<PAGE>
Filed pursuant to Rule 424(b)(5)
Registration File No. 333-59167
PROSPECTUS SUPPLEMENT
(to Prospectus dated November 20, 1998)
$985,835,000 (Approximate)
DLJ Commercial Mortgage Corp., the Depositor
DLJ Commercial Mortgage Trust 1998-CF2, the Trust
Commercial Mortgage Pass-Through Certificates,
Series 1998-CF2
The Depositor will establish the Trust. The Trust will issue the
eight (8) classes of "Offered Certificates" described in the table below,
together with nine (9) additional classes of "Private Certificates".
The Offered Certificates are the only securities offered pursuant to
this prospectus supplement. This prospectus supplement may be used to offer
and sell the Offered Certificates only if accompanied by the Depositor's
prospectus dated November 20, 1998.
The Private Certificates are not offered by this prospectus
supplement. The Private Certificates will be subordinated to, and provide
credit enhancement for, the Offered Certificates.
The assets of the Trust will include a pool of 302 fixed rate,
monthly pay mortgage loans secured by first priority liens on various
commercial and multifamily residential properties. The mortgage pool will have
an "Initial Pool Balance" of approximately $1,107,680,439. The mortgage loans
and related mortgaged properties are more fully described in this prospectus
supplement.
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.
--------------------------
<TABLE>
<CAPTION>
Initial Aggregate
Offered Certificates Certificate Principal
Balance or Certificate Initial Pass- Pass-Through Expected Ratings Assumed Final
B Notional Amount(1) Through Rate(3) Rate Description(4) (Moody's/Fitch)(7) Distribution Date (3)
---------------------- --------------- ------------------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
Class S................. N/A (2) 0.8514% Variable Aaa/AAA October 2023
Class A-1A.............. $218,044,000 5.8800% Fixed Aaa/AAA June 2008
Class A-1B.............. $579,485,000 6.2400% Fixed Aaa/AAA October 2008
Class A-2............... $ 55,384,000 6.4800% Fixed Aa2/AA November 2008
Class A-3............... $ 60,923,000 6.6500% WAC Cap(5) A2/A November 2008
Class A-4............... $ 13,846,000 6.9000% WAC Cap A3/A- November 2008
Class B-1............... $ 41,538,000 7.0663% WAC(6) Baa2/BBB November 2008
Class B-2............... $ 16,615,000 7.0663% WAC Baa3/BBB- November 2008
</TABLE>
(footnotes to table on next page)
--------------------------
You should fully consider the risk factors beginning on page S-33 in
this prospectus supplement prior to investing in the Offered Certificates.
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.
--------------------------
Donaldson, Lufkin & Jenrette Securities Corporation (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. Proceeds to the Depositor from the sale of the Offered Certificates will
be an amount equal to approximately 102.0% of the initial aggregate
Certificate Principal Balance of the Offered Certificates, plus accrued
interest, before deducting expenses payable by the Depositor. See "Method of
Distribution" in this Prospectus Supplement.
Donaldson, Lufkin & Jenrette
Securities Corporation
The date of this Prospectus Supplement is November 20, 1998.
<PAGE>
Footnotes to the Table on the Cover of this Prospectus Supplement:
(1) The initial aggregate Certificate Principal Balance or Certificate
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 in the table on the cover
for such class. The terms "Certificate Principal Balance" and
"Certificate Notional Amount" are defined in this Prospectus
Supplement under "Description of the Offered Certificates--General".
(2) The Class S Certificates will not have Certificate Principal Balances
and will not entitle the holders thereof to any distributions of
principal. The Class S Certificates will accrue interest on an
aggregate Certificate Notional Amount that is equal to the aggregate
Certificate Principal Balance outstanding from time to time of all
those Certificates that have Certificate Principal Balances.
(3) The Pass-Through Rates shown in the table on the cover page for the
Class S, Class A-3, Class A-4, Class B-1 and Class B-2 Certificates
are the rates applicable for distributions to be made in January
1999. The Pass-Through Rate for each of those classes will be
variable or otherwise subject to change and will be calculated
pursuant to a formula described under "Description of the Offered
Certificates--Distributions--Calculation of Pass-Through Rates" in
this Prospectus Supplement. The Pass-Through Rates for the Class
A-1A, Class A-1B and Class A-2 Certificates are fixed at the
respective rates per annum specified in the table.
(4) 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 or yield maintenance charges
received from time to time on the underlying mortgage loans.
(5) "WAC Cap" refers to a Pass-Through Rate that is, from time to time,
equal to the lesser of the initial Pass-Through Rate for the subject
class of Certificates and a weighted average coupon derived from
rates on the underlying mortgage loans.
(6) "WAC" refers to a Pass-Through Rate that is, from time to time, equal
to a weighted average coupon derived from rates on the underlying
mortgage loans.
(7) By Moody's Investors Service, Inc. ("Moody's") and Fitch IBCA, Inc.
("Fitch"; and, together with Moody's, the "Rating Agencies"). See
"Ratings" in this Prospectus Supplement.
(8) 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 defined
under "Summary of Prospectus Supplement--Relevant Dates and Periods"
in this Prospectus Supplement, will occur in November 2031.
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 20, 1998 (the "Prospectus"), which
provides general information, some of which may not apply to the Offered
Certificates; and (b) this prospectus supplement dated November 20, 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.
S-2
<PAGE>
This Prospectus Supplement uses certain capitalized terms that are
defined either in a different section of this Prospectus Supplement or in the
Prospectus. Each of this Prospectus Supplement and the Prospectus includes an
"Index of Principal Definitions" that identifies where to locate the
definitions for those capitalized terms that are most significant or are most
commonly used.
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
made in this Prospectus Supplement are accurate as of the date stated on the
cover 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 (the
"Securities Act"), 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, 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 subject to prior
sale, when, as and if delivered to and accepted by it, and subject to certain
other conditions. It is expected that the Offered Certificates will be
delivered in book-entry form only through the facilities of The Depository
Trust Company, in New York, New York, on or about December 3, 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. "Risk Factors--Risk Related
to the Offered Certificates--Risks Associated with Liquidity and Market Value"
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-33
Risks Related to the Mortgage Loans..........................S-36
DESCRIPTION OF THE MORTGAGE POOL..................................S-51
General......................................................S-51
Certain Terms and Conditions of
the Mortgage Loans.........................................S-55
Certain Mortgage Pool Characteristics........................S-63
Additional Mortgage Loan Information.........................S-69
Certain Underwriting Matters.................................S-70
Cash Management and
Certain Escrows and Reserves...............................S-75
Significant Mortgage Loans...................................S-76
The Mortgage Loan Seller and
the Third Party Originators................................S-79
Assignment of the Mortgage Loans.............................S-80
Representations and Warranties...............................S-81
Cures, Repurchases and Substitutions.........................S-83
Changes in Mortgage Pool Characteristics.....................S-84
SERVICING OF THE MORTGAGE LOANS...................................S-85
General......................................................S-85
The Master Servicer and
the Special Servicer.......................................S-87
Servicing and Other Compensation
and Payment of Expenses....................................S-88
Modifications, Waivers,
Amendments and Consents....................................S-92
The Controlling Class Representative.........................S-95
Replacement of the Special Servicer..........................S-97
Sale of Defaulted Mortgage Loans.............................S-97
Inspections; Collection of
Operating Information......................................S-98
DESCRIPTION OF THE
OFFERED CERTIFICATES............................................S-99
General......................................................S-99
Registration and Denominations..............................S-101
Seniority...................................................S-102
Certain Relevant Characteristics of
the Mortgage Loans........................................S-104
Distributions...............................................S-104
Allocation of Realized Losses and
Certain Other Shortfalls and Expenses.....................S-113
P&I Advances................................................S-114
Appraisal Reductions........................................S-116
Reports to Certificateholders;
Certain Available Information.............................S-117
Voting Rights...............................................S-119
Termination.................................................S-120
The Trustee.................................................S-120
YIELD AND MATURITY
CONSIDERATIONS.................................................S-121
Yield Considerations........................................S-121
Weighted Average Lives of
Certain Classes of Offered Certificates...................S-125
Yield Sensitivity of
the Class S Certificates..................................S-126
USE OF PROCEEDS..................................................S-127
FEDERAL INCOME
TAX CONSEQUENCES...............................................S-127
General.....................................................S-127
Discount and Premium;
Prepayment Consideration..................................S-127
Constructive Sales of Class S Certificates..................S-129
Characterization of Investments in
Offered Certificates......................................S-129
Possible Taxes on Income From
Foreclosure Property and Other Taxes......................S-129
Reporting and Other
Administrative Matters....................................S-130
CERTAIN ERISA CONSIDERATIONS.....................................S-131
LEGAL INVESTMENT.................................................S-134
S-4
<PAGE>
Page
----
METHOD OF DISTRIBUTION...........................................S-135
LEGAL MATTERS....................................................S-136
RATINGS..........................................................S-136
INDEX OF PRINCIPAL DEFINITIONS...................................S-138
EXHIBIT A-1--
Certain Characteristics of Mortgage Loans
and Mortgaged Properties...................................A-1-1
EXHIBIT A-2--
Mortgage Pool Information....................................A-2-1
EXHIBIT B--
Form of Trustee Report.........................................B-1
EXHIBIT C--
Decrement Tables for Certain Classes
of Offered Certificates ....................................C-1
EXHIBIT D--
Price/Yield Tables for the
Class S Certificates .......................................D-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 Aggregate
Certificate Principal Approx. Approx. Pass-Through Initial Weighted
Class Ratings(1) Balance or % of Initial Credit Rate Pass- Average Principal
Certificate Notional Initial Pool Support (3) Description Through Life Window(4)
Amount (2) Balance Rate (years)(4)
- ----------------------------------------------------------------------------------------------------------------------------
Offered Certificates
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S Aaa/AAA $1,107,680,439(5) N/A N/A Variable 0.8514% N/A N/A
(Interest Only)
A-1A Aaa/AAA $218,044,000 19.68% 28.00% Fixed 5.8800% 5.7 1/99-6/08
A-1B Aaa/AAA $579,485,000 52.32% 28.00% Fixed 6.2400% 9.7 6/08-10/08
A-2 Aa2/AA $55,384,000 5.00% 23.00% Fixed 6.4800% 9.9 10/08-11/08
A-3 A2/A $60,923,000 5.50% 17.50% WAC Cap(6) 6.6500% 9.9 11/08
A-4 A3/A- $13,846,000 1.25% 16.25% WAC Cap 6.9000% 9.9 11/08
B-1 Baa2/BBB $41,538,000 3.75% 12.50% WAC(7) 7.0663% 9.9 11/08
B-2 Baa3/BBB- $16,615,000 1.50% 11.00% WAC 7.0663% 9.9 11/08
<CAPTION>
Private Certificates--Not Offered Hereby (8)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B-3 (9) $52,615,000 4.75% 6.25% Fixed 6.0400% 10.8 11/08-5/12
B-4 (9) $11,077,000 1.00% 5.25% Fixed 6.0400% 14.1 5/12-7/13
B-5 (9) $22,153,000 2.00% 3.25% Fixed 5.9500% 14.7 7/13-10/13
B-6 (9) $13,846,000 1.25% 2.00% Fixed 5.8300% 14.9 10/13-8/14
C (9) $22,154,439 2.00% N/A Fixed 5.3400% 18.3 8/14-10/23
</TABLE>
- ---------------------
(1) Ratings shown are those of Moody's and Fitch, 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
aggregate Certificate Principal Balance or Certificate Notional
Amount of any class of 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.
(3) Represents the initial aggregate Certificate Principal Balance
(expressed as a percentage of the Initial Pool Balance) of all classes
of Certificates subordinate to the indicated class.
(4) Based on the assumptions that each borrower timely makes all payments
on its underlying mortgage loan, that each underlying 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 underlying mortgage loan is otherwise prepaid prior to stated
maturity. Further based on the other Maturity Assumptions (as defined
under "Yield and Maturity Considerations" in this Prospectus
Supplement).
(5) Aggregate Certificate Notional Amount.
(6) "WAC Cap" refers to a Pass-Through Rate that is, from time to time,
equal to the lesser of the initial Pass-Through Rate for the subject
class of Certificates and a weighted average coupon derived from
rates on the underlying mortgage loans.
(7) "WAC" refers to a Pass-Through Rate that is, from time to time, equal
to a weighted average coupon derived from rates on the underlying
mortgage loans.
(8) The Private Certificates will also include three (3) classes of
certificated REMIC residual interests and one (1) class of grantor
trust certificates that are not shown above. Such Private
Certificates do not have Certificate Principal Balances or
Pass-Through Rates.
(9) 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
<TABLE>
<S> <C>
Establishment of the Trust ..................... The Depositor is establishing a trust, to be designated as DLJ
Commercial Mortgage Trust 1998-CF2 (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-CF2 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".
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
REMIC Administrator, 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 (the "Form 8-K"),
within 15 days after the initial issuance of the Offered Certificates. The
SEC will make the Form 8-K and its exhibits available to the public for
inspection.
Relevant Parties
Depositor....................................... DLJ Commercial Mortgage Corp., a Delaware corporation and an
affiliate of the Underwriter and the Mortgage Loan Seller. See "The
Depositor" in the Prospectus.
Master Servicer................................. Banc One Mortgage Capital Markets, LLC, a Delaware limited liability
company. See "Servicing of the Mortgage Loans--The Master Servicer
and the Special Servicer" in this Prospectus Supplement.
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
Special Servicer................................ Banc One Mortgage Capital Markets, LLC, a Delaware limited liability
company. See "Servicing of the Mortgage Loans--The Master Servicer
and the Special Servicer" in this Prospectus Supplement.
The 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 select
a representative that may advise the Special Servicer on various servicing
matters. At any particular time, the "Controlling Class" will, in general, be
the most subordinate Class of the Certificates (other than the Class D, Class
S, Class R-I, Class R-II and Class R-III Certificates) then outstanding that
has a then-current aggregate Certificate Principal Balance that is not less
than 25% (or, in the case of the Class C Certificates, 20%) of such Class'
initial aggregate Certificate Principal Balance. See "Servicing of the Mortgage
Loans--Replacement of the Special Servicer" and "--The Controlling Class
Representative" in this Prospectus Supplement.
Trustee and REMIC Administrator................. Norwest Bank Minnesota, National Association, 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").
Mortgage Loan Seller............................ Column Financial, Inc. ("Column" or the "Mortgage Loan Seller"), a
Delaware corporation and an affiliate of the Depositor and the
Underwriter. Column either originated each Mortgage Loan or acquired
it, directly or through an affiliate thereof, from the related originator. See
"Description of the Mortgage Pool--The Mortgage Loan Seller and the
Third Party Originators" in this Prospectus Supplement.
Originators..................................... Each Mortgage Loan was originated by one of the following parties
(collectively, the "Originators"):
o Column -- Two hundred seventy-five (275) Mortgage Loans,
representing 90.7% of the Initial Pool Balance.
o Union Capital Investments, LLC ("Union Capital") -- twenty-six (26)
Mortgage Loans, representing 8.0% of the Initial Pool Balance.
o Apple Bank for Savings ("Apple Bank") -- One (1) Mortgage Loan,
representing 1.3% of the Initial Pool Balance.
Union Capital and Apple Bank are together referred to in this Prospectus
Supplement as the "Third Party Originators". See "The Mortgage Loan Seller and
the Third Party Originators" in this Prospectus Supplement.
</TABLE>
S-8
<PAGE>
Relevant Dates and Periods
<TABLE>
<S> <C>
Cut-off Date.................................... December 1, 1998. The Cut-off Date is the date as of which the
Depositor will establish the Trust.
Closing Date.................................... On or about December 3, 1998. The Closing Date is the date on which
the Offered Certificates will initially be issued.
Distribution Date............................... With respect to any calendar month (beginning with January 1999), the
later of (i) the 12th day of such month (or, if such 12th day is not a
business day, then the next succeeding business day) and (ii) the fourth
business day following the Determination Date in such month. The
Distribution Date is the date during any such calendar 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 Holders of the Certificates are entitled to receive distributions on
the related Distribution Date.
Determination Date.............................. With respect to any calendar month (beginning with January 1999), the
seventh day of such calendar month (or, if any such seventh day is not
a business day, the immediately preceding business day). The
Determination Date during any such calendar month is relevant for
purposes of establishing the end of the Collection Period for the
Distribution Date in such month.
Collection Period............................... With respect to 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. 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 the Mortgage Loans during the related
Collection Period.
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 November 2031. The Rated Final Distribution
Date is set at the first Distribution Date following the third anniversary
of the end of the amortization term for the Mortgage Loan with the
longest remaining amortization term as of the Closing Date. As
discussed in this Prospectus Supplement, the ratings assigned to the
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
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 S 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 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 Maturity Assumptions set forth under "Yield
and Maturity Considerations" in this Prospectus Supplement.
The Assumed Final Distribution Date for each Class of Offered Certificates is
the Distribution Date occurring in the calendar month and year set forth below
for such Class.
<CAPTION>
Assumed Final
Class Distribution Date
----- -----------------
<S> <C> <C>
Class S October 2023
Class A-1A June 2008
Class A-1B October 2008
Class A-2 November 2008
Class A-3 November 2008
Class A-4 November 2008
Class B-1 November 2008
Class B-2 November 2008
</TABLE>
Overview of the Certificates
<TABLE>
<S> <C>
General......................................... The Certificates will consist of 17 Classes, only eight (8) of which are
being offered pursuant to this Prospectus Supplement and the
Prospectus. The Classes of Certificates that are being so offered are
referred to in this Prospectus Supplement as the "Offered Certificates".
The Depositor does not intend to register any of the remaining Classes of
Certificates (collectively, the "Private Certificates") under the Securities
Act, and is not offering such Certificates pursuant to this Prospectus
Supplement or the Prospectus. The Depositor has included information regarding
the Private Certificates in this Prospectus
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
Supplement because of its potential relevance to an investment decision with
respect to the Offered Certificates.
The Offered Certificates........................ Each Class of Offered Certificates will have the approximate initial
aggregate Certificate Principal Balance or Certificate 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:
<CAPTION>
Approx. Initial
Aggregate Certificate
Principal Balance
or Certificate Pass-Through
Class Notional Amount Rate
----- --------------- ----
<S> <C> <C> <C>
Class S N/A(1) 0.8514%(2)
Class A-1A $218,044,000 5.8800%(3)
Class A-1B $579,485,000 6.2400%(3)
Class A-2 $55,384,000 6.4800%(3)
Class A-3 $60,923,000 6.6500%(4)
Class A-4 $13,846,000 6.9000%(4)
Class B-1 $41,538,000 7.0663%(5)
Class B-2 $16,615,000 7.0663%(5)
---------------
<CAPTION>
<S> <C>
(1) The Class S Certificates will accrue interest based on an aggregate
Certificate Notional Amount equal to the aggregate Certificate Principal
Balance outstanding from time to time of all those Certificates that
have Certificate Principal Balances.
(2) The Pass-Through Rate shown above for the Class S Certificates is the
rate applicable for the Distribution Date in January 1999. 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--Calculation of Pass-Through Rates" in this
Prospectus Supplement. Based on such formula, the Pass-Through Rate for
such Class will generally equal the weighted average of the strip rates
at which interest accrues on the respective components of the aggregate
Certificate Notional Amount of the Class S Certificates from time to
time.
(3) Fixed Pass-Through Rate.
(4) The Pass-Through Rates shown above for the Class A-3 and Class A-4
Certificates are the rates applicable for the Distribution Date in
January 1999. The Pass-Through Rate for each such Class will be subject
to change and will be determined pursuant to a formula described under
"Description of the Offered Certificates--Distributions--Calculation of
Pass-Through Rates" in this Prospectus Supplement. Based upon such
formula, the Pass-Through Rate for each such Class will generally equal
the lesser of the rate per annum specified above for such Class and the
weighted average of the annual interest rates on the Mortgage Loans (in
some cases, adjusted as described in this Prospectus Supplement and, in
all cases, reduced by the rates per annum applicable to the calculation
of certain fees).
(5) The Pass-Through Rates shown above for the Class B-1 and Class B-2
Certificates are the rates applicable for the Distribution Date in
January 1999. The Pass-Through Rate for each such Class will be variable
and will be determined pursuant to a formula described under
"Description of the Offered
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Certificates--Distributions--Calculation of Pass-Through Rates" in this
Prospectus Supplement. Based upon such formula, the Pass-Through Rate
for each such Class will generally equal the weighted average of the
annual interest rates on the Mortgage Loans (in some cases, adjusted as
described in this Prospectus Supplement and, in all cases, reduced by
the rates per annum applicable to the calculation of certain fees).
See "Description of the Offered Certificates--General" and
"--Distributions--Calculation of Pass-Through Rates" in this Prospectus
Supplement.
The Private Certificates........................ Each Class of the Private Certificates will have the approximate initial
aggregate Certificate Principal 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:
<CAPTION>
Approx. Initial
Aggregate Certificate Pass-Through
Class Principal Balance Rate
----- ----------------- -----
<S> <C> <C> <C>
Class B-3 $52,615,000 6.0400%(1)
Class B-4 $11,077,000 6.0400%(1)
Class B-5 $22,153,000 5.9500%(1)
Class B-6 $13,846,000 5.8300%(1)
Class C $22,154,439 5.3400%(1)
Class D N/A (2) N/A (2)
Class R-I N/A (3) N/A (3)
Class R-II N/A (3) N/A (3)
Class R-III N/A (3) N/A (3)
---------------
<CAPTION>
<S> <C>
(1) Fixed Pass-Through Rate.
(2) Holders of the Class D Certificates will be entitled to receive, if and
when paid, certain additional interest accrued in respect of each
Mortgage Loan with an Anticipated Repayment Date that remains
outstanding after such date, the payment of which additional interest is
deferred as described in this Prospectus Supplement. The Class D
Certificates do not have Certificate Principal Balances or Pass-Through
Rates, however.
(3) The Class R-I, Class R-II and Class R-III Certificates are REMIC residual
interests and do not have Certificate Principal Balances or Pass-Through
Rates.
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 S Certificates,
$10,000 initial Certificate Notional Amount and in any whole dollar
denomination in excess thereof; (ii) in the case of the Class A-1A and
Class A-1B Certificates, $10,000 initial Certificate Principal Balance
and in any whole dollar denomination in excess thereof; and (ii) in the
case of the other Classes of Offered Certificates, $100,000 initial
Certificate Principal Balance 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"). As a result, you
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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 Certificates--Book-Entry Registration and
Definitive Certificates" 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 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
designations for such REMICs are as follows:
o "REMIC I", the lowest tier REMIC, will hold, among other things, the
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 excludes 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, the "Non-REMIC Assets").
o "REMIC II" will hold the "regular interests" in REMIC I.
o "REMIC III" will hold the "regular interests" in REMIC II.
The Non-REMIC Assets will collectively constitute a grantor trust (the "Grantor
Trust") for federal income tax purposes.
The Offered Certificates will be treated as "regular interests" (or, in the
case of the Class S Certificates, multiple "regular interests") in REMIC III.
This means that they 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 Offered Certificates will not
represent any interest in the Grantor Trust.
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The Class S and Class B-2 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 (and be subject to a tax thereon) before
receiving a corresponding cash distribution.
For tax information reporting purposes, the 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 Consequences" in the Prospectus.
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-1A, Class A-1B and Class S
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. See "Certain ERISA Considerations" in
this Prospectus Supplement and "ERISA Considerations" in the Prospectus.
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<S> <C>
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 S
o Class A-1A
o Class A-1B
o Class A-2
The other Offered Certificates 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 payments 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 payments and
other collections of principal could result in a lower than anticipated
yield. In the case of Class S Certificates or any other Offered
Certificates purchased at a premium, a faster than anticipated rate of
payments and other collections of principal could result in a lower than
anticipated yield. If you are contemplating the purchase of Class S
Certificates, you should be aware that the yield to maturity on the
Class S Certificates will be highly sensitive to the rate and timing of
principal prepayments and other liquidations of 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 in the Prospectus.
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 Rating Fitch Rating
----- -------------- ------------
Class S Aaa AAA
Class A-1A Aaa AAA
Class A-1B Aaa AAA
Class A-2 Aa2 AA
Class A-3 A2 A
Class A-4 A3 A-
Class B-1 Baa2 BBB
Class B-2 Baa3 BBB-
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The ratings of the Offered Certificates address the timely payment of interest
and, except in the case of the Class S Certificates, the ultimate payment of
principal on or before the Rated Final Distribution Date. Such ratings do not
represent any assessment of --
o The tax attributes of the Offered Certificates or of the Trust.
o Whether or to what extent prepayments of principal may be
received on the Mortgage Loans.
o The likelihood or frequency of prepayments of principal on the
Mortgage Loans.
o The degree to which the amount or frequency of prepayments on the
Mortgage Loans might differ from those originally anticipated.
o Whether or to what extent the interest distributable on any Class of
Certificates may be reduced in connection with Net Aggregate
Prepayment Interest Shortfalls.
o The likelihood that prepayment premiums, yield maintenance charges
or interest in excess of interest at the related Mortgage Rates will
be received with respect to the Mortgage Loans.
o Whether the Holders of the Class S Certificates, despite receiving
all distributions of interest to which they are entitled, would
ultimately recover their initial investments in such Certificates.
A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning rating
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 Ratings" in the Prospectus.
Reports to Certificateholders................... On each Distribution Date, the Trustee Report (substantially in the form
of Exhibit B to this Prospectus Supplement) will be available to you through
the sources described under "Description of the Offered Certificates--Reports
to Certificateholders; Certain Available Information" in this Prospectus
Supplement:
You may review a loan-by-loan listing electronically in the form of the
standard CSSA loan setup file and CSSA loan periodic update file. The Trustee
will electronically provide such files on a monthly basis, to the extent that
it receives the information needed to do so.
</TABLE>
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<S> <C>
Upon reasonable prior notice, you will also 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, to the extent the Trustee receives such
information and documents.
See "Description of the Offered Certificates--Reports to Certificateholders;
Certain Available Information" in this Prospectus Supplement.
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 on the Mortgage Loans, as well as certain
default-related and otherwise unanticipated expenses of the
Trust.
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.
</TABLE>
S-17
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<S> <C>
Summary Seniority Chart
Most Senior
Class S, Class A-1A and Class A-1B
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2
Various Classes of Private 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 to
which it is senior, including all of the Private Certificates (other than the
Class D Certificates).
Holders of the Class D Certificates will be entitled to receive, if and when
paid, certain additional interest accrued in respect of each Mortgage Loan with
an Anticipated Repayment Date that remains outstanding after such date, the
payment of which additional interest is deferred as described in this
Prospectus Supplement. Accordingly, the Class D Certificates are neither senior
nor subordinate to any other Class of Certificates (except to the extent that
amounts received on any particular Mortgage Loan with an Anticipated Repayment
Date are applied to pay amounts other than such additional interest).
See "Description of the Offered Certificates--General", "--Seniority",
"--Distributions" and "--Allocation of Realized Losses and Certain Other
Shortfalls and Expenses" in this Prospectus Supplement.
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Distributions
A. General..................................... Distributions of interest and principal will be made to the Holders of the
various Classes of Certificates entitled thereto, sequentially based upon their
seniority as depicted in the Summary Seniority Chart above. See "Description of
the Offered Certificates--Seniority" 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, Class R-
III and Class D 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 aggregate Certificate Principal Balance or Certificate 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 on a pro
rata basis.
On each Distribution Date, subject to available funds and the payment
priorities described above, 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" and "--Allocation of Realized Losses and Certain Other Shortfalls and
Expenses" in this Prospectus Supplement.
C. Distributions of Principal.................. Those Certificates with Certificate Principal Balances are referred to in
this Prospectus Supplement as "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 a total amount of principal over time equal to the
aggregate Certificate Principal Balance of such Class. However, the
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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 aggregate
Certificate Principal Balance of the Offered
Certificates (other than the Class S Certificates, which
do not have Certificate Principal Balances) is reduced to zero.
o No distributions of principal will be made to the Holders
of the Class A-2, Class A-3, Class A-4, Class B-1 or Class B-2
Certificates until, in the case of each such Class, the aggregate
Certificate Principal Balance of all more senior Classes of Offered
Certificates (other than the Class S Certificates, which do not have
Certificate Principal Balances) is reduced to zero.
o No distributions of principal will be made to the Holders of the
Class A-1B Certificates until either:
(i) the aggregate Certificate Principal Balance of the Class
A-1A Certificates is reduced to zero; or
(ii) the aggregate Certificate Principal Balance of the Class
A-2, Class A-3, Class A-4, Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5, Class B-6 and Class
C Certificates is reduced to zero due to losses on the
Mortgage Loans and/or certain default-related or
otherwise unanticipated expenses of the Trust and, as
a result, the Class A-1A and Class A-1B Certificates
are the only Certificates with remaining Certificate
Principal Balances (in which case, distributions of
principal will be made to the Holders of the Class A-
1A Certificates and the Holders of the Class A-1B
Certificates on a pro rata basis).
The aggregate distributions of principal to be made on the respective Classes
of Principal Balance Certificates 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.
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See "Description of the Offered Certificates--Distributions --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 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 S
Certificates and/or to the Holders of the Class or Classes of Principal
Balance Certificates then entitled to receive distributions 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 Pool to be less than the
aggregate Certificate Principal Balance of the 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 aggregate Certificate Principal Balances of
the respective Classes of Principal Balance Certificates will be
successively reduced in reverse order of their seniority (as depicted in
the Summary Seniority Chart above), until such 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 aggregate amount of interest otherwise payable to
the Holders of the respective Classes of interest-bearing Certificates on a pro
rata basis.
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.
P&I 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 limited 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
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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. None of
the Master Servicer, the Special Servicer or the Trustee, 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 be reimbursed for such
Advance, together with 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 and "Description of the Certificates--Advances in
Respect of Delinquencies" and "Description of the Pooling
Agreements--Certificate Account" in the Prospectus.
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 Master Servicer or 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 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.
<CAPTION>
The Mortgage Loans and Mortgaged Properties
<S> <C>
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").
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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"
o Exhibit A-1 - Certain Characteristics of the Mortgage Loans
and Mortgaged Properties
o Exhibit A-2 - Mortgage Pool Information
Listed 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 Some of the Mortgage Loans are cross-collateralized and cross-defaulted
with one or more other Mortgage Loans. Except where otherwise
specifically indicated, each such cross-collateralized Mortgage Loan is
presented as if it were secured only by a mortgage lien on the
corresponding Mortgaged Property identified on Exhibit A-1 to this
Prospectus Supplement.
o In certain cases, a single mortgage loan secured by multiple Mortgaged
Properties is presented as a group of cross-collateralized Mortgage
Loans. In each such case, a portion of such individual mortgage loan
has been allocated to, and will be treated as a Mortgage Loan secured
by, each related 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.
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o This Prospectus Supplement refers to certain properties specifically by
name. You should construe each reference to a named property as a
reference to the Mortgaged Property identified by that name on Exhibit
A-1 to this Prospectus Supplement.
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)................................ $1,107,680,439
Number of Mortgage Loans............................... 302
Maximum Cut-off Date Balance(2)........................ $74,732,033
Minimum Cut-off Date Balance........................... $66,773
Average Cut-off Date Balance........................... $3,667,816
Maximum Mortgage Rate.................................. 8.520%
Minimum Mortgage Rate.................................. 5.780%
Weighted Average Mortgage Rate......................... 7.116%
Maximum Original Term to Maturity
or Anticipated Repayment Date..................... 300 months
Minimum Original Term to Maturity
or Anticipated Repayment Date..................... 60 months
Weighted Average Original Term to Maturity
or Anticipated Repayment Date..................... 130 months
Maximum Remaining Term to Maturity
or Anticipated Repayment Date..................... 298 months
Minimum Remaining Term to Maturity
or Anticipated Repayment Date..................... 55 months
Weighted Average Remaining Term to Maturity
or Anticipated Repayment Date..................... 126 months
Maximum Underwritten Debt
Service Coverage Ratio(3).......................... 2.79x
Minimum Underwritten Debt
Service Coverage Ratio............................. 1.06x
Weighted Average Underwritten
Debt Service Coverage Ratio........................ 1.46x
Maximum Cut-off Date Loan-to-Value Ratio(4)............ 91.2%
Minimum Cut-off Date Loan-to-Value Ratio............... 25.0%
Weighted Average Cut-off Date
Loan-to-Value Ratio................................ 71.6%
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Maximum Maturity/ARD Loan-to-Value Ratio(5)............ 76.0%
Minimum Maturity/ARD Loan-to-Value Ratio............... 3.3%
Weighted Average Maturity/ARD 60.3%
Loan-to-Value Ratio................................
---------------------
(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 "Underwritten Debt Service Coverage Ratio" for any Mortgage Loan
is equal to the Underwritten Net Cash Flow (as such term is defined
under "Description of the Mortgage Pool--Additional Mortgage Loan
Information" 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.
(4) The "Cut-off Date Loan-to-Value 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
appraisal obtained by the Mortgage Loan Seller.
(5) The "Maturity/ARD 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 appraisal obtained by the Mortgage Loan Seller.
Maturity/ARD Loan-to-Value Ratios have not been calculated and are not
presented for fully amortizing Mortgage Loans.
B. State Concentration......................... The table below shows the number and percentage (based on Cut-off
Date Balance) of the Mortgage Loans that are secured by Mortgaged
Properties located in the indicated states:
Number of % of Initial
State Mortgage Loans Pool Balance
----- -------------- ------------
New York 19 14.0%
California 39 13.0%
Texas 44 11.0%
Florida 27 10.6%
Illinois 19 10.4%
The remaining Mortgaged Properties are located throughout 32 other states and
the District of Columbia. No more than 3.4% of the Initial Pool Balance is
secured by Mortgaged Properties located in any such other jurisdiction.
</TABLE>
S-25
<PAGE>
<TABLE>
<S> <C>
C. Property Types.............................. The table below shows the number and percentage (based on Cut-off
Date Balance) of the Mortgage Loans that are secured by Mortgaged
Properties operated for each indicated purpose:
Number of % of Initial
Property Type Mortgage Loans Pool Balance
------------- -------------- ------------
Multifamily Rental................... 106 27.8%
Office............................... 38 20.3%
Retail............................... 61 19.9%
Hospitality.......................... 28 14.1%
Industrial........................... 23 6.8%
Mixed Use............................ 13 4.8%
Manufactured Housing
Community.......................... 18 3.3%
Other................................ 11 1.9%
Self Storage......................... 1 0.6%
Triple Net Lease(1).................. 3 0.5%
-------------------
(1) Mortgaged Properties subject to Triple Net Leases (as defined
in this Prospectus Supplement), regardless of property type.
D. Security for the Mortgage
Loans................................... The table below shows the number and percentage (based on Cut-off
Date Balance) of the Mortgage Loans that are secured by first mortgage
liens on each of the specified interests in the related Mortgaged
Properties.
Encumbered Interest
in the Related Number of % of Initial
Mortgaged Property Mortgage Loans Pool Balance
------------------ -------------- ------------
Fee 294 90.4%
Leasehold 5 7.5%
Fee and Leasehold 2 2.0%
Fee in Part, Leasehold in Part 1 0.1%
</TABLE>
S-26
<PAGE>
<TABLE>
<S> <C>
E. Cut-off Date Balances....................... The table below shows the range of Cut-off Date Balances for the
Mortgage Loans.
</TABLE>
Range of Number of % of Initial
Cut-off Date Balances Mortgage Loans Pool Balance
--------------------- -------------- ------------
$66,773 - $749,999 29 1.4%
$750,000 - $1,249,999 43 4.0%
$1,250,000 - $1,999,999 72 10.4%
$2,000,000 - $2,999,999 52 11.6%
$3,000,000 - $3,999,999 26 8.2%
$4,000,000 - $4,999,999 18 7.4%
$5,000,000 - $5,999,999 20 9.8%
$6,000,000 - $9,999,999 26 16.8%
$10,000,000 - $14,999,999 5 5.5%
$15,000,000 - $19,999,999 5 8.2%
$20,000,000 - $24,999,999 5 10.0%
$25,000,000 - $74,732,033 1 6.7%
<TABLE>
<S> <C>
F. Mortgage Rates ............................. The table below shows the range of Mortgage Rates for the Mortgage
Loans as of the Cut-off Date.
</TABLE>
Range of Cut-off Number of % of Initial
Mortgage Rates Mortgage Loans Pool Balance
--------------- -------------- ------------
5.780% - 6.499% 13 2.1%
6.500% - 6.749% 18 7.5%
6.750% - 6.999% 67 31.7%
7.000% - 7.249% 87 25.9%
7.250% - 7.499% 53 16.8%
7.500% - 7.999% 49 14.2%
8.000% - 8.520% 15 1.7%
<TABLE>
<S> <C>
G. Original Terms to
Maturity or ARD......................... The table below shows the range of original terms to stated maturity or
Anticipated Repayment Date, as applicable, for the Mortgage Loans.
</TABLE>
Range of Original
Terms to Maturity Number of % of Initial
or ARD (in Months) Mortgage Loans Pool Balance
------------------ -------------- ------------
60 - 108 4 1.3%
109 - 120 253 86.4%
121 - 204 28 7.3%
205 - 300 17 4.9%
S-27
<PAGE>
<TABLE>
<S> <C>
H. Remaining Terms to
Maturity or ARD......................... The table below shows the range of remaining terms to stated maturity
or Anticipated Repayment Date, as applicable, for the Mortgage Loans
as of the Cut-off Date.
</TABLE>
Range of Remaining
Terms to Maturity Number of % of Initial
or ARD (in Months) Mortgage Loans Pool Balance
------------------ -------------- ------------
55 - 90 4 1.3%
91 - 126 253 86.4%
127 - 162 4 0.9%
163 - 186 23 6.2%
187 - 298 18 5.1%
<TABLE>
<S> <C>
I. Underwritten Debt Service
Coverage Ratios.......................... The table below shows the range of Underwritten Debt Service
Coverage Ratios for the Mortgage Loans.
</TABLE>
Range of
Underwritten
Debt Service Number of % of Initial
Coverage Ratios Mortgage Loans Pool Balance
--------------- -------------- ------------
1.06x - 1.19x 4 0.7%
1.20x - 1.29x 48 13.2%
1.30x - 1.39x 93 38.6%
1.40x - 1.49x 71 18.7%
1.50x - 1.59x 40 12.2%
1.60x - 1.69x 17 6.8%
1.70x - 1.79x 7 3.8%
1.80x - 1.89x 6 1.3%
1.90x - 1.99x 6 1.5%
2.00x- 2.79x 10 3.4%
<TABLE>
<S> <C>
J. Cut-off Date Loan-to-Value
Ratios.................................... The table below shows the range of Cut-off Date Loan-to-Value Ratios
for the Mortgage Loans.
</TABLE>
Range of
Cut-off Date Number of % of Initial
Loan-to-Value Ratios Mortgage Loans Pool Balance
-------------------- -------------- ------------
25.00% - 50.00% 14 3.1%
50.01% - 60.00% 22 7.8%
60.01% - 70.00% 64 17.0%
70.01% - 75.00% 100 34.4%
75.01% - 80.00% 93 33.8%
80.01% - 85.00% 6 3.3%
85.01% - 91.20% 3 0.5%
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<PAGE>
<TABLE>
<S> <C>
K. Maturity/ARD
Loan-to-Value Ratios.................... The table below shows the range of Maturity/ARD Loan-to-Value
Ratios for the Balloon Loans and the ARD Loans described in this
Prospectus Supplement.
<CAPTION>
Range of
Maturity/ARD Number of % of Initial
Loan-to-Value Ratios(1) Mortgage Loans Pool Balance
----------------------- -------------- ------------
<S> <C> <C> <C>
3.30% - 19.99% 3 0.5%
20.00% - 39.99% 8 2.1%
40.00% - 59.99% 126 39.6%
60.00% - 76.00% 139 50.8%
-------------------
<S> <C>
(1) Maturity/ARD Loan-to-Value Ratios have not been calculated and
are not presented for fully amortizing Mortgage Loans.
The Large Mortgage Loans and Groups
A. The Chanin Loan............................. Set forth below is certain loan and property information in respect of the
Mortgage Loan identified in this Prospectus Supplement as the "Chanin Loan".
See "Description of the Mortgage Pool--Significant Mortgage Loans--The Chanin
Loan" in this Prospectus Supplement.
Cut-off Date Balance............................... $74,732,033
% of Initial Pool Balance.......................... 6.7%
Property Type...................................... Office
Mortgage Rate...................................... 6.930%
Scheduled P&I Payment.............................. $526,740
Stated Maturity Date............................... June 1, 2022
Anticipated Repayment Date......................... Sept. 1, 2008
Appraised Value.................................... $105,000,000
Appraisal Date..................................... June 1, 1998
Underwritten Debt Service Coverage Ratio........... 1.33x
Cut-off Date Loan-to-Value Ratio................... 71.2%
Maturity/ARD Loan-to-Value Ratio................... 57.0%
B. The American
Real Estate Loans...................... Set forth below is certain loan and property information in respect of the
group of cross-collateralized Mortgage Loans identified in this
Prospectus Supplement as the "American Real Estate Loans". See
"Description of the Mortgage Pool--Significant Mortgage Loans--The
American Real Estate Loans" in this Prospectus Supplement.
Cut-off Date Balance.............................. $65,451,390
% of Initial Pool Balance......................... 5.9%
No. of Mortgage Loans............................. 11
Property Types.................................... Industrial and Office
Mortgage Rate..................................... 7.500%
</TABLE>
S-29
<PAGE>
<TABLE>
<S> <C>
Scheduled P&I Payment............................. $457,985
Stated Maturity Date.............................. Nov. 1, 2008
Appraised Value................................... $81,945,000
Appraisal Dates................................... Feb. 2, 1998
to Oct. 9, 1998
Underwritten Debt Service Coverage Ratio.......... 1.43x
Cut-off Date Loan-to-Value Ratio.................. 79.9%
Maturity/ARD Loan-to-Value Ratio.................. 70.6%
Payment Terms................................... Each Mortgage Loan accrues interest at the annual rate (its "Mortgage
Rate") set forth with respect thereto on Exhibit 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 the first day of each month (its
monthly "Due Date").
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"). Three (3) Balloon Loans, representing 2.7% of
the Initial Pool Balance, provide that the amount of the Scheduled P&I Payment
(but not the related Mortgage Rate) will increase one time on the date on which
an initial interest-only period ends and the amortization period commences. One
(1) other Balloon Loan, representing 0.2% of the Initial Pool Balance, provides
that the amount of the Scheduled P&I Payment (but not the related Mortgage
Rate) will increase one time on the date that is 10 years following the initial
Scheduled P&I 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 certain date (the "Anticipated Repayment Date" or
"ARD"). Such disincentives, which in each case will begin effective as of the
related Anticipated Repayment Date, include:
</TABLE>
S-30
<PAGE>
<TABLE>
<S> <C>
o The accrual of interest in excess of that accrued at the related
Mortgage Rate. Such additional interest will be deferred and will be
payable only after the outstanding principal balance of the ARD Loan
is paid in full.
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 267 78.1%
ARD Loans 9 14.9%
Fully Amortizing 26 6.9%
Loans
No Mortgage Loan is a "premium loan" (i.e., no Borrower received more loan
proceeds than the original principal balance of its Mortgage Loan in exchange
for agreeing to a higher Mortgage Rate).
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.
Lock-out Periods................................ A prepayment lock-out period is currently in effect for all of the
Mortgage Loans. Set forth below is information regarding the
remaining lock-out periods for the Mortgage Loans:
Maximum Remaining Lock-out Period: 292 months
Minimum Remaining Lock-out Period: 14 months
Weighted Average Remaining Lock-out Period: 115 months
</TABLE>
S-31
<PAGE>
<TABLE>
<S> <C>
Defeasance...................................... Certain Mortgage Loans identified in this Prospectus Supplement as
"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.
Number of % of Initial
Loan Type Mortgage Loans Pool Balance
--------- -------------- ------------
Defeasance Loans 243 93.0%
Non-Defeasance Loans 59 7.0%
</TABLE>
S-32
<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 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
of Offered Certificates" 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 Maturity 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
S-33
<PAGE>
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. The actual yield to you, as a Holder of an
Offered Certificate, 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.
If you purchase Class S 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 S 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.
The ratings on the Class S Certificates do not address whether a purchaser of
such Certificates would be able to recover its initial investment therein.
See "Yield and Maturity Considerations" in this Prospectus Supplement
and in the Prospectus. See also "Risk Factors--Effect of Prepayments on Yield
of Certificates" in the Prospectus.
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 Certificate Principal Balance or Certificate
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 Certificate Principal Balance or
Certificate 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 Certificate Principal Balance or
Certificate 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,
Amendments and Consents" 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 your interests as a Holder of
the Offered Certificates. In addition, the Depositor anticipates that Banc One
Mortgage Capital Markets, LLC ("Banc One") (which will act both as Master
S-34
<PAGE>
Servicer and Special Servicer) or an affiliate thereof will acquire certain of
the Private Certificates as part of a joint bid with other investors in the
Private Certificates. In connection with such joint bid, Banc One may enter
into certain contractual arrangements with such other investors. Banc One is
obligated to perform its servicing duties in accordance with the terms of the
Pooling Agreement, including the servicing standard described in this
Prospectus Supplement. In general, however, Banc One is not required to act in
a manner more favorable to the Offered Certificates or any particular Class
thereof than to the Private Certificates. In addition, as a Holder of Private
Certificates, Banc One could have interests when dealing with defaulted
Mortgage Loans or otherwise performing its duties under the Pooling Agreement
that are in conflict with your interests as a Holder of Offered Certificates.
Furthermore, the 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. The
Depositor anticipates that Banc One and the other investors with whom it is
submitting a joint bid for the Private Certificates, will initially own the
Controlling Class of Private Certificates.
In addition, Banc One 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 Banc One, 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. This may pose inherent conflicts for Banc One in its
capacity as Master Servicer or 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 be reimbursed for its
Advances, together with interest thereon to offset its cost of funds.
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 A-2,
Class A-3, Class A-4, Class B-1, and Class B-2 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 Special 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. To
the extent the computer systems of the Master Servicer, the Special Servicer
or the Trustee rely on the computer systems of other companies, there can be
no assurance that such other computer systems will be year 2000 ready or (even
if they are year 2000 ready) that they will be compatible with the computer
systems of the Master
S-35
<PAGE>
Servicer, the Special Servicer or the Trustee, as the case may be. If the
Master Servicer, the Special Servicer or the Trustee does not have by the year
2000 computerized systems which are able to correctly interpret data involving
dates, or to the extent its computer systems depend on other companies'
computer systems that are not year 2000 ready or are incompatible with its
systems, the ability of such party to service the Mortgage Loans (in the case
of the Master Servicer and the Special Servicer) or to 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 Operation of the
Mortgaged Properties. The Mortgage Loans are secured by first mortgage liens
on interests in the following types of real property:
o Multifamily Rental
o Office
o Retail
o Hospitality
o Industrial
o Mixed-Use
o Manufactured Housing Communities
o Other
o Self Storage
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 successful 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 of competing properties;
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 (in
particular, a sole tenant or anchor tenant);
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or
replaced.
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);
S-36
<PAGE>
o local real estate conditions (such as an increase in or
oversupply of comparable commercial or residential
space);
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 rental rates at which leases are renewed or replaced;
o the percentage of total property expenses in relation to
revenue;
o the ratio of fixed operating expenses to those that vary
with revenues; and
o the level of capital expenditures required to maintain the
property and to maintain or replace tenants.
Therefore, Mortgaged Properties with short-term or less creditworthy sources
of revenue and/or relatively high operating costs, such as those operated as
hospitality and self-storage properties, can be expected to have more volatile
cash flows than 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 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 operations 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 by a decline in a particular business
or industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy 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 ability of the respective Borrowers to
renew leases or relet space on comparable terms when existing leases expire
and/or become defaulted. Most of the Mortgaged Properties are in whole or in
part occupied under leases that expire during the respective terms of the
related Mortgage Loans. 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, office or
industrial 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.
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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.
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 hospitality or self-storage properties, generally
require more intensive management than properties leased to tenants under
long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can
maintain or improve occupancy rates, business and cash flow, reduce operating
and repair costs and preserve building value. On the other hand, management
errors can, in some cases, impair the long term viability of a Mortgaged
Property.
Factors Affecting the Operation of Multifamily Rental Properties. One
hundred six (106) Mortgage Loans, representing 27.8% of the Initial Pool
Balance, are secured 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 (which
may change over time);
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);
o state and local regulations (which may affect the building
owner's ability to increase rent to the market
rent for an equivalent apartment); and
o the extent to which the property is subject to land use
restrictive covenants or contractual covenants that require
that units be rented to low income tenants.
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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 and others may impose such restrictions in
the future. 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.
Moderate- and Low-Income Tenants. Some of the Multifamily Rental
Properties are subject to land use restrictive covenants or contractual
covenants in favor of federal or state housing agencies. These covenants
generally require that a minimum number or percentage of units be rented to
tenants who have incomes that are substantially lower than median incomes in
the area or region. Such covenants may limit the potential rental rates that
may govern rentals at a Multifamily Rental Property, the potential tenant base
for the property or both.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure
and Loss of the Mortgage Loans--Risks Particular to Multifamily Rental
Properties" in the Prospectus.
Factors Affecting the Operation of Office Properties. Thirty-eight
(38) Mortgage Loans, representing 20.3% of the Initial Pool Balance, are
secured by office properties (such Mortgaged Properties, the "Office
Properties"). 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, regional and
national economies;
o the availability of tax benefits;
o the desirability of the location of business;
o changes in zoning laws; 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).
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure
and Loss of the Mortgage Loans--Risks Particular to Office Properties" in the
Prospectus.
Factors Affecting the Operation of Retail Properties. Without regard
to Mortgaged Properties subject to Triple Net Leases, sixty-one (61) Mortgage
Loans, representing 19.9% of the Initial Pool Balance, are secured by retail
properties at which businesses offer consumer goods, other products and
various entertainment, recreational or personal services (such Mortgaged
Properties, the "Retail Properties").
The Retail Properties consist of--
o Neighborhood shopping centers;
o Strip shopping centers;
o Power centers; and
o Individual stores and businesses.
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A variety of stores and businesses are located at the Retail
Properties, including--
o Department stores;
o Grocery stores;
o Convenience stores;
o Restaurants;
o Discount stores;
o Drug stores;
o Electronics stores;
o Automotive parts supply stores;
o Automotive repair stores;
o Hardware and home improvement stores;
o Fitness centers;
o Banks;
o Specialty shops;
o Gasoline stations;
o Movie theaters;
o Salons; and
o Dry cleaners.
The value and operation of a Retail Property depend on (among other
things) the qualities and success of its tenants. The success of tenants
generally at a Retail Property will be affected by a number of factors,
including--
o competition from other retail properties;
o perceptions regarding the safety, convenience and
attractiveness of the property;
o demographics of the surrounding area;
o the strength and stability of the local, regional and
national economies;
o traffic patterns and access to major thoroughfares;
o availability of parking;
o the particular mixture of the goods and services offered at
the property;
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 retail center can be important, because anchor tenants
play a key role in generating customer traffic and making the 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
center and whose operation is vital in attracting customers to the property.
The Depositor considers many of the Retail Properties to be "anchored",
although in some cases the premises occupied by the "anchor tenant" is not
part of the security for the particular Mortgage Loan. In such cases, to the
extent the Borrower does not control the space rented to the "anchor tenant",
the Borrower may not be able to take actions with respect to such space that
it otherwise typically would, such as granting concessions to retain an
"anchor tenant" or removing an ineffective "anchor tenant".
S-40
<PAGE>
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.
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 television shopping networks and programs;
o internet web sites; and
o telemarketing.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure
and Loss of the Mortgage Loans--Risks Particular to Retail Sales and Service
Properties" in the Prospectus.
Factors Affecting the Operation of Hospitality Properties.
Twenty-eight (28) Mortgage Loans, representing 14.1% of the Initial Pool
Balance, are secured by full service hotels, limited service hotels or motels
or other similar lodging facilities (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, whether 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 motels;
o the need for 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 perceptions regarding safety or attractiveness of the
property or the amenities offered;
o proximity to businesses, airports or resort areas;
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-41
<PAGE>
In addition, because hotel and motel rooms generally are rented for
short periods of time, Hospitality 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 restricted. In
the event of a foreclosure of a Hospitality Property, neither the Trustee nor
the Special Servicer would have the right 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.
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.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure
and Loss of the Mortgage Loans--Risks Particular to Hotel and Motel
Properties" in the Prospectus.
Some of the Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses. Some of the Mortgaged Properties (in particular, those
operated as manufactured housing communities or those operated for industrial
purposes) may not be converted to alternative uses without substantial capital
expenditures. If a Mortgaged Property is not readily adaptable to other uses,
its liquidation value may be substantially less than would otherwise be the
case.
Risks Associated with Related Parties. Certain groups of Borrowers
under the Mortgage Loans are under common control. For example, the Borrower
under the "Chanin Loan" described in this Prospectus Supplement is affiliated
with the Borrower under the Mortgage Loan secured by "11 Park Place". Those
Mortgage Loans collectively represent 8.1% 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 Exhibit A-1
to this Prospectus Supplement for a list of the three most significant tenants
at each of the Office Properties, the Retail Properties and the Mortgaged
Properties used for industrial purposes. 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.
Loan Concentration Entails Risk. In general, the inclusion in 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. The average Cut-off Date Balance of the Mortgage Loans is $3,667,816
(calculated without regard to the cross-collateralization of any
cross-collateralized Mortgage Loans). Several of the individual Mortgage Loans
have Cut-off Date Balances, and several of the groups of cross-collateralized
Mortgage Loans have aggregate Cut-
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<PAGE>
off Date Balances, that are substantially higher than such average Cut-off
Date Balance. The following table sets forth Cut-off Date Balances for the
five largest individual Mortgage Loans and groups of cross-collateralized
Mortgage Loans.
Cut-off Date Balances and Concentration of Mortgage Loans
Individual Mortgage Loan % of Initial
or Group of Mortgage Loans(1) Cut-off Date Balance Pool Balance
- ----------------------------- -------------------- ------------
Chanin Loan(2) $ 74,732,033 6.7%
American Real Estate Loans $ 65,451,390 5.9%
Mortgage Loans secured by the %
Centers at Rancho Niguel(3) $ 28,674,753 2.6
Inland Loans $ 25,000,000 2.3%
Heritage Pointe Loan $ 24,982,355 2.3%
-------------- -------
Total $ 218,840,530 19.8%
---------------------
(1) The Chanin Loan and the American Real Estate Loans are
described under "Description of the Mortgage
Pool--Significant Mortgage Loans" in this Prospectus
Supplement.
(2) The Borrower under the Chanin Loan is affiliated with the
Borrower under the Mortgage Loan secured by "11 Park Place".
(3) These Mortgage Loans constitute a group of two (2)
cross-collateralized Mortgage Loans that are secured by "The
Center at Rancho Niguel" and "The Edwards Center at Rancho
Niguel".
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.
The Mortgaged Properties are located in 37 states and the District of
Columbia. The Mortgaged Properties located in each of the following states
secure Mortgage Loans that represent more than 5% of the Initial Pool Balance:
Total Cut-off Date Balance
of Mortgage Loans Secured % of Initial
State by Properties in State Pool Balance
- ----- ---------------------- ------------
New York 19 14.0%
California 39 13.0%
Texas 44 11.0%
Florida 27 10.6%
Illinois 19 10.4%
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<PAGE>
Risk of Changes in Mortgage Pool Composition. The Mortgage Loans
amortize at different rates and mature at different dates. 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. If you purchase any Offered
Certificates other than the Class A-1A Certificates, you will be more exposed
to any risks associated with changes in concentrations of Borrower, loan or
property characteristics than are persons who own Offered Certificates that
have an earlier Assumed Final Distribution Date than your Certificates.
Extension and Default Risks Associated With Balloon Loans and ARD
Loans. Two hundred sixty-seven (267) Mortgage Loans, representing 78.1% of the
Initial Pool Balance, are Balloon Loans, and nine (9) Mortgage Loans,
representing 14.9% 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 either to refinance the loan or to sell the
related Mortgaged Property. 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;
o the state of the fixed income and mortgage markets; 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--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans" 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,
Amendments and Consents" 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 may 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.
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<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 in the Prospectus.
Risks of Subordinate and Other Additional Financing. At the
respective dates of origination for the related Mortgage Loans, none of the
Mortgaged Properties was encumbered by liens securing subordinated debt other
than subordinated debt that is held by affiliates of the respective Borrowers,
which affiliates have in each case agreed not to foreclose for so long as the
related Mortgage Loan is outstanding. Some of the Mortgage Loans secured by
Hospitality Properties allow the Borrowers to encumber the related Mortgaged
Properties so long as--
o the additional indebtedness is used for the purpose of
refurbishing or renovating the property and/or acquiring
certain furniture, fixtures and equipment for the property;
and
o certain loan-to-value and debt service coverage tests are
satisfied.
Except as described above, each Mortgage Loan either (i) prohibits
the related Borrower from encumbering the Mortgaged Property with additional
secured debt or (ii) requires the consent of the holder of such Mortgage Loan
prior to so encumbering such property. A violation of such prohibition may not
become evident until the related Mortgage Loan otherwise defaults and,
accordingly, the Trust may not realistically be able to prevent a Borrower
from incurring subordinate debt. The existence of any secured subordinated
indebtedness increases the difficulty of refinancing the related Mortgage Loan
at maturity, and the related Borrower may have difficulty repaying multiple
loans. In addition, the Trust's foreclosure of the related Mortgage Loan may
be delayed by the bankruptcy or similar proceedings involving the subordinate
lender or other legal action by such subordinate lender. See "Certain Legal
Aspects of Mortgage Loans--Subordinate Financing" in the Prospectus.
Certain of the Mortgage Loans permit, and certain Borrowers have
incurred, additional indebtedness for operating costs or other 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.
Except as described above, the Depositor has not been able to confirm
whether the respective Borrowers under the Mortgage Loans have any other debt
outstanding.
Owners of certain Borrowers under the Mortgage Loans may incur
so-called "mezzanine debt" 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. In the case of
the Mortgage Loan secured by "Jefferson at Treetops", which Mortgage Loan
represents 1.8% of the Initial Pool Balance, general and limited partnership
interests in the Borrower have been pledged to an unaffiliated third party to
secure a loan in the original principal amount of $2,800,000. No such
"mezzanine debt" is included in the Mortgage Pool.
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; and
o the ability of the Borrower to refinance or sell the
Mortgaged Property.
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None of the Mortgage Loans is insured or guaranteed by any governmental entity
or by any other person.
Environmental Risks. In general, a third-party environmental
consultant conducted an environmental site assessment (or updated a previously
conducted assessment) with respect to all of the Mortgaged Properties within
the 21- month period preceding the Cut-off Date. However, no environmental
assessment was conducted, but environmental insurance was obtained, as to the
Mortgaged Properties identified on Exhibit A-1 to this Prospectus Supplement
as "Run in Foods". See, however, "--Risks Related to the Mortgage
Loans--Uninsured Loss; Sufficiency of Insurance" in this Prospectus
Supplement. Each environmental site assessment or update generally complied
with industry-wide 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 and the consultant recommended action, then
(depending on the nature of the condition or circumstance) the Borrower--
o has implemented or agreed to implement 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 in
the manner and within the time frames specified in the
related Mortgage Loan documents; or
o established an escrow reserve with the lender to cover the
estimated cost of remediation; or
o has obtained environmental insurance.
There can be no assurance, however, that the environmental
assessments identified all adverse environmental conditions and risks, that
the related Borrowers will implement all recommended operations and
maintenance plans or that the recommended action will fully remediate or
otherwise address all the adverse environmental conditions and risks. In
addition, the current environmental condition of a Mortgaged Property could be
adversely affected by tenants or by the conditions or operations in the
vicinity of the Mortgaged Properties (e.g., leaking underground storage tanks)
at another property nearby.
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
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<PAGE>
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
Considerations" 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.
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 the Special Servicer Obtaining an Environmental
Assessment Prior to taking Remedial Action. The Pooling Agreement will provide
that before the Special Servicer acquires title to a Mortgaged Property on
behalf of the Trust or assumes operation of a Mortgaged Property, it must
obtain an environmental assessment of the property. Although this requirement
will decrease the likelihood that the Trust will become liable under any
environmental law, it will effectively preclude foreclosure until a
satisfactory environmental assessment is obtained (or until any required
remedial action is thereafter taken or a determination is made that such
action need not be taken or need not be taken prior to foreclosure).
Accordingly, there is some risk that the Mortgaged Property will decline in
value while this assessment is being obtained. Moreover, there is no assurance
that this requirement will effectively insulate the Trust from potential
liability under environmental laws. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans" in the Prospectus.
Risks Related to Property Condition. Licensed engineers inspected all
of the Mortgaged Properties during the 18-month period 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 of the related Mortgage Loan generally required the
related Borrower to fund reserves, or deliver letters of credit or other
instruments, to cover such costs. In certain cases, no reserve was required
because of the creditworthiness of the Borrower or a significant tenant
responsible for most of the 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 or that the creditworthiness of the particular Borrower or
any significant tenant responsible for such repair or replacement will not
decline.
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Reserves May Be Insufficient. Certain of the Mortgage Loans 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. Most of the Mortgage Loans 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.
Limitations on Enforceability of Cross-Collateralization. Nine (9)
separate groups of Mortgage Loans, representing 5.9%, 2.6%, 2.3%, 1.4%, 1.1%,
0.8%, 0.8%, 0.3% and 0.3%, respectively, of the Initial Pool Balance, provide
for some form of cross-collateralization between the Mortgage Loans in each
such group (such Mortgage Loans, collectively, the "Cross-Collateralized
Mortgage Loans"; and each such group, a "Cross-Collateralized Group"). The
purpose of these arrangements is to reduce the risk of default or ultimate
loss as a result of an inability of a Mortgaged Property to generate
sufficient net operating income to pay debt service. However, certain of the
Cross-Collateralized Groups provide for a full or partial termination of the
applicable cross-collateralization, and/or permit the release of one or more
of the related Mortgaged Properties from the related mortgage lien, 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 Groups are, in each such case,
secured by Mortgaged Properties located in two or more states. Such
Cross-Collateralized Groups collectively represent 9.6% 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 Cross-Collateralized Mortgage Loan, it may not be
possible to foreclose on the related Mortgaged Properties simultaneously.
Certain of the Cross-Collateralized Groups involve, in each such
case, multiple Borrowers. Cross-collateralization arrangements involving more
than one Borrower could be challenged as a fraudulent conveyance by creditors
of a Borrower or by the representative of the bankruptcy estate of a Borrower,
if a Borrower were to become a debtor in a bankruptcy case. A lien granted by
a Borrower to secure repayment of another Borrower's Mortgage Loan could be
avoided if a court were to determine that (i) 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 (ii) the Borrower did not, when it allowed its Mortgaged
Property to be encumbered by a lien securing the entire indebtedness
represented by the other Mortgage Loan, receive fair consideration or
reasonably equivalent value for pledging such Mortgaged Property for the equal
benefit of the other Borrower. Among other things, a legal challenge to the
granting of the liens may focus on the benefits realized by such Borrower from
the respective Mortgage Loan proceeds, as well as the benefit to it from the
cross-collateralization. If a court were to conclude that the granting of the
liens 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 pertinent Mortgage Loan 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. Sixty-one (61) Mortgage Loans,
representing 8.7% of the Initial Pool Balance, require the related Borrowers
during some period of the related loan term to pay an additional amount
("Prepayment Consideration") when they make a voluntary principal prepayment.
In general, the Prepayment Consideration is calculated either as a percentage
of the principal amount prepaid (a "Prepayment Premium") or on the basis of 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 or Yield Maintenance Charges collected on the Mortgage Loans will be
distributed to the persons, in the amounts and in accordance with the
priorities described in this Prospectus Supplement under "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums
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<PAGE>
and Yield Maintenance Charges". The Depositor makes no representation or
warranty as to the collectability of any Prepayment Premium or Yield
Maintenance Charge.
Under the laws of a number of states, the enforceability of any
Mortgage Loan provisions that require the Prepayment Premium or Yield
Maintenance Charge upon an involuntary prepayment is unclear. Even if the
obligation is enforceable, the Special Servicer has authority to waive it in
connection with obtaining a pay-off of a defaulted Mortgage Loan. Even if the
obligation is enforceable and enforced, the related liquidation proceeds may
not be sufficient to make such payment because the Pooling Agreement generally
requires the Special Servicer to apply liquidation proceeds to cover
outstanding servicing expenses and unpaid principal and interest before
applying them to cover any Prepayment Premium or Yield Maintenance Charge due
in connection with the liquidation of such Mortgage Loan. Accordingly, the
Holders of the more subordinate Classes of Certificates may receive
distributions of interest and/or principal with respect to the liquidated
Mortgage Loan, while the Holders of the more senior Classes of Certificates
receive none (or less than all) of the required Prepayment Consideration in
connection with the liquidation. See "Servicing of the Mortgage
Loans--Modifications, Waivers, Amendments and Consents" in this Prospectus
Supplement and "Certain Legal Aspects of Mortgage Loans--Default Interest and
Limitations on Prepayments" in the Prospectus.
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, Repurchases and Substitutions",
"Servicing of the Mortgage Loans--Sale of Defaulted Mortgage Loans" and
"Description of the Offered Certificates--Termination" in this Prospectus
Supplement.
Limitations on Enforceability of Other Provisions. Most of 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)
a majority ownership interest in the related Borrower. All of 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
related Borrower. The courts of all states will enforce acceleration clauses
in the event of a material payment default. The equity courts of any state,
however, may refuse to allow the foreclosure of a mortgage or deed of trust or
to permit the acceleration of the indebtedness if--
o the default is deemed to be immaterial,
o the exercise of such remedies would be inequitable or
unjust, or
o the circumstances would render the acceleration
unconscionable.
Most of the Mortgage Loans are secured by, in each such case, 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--Bankruptcy Laws" in
the Prospectus.
Limitations of Appraisals. Appraisals were obtained for all of the
Mortgaged Properties. 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 value of each Mortgaged
Property at or about the time of origination of the related Mortgage Loan
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is presented, for illustrative purposes only, on Exhibit A-1 to this
Prospectus Supplement. Furthermore, in the case of certain Mortgage Loans that
constitute acquisition financing, the related Borrower may have acquired the
related Mortgaged Property at a price less than the appraised value on which
such Mortgage Loan was underwritten.
Risks Associated With Substitution Provisions. Each of three (3)
Cross-Collateralized Groups, including the "American Real Estate Loans"
described in this Prospectus Supplement and the Mortgage Loans secured by
"Rivertree Court Shopping Center," "Woodland Heights Shopping Center,"
"Winnetka Commons Shopping Center," "Berwyn Plaza Shopping Center" and
"Walgreen's Store" (the "Inland Loans"), permits the related Borrower the
opportunity to obtain the release of one or more of the related Mortgaged
Properties by substituting comparable real property. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Substitution" in this Prospectus Supplement. Although each related
Mortgage Loan sets forth conditions to substitution that are intended to avoid
a deterioration in the quality of the properties securing the Mortgage Loan,
there is no assurance that any substitute property will be of equal or better
quality as the Mortgaged Property that it replaces or that the value and
operating results of any substitute property will ultimately equal or exceed
those of such Mortgaged Property.
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 relevant area 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 to the
holders of 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 the Borrowers have covenanted to insure
their respective Mortgaged Properties as and to the extent 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 that are
not covered by insurance or for which insurance proceeds may not be adequate.
Consequently, there can be no assurance that any loss incurred will not exceed
the limits of policies obtained. In addition, earthquake insurance is
generally not required to be maintained by a Borrower, even in respect of
Mortgaged Properties located in California.
In addition, various forms of insurance maintained with respect to a
Mortgaged Property, including casualty insurance, environmental insurance (in
the limited number of cases where it was obtained), earthquake insurance (in
the limited number cases where it was obtained) or other insurance, may be
provided under a blanket policy that 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.
Risks Particular to Ground Leases. Several of the Mortgage Loans
(including the Chanin Loan described herein) 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
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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--Foreclosure--Leasehold
Considerations" 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. In such cases, either the Mortgaged
Property is considered a "permitted non-conforming structure" or the operation
of the Mortgaged Property 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 to effect
such compliance. In addition, noncompliance could result in the imposition of
fines by the federal government or an award or damages to private litigants.
Limited Information Causes Uncertainty. Certain Mortgage Loans
constitute acquisition financing. Accordingly, limited or no operating
information is available with respect to the related Mortgaged Property. As a
result, you may find it difficult to analyze the performance of any such
Mortgaged Property.
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 $1,107,680,439,
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 $66,773 to $74,732,033, and the
average Cut-off Date Balance of the Mortgage Loans is $3,667,816.
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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 Some of the Mortgage Loans are cross-collateralized and
cross-defaulted with one or more other Mortgage Loans.
Except where otherwise specifically indicated, each
cross-collateralized Mortgage Loan is presented as if it
were secured only by the corresponding Mortgaged Property
identified on Exhibit A-1 to this Prospectus Supplement.
o In certain cases, a single mortgage loan secured by multiple
Mortgaged Properties is presented as a group of
cross-collateralized Mortgage Loans. In each such case, a
portion of such individual mortgage loan has been allocated
to, and will be treated as a Mortgage Loan secured by, each
related 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 This Prospectus Supplement refers to certain properties
specifically by name. You should construe each reference to
a named property as a reference to the Mortgaged Property
identified by that name on Exhibit A-1 to this Prospectus
Supplement.
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 an 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 Mortgaged Properties.
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The table below shows the number and percentage (based on Cut-off
Date Balance) of the Mortgage Loans secured by Mortgaged Properties operated
for each indicated purpose:
Number of % of Initial
Property Type Mortgage Loans Pool Balance
- ------------- -------------- ------------
Multifamily Rental ....................... 106 27.8%
Office.................................... 38 20.3%
Retail.................................... 61 19.9%
Hospitality............................... 28 14.1%
Industrial................................ 23 6.8%
Mixed Use................................. 13 4.8%
Manufactured Housing Community............ 18 3.3%
Other..................................... 11 1.9%
Self Storage.............................. 1 0.6%
Triple Net Lease(1)....................... 3 0.5%
- -------------------
(1) Mortgaged Properties that are subject to Triple Net
Leases (as defined in this Prospectus Supplement),
regardless of property type.
See "Description of the Trust Funds--Mortgage Loans--Mortgage Loans
Secured by Multifamily Rental Properties", "--Mortgage Loans Secured by Office
Properties", "--Mortgage Loans Secured by Retail Sales and Service
Properties", "--Mortgage Loans Secured by Hospitality Properties" and
"--Mortgage Loans Secured by Other Types of Properties" in the Prospectus.
Certain of the Multifamily Rental Properties are subject to land use
restrictive covenants or contractual covenants that require all or a portion
of the units to be rented to low income tenants. Several of the Multifamily
Rental Properties have concentrations of student tenants. Certain Multifamily
Rental Properties consist of all or a majority of the individual units, and
the corresponding interests in the common areas and facilities, of a
condominium property whose homeowners association is controlled by the related
Borrower.
The table below shows the number and percentage of Mortgage Loans
that are secured by first mortgage liens on each of the specified interests in
the related Mortgaged Properties.
Encumbered Interest
in the Related Number of % of Initial
Mortgaged Property Mortgage Loans Pool Balance
------------------ -------------- ------------
Fee 294 90.4%
Leasehold 5 7.5%
Fee and Leasehold 2 2.0%
Fee in Part, Leasehold in Part 1 0.1%
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The table below shows the number of, and the percentage of the
Initial Pool Balance secured by, Mortgage Loans secured by Mortgaged
Properties located in the indicated states.
% of
Number of Initial Pool
State Mortgage Loans Balance
- ----- -------------- -------
New York 19 14.0%
California 39 13.0%
Texas 44 11.0%
Florida 27 10.6%
Illinois 19 10.4%
The remaining Mortgaged Properties are located throughout 32 other
states and the District of Columbia. No more than 3.4% of the Initial Pool
Balance is secured by Mortgaged Properties located in any such other
jurisdiction.
The Mortgage Pool includes nine (9) Cross-Collateralized Groups. Each
Cross-Collateralized Group consists of two or more Mortgage Loans that are
cross-collateralized and cross-defaulted with each other. Certain
Cross-Collateralized Groups entitle the related Borrower(s) to obtain (at any
time following the related Lock-out Period) a release of one or more of the
related Mortgaged Properties and/or a termination of the applicable
cross-collateralization, subject, in each such case, to the fulfillment of one
or more of the following conditions--
o the pay down of the loan(s) in an amount equal to a
specified percentage (generally 125%) of the portion of the
aggregate loan amount allocated to the Mortgaged Property to
be released;
o the satisfaction of certain debt service coverage and
loan-to-value tests for the remaining Mortgaged
Properties; and/or
o receipt by the lender of confirmation from each Rating
Agency that such action will not result in a qualification,
downgrade or withdrawal of any of the then-current ratings
of the Certificates.
Certain of Cross-Collateralized Groups also entitle the related
Borrower to a release of one or more of the related Mortgaged Properties under
defeasance provisions. See "Certain Terms and Conditions of the Mortgage
Loans--Defeasance Loans". Three (3) of those Cross-Collateralized Groups
permit the related Borrower to substitute one or more other commercial
properties in place of one or more of the existing Mortgaged Properties as
security for the loan. See "Certain Terms and Conditions of the Mortgage
Loans--Substitution".
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Set forth below are the number of Mortgaged Properties securing, and
the percentage of the Initial Pool Balance represented by, each
Cross-Collateralized Group that has an aggregate Cut-off Date Balance
representing at least 1.0% of the Initial Pool Balance.
<TABLE>
<CAPTION>
Number of Number of States
Mortgage Where the Mortgaged % of Initial
Cross-Collateralized Group Loans Properties are Located Pool Balance
- -------------------------- ----- ---------------------- ------------
<S> <C> <C> <C>
American Real Estate Loans 11 3 5.9%
Mortgage Loans secured by The Center at
Rancho Niguel and The Edwards Center at
Rancho Niguel 2 1 2.6%
Mortgage Loans secured by Rivertree Court Shopping
Center, Woodland Heights Shopping Center, Winnetka
Commons Shopping Center, Berwyn Plaza Shopping
Center and Walgreen's Store 5 2 2.3%
Mortgage Loans secured by Blue Ash Portfolio,
Springdale Office Center, Executive Center East
and McDonald's 4 2 1.4%
Mortgage Loans secured by Storage Box/Stowaway 2 1 1.1%
Storage and Maplewood Mobile Estates
</TABLE>
In certain cases, a single Mortgage Loan is secured by mortgage liens
on two or more parcels that are contiguous or otherwise operated in close
proximity or are operated jointly. For purposes of this Prospectus Supplement,
all such parcels are presented and considered as one Mortgaged Property.
You should consider each Mortgage Loan to be a nonrecourse obligation
of the related Borrower (i.e., in the event of a payment default by such
Borrower, recourse will be limited to the related Mortgaged Property or
Properties for satisfaction of the Borrower's obligations). In those cases
where recourse to a Borrower or guarantor is permitted under the related
Mortgage Loan documents, 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.
Certain Terms and Conditions of the Mortgage Loans
Due Dates. All of the Mortgage Loans provide for Scheduled P&I
Payments to be due on the first day of each month.
Mortgage Rates; Calculations of Interest. Each Mortgage Loan bears
interest at a Mortgage Rate that is fixed until maturity. However, as
described below, each ARD Loan will accrue interest after its Anticipated
Repayment Date at a rate that is in excess of its Mortgage Rate prior to the
Anticipated Repayment Date.
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 5.780% per annum to 8.520% per annum, and the weighted
average Mortgage Rate for the Mortgage Loans was 7.116%
No Mortgage Loan provides for negative amortization or, except as
described below with respect to the ARD Loans, for the deferral of interest.
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Each Mortgage Loan will accrue interest on the basis of one of the
following conventions:
o The actual number of days elapsed during each one-month
accrual period in a year of 360 days (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".
The table below shows the number of, and percentage of Initial Pool
Balance represented by, Mortgage Loans that accrue interest based on each of
the foregoing conventions.
Number of % of Initial
Interest Accrual Basis Mortgage Loans Pool Balance
- ---------------------- -------------- ------------
Actual/360 Basis 295 98.2%
30/360 Basis 7 1.8%
ARD Loans. Nine (9) Mortgage Loans, representing 14.9% of the Initial
Pool Balance, are ARD Loans.
An "ARD Loan" is characterized by the following features:
o A maturity date that is approximately 24 years (or, in one
case, 20 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
Exhibit 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 a date that is 6 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") that is, in most such cases, not more than two
percentage points.
o The deferral of any interest accrued in respect of such
Mortgage Loan at its Additional Interest Rate from and after
the related Anticipated Repayment Date (such excess interest
being referred to in this Prospectus Supplement 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 such Mortgage Loan has been paid in full.
o From and after its Anticipated Repayment Date, the
accelerated amortization of such Mortgage Loan out 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 in this Prospectus Supplement 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.
S-56
<PAGE>
In general, the Borrower under each ARD Loan entered into a cash
management agreement at closing whereby the Borrower or the manager of the
Mortgaged Property is required to deposit or cause the deposit of all revenue
from the related Mortgaged Property received after the related Anticipated
Repayment Date into a designated account controlled by the Master Servicer.
Balloon Loans. Two hundred sixty-seven (267) Mortgage Loans,
representing 78.1% of the Initial Pool Balance, are Balloon Loans.
A "Balloon Loan" is characterized by one of the following--
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 and which, in some
cases, begins only after the end of an initial interest-only
period,
which in either case results in a Balloon Payment being due in respect of such
Mortgage Loan on its stated maturity date.
Three (3) Balloon Loans, representing 2.7% of the Initial Pool
Balance, provide that the amount of the Scheduled P&I Payment (but not the
related Mortgage Rate) will increase one time at the date on which an
interest-only period ends and the amortization period commences. One other
Balloon Loan, representing 0.2% of the Initial Pool Balance, provides that the
amount of the Scheduled P&I Payment (but not the Mortgage Rate) will increase
one time on the date that is 10 years following the date of the initial
Scheduled P&I Payment.
Fully Amortizing Loans. Twenty-six (26) Mortgage Loans, representing
6.9% 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.
S-57
<PAGE>
Amortization of Principal. The table below shows (in months) the
original and remaining 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.
<TABLE>
<CAPTION>
Fully Amortizing
Balloon Loans ARD Loans Loans All Loans
------------- --------- ---------------- ---------
<S> <C> <C> <C> <C>
Original Term to Maturity
Maximum 240 120 300 300
Minimum 60 120 120 60
Weighted Average 123 120 220 130
Remaining Term to Maturity
Maximum 237 118 298 298
Minimum 55 115 117 55
Weighted Average 120 117 217 126
Original Amortization Term(1)
Maximum 360 300 300 360
Minