
institutions to help finance construction or substantial rehabilitation of the
related multifamily rental or cooperative housing for moderate-income or
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displaced families. See "DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS--Hazard
Insurance on the Mortgage Loans--FHA Insurance."
Each Mortgaged Property will be located on land owned in fee simple by the
Mortgagor or on land leased by the Mortgagor for a term at least two years
greater than the term of the related Mortgage Loan. Unless otherwise specified
in the related Prospectus Supplement, the fee interest in leased land will be
subject to the lien securing the related Mortgage Loan. Mortgage Loans secured
by Multifamily Property or Commercial Property will generally also be secured by
an assignment of leases and rents and/or operating or other cash flow guarantees
relating to the Mortgage Loan.
If so specified in the related Prospectus Supplement, Mortgage Loans
relating to real estate projects under construction may be included in the
Mortgage Assets for a Series. The related Prospectus Supplement will set forth
the procedures and timing for making disbursements from construction reserve
funds as portions of the related real estate project are completed. If permitted
by applicable law, the Mortgage Pool may also include Mortgaged Properties
acquired by foreclosure or by deed-in-lieu of foreclosure ("REO Property"). To
the extent specified in the related Prospectus Supplement, the Servicer, the
Master Servicer or the Special Servicer, if any, may establish and maintain a
trust account or accounts to be used in connection with REO Properties and other
Mortgaged Properties being operated by it or on its behalf on behalf of the
Trust Estate or the Trust Fund, as the case may be, by the mortgagor as
debtor-in-possession or otherwise. See "SERVICING OF MORTGAGE LOANS--Maintenance
of Insurance Policies and Other Servicing Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans." In addition, the Mortgage Pool for a
particular Series may include Mortgage Loans which consist of cash flow
mortgages, installment contracts, mortgage loans with equity features or other
mortgage loans described in the related Prospectus Supplement.
The related Prospectus Supplement for each Series will provide information
with respect to the Mortgage Pool as of the Cut-Off Date, including, among other
things, (a) the aggregate unpaid principal balance of the Mortgage Loans
comprising the Mortgage Pool; (b) the weighted average Mortgage Rate on the
Mortgage Loans, and, in the case of adjustable Mortgage Rates, the weighted
average of the current adjustable Mortgage Rates, the minimum and maximum
permitted adjustable Mortgage Rates, if any, and the weighted average thereof;
(c) the average outstanding principal balance of the Mortgage Loans; (d) the
weighted average remaining scheduled term to maturity of the Mortgage Loans and
the range of remaining scheduled terms to maturity; (e) the range of
Loan-to-Value Ratios of the Mortgage Loans; (f) the relative percentage (by
principal balance as of the Cut-Off Date) of Mortgage Loans that are ARMs, fixed
interest rate, FHA Loans or other types of Mortgage Loans; (g) any Enhancement
relating to the Mortgage Pool; (h) the relative percentage (by principal balance
as of the Cut-Off Date) of Mortgage Loans that are secured by Multifamily
Property or Commercial Property; (i) the geographic dispersion of Mortgaged
Properties securing the Mortgage Loans; and (j) the use or type of each
Mortgaged Property securing a Mortgage Loan. The related Prospectus Supplement
will also specify other characteristics of Mortgage Loans which may be included
in the Mortgage Pool for a Series. If Private Mortgage-Backed Securities
representing ownership interests in multiple mortgage pools constitute Mortgage
Assets for a Series, the Prospectus Supplement will set forth, to the extent
available, the above-specified information on an aggregate basis for the
respective mortgage pools. If specific information respecting the Mortgage Loans
is not known to the Issuer at the time the related Series is initially offered,
more general information of the nature described above will be provided in the
Prospectus Supplement, and final specific information will be set forth in a
Current Report on Form 8-K to be available to investors on the date of issuance
of the Series and to be filed with the Commission within 15 days after the
initial issuance of such Series.
If so specified in the related Prospectus Supplement, the terms of a
Mortgage Loan may provide that upon the sale of the Mortgaged Property, the
obligor may, in lieu of the payment in full of the amount of principal and
interest then outstanding or accrued on the related Mortgage Loan, irrevocably
deposit cash or other specified obligations into an account with the Trustee in
an amount which, together with interest thereon, will be sufficient
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to make timely payments or distributions of principal and interest on the
Mortgage Loan and, therefore, on the Securities according to their terms.
The characteristics of the Mortgage Loans comprising or underlying the
Mortgage Assets may affect the rate of prepayment of Securities and the risk of
delinquencies, foreclosures and losses. See "RISK FACTORS" and "YIELD AND
PREPAYMENT CONSIDERATIONS."
Mortgage Underwriting Standards and Procedures. The underwriting
procedures and standards for Mortgage Loans included in a Mortgage Pool will be
specified in the related Prospectus Supplement to the extent such procedures and
standards are known or available. Such Mortgage Loans may be originated in
contemplation of the transactions contemplated by this Prospectus and the
related Prospectus Supplement. If stated in the related Prospectus Supplement,
the originator of the Mortgage Loans (or another entity specified in the related
Prospectus Supplement) will make representations and warranties concerning
compliance with such underwriting procedures and standards.
Except as otherwise set forth in the related Prospectus Supplement for a
Series, the originator of a Mortgage Loan will have applied underwriting
procedures intended to evaluate, among other things, the income derived from the
Mortgaged Property, the capabilities of the management of the project, including
a review of management's past performance record, its management reporting and
control procedures (to determine its ability to recognize and respond to
problems) and its accounting procedures to determine cash management ability,
the obligor's credit standing and repayment ability and the value and adequacy
of the Mortgaged Property as collateral. FHA Loans will have been originated by
mortgage lenders which are approved by HUD as an FHA mortgagee in the ordinary
course of their real estate lending activities and will comply with the
underwriting policies of FHA. Except as described below or in the related
Prospectus Supplement, the Issuer believes that underwriting procedures used
were consistent with those utilized by mortgage lenders generally during the
period of origination.
Unless otherwise specified in the related Prospectus Supplement, the
adequacy of a Mortgaged Property as security for repayment will generally have
been determined by appraisal by appraisers selected in accordance with
pre-established guidelines established by or acceptable to the loan originator
for appraisers. Unless otherwise specified in the related Prospectus Supplement,
the appraiser must personally inspect the property and verify that it was in
good condition and that construction, if new, has been completed. Unless
otherwise stated in the applicable Prospectus Supplement, the appraisal will
have been based upon a cash flow analysis or a market data analysis of recent
sales of comparable properties and, when deemed applicable, a replacement cost
analysis based on the current cost of constructing or purchasing a similar
property.
No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. Further, there is no assurance that appreciation of real
estate values generally will limit loss experiences on Commercial Property or on
non-traditional housing such as Multifamily Property. If the residential real
estate market should experience an overall decline in property values such that
the outstanding balances of the Mortgage Loans and any additional financing on
the Mortgaged Properties in a particular Mortgage Pool become equal to or
greater than the value of the Mortgaged Properties, the actual rates of
delinquencies, foreclosures and losses could be higher than those now generally
experienced in the mortgage lending industry. To the extent that such losses are
not covered by the methods of Enhancement or the insurance policies described
herein, the ability of the Issuer to pay principal of and interest on the
Securities may be adversely affected. Even where credit support covers all
losses resulting from defaults and foreclosure, the effect of defaults and
foreclosures may be to increase prepayment experience on the Mortgage Assets,
thus shortening weighted average life and affecting yield to maturity. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
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Determination of Compliance With Pool Requirements and Underwriting
Procedures. As more specifically set forth in the related Prospectus Supplement,
the Issuer will represent and warrant, upon pledge of the Mortgage Loans to the
Trustee under the Indenture or deposit of such Mortgage Loans into the Trust
Fund, as applicable, among other things, as to the accuracy of the information
in the related Mortgage Loan Schedule. If specified in the related Prospectus
Supplement, the originator of a Mortgage Loan may make representations and
warranties with respect to such Mortgage Loan. If so specified in the related
Prospectus Supplement, the Issuer will assign its rights and the seller's
obligations under the agreement pursuant to which the Issuer acquired the
Mortgage Assets for the related Series to the Trustee.
If so specified in the related Prospectus Supplement, upon the discovery
of the breach of certain representations or warranties made by the Issuer in
respect of a Mortgage Loan that materially and adversely affects the interests
of the Bondholders or Certificateholders of the related Series, the Issuer will
be obligated to cause the seller of such Mortgage Loans to repurchase such
Mortgage Loan or deliver a substitute conforming Mortgage Loan as described
below under "Repurchase and Substitution of Non-Conforming Mortgage Loans." The
Trustee will be required to enforce this obligation for the benefit of the
Bondholders or Certificateholders, following the practices it would employ in
its good faith business judgment were it the owner of such Mortgage Loan. If so
specified in the related Prospectus Supplement, the Master Servicer, if any, may
be obligated to enforce such obligations rather than the Trustee.
Repurchase and Substitution of Non-Conforming Mortgage Loans. The Trustee,
or if so specified in the related Prospectus Supplement, a custodian, will
review Mortgage Loan documents after receipt thereof. Unless otherwise provided
in the related Prospectus Supplement, if any such document is found to be
defective in any material respect, or if it is determined that the Issuer has
breached any representation or warranty, the Trustee or the custodian shall
immediately notify the Issuer and the Master Servicer, if any, and the Trustee,
if the custodian. Unless otherwise specified in the related Prospectus
Supplement, if the Issuer cannot cure such defect thereafter, the Issuer will be
obligated to cause the seller of such Mortgage Loan to repurchase within 90 days
of the execution of the related Series Supplement, or within such other period
specified in the related Prospectus Supplement, the related Mortgage Loan or any
property acquired in respect thereof from the Trustee at a purchase price
generally equal to the unpaid principal balance of the Mortgage Loan (or, in the
case of a foreclosed Mortgage Loan, the unpaid principal balance of such
Mortgage Loan immediately prior to foreclosure) plus accrued interest.
Unless otherwise provided in the related Prospectus Supplement, the Issuer
may, rather than cause the repurchase of the Mortgage Loan as described above,
remove such Mortgage Loan from the Trust Estate (a "Deleted Mortgage Loan") or
Trust Fund, as applicable, and substitute in its place one or more other
Mortgage Loans (each, a "Substitute Mortgage Loan"); provided, however with
respect to a Series for which no REMIC election is made, such substitution must
be effected within the period specified in the related Prospectus Supplement.
Any Substitute Mortgage Loan will, on the date of substitution, have the
characteristics specified in the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation constitutes the sole remedy available to the Bondholders,
Certificateholders or the Trustee for a material defect in a Mortgage Loan
document or for breach of representations and warranties with respect to any
Mortgage Loan. With respect to Mortgage Loans underlying Private Mortgage-Backed
Securities, the PMBS Agreement may have terms relating to the repurchase or
substitution obligations which differ from those set forth above.
The Master Servicer, if any, may also make certain warranties with respect
to the Mortgage Loans comprising the Mortgage Pool for a Series. See "SERVICING
OF MORTGAGE LOANS--Certain Matters Regarding the Master Servicer and Special
Servicer." Upon a breach of any such warranty that materially and adversely
affects the interests of Bondholders or Certificateholders of the related
Series, the related Mortgage Loan will be required to be repurchased, subject to
the conditions described in the preceding paragraph and in
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the related Prospectus Supplement. If the Master Servicer fails to repurchase
such a Mortgage Loan, payments to Bondholders or Certificateholders could be
reduced to the extent payments are not made on the Mortgage Loan.
Various Servicers will provide certain customary servicing functions with
respect to any Mortgage Loans pursuant to servicing agreements. Such Servicers
may include affiliates of the Issuer. If so specified in the related Prospectus
Supplement, a Master Servicing Agreement may be entered into between the Issuer
and a Master Servicer. The Master Servicer will supervise the performance by the
Servicers of their duties and responsibilities under the servicing agreements
with respect to Mortgage Loans for the related Series. Alternatively, if so
specified in the related Prospectus Supplement, the Master Servicer may be
obligated to service Mortgage Loans directly or through one or more Servicers.
In such a case, the Master Servicer will be primarily responsible for servicing
of the Mortgage Loans. The specific duties to be performed by any Servicers and
Master Servicer, if any, with respect to the Mortgage Loans of a particular
Series will be set forth in the Prospectus Supplement to the extent they differ
from the servicing obligations described herein under "SERVICING OF THE MORTGAGE
LOANS." Servicers and the Master Servicer, if any, may be required to advance
funds to cover delinquent payments on Mortgage Loans, to the extent specified in
the related Prospectus Supplement. The Prospectus Supplement also will specify
criteria to be met by each Servicer and the Master Servicer. Such criteria will
be determined by the Issuer consistent with the requirements of each Rating
Agency rating such Series. See "SERVICING OF MORTGAGE LOANS."
Private Mortgage-Backed Securities
General. Private Mortgage-Backed Securities may consist of (a) mortgage
participations and pass-through certificates, evidencing an undivided interest
in a pool of Mortgage Loans, (b) debt obligations (interest payments on which
may be tax-exempt in whole or in part), secured by mortgages or (c)
participations or other interests in any of the foregoing. Private
Mortgage-Backed Securities will have been issued pursuant to a pooling and
servicing agreement, an indenture or similar agreement, or a participation
agreement or similar agreement (a "PMBS Agreement"). The seller or servicer of
the underlying Mortgage Loans will have entered into the PMBS Agreement with the
trustee under such PMBS Agreement (the "PMBS Trustee"). The PMBS Trustee or its
agent, or a custodian, will possess the Mortgage Loans, participations or other
interest, underlying such Private Mortgage-Backed Security. Mortgage Loans
underlying a Private Mortgage-Backed Security will be serviced by the Master
Servicer directly or by one or more Servicers who may be subject to the
supervision of the Master Servicer. Unless otherwise specified in the Prospectus
Supplement relating to a Series, if payments with respect to interest on the
underlying obligations are tax-exempt, such Prospectus Supplement will disclose
the relevant federal tax characteristics relating to the tax-exempt status of
such obligations.
The issuer of the Private Mortgage-Backed Securities (the "PMBS Issuer")
may be a financial institution or other entity engaged generally in the business
of mortgage lending, a public agency or instrumentality of a state, local or
federal government or a limited purpose corporation organized for the purpose
of, among other things, establishing trusts and acquiring and selling housing
loans to such trusts, and selling beneficial interests in such trusts. If so
specified in the Prospectus Supplement, the PMBS Issuer may be an affiliate of
the Issuer. The obligations of the PMBS Issuer will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related trust. Unless otherwise specified in the related Prospectus
Supplement, the PMBS Issuer will not have guaranteed any of the assets conveyed
to the related trust or any of the Private Mortgage-Backed Securities issued
under the PMBS Agreement. Additionally, although the Mortgage Loans,
participations or other interest, underlying the Private Mortgage-Backed
Securities may be guaranteed by an agency or instrumentality of the United
States, the Private Mortgage-Backed Securities themselves will not be so
guaranteed.
Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related Prospectus
Supplement. The Private Mortgage-Backed Securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest
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distributions will be made on the Private Mortgage-Backed Securities by the PMBS
Trustee or the Servicer. The PMBS Issuer or the Servicer or another person
specified in the related Prospectus Supplement may have the right or obligation
to repurchase or substitute assets underlying the Private Mortgage-Backed
Securities after a certain date or under other circumstances specified in the
related Prospectus Supplement.
Underlying Mortgage Loans. The Mortgage Loans underlying the Private
Mortgage-Backed Securities may consist of fixed rate, level payment, fully
amortizing Mortgage Loans, ARMs, or Mortgage Loans having balloon or other
special payment features. Mortgage Loans underlying the Private Mortgage-Backed
Securities will be secured primarily by Multifamily Property or Commercial
Property. Unless otherwise stated in the related Prospectus Supplement, the
underwriting procedures set forth above will also apply to Underlying Mortgage
Loans.
Enhancement Relating to Private Mortgage-Backed Securities. Enhancement in
the form of reserve funds, subordination of other private mortgage certificates
issued under the PMBS Agreement, letters of credit, insurance policies or other
types of credit support may be provided with respect to the Mortgage Loans,
participations or other interest, underlying the Private Mortgage-Backed
Securities or with respect to the Private Mortgage-Backed Securities themselves.
The type, characteristics and amount of enhancement, if any, will be a function
of certain characteristics of the Mortgage Loans, participations or other
interest, and other factors and will have been established for the Private
Mortgage-Backed Securities on the basis of requirements of the Rating Agency
which assigned a rating to the Private Mortgage-Backed Securities.
Additional Information. The Prospectus Supplement for a Series which
includes Private Mortgage-Backed Securities will specify, to the extent
available, (i) the aggregate approximate principal amount and type of the
Private Mortgage-Backed Securities to be included in the Trust Estate or Trust
Fund, as applicable, (ii) certain characteristics of the Mortgage Loans,
participations or other interests which comprise the underlying assets for the
Private Mortgage-Backed Securities including (A) the payment features of such
Mortgage Loans, participations or other interests (i.e., whether they are fixed
rate or adjustable rate and whether they provide for fixed level payments,
adjustable payments or other payment features), (B) the approximate aggregate
principal balance, if known, of Underlying Mortgage Loans, participations or
other interests insured or guaranteed by a governmental entity, (C) the
servicing fee or range of servicing fees with respect to the Mortgage Loans, and
(D) the minimum and maximum stated maturities of the underlying Mortgage Loans,
participations or other interests at origination, (iii) the maximum original
term-to-stated maturity of the Private Mortgage-Backed Securities, (iv) the
weighted average pass-through or bond rate of the Private Mortgage-Backed
Securities or formula therefor, (v) the pass-through or bond rate or ranges
thereof for the Private Mortgage-Backed Securities or formula therefor, (vi) the
PMBS Issuer, Master Servicer and the PMBS Trustee for such Private
Mortgage-Backed Securities, (vii) certain characteristics of enhancement, if
any, such as subordination, reserve funds, insurance policies, letters of credit
or guarantees relating to the Mortgage Loans, participations or other interests
underlying the Private Mortgage-Backed Securities or to such Private
Mortgage-Backed Securities themselves, (viii) the terms on which the Underlying
Mortgage Loans, participations or other interests for such Private
Mortgage-Backed Securities or the Private Mortgage-Backed Securities may, or are
required to, be purchased prior to their maturity or the maturity of the Private
Mortgage-Backed Securities and (ix) the terms on which Mortgage Loans,
participations or other interests may be substituted for those originally
underlying the Private Mortgage-Backed Securities.
Substitution of Mortgage Assets
Unless otherwise provided in the related Prospectus Supplement, subject to
the limitations set forth in the Indenture or Trust Agreement for a Series, the
Issuer or Depositor may deliver to the Trustee other Mortgage Assets in
substitution for any Mortgage Assets originally pledged as security for a
Series, or deposited in the Trust Fund for a Series, as the case may be. Any
such Substitute Mortgage Assets will have an outstanding principal balance or
Asset Value (determined in a manner consistent with the Mortgage Assets for
which it is
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substituted) that is less than or equal to the outstanding principal balance or
Aggregate Asset Value of the Mortgage Assets for which it is substituted, unless
otherwise specified in the related Prospectus Supplement, and will otherwise
have such characteristics as shall be necessary to cause the Mortgage Assets,
upon such substitution, to conform more fully to the description thereof set
forth in the related Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, (1) no substitution will be permitted which would
delay the Stated Maturity or Final Scheduled Distribution Date, of any Class of
Securities of the related Series, (2) no more than 40% of the Mortgage Assets
(including any cash deposited on the Closing Date) securing a Series may be
substituted for, (3) only like kind Mortgage Assets may be substituted for
Mortgage Assets (or, with respect to a substitution for cash deposited in any
Pledged Fund or Account on the Closing Date, the Substitute Mortgage Assets must
be of like kind as the Mortgage Assets securing the related Series) and (4)
there can be no substitutions for Substitute Mortgage Assets. No substitution
may be made (1) if such substitution would result in the Issuer becoming
required to register as an "Investment Company" for purposes of the Investment
Company Act of 1940, (2) if the Rating Agencies will, as a result of such
substitution, downgrade the rating on the related Series of Securities or any
Class thereof or (3) in the event that the Issuer has elected to be treated as a
REMIC and such substitution would cause the REMIC to lose its status as a REMIC
or result in a tax on "prohibited contributions" to or "prohibited transactions"
of the REMIC.
If the Issuer elects to treat the Mortgage Assets securing a Series of
Bonds, or deposited into the Trust Fund, as a REMIC or an election is made to
treat the arrangement by which a Series of Securities is issued as a REMIC, no
Substitute Mortgage Assets may be pledged by the Issuer (a) in the case of the
substitution for a "defective obligation" (within the meaning of Section
860G(a)(4)(B) of the Code), more than two years after the "Start Up Day" (as
defined in Section 860G(a)(9) of the Code) of the REMIC, or (b) in the case of
any other Mortgage Assets, more than three months after the Start Up Day.
Collection Account
Unless otherwise provided in the related Series Supplement, a separate
Collection Account for each Series will be established by the Trustee, or if the
Trustee is not also the Paying Agent, by the Paying Agent, for receipt of all
monthly principal and interest payments on the Primary Assets securing such
Series and the amount of cash, if any, to be initially deposited therein by the
Issuer, Reinvestment Income, if any, thereon and any amounts withdrawn from any
Reserve Funds for such Series. If specified in the related Prospectus
Supplement, Reinvestment Income, if any, or other gain from investments of
moneys in the Collection Account will be credited to the Collection Account for
such Series and any loss resulting from such investments will be charged to such
Collection Account. Funds on deposit in the Collection Account will be available
for application to the payment of principal of and interest on the Securities of
the related Series and for certain other payments provided for in the Indenture
or Trust Agreement and described in the related Prospectus Supplement. To the
extent that amounts remaining on deposit in the Collection Account on each
Payment Date or Distribution Date represent Excess Cash Flow not required to be
applied to such payments or distributions, unless otherwise specified in the
related Prospectus Supplement, such amounts may be paid as provided in the
Indenture or Trust Agreement to the Issuer (or, in the case of a REMIC, to the
holder of the residual interest therein).
Other Funds or Accounts
A Series may also be secured by certain other funds and accounts for the
purpose of, among other things, (i) paying certain administrative fees and
operating expenses and (ii) accumulating funds that are credited to the Issuer's
account pending their distribution to the Issuer. See "--Enhancement."
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Investment of Funds
The Collection Account, Servicing Accounts and certain other funds and
accounts for a Series are to be invested by the Trustee or the Paying Agent, as
directed by the Issuer, in certain Eligible Investments acceptable to each
Rating Agency rating such Series, which may include, without limitation, (a)
direct obligations of, and obligations fully guaranteed by, the United States of
America, FHLMC, FNMA or any agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and credit of the
United States of America, (b) demand and time deposits, certificates of deposit
or bankers' acceptances, (c) repurchase obligations pursuant to a written
agreement with respect to (1) any security described in clause (a) above or (2)
any other security issued or guaranteed by an agency or instrumentality of the
United States of America, (d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state, (e) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof), (f) a
Guaranteed Investment Contract, (g) certificates or receipts representing
ownership interests in future interest or principal payments on obligations
described in clause (a) above, and (h) any other demand, money market or time
deposit obligation, security or investment acceptable to the Rating Agencies.
Eligible Investments with respect to a Series will include only
obligations or securities that mature on or before the date on which the
Collection Account or any other Pledged Fund or Account for such Series are
required or may be anticipated to be required to be applied for the benefit of
the holders of such Series. Any gain or loss from such investments for a Series
will be credited or charged to the appropriate fund or account for such Series
unless otherwise specified in the related Prospectus Supplement.
Guaranteed Investment Contract
If specified in the related Prospectus Supplement, on or prior to the
Delivery Date the Issuer and the Trustee will enter into a Guaranteed Investment
Contract with a guarantor acceptable to the Rating Agencies rating the
Securities (the "Guarantor"), pursuant to which all distributions on the
Mortgage Assets will be invested by the Trustee with the Guarantor, and the
Guarantor will pay to the Trustee interest at the rate per annum set forth in
such Guaranteed Investment Contract on all amounts invested. Whenever funds are
required under the Indenture to be paid to Bondholders or under the Trust
Agreement to be paid to the Certificateholders, the Guarantor, upon the request
of the Trustee, will remit such funds to the Trustee.
Enhancement
Enhancement may be provided with respect to a Series, or with respect to
any Mortgage Loans or Private Mortgage-Backed Securities securing a Series. See
"ENHANCEMENT."
SERVICING OF MORTGAGE LOANS
General
The servicing obligations with respect to a particular Series may be
performed by various Servicers or by the Trustee. If so specified in the related
Prospectus Supplement, a Master Servicer or a Special Servicer may be appointed.
The related Prospectus Supplement for each Series will describe the extent, if
any, such rights, duties and obligations vary or differ with respect to such
Series from those described herein.
If so specified in the related Prospectus Supplement, pursuant to a Master
Servicing Agreement or Trust Agreement, customary servicing functions with
respect to Mortgage Loans which comprise Mortgage Assets for
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a Series, or which constitute Underlying Collateral for a Private
Mortgage-Backed Security will be provided by the Master Servicer directly or by
one or more Servicers subject to supervision by the Master Servicer. To the
extent specified in the related Prospectus Supplement, a special servicer (the
"Special Servicer") may be appointed. The related Prospectus Supplement will
describe the duties and obligations of such Special Servicer. To the extent
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, if any, may have the authority to sell or otherwise dispose of
Mortgage Loans or the related REO Property in order to maximize the value of
such Mortgage Loans or property. The entity which has primary liability for
servicing Mortgage Loans directly is sometimes referred to herein as the
"Primary Servicer." If the Master Servicer is not required under the Master
Servicing Agreement, Trust Agreement or PMBS Agreement, as applicable, to act as
Primary Servicer, then the Master Servicer, if any, will (i) administer and
supervise the performance by the Servicers (who will act as Primary Servicers)
of their servicing responsibilities under the Servicing Agreements, (ii) to the
extent not maintained by a Primary Servicer, maintain any insurance policy
required for the related Mortgage Pool and (iii) advance funds as described
below under "Advances" and in the related Prospectus Supplement. If a Master
Servicer undertakes to service Mortgage Loans directly it may do so through
Servicers as its agents. In such case, the Master Servicer will be responsible
for all aspects of the servicing of the related Mortgage Loans notwithstanding
such use of Servicers. The Master Servicer or a Servicer may be an affiliate of
the Issuer. Unless otherwise specified in the related Prospectus Supplement, in
the case of FHA Loans, the Master Servicer and each Servicer will be required to
be approved by HUD as an FHA mortgagee. The Master Servicer will only be
responsible for the duties and obligations of the Special Servicer to the extent
set forth in the related Prospectus Supplement.
To the extent applicable, Master Servicing Agreements (direct or
supervisory), Servicing Agreements and Special Servicing Agreements, if any,
with respect to a Series will be filed as exhibits to a Current Report on Form
8-K within 15 days following the issuance of the Securities of a Series.
The Master Servicer will be paid a servicing fee for the performance of
its services and duties under each Master Servicing Agreement, as specified in
the related Prospectus Supplement. Each Servicer, if any, will be entitled to
receive a servicing fee. The Special Servicer, if any, will also be entitled to
a servicing fee. In addition, the Master Servicer, Special Servicer or Servicer
may be entitled to retain late charges, assumption fees and similar charges to
the extent collected from Mortgagors. If a Servicer or the Special Servicer is
terminated by the Master Servicer, the servicing function of the Servicer or the
Special Servicer will be either transferred to a substitute Servicer or Special
Servicer, as the case may be, or performed by the Master Servicer. The Master
Servicer will be entitled to retain the portion of the Servicing Fee paid to a
Servicer, under a terminated Servicing Agreement, or the Special Servicer, under
the Special Servicing Agreement, if the Master Servicer elects to perform such
servicing functions itself. See "--Servicing Compensation and Payment of
Expenses" below.
Collection Procedures
The Primary Servicer or, if so specified in the related Prospectus
Supplement, the Trustee, will make reasonable efforts to collect all payments
called for under the Mortgage Loans and will follow such collection procedures
as it follows with respect to mortgage loans serviced by it that are comparable
to the Mortgage Loans.
Unless otherwise specified in the related Prospectus Supplement, the
Primary Servicer, to the extent permitted by law and the terms of the related
Mortgage Loans, will establish and maintain an escrow account (the "Escrow
Account") in which payments by Mortgagors to pay taxes, assessments, mortgage
and hazard insurance premiums, and other comparable items will be deposited.
Withdrawals from the Escrow Account are to be made to effect timely payment of
taxes, assessments and hazard insurance premiums, to refund to Mortgagors
amounts determined to be overages, to pay interest to Mortgagors on balances in
the Escrow Account to the extent required by law, to repair or otherwise protect
the Mortgaged Property and to clear and terminate such account. Alternatively,
the terms of the related Mortgage Loan may require, upon the occurrence of a
delinquency or default by the obligor, an impound account ("Impound Account") to
be established and maintained and into which
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payments by Mortgagors to pay taxes, assessments, mortgage and hazard insurance
premiums and other comparable items will be deposited pending distribution of
such items. The Primary Servicer will be responsible for the administration of
the Escrow Account or the Impound Account and may be obligated to make escrow or
impound advances to the relevant account when a deficiency exists therein if so
specified in the related Prospectus Supplement.
Payments on Mortgage Loans; Deposits to Custodial Accounts
With respect to any Series, the Master Servicer, if any, will establish an
account (the "Custodial Account") in the name of the Trustee, unless otherwise
specified in the related Prospectus Supplement. The Custodial Account will be
established so as to comply with the standards of each Rating Agency rating the
Securities of a Series. Amounts to be remitted to the Trustee shall be remitted
by the Master Servicer to the Trustee from the Custodial Account for deposit in
the Collection Account for the related Series.
In those cases where a Servicer is servicing Mortgage Loans pursuant to a
Servicing Agreement, the Servicer will establish and maintain an account (the
"Servicing Account") that will comply with the standards set forth below for the
Custodial Account and that is otherwise acceptable to the Master Servicer, if
any. The Servicer will be required to deposit into the Servicing Account on a
daily basis (or upon identification) all mortgage related receipts received by
it with respect to Mortgage Loans serviced by such Servicer subsequent to the
Cut-Off Date less its servicing fee and certain other amounts specified in the
Servicing Agreement. On each Servicer Remittance Date, the Servicer shall remit
all funds held in the Servicing Account (other than payments due on or before
the Cut-Off Date and other amounts permitted to be withdrawn from or held in the
Servicing Account pursuant to the Servicing Agreement) with respect to each
Mortgage Loan together with any Advances made by such Servicer for deposit to
the Custodial Account, or if a Custodial Account has not been established,
directly to the Collection Account. See "--Advances" below.
If so specified in the related Prospectus Supplement, the Custodial
Account and each Servicing Account may be maintained as an interest-bearing
account, or the funds held therein may be invested pending remittance to the
Trustee in Eligible Investments. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer or the Servicer will be entitled to
receive any such interest or other income earned on funds in the Custodial
Account or Servicing Account as additional compensation.
The Master Servicer will deposit in the Custodial Account on a daily basis
all mortgage related receipts (including amounts remitted by the Servicer)
received by it subsequent to the Cut-off Date (other than payments of principal
and interest due on or before the Cut-off Date).
With respect to any other type of Mortgage Loan which provides for
payments other than on the basis of level payments, an account may be
established as described in the related Prospectus Supplement.
Advances
General. To the extent provided in the related Prospectus Supplement, the
Primary Servicer may make periodic advances of cash ("Advances") from its own
funds or, if so specified in the related Prospectus Supplement, from excess
funds in the Custodial Account or Servicing Account, but only to the extent such
Advances are, in the good faith business judgment of the Servicer or the Master
Servicer, as the case may be, ultimately recoverable from future payments and
collections on the Mortgage Loans or otherwise. Neither the Master Servicer nor
the Servicers will be required to make such Advances, unless otherwise specified
in the related Prospectus Supplement. The Master Servicer's obligation to make
Advances, if any, may, as specified in the related Prospectus Supplement, be
limited in amount or may be limited to Advances received from Servicers. If so
specified in the related Prospectus Supplement, the Master Servicer will not be
obligated to make Advances until all or a specified portion of a Reserve Fund is
depleted. Advances are intended to enable the Issuer
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to make timely payment of the scheduled principal and interest payments or
distributions on the Securities of such Series, not to guarantee or insure
against losses. Accordingly, any funds so advanced are recoverable by the
Servicer or the Master Servicer, as the case may be, out of amounts received on
particular Mortgage Loans which represent late recoveries of principal or
interest respecting which any such Advance was made. If an Advance is made and
subsequently determined to be nonrecoverable from late collections, Insurance
Proceeds or Liquidation Proceeds from the related Mortgage Loans, or any other
source described in the related Prospectus Supplement, the Servicer or Master
Servicer will be entitled to reimbursements from other funds in the Custodial
Account or Servicing Account, as applicable.
Adjustments to Servicing Fee or Advances in Connection with Prepaid
Mortgage Loans. With respect to each Mortgage Pool, if an obligor makes a
principal prepayment between scheduled payment dates, the obligor may be
required to pay interest on the principal balance only to the date of prepayment
in full. If and to the extent provided in the related Prospectus Supplement, the
amount of the servicing fee may be reduced, or the Primary Servicer may be
otherwise obligated to advance moneys from its own funds or any reserve
maintained for such purpose, to the extent necessary to include an amount equal
to a full month's interest payment at the applicable Mortgage Rate. Partial
principal prepayments may be treated as having been received on the next Due
Date, and, if so, no reduction in interest remitted for deposit to the
Collection Account will occur. See "YIELD AND PREPAYMENT CONSIDERATIONS."
Maintenance of Insurance Policies and Other Servicing Procedures
General. To the extent specified in the related Prospectus Supplement and
the Servicing Agreement, the Primary Servicer will be required to cause to be
maintained a standard hazard insurance policy with respect to each Mortgaged
Property. In addition, all or a portion of the Mortgage Loans comprising a
Mortgage Pool or constituting Underlying Collateral may be insured by the FHA.
The Primary Servicer will be required to take such steps as are reasonably
necessary to keep such insurance in full force and effect. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
Presentation of Claims; Realization Upon Defaulted Mortgage Loans. The
market value of any property obtained in foreclosure or by deed in lieu of
foreclosure may be based substantially on the operating income obtained by
renting the applicable property. As a default on a Mortgage Loan secured by
Multifamily Property or Commercial Property is likely to have occurred because
operating income, net of expenses, is insufficient to make debt service payments
on the related Mortgage Loan, it can be anticipated that the market value of
such property generally will be less than anticipated when such Mortgage Loan
was originated. To the extent that equity does not cushion the loss in market
value upon any liquidation and such loss is not covered by other credit support,
a loss may be experienced by the related Bondholders or Certificateholders, as
applicable.
The Primary Servicer, on behalf of itself, the Trustee, the Bondholders or
Certificateholders, as applicable, and the Issuer, will be required to present,
or cause to be presented, claims with respect to any insurance policy. The
Primary Servicer will be required to present claims and take such reasonable
steps as are necessary to permit recovery under any FHA insurance respecting
defaulted Mortgage Loans.
The Primary Servicer may foreclose upon or otherwise comparably convert
the ownership of properties securing such of the related Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments. In connection with such foreclosure
or other conversion, the Primary Servicer will generally follow such practices
and procedures as it shall deem necessary or advisable and as shall be normal
and usual in its general mortgage servicing activities, subject to the express
provisions of the related Servicing Agreement.
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Enforcement of Due-On Sale Clauses
Unless otherwise specified in the related Prospectus Supplement, when any
Mortgaged Property is about to be conveyed by the Mortgagor, the Primary
Servicer will not exercise its rights to accelerate the maturity of such
Mortgage Loan under the applicable "due-on-sale" clause, if any, so long as the
new mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. If such conditions are met or the Primary
Servicer reasonably believes enforcement of a due-on-sale clause will not be
enforceable, the Primary Servicer is authorized to take or enter into an
assumption agreement from or with the person to whom such Mortgaged Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and pursuant to which the original Mortgagor is released
from liability and such person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Unless otherwise specified in the related Prospectus
Supplement, any fee collected in connection with an assumption will be retained
as additional servicing compensation.
Modification; Waivers
As set forth in the related Prospectus Supplement, the Master Servicer or
Special Servicer, if any, may have the discretion, subject to certain conditions
set forth therein, to modify, waive or amend the terms of any Mortgage Loan
without the consent of the Trustee, or any Bondholder or Certificateholders, as
applicable.
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer or the Special Servicer, if any, will not agree to any
modification, waiver or amendment of the payment terms of a Mortgage Loan unless
the Master Servicer or the Special Servicer, if any, has determined that such
modification, waiver or amendment is reasonably likely to produce a greater
recovery on a present value basis than liquidation of the Mortgage Loan.
Servicing Compensation and Payment of Expenses
The Master Servicer, the Special Servicer, if any, and each Servicer will
be entitled to a servicing fee in an amount specified or to be calculated in a
manner described in the related Prospectus Supplement. The servicing fee may be
fixed or variable, as specified in the related Prospectus Supplement. In
addition, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer, the Special Servicer, if any, or a Servicer will be entitled to
additional servicing compensation in the form of assumption fees, late payment
charges and modification fees.
The Primary Servicer will be entitled to reimbursement for certain
expenses incurred by it in connection with the liquidation of defaulted Mortgage
Loans. The ability of the Issuer of the related Series to pay principal of and
interest on the Securities will not be affected to the extent claims are paid
under the related insurance policies. If claims are either not made or paid
under such insurance policies or if coverage thereunder has ceased or is
insufficient, the ability of the Issuer to meet debt service requirements on the
related Series may be adversely affected. In addition, the Primary Servicer will
be entitled to reimbursement of expenditures incurred by it in connection with
the restoration of Mortgaged Property, such right of reimbursement being prior
to the rights of the Bondholders to receive any related Insurance Proceeds or
Liquidation Proceeds.
Evidence as to Compliance
The Master Servicer and the Special Servicer, if any, will deliver to the
Trustee, on or before 120 days after the end of each fiscal year of the Master
Servicer and the Special Servicer, if applicable, an officer's certificate
stating that (i) a review of the activities of the Master Servicer, the Special
Servicer and the Servicers during the preceding calendar year and of performance
under the Master Servicing Agreement, Special Servicing Agreement, if
applicable, and the Servicing Agreements has been made under the supervision of
such officer and
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(ii) the Master Servicer and the Special Servicer, if applicable, has fulfilled
all its obligations under the Master Servicing Agreement and Special Servicing
Agreement, if applicable, throughout such year, and, to the best of such
officer's knowledge, based on such review, each Servicer has fulfilled its
obligations under the related Servicing Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. Such
officer's certificate shall be accompanied by a statement of a firm of
independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
Mortgage Loans, conducted in accordance with generally accepted accounting
principles in the mortgage banking industry, the Master Servicer's and the
Special Servicer's, if applicable, duties and duties of the Servicers have been
conducted in compliance with the provisions of the applicable agreement, except
for (i) such exceptions as such firm believes to be immaterial and (ii) such
other exceptions as are set forth in such statement. Copies of the annual
officer's certificate and accountants' statement may be obtained without charge
upon written request to the Trustee.
Certain Matters Regarding the Master Servicer and Special Servicer
The Master Servicer and any Special Servicer for each Series will be
specified in the related Prospectus Supplement. The Master Servicer and any
Special Servicer may be an affiliate of the Issuer and may have other business
relationships with the Issuer and its affiliates.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer may not resign from its obligations and duties except with the consent
of the Trustee or upon a determination that its duties thereunder are no longer
permissible under applicable law. No such resignation will become effective
until the Trustee or a successor servicer has assumed the Master Servicer's
obligations and duties under such Master Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Master Servicing Agreement will also provide that neither the Master Servicer,
nor any director, officer, employee or agent of the Master Servicer, will be
under any liability to the Bondholders or Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
the Master Servicing Agreement, or for errors in judgment; provided, however,
that neither the Master Servicer nor any such person will be protected against
any liability which would otherwise be imposed by reason of failure to perform
its obligations in compliance with the standards of care set forth in the Master
Servicing Agreement. The Master Servicer may, in its discretion, undertake any
such action which it may deem necessary or desirable with respect to the rights
and duties of the parties to the Master Servicing Agreement and the interests of
the Bondholders, or Certificateholders thereunder. In such event, the Master
Servicer will be entitled to be reimbursed for legal expenses and costs of such
action out of the related Custodial Account.
ENHANCEMENT
General
For any Series, Enhancement may be provided with respect to one or more
Classes thereof or the related Mortgage Assets. Enhancement may be in the form
of a letter of credit, the subordination of one or more Classes of the
Securities of such Series, the establishment of one or more reserve funds,
overcollateralization, guarantee insurance, the use of cross-support features or
another method of Enhancement described in the related Prospectus Supplement, or
any combination of the foregoing. If so specified in the related Prospectus
Supplement, any form of Enhancement (including but not limited to insurance,
letters of credit or guarantee insurance) may be structured so as to be drawn
upon by more than one Series to the extent described therein.
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Unless otherwise specified in the related Prospectus Supplement for a
Series, the Enhancement will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal balance of the
Securities and interest thereon. If losses occur which exceed the amount covered
by Enhancement or which are not covered by the Enhancement, Bondholders or
Certificateholders, as applicable will bear their allocable share of
deficiencies. Moreover, if a form of Enhancement covers more than one Series of
Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such Enhancement will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage.
If Enhancement is provided with respect to a Series, or the related
Mortgage Assets, the related Prospectus Supplement will include a description of
(a) the amount payable under such Enhancement, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any) under
which the amount payable under such Enhancement may be reduced and under which
such Enhancement may be terminated or replaced and (d) the material provisions
of any agreement relating to such Enhancement. Additionally, the related
Prospectus Supplement will set forth certain information with respect to the
issuer of any third-party Enhancement, including (i) a brief description of its
principal business activities, (ii) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (iii) if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, and its stockholders' or policyholders' surplus, if applicable, as
of the date specified in the Prospectus Supplement.
Subordinate Securities
If so specified in the related Prospectus Supplement, one or more Classes
of a Series may be Subordinate Securities. If so specified in the related
Prospectus Supplement, the rights of the Holders of Subordinate Securities to
receive distributions of principal and interest from the Collection Account on
any Payment Date or Distribution Date will be subordinated to such rights of the
Holders of Senior Securities to the extent specified in the related Prospectus
Supplement. Unless otherwise provided in the Prospectus Supplement, the amount
of subordination will decrease whenever amounts otherwise payable to the Holder
of Subordinate Securities are paid to the Holders of Senior Securities
(including amounts withdrawn from any related Reserve Fund and paid to the
Holders of Senior Securities), and will (unless otherwise specified in the
related Prospectus Supplement) increase whenever there is distributed to the
Holders of Subordinate Securities amounts in respect of which subordination
payments have previously been paid to the Holders of Senior Securities. Unless
otherwise specified in the related Prospectus Supplement, the related Series
Supplement may require a trustee that is not the Trustee to be appointed to act
on behalf of Holders of Subordinate Securities.
A Series may include one or more Classes of Subordinate Securities
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right will effectively be
subordinate to the rights of other Holders of Senior Securities, but will be not
be limited to a specified dollar amount of subordination. If so specified in the
related Prospectus Supplement, the subordination of a Class may apply only in
the event of (or may be limited to) certain types of losses not covered by
Insurance Policies or other credit support, such as losses arising from damage
to property securing a Mortgage Loan not covered by standard hazard insurance
policies.
The related Prospectus Supplement will set forth information concerning
the amount of subordination of a Class or Classes of Subordinate Securities in a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
the manner of funding any related Reserve Fund and the conditions under which
amounts in any related Reserve Fund will be used to make distributions to
Holders of Senior Securities and/or to Holders of Subordinate Securities or be
released from the related Trust Estate or Trust Fund. If cash flows otherwise
distributable to holders of Subordinate Securities secured by a Mortgage Group
will be used as credit support for Senior Securities secured
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by another Mortgage Group within the Trust Estate or Trust Fund, the related
Prospectus Supplement will specify the manner and conditions for applying such a
cross-support feature.
Cross-Support Features
If the Mortgage Assets for a Series are divided into separate Mortgage
Groups, each securing a separate Class or Classes of a Series, credit support
may be provided by a cross-support feature which requires that distributions be
made on Senior Securities secured by one Mortgage Group prior to distributions
on Subordinate Securities secured by another Mortgage Group within the Trust
Estate or Trust Fund. The related Prospectus Supplement for a Series which
includes a cross-support feature will describe the manner and conditions for
applying such cross-support feature.
Insurance on the Mortgage Loans
Credit support with respect to a Series may be provided by insurance
policies that include standard hazard insurance and may, if specified in the
related Prospectus Supplement, include FHA Insurance. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
Letter of Credit
The letter of credit, if any, with respect to a Series of Securities will
be issued by the bank or financial institution specified in the related
Prospectus Supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank
will be obligated to honor drawings thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, equal to the percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of the Mortgage Loans on the related Cut-Off Date or of one or more
Classes of Securities (the "L/C Percentage"). If so specified in the related
Prospectus Supplement, the letter of credit may permit drawings in the event of
losses not covered by insurance policies or other credit support, such as losses
arising from damage not covered by standard hazard insurance policies. The
amount available under the letter of credit will, in all cases, be reduced to
the extent of the unreimbursed payments thereunder. The obligations of the L/C
Bank under the letter of credit for each Series of Securities will expire at the
earlier of the date specified in the related Prospectus Supplement or the
termination of the Trust Estate or Trust Fund, as applicable. A copy of the
letter of credit for a Series, if any, will be filed with the Commission as an
exhibit to a Current Report on Form 8-K to be filed within 15 days of issuance
of the Securities of the related Series.
Bond Guarantee Insurance
Bond guarantee insurance, if any, with respect to a Series of Bonds will
be provided by one or more insurance companies. Such bond guarantee insurance
will guarantee, with respect to one or more Classes of Bonds of the related
Series, timely distributions of interest and full distributions of principal on
the basis of a schedule of principal distributions set forth in or determined in
the manner specified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the bond guarantee insurance will also
guarantee against any payment made to a Bondholder which is subsequently
recovered as a "voidable preference" payment under the Bankruptcy Code. A copy
of the bond guarantee insurance for a Series, if any, will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed with the
Commission within 15 days of issuance of the Bonds of the related Series.
Reserve Funds
One or more Reserve Funds may be established with respect to a Series, in
which cash, a letter of credit, Eligible Investments, a demand note or a
combination thereof, in the amounts, if any, so specified in the related
Prospectus Supplement will be deposited. The Reserve Funds for a Series may also
be funded over time by
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depositing therein a specified amount of the distributions received on the
related Mortgage Assets as specified in the related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for a Series, together with the
reinvestment income thereon, if any, will be applied by the Trustee for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. A Reserve Fund may be provided to increase the likelihood of timely
payments or distributions of principal of and interest on the Securities, if
required as a condition to the rating of such Series by each Rating Agency, or
to reduce the likelihood of special redemptions with respect to any Series. If
so specified in the related Prospectus Supplement, Reserve Funds may be
established to provide limited protection, in an amount satisfactory to each
Rating Agency, against certain types of losses not covered by Insurance Policies
or other credit support, such as losses arising from damage not covered by
standard hazard insurance policies. Following each Payment Date or Distribution
Date amounts in such Reserve Fund in excess of any amount required to be
maintained therein may be released from the Reserve Fund under the conditions
and to the extent specified in the related Prospectus Supplement and will not be
available for further application by the Trustee.
Moneys deposited in any Reserve Funds will be invested in Eligible
Investments, except as otherwise specified in the related Prospectus Supplement.
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 the Master Servicer or a Servicer as additional servicing
compensation. See "SERVICING OF MORTGAGE LOANS". The Reserve Fund, if any, for a
Series will not be a part of the Trust Estate or Trust Fund, as applicable,
unless otherwise specified in the related Prospectus Supplement.
Additional information concerning any Reserve Fund will be set forth in
the related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make payments or distributions to Bondholders or Certificateholders and use of
investment earnings from the Reserve Fund, if any.
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS
The following descriptions of standard hazard insurance policies and FHA
insurance and the respective coverages thereunder are general descriptions only
and do not purport to be complete.
General
Each Mortgaged Property will be covered by a standard hazard insurance
policy, as described in the related Prospectus Supplement. The coverage under
standard hazard insurance policies will be subject to conditions and limitations
described in the Prospectus Supplement and under "Hazard Insurance on the
Mortgage Loans" below. Certain hazard risks will, therefore, not be insured and
the occurrence of such hazards could adversely affect payments or distributions
to Holders. Additionally, to the extent that losses on a defaulted or foreclosed
Mortgage Loan are not covered by other credit support for such Series, such
losses, if any, would affect payments or distributions to Holders.
Hazard Insurance on the Mortgage Loans
The standard hazard insurance policies will provide for coverage at least
equal to the applicable state standard form of fire insurance policy with
extended coverage. In general, the standard form of fire and extended coverage
policy will cover physical damage to or destruction of, the improvements on the
Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm, hail,
riot, strike and civil commotion, subject to the
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conditions and exclusions particularized in each policy. Because the standard
hazard insurance policies relating to the Mortgage Loans will be underwritten by
different insurers and will cover Mortgaged Properties located in various
states, such policies will not contain identical terms and conditions. The basic
terms, however, generally will be determined by state law and generally will be
similar. Most such policies typically will not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquake, landslides, and
mudflows), nuclear reaction, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in certain cases, vandalism. The foregoing list is
merely indicative of certain kinds of uninsured risks and is not intended to be
all-inclusive. Uninsured risks not covered by a special hazard insurance policy
or other form of credit support may adversely affect the ability of the Issuer
to make payments of principal or interest on the Bonds. When a Mortgaged
Property is located in a flood area identified in the Federal Register by the
Flood Emergency Management Agency, the Master Servicer or the Servicer will be
required to cause flood insurance to be maintained with respect to such
Mortgaged Property.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which will
require the insured at all times to carry hazard insurance of a specified
percentage (generally 80% to 90%) of the actual cash value of the improvements
on the Mortgaged Property in order to recover the full amount of any partial
loss. If the insured's coverage falls below this specified percentage, such
clause will provide that the hazard insurer's liability in the event of partial
loss will not exceed the greater of (i) the actual cash value (the replacement
cost less physical depreciation) of the improvements damaged or destroyed or
(ii) such proportion of the loss as the amount of insurance carried bears to the
specified percentage of the actual cash value of such improvements.
In the event of partial loss, hazard insurance proceeds may be
insufficient to restore fully the damaged property. Under the terms of the
Mortgage Loans, Mortgagors are required to present claims to insurers under
hazard insurance policies maintained on the Mortgaged Properties. The Primary
Servicer, on behalf of the Trustee, Bondholders, and Certificateholders, is
obligated to present or cause to be presented claims under any blanket insurance
policy insuring against hazard losses on Mortgaged Properties; however, the
ability of the Primary Servicer to present or cause to be presented such claims
is dependent upon the extent to which information in this regard is furnished to
the Primary Servicer by Mortgagors.
FHA Insurance
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the Housing Act, as amended, and
the United States Housing Act of 1937, as amended. To the extent specified in
the related Prospectus Supplement, all or a portion of the Mortgage Loans may be
insured by the FHA. The Primary Servicer will be required to take such steps as
are reasonably necessary to keep such insurance in full force and effect.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because such legal aspects are
governed by applicable state law (which laws may differ substantially), the
summaries do not purport to be complete nor to reflect the laws of any
particular state, nor to encompass the laws of all states in which the Mortgaged
Properties are situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the Mortgage Loans.
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Mortgages
Each Mortgage Loan will be secured by a mortgage, a 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. The filing of a mortgage,
deed of trust or deed to secure debt creates a lien upon, or grants a title
interest in, the real property covered by such instrument and represents the
security for the repayment of an obligation that is customarily evidenced by a
promissory note. The lien of the mortgage is generally subordinate to the lien
for real estate taxes and assessments or other charges imposed under
governmental police powers. The priority of the lien with respect to such
mortgage depends on its terms, the knowledge of the parties to the mortgage and
generally on the order of recording the mortgage with the applicable public
recording office.
There are two parties to a mortgage: the mortgagor, who is the owner of
the property and usually the borrower, and the mortgagee, who is the lender. In
the case where the borrower is a land trust, there are three parties because
title to the property is held by a land trustee under a land trust agreement of
which the borrower is the beneficiary at origination of a mortgage loan
involving a land trust, the borrower executes a separate undertaking to make
payments on the mortgage note. A deed of trust has three parties: the owner of
the property and usually the borrower, called the trustor (similar to a
mortgagor), a lender, called the beneficiary (similar to the mortgagee), and a
third-party grantee, called the trustee. Under a deed of trust, the borrower
grants the property, irrevocably until the debt is paid, in trust, generally
with a power of sale, to the trustee to secure payment of the mortgage loan. The
trustee's authority under a deed of trust and the mortgagee's authority under a
mortgage are governed by the express provisions of the deed of trust or
mortgage, the law of the state in which the related Mortgaged Property is
located and, in some cases, in deed of trust transactions, the directions of the
beneficiary. Some states use a security deed or deed to secure debt which is
similar to a deed of trust except it has only two parties: a grantor (similar to
a mortgagor) and a grantee (similar to a mortgagee).
Interest in Real Property
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property such
as a tenant's interest in a lease of land or improvements, or both, and the
leasehold estate created by such lease. An instrument covering an interest in
real property other than the fee estate requires special provisions in the
instrument creating such interest or in the mortgage, deed of trust, security
deed or deed to secure debt, to protect the mortgagee against termination of
such interest before the mortgage, deed of trust, security deed or deed to
secure debt is paid. Unless otherwise specified in the Prospectus Supplement,
the Depositor or the Asset Seller will make certain representations and
warranties in the Agreement with respect to the Mortgage Loans which are secured
by an interest in a leasehold estate. Such representation and warranties will be
set forth in the Prospectus Supplement if applicable.
Junior Mortgages; Rights of Senior Mortgages or Beneficiaries
If specified in the applicable Prospectus Supplement, some of the Mortgage
Loans included in the Mortgage Pool will be secured by junior mortgages or deeds
of trust which are subordinate to senior mortgages or deeds of trust held by
other lenders or institutional investors. The rights of the Trust Fund (and
therefore the Certificateholders), as beneficiary under a junior deed of trust
or as mortgagee under a junior mortgage, are subordinate to those of the
mortgagee or beneficiary under the senior mortgage or deed of trust, including
the prior rights of the senior mortgagee or beneficiary to receive rents, hazard
insurance and condemnation proceeds and to cause the property securing the
Mortgage Loan to be sold upon default of the mortgagor or trustor, thereby
extinguishing the junior mortgagee's or junior beneficiary's lien unless the
Special Servicer asserts its subordinate interest in a property in foreclosure
litigation or satisfies the defaulted senior loan. Accordingly, the Trust Fund
(and therefore the Certificateholders), as the holder of the junior lien, bear
(i) the risk of delay in distributions while a deficiency judgement against the
borrower is obtained and (ii) the risk of loss if the deficiency judgement
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is not realized upon. Moreover, deficiency judgements may not be available in
certain jurisdictions or the Mortgage Loan may be nonrecourse. As discussed more
fully below, in many states a junior mortgagee or beneficiary may satisfy a
defaulted senior loan in full, or may cure such default and bring the senior
loan current, in either event adding the amounts expended to the balance due on
the junior loan. Absent a provision in the senior mortgage, no notice of default
is required to be given to the junior mortgagee.
The form of the mortgage or deed of trust used by many institutional
lenders confers on the mortgagee or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply such proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the mortgage or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the mortgagee or
beneficiary under the senior mortgage or deed of trust will have the prior right
to collect any insurance proceeds payable under a hazard insurance policy and
any award of damages in connection with the condemnation and to apply the same
to the indebtedness secured by the senior mortgage or deed of trust. Proceeds in
excess of the amount of senior mortgage indebtedness will, in most cases, by
applied to the indebtedness of a junior mortgage or trust deed. The laws of
certain states may limit the ability of mortgagees or beneficiaries to apply the
proceeds of hazard insurance and partial condemnation awards to the secured
indebtedness. In such states, the mortgagor or trustor must be allowed to use
the proceeds of hazard insurance to repair the damage unless the security of the
mortgagee or beneficiary has been impaired. Similarly, in certain states, the
mortgagee or beneficiary is entitled to the award for a partial condemnation of
the real property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
While such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
"future advance" clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a "credit limit"
amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed of
trust used by many institutional lenders obligates the mortgagor or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee or beneficiary under the
mortgage or deed of trust. Upon a failure of the mortgagor or trustor to perform
any of these obligations, the mortgagee or beneficiary is given the right under
the mortgage or deed of trust to perform the obligation itself, at its election,
with the mortgagor or trustor agreeing to reimburse the mortgagee or beneficiary
for any sums expended by the mortgagee or beneficiary on behalf of the trustor.
All sums so expended by the mortgagee or beneficiary become part of the
indebtedness secured by the mortgage or deed of trust.
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The form of mortgage or deed of trust used by many institutional lenders
typically requires the mortgagor or trustor to obtain the consent of the
mortgagee or beneficiary in respect of actions affecting the mortgaged property,
including, without limitation, leasing activities (including new leases and
termination or modification of existing leases), alterations and improvements to
buildings forming a part of the mortgaged property and management and leasing
agreements for the mortgaged property. Tenants will often refuse to execute a
lease unless the mortgagee or beneficiary executes a written agreement with the
tenant not to disturb the tenant's possession of its premises in the event of a
foreclosure. A senior mortgagee or beneficiary may refuse to consent to matters
approved by a junior mortgagee or beneficiary with the result that the value of
the security for the junior mortgage or deed of trust is diminished. For
example, a senior mortgagee or beneficiary may decide not to approve a lease or
to refuse to grant a tenant a non-disturbance agreement. If, as a result, the
lease is not executed, the value of the mortgaged property may be diminished.
Foreclosure of Mortgage
In states permitting nonjudicial foreclosure proceedings, foreclosure of a
deed of trust or deed to secure debt is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust which authorizes
the trustee to sell the property upon any default by the borrower under the
terms of the note or deed of trust or deed to secure debt. In some states, prior
to such sale, the trustee must record a notice of default and send a copy to the
borrower-trustor and to any person who has recorded a request for a copy of a
notice of default and notice of sale. In addition, the trustee in some states
must provide notice of any other individual having an interest in the real
property, including any junior lienholders. In some states there is a
reinstatement period. The trustor, borrower, or any person having a junior
encumbrance on the real estate may, during a reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation. In other states, after acceleration of the
debt, the borrower is not provided with 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 controls the amount of foreclosure expenses and costs,
including attorneys' fees, which may be recovered by a lender. If the deed of
trust is not reinstated, 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. In addition, some state laws require that a copy of the notice of
sale be posted on the property, recorded and sent to all parties having an
interest in the real property. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
An action to foreclose a mortgage is an action to recover the mortgage
debt by enforcing the mortgagee's rights under the mortgage. It is regulated by
statutes and rules and subject throughout to the court's equitable powers.
Generally, a borrower is bound by the terms of the mortgage note and the
mortgage and cannot be relieved from his default if the mortgagee has exercised
his rights in a commercially reasonable manner. However, since a foreclosure
action historically was equitable in nature, the court may exercise equitable
powers to relieve a mortgagor of a default and deny the mortgagee foreclosure on
proof that either the mortgagor's default was neither willful nor in bad faith
or the mortgagee's action established a waiver, fraud, bad faith, or oppressive
or unconscionable conduct such as to warrant a court of equity refusing
affirmative relief to the mortgagee. Under certain circumstances, a court of
equity may relieve the borrower from an entirely technical default where such
default was not willful.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses or counterclaims are interposed, sometimes requiring
up to several years to complete. Moreover, a non-collusive, regularly conducted
foreclosure sale may be challenged as a fraudulent conveyance, regardless of the
parties' intent, if a court determines that the sale was for less than fair
consideration and such sale occurred while the mortgagor was insolvent and
within the state statute of limitations (which is tolled by the filing of a
bankruptcy case). Similarly, in some states, a suit against the debtor on the
mortgage note may take several years and, generally, is a remedy alternative to
foreclosure, the mortgagee being precluded from pursuing both at the same time.
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In case of foreclosure under either a mortgage or a deed of trust, the
sale by the referee or other designated officer or by the trustee is a public
sale. However, because of the difficulty potential third-party purchasers at the
sale have in determining the exact status of title and because the physical
condition of the property may have deteriorated during the foreclosure
proceedings, it is uncommon for a third party to purchase the property at a
foreclosure sale. Rather, it is common for the lender to purchase the property
from the trustee or referee for an amount which may be equal to the principal
amount of the mortgage or deed of trust plus accrued and unpaid interest and the
expenses of foreclosure, in which event the borrower's debt will be extinguished
or the lender may purchase for a lesser amount in order to preserve its right
against a borrower to seek a deficiency judgment in states where such a judgment
is available. Thereafter, and subject in some states to the right of the
borrower to stay in possession during a redemption period, the lender will
assume the burdens of ownership, including obtaining casualty insurance, paying
taxes and making such repairs at its own expense as are necessary to render the
property suitable for sale. The lender will commonly obtain the services of a
real estate broker and pay the broker's commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, a lender typically incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure. Furthermore,
certain states require that any environmental hazards be eliminated before a
property may be resold. In addition, a lender may be responsible under federal
or state law for the cost of cleaning up a mortgaged property that is
environmentally contaminated. As a result, a lender could realize an overall
loss on a mortgage loan even if the related mortgaged property is sold at
foreclosure or resold after it is acquired through foreclosure for an amount
equal to the full outstanding principal amount of the mortgage loan, plus
accrued interest. Any loss may be reduced by the receipt of any mortgage
guaranty insurance proceeds.
The holder of a junior mortgage that forecloses on any 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.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders, the Master Servicer or any related Sub-servicer or the
Special Servicer, on behalf of such holders, will be required to sell the
Mortgaged Property prior to the close of the third calendar year following the
year of acquisition of such Mortgaged Property by the Trust Fund, unless (i) the
Internal Revenue Service grants an extension of time to sell such property (an
"REO Extension") or (ii) it obtains an opinion of counsel generally to the
effect that the holding of the property for more than two years after its
acquisition will not result in the imposition of a tax on the Trust Fund or
cause any REMIC created pursuant to the Pooling and Servicing Agreement to fail
to qualify as a REMIC under the Code. Subject to the foregoing, the Master
Servicer or any related Sub-servicer or the Special Servicer will generally be
required to solicit bids for any Mortgaged Property so acquired in such a manner
as will be reasonably likely to realize a fair price for such property. The
Master Servicer or any related Sub-servicer or the Special Servicer may retain
an independent contractor to operate and manage any REO Property; however, the
retention of an independent contractor will not relieve the Master Servicer or
any related Sub-servicer or the Special Servicer of its obligations with respect
to such REO Property.
In general, the Master Servicer or any related Sub-servicer or the Special
Servicer or an independent contractor employed by the Master Servicer or any
related Sub-servicer or the Special Servicer at the expense of the Trust Fund
will be obligated to operate and manage any Mortgaged Property acquired as REO
Property in a manner that (i) would cause such property to be treated as
"foreclosure property" by any REMIC in which such REO Property is held and (ii)
would, to the extent commercially reasonable and consistent with clause (i),
maximize the Trust Fund's net after-tax proceeds from such property. After the
Master Servicer or any related Sub-servicer or the Special Servicer reviews the
operation of such property and consults with the Trustee to determine the Trust
Fund's federal income tax reporting position with respect to the income it is
anticipated that the Trust Fund would derive from such property, the Master
Servicer or any related Sub-servicer or the Special
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Servicer could determine (particularly in the case of an REO Property that is a
hospitality property or residential health care facility) that it would not be
commercially feasible to manage and operate such property in a manner that would
avoid the imposition of a tax on "net income from foreclosure property," within
the meaning of Section 857(b)(4)(B) of the Code (an "REO Tax") at the highest
marginal corporate tax rate (currently 35%). 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. Any REO Tax imposed on the Trust Fund's income from an REO
Property would reduce the amount available for distribution to
Certificateholders. Certificateholders are advised to consult their tax advisors
regarding the possible imposition of REO Taxes in connection with the operation
of commercial REO Properties by REMICs.
Leasehold Risks
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these risks
is that the ground lease creating the leasehold estate could terminate, leaving
the leasehold mortgagee without its security. The ground lease may terminate if,
among other reasons, the ground lessee breaches or defaults in is obligations
under the ground lease or there is a bankruptcy of the ground lessee or the
ground lessor. This risk may be minimized if the ground lease contains certain
provisions protective of the mortgagee, but the ground leases that secure
Mortgage Loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include the right of the leasehold mortgagee
to receive notices from the ground lessor of any defaults by the mortgagor; the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the leasehold mortgagee, the right to acquire the
leasehold estate through foreclosure or otherwise; the ability of the ground
lease to be assigned to and by the leasehold mortgagee or purchaser at a
foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into a
new ground lease with the ground lessor on the same terms and conditions as the
old ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may
require that the ground lease or leasehold mortgage prohibit the ground lessee
from treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (Title
11 of the United States Code), although the enforceability of such clause has
not been established. Without the protections described above, a leasehold
mortgagee may lose the collateral securing its leasehold mortgage. In addition,
terms and conditions of a leasehold mortgage are subject to the terms and
conditions of the ground lease. Although certain rights given to a ground lessee
can be limited by the terms of a leasehold mortgage, the rights of a ground
lessee or a leasehold mortgagee with respect to, among other things, insurance,
casualty and condemnation will be governed by the provisions of the ground
lease.
Rights of Redemption
In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the trustor or borrower and foreclosed junior lienors are given a
statutory period in which to redeem the property from the foreclosure sale. The
right of redemption should be distinguished from the equity of redemption, which
is a nonstatutory right that must be exercised prior to the foreclosure sale. In
some states, redemption may occur only upon payment of the foreclosure sales
price and expenses of foreclosure. In other states, redemption may be authorized
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. The right of redemption would defeat the title of any
purchaser from the lender subsequent to foreclosure or sale under a deed of
trust. Consequently, the practical effect of a right of redemption is to force
the lender to retain the property and pay expenses of ownership until
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the redemption period has run. In some states, there is no right to redeem
property after a trustee's sale under a deed of trust.
Under the REMIC Provisions currently in effect, property acquired by
foreclosure generally must not be held beyond the end of the third taxable year
following the year of acquisition. Unless otherwise provided in the related
Prospectus Supplement, with respect to a series of Certificates for which an
election is made to qualify the Trust Fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held for more than two years if
the Internal Revenue Service grants an extension of time within which to sell
such property or independent counsel renders an opinion to the effect that
holding such property for such additional period is permissible under the REMIC
Provisions.
Environmental Matters
Real property pledged as security to a lender may be subject to
environmental risks. For example, certain environmental liabilities may (1)
cause a diminution in the value of the Mortgaged Property; (2) limit the
lender's foreclosure rights; and (3) subject the lender to liability for
clean-up costs or other remedial actions. Under the laws of many states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an existing mortgage against such property.
The presence of hazardous or toxic substances, or the failure to remediate
such property properly, may adversely affect the market value of the property,
as well as the owner's ability to sell or use the real estate or to borrow using
the real estate as collateral. In addition, certain environmental laws and
common law principles govern the responsibility for the removal, encapsulation
or disturbance of asbestos containing materials ("ACMs") when these ACMs are in
poor condition or when a property with ACMs is undergoing repair, renovation or
demolition. Such laws could also be used to impose liability upon owners and
operators of real properties for release of ACMs into the air that cause
personal injury or other damage. In addition to cleanup and natural resource
damages actions brought by federal, state, and local agencies and private
parties, the presence of hazardous substances on a property may lead to claims
of personal injury, property damage, or other claims by private plaintiffs.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), and under the laws of certain
states, a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a Mortgaged Property may
become liable in some circumstances either to the government or to private
parties for cleanup costs, even if the lender does not cause or contribute to
the contamination. Liability under some federal or state statutes may not be
limited to the original or unamortized principal balance of a loan or to the
value of the property securing a loan. CERCLA imposes strict, as well as joint
and several, liability on several classes of potentially responsible parties,
including current owners and operators of the property, regardless of whether
they caused or contributed to the contamination. Many states have laws similar
to CERCLA.
Lenders may be held liable under CERCLA as owners or operators. 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 exemption for holders
of a security interest such as a secured lender applies only in circumstances
where the lender acts to protect its security interest in the contaminated
facility or property. Thus, if a lender's activities encroach on the actual
management of such facility or property, the lender faces potential liability as
an "owner or operator" under CERCLA. Similarly, when a lender forecloses and
takes title to a contaminated facility or property (whether it holds the
facility or property as an investment or leases it to a third party), the lender
may incur potential CERCLA liability.
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Whether actions taken by a lender would constitute such an encroachment on
the actual management of a facility or property, so as to render the secured
creditor exemption unavailable to the lender has been a matter of judicial
interpretation of the statutory language, and court decisions have historically
been inconsistent.
This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996 (the
"Asset Conservation Act"), signed into law by President Clinton on September 30,
1996, which lists permissible actions that may be undertaken by a lender holding
security in a contaminated facility without exceeding the bounds of the secured
creditor exemption, subject to certain conditions and limitations. The Asset
Conservation Act provides that in order to be deemed to have participated in the
management of a secured property, a lender must actually participate in the
operational affairs of the property or the borrower. The Asset Conservation 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. In addition to
its application to CERCLA, the Asset Conservation Act applies to determining a
lender's liability as an owner or operator of a petroleum or hazardous substance
underground storage tank ("UST") under the federal Resource Conservation and
Recovery Act ("RCRA").
The secured creditor exemption does not protect a lender from liability
under CERCLA in cases, among others, where the lender arranges for disposal of
hazardous substances or for transportation of hazardous substances. In addition,
the secured creditor exemption does not govern liability for cleanup costs under
federal laws other than CERCLA or the petroleum and hazardous substance UST
provisions of RCRA. For example, under other provisions of RCRA, a past or
present owner or operator of a facility may be ordered to conduct environmental
property remediation in a proceeding brought by the government or by private
citizens. In addition, many states have statutes similar to CERCLA, and not all
those statutes provide for a secured creditor exemption.
In a few states, transfer of some types of properties is conditioned upon
clean up 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 cleanup 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 uninsurable liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the Trust Fund and occasion a
loss to Certificateholders in certain circumstances described above if such
remedial costs were incurred.
Except as otherwise specified in the applicable Prospectus Supplement, at
the time the Mortgage Loans were originated, it is possible that no
environmental assessment or a very limited environmental assessment of the
Mortgaged Properties was conducted.
Unless otherwise specified in the related Prospectus Supplement, the
Servicing Agreement, Master Servicing Agreement or Special Servicing Agreement,
as applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate or Trust Fund, as
applicable, may not acquire title to a Mortgaged Property underlying a Mortgage
Loan or take over its operation unless the Servicer, the Master Servicer or the
Special Servicer, as applicable, has previously determined, based upon a
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report prepared by a person who regularly conducts environmental audits, that
(i) the Mortgaged Property is in compliance with applicable environmental laws
and regulations or, if not, that taking such actions as are necessary to bring
the Mortgaged Property in compliance therewith is reasonably likely to produce a
greater recovery on a present value basis than not taking such actions and (ii)
there are no circumstances or conditions present that have resulted in any
contamination or if such circumstances or conditions are present for which any
action could be required, taking such actions with respect to the affected
Mortgaged Property is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions.
Certain Laws and Regulations
The Mortgaged Properties are 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 limited alternative
uses for such Mortgaged Property, result in a failure to realize the full
principal amount of the Mortgage Loans.
For instance, Mortgaged Properties which are hospitals, nursing homes or
convalescent homes may present special risks in large part due to significant
governmental regulation of the operation, maintenance, control and financing of
health care institutions. Mortgaged Properties which are hotels or motels may
present additional risk in that: (i) hotels and motels are typically operated
pursuant to franchise, management and operating agreements which may be
terminable by the operator, and (ii) the transferability of the hotel's
operating, liquor and other licenses to the entity acquiring the hotel either
through purchase or foreclosure is subject to the vagaries of local law
requirements.
Leases and Rents
Multifamily and commercial mortgage loan transactions often provide for an
assignment of the leases and rents pursuant to which the borrower typically
assigns its right, title and interest, as landlord under each lease and the
income derived therefrom, to the lender while either obtaining a license to
collect rents for so long as there is no default or providing for the direct
payment to the lender. The manner of perfecting the mortgagee's interest in
rents may depend on whether the mortgagor's assignment was absolute or one
granted as security for the loan. Failure to properly perfect the mortgagee's
interest in rents may result in the loss of substantial pool of funds, which
could otherwise serve as a source of repayment for such loan. If the mortgagor
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 revenues are considered accounts
receivable under the UCC; generally these revenues are either assigned by the
mortgagor, which remains entitled to collect such revenues absent a default, or
pledged by the mortgagor, as security for the loan. In general, the lender must
file financing statements in order to perfect its security interest in the
revenues and must file continuation statements, generally every five years, to
maintain perfection of such security interest. Even if the lender's security
interest in room revenues is perfected under the UCC, the lender will generally
be required to commence a foreclosure or otherwise take possession of the
property in order to collect the room revenues after a default.
Personalty
Certain types of Mortgaged Properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value from
personal property which does not constitute "fixtures" under applicable state
real property law and, hence, would not be subject to the lien of a mortgage.
Such property is generally pledged or assigned as security to the lender under
the UCC. In order to perfect its security interest therein, the lender generally
must file UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
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Anti-Deficiency Legislation and Other Limitations on Lenders
Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, statutes limit the right of the beneficiary or mortgagee to 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 in most cases to the difference between the amount due to the
lender and the net amount realized upon the foreclosure sale. Other statutes may
require the beneficiary or mortgagee to exhaust the security afforded under a
deed of trust or mortgage by foreclosure in an attempt to satisfy the full debt
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 these
states, the lender, following judgment on such personal action, may be deemed to
have elected a remedy and may be precluded from exercising remedies with respect
to the security. Consequently, the practical effect of the election requirement,
when applicable, is that lenders will usually proceed first against the security
rather than bringing personal action against the borrower. Finally, other
statutory provisions may limit any deficiency judgment against the former
borrower following a foreclosure sale to the excess of the outstanding debt over
the fair market value of the property at the time of such sale. The purpose of
these statutes is to prevent a beneficiary or a mortgagee from obtaining a large
deficiency judgment against the former borrower as a result of low or no bids at
the judicial sale. In some states, exceptions to the anti-deficiency statutes
are provided for in certain instances where the value of the lender's security
has been impaired by acts or omissions of the borrower, for example, in the
event of waste of the property.
In addition, substantive requirements are imposed upon lenders in
connection with the origination and the servicing of mortgage loans by numerous
federal and some state consumer protection laws. The laws include the federal
Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and related
statutes and regulations. These federal laws impose specific statutory
liabilities upon lenders who originate loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
loans.
Federal Bankruptcy and Other Laws Affecting Creditors' Rights
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws (the
"Bankruptcy Code") and state laws affording relief to debtors, may interfere
with or affect the ability of the secured lender to realize upon collateral
and/or enforce a deficiency judgment. For example, with respect to federal
bankruptcy law, the filing of a bankruptcy petition acts as a stay of the
enforcement of remedies (including the right of foreclosure) for collection of a
debt. Also, the filing of a petition in bankruptcy by or on behalf of a junior
lienor may stay a senior lender from taking action to foreclose the junior lien.
In a Chapter 11 case under the Bankruptcy Code, the lender's lien may be
transferred to other collateral and/or be limited in amount to the value of the
lender's interest in the collateral as of the date of the bankruptcy. The loan
term may be extended, the interest rate may be adjusted to market rates and the
priority of the loan may be subordinated to bankruptcy court-approved financing.
The bankruptcy court can also reinstate accelerated indebtedness and, in effect,
invalidate due-on-sale clauses through confirmed Chapter 11 plans of
reorganization. Under Section 363(b) and (f) of the Bankruptcy Code, a trustee
for a debtor, or a debtor as debtor-in-possession, may, despite the provisions
of the related Mortgage Loan to the contrary, sell its Mortgaged Property free
and clear of all liens, which liens would then attach to the proceeds of such
sale.
The Bankruptcy Code has recently been amended to provide that a lender's
perfected pre-petition security interest in leases, rents and hotel revenues
continues in the post-petition leases, rents and hotel revenues, unless a
bankruptcy court orders to the contrary "based on the equities of the case."
Thus, unless a court orders otherwise, revenues from a Mortgaged Property
generated after the date the bankruptcy petition is filed will
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constitute "cash collateral" under the Bankruptcy Code. Debtors may only use
cash collateral upon obtaining the lender's consent or a prior court order
finding that the lender's interest in the Mortgaged Properties and the cash
collateral is "adequately protected" as such term has been interpreted under the
Bankruptcy Code. It should be noted, however, that, in the case of hospitality
properties, the court may find that the lender has no security interest in
either pre-petition or post-petition revenues if the court finds that the loan
documents do not contain language covering accounts, room rents, or other forms
of personalty necessary for a security interest to attach to hotel revenues.
Lessee bankruptcies at the Mortgaged Properties could have an adverse
impact on the Mortgagors' ability to meet their obligations. For example,
Section 365(e) of the Bankruptcy Code provides generally that rights and
obligations under an unexpired lease may not be terminated or modified at any
time after the commencement of a case under the Bankruptcy Code solely because
of a provision in the lease conditioned upon the commencement of a case under
the Bankruptcy Code or certain other similar events. In addition, Section 362 of
the Bankruptcy Code operates as an automatic stay of, among other things, any
act to obtain possession of property of or from a debtor's estate, which may
delay the Trustee's exercise of remedies in the event that a lessee becomes the
subject of a proceeding under the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code generally provides that a trustee or
a debtor-in-possession in a case under the Bankruptcy Code has the power to
assume or to reject an executory contract or an unexpired lease of the debtor,
in each case subject to the approval of the bankruptcy court administering such
case. If the trustee or debtor-in-possession rejects an executory contract or an
unexpired lease, such rejection generally constitutes a breach of the executory
contract or unexpired lease immediately before the date of the filing of the
bankruptcy petition. As a consequence, the other party or parties to such
executory contract or unexpired lease, such as the Mortgagor as lessor under a
lease, would have only an unsecured claim against the debtor for damages
resulting from such breach, which could adversely affect the security for the
related Mortgage Loan. Moreover, under Section 502(b)(6) of the Bankruptcy Code,
the claim of a lessor for such damages from the termination of a lease of real
property will be limited to the sum of (i) the rent reserved by such lease,
without acceleration, for the greater of one year or 15 percent, not to exceed
three years, of the remaining term of such lease, following the earlier of the
date of the filing of the petition and the date on which such lender
repossessed, or the lessee surrendered, the leased property, and (ii) any unpaid
rent due under such lease, without acceleration, on the earlier of such dates.
Under Section 365(f) of the Bankruptcy Code, if a trustee or
debtor-in-possession assumes an executory contract or an unexpired lease of the
debtor, the trustee or debtor-in-possession generally may assign such executory
contract or unexpired lease, notwithstanding any provision therein or in
applicable law that prohibits, restricts or conditions such assignment, provided
that "adequate assurance of future performance" by the assignee is provided to
the lessor or contract party. The Bankruptcy Code specifically provides,
however, that adequate assurance of future performance for purposes of a lease
of real property in a shopping center includes adequate assurance of the source
of rent and other consideration due under such lease, and in the case of an
assignment, that the financial condition and operating performance of the
proposed assignee and its guarantors, if any, shall be similar to the financial
condition and operating performance of the debtor and its guarantors, if any, as
of the time the debtor became the lessee under the lease, that any percentage
rent due under such lease will not decline substantially, that the assumption
and assignment of the lease is subject to all the provisions thereof, including
(but not limited to) provisions such as a radius location, use or exclusivity
provision, and that the assignment will not breach any such provision contained
in any other lease, financing agreement, or master agreement relating to such
shopping center, and that the assumption or assignment of such lease will not
disrupt the tenant mix or balance in such shopping center. Thus, an undetermined
third party may assume the obligations of the lessee under a lease in the event
of commencement of a proceeding under the Bankruptcy Code with respect to the
lessee.
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Under Section 365(h) of the Bankruptcy Code, if a trustee for a debtor, or
a debtor as a debtor-in-possession, rejects an unexpired lease of real property
as to which it is the lessor, the lessee may treat such lease as terminated by
such rejection or, in the alternative, may remain in possession of the leasehold
for the balance of such term and for any renewal or extension of such term that
is enforceable by the lessee under applicable nonbankruptcy law. The Bankruptcy
Code provides that if a lessee elects to remain in possession after such a
rejection of a lease, the lessee may offset against rents reserved under the
lease for the balance of the term after the date of rejection of the lease, and
any such renewal or extension thereof, any damages occurring after such date
caused by the nonperformance of any obligation of the lessor under the lease
after such date.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by a mortgagor under
the related Mortgage Loan to the Trust Fund. Such payments may be protected from
recovery as preferences if they are payments in the ordinary course of business
made according to ordinary business terms on debts incurred in the ordinary
course of business. Whether any particular payment would be protected depends
upon the facts specific to the particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling mortgaged property ahead of payment
to the lender. In certain circumstances, a debtor in bankruptcy may have the
power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with the
ability to halt a foreclosure proceeding or sale and to force a restructuring of
a mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage and the claim of the mortgagee may be subordinated to the claims of
unsecured creditors.
Due On-Sale Clauses in Mortgage Loans
A note, mortgage or deed of trust relating to the Mortgage Loans generally
contains a "due-on-sale" clause permitting acceleration of the maturity of a
loan if the borrower transfers its interest in the property. In recent years,
court decisions and legislative actions placed substantial restrictions on the
right of lenders to enforce such clauses in many states. By virtue, however, of
the Garn St. Germain Depository Institutions Act of 1982 (the "Garn Act")
effective October 15, 1982 (which purports to preempt state laws which prohibit
the enforcement of due-on-sale clauses by providing among other matters, that
"due-on-sale" clauses in certain loans made after the effective date of the Garn
Act are enforceable, within certain limitations as set forth in the Garn Act and
the regulations promulgated thereunder) the Servicer or the Master Servicer may
nevertheless be able to accelerate many of the Mortgage Loans that contain a
"due-on-sale" provision upon transfer of an interest in the property subject to
the Mortgage Loans, regardless of the Servicer's or the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
Enforceability of Prepayment and Late Payment Fees
Forms of notes, mortgages and deeds of trust used by lenders may contain
provisions obligating the borrower to pay a late charge if payments are not
timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. 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. The enforceability, under the laws of a number of states of
provisions providing for prepayment fees or penalties upon an involuntary
prepayment is unclear, and no assurance can be given that, at the time a
prepayment fee or penalty is required to be made on a Mortgage Loan in
connection with an involuntary prepayment, the obligation to make such payment
will be enforceable under applicable state law. Late charges and prepayment fees
are typically retained by servicers as additional servicing compensation. The
absence of a
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restraint on prepayment, particularly with respect to Mortgage Loans having
higher mortgage rates, may increase the likelihood of refinancing or other early
retirements of the Mortgage Loans.
Equitable Limitations on Remedies
In connection with lenders' attempts to realize upon their security,
courts have invoked general equitable principles. The equitable principles are
generally designed to relieve the borrower from the legal effect of his defaults
under the loan documents. Examples of judicial remedies that have been fashioned
include judicial requirements that the lender undertake affirmative and
expensive actions to determine the causes for 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 judgment and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disability. In
other cases, courts have limited the right of a lender to realize upon his
security if the default under the security agreement is not monetary, such as
the borrower's failure to adequately maintain the property or the borrower's
execution of secondary financing affecting the property. Finally, some courts
have been faced with the issue of whether or not federal or state constitutional
provisions reflecting due process concerns for adequate notice require that
borrowers under security agreements receive notices in addition to the
statutorily prescribed minimums. For the most part, these cases have upheld the
notice provisions as being reasonable or have found that, in cases involving the
sale by a trustee under a deed of trust or by a mortgagee under a mortgage
having a power of sale, there is insufficient state action to afford
constitutional protections to the borrower.
The Mortgage Loans may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary default of the borrower, after
the applicable cure period. The courts of all states will enforce clauses
providing for acceleration in the event of a material payment default. However,
courts of any state, exercising equity jurisdiction, may refuse to allow a
lender to foreclose a mortgage or deed of trust when an acceleration of the
indebtedness would be inequitable or unjust and the circumstances would render
the acceleration unconscionable.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. Similar federal statutes
were in effect with respect to mortgage loans made during the first three months
of 1980. The OTS, as successor to the Federal Home Loan Bank Board, is
authorized to issue rules and regulations and to publish interpretations
governing implementation of Title V. Title V authorizes any state to reimpose
interest rate limits by adopting, before April 1, 1983, a state law, or by
certifying that the voters of such state have voted in favor of any provision,
constitutional or otherwise, which expressly rejects an application of the
federal law. Fifteen states adopted such a law prior to the April 1, 1983
deadline. 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.
In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges is adopted, no Mortgage
Loan originated after the date of such state action will be eligible as Mortgage
Assets 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 shall 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 Mortgagor's counsel has rendered an opinion that
such choice of law provision would be given effect. No Mortgage Loan originated
prior to January 1, 1980 will bear interest or provide for discount points or
charges in excess of permitted levels.
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Alternative Mortgage Instruments
Alternative mortgage instruments, including ARMs originated by
non-federally chartered lenders, have historically been subject to a variety of
restrictions. Such restrictions differed from state to state, resulting in
difficulties in determining whether a particular alternative mortgage instrument
originated by a state-chartered lender complied with applicable law. These
difficulties were alleviated substantially as a result of the enactment of Title
VIII of the Garn St. Germain Act ("Title VIII"). Title VIII provides that,
notwithstanding any state law to the contrary, state-chartered banks may
originate "alternative mortgage instruments" (including ARMs) in accordance with
regulations promulgated by the Comptroller of the Currency with respect to
origination of alternative mortgage instruments by national banks; state
chartered credit unions may originate alternative mortgage instruments in
accordance with regulations promulgated by the National Credit Union
Administration with respect to origination of alternative mortgage instruments
by federal credit unions and all other non-federally chartered housing
creditors, including state-chartered savings and loan associations; and
state-chartered savings banks and mortgage banking companies may originate
alternative mortgage instruments in accordance with the regulations promulgated
by the Federal Home Loan Bank Board, as succeeded by the OTS, with respect to
origination of alternative mortgage instruments by federal savings and loan
associations. Title VIII provides that any state may reject applicability of the
provisions of Title VIII by adopting, prior to October 15, 1985, a law or
constitutional provision expressly rejecting the applicability of such
provisions. Certain states have taken such action.
Secondary Financing; Due-On-Encumbrance Provisions
Certain of the Mortgage Loans may not restrict secondary financing,
thereby permitting the borrower to use the Mortgaged Property as security for
one or more additional loans. Certain of the Mortgage Loans may preclude
secondary financing (by permitting the first lender to accelerate the maturity
of its loan if the borrower further encumbers the Mortgaged Property or in some
other fashion) or may require the consent of the senior lender to any junior or
substitute financing; however, such provisions may be unenforceable in certain
jurisdictions under certain circumstances.
Where the borrower encumbers the Mortgaged Property with one or more
junior liens, the senior lender is subjected to additional risk. For example,
the borrower may have difficulty servicing and repaying multiple loans or acts
of the senior lender which 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. In addition, 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, delay and in certain circumstances
even prevent the taking of action by the senior lender. In addition, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
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 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 Mortgagor in its capacity as owner or landlord,
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the ADA may also impose such requirements on a foreclosing lender who succeeds
to the interest of the Mortgagor as owner or landlord. Furthermore, since the
"readily achievable" standard may vary depending on the financial condition of
the owner or landlord, a foreclosing lender who is financially more capable than
the Mortgagor of complying with the requirements of the ADA may be subject to
more stringent requirements than those to which the Mortgagor is subject.
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 mortgagor who enters military service after the
origination of such mortgagor's Mortgage Loan (including a mortgagor 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 mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
mortgagors 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 mortgagors
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 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 any 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 of Certificates, 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 servicer to foreclose on an affected Mortgage Loan
during the mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in the
event that such a Mortgage Loan goes into default, there may be delays and
losses occasioned thereby.
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.
THE INDENTURE
The following summaries describe certain provisions of the Indenture. The
summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture. Where
particular provisions or terms used in the Indenture are referred to, such
provisions or terms are as specified in the Indenture.
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Certain Covenants
The Issuer may not liquidate or dissolve, without the consent of the
holders of not less than 662/3% of the Aggregate Outstanding Principal of each
Series. The Issuer also may not consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety without the consent of holders of not less than 662/3% of the Aggregate
Outstanding Principal of each Series, and unless (a) the Person (if other than
the Issuer) formed or surviving such merger or consolidation or acquiring such
assets is a Person organized under the laws of the United States of America or
any State and shall have expressly assumed, by supplemental indenture in form
satisfactory to the Trustee, the due and punctual payment of principal of and
interest on all Bonds and the performance of every applicable covenant of the
Indenture to be performed, by the Issuer, (b) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred, and be
continuing, (c) the Trustee shall have received a letter from each Rating Agency
rating any outstanding Bonds to the effect that the rating issued with respect
to such Bonds is confirmed notwithstanding the consummation of such transaction
and (d) the Trustee shall have received from the Issuer an Officers' Certificate
and an Opinion of Counsel, each to the effect that, among other things, such
transaction complies with the foregoing requirements.
The Issuer may incur, assume, have outstanding or guarantee any
indebtedness other than pursuant to the Indenture only subject to certain
conditions and limitations.
Modification of Indenture
Except as set forth below, with the consent of the holders of not less
than a majority of the then Aggregate Outstanding Principal of each Series or
Class of such Series to be affected, the Trustee and the Issuer may amend the
Indenture or execute a supplemental indenture, to add provisions to or change or
eliminate any provisions of the Indenture or Trust Agreement, as applicable,
relating to such Series, or modify the rights of the holders of the Bonds of
that Series.
Without the consent of the holder of each outstanding Bond affected,
however, except as provided below, no such amendment or supplemental indenture
shall (i) change the Stated Maturity of the principal of or any installment of
principal of or interest on any Bond or reduce the principal amount thereof, the
Bond Interest Rate for any Bond or the Redemption Price with respect thereto, or
change the provisions of the Trust Indenture or the related Series Supplement
relating to the application of the Trust Estate to payment principal of or
interest on the affected Bonds, or change any place of payment where, or the
coin or currency in which, any affected Bond or any interest thereon is payable,
or impair the right to institute suit for the enforcement of the provisions of
the Indenture regarding payment, (ii) reduce the percentage of Aggregate
Outstanding Principal of the Bonds of the affected Series or Class of such
Series, the consent of the holders of which is required for the authorization of
any such amendment or supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder and
their consequences, (iii) modify or alter the provisions of the Indenture
defining the term "Outstanding," (iv) permit the creation of any lien ranking
prior to or on a parity with the lien of the Indenture with respect to any part
of the property subject to the lien of the Indenture or terminate the lien of
the Indenture on any property at any time subject thereto or deprive the holder
of any Bond of the security afforded by the lien of the Indenture, (v) reduce
the percentage of the Aggregate Outstanding Principal of any Series (or Class of
such Series), the consent of the holders of which is required to direct the
Trustee to liquidate the Mortgage Assets for such Series, (vi) modify any of the
provisions of the Indenture if such modification affects the calculation of the
amount of any payment of interest or principal due and payable on any Bond on
any Payment Date or to affect the rights of the holders of Bonds of any Series
(or Class of such Series) to the benefit of any provisions for the mandatory
redemption of Bonds of such Series (or Class of such Series) contained therein
or in the related Series Supplement or (vii) modify the provisions of the
Indenture regarding any modifications of such Indenture requiring consent of the
holders of Bonds, except to increase the percentage or number of holders
required to consent to such modification of such Indenture or Trust Agreement,
as
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applicable, or to provide that additional provisions of the Indenture cannot be
modified or waived without the consent of the holder of each Bond affected
thereby.
The Issuer and the Trustee may also amend the Indenture or enter into
supplemental indentures, without obtaining the consent of holders of any Series,
to cure any ambiguity or to correct or supplement any provision of the Indenture
or any supplemental indenture which may be defective or inconsistent with any
other provision, or to make or to amend any other provisions with respect to
matters or questions arising under the Indenture or any supplemental indenture,
provided that such action shall not materially adversely affect the interests of
the holders of the Bonds. Such amendments may also be made and such supplemental
indentures may also be entered into without the consent of Bondholders or
Certificateholders to set forth the terms of and security for additional Series,
to evidence the succession of another person to the Issuer, to add to the
conditions, limitations and restrictions on certain terms of any Series and to
the covenants of the Issuer, to surrender any right or power conferred upon the
Issuer, to convey, transfer, assign, mortgage or pledge any property to the
Trustee, to correct or amplify the description of any property subject to the
lien of the Indenture to modify the Indenture to the extent necessary to effect
the Trustee's qualification under the TIA or comply with the requirements of the
TIA, to provide for the issuance of Bonds of any Series, to make any amendment
necessary or desirable to maintain the status of a REMIC as a REMIC and to amend
the provisions of the Indenture relating to authentication and delivery of a
Series with respect to which a supplemental indenture has not theretofore been
authorized or to evidence and provide for the acceptance of appointment by a
successor trustee.
Events of Default
Unless otherwise stated in the related Prospectus Supplement, an "Event of
Default" with respect to any Series is defined in the Indenture as being: (i) a
continuing default for 5 days in the payment of interest on any Bond of such
Series; (ii) a continuing default for five days in the payment of principal,
when due, of any Bond of such Series; (iii) the impairment of the validity or
effectiveness of the Indenture or any grant thereunder, or the subordination,
termination or discharge of the lien of the Indenture with respect to such
Series, or the release of any Person from any covenants or obligations under the
Indenture with respect to such Series, unless otherwise expressly permitted, or
the creation of any lien, charge, security interest, mortgage or other
encumbrance with respect to any part of the property subject to the lien of the
Indenture, or any interest in or proceeds of such property, or the failure of
the lien of the Indenture to constitute a valid first priority security interest
in the property subject to the lien of the Indenture and the continuation of any
of such defaults for a period of 30 days after notice to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% of the
then Aggregate Outstanding Principal of such Series; (iv) a default in the
observance of, or breach of, any covenant or negative covenant of the Issuer
made in the Indenture, or a material breach of any representation or warranty of
the Issuer made in the Indenture or in any certificate or other document
delivered pursuant thereto or in connection therewith as of the time when the
same shall have been made, and the continuation of any such default or breach
for a period of 60 days after notice to the Issuer by the Trustee or to the
Issuer and the Trustee by the holders of at least 25% of the then Aggregate
Outstanding Principal of such Series (unless the default or breach is with
respect to certain covenants specified in the Indenture not requiring such
continuation or notice); and (v) certain events of bankruptcy, insolvency,
receivership or reorganization of the Issuer. Notwithstanding the foregoing, if
a Series includes a Class of Subordinate Bonds, the Series Supplement for such a
Series may provide that certain defaults which relate only to such Subordinate
Securities shall not constitute an Event of Default with respect to the Bonds,
under certain circumstances, and may limit the rights of holders of Subordinate
Securities to direct the Trustee to pursue remedies with respect to such
defaults, or other Events of Default. Such limitations, if any, will be
specified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, in case an
Event of Default with respect to any Series should occur and be continuing, the
Trustee may and, upon the written request of the holders of at least 25% of the
then Aggregate Outstanding Principal of such Series shall, declare all Bonds of
such Series to be due and payable, together with accrued and unpaid interest
thereon. Such declaration may under certain
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circumstances be rescinded by the holders of a majority of the then Aggregate
Outstanding Principal of such Series.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of an Event of Default with respect to a Series, mail to the holders
of such Series notice of all uncured or unwaived defaults known to it; provided
that, except in the case of an Event of Default in the payment of the principal
or purchase price of or interest on any Bond, the Trustee shall be protected in
withholding such notice if it determines in good faith that the withholding of
such notice is in the interest of the Bondholders of such Series, and provided,
further, that, in the case of a default specified in clause (iv) of the first
paragraph of this "Events of Default" subsection the Trustee is not required to
give such notice until at least 30 days after the occurrence of such default or
breach and that, in the case of any default or breach specified in clause (v) of
the first paragraph of this "Events of Default" subsection, the Trustee is not
required to give such notice until at least 60 days after the occurrence of such
default or breach.
An Event of Default with respect to one Series will not necessarily be an
Event of Default with respect to any other Series.
Unless otherwise provided in the related Prospectus Supplement, if
following an Event of Default with respect to any Series, the Bonds of such
Series have been declared to be due and payable, the Trustee may, but shall not
be obligated to, in its sole discretion, refrain from liquidating the related
Mortgage Assets if (i) the Trustee determines that the amounts receivable with
respect to such Mortgage Assets and any Enhancement will be sufficient to pay
(a) all principal of and interest on the Bonds in accordance with their terms
without regard to the declaration of acceleration and (b) all sums due the
Trustee and any other administrative amounts required to be paid under the
Indenture and (ii) Holders of the requisite percentage of the Securities of such
Series have not directed the Trustee to sell the related Mortgage Assets as so
specified in the Indenture. In addition, unless otherwise specified in the
related Prospectus Supplement, the Trustee is prohibited from selling the Trust
Estate following certain Events of Default unless (a) the amounts receivable
with respect to the Mortgage Assets and any Enhancement are not sufficient to
pay in full the principal of and accrued interest on the Bonds of such Series
and to pay sums due the Trustee and other administrative expenses specified in
the Indenture and the Trustee obtains the consent of holders of 66 2/3% of the
Aggregate Outstanding Principal of such Series or (b) the Trustee obtains the
consent of 100% of the Aggregate Outstanding Principal of such Series, and
subject to the provisions of the related Prospectus Supplement, the obligor
under the Enhancement. Unless otherwise provided in the related Prospectus
Supplement, the proceeds of a sale of Mortgage Assets will be applied to the
payment of amounts due the Trustee and other administrative expenses specified
in the Indenture and then distributed pro rata among the Bondholders of such
Series (without regard to Class, provided that Subordinate Securities will be
subordinate to Senior Securities of the Series to the extent provided in the
related Prospectus Supplement) according to the amounts due and payable on the
Bonds for principal and interest at the time such proceeds are distributed by
the Trustee.
The Trustee shall not be deemed to have knowledge of any Event of Default
or Default described in clauses (iv) through (vi) of the first paragraph of this
"Events of Default" subsection unless an officer in the Trustee's corporate
trust department has actual knowledge thereof. Subject to the provisions of the
Indenture relating to the duties of the Trustee, in case an Event of Default
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Bondholders of a Series, unless such Bondholders shall
have offered to the Trustee reasonable security or indemnity. Subject to such
provisions for indemnification and certain limitations contained in the
Indenture the holders of a majority of the then Aggregate Outstanding Principal
of a Series (or of such Classes specified in the related Prospectus Supplement)
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Series. In addition, the
Holders of a majority of the then Aggregate Outstanding Principal of a Series
(or of such Classes specified in the related Prospectus Supplement) may, in
certain cases, waive any default
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with respect to such Series, except a default in payment of principal or
interest or in respect of a covenant or provision which cannot be modified
without the consent of all Bondholders affected.
Unless otherwise specified in the related Prospectus Supplement, no holder
of Bonds of a Series will have the right to institute any Proceeding with
respect to the Indenture, unless (i) such Holder previously has given to the
Trustee written notice of a continuing Event of Default with respect to such
Series and has offered the Trustee satisfactory indemnity, (ii) the Holders of
not less than 25% of the then Aggregate Outstanding Principal of such Series
have made written request upon the Trustee to institute such Proceeding as
Trustee and have offered satisfactory indemnity, (iii) the Trustee has, for 60
days after receipt of such notice, request and offer of indemnity, failed to
institute any such Proceeding and (iv) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority of the then Aggregate Outstanding Principal of such
Series; provided, however, that in the event that the Trustee receives
conflicting requests and indemnities from two or more groups of Bondholders,
each representing less than a majority of the Aggregate Outstanding Principal of
such Series, the Trustee may in its sole discretion determine what action with
respect to the Proceeding, if any, shall be taken.
Authentication and Delivery of Bonds
The Issuer may from time to time deliver Bonds executed by it to the
Trustee and order that the Trustee authenticate such Bonds. Upon the receipt of
such Bonds and such order and subject to the Issuer's compliance with certain
conditions specified in the Indenture the Trustee will authenticate and deliver
such Bonds as the Issuer may direct. Unless otherwise specified in the related
Prospectus Supplement, the Trustee will be authorized to appoint an agent for
purposes of authenticating and delivering any Series of Bonds (the
"Authenticating Agent").
Satisfaction and Discharge of the Indenture
The Indenture will be discharged as to a Series (except with respect to
certain continuing rights specified in the Indenture or Trust Agreement, as
applicable), (a)(1) upon the delivery to the Trustee for cancellation of all of
the Bonds of such Series other than Bonds which have been mutilated, lost or
stolen and have been replaced or paid and Bonds for which money has been
deposited in trust for the full payment thereof (and thereafter repaid to the
Issuer and discharged from such trust) as provided in of the Indenture, or (2)
at such time as all Bonds of such Series not previously cancelled by the Trustee
have become, or, within one year, will become, due and payable or called for
redemption and the Issuer shall have deposited with the Trustee an amount
sufficient to repay all of the Bonds and (b) the Issuer shall have paid all
other amounts payable under the Indenture or Trust Agreement, as applicable,
with respect to such Series.
Issuer's Annual Compliance Statement
The Issuer will be required to file annually with the Trustee a written
statement as to fulfillment of its obligations under the Indenture.
List of Bondholders
Three or more Holders of a Series which have each owned the Bonds for at
least six months may, by written application to the Trustee, request access to
the list maintained by the Trustee of all holders of the same Series or of all
Bonds, as specified in the request, for the purpose of communicating with other
Bondholders with respect to their rights under the Indenture.
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Meetings of Bondholders
Meetings of Bondholders or Certificateholders may be called at any time
and from time to time to (i) give any notice to the Issuer or to the Trustee,
give directions to the Trustee, consent to the waiver of any Default or Event of
Default under the Indenture, or to take any other action authorized to be taken
by Bondholders in connection therewith, (ii) remove the Trustee and to appoint a
successor Trustee, (iii) consent to the execution of supplemental indentures or
(iv) take any other action authorized to be taken by or on behalf of the
Bondholders of any specified percentage of the Aggregate Outstanding Principal
of the Bonds. Such meetings may be called by the Trustee, the Issuer or by the
holders of 10% in Aggregate Outstanding Principal of any such Series.
Fiscal Year
The fiscal year of each Issuer ends on December 31.
Trustee's Annual Report
The Trustee will be required to mail each year to all Bondholders a brief
report relating to its eligibility and qualification to continue as the Trustee
under the Indenture any amounts advanced by it under the Indenture which remain
unpaid on the date of the report, the amount, interest rate and maturity date of
certain indebtedness owing by the Issuer (or any other obligor on such Series)
to the Trustee in its individual capacity, the property and funds physically
held by the Trustee as such, any release or release and substitution of property
subject to the lien of the Indenture which has not been previously reported, any
additional issuance of Bonds not previously reported and any action taken by it
which materially affects the Bonds and which has not been previously reported.
The Trustee
LaSalle National Bank (or another bank or trust company qualified under
the TIA and named in the Prospectus Supplement related to a Series of Bonds)
will be the Trustee under the Indenture for the Bonds. The Issuer may maintain
other banking relationships in the ordinary course of business with the Trustee.
If LaSalle National Bank serves as Trustee, the Trustee's "Corporate Trust
Office" is 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60674, or at
such other addressees as the Trustee may designate from time to time by notice
to the Bondholders and the Issuer. If another bank or trust company serves as
Trustee, the address of its Corporate Trust Office will be specified in the
related Prospectus Supplement. With respect to the presentment and surrender of
Bonds for final payment of principal in retirement thereof on any Payment Date,
Redemption Date, Special Payment Date or Special Redemption Date and, with
respect to any other presentment and surrender of such Bonds and for all other
purposes, unless otherwise specified in the related Prospectus Supplement, such
Bonds may be presented at the Corporate Trust Office of the Trustee or at the
office of the Issuer's agent in the State of New York (the "New York Presenting
Agent"), which will be specified in the related Prospectus Supplement.
THE TRUST AGREEMENT
The following summaries describe certain provisions of the Trust
Agreement. The summaries do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the provisions of the Trust
Agreement. Where particular provisions or terms used in the Trust Agreement are
referred to, such provisions or terms are as specified in the Trust Agreement.
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Assignment of Mortgage Assets
General. The Depositor will transfer, convey and assign to the Trustee all
right, title and interest of the Depositor in the Mortgage Assets and other
property to be included in the Trust Fund for a Series. Such assignment will
include all principal and interest due on or with respect to the Mortgage Assets
after the Cut-off Date specified in the related Prospectus Supplement. The
Trustee will, concurrently with such assignment, execute and deliver the
Certificates.
Assignment of Mortgage Loans. The Depositor will, as to each Mortgage
Loan, deliver or cause to be delivered to the Trustee, or, as specified in the
related Prospectus Supplement, the Custodian, the Mortgage Note endorsed without
recourse to the order of the Trustee or in blank, the original Mortgage with
evidence of recording indicated thereon (except for any Mortgage not returned
from the public recording office, in which case a copy of such Mortgage will be
delivered, together with a certificate that the original of such Mortgage was
delivered to such recording office) and an assignment of the Mortgage in
recordable form. The Trustee, or, if so specified in the related Prospectus
Supplement, the Custodian, will hold such documents in trust for the benefit of
the Certificateholders.
If so specified in the related Prospectus Supplement, the Depositor will,
at the time of delivery of the Certificates, cause assignments to the Trustee of
the Mortgage Loans to be recorded in the appropriate public office for real
property records, except in states where, in the opinion of counsel acceptable
to the Trustee, such recording is not required to protect the Trustee's interest
in the Mortgage Loan. If specified in the related Prospectus Supplement, the
Depositor will cause such assignments to be so recorded within the time after
delivery of the Certificates as is specified in the related Prospectus
Supplement, in which event, the Trust Agreement may, as specified in the related
Prospectus Supplement, require the Depositor to repurchase from the Trustee any
Mortgage Loan required to be recorded but not recorded within such time, at the
price described below with respect to repurchase by reason of defective
documentation. Unless otherwise provided in the related Prospectus Supplement,
the enforcement of the repurchase obligation would constitute the sole remedy
available to the Certificateholders or the Trustee for the failure of a Mortgage
Loan to be recorded.
Each Mortgage Loan will be identified in a schedule appearing as an
exhibit to the Trust Agreement (the "Mortgage Loan Schedule"). Such Mortgage
Loan Schedule will specify with respect to each mortgage loan: the original
principal amount and unpaid principal balance as of the Cut-off Date; the
current interest rate; the current Scheduled Payment of principal and interest;
the maturity date of the related mortgage note; if the Mortgage Loan is an
adjustable rate mortgage, the lifetime mortgage rate cap, if any, and the
current index; and, if the Mortgage Loan is a loan with other than fixed
Scheduled Payments and level amortization, the terms thereof.
Repurchase of Non-Conforming Loans
Unless otherwise provided in the related Prospectus Supplement, if any
document in the Mortgage Loan file delivered by the Depositor to the Trustee is
found by the Trustee within 45 days of the execution of the related Trust
Agreement (or promptly after the Trustee's receipt of any document permitted to
be delivered after the Closing Date) to be defective in any material respect and
the Depositor does not cure such defect within 90 days, or within such other
period specified in the related Prospectus Supplement, the Depositor will, not
later than 90 days or within such other period specified in the related
Prospectus Supplement, after the Trustee's notice to the Depositor or the Master
Servicer, as the case may be, of the defect, repurchase the related Mortgage
Loan or any property acquired in respect thereof from the Trustee at a price
generally equal to (a) the outstanding principal balance of such Mortgage Loan
(or, in the case of a foreclosed Mortgage Loan, the outstanding principal
balance of such Mortgage Loan immediately prior to foreclosure) and (b), accrued
and unpaid interest to the date of the next scheduled payment on such Mortgage
Loan at the related Certificate Interest Rate (less any unreimbursed Advances
respecting such Mortgage Loan).
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Unless otherwise provided in the related Prospectus Supplement, the
above-described repurchase obligation constitutes the sole remedy available to
the Certificateholders or the Trustee for a material defect in a Mortgage Loan
document.
The Depositor or another entity will make representations and warranties
with respect to Mortgage Loans which comprise the Mortgage Assets for a Series.
If the Depositor or such entity cannot cure a breach of any such representations
and warranties in all material respects within 90 days after notification by the
Trustee of such breach, and if such breach is of a nature that materially and
adversely affects the value of such Mortgage Loan, the Depositor or such entity
is obligated to repurchase the affected Mortgaged Loan or, if provided in the
related Prospectus Supplement, provide a Substitute Mortgage Loan therefor,
subject to the same conditions and limitations on purchases and substitutions as
described above.
The Depositor's only source of funds to effect any cure, repurchase or
substitution will be through the enforcement of the corresponding obligations of
the responsible originator or seller of such Mortgage Loans. See "RISK FACTORS".
Reports to Certificateholders
The Trustee will prepare and forward to each Certificateholder on each
Distribution Date, or as soon thereafter as is practicable, a statement setting
forth, to the extent applicable to any Series, among other things:
(i) with respect to a Series, the amount of such distribution allocable to
principal on the Mortgage Assets, separately identifying the aggregate amount of
any principal prepayments included therein and the amount, if any, advanced by
the Servicer or by a Servicer;
(ii) with respect to a Series, the amount of such distribution allocable
to interest on the Mortgage Assets and the amount, if any, advanced by a
Servicer;
(iii) the amount of servicing compensation with respect to the Mortgage
Assets and paid during the Due Period commencing on the Due Date to which such
distribution relates and the amount of servicing compensation during such period
attributable to penalties and fees;
(iv) the aggregate outstanding principal balance of the Mortgage Assets as
of the opening of business on the Due Date, after giving effect to distributions
allocated to principal and reported under (i) above;
(v) the aggregate outstanding principal amount of the Certificates of such
series as of the Due Date, after giving effect to distributions allocated to
principal reported under (i) above;
(vi) with respect to Compound Interest Securities, prior to the Accrual
Termination Date in addition to the information specified in (ii) above, the
amount of interest accrued on such Securities during the related Interest
Accrual Period and added to the Compound Value thereof;
(vii) in the case of Variable Rate Securities, the Variable Interest Rate
applicable to the distribution being made;
(viii) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which Certificateholders
would have received if there were sufficient eligible funds to distribute and
the amounts actually distributed);
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(ix) if applicable, the number and aggregate principal balances of
Mortgage Loans delinquent for (A) two consecutive payments and (B) three or more
consecutive payments, as of the close of the business on the Determination Date
to which such distribution relates;
(x) if applicable, the book value of any REO Property acquired on behalf
of Certificateholders through foreclosure, grant of a deed in lieu of
foreclosure or repossession as of the close of the business on the Business Day
preceding the Distribution Date to which such distribution relates;
(xi) if applicable, the amount of coverage under any pool insurance policy
as of the close of business on the applicable Distribution Date;
(xii) if applicable, the amount of coverage under any special hazard
insurance policy as of the close of business on the applicable Distribution
Date;
(xiii) if applicable, the amount of coverage under any bankruptcy bond as
of the close of business on the applicable Distribution Date;
(xiv) in the case of any other Enhancement described in the related
Prospectus Supplement, the amount of coverage of such credit support as of the
close of business on the applicable Distribution Date;
(xv) in the case of any Series which includes a Subordinate Securities,
the subordinated amount, if any, determined as of the related Determination Date
and if the distribution to the Holders of Senior Securities is less than their
required distribution, the amount of the shortfall;
(xvi) the amount of any withdrawal from any applicable reserve fund
included in amounts actually distributed to Certificateholders and the remaining
balance of each reserve fund, if any, on such Distribution Date, after giving
effect to distributions made on such date; and
(xvii) such other information as specified in the related Trust Agreement.
In addition, within a reasonable period of time after the end of each
calendar year the Trustee, unless otherwise specified in the related Prospectus
Supplement, will furnish to each Certificateholder of record at any time during
such calendar year: (a) the aggregate of amounts reported pursuant to (i)
through (iv), (vi), (viii) and (xvi) above for such calendar year and (b) such
information specified in the Trust Agreement to enable Certificateholders to
prepare their tax returns including, without limitation, the amount of original
issue discount accrued on the Certificates, if applicable. Information in the
Distribution Date and annual reports provided to the Certificateholders will not
have been examined and reported upon by an independent public accountant.
However, the Master Servicer will provide to the Trustee a report by independent
public accountants with respect to the Master Servicer's servicing of the
Mortgage Loans. See "SERVICING OF MORTGAGE LOANS--Evidence as to Compliance"
herein.
Event of Default
Unless otherwise specified in the related Prospectus Supplement, events of
Default under the Trust Agreement for each Series include (i) any failure by the
Master Servicer to distribute to Certificateholders of such Series any required
payment which continues unremedied for five days after the giving of written
notice of such failure to the Master Servicer by the Trustee for such Series, or
to the Master Servicer and the Trustee by the Holders of Certificates of such
Series evidencing not less than 25% of the aggregate outstanding principal
amount of the Certificates for such Series, (ii) any failure by the Servicer
duly to observe or perform in any material respect any other of its covenants or
agreements in the Trust Agreement which continues unremedied for 30 days after
the giving of written notice of such failure to the Master Servicer by the
Trustee, or to the Master Servicer
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and the Trustee by the Holders of Certificates of such Series evidencing not
less than 25% of the aggregate outstanding principal amount of the Certificates
and (iii) certain events in insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain actions by the Master
Servicer indicating its insolvency, reorganization or inability to pay its
obligations.
Rights Upon Event of Default
So long as an Event of Default remains unremedied under the Trust
Agreement for a Series, the Trustee for such Series or Holders of Certificates
of such Series evidencing not less than 25% of the aggregate outstanding
principal amount of the Certificates for such Series may terminate all of the
rights and obligations of the Master Servicer as servicer under the Trust
Agreement and in and to the Mortgage Loans (other than its right to recovery of
other expenses and amounts advanced pursuant to the terms of the Trust Agreement
which rights the Master Servicer will retain under all circumstances), whereupon
the Trustee will succeed to all the responsibilities, duties and liabilities of
the Master Servicer under the Trust Agreement and will be entitled to reasonable
servicing compensation not to exceed the applicable servicing fee, together with
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in the Trust Agreement.
In the event that the Trustee is unwilling or unable so to act, it may
select, or petition a court of competent jurisdiction to appoint, a housing and
home finance institution, bank or mortgage servicing institution with a net
worth of at least $15,000,000 to act as successor Master Servicer under the
provisions of such Trust Agreement relating to the servicing of the Mortgage
Loans. The successor Servicer would be entitled to reasonable servicing
compensation in an amount not to exceed the servicing fee as set forth in the
related Prospectus Supplement, together with the other servicing compensation in
the form of assumption fees, late payment charges or otherwise, as provided in
the Trust Agreement.
During the continuance of any Event of Default under the Trust Agreement
for a Series, the Trustee for such Series will have the right to take action to
enforce its rights and remedies and to protect and enforce the rights and
remedies of the Certificateholders of such Series, and Holders of Certificates
evidencing not less than 25% of the aggregate outstanding principal amount of
the Certificates for such Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred upon the Trustee. However, the Trustee will not be
under any obligation to pursue any such remedy or to exercise any of such trusts
or powers unless such Certificateholders have offered the Trustee reasonable
security or indemnity against the cost, expenses and liabilities which may be
incurred by the Trustee therein or thereby. Also, the Trustee may decline to
follow any such direction if the Trustee determines that the action or
proceeding so directed may not lawfully be taken or would involve it in personal
liability or be unjustly prejudicial to the nonassenting Certificateholders.
No Certificateholder of a Series, solely by virtue of such Holder's status
as a Certificateholder, will have any right under the Trust Agreement for such
Series to institute any proceeding with respect to the Trust Agreement, unless
such Holder previously has given to the Trustee for such Series written notice
of default and unless the Holders of Certificates evidencing not less than 25%
of the aggregate outstanding principal amount of the Certificates 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 60 days has neglected or refused to institute any
such proceeding.
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The Trustee
The identity of the commercial bank, savings and loan association or trust
company named as the Trustee for each Series of Certificates will be set forth
in the related Prospectus Supplement, and such Trustee may be LaSalle National
Bank. The entity serving as Trustee may have normal banking relationships with
the Depositor or the Master Servicer. In addition, for the purpose of meeting
the legal requirements of certain local jurisdictions, the Trustee will have the
power to appoint co-trustees or separate trustees of all or any part of the
Trust Fund relating to a Series of Certificates. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee by the Trust Agreement relating to such Series will be
conferred or imposed upon the Trustee and each 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. The Trustee may also
appoint agents to perform any of the responsibilities of the Trustee, which
agents shall have any or all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment; provided that the Trustee
shall continue to be responsible for its duties and obligations under the Trust
Agreement.
Duties of the Trustee
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates or of any Mortgage Asset or related
documents. If no Event of Default (as defined in the related Trust Agreement)
has occurred, the Trustee is required to perform only those duties specifically
required of it under the Trust Agreement. Upon receipt of the various
certificates, statements, reports or other instruments required to be furnished
to it, the Trustee is required to examine them to determine whether they are in
the form required by the related Trust Agreement; provided, however, the Trustee
will not be responsible for the accuracy or content of any such documents
furnished to it.
The Trustee may be held liable for its own grossly negligent action or
failure to act, or for its own willful misconduct; provided, however, that the
Trustee will not be personally liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with the direction of
the Certificateholders in connection with the occurrence and/or continuation of
an Event of Default (see "--Rights Upon Event of Default" above). The Trustee is
not required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under a Trust Agreement, or in
the exercise of any of its rights or powers, if it has reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
Resignation of Trustee
The Trustee may, upon written notice to the Depositor, resign at any time,
in which event the Depositor will be obligated to use its best efforts to
appoint a successor Trustee. If no successor Trustee has been appointed and has
accepted the appointment within 30 days after giving such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
appointment of a successor Trustee. The Trustee may also be removed at any time
(i) by the Depositor, if the Trustee ceases to be eligible to continue as such
under the Trust Agreement, if the Trustee becomes insolvent, or if a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee pursuant to the Trust Agreement is
located, or (ii) by the Holders of Certificates evidencing over 50% of the
aggregate outstanding principal amount of the Certificates in the Trust Fund
upon 30 days' advance written notice to the Trustee and to the Depositor. Any
resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the successor
Trustee.
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Amendment of Trust Agreement
Unless otherwise specified in the Prospectus Supplement, the Trust
Agreement for each Series of Certificates may be amended by the Depositor, the
Master Servicer, and the Trustee with respect to such Series, without notice to
or consent of the Certificateholders (i) to cure any ambiguity, (ii) to correct
or supplement any provision therein which may be inconsistent with any other
provision therein or in the Prospectus Supplement, (iii) to make any other
provisions with respect to matters or questions arising under such Trust
Agreement or (iv) to comply with any requirements imposed by the Code; provided
that any such amendment pursuant to clause (iii) above will not adversely affect
in any material respect the interests of any Certificateholders of such Series
not consenting thereto. Any such amendment pursuant to clause (iii) of the
preceding sentence shall be deemed not to adversely affect in any material
respect the interests of any Certificateholder if the Trustee receives written
confirmation from each Rating Agency rating such Certificates that such
amendment will not cause such Rating Agency to reduce the then current rating
thereof. The Trust Agreement for each Series may also be amended by the Trustee,
the Master Servicer and the Depositor with respect to such Series with the
consent of the Holders possessing not less than 66 2/3% of the aggregate
outstanding principal amount of the Certificates of each Class of such Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Trust Agreement or modifying
in any manner the rights of Certificateholders of such Series; provided,
however, that no such amendment may (a) reduce the amount or delay the timing of
payments on any Certificate without the consent of the Holder of such
Certificate; or (b) reduce the aforesaid percentage of aggregate outstanding
principal amount of Certificates of each Class, the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of the aggregate outstanding principal amount of each Class of Certificates
affected thereby.
Voting Rights
The related Prospectus Supplement will set forth the method of determining
allocation of voting rights with respect to a Series, if other than set forth
herein.
List of Certificateholders
Upon written request of three or more Certificateholders of record of a
Series for purposes of communicating with other Certificateholders with respect
to their rights under the Trust Agreement or under the Certificates for such
Series, which request is accompanied by a copy of the communication which such
Certificateholders propose to transmit, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders of that Series held by the Trustee.
No Trust Agreement will provide for the holding of any annual or other
meeting of Certificateholders.
REMIC Administrator
With respect to any Series, preparation of certain reports and certain
other administrative duties with respect to the Trust Fund may be performed by a
REMIC administrator, who may be an affiliate of the Depositor.
Termination
The obligations created by the Trust Agreement for a Series will terminate
upon the distribution to Certificateholders of all amounts distributable to them
pursuant to such Trust Agreement after (i) the later of the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust Fund for such
Series or the disposition of all REO Property or (ii) the repurchase, as
described below, by the Servicer from the Trustee for such Series of all
Mortgage Loans at that time subject to the Trust Agreement and all REO Property.
The Trust Agreement for each Series permits, but does not require, the Servicer
to repurchase from the Trust Fund for such
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Series all remaining Mortgage Loans at a price equal to 100% of the Aggregate
Asset Value of such Mortgage Loans plus, with respect to REO Property, if any,
the outstanding principal balance of the related Mortgage Loan, less, in either
case, related unreimbursed Advances (in the case of the Mortgage Loans, only to
the extent not already reflected in the computation of the Aggregate Asset Value
of such Mortgage Loans) and unreimbursed expenses (that are reimburseable
pursuant to the terms of the Trust Agreement) plus, in either case, accrued
interest thereon at the weighted average Mortgage Rate through the last day of
the Due Period in which such repurchase occurs; provided, however, that if an
election is made for treatment as a REMIC under the Code, the repurchase price
may equal the greater of (a) 100% of the Aggregate Asset Value of such Loans,
plus accrued interest thereon at the applicable net Mortgage Rates through the
last day of the month of such repurchase and (b) the aggregate fair market value
of such Mortgage Loans; plus the fair market value of any property acquired in
respect of a Mortgage Loan and remaining in the Trust Fund. The exercise of such
right will effect early retirement of the Certificates of such Series, but the
Servicer's right to so purchase is subject to the Aggregate Value of the
Mortgage Loans at the time of repurchase being less than a fixed percentage, to
be set forth in the related Prospectus Supplement, of the Cut-off Date Aggregate
Asset Value. In no event, however, will the trust created by the Trust Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of certain persons identified therein. For each Series, the Servicer or the
Trustee, as applicable, will give written notice of termination of the Trust
Agreement to each Certificateholder, and the final distribution will be made
only upon surrender and cancellation of the Certificates at an office or agency
specified in the notice of termination. If so provided in the related Prospectus
Supplement for a Series, the Depositor or another entity may effect an optional
termination of the Trust Fund or repurchase all or certain Classes of
Certificates of a Series under the circumstances described in such Prospectus
Supplement. See "DESCRIPTION OF THE SECURITIES--Optional Termination,"
"--Optional Repurchase of Certificates," and "--Other Repurchases" herein.
THE ISSUER
The Company
The Company was incorporated in the State of Delaware on January 2, 1987.
The principal office of the Company is located at 200 Vesey Street, New York,
New York 10285. Its telephone number is (212) 526-5594.
The Certificate of Incorporation of the Company provides that the Company
may not conduct any activities other than those related to the issue and sale of
one or more Series and to serve as depositor of one or more trusts that may
issue and sell Bonds or Certificates. The Certificate of Incorporation of the
Company provides that any Securities, except for subordinated Securities, issued
by the Company must be rated in one of the three highest categories available by
any Rating Agency rating the Series. Pursuant to the terms of the Indenture or
Trust Agreement, as applicable, the Company may not issue any Securities which
would result in the lowering of the then current ratings of the outstanding
Securities of any Series.
The Series Supplement for a particular Series may permit the Primary
Assets pledged to secure the related Series of Bonds to be transferred by the
Issuer to a trust, subject to the obligations of the Bonds of such Series,
thereby relieving the Issuer of its obligations with respect to such Bonds.
Owner Trust
Each owner trust established to act as Issuer of a Series of bonds (each,
an "Owner Trust") will be created pursuant to a deposit trust agreement (the
"Deposit Trust Agreement") between the Company which will act as Depositor and
the bank, trust company or other fiduciary named in the related Prospectus
Supplement which will act solely in its fiduciary capacity as Owner Trustee.
Under the terms of each Deposit Trust Agreement, the Company will convey to the
Owner Trustee Mortgage Assets and other Primary Assets to secure
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one or more Series in return for certificates or other instruments evidencing
beneficial ownership of the Owner Trust and the net proceeds of the sale of the
Bonds. The Company may in turn sell or assign the certificates of beneficial
interest to another entity or entities, including affiliates of the Company.
The Owner Trust will pledge the Mortgage Assets and other Primary Assets
to the Trustee under the related Indenture as security for a Series. The Trustee
will hold such Mortgage Assets as security only for that Series, and Holders of
the Bonds of such Series will be entitled to the equal and proportionate
benefits of such security, subject to the express subordination of certain
Classes thereof, as if the same had been granted by a corporate issuer.
Each Deposit Trust Agreement will provide that the related Trust may not
conduct any activities other than those related to the issuance and sale of the
particular Series. No Deposit Trust Agreement will be subject to amendment
without the prior written consent of the Owner Trustee, the holders representing
a majority of the beneficial interest of the Owner Trust and the Trustee, except
that the holders of not less than 66 2/3% of the Aggregate Outstanding Principal
of each Series must consent to any amendment of, among other provisions, the
limitation on activities of the Owner Trust and the provision regarding
amendments to the Deposit Trust Agreement. The holders of the beneficial
interests in an Owner Trust which issues a Series will not be liable for payment
of principal of or interest on the Bonds and each holder of Bonds of such Series
will be deemed to have released such beneficial owners from any such liability.
Administrator
Unless otherwise specified in the related Prospectus Supplement, it is
expected that the Issuer will enter into an administration agreement with an
administrator acceptable to the Rating Agencies rating the applicable Series of
Securities (the "Administrator") pursuant to which advisory, administrative,
accounting and clerical services will be provided to the Issuer with respect to
the Securities. The Trustee or the Master Servicer may serve as the Securities
Administrator. In addition, under the Indenture or Trust Agreement, as
applicable, the Issuer is responsible for certain administrative and accounting
matters relating to the Securities. It is intended that the Administrator will
perform these services on behalf of the Issuer, and amounts payable with respect
to such services, unless otherwise provided in the related Prospectus
Supplement, will be subordinate to the Issuer's obligations to pay principal and
interest to the Bondholders or Certificateholders (including any Residual
Interest Bondholders or Residual Interest Certificateholders) but, unless
otherwise specified in the related Prospectus Supplement, will be senior to the
Issuer's obligation to pay any Excess Cash Flow to the Residual Interest
Bondholders or Residual Interest Certificateholders.
USE OF PROCEEDS
The Issuer will apply all or substantially all of the net proceeds from
the sale of each Series offered hereby and by the related Prospectus Supplement
to purchase the Mortgage Assets securing each Series simultaneously with the
issuance and sale of such Securities. The proceeds may also be used to repay
indebtedness which has been incurred to acquire Mortgage Assets, to establish
the Reserve Funds, if any, for the Series and to pay costs of structuring,
guaranteeing and issuing the Securities. If so specified in the related
Prospectus Supplement, the purchase of the Mortgage Assets for a Series may be
effected by an exchange of Securities with the Seller of such Mortgage Assets.
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LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Any bearer securities will be issued in compliance with United States
federal tax laws and regulations applicable at the time of issuance. Under
current law, bearer securities may not be offered or sold during the restricted
period, or delivered in definitive form in connection with a sale during the
restricted period (as defined under "DESCRIPTION OF THE SECURITIES--Bearer
Securities and Registered Securities"), in the United States or to United States
persons other than to (a) the United States office of (i) an international
organization (as defined in Section 7701(a)(18) of the Code), (ii) a foreign
central bank (as defined in Section 895 of the Code), or (iii) any underwriter,
agent, or dealer offering or selling bearer securities during the restricted
period (a "Distributor") pursuant to a written contract with the Issuer or with
another Distributor, that purchases bearer securities for resale or for its own
account and agrees to comply with the requirements of Section 165(j)(3)(A), (B),
or (C) of the Code, or (b) the foreign branch of a United States financial
institution purchasing for its own account or for resale, which institution
agrees to comply with the requirements of Section 165(j)(3)(A), (B), or (C) of
the Code. In addition, a sale of a bearer security may be made during the
restricted period to a United States person who acquired and holds the bearer
security on the certification date through a foreign branch of a United States
financial institution that agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code. Any Distributor (including an affiliate of
a Distributor) offering or selling bearer securities during the restricted
period must agree not to offer or sell bearer securities in the United States or
to United States persons (except as discussed above) and must employ procedures
reasonably designed to ensure that its employees or agents directly engaged in
selling bearer securities are aware of these restrictions.
Bearer securities and their interest coupons will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Section 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States and an estate the income of which is
subject to United States federal income taxation regardless of its source or a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust,
and "United States" means the United States of America (including the States and
the District of Columbia) and its possessions including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of certain anticipated federal income tax
consequences of the purchase, ownership, and disposition of the Securities. The
summary is based upon the provisions of the Code, the regulations promulgated
thereunder, including, where applicable, proposed regulations, and the judicial
and administrative rulings and decisions now in effect, all of which are subject
to change or possible differing interpretations. The statutory provisions,
regulations, and interpretations on which this summary and the opinion of
counsel to which the summary refers below, are based are subject to change, and
such a change could apply retroactively. No rulings have been or will be sought
from the IRS on these matters.
The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances, nor with certain types of investors subject to special treatment
under the federal income tax laws. This summary focuses primarily upon investors
who will hold Securities as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the
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Code, but much of the discussion is applicable to other investors as well.
Potential purchasers of Securities are advised to consult their own tax advisers
concerning the federal, state or local tax consequences to them of the purchase,
holding and disposition of the Securities.
Characterization of Securities
Unless otherwise stated in the applicable Prospectus Supplement, a REMIC
election will be made with respect to each Series of Securities. In such a case,
special counsel to the Issuer will deliver its opinion to the effect that the
arrangement by which the Securities of that Series are issued will be treated as
a REMIC as long as all of the provisions of the applicable Indenture or Trust
Agreement, as applicable, are complied with and the statutory and regulatory
requirements are satisfied. Securities of such Series will be designated as
"regular interests" or "residual interests" in a REMIC, as specified in the
related Prospectus Supplement.
If the applicable Prospectus Supplement so specifies with respect to a
Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead will be treated as (i) indebtedness of the Issuer; (ii) an undivided
beneficial ownership interest in the Mortgage Loans (and the arrangement
pursuant to which the Mortgage Loans will be held and the Securities will be
issued will be treated as a grantor trust under Subpart E, part I of subchapter
J of the Code and not as an association taxable as a corporation for federal
income tax purposes); (iii) equity interests in an association that will satisfy
the requirements for qualification as a real estate investment trust; (iv)
interests in an entity that will be treated as a partnership for federal income
tax purposes, or (v) interests in an entity or a pool of assets that will
satisfy the requirements for qualification as a financial asset securitization
investment trust (a "FASIT") for federal income tax purposes. The federal income
tax consequences to Bondholders or Certificateholders of any such Series will be
described in the applicable Prospectus Supplement.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related 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 or Indenture 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 terminated.
Except to the extent the related Prospectus Supplement specifies
otherwise, if a REMIC election is made with respect to a Series of Securities,
(i) Securities held by a domestic building and loan association will constitute
"a regular or a residual interest in a REMIC" within the meaning of Code Section
7701(a)(19)(C)(xi) (assuming that at least 95% of the REMIC's assets consist of
cash, government securities, "loans . . . secured by an interest in real
property which is . . . residential real property," and other types of assets
described in Code Section 7701(a)(19)(C)); and (ii) Securities held by a real
estate investment trust will constitute "real estate assets" within the meaning
of Code Section 856(c)(5)(B), and income with respect to the Securities will be
considered "interest on obligations secured by mortgages on real property or on
interest in real property" within the meaning of Code Section 856(c)(3)(B)
(assuming, for both purposes, that at least 95% of the REMIC's assets are
qualifying assets). If less than 95% of the REMIC's assets consist of assets
described in (i) or (ii) above, then Securities will qualify for the tax
treatment described in (i) or (ii) in the proportion that such REMIC assets are
qualifying assets. In general, Mortgage Loans secured by non-residential real
property will not constitute "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of Section
7701(a)(19)(C). The Small Business Job Protection Act of 1996 (the "SBJPA of
1996") repealed the reserve method for bad debts
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of domestic building and loan associations and mutual savings banks, and thus
has eliminated the asset category of "qualifying real property loans" in former
Code Section 593(d) for taxable years beginning after December 31, 1995. The
requirement in the SBJPA of 1996 that such institutions must "recapture" a
portion of their existing bad debt reserves is suspended if a certain portion of
their assets are maintained in "residential loans" under Code Section
7701(a)(19)(C)(v), but only if such loans were made to acquire, construct or
improve the related real property and not for the purpose of refinancing.
However, no effort will be made to identify the portion of the Mortgage Loans of
any Series meeting this requirement, and no representation is made in this
regard.
It is possible that various reserves or funds will reduce the proportion
of REMIC assets which qualify under the standards described above.
Taxation of Regular Interest Securities
Interest and Acquisition Discount. Securities that qualify as regular
interests in a REMIC ("Regular Interest Securities") are generally treated as
indebtedness for federal income tax purposes. Stated interest on a Regular
Interest Security will be taxable as ordinary income using the accrual method of
accounting, regardless of the Bondholder's or Certificateholder's normal
accounting method. Reports will be made annually to the IRS and to holders of
Regular Interest Securities that are not excepted from the reporting
requirements regarding amounts treated as interest (including accrual of
original issue discount) on Regular Interest Securities.
Compound Interest Securities, Interest Weighted Securities, and Zero
Coupon Securities will, and other Securities constituting Regular Interest
Securities may, be issued with "original issue discount" ("OID") within the
meaning of Code Section 1273. Rules governing original issue discount are set
forth in sections 1271-1275 of the Code and the Treasury regulations thereunder
(the "OID Regulations"). Treasury regulations (the "Contingent Regulations")
governing the treatment of contingent payment obligations also have been
adopted. As described more fully below, Code Section 1272(a)(6) requires the use
of an income tax accounting methodology that utilizes (i) a single constant
yield to maturity and (ii) the Prepayment Assumptions. Under Section 1272(a)(6)
of the Code, special rules apply to the computation of OID on instruments, such
as the Regular Interest Securities, on which principal is prepaid based on
prepayments of the underlying assets. Neither the OID Regulations nor the
Contingent Regulations contain rules applicable to instruments governed by
Section 1272(a)(6). Although technically not applicable to prepayable
securities, the Contingent Regulations may represent a possible method to be
applied in calculating OID on certain Classes of Certificates. Until the
Treasury Department issues guidance to the contrary, the Servicer or other
person responsible for computing the amount of original issue discount to be
reported to a Regular Interest Securityholder each taxable year (the "Tax
Administrator") intends to base its computations on Code Section 1272(a)(6), the
OID Regulations and the Contingent Regulations as described below. However,
because no regulatory guidance currently exists under Code Section 1272(a)(6),
there can be no assurance that the methodology described below represents the
correct manner of calculating original issue discount on the Regular Interest
Securities.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Regular Interest Security and its issue price.
A holder of a Regular Interest Security must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Regular Interest Security will be considered to be zero if it is less than
a de minimis amount determined under the Code, generally less than 0.25% of the
stated redemption price at maturity of the Regular Interest Security multiplied
by the weighted average maturity of the Regular Interest Security. For this
purpose, the weighted average maturity of the Regular Interest Security is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until each
distribution in reduction of stated redemption price at maturity is scheduled to
be made by a fraction, the numerator of which is the amount of each distribution
included in the stated redemption price at maturity of the Regular Interest
Security and the denominator of which is the stated redemption price at maturity
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of the Regular Interest Security. The schedule of such distributions should be
determined in accordance with the assumed rate of prepayment of the Mortgage
Loans used in pricing the Regular Interest Securities (the "Prepayment
Assumption") relating to the Regular Interest Securities. The Prepayment
Assumption with respect to a Series of Regular Interest Securities will be set
forth in the applicable Prospectus Supplement. However, the amount of any de
minimis OID must be included in income as principal payments are received on a
Regular Interest Security, in the proportion that each such payment bears to the
original principal balance of the Security.
The issue price of a Regular Interest Security of a Class will generally
be the initial offering price at which a substantial amount of the Securities in
the Class are sold, and will be treated by the Issuer as including, in addition,
the amount paid by the Bondholder or Certificateholder for accrued interest that
relates to a period prior to the Closing Date of such Regular Interest Security.
Under the OID Regulations, the stated redemption price at maturity is the sum of
all payments on the Security other than any "qualified stated interest"
payments. Qualified stated interest is defined as any one of a series of
payments equal to the product of the outstanding principal balance of the
Security and a single fixed rate, or certain variable rates of interest, that is
unconditionally payable at least annually. See "--Variable Rate Securities"
below. In the case of the Compound Interest Securities, Interest Weighted
Securities and certain of the other Regular Interest Securities, none of the
payments under the instrument will be considered "qualified stated interest,"
and thus the aggregate amount of all payments will be included in the stated
redemption price. For example, any securities upon which interest can be
deferred and added to principal ("Deferred Interest Securities") will not be
"qualified stated interest." In addition, because Securities Owners are entitled
to receive interest only to the extent that payments are made on the Mortgage
Loans, interest on all Regular Interest Securities may not be "unconditionally
payable." In that case, all of the yield on a Regular Interest Security will be
taxed as OID, but interest would not then be includable in income again when
received. Unless otherwise specified in the related Prospectus Supplement, the
Issuer intends to take the position for income tax information reporting
purposes that interest on the Regular Interest Securities is "unconditionally
payable."
The holder of a Regular Interest Security issued with OID must include in
gross income, for all days during its taxable year on which it holds such
Regular Interest Security, the sum of the "daily portions" of such OID. Such
daily portions are computed by allocating to each day during a taxable year a
pro rata portion of the OID that accrued during the relevant accrual period. In
the case of a debt instrument, subject to Section 1272(a)(6) of the Code, such
as a Regular Interest Security, that is subject to acceleration due to
prepayments on other debt obligations securing such instrument, OID is computed
by taking into account the Prepayment Assumption. The amount of OID that will
accrue during an accrual period (generally the period between interest payments
or compounding dates) is the excess (if any) of (i) the sum of (a) the present
value of all payments remaining to be made on the Regular Interest Security as
of the close of the accrual period and (b) the payments during the accrual
period of amounts included in the stated redemption price of the Regular
Interest Security, over (ii) an "adjusted issue price" of the Regular Interest
Security at the beginning of the accrual period. The adjusted issue price of a
Regular Interest Security is the sum of its issue price plus prior accruals of
OID, reduced by the total payments made with respect to such Regular Interest
Security in all prior periods, other than qualified stated interest payments.
The present value of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Regular Interest Security
(determined on the basis of compounding at the end of each accrual period and
properly adjusted for the length of the accrual period), (ii) events which have
occurred before the end of the accrual period and (iii) the assumption that the
remaining payments will be made in accordance with the original Prepayment
Assumption. Although original issue discount will be reported to Bondholders or
Certificateholders based on the Prepayment Assumption, no representation is made
to Bondholders or Certificateholders that Mortgage Loans will be prepaid at that
rate or at any other rate.
Certain classes of Regular Interest Securities may represent more than one
class of REMIC regular interests. Unless the applicable Prospectus Supplement
specifies otherwise, the Trustee intends, based on the OID Regulations, to
calculate OID on such Regular Interest Securities as if, solely for the purposes
of computing OID, the separate regular interests were a single debt instrument.
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Certain Series of Securities may be structured to include two or more
REMICs, one or more of which (each, an "Upper Tier REMIC") hold regular
interests ("Lower Tier Interests") in other REMICs (each, a "Lower Tier REMIC").
Under the OID Regulations, OID on all of the Lower Tier Interests issued by a
single Lower Tier REMIC that are held by a second REMIC will be calculated by
treating all of such Lower Tier Interests as a single debt instrument.
A holder of a Regular Interest Security, which acquires the Regular
Interest Security for an amount that exceeds its stated redemption price, will
not include any original issue discount in gross income. A subsequent holder of
a Regular Interest Security which acquires the Regular Interest Security for an
amount that is less than its stated redemption price, will be required to
include original issue discount in gross income, but such a holder who purchases
such Regular Interest Security for an amount that exceeds its adjusted issue
price will be entitled (as will an initial holder who pays more than a Regular
Interest Security's issue price) to offset such original issue discount by
comparable economic accruals of offsetting portions of such excess.
Interest Weighted Securities. It is not clear how income should be accrued
with respect to Regular Interest Securities the payments on which consist solely
or primarily of a specified portion of the interest payments on qualified
mortgages held by a REMIC ("Interest Weighted Securities"). Absent guidance to
the contrary, the Issuer intends to take the position that all of the income
derived from Interest Weighted Securities is treated as OID and that the amount
and rate of accrual of such OID should be calculated in the same manner as for a
Compound Interest Security. Those calculations could result in an income accrual
for a period below zero (a "Negative Adjustment"). The legislative history to
the relevant Code provisions indicates, and the relevant Code provisions appear
to provide that any such Negative Adjustment may not be taken as current loss or
deduction, but may only be carried forward to offset future accruals of positive
OID. Thus, in the absence of such accruals of positive OID, it appears that any
losses resulting from a Negative Adjustment must be carried forward until
disposition or retirement of the debt obligation, and may give rise to a capital
loss at that time. However it is possible that income derived from an Interest
Weighted Security that had a principal balance might be calculated as if the
Interest Weighted Security were a bond purchased at a premium equal to the
excess of the price paid by such holder for the Interest Weighted Security over
its stated principal amount, if any. Under this approach, a holder would be
entitled to amortize such premium only if it had in effect an election under
Section 171 of the Code with respect to all taxable debt instruments held by
such holder, as described below.
Variable Rate Regular Securities. The REMIC regulations (the "REMIC
Regulations") permit REMICs to issue regular interests bearing a variety of
variable rates including rates based on (i) "qualified floating rates" or (ii) a
weighted average of the interest rates on some or all of the qualified mortgages
held by the REMIC (a "Variable Rate Security"). Under the OID Regulations,
interest is treated as payable at a variable rate if, generally, (i) the issue
price does not exceed the original principal balance by more than a specified
amount and (ii) the interest compounds or is payable at least annually at
current values of (a) one or more "qualified floating rates," (b) a single fixed
rate and one or more qualified floating rates, (c) a single "objective rate," or
(d) a singled fixed rate and a single objective rate that is a "qualified
inverse floating rate." A floating rate is a qualified floating rate if
variations in the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds, where such rate is subject to a
fixed multiple that is greater than 0.65 but not more than 1.35. Such rate may
also be increased or decreased by a fixed spread or subject to a fixed cap or
floor, or a cap or floor that is not reasonably expected as of the issue date to
affect the yield of the instrument significantly. An objective rate is any rate
(other than a qualified floating rate) that is determined using a single fixed
formula and that is based on objective financial or economic information,
provided that such information is not (i) within the control of the issuer or a
related party or (ii) unique to the circumstances of the issuer or a related
party. A qualified inverse floating rate is a rate equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified inverse floating rate may nevertheless be an objective rate.
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Under the OID Regulations, the amount and accrual of OID on a Variable
Rate Security that qualifies for treatment under the rules applicable to
variable rate debt instruments (a "VRDI Security") is determined, in general, by
converting the VRDI Security into a hypothetical fixed rate security and
applying the rules applicable to fixed rate securities described above to the
hypothetical fixed rate security. A VRDI Security providing for a qualified
floating rate or rates or a qualified inverse floating rate is converted to a
hypothetical fixed rate security by assuming that each qualified floating rate
or the qualified inverse floating rate will remain at its value as of the issue
date. A VRDI Security providing for an objective rate or rates is converted to a
hypothetical fixed rate security by assuming that each objective rate will equal
a fixed rate that reflects the yield that reasonably is expected for the
instrument. Such hypothetical fixed rate securities are assumed to have terms
identical to those provided under the related VRDI Securities, except for the
substitution of fixed rates for the qualified floating rates, objective rates,
or qualified inverse floating rate as described above. In the case of a VRDI
Security that does not provide for the payment of interest at least annually,
appropriate adjustments to the OID accruals and the qualified stated interest
payments are made in each accrual period to the extent that the interest
actually accrued or paid during the accrual period is greater or less than the
interest assumed to be accrued or paid under the hypothetical fixed rate
security.
Regular Interest Securities of certain Series may provide for interest
based on a weighted average of the interest rates on some or all of the Mortgage
Loans of the related Trust ("Weighted Average Securities"). Under the OID
Regulations, it appears that Weighted Average Securities bear interest at an
"objective rate."
Due to the complexity of these rules and the variety of Variable Rate
Securities that may be offered hereunder, the precise application of these rules
to any Variable Rate Securities offered hereunder will be discussed in the
related Prospectus Supplement, based on the specific characteristics of each
such security.
Effect of Defaults and Delinquencies. Each holder of a Regular Interest
Security will be required to accrue interest and original issue discount on such
Security without giving effect to any reductions in distributions attributable
to defaults or delinquencies on the Mortgage Loans, until it can be established
that any such reduction ultimately will not be recoverable. As a result, the
amount of taxable income reported in any period by the holder of a Regular
Interest Security could exceed the amount of economic income actually realized
by the holder in such period. Although the holder of a Regular Interest Security
eventually will recognize a loss or reduction in income attributable to
previously accrued and included income that, as a result of such loss,
ultimately will not be paid, the law is unclear with respect to the timing and
character of such losses or reduction in income.
Under Section 166 of the Code, both corporate and noncorporate holders of
Regular Interest Securities that hold such Securities in connection with a trade
of business should be allowed to deduct, as ordinary losses, any losses
sustained during a taxable year in which their Regular Interest Securities
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 Regular Interest Security 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 Regular Interest Security becomes wholly worthless (that is,
until its outstanding principal balance has been reduced to zero) and that the
loss will be characterized as a short-term capital loss.
Market Discount and Premium. A purchaser of a Regular Interest Security
may also be subject to the market discount rules of the Code. Such purchaser
generally will be required to recognize accrued market discount as ordinary
income as payments of principal are received on such Regular Interest Security,
or upon sale or exchange of the Regular Interest Security. In general terms,
until regulations are promulgated, market discount may be treated as accruing,
at the election of the holder, either (i) under a constant yield method, taking
into account the Prepayment Assumption, or (ii) in the ratio of (a) in the case
of a Regular Interest Security not originally issued with original issue
discount, stated interest payable in the relevant period to total stated
interest remaining to be paid at the beginning of the period or (b) in the case
of a Regular Interest Security originally issued at a discount, original issue
discount in the relevant period to total original issue discount remaining to be
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paid. A holder of a Regular Interest Security having market discount may also be
required to defer a portion of the interest deductions attributable to any
indebtedness incurred or continued to purchase or carry the Regular Interest
Security. As an alternative to the inclusion of market discount in income on the
foregoing basis, the holder may elect to include such market discount in income
currently as it accrues on all market discount instruments acquired by such
holder in that taxable year or thereafter, in which case the interest deferral
rule will not apply.
A holder who purchases a Regular Interest Security (other than an Interest
Weighted Security, to the extent described above) at a cost greater than its
stated redemption price at maturity, generally will be considered to have
purchased the Security at a premium, which it may elect to amortize as an offset
to interest income on such Security (and not as a separate deduction item) on a
constant yield method. Although no regulations addressing the computation of
premium accrual on collateralized mortgage obligations or REMIC regular
interests have been issued, applicable legislative history indicates that
premium is to be accrued in the same manner as market discount. Accordingly, it
appears that the accrual of premium on a Regular Interest Security will be
calculated using the prepayment assumption used in pricing such Regular Interest
Security. If a holder makes an election to amortize premium on a Security, such
election will apply to all taxable debt instruments (including all REMIC regular
interests) held by the holder at the beginning of the taxable year in which the
election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Regular Interest Security should
consult their tax advisers regarding the election to amortize premium and the
method to be employed.
Election to Treat All Interest Under the Constant Yield Method. A holder
of a debt instrument such as a Regular Interest Security may elect to treat all
interest that accrues on the instrument using the constant yield method, with
none of the interest being treated as qualified stated interest. For purposes of
applying the constant yield method to a debt instrument subject to such an
election, (i) "interest" includes stated interest, original issue discount, de
minimis original issue discount, market discount and de minimis market discount,
as adjusted by any amortizable bond premium or acquisition premium and (ii) the
debt instrument is treated as if the instrument were issued on the holder's
acquisition date in the amount of the holder's adjusted basis immediately after
acquisition. It is unclear whether, for this purpose, the initial Prepayment
Assumption would continue to apply or if a new prepayment assumption as of the
date of the holder's acquisition would apply. A holder generally may make such
an election on an instrument by instrument basis or for a class or group of debt
instruments. However, if the holder makes such an election with respect to a
debt instrument with amortizable bond premium or with market discount, the
holder is deemed to have made elections to amortize bond premium or to report
market discount income currently as it accrues under the constant yield method,
respectively, for all premium bonds held or market discount bonds acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Internal Revenue
Service. Investors should consult their own tax advisors regarding the
advisability of making such an election.
Sale or Exchange of Regular Interest Securities
A Regular Bondholder's or Regular Certificateholder's tax basis in its
Regular Interest Securities is the price such holder pays for a Security, plus
amounts of original issue discount and market discount included in income and
reduced by any payments received (other than qualified periodic interest
payments), any amortized premium, and any prior losses. Gain or loss recognized
on a sale, exchange, or redemption of a Regular Interest Securities, measured by
the difference between the amount realized and the Regular Interest Security's
basis as so adjusted, will generally be capital gain or loss, assuming that the
Regular Interest Security is held as a capital asset. If, however, a Regular
Bondholder or Regular Certificateholder is a bank, thrift, or similar
institution described in Section 582 of the Code, gain or loss realized on the
sale or exchange of a Regular Interest Security will be taxable as ordinary
income or loss. In addition, gain from the disposition of a Regular Interest
Security that might otherwise be capital gain will be treated as ordinary income
to the extent of the excess, if any, of (i) the
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amount that would have been includable in the holder's income if the yield on
such Regular Interest Security had equaled 110% of the applicable federal rate
as of the beginning of such holder's holding period, over (ii) the amount of
ordinary income actually recognized by the holder with respect to such Regular
Interest Security. The Taxpayer Relief Act of 1997 (the "1997 Act") has
generally reduced capital gains tax rates for non-corporate taxpayers, who
should consult their tax advisors regarding the consequences to them of the 1997
Act. There is no such discrepancy in tax rates on capital gains and ordinary
income in the case of corporations.
REMIC Expenses
As a general rule, all of the expenses of a REMIC will be taken into
account by holders of the Residual Interest Securities or the REMIC residual
interest. In the case of a "single class REMIC," however, the expenses will be
allocated, under temporary Treasury regulations, among the holders of the
Regular Interest Securities and the holders of the Residual Interest Securities
on a daily basis in proportion to the relative amounts of income accruing to
each Bondholder or Certificateholder on that day. In the case of a holder of a
Regular Interest Security who is an individual or a "pass-through interest
holder" (including certain pass-through entities but not including real estate
investment trusts), such expenses will be deductible only to the extent that
such expenses, plus other "miscellaneous itemized deductions" of the Bondholder
or Certificateholder exceed 2% of such Bondholder's or Certificateholder's
adjusted gross income and will not be deductible in computing alternative
minimum taxable income. In addition, Code Section 68 provides that the amount of
itemized deductions otherwise allowable for the taxable year for an individual
whose adjusted gross income exceeds the applicable amount (for 1991, $100,000,
or $50,000 in the case of a separate return by a married individual within the
meaning of Code Section 7703, which amounts will be adjusted annually for
inflation) will be reduced by the lesser of (i) 3% of the excess of adjusted
gross income over the applicable amount, or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. Moreover, such expenses
are disallowed entirely as deductions for purposes of the Alternative Minimum
Tax. The disallowance of this deduction may have a significant impact on the
yield of the Regular Interest Security to such a holder. In general terms, a
single class REMIC is one that either (i) would qualify, under existing Treasury
regulations, as a grantor trust if it were not a REMIC (treating all interests
as ownership interests, even if they would be classified as debt for federal
income tax purposes) or (ii) is similar to such a trust and which is structured
with the principal purpose of avoiding the single class REMIC rules.
Unless otherwise disclosed in the related Prospectus Supplement, REMICs
issuing securities offered hereunder will not be treated as "single class"
REMICs under these rules.
Taxation of the REMIC
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to entity-level tax. Rather, the
taxable income or net loss of a REMIC is taken into account by the holders of
residual interests. The regular interests are generally taxable as debt of the
REMIC.
Calculation of REMIC Income. The taxable income or net loss of a REMIC is
determined under an accrual method of accounting and in the same manner as in
the case of an individual, with certain adjustments. In general, the taxable
income or net loss will be the difference between (i) the gross income produced
by the REMIC's assets, including stated interest and any original issue discount
or market discount on loans and other assets, income from amortization of
premium on Regular Interest Securities issued at a premium and income from
write-off of Regular Interest Securities, and (ii) deductions, including stated
interest and original issue discount accrued on a Regular Interest Security,
amortization of any premium with respect to loans, losses on Mortgage Loans, and
servicing fees and other expenses of the REMIC. A holder of a Residual Interest
Security that is an individual or a "pass-through interest holder" (including
certain pass-through entities, but not including real estate investment trusts)
will be unable to deduct servicing fees payable on the loans or other
administrative expenses of the REMIC for a given taxable year, to the extent
that such expenses, when aggregated with the Residual Interest Securityholder's
other miscellaneous itemized deductions for that year, do not exceed two percent
of such
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holder's adjusted gross income. In addition, Code Section 68 provides that the
amount of itemized deductions otherwise allowable for the taxable year for an
individual whose adjusted gross income exceeds a specified applicable amount
will be reduced by the lesser of (i) 3% of the excess of adjusted gross income
over the applicable amount, or (ii) 80% of the amount of itemized deductions
otherwise allowable for such taxable year. See "--REMIC Expenses" above.
For purposes of computing its taxable income or net loss, the REMIC should
have an initial aggregate tax basis in its assets equal to the aggregate fair
market value of the regular interests and the residual interests on the Start Up
Day (generally, the day that the interests are issued). That aggregate basis
will be allocated among the assets of the REMIC in proportion to their
respective fair market values.
The original issue discount provisions of the Code apply to loans of
individuals originated on or after March 2, 1984, and the market discount
provisions apply to all loans. Subject to possible application of the de minimis
rules, the method of accrual by the REMIC of original issue discount on such
loans will be equivalent to the method under which holders of Regular Interest
Securities accrue original issue discount (i.e., under the constant yield method
taking into account the Prepayment Assumption). The REMIC will deduct original
issue discount on the Regular Interest Securities in the same manner that the
holders of the Securities include such discount in income, but without regard to
the de minimis rules. See "--Taxation of Regular Interest Securities" above.
However, a REMIC that acquires loans at a market discount must include such
market discount in income currently, as it accrues, on a constant interest
basis.
To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.
Income from Foreclosure Property. To the extent that the Lower Tier REMIC
derives income from Foreclosed Properties that is treated as "net income from
foreclosure property," that income will be subject to taxation at the highest
corporate tax rate. Net income from foreclosure property generally includes gain
from the sale of a foreclosure property that is inventory property and net
income from the property that would not be treated as "rents from real property"
or other certain other qualifying income for a real estate investment trust. A
trust agreement or indenture may permit the Servicer to operate a Foreclosed
Property in a manner that produces income subject to the foregoing tax if
certain conditions are satisfied. In addition, if the operation of the
Foreclosed Property is treated as a trade or business carried on by the REMIC,
then unless the property is operated through an independent contractor, the
income from the foreclosed property will be subject to tax on "net income from
foreclosure property" at a rate of 100%. Accordingly, operation of Foreclosed
Properties generally will be required to be conducted through an independent
contractor.
Prohibited Transactions and Contributions Tax. The REMIC will be subject
to a 100% tax on any net income derived from a "prohibited transaction." For
this purpose, net income will be calculated without taking into account any
losses from other prohibited transactions or any deductions attributable to any
prohibited transaction that resulted in a loss. In general, prohibited
transactions include (i) subject to limited exceptions, the sale or other
disposition of any qualified mortgage transferred to the REMIC; (ii) subject to
a limited exception, the sale or other disposition of a cash flow investment;
(iii) the receipt of any income from assets not permitted to be held by the
REMIC pursuant to the Code; or (iv) the receipt of any fees or other
compensation for services rendered by the REMIC. It is anticipated that a REMIC
will not engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, subject to a number of exceptions, a
tax is imposed at the rate of 100% on amounts contributed to a REMIC after the
close of the three-month period beginning on the Start Up Day. Unless chargeable
to the servicer or trustee under the applicable Trust Agreement
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or Indenture, such taxes will be paid out of the assets of the REMIC and, unless
otherwise specified in the related Prospectus Supplement, will be allocated pro
rata to all outstanding Classes of Securities of such REMIC.
Taxation of Holders of Residual Interest Securities
The Holder of a Security representing a REMIC residual interest (a
"Residual Interest Security") will take into account the "daily portion" of the
taxable income or net loss of the REMIC for each day during the taxable year on
which such holder held the Residual Interest Security. The daily portion is
determined by allocating to each day in any calendar quarter its ratable portion
of the taxable income or net loss of the REMIC for such quarter, and by
allocating that amount among the holders (on such day) of the Residual Interest
Securities in proportion to their respective holdings on such day.
The holder of a Residual Interest Security must report its proportionate
share of the taxable income of the REMIC whether or not it receives cash
distributions from the REMIC attributable to such income or loss. The reporting
of taxable income without corresponding distributions could occur, for example,
in certain REMIC issues in which the loans held by the REMIC were issued or
acquired at a discount, since mortgage prepayments cause recognition of discount
income, while the corresponding portion of the prepayment could be used in whole
or in part to make principal payments on Regular Interest Securities issued
without any discount or at an insubstantial discount. (If this occurs, it is
likely that cash distributions will exceed taxable income in later years.)
Taxable income may also be greater in earlier years of certain REMIC issues as a
result of the fact that interest expense deductions, as a percentage of
outstanding principal on Regular Interest Securities, will typically increase
over time as lower yielding Securities are paid, whereas interest income with
respect to loans will generally remain constant over time as a percentage of
loan principal.
In any event, because the holder of a residual interest is taxed on the
net income of the REMIC, the taxable income derived from a Residual Interest
Security in a given taxable year will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pretax yield. Therefore, the after-tax
yield on the Residual Interest Security may be less than that of such a bond or
instrument, or may be negative. Consequently, a Residual Interest Security may
have a negative "value".
Limitation on Losses. The amount of the REMIC's net loss that a holder may
take into account currently is limited to the holder's adjusted basis at the end
of the calendar quarter in which such loss arises. A holder's basis in a
Residual Interest Security will initially equal such holder's purchase price,
and will subsequently be increased by the amount of the REMIC's taxable income
allocated to the holder, and decreased (but not below zero) by the amount of
distributions made and the amount of the REMIC's net loss allocated to the
holder. Any disallowed loss may be carried forward indefinitely, but may be used
only to offset income generated by the same REMIC. The ability of Residual
Bondholders or Residual Certificateholders to deduct net losses may be subject
to additional limitations under the Code, as to which such holders should
consult their tax advisers.
Distributions. Distributions on a Residual Interest Security (whether at
their scheduled times or as a result of prepayments) will generally not result
in any additional taxable income or loss to a holder of a Residual Interest
Security. If the amount of such payment exceeds a holder's adjusted basis in the
Residual Interest Security, however, the holder will recognize gain (treated as
gain from the sale of the Residual Interest Security) to the extent of such
excess.
Mark-to-Market Rules. A Residual Interest Security is not treated as a
security and thus may not be marked to market under Treasury regulations that
generally require a securities dealer to mark to market securities held for sale
to customers.
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Sale or Exchange. A holder of a Residual Interest Security will recognize
gain or loss on the sale or exchange of a Residual Interest Security equal to
the difference, if any, between the amount realized and such Bondholder's or
Certificateholder's adjusted basis in the Residual Interest Security at the time
of such sale or exchange. Except to the extent provided in regulations, which
have not yet been issued, any loss upon disposition of a Residual Interest
Security will be disallowed if the selling Bondholder or Certificateholder
acquires any residual interest in a REMIC or similar mortgage pool within six
months before or after such disposition.
Excess Inclusion Income
The portion of a Residual Bondholder's or Residual Certificateholder's
REMIC taxable income consisting of "excess exclusion" income may not be offset
by other deductions or losses, including net operating losses, on such
Bondholder's or Certificateholder's federal income tax return. Further, if the
holder of a Residual Interest Security is an organization subject to the tax on
unrelated business income imposed by Code Section 511, such Residual
Bondholder's or Residual Certificateholder's excess inclusion income will be
treated as unrelated business taxable income of such Bondholder or
Certificateholder's. In addition, under Treasury regulations yet to be issued,
if a real estate investment trust, a regulated investment company, a common
trust fund, or certain cooperatives were to own a Residual Interest Security, a
portion of dividends (or other distributions) paid by the real estate investment
trust (or other entity) would be treated as excess inclusion income. If a
Residual Interest Security is owned by a foreign person, excess inclusion income
is subject to tax at a rate of 30% which may not be reduced by treaty and is not
eligible for treatment as "portfolio interest."
The excess inclusion portion of a REMIC's income is generally equal to the
excess, if any, of REMIC taxable income for the quarterly period allocable to a
Residual Interest Security, over the daily accruals for such quarterly period of
(i) 120% of the long term applicable federal rate on the Start Up Day multiplied
by (ii) the adjusted issue price of such Residual Interest Security at the
beginning of such quarterly period. The adjusted issue price of a Residual
Interest Security at the beginning of each calendar quarter will equal its issue
price (calculated in a manner analogous to the determination of the issue price
of a Regular Interest Security), increased by the aggregate of the daily
accruals for prior calendar quarters, and decreased (but not below zero) by the
amount of loss allocated to a holder and the amount of distributions made on the
Residual Interest Security before the beginning of the quarter. The long-term
federal rate, which is announced monthly by the Treasury Department, is an
interest rate that is based on the average market yield of outstanding
marketable obligations of the United States government having remaining
maturities in excess of nine years.
Under the REMIC Regulations, in certain circumstances, transfers of
Residual Interest Securities may be disregarded. See "--Restrictions on
Ownership and Transfer of Residual Interest Securities" and "--Tax Treatment of
Foreign Investors" below.
Restrictions on Ownership and Transfer of Residual Interest Securities
As a condition to qualification as a REMIC, reasonable arrangements must
be made to prevent the ownership of a REMIC residual interest by any
"Disqualified Organization." Disqualified Organizations include the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, a rural electric or telephone cooperative described in Section
1381(a)(2)(C) of the Code, or any entity exempt from the tax imposed by Sections
1-1399 of the Code, if such entity is not subject to tax on its unrelated
business income. Accordingly, the Indenture or Trust Agreement, as applicable,
will prohibit Disqualified Organizations from owning a Residual Interest
Security. In addition, no transfer of a Residual Interest Security will be
permitted unless the proposed transferee shall have furnished to the Issuer an
affidavit representing and warranting that it is neither a Disqualified
Organization nor an agent or nominee acting on behalf of a Disqualified
Organization.
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If a Residual Interest Security is transferred to a Disqualified
Organization (in violation of the restrictions set forth above), a substantial
tax will be imposed on the transferor of such Residual Interest Security at the
time of the transfer. In addition, if a Disqualified Organization holds an
interest in a pass-through entity (including, among others, a partnership,
trust, real estate investment trust, regulated investment company, or any person
holding as nominee), that owns a Residual Interest Security, the pass-through
entity will be required to pay an annual tax on its share of the excess
inclusion income of the REMIC allocable to such Disqualified Organization.
Under the REMIC Regulations, if a Residual Interest Security is a
"noneconomic residual interest," as described below, a transfer of a Residual
Interest Security to a United States person will be disregarded for all Federal
tax purposes unless no significant purpose of the transfer was to impede the
assessment or collection of tax. A Residual Interest Security is a "noneconomic
residual interest" unless, at the time of the transfer (i) the present value of
the expected future distributions on the Residual Interest Security at least
equals the product of the present value of the anticipated excess inclusions and
the highest rate of tax for the year in which the transfer occurs, and (ii) the
transferor reasonably expects that the transferee will receive distributions
from the REMIC at or after the time at which the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. The
present value is calculated based on the Prepayment Assumption, using a discount
rate equal to the "applicable federal rate" at the time of transfer. If a
transfer of a residual interest is disregarded, the transferor would be liable
for any Federal income tax imposed upon taxable income derived by the transferee
from the REMIC. A significant purpose to impede the assessment or collection of
tax exists if the transferor, at the time of transfer, knew or should have known
that the transferee would be unwilling or unable to pay taxes on its share of
the taxable income of the REMIC. A similar limitation exists with respect to
certain transfers of residual interests by foreign persons to United States
persons. See "--Tax Treatment of Foreign Investors" below.
Administrative Matters
The REMIC's books must be maintained on a calendar year basis and the
REMIC must file an annual federal income tax return. The REMIC will also be
subject to the procedural and administrative rules of the Code applicable to
partnerships, including the determination of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction, or credit, by the Internal
Revenue Service in a unified administrative proceeding. The holder of the
Residual Interest Security holding the largest percentage interest will be
designated as "tax matters person" of the related REMIC for purposes of any such
proceeding.
Tax Status as a Grantor Trust
General. If the applicable Prospectus Supplement so specifies with respect
to a Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead, special tax counsel to the Issuer will deliver its opinion to the
effect that the arrangement by which the Securities of that Series are issued
will be treated as a "grantor" or "fixed investment" trust as long as all of the
provisions of the applicable Trust Agreement are complied with and the statutory
and regulatory requirements are satisfied. In some Series ("Pass-Through
Certificates"), there will be no separation of the principal and interest
payments on the Mortgage Loans. In such circumstances, a Certificateholder will
be considered to have purchased an undivided interest in each of the Mortgage
Loans. In other cases ("Stripped Certificates"), sale of the Certificates will
produce a separation in the ownership of the principal payments and interest
payments on the Mortgage Loans.
Each Certificateholder must report on its federal income tax return its
pro rata share of the gross income derived from the Mortgage Loans (not reduced
by the amount payable as fees to the Trustee and the Master Servicer and similar
fees (collectively, the "Servicing Fee")), at the same time and in the same
manner as such items would have been reported under the Certificateholder's tax
accounting method had it held its interest in the Mortgage Loans directly,
received directly its share of the amounts received with respect to the Mortgage
Loans,
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and paid directly its share of the Servicing Fees. In the case of Pass-Through
Certificates, such gross income will consist of a pro rata share of all of the
income derived from all of the Mortgage Loans and, in the case of Stripped
Certificates, such income will consist of a pro rata share of the income derived
from each stripped bond or stripped coupon in which the Certificateholder owns
an interest. The holder of a Certificate will generally be entitled to deduct
such Servicing Fees under Section 162 or Section 212 of the Code to the extent
that such Servicing Fees represent "reasonable" compensation for the services
rendered by the Trustee, the Master Servicer, and any other service providers.
In the case of a noncorporate holder, however, Servicing Fees (to the extent not
otherwise disallowed, e.g., because they exceed reasonable compensation) will be
deductible in computing such holder's regular tax liability only to the extent
that such fees, when added to other miscellaneous itemized deductions, exceed 2%
of adjusted gross income and may not be deductible to any extent in computing
such holder's alternative minimum tax liability. In addition, Code Section 68
provides that the amount of itemized deductions otherwise allowable for the
taxable year for an individual whose adjusted gross income exceeds a specified
applicable amount will be reduced by the lesser of (i) 3% of the excess of
adjusted gross income over the applicable amount, or (ii) 80% of the amount of
itemized deductions otherwise allowable for such taxable year.
Discount or Premium on Pass-Through Certificates. The holder's purchase
price of a Pass-Through Certificate is to be allocated among the Mortgage Loans
in proportion to their fair market values, determined as of the time of purchase
of the Certificates. In the typical case, the Trustee believes it is reasonable
for this purpose to treat each Mortgage Loan as having a fair market value
proportional to the share of the aggregate principal balances of all of the
Mortgage Loans that it represents, to the extent that the Mortgage Loans
underlying a series have a relatively uniform interest rate and other common
characteristics. To the extent that the portion of the purchase price of a
Certificate allocated to a Mortgage Loan (other than to a right to receive any
accrued interest thereon and any undistributed principal payments) is less than
or greater than the portion of the principal balance of the Mortgage Loan
allocable to the Certificate, the interest in the Mortgage Loan allocable to the
Certificate will be deemed to have been acquired at a discount or premium,
respectively.
The treatment of any discount will depend on whether the discount
represents original issue discount or market discount. Under Legislation enacted
in 1997, Section 1272(a)(6) of the Code requires in the case of a pool of
Mortgage Loans with original issue discount in excess of a prescribed de minimis
amount, that a holder of a Certificate report as interest income in each taxable
year its share of the amount of original issue discount that accrues during that
year, determined under a constant yield method by reference to the initial yield
to maturity of the Mortgage Loan, based on a prepayment assumption, in advance
of receipt of the cash attributable to such income and regardless of the method
of federal income tax accounting employed by that holder. It is unclear when
such prepayment assumption is determined or adjusted. Original issue discount
with respect to a Mortgage Loan could arise for example by virtue of the
financing of points by the originator of the Mortgage Loan, or by virtue of the
charging of points by the originator of the Mortgage Loan in an amount greater
than a statutory de minimis exception, in circumstances under which the points
are not currently deductible pursuant to applicable Code provisions. However,
the OID Regulations provide that if a holder acquires an obligation at a price
that exceeds its stated redemption price, the holder will not include any
original issue discount in gross income. In addition, if a subsequent holder
acquires an obligation for an amount that exceeds its adjusted issue price, the
subsequent holder will be entitled to offset the original issue discount with
economic accruals of portions of such excess. Accordingly, if the Mortgage Loans
acquired by a Certificateholder are purchased at a price that exceeds the
adjusted issue price of such Mortgage Loans, any original issue discount will be
reduced or eliminated.
Certificateholders also may be subject to the market discount rules of
Sections 1276-1278 of the Code. A Certificateholder that acquires an interest in
Mortgage Loans with more than a prescribed de minimis amount of "market
discount" (generally, the excess of the principal amount of the Mortgage Loans
over the purchaser's purchase price) will be required under Section 1276 of the
Code to include accrued market discount in income as ordinary income in each
month, but limited to an amount not exceeding the principal payments on the
Mortgage Loans received in that month and, if the Certificates are sold, the
gain realized. Such market discount
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would accrue, using a prepayment assumption, in a manner to be provided in
Treasury regulations. The relevant legislative history of the 1986 Act indicates
that, until such regulations are issued, such market discount would in general
accrue either (i) on the basis of a constant interest rate or (ii) in the ratio
of (a) in the case of Mortgage Loans not originally issued with original issue
discount, stated interest payable in the relevant period to total stated
interest remaining to be paid at the beginning of the period or (b) in the case
of Mortgage Loans originally issued at a discount, original issue discount in
the relevant period to total original issue discount remaining to be paid.
Section 1277 of the Code provides that the excess of interest paid or
accrued to purchase or carry a loan with market discount over interest received
on such loan is allowed as a current deduction only to the extent such excess is
greater than the market discount that accrued during the taxable year in which
such interest expense was incurred. In general, the deferred portion of any
interest expense will be deductible when such market discount is included in
income, including upon the sale, disposition, or repayment of the loan. A holder
may elect to include market discount in income currently as it accrues, on all
market discount obligations acquired by such holder during the taxable year such
election is made and thereafter, in which case the interest deferral rule
discussed above will not apply.
A Certificateholder who purchases a Certificate at a premium generally
will be deemed to have purchased its interest in the underlying Mortgage Loans
at a premium. A Certificateholder who holds a Certificate as a capital asset may
generally elect under Section 171 of the Code to amortize such premium as an
offset to interest income on the Mortgage Loans (and not as a separate deduction
item) on a constant yield method. The legislative history of the 1986 Act
suggests that the same rules that will apply to the accrual of market discount
(described above), which rules now appear to require the use of a prepayment
assumption, will generally also apply in amortizing premium with respect to
Mortgage Loans originated after September 27, 1985. If a holder makes an
election to amortize premium, such election will apply to all taxable debt
instruments held by such holder at the beginning of the taxable year in which
the election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Certificates should consult their
tax advisers regarding the election to amortize premium and the method to be
employed. Although the law is somewhat unclear regarding recovery of premium
allocable to Mortgage Loans originated before September 28, 1985, it is possible
that such premium may be recovered in proportion to payments of Mortgage Loan
principal.
Discount or Premium on Stripped Certificates. A Stripped Certificate may
represent a right to receive only a portion of the interest payments on the
Mortgage Loans, a right to receive only principal payments on the Mortgage
Loans, or a right to receive certain payments of both interest and principal.
Certain Stripped Certificated ("Ratio Strip Certificates") may represent a right
to receive differing percentages of both the interest and principal on each
Mortgage Loan. Pursuant to Section 1286 of the Code, the separation of ownership
of the right to receive some or all of the interest payments on an obligation
from ownership of the right to receive some or all of the principal payments
results in the creation of "stripped bonds" with respect to principal payments
and "stripped coupons" with respect to interest payments. Section 1286 of the
Code applies the original issue discount rules to stripped bonds and stripped
coupons. For purposes of computing original issue discount, a stripped bond or a
stripped coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased with an issue price equal to its purchase price
or, if more than one stripped interest is purchased, the ratable share of the
purchase price allocable to such stripped interest. The Code, the OID
Regulations, and judicial decisions provide no direct guidance as to how the
interest and original issue discount rules are to apply to Stripped
Certificates. Under the method described above for REMIC Regular Interest
Certificates (the "Cash Flow Bond Method"), a prepayment assumption is used and
periodic recalculations are made which take into account with respect to each
accrual period the effect of prepayments during such period. Legislation enacted
in 1997 extends this treatment to instruments such as the Stripped Certificates.
The Cash Flow Bond Method will consequently be used in preparing information
reports as to the income accruing on such Certificates, and it is expected that
original issue discount will be reported on that basis. In applying the
calculation to a class of Certificates, the
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Trustee will treat all payments to be received with respect to the Certificates,
whether attributable to principal or interest on the loans, as payments on a
single installment obligation, in the case of a Class of Certificates that has
no right, or a nominal right, to receive principal, and as includable in the
stated redemption price at maturity. In the case of a "stripped bond" which is
entitled to a significant amount of principal, the Trustee intends to take the
position that interest payments are "qualified stated interest." The Internal
Revenue Service could, however, assert that original issue discount must be
calculated separately for each Mortgage Loan underlying a Certificate. In
addition, in the case of Ratio Strip or similar Certificates, the Internal
Revenue Service could assert that original issue discount must be calculated
separately for each stripped coupon or stripped bond underlying a Certificate.
Under certain circumstances, if the Mortgage Loans prepay at a rate faster
than the Prepayment Assumption, the use of the Cash Flow Bond Method may
accelerate a Certificateholder's recognition of income. If, however, the
Mortgage Loans prepay at a rate slower than the prepayment assumption, in some
circumstances the use of this method may decelerate a Certificateholder's
recognition of income.
A Stripped Certificate which either embodies only interest payments on the
underlying loans or (if it embodies some principal payments on the Mortgage
Loans) is issued at a price that exceeds the principal payments (an "Interest
Weighted Certificate"), may be taxed as a contingent payment instrument.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates described above are not the only possible interpretations
of the applicable Code provisions. Among other possibilities, the Internal
Revenue Service could contend that (i) in certain Series, each non-Interest
Weighted Certificate is composed of an unstripped undivided ownership interest
in Mortgage Loans and an installment obligation consisting of stripped principal
payments; (ii) the non-Interest Weighted Certificates are subject to the OID
Regulations; (iii) each Interest Weighted Certificate is composed of an
unstripped undivided ownership interest in the Mortgage Loans and an installment
obligation consisting of stripped interest payments; or (iv) there are as many
stripped bonds or stripped coupons as there are scheduled payments of principal
and/or interest on each Mortgage Loan.
Given the variety of alternatives for treatment of the Certificates and
the different federal income tax consequences that result from each alternative,
potential purchasers are urged to consult their own tax advisers regarding the
proper treatment of the Certificates for federal income tax purposes.
Character as Qualifying Mortgage Loans. In the case of Stripped
Certificates there is no specific legal authority existing regarding whether the
character of the Certificates, for federal income tax purposes, will be the same
as the Mortgage Loans. The IRS could take the position that the Mortgage Loans'
character is not carried over to the Certificates in such circumstances.
Pass-Through Certificates will be, and, although the matter is not free from
doubt, Stripped Certificates should be considered to represent "real estate
assets" within the meaning of Section 856(c)(5)(B) of the Code, and "loans . . .
secured by an interest in real property which is . . . residential real
property" within the meaning of Section 7701(a)(19)(C)(v) of the Code, and
interest income attributable to the Certificates should be considered to
represent "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code, in each case to the extent the underlying Mortgage Loans qualify for such
treatments. However, Mortgage Loans secured by non-residential real property
will not constitute "loans . . . secured by an interest in real property which
is . . . residential real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code. In addition, it is possible that various reserve
funds underlying the Certificates may cause a proportionate reduction in the
above-described qualifying status categories of Certificates.
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Sale of Certificates. As a general rule, if a Certificate is sold, gain or
loss will be recognized by the holder thereof in an amount equal to the
difference between the amount realized on the sale and the Certificateholder's
adjusted tax basis in the Certificate. Such gain or loss will generally be
capital gain or loss if the Certificate is held as a capital asset. In the case
of Pass-Through Certificates, such tax basis will generally equal the holder's
cost of the Certificate increased by any discount income with respect to the
loans represented by such Certificate previously included in income, and
decreased by the amount of any distributions of principal previously received
with respect to the Certificate. Such gain, to the extent not otherwise treated
as ordinary income, will be treated as ordinary income to the extent of any
accrued market discount not previously reported as income. In the case of
Stripped Certificates, the tax basis will generally equal the
Certificateholder's cost for the Certificate, increased by any discount income
with respect to the Certificate previously included in income, and decreased by
the amount of all payments previously received with respect to such Certificate.
Miscellaneous Tax Aspects
Backup Withholding. A Bondholder or Certificateholder, other than a
Residual Bondholder or Residual Certificateholder, may, under certain
circumstances, be subject to "backup withholding" at the rate of 31% with
respect to distributions or the proceeds of a sale of certificates to or through
brokers that represent interest or original issue discount on the Securities.
This withholding generally applies if the holder of a Security (i) fails to
furnish the Issuer with its taxpayer identification number ("TIN"); (ii)
furnishes the Issuer an incorrect TIN; (iii) fails to report properly interest,
dividends or other "reportable payments" as defined in the Code; or (iv) under
certain circumstances, fails to provide the Issuer or such holder's securities
broker with a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that the holder is not subject to backup
withholding. Backup withholding will not apply, however, with respect to certain
payments made to Bondholders or Certificateholders, including payments to
certain exempt recipients (such as exempt organizations) and to certain
Nonresidents (as defined below). Holders of the Securities should consult their
tax advisers as to their qualification for exemption from backup withholding and
the procedure for obtaining the exemption.
The Issuer will report to the Securityholders and to the Internal Revenue
Service for each calendar year the amount of any "reportable payments" during
such year and the amount of tax withheld, if any, with respect to payments on
the Securities.
Tax Treatment of Foreign Investors
Under the Code, unless interest (including OID) paid on a Security (other
than a Residual Interest Security) is considered to be "effectively connected"
with a trade or business conducted in the United States by a nonresident alien
individual, foreign partnership or foreign corporation ("Nonresidents"), such
interest will normally qualify as portfolio interest (except where (i) the
recipient is a holder, directly or by attribution, of 10% or more of the capital
or profits interest in the Issuer or (ii) the recipient is a controlled foreign
corporation to which the Issuer is a related person) and will be exempt from
federal income tax. Upon receipt of appropriate ownership statements, the Issuer
normally will be relieved of the obligation to withhold federal income tax from
such interest payments. These provisions supersede the generally applicable
provisions of the Code that would otherwise require the Issuer to withhold at a
30% rate (unless such rate were reduced or eliminated by an applicable tax
treaty) on, among other things, interest and original issue discount paid to
Nonresidents.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder that is a
Nonresident if such holder owns 10% or more of one or more underlying mortgagors
or if the holder is a controlled foreign corporation that is related to one or
more mortgagors.
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Interest and original issue discount of Bondholders or Certificateholders
who are foreign persons are not subject to withholding if they are effectively
connected with a United States business conducted by the Bondholder or
Certificateholders. In such case, however, they will generally be subject to the
regular United States income tax.
Payments to holders of Residual Interest Securities who are foreign
persons will generally be treated as interest for purposes of the 30% (or lower
treaty rate) United States withholding tax. Holders should assume that such
income does not qualify for exemption from United States withholding tax as
"portfolio interest." To the extent that a payment represents a portion of REMIC
taxable income that constitutes excess inclusion income, a holder of a Residual
Interest Security will not be entitled to an exemption from or reduction of the
30% (or lower treaty rate) withholding tax rule. If the payments are subject to
United States withholding tax, they generally will be taken into account for
withholding tax purposes only when paid or distributed (or when the Residual
Interest Security is disposed of). The Treasury has statutory authority,
however, to promulgate regulations which would require such amounts to be taken
into account at an earlier time in order to prevent the avoidance of tax. Under
the REMIC Regulations, if a Residual Interest Security has tax avoidance
potential, a transfer of a Residual Interest Security to a Nonresident will be
disregarded for all Federal tax purposes. A Residual Interest Security has tax
avoidance potential unless, at the time of the transfer the transferor
reasonably expects that the REMIC will distribute to the transferee residual
holder amounts that will equal at least 30% of each excess inclusion, and that
such amounts will be distributed at or after the time at which the excess
inclusion accrues and not later than the close of the calendar year following
the calendar year of accrual. If a Nonresident transfers a Residual Interest
Security to a United States person, and if the transfer has the effect of
allowing the transferor to avoid tax on accrued excess inclusions, then the
transfer is disregarded and the transferor continues to be treated as the owner
of the Residual Interest Security for purposes of the withholding tax provisions
of the Code. See "--Excess Inclusion Income."
STATE AND LOCAL TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "FEDERAL
INCOME TAX CONSIDERATIONS," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the
Securities. State and local income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state or locality. Therefore, potential
investors should consult their own tax advisors with respect to the various
state and local tax consequences of investment in the Bonds or Certificates. In
particular, potential investors in Residual Interest Securities should consult
their tax advisers regarding the taxation of the Residual Interest Securities in
general and the effect of foreclosure on the Mortgaged Properties on such
taxation.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") subject to
ERISA and persons who have certain specified relationships to such Plans
("Parties in Interest"). ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits certain transactions between
a Plan and Parties in Interest with respect to such Plans ("Prohibited
Transactions"). Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a Plan is considered
to be a fiduciary of such Plan (subject to certain exceptions not here
relevant). Similar restrictions also apply to Plans and other retirement
arrangements, such as individual retirement accounts and Keogh plans, that are
subject to Section 4975 of the Code.
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The Issuer, the Master Servicer, if any, the Servicer, the Trustee or the
provider of Enhancement, if any, because of their activities or the activities
of their respective affiliates, may be considered to be or may become Parties in
Interest with respect to certain Plans. If the Securities are acquired by a Plan
with respect to which the Issuer, the Master Servicer, if any, the Servicer, the
Trustee or the provider of Enhancement, if any, is a Party in Interest, such
transaction might be considered to violate the Prohibited Transaction rules of
ERISA and the Code unless such transaction were subject to one or more statutory
or administrative exemptions such as: Prohibited Transaction Class Exemption
("PTCE") 75-1, which exempts certain transactions involving employee benefit
plans and certain broker-dealers, reporting dealers and banks; PTCE 90-1, which
exempts certain transactions between insurance company pooled separate accounts
and Parties in Interest; PTCE 91-38, which exempts certain transactions between
bank collective investment funds and Parties in Interest; PTCE 95-60, which
exempts certain transactions between insurance company general accounts and
Parties in Interest; PTCE 84-14, which exempts certain transactions effected on
behalf of a Plan by a "qualified plan asset manager"; PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager"; or any other available exemption. Accordingly, prior to making an
investment in the Securities, investing Plans should determine whether the
Issuer is a Party in Interest with respect to such Plan and, if so, whether such
transaction is subject to one or more statutory or administrative exemptions.
Special caution should be exercised before the assets of a Plan (including
assets that may be held in an insurance company's separate or general accounts
where assets in such accounts may be deemed Plan assets for purposes of ERISA)
are used to purchase a Security if the Issuer, the Master Servicer, if any, the
Servicer, the Trustee, the provider of Enhancement, if any, or an affiliate
thereof is a fiduciary with respect to such assets.
The Certificates of a Series will, and the Bonds of a Series could, be
treated as "equity" for purposes of ERISA. Under regulations issued by the
Department of Labor ("DOL") (the "Plan Asset Regulations"), if a Plan makes an
"equity" investment in a corporation, partnership, trust or certain other
entities, the underlying assets and properties of such entity will be deemed for
purposes of ERISA to be assets of the investing Plan unless certain exceptions
set forth in the regulation apply. One such exception applies if the class of
"equity" interests in question is (i) held by 100 or more investors who are
independent of the Issuer and each other, (ii) freely transferable, and (iii)
sold as part of an offering pursuant to (a) an effective registration statement
under the Securities Act of 1933, and then subsequently registered under the
Securities Exchange Act of 1934 or (b) an effective registration statement under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934 ("Publicly Offered
Securities"). In addition, another exception provides that if at all times less
than 25% of the value of all classes of equity interests in the Issuer are held
by "benefit plan investors" (which is defined as including plans subject to
ERISA, individual retirement accounts, certain plans not subject to ERISA, and
entities whose underlying assets include plan assets by reason of plan
investment in such entities), the investing Plan's assets will not include any
of the underlying assets of the Issuer.
If a particular Series is treated as "equity" for purposes of the Plan
Asset Regulations and the underlying assets of the Issuer are treated as assets
of a Plan purchasing Securities of such Series and the Mortgage Assets securing
such Series consists of a single Mortgage Loan or obligations of a single
obligor or related obligors as specified in the related Prospectus Supplement
(e.g., affiliates of the Issuer), and Securities of such Series are acquired by
a Plan with respect to which the obligor or related obligors are Parties in
Interest, such transaction would violate the Prohibited Transaction rules of
ERISA and the Code unless such transaction were subject to one or more statutory
or administrative exemptions such as those described above or any other
available exemption. Accordingly, prior to making an investment in Securities of
such Series, a Plan investor should determine whether such obligor or related
obligors are Parties in Interest with respect to such Plan and, if so, whether
such transaction is subject to one or more of the statutory or administrative
exemptions.
If a particular Series is treated as "equity" for purposes of the Plan
Asset Regulations and the underlying assets of the Issuer are treated as assets
of a Plan purchasing Securities of such Series and the Mortgage Assets securing
such Series consists of multiple Mortgage Loans or obligations of multiple
unrelated obligors as specified in the related Prospectus Supplement, an
investing Plan may not be able to determine whether any of
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the obligors is a Party in Interest with respect to such Plan. In that event,
prior to making an investment in Securities of such Series, such Plan investor
should determine whether one or more statutory or administrative exemptions is
applicable.
Furthermore, in either of the cases above, if the Issuer were deemed to
hold plan assets by reason of a Plan's investment in a Security, the persons
providing services with respect to the assets of the Issuer, including the
Mortgage Loans, may be subject to the fiduciary responsibility provisions of
Title I of ERISA and be subject to the prohibited transactions provisions of
ERISA and Section 4975 of the Code with respect to transactions involving such
assets unless such transactions are subject to a statutory or administrative
exemption.
Even if the underlying assets of the Issuer are treated as assets of a
Plan purchasing Securities of such Series, an additional exemption may also be
available if the Issuer is a trust. The DOL granted to Shearson Lehman Hutton,
Inc. an administrative exemption (the "Exemption") from certain of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by Plans of certificates representing
interests in asset-backed pass through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The obligations covered by the Exemption include
obligations such as the Mortgage Assets. The Exemption will apply to the
acquisition, holding and resale of the Securities by a Plan, provided that
certain conditions (certain of which are described below) are met. The
Prospectus Supplement will specify whether the Exemption will apply with respect
to any particular series.
Among the conditions which must be satisfied for the Exemption to apply
are the following:
1. The acquisition of the Securities by a Plan is on terms (including the
price for the Securities) that are at least as favorable to the Plan as they
would be in an arm's-length transaction with an unrelated party;
2. The rights and interests evidenced by the Securities acquired by the
Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust;
3. The Securities acquired by the Plan have received a rating at the time
of such acquisition that is in one of the three highest generic rating
categories from either Standard & Poor's Ratings Services, a Division of the
McGraw Hill Companies, Inc. ("Standard & Poor's"), Moody's Investors Service,
Inc. ("Moody's"), Duff & Phelps Credit Rating Co. ("DCR") or Fitch Investors
Service, L.P. ("Fitch");
4. The sum of all payments made to the underwriter in connection with the
distribution of the Securities represents not more than reasonable compensation
for underwriting the Securities. The sum of all payments made to and retained by
the seller pursuant to the sale of the obligations to the trust represents not
more than the fair market value of such obligations. The sum of all payments
made to and retained by the servicer represents not more than reasonable
compensation for the servicer's services under the related servicing agreement
and reimbursement of the servicer's reasonable expenses in connection therewith;
5. The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below); and
6. The Plan investing in the Securities is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The trust also must meet the following requirements:
(i) the corpus of the trust must consist solely of assets of the type
which have been included in other investment pools;
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(ii) certificates in such other investment pools must have been rated in
one of the three highest rating categories of Standard & Poor's, Moody's, DCR or
Fitch for at least one year prior to the Plan's acquisition of certificates; and
(iii) certificates evidencing interests 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 Securities.
Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when the Plan fiduciary
causes a Plan to acquire certificates in a trust in which the fiduciary (or its
affiliate) is an obligor on the receivables held in the trust provided that,
among other requirements: (i) in the case of an acquisition in connection with
the initial issuance of Securities, at least fifty (50) percent of each class of
Securities in which Plans have invested is acquired by persons independent of
the Restricted Group and at least fifty (50) percent of the aggregate interest
in the trust is acquired by persons independent of the Restricted Group; (ii)
such fiduciary (or its affiliate) is an obligor with respect to five (5) percent
or less of the fair market value of the obligations contained in the trust;
(iii) the Plan's investment in Securities does not exceed twenty-five (25)
percent of all of the Securities outstanding after the acquisition; and (iv) no
more than twenty-five (25) percent of the assets of the Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Issuer, the Underwriter, the Trustee, the Servicer, the Master
Servicer, if any, the Special Servicer, if any, any obligor with respect to
obligations included in a Trust constituting more than five (5) percent of the
aggregate unamortized principal balance of the assets in a Trust, provider of
Enhancement, if any, or any affiliate of such parties (the "Restricted Group").
There can be no assurance that the Securities will not be treated as
equity interests in the Issuer for purposes of the Plan Asset Regulations.
Moreover, if the Securities are treated as equity interests for purposes of
ERISA, it should be assumed, unless the Prospectus Supplement provides
otherwise, that none of the exceptions set forth in the Plan Asset Regulations
will apply to the purchase of Securities offered hereby.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code and the potential consequences to
their specific circumstances, prior to making an investment in the Securities.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment procedure and diversification an investment in
the Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Section 4975 of the Code. However, such a governmental plan may be
subject to a federal, state, or local law which is, to a material extent,
similar to the provisions of ERISA or Section 4975 of the Code ("Similar Law").
A fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
The sale of Securities to a Plan is in no respect a representation by the
Issuer or the Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or by any particular
Plan, or that this investment is appropriate for Plans generally or for any
particular Plan.
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LEGAL INVESTMENT
The Prospectus Supplement for each Series of Securities will specify
which, if any, of the Classes of Securities offered thereby will constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA"). The appropriate characterization
of those Securities not qualifying as "mortgage related securities" ("Non-SMMEA
Securities") under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Securities, may be
subject to significant interpretive uncertainties. Accordingly, investors whose
investment authority is subject to legal restrictions should consult their own
legal advisors to determine whether and to what extent the Non-SMMEA Securities
constitute legal investments for them.
Those Classes of Securities that (i) are rated in one of the two highest
rating categories by one or more Rating Agencies and (ii) are part of a Series
representing interests in, or secured by, a Trust Fund consisting of Mortgage
Loans or Private Mortgage-Backed Securities, provided that such Mortgage Loans
(or the Mortgage Loans underlying the Private Mortgage-Backed Securities) are
secured by first liens on Mortgaged Property and were originated by certain
types of originators as specified in SMMEA, will be "mortgage related
securities" for purposes of SMMEA. As "mortgage related securities," such
Classes will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including,
but not limited to, state-chartered savings banks, commercial banks, savings and
loan associations and insurance companies, as well as trustees and state
government employee retirement systems) created pursuant to or existing under
the laws of the United States or of any state (including the District of
Columbia and Puerto Rico) whose authorized investments are subject to state
regulation 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 such entities. Pursuant
to SMMEA, a number of states enacted legislation, on or before the October 3,
1991 cutoff for such enactments, limiting to varying extents the ability of
certain entities (in particular, insurance companies) to invest in "mortgage
related securities" secured by liens on residential, or mixed residential and
commercial properties, in most cases by requiring the affected investors to rely
solely upon existing state law, and not SMMEA. Pursuant to Section 347 of the
Riegle Community Development and Regulatory Improvement Act of 1994, which
amended the definition of "mortgage related security" (effective December 31,
1996) to include, in relevant part, Securities satisfying the rating, first lien
and qualified originator requirements for "mortgage related securities," but
representing interests in, or secured by, a Trust Fund consisting, in whole or
in part, of first liens on one or more parcels of real estate upon which are
located one or more commercial structures, states were authorized to enact
legislation, on or before September 23, 2001, specifically referring to Section
347 and prohibiting or restricting the purchase, holding or investment by
state-regulated entities in such types of Securities. Accordingly, the investors
affected by such legislation will be authorized to invest in Securities
qualifying as "mortgage related securities" only to the extent provided in such
legislation.
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 in 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.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has 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. '1.5), certain "Type IV
securities," defined in 12 C.F.R. '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
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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 Securities will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. Federal credit unions should review National
Credit Union Administration ("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. 703.5(f)-(k), which prohibit
federal credit unions from investing in certain mortgage related securities
(including securities such as certain Series or Classes of Securities), except
under limited circumstances. Effective January 1, 1998, the NCUA has amended its
rules governing investments by federal credit unions at 12 C.F.R. Part 703; the
revised rules will permit investments in "mortgage related securities" under
certain limited circumstances, but will prohibit investments in stripped
mortgage related securities, residual interests in mortgage related securities,
and commercial mortgage related securities, unless the credit union has obtained
written approval from the NCUA to participate in the "investment pilot program"
described in 12 C.F.R. 703.140.
All depository institutions considering an investment in the Securities
should review the "Supervisory Policy Statement on Securities Activities" dated
January 28, 1992, as revised April 15, 1994 (the "Policy Statement") of the
Federal Financial Institutions Examination Council. The Policy Statement, which
has been adopted by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the OCC and the Office of Thrift
Supervision, and by the NCUA (with certain modifications), prohibits depository
institutions from investing in certain "high-risk mortgage securities"
(including securities such as certain Series or Classes of the Securities),
except under limited circumstances, and sets forth certain investment practices
deemed to be unsuitable for regulated institutions.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Securities,
as certain Series or Classes may be deemed unsuitable investments, or may
otherwise be restricted, under such rules, policies or guidelines (in certain
instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any Securities issued in
book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain Classes of Securities as "mortgage
related securities," no representation is made as to the proper characterization
of the Securities for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase Securities under applicable legal investment restrictions.
The uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the Securities) may adversely affect the liquidity of the Securities.
Investors should consult their own legal advisors in determining whether
and to what extent the Securities constitute legal investments for such
investors.
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PLAN OF DISTRIBUTION
The Issuer may sell the Securities offered hereby through Lehman Brothers,
as agent or as underwriter, or through underwriting syndicates represented by
Lehman Brothers (collectively, the "Underwriters") or by one or more other
underwriters, in each case, to be specified in the related Prospectus
Supplement. The Prospectus Supplement relating to a Series will set forth the
terms of the offering of such Series and each Class within such Series,
including the name or names of the Underwriters, the proceeds to and their
intended use by the Issuer, and either the initial public offering price, the
discounts and commissions to the Underwriters and any discounts or concessions
allowed or reallowed to certain dealers, or the method by which the price at
which the Underwriters will sell the Securities will be determined.
The Underwriters will be obligated, subject to certain conditions, to
purchase all of the Securities described in the Prospectus Supplement relating
to a Series if any such Securities are purchased. The Securities may 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 a fixed public
offering price or at varying prices determined at the time of sale. If specified
in the related Prospectus Supplement, a Series may be offered in whole or in
part in exchange for the Mortgage Assets that would be pledged to secure such
Series. In such event, the Prospectus Supplement will specify the amount of
compensation to be paid to the Underwriters and expenses, if any, in connection
with such distribution. If so indicated in the Prospectus Supplement, the Issuer
will authorize Underwriters or other persons acting as the Issuer's agents to
solicit offers by certain institutions to purchase the Securities on such terms
and subject to such conditions as so specified.
The Issuer may also sell the Securities offered hereby and by means of the
related Prospectus Supplements from time to time in negotiated transactions or
otherwise, at prices determined at the time of sale. The Issuer may effect such
transactions by selling Securities to or through dealers and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Issuer and any purchasers of Securities for whom they may
act as agents.
If any Certificates are offered other than through underwriters pursuant
to such underwriting agreements, the related Prospectus Supplement or Prospectus
Supplements will contain information regarding the terms of such offering and
any agreements to be entered into in connection with such offering.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
connection with reoffers and sales by them of Certificates. Certificateholders
should consult with their legal advisors in this regard prior to any such
reoffer and sale.
If specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor, any affiliate thereof or any other person or
persons specified therein may purchase some or all of one or more Classes of
Certificates of such Series from the underwriter or underwriters of such other
person or persons specified in such Prospectus Supplement. The consideration for
such purchase may be cash or Mortgage Assets. Such purchaser may thereafter from
time to time offer and sell, pursuant to this Prospectus and the related
Prospectus Supplement, some or all of such Certificates so purchased, directly,
through one or more underwriters to be designated at the time of the offering of
such Certificates, through dealers acting as agent and/or principal as in such
other manner as may be specified in the related Prospectus Supplement. Such
offering may be restricted in the manner specified in such Prospectus
Supplement. Such transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or at fixed prices. Any underwriters and
dealers participating in such purchaser's offering of such Certificates may
receive compensation in the form of underwriting discounts or commissions from
such purchaser and such dealers may receive commissions from the investors
purchasing such Certificates for whom they may act as agent (which discounts or
commissions will not exceed those customary in those types of transactions
involved). Any dealer that participates in the distribution of such
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Certificates may be deemed to be an "underwriter" within the meaning of the
Securities Act and any commissions and discounts received by such dealer and any
profit on the resale of such Certificates by such dealer might be deemed to be
underwriting discounts and commissions under the Securities Act.
The place and time of delivery for the Series in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby
will be passed upon for the Issuer and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, New York, New York, Cadwalader, Wickersham & Taft, New
York, New York, Sidley & Austin, New York, New York or Thacher Proffitt & Wood,
New York, New York.
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GLOSSARY
The following are abbreviated definitions of certain capitalized terms
used in this Prospectus. Unless otherwise provided in the Prospectus Supplement
for a Series, such definitions shall apply to capitalized terms used in such
Prospectus Supplement. The definitions may vary from those in the Indenture or
Trust Agreement, as applicable, and the Indenture or Trust Agreement, as
applicable, generally provides a more complete definition of certain of the
terms. Reference should be made to the Indenture or Trust Agreement, as
applicable, for a more complete definition of such terms.
"Accrual Date" means, with respect to any Series, the date upon which
interest begins accruing on the Securities of the Series, as specified in the
related Prospectus Supplement.
"Accrual Payment Amount" means, with respect to any Payment Date or
Distribution Date for a Series that occurs prior to or on the Accrual
Termination Date, the aggregate amount of interest which has accrued on the
Compound Interest Securities of such Series during the Interest Accrual Period
relating to such Payment Date or Distribution Date and which is not then
required to be paid.
"Accrual Termination Date" means, with respect to a Class of Compound
Interest Securities, the Payment Date or Distribution Date on which all
Securities of the related Series with Stated Maturities or Final Scheduled
Termination Dates earlier than that of such Class of Compound Interest
Securities have been fully paid, or such other date or period as may be
specified in the related Prospectus Supplement.
"Administration Agreement" means, with respect to a Series, an agreement
pursuant to which the Administrator agrees to perform certain ministerial,
administrative, accounting and clerical duties on behalf of the Issuer with
respect to such Series.
"Administration Fee" means the fee specified as such in the Administration
Agreement.
"Advances" means, unless otherwise specified in a Prospectus Supplement,
cash advances with respect to delinquent payments of principal and interest on
any Mortgage Loan made by the Primary Servicer from its own funds or, if so
specified in the related Prospectus Supplement, from excess funds in the
Custodial Account or Servicing Account, but only to the extent that such
advances are, in the good faith business judgment of the Servicer or the Master
Servicer, as the case may be, ultimately recoverable from future payments and
collections on the Mortgage Loans or otherwise.
"Aggregate Asset Value" means, with respect to any Series, the aggregate
amount obtained by adding the Asset Value of each Mortgage Loan or Private
Mortgage-Backed Security or other Mortgage Assets in the Trust Estate for such
Series, plus the Asset Value, as determined in the related Series Supplement, of
any cash remaining in the Collection Account or any other Pledged Fund or
Account subsequent to an initial deposit therein by the Issuer.
"Aggregate Outstanding Principal" means, with respect to any Series or
Class thereof, the principal amount of all Securities of such Series or Class
outstanding at the date of determination, including, in respect of any Class of
Compound Interest Securities of such Series (or other Class of Securities on
which interest accrues and is added to the outstanding principal amount
thereof), the Compound Value (or accreted value) of such Securities through the
Payment Date or Distribution Date immediately preceding the date of
determination.
"Appraised Value" means, unless otherwise specified in a Prospectus
Supplement, the lesser of the appraised value determined in an appraisal
obtained at origination or the sales price of a Mortgaged Property.
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"ARM," "ARM Loan," or "Adjustable Rate Mortgage Loan" means a Mortgage
which provides for adjustment from time to time to the Mortgage Rate in
accordance with an approved index.
"Asset Value" means, unless specified otherwise in the related Prospectus
Supplement, with respect to each Private Mortgage-Backed Security or Mortgage
Loan or other Mortgage Assets included in the Trust Estate or Trust Fund for a
Series, its Scheduled Principal Balance. In addition, the related Series
Supplement shall set forth, for purposes of calculating the Asset Value of
Mortgage Assets, the dates on which the scheduled principal and interest
payments with respect to such Mortgage Assets are assumed to be deposited in the
Collection Account. The Asset Value of any cash deposited in any Pledged Fund or
Account shall be as set forth in the related Series Supplement.
"Assumed Deposit Date" means the date specified therefor in the Series
Supplement for a Series, upon which distributions on the Primary Assets are
assumed to be deposited in the Collection Account for purposes of calculating
Reinvestment Income thereon.
"Assumed Reinvestment Rate" means, with respect to a Series, the per annum
rate or rates specified in the related Prospectus Supplement or the related
Guaranteed Investment Contract for a particular period or periods as the
"Assumed Reinvestment Rate" for funds held in Pledged Funds and Accounts for the
Series.
"BIF" means Bank Insurance Fund.
"Bondholder" means the Person in whose name a Bond is registered in the
Bond Register.
"Bond Interest Rate" means the interest rate on the outstanding principal
amount of a Bond payable on the applicable Payment Date for such Bond, as
specified in the related Prospectus Supplement.
"Bond Register" means the register maintained pursuant to the Trust
Indenture for a Series, providing for the registration of the Bonds of a Series
and the transfers and exchanges thereof.
"Bonds" means Collateralized Mortgage Obligations sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
"Business Day" means, with respect to any Series that does not include any
Class of Variable Interest Securities, any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York, or in
the cities in which the Corporate Trust Office or, if applicable, the offices of
the Servicer or the Special Servicer, are then located, are authorized or
obligated by law or executive order to be closed, and with respect to any Series
that includes any Class of Variable Interest Securities, a day that is not a
Saturday or Sunday, and that is not a legal holiday nor a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close in either London or New York City or in the city in which the Corporate
Trust Office is then located.
"Cash Liquidation" means as to any defaulted Mortgage Loan other than a
Mortgage Loan with respect to which the related Mortgaged Property became REO
Property, the recovery of all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Master Servicer or Servicer, as applicable,
expects to be finally recoverable.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register.
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"Certificate Interest Rate" means the per annum interest rate on the
outstanding principal amount of a Certificate payable on the applicable
Distribution Date for such Certificate, as specified in the related Prospectus
Supplement.
"Certificate Register" means the register maintained pursuant to the Trust
Agreement for a Series, providing for the registration of the Certificates of a
Series and the transfers and exchanges thereof.
"Certificates" means the Mortgage-Backed Certificates sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
"Class" means a class of Securities of a Series.
"Closing Date" means, with respect to a Series, the date specified in the
related Series Supplement as the date on which Securities of such Series are
first issued.
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Collection Account" means, with respect to a Series, the account
designated as such and created pursuant to the Trust Indenture or Trust
Agreement, as applicable.
"Commercial Property" means any property securing a Mortgage Loan that
used for commercial purposes.
"Commission" means the Securities and Exchange Commission.
"Company" means Structured Asset Securities Corporation.
"Compound Interest Security" means any Security of a Series on which
interest accrues and is added to the principal of such Security periodically,
but with respect to which no interest or principal shall be payable except
during the period or periods specified in the related Prospectus Supplement.
"Compound Value" means, with respect to a Class of Compound Interest
Securities, as of any determination date, the original principal amount of such
Class, plus all accrued and unpaid interest, if any, previously added to the
principal thereof and reduced by any payments of principal previously made on
such Class of Compound Interest Securities and by any losses allocated to such
Class.
"Condemnation Proceeds" means any awards resulting from the full or
partial condemnation or any eminent domain proceeding or any conveyance in lieu
or in anticipation thereof with respect to a Mortgaged Property by or to any
governmental or quasi-governmental authority other than amounts to be applied to
the restoration, preservation or repair of such Mortgaged Property or released
to the related Mortgagor in accordance with the terms of the Mortgage Loan.
"Corporate Trust Office" means the corporate trust office of the Trustee.
"Covered Trust" means a Trust Estate or Trust Fund covered by a form of
credit support.
"CPR" means the Constant Prepayment Rate prepayment model.
"Custodial Account" means an account established by a Master Servicer, a
Servicer, or a Special Servicer in the name of the Trustee for the deposit on a
daily basis of all Mortgage Loan related receipts received by it subsequent to
the Cut-Off Date.
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"Custodian" means any bank, savings and loan association, trust company or
other entity appointed to hold documentation with respect to any Mortgage Loans.
"Cut-Off Date" means, with respect to a Series, the date specified in the
related Series Supplement on which, as of the close of business on such date,
the Mortgage Loans securing or included in such Series are sold to a Trust or
subject to the lien of the Indenture.
"Deferred Interest" means the excess resulting when the amount of interest
required to be paid by a Mortgagor on a Mortgage Loan on any Due Date for such
Mortgage Loan is less than the amount of interest accrued on the Scheduled
Principal Balance thereof, to the extent such excess is added to the Scheduled
Principal Balance of such Mortgage Loan.
"Deferred Interest Securities" means Bonds or Certificates on which
interest accrued during an Interest Accrual Period may be added to the principal
amount of such Bonds or Certificates rather than being paid in cash on the
related Distribution Date.
"Definitive Securities" means the Bonds or the Certificates for a Series
when and if issued in definitive form to the Securities Owners of such Series or
their nominees.
"Deleted Mortgage Loan" means a Mortgage Loan removed from the Trust
Estate or Trust Fund in order to substitute a Substitute Mortgage Loan.
"Delivery Date" means with respect to a Series, the date specified in the
related Prospectus Supplement as the date on which the Securities of such Series
are to be delivered to the original purchasers thereof.
"Depositor" means the Company (i) when acting in such capacity under a
Deposit Trust Agreement to deposit Primary Assets into an Owner Trust relating
to a Series of Bonds, or (ii) when acting in such capacity under a Trust
Agreement to deposit Primary Assets into a Trust Fund relating to a Series of
Certificates.
"Deposit Trust Agreement" means a deposit trust agreement between the
Company and an Owner Trustee pursuant to which an Owner Trust is created and
Primary Assets are deposited therein.
"Designated Interest Accrual Date" means, as specified in the related
Prospectus Supplement, (a) the day preceding a Redemption Date or Special
Redemption Date as the date through which accrued interest is paid upon
redemption or special redemption, or (b) the date through which accrued interest
is paid upon the occurrence of an Event of Default.
"Determination Date" means the date specified in the related Prospectus
Supplement.
"Disqualified Organization" means the United States, any State or
political subdivision thereof, any possession of the United States, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, a rural electric or telephone cooperative described in
section 1381(a)(2)(C) of the Code, or any entity exempt from the tax imposed by
sections 1-1399 of the Code, if such entity is not subject to tax on its
unrelated business income.
"Distribution Date" means the date on which distributions of principal of
and interest on Certificates of a Series will be made.
"DOL" means Department of Labor.
"Due Date" means each date on which a payment is due and payable on any
Mortgage Assets.
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"Due Period" means, unless other specified in the related Prospectus
Supplement, for each Payment Date or Distribution Date, as applicable, the
period beginning on the second day of the month preceding the month in which
such Payment Date or Distribution Date, as applicable, occurs and ending on the
first day of the month in which such Payment Date or Distribution Date, as
applicable, occurs.
"Eligible Investments" means any one or more of the obligations or
securities described herein under "SECURITY FOR THE BONDS AND
CERTIFICATES--Investment of Funds."
"Enhancement" means the Enhancement for a Series, if any, specified in the
related Prospectus Supplement.
"Enhancement Agreement" means the agreement or instrument pursuant to
which any Enhancement is issued or the terms of any Enhancement are set forth.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" means qualified employee benefit plans established under
ERISA or the Code.
"Escrow Account" means an escrow account established and maintained by the
Primary Servicer in which payments by Mortgagors to pay taxes, assessments,
mortgage and hazard insurance premiums and other comparable items will be
deposited.
"Event of Default" unless otherwise specified in the Prospectus Supplement
shall have the meaning set forth herein under "THE INDENTURE AND TRUST
AGREEMENT--Events of Default."
"Excess Cash Flow" shall have the meaning set forth in the related
Prospectus Supplement.
"Exchange Act" means the Securities Exchange Act of 1934.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHA" means the Federal Housing Administration, a division of HUD. "FHA
Loan" means a fixed-rate mortgage loan insured by the FHA. "FHLMC" means the
Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"Final Scheduled Distribution Date" means the Distribution Date on which
principal of and interest on a Series of Certificates is scheduled to be paid in
full.
"First Mandatory Principal Distribution Date" means the date specified in
the related Prospectus Supplement as the Distribution Date on which the Issuer
must begin paying installments of principal of the Certificates of the related
Series or Class if the Issuer has not already begun making such distributions.
"First Mandatory Principal Payment Date" means the date specified in the
related Prospectus Supplement as the Payment Date on which the Issuer must begin
paying installments of principal of the Bonds of the related Series or Class if
the Issuer has not already begun making such payments.
"First PAC Paydown Date" means the date on which the initial PAC Principal
Payment is applied to the PAC Bonds, as set forth in the related Prospectus
Supplement.
"Garn-St. Germain Act" means the Garn-St. Germain Depository Institutions
Act of 1982.
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"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, convey, assign, transfer, create and grant a lien upon and a security
interest in and right of setoff against, deposit, set over and confirm.
"Guaranteed Investment Contract" means a guaranteed investment contract
providing for the investment of all distributions on the Mortgage Assets
guaranteeing a minimum or a fixed rate of return on the investment of moneys
deposited therein.
"Guarantor" means a guarantor acceptable to the Rating Agencies rating the
Securities.
"Highest Bond Interest Rate" means, unless specified otherwise in the
related Prospectus Supplement, with respect to any Series of Bonds, the highest
Bond Interest Rate borne by outstanding Bonds of the Series.
"Highest Certificate Interest Rate" means, unless otherwise specified in
the related Prospectus Supplement, with respect to any Series of Certificates,
the highest Certificate Interest Rate borne by outstanding Certificates of a
Series.
"Holder" means a Bondholder or Certificateholder, as applicable.
"Housing Act" means the National Housing Act of 1934, as amended.
"HUD" means the United States Department of Housing and Urban Development.
"Indenture" means, with respect to any Series of Bonds, collectively the
Trust Indenture and any related Series Supplement.
"Individual Investor Bonds" means each of the Bonds of a Class identified
as such in the related Prospectus Supplement.
"Individual Investor Certificates" means each of the Certificates of a
Class identified as such in the related Prospectus Supplement.
"Insurance Policies" means hazard insurance and other insurance policies
required to be maintained with respect to Mortgage Loans.
"Insurance Proceeds" means amounts received by the Trustee from the Master
Servicer or a Servicer in connection with sums paid or payable under any
insurance policies, to the extent not applied to the restoration or repair of
the Mortgaged Property.
"Interest Accrual Period" means the period specified in the related
Prospectus Supplement for a Series, during which interest accrues on Securities
of the related Series or Class with respect to any Payment Date, Distribution
Date, Redemption Date, or Special Redemption Date.
"Interest Only Securities" means a Security entitled to receive payments
of interest only based upon the Notional Amount of the Security.
"Interest Weighted Securities" means, with respect to Certificates issued
by a grantor Trust, Certificates that embody only interest payments on the
underlying Mortgage Loans or which consist in whole or in part of stripped
coupons or, in the case of a regular interest in a REMIC, which qualify as such
pursuant to Section 860G(a)(1)(B)(ii) of the Code.
"IRS" means the Internal Revenue Service.
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"Issuer" means the Company Owner Trust, or a separate trust established by
the Company as issuer of a Series of Securities.
"L/C Bank" means the issuer of the letter of credit.
"LCPI" means Lehman Commercial Paper Inc.
"Lehman Brothers" means Lehman Brothers Inc.
"Liquidation Proceeds" means amounts (other than Insurance Proceeds)
received and retained in connection with liquidation of defaulted Mortgage Loans
whether through foreclosure or otherwise, net of related liquidation expenses
and certain other expenses.
"Loan-to-Value Ratio" means, as of any date of determination, the ratio of
the then outstanding principal amount to the lesser of the appraised value and
the purchase price of the Mortgaged Property at the time of origination.
"Master Servicer" means, with respect to a Series secured by Mortgage
Loans or Private Mortgage-Backed Securities, the Person, if any, designated in
the related Prospectus Supplement to manage and supervise the administration and
servicing by the Servicers of the Mortgage Loans comprising Mortgage Assets or
Underlying Collateral for that Series, or the successors or assigns of such
Person.
"Master Servicing Agreement" means the Master Servicing Agreement between
the Issuer and the Master Servicer, if any, specified in the related Prospectus
Supplement.
"Maximum Variable Interest Rate" means the interest rate cap on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Minimum Variable Interest Rate" means the interest rate floor on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Mortgage" means a mortgage, deed of trust or other security instrument
evidencing the lien on the Mortgaged Property.
"Mortgage Assets" means the Mortgage Loans, including participation
interests therein, REO Property and Private Mortgage-Backed Securities which are
Granted to the Trustee as security for a Series of Bonds or deposited into the
Trust Fund in respect of a Series of Certificates; an item of Mortgage Assets
refers to a specific Mortgage Loan, REO Property or Private Mortgage-Backed
Security.
"Mortgaged Properties" means the real properties on which liens are
created pursuant to Mortgages for purposes of securing the Mortgage Loans.
"Mortgage Loan Group" means groups of Mortgage Assets.
"Mortgage Loan" means a mortgage loan or participation interest therein
that is owned by the Issuer and constitutes a part of the Mortgage Assets for a
Series, or that is Underlying Collateral for a Private Mortgage-Backed Security
that constitutes a part of the Mortgage Assets for a Series.
"Mortgage Note" means the note or other evidence of indebtedness of a
Mortgagor with respect to a Mortgage Loan.
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"Mortgage Pool" means, with respect to a Series, the pool of Mortgage
Loans.
"Mortgage Rate" means, with respect to each Mortgage Loan, the annual
interest rate required to be paid by the Mortgagor under the terms of the
related Mortgage Note.
"Mortgagor" means the Person indebted under the Mortgage Note relating to
a Mortgage Loan.
"Multifamily Property" means any property securing a Mortgage Loan
consisting of multifamily residential rental property or cooperatively owned
multifamily property consisting of five or more dwelling units.
"New York Presenting Agent" means the Issuer's agent in the State of New
York.
"Nonresidents" means a nonresident alien individual, foreign partnership
or foreign corporation.
"OID" means "original issue discount" within the meaning of section 1273
of the Code.
"OTS" means the Office of the Thrift Supervision.
"Owner Trust" means the trust fund established by the Company pursuant to
a Deposit Trust Agreement to hold Primary Assets and issue a Series of Bonds.
"Owner Trustee" means the bank or trust company named in the Prospectus
Supplement related to a Series of Bonds, not in its individual capacity but
solely as trustee pursuant to a Deposit Trust Agreement, and its successors and
assigns.
"PAC" means Planned Amortization Class Securities.
"PAC Amount" means the scheduled amounts of principal payments to be
applied on each Payment Date or Distribution Date to the PAC Securities, as set
forth in the related Prospectus Supplement.
"PAC Security" or "Planned Amortization Class Security" means a Security
on which the Principal Amortization Amount in an amount equal to the PAC
Principal Payment or PAC Principal Distribution will be applied to such
Securities commencing on the First PAC Paydown Date, and each Payment Date or
Distribution Dates thereafter.
"PAC Paydown Date" means the date on which each PAC Amount is applied to
the PAC Securities as set forth in the related Prospectus Supplement.
"PAC Principal Payment" means, with respect to a particular Payment Date,
the scheduled PAC Amount, if any, for such Payment Date less any principal
payments made on the PAC Securities due to a special redemption subsequent to
the preceding Payment Date.
"Participating Securities" means a Security entitled to receive payments
of principal and interest and an additional return on investment as described in
the related Prospectus Supplement.
"Participation Agreement" means the agreement through which participation
interests in a Series will be acquired.
"Pass-Through Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is no separation of the principal and
interest payments on the underlying Mortgage Loans.
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"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in the Indenture or Trust
Agreement, as applicable and is authorized and appointed pursuant to the
Indenture or Trust Agreement, as applicable by the Issuer to pay the principal
of or interest on any Securities on behalf of the Issuer.
"Payment Date" means the date on which payments of principal of and
interest on the Bonds will be made.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political
subdivision thereof.
"Pledged Fund or Account" means any fund or account, including, without
limitation, the Collection Account or any Reserve Fund established with respect
to, and Granted as security for, a Series.
"PMBS Agreement" means the pooling and servicing agreement, indenture or
similar agreement pursuant to which Private Mortgage-Backed Securities have been
issued.
"PMBS Issuer" means the issuer of the Private Mortgage-Backed Securities.
"PMBS Trustee" means the trustee of the Private Mortgage-Backed
Securities.
"Policy Statement" means the supervisory policy statement adopted by the
Federal Financial Institution Examination Council.
"Prepayment Assumption" means the anticipated rate of prepayments assumed
in pricing the Securities.
"Prepayment Period" means, if specified in any Prospectus Supplement with
respect to any Series, the calendar month preceding the month in which the
related Payment Date occurs.
"Primary Assets" means that portion of the Trust Estate pledged to secure
a Series of Bonds, or comprising the Trust Fund relating to a Series of
Certificates.
"Primary Servicer" means the entity which has primary liability for
servicing Mortgage Loans directly.
"Principal Balance" means, unless otherwise specified in a Prospectus
Supplement, with respect to any Mortgage Loan or related REO Property, for any
Due Date and the Due Period with respect thereto, the principal balance of such
Mortgage Loan (or, in the case of REO Property, of the related Mortgage Loan on
the last date on which a payment was made thereon) outstanding as of the Cut-Off
Date, after application of principal payments due on or before the Cut-Off Date,
whether or not received, plus all amounts of Deferred Interest accrued on such
Mortgage Loan to the Due Date in the Due Period immediately preceding the date
of determination minus the sum of (a) the principal portion of the Scheduled
Payment due on or prior to such Due Date, but only if received from or on behalf
of the Mortgagor, (b) all Principal Prepayments, and all Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds and other amounts applied as
recoveries of principal to the extent identified and applied by the Master
Servicer, Special Servicer or Servicer, as applicable, as recoveries of
principal through the close of the related Prepayment Period for the Master
Servicer or Servicer, as applicable, and (c) any Realized Loss on such Mortgage
Loan to the extent treated as a principal loss and which is realized during such
Prepayment Period.
"Principal Determination Date" means the day specified in the related
Prospectus Supplement.
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"Principal Payment Amount" means, with respect to any Payment Date or
Distribution Date related to a particular Series, the amount that is specified
in the related Prospectus Supplement.
"Principal Payment Dates" means, with respect to a Class, the dates
specified in the related Prospectus Supplement on which principal of the
Securities of such Class is to be paid.
"Principal Only Securities" means a Security entitled to receive payments
of principal only.
"Principal Prepayment" means, with respect to any Private Mortgage-Backed
Security or Mortgage Loan, any payment of principal on such Private
Mortgage-Backed Security or Mortgage Loan in excess of the Scheduled Payment,
resulting from prepayment, partial prepayment, (other than Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds) with respect to the Mortgage Loan
or Mortgage Loans underlying such Private Mortgage-Backed Security but not
including any Scheduled Payment received prior to the Due Period in which it was
scheduled to be paid.
"Private Mortgage-Backed Security" means a mortgage participation or other
interest, pass-through certificate or collateralized mortgage obligation.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PTE" means Prohibited Transactions Exemption.
"Rating Agency" means a nationally recognized statistical rating agency.
"Realized Losses" means, unless otherwise specified in a Prospectus
Supplement, with respect to each Mortgage Loan or REO Property, as the case may
be, as to which a Cash Liquidation or REO Disposition has occurred, an amount
equal to (i) the Principal Balance of the Mortgage Loan as of the date of Cash
Liquidation or REO Disposition, plus (ii) interest at the applicable Mortgage
Rate, from the date as to which interest was last paid up to the Due Date in the
period in which such Cash Liquidation or REO Disposition has occurred on the
Principal Balance of such Mortgage Loan outstanding during each Due Period that
accrued interest was not paid, minus (iii) Liquidation Proceeds received during
the month in which such Cash Liquidation or REO Disposition occurred, net of
related expenses, including but not limited to, amounts that are payable to a
Master Servicer, Servicer, or Special Servicer, as applicable, with respect to
such Mortgage Loan and (iv) any other amounts applied as a recovery of principal
or interest on the Mortgage Loan.
"Redemption Date" means, with respect to any Series, the Payment Date
specified by the Issuer for the redemption of Bonds of such Series pursuant to
the Indenture.
"Redemption Price" means, with respect to any Bond of a Series or Class to
be redeemed, an amount equal to the percentage specified in the related
Prospectus Supplement of the principal amount (or of the Compound Value of any
Compound Interest Security) of such Security so redeemed, together with accrued
and unpaid interest thereon at the applicable Bond Interest Rate to the
Designated Interest Accrual Date for such Series.
"Regular Bondholder" means a Holder of a Regular Interest Bond.
"Regular Certificateholder" means a Holder of a Regular Interest
Certificate.
"Regular Interest Bonds" means Classes of Bonds constituting regular
interests in a REMIC.
"Regular Interest Certificates" means Classes of Certificates constituting
regular interests in a REMIC.
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"Regular Interest Securities" means Regular Interest Bonds, Regular
Interest Certificates or Uncertificated Regular Interests, as applicable.
"Reinvestment Income" means any interest or other earnings on Pledged
Funds or Accounts that are part of the Primary Assets for a Series.
"REMIC Provisions" means the provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder.
"REMIC Regulations" means final Treasury regulations under Sections 860A
through 860G of the Code or related provisions.
"REO Disposition" means the receipt by the Master Servicer, Servicer, or
Special Servicer, as applicable, of Liquidation Proceeds, Insurance Proceeds and
other payments and recoveries (including proceeds of a final sale) from the sale
or other disposition of the REO Property.
"REO Property" means Mortgaged Properties the beneficial interest in which
has been acquired by a Trust Fund or by a Trustee on behalf of Bondholders by
foreclosure, by deed-in-lieu of foreclosure or otherwise.
"Reserve Fund" means, with respect to a Series, any reserve fund described
in the applicable Prospectus Supplement, including a Subordination Reserve Fund.
"Reserve Funds" means, collectively, more than one reserve fund.
"Residual Bondholder" means the Holder of a Residual Interest Bond.
"Residual Certificateholder" means the Holder of a Residual Interest
Certificate.
"Residual Interest Bonds" means Classes of Bonds constituting the residual
interest in a REMIC.
"Residual Interest Certificates" means Classes of Certificates
constituting residual interests in a REMIC.
"Residual Interest Securities" means Residual Interest Bonds or Residual
Interest Certificates, as applicable.
"SAIF" means Savings Association Insurance Fund.
"Scheduled Payments" means the scheduled payments of principal and
interest to be made by the Mortgagor on a Mortgage Loan in accordance with the
terms of the related Mortgage Note, as modified by any permitted modification of
a Mortgage Note.
"Scheduled Principal Balance" means the principal balance of a Mortgage
Loan outstanding as of the Cut-Off Date, after application of principal payments
due on or before the Cut-Off Date, whether or not received, plus all amounts of
Deferred Interest accrued on such Mortgage Loan to the Due Date in the Due
Period immediately preceding the date of determination, minus the sum of (a) the
principal portion of all Scheduled Payments due on or prior to such Due Date,
irrespective of any delinquency in payment by the Mortgagor, (b) all Principal
Prepayments and all Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds and other amounts applied as recoveries of principal to the extent
identified and applied by the Master Servicer, Special Servicer, or Servicer, as
applicable, as recoveries of principal through the close of the related
Prepayment Period,
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and (c) any Realized Loss on such Mortgage Loan to the extent treated as a
principal loss and that is realized during such Prepayment Period.
"Securities" means Bonds of Certificates.
"Securities Owners" means the owners of the beneficial interests in a
Series of Bonds or Certificates.
"Senior Securities" means a Class of Securities which are senior in right
and priority to the extent described in the related Prospectus Supplement to
payment of principal and interest to certain other Classes of Securities of such
Series.
"Series" means a separate series of Bonds sold pursuant to this Prospectus
and the related Prospectus Supplement.
"Series Supplement" means the supplemental indenture to or terms indenture
incorporating by reference the Trust Indenture or Trust Agreement, as
applicable, between the Issuer of a Series of Securities and the Trustee
relating to such Series of Securities.
"Servicer" means, for any Mortgage Loan, the Person approved by the Issuer
and by the Master Servicer, if any, as servicer of such Mortgage Loan, which
Person shall also be a FNMA or FHLMC-approved seller and servicer.
"Servicer Remittance Date" means with respect to each Mortgage Loan, the
date on which the Servicer shall remit all funds held in the Servicing Account
together with any Advances made by such Servicer for deposit to the Collection
Account.
"Servicing Account" means an account established by a Servicer which
complies with the standards set forth herein for a Custodial Account.
"Servicing Agreements" means the Master Servicing Agreement, Servicing
Agreement and Special Servicing Agreement, if any.
"Servicing Fee" means for any Series, the aggregate fees paid to the
Trustee, Master Servicer or other similar fees.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"SPA" means the Standard Prepayment Assumption prepayment model.
"Special Redemption Date" means, with respect to a Series, the date each
month (other than any month in which a Payment Date occurs) on which Bonds of
that Series may be redeemed pursuant to the Trust Indenture or the related
Series Supplement; such date shall be the same day of the month as the day on
which the Payment Date for the Bonds of that Series occurs.
"Special Servicer" means a special servicer identified in the related
Prospectus Supplement appointed to perform the activities set forth in the
related Prospectus Supplement.
"Start Up Day" means the "startup day" of the REMIC as defined in section
860G(a)(9) of the Code.
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"Stated Maturity" means the date specified in the related Prospectus
Supplement no later than which all the Bonds of such Class will be fully paid,
calculated on the basis of the assumptions set forth in the related Prospectus
Supplement.
"Stripped Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is considered to be a separate
ownership of the payments of principal and interest on the underlying Mortgage
Loans. "Subordinate Securities" means a Class of Securities which are
subordinate in right and priority to the extent described in the related
Prospectus Supplement to payment of principal and interest to Senior Classes of
Securities of such Series.
"Substitute Mortgage Asset" means any Mortgage Asset that is Granted to
the Trustee as security for a Series of Bonds or deposited into the Trust Fund
in respect of a Series of Certificates in lieu of any Mortgage Assets then
pledged as security.
"Substitute Mortgage Loan" means a Mortgage Loan substituted for one or
more Deleted Mortgage Loans in the Trust Estate or Trust Fund.
"TIN" means Taxpayer Identification Number.
"Trust Agreement" means the trust agreement between the Company and a
Trustee pursuant to which a Series of Certificates is issued.
"Trust Estate" means, with respect to any Series of Bonds, all money,
instruments, securities and other property, including all proceeds thereof,
which are subject or intended to be subject to the lien of the Indenture for the
benefit of the Series as of any particular time (including, without limitation,
all property and interests Granted to the Trustee pursuant to the Series
Supplement for such Series).
"Trust Fund" means the trust fund established pursuant to a Trust
Agreement into which Primary Assets are deposited for the purpose of issuing a
Series of Certificates.
"Trust Indenture" means the trust indenture between the Company and the
Trustee or a Trust and the Trustee pursuant to which a Series of Bonds are
issued.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 and
rules and regulations promulgated by the Commission with respect thereto.
"Trustee" means LaSalle National Bank or another bank or trust company
named as trustee in the Prospectus Supplement for a series of Securities and, in
the case of a series of Bonds, qualified under the TIA.
"Unavailable Amount" means, with respect to a Series, the amount, if any,
remaining in the related Collection Account on a related Payment Date that
represents (1) payments of scheduled payments of principal of and interest on
the Mortgage Assets due subsequent to the Principal Determination Date
immediately preceding the related Payment Date or Distribution Date, (2) the
amount of all related prepayments received or deemed received subsequent to the
Principal Determination Date immediately preceding such Payment Date or
Distribution Date, or (3) any investment income that has accrued subsequent to
the Principal Determination Date immediately preceding such Payment Date or
Distribution Date.
"Uncertificated Regular Interest" means a regular interest in a REMIC that
is not represented by a physical Certificate.
129
<PAGE>
"Undelivered Mortgage Assets" means Mortgage Assets that are not pledged
and delivered to the Trustee on the related Closing Date.
"Underlying Collateral" means, with respect to a Private Mortgage-Backed
Security, the underlying Mortgage Loans.
"Underwriters" means, collectively, Lehman Brothers, as agent or as
underwriter, or underwriting syndicates represented by Lehman Brothers.
"VRDI Security" means a Regular Interest Security that qualifies as a
"variable rate debt instrument" under Section 1.7275-5 of the Treasury
Regulations.
"Variable Interest Distribution Date" means, with respect to a Class of
Variable Interest Securities issued as part of a Series of Certificates, the
date specified in the related Prospectus Supplement, it being expressly provided
herein that Variable Interest Distribution Dates may be monthly, quarterly,
semi-annual or annual.
"Variable Interest Payment Date" means, with respect to any Class of
Variable Interest Securities issued as part of a Series of Bonds, the date
specified in the related Prospectus Supplement, it being expressly provided
herein that Variable Interest Payment Dates may be monthly, quarterly,
semi-annual or annual.
"Variable Interest Period" means, with respect to any Class of Variable
Interest Securities, the period commencing immediately subsequent to the
preceding Variable Interest Period (or, in the case of the Variable Interest
Period applicable to the first Variable Interest Payment Date with respect to
such Class of Variable Interest Securities, commencing on the Accrual Date for
such Class) and ending on the date specified in the related Prospectus
Supplement, during which such Class of Variable Interest Securities shall accrue
interest, payable on the immediately succeeding Variable Interest Payment Date
or Variable Interest Distribution Date, at the Bond Interest Rate or Certificate
Interest Rate determined on the immediately preceding Determination Date.
"Variable Interest Rate" means the interest rate in respect of a Variable
Interest Security.
"Variable Interest Security" means a Security on which interest accrues at
a Bond Interest Rate or Certificate Interest Rate that is adjusted, based upon a
predetermined index, at fixed periodic intervals, all as set forth in the
related Prospectus Supplement.
"Weighted Average Securities" means Regular Interest Securities that bear
interest at a rate based on a weighted average of the interest rates on some or
all of the Mortgage Loans of the related trust.
"Zero Coupon Bonds" means a Security entitled to receive payments or
distributions of Principal only. "1986 Act" means the Tax Reform Act of 1986, as
amended.
130
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"LB98C4.XLS" is a Microsoft Excel*, Version 5.0 spreadsheet that provides in
electronic format certain information shown in Annexes A-1, A-2, A-3 and A-4, as
well as certain Mortgage Loan and Mortgaged Property information shown in the
Prospectus Supplement. In addition, the spreadsheet provides certain Mortgage
Loan and Mortgage Property information contained in Annex A-1 in the CSSA format
and information detailing the changes in the amount of Scheduled P&I Payments
with regard to certain Mortgage Loans. As described under "Description of the
Offered Certificates--Reports to Certificateholders; Available Information" in
this Prospectus Supplement, each month the Trustee will make available through
its bulletin board system an electronic file in the CSSA format updating and
supplementing the information contained in the LB98C4.XLS file.
To open the file, insert the diskette into your floppy drive. Copy the file
"LB98C4.XLS" to your hard drive or network drive. Open the file "LB98C4.XLS" as
you would normally open any spreadsheet in Microsoft Excel. After the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY. To
view the data, see the worksheets labeled "Step:, "Annex A-1", "Annex A-2",
"Annex A-3", "Annex A-4", "CSSALOAN" or "CSSAPROP", respectively.
- --------------
* Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Important Notice about the Information Contained in
this Prospectus Supplement and the Accompanying Prospectus.............S-2
Executive Summary.........................................................S-6
Summary of Prospectus Supplement..........................................S-7
Risk Factors.............................................................S-27
Description of the Mortgage Pool.........................................S-40
Servicing of the Mortgage Loans..........................................S-72
Description of the Offered Certificates..................................S-90
Yield and Maturity Considerations.......................................S-115
Use of Proceeds.........................................................S-120
Federal Income Tax Consequences.........................................S-120
Certain ERISA Considerations............................................S-123
Legal Investment........................................................S-126
Method of Distribution..................................................S-127
Legal Matters...........................................................S-127
Ratings.................................................................S-128
Index of Principal Definitions..........................................S-130
ANNEX A-1 - Certain Characteristics of the Mortgage Loans.................A-1
ANNEX A-2 - Certain Monetary Terms of the Mortgage Loans..................A-2
ANNEX A-3 - Certain Additional Information Regarding
the Group 2 Mortgaged Properties.......................................A-3
ANNEX A-4 - Certain Information Regarding Reserves........................A-4
ANNEX B - Term Sheet......................................................B-1
ANNEX C-1 - Price/Yield Tables............................................C-1
ANNEX C-2 - Decrement Tables..............................................C-2
ANNEX D - Form of Delinquent Loan Status Report...........................D-1
ANNEX E - Form of Historical Loan Modification Report....................E-1
ANNEX F - Form of Historical Loss Estimate Report.........................F-1
ANNEX G - Form of REO Status Report.......................................G-1
ANNEX H - Form of Watch List Report.......................................H-1
ANNEX I - Form of Operating Statement Analysis............................I-1
ANNEX J - Form of NOI Adjustment Worksheet................................J-1
ANNEX K - Form of Comparative Financial Status Report.....................K-1
Prospectus
Prospectus Supplement.......................................................7
Additional Information......................................................7
Incorporation of Certain Documents by Reference.............................8
Summary of Terms............................................................9
Risk Factors...............................................................30
Description of the Securities..............................................36
Yield and Prepayment Considerations........................................45
Security for the Bonds and Certificates....................................48
Servicing of Mortgage Loans................................................56
Enhancement................................................................61
Description of Insurance on the Mortgage Loans.............................64
Certain Legal Aspects of Mortgage Loans....................................65
The Indenture..............................................................79
The Trust Agreement........................................................84
The Issuer.................................................................91
Use of Proceeds............................................................92
Limitations on Issuance of Bearer Securities...............................93
Federal Income Tax Considerations..........................................93
State and Local Tax Considerations........................................109
ERISA Considerations......................................................109
Legal Investment..........................................................113
Plan of Distribution......................................................115
Legal Matters.............................................................116
Glossary..................................................................117
Until February 23, 1999, all dealers that effect transactions in the Offered
Certificates, whether or not participating in this offering, may be required to
deliver a Prospectus Supplement and the accompanying Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a Prospectus
Supplement and the accompanying Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
================================================================================
================================================================================
$1,833,159,000
(Approximate)
LB Commercial Mortgage Trust
Class A-1-a, Class A-1-b, Class A-2,
Class B, Class C, Class D,
Class E and Class X
Commercial Mortgage
Pass-Through Certificates
Series 1998-C4
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
-----------------------------
LEHMAN BROTHERS
-----------------------------
November 17, 1998
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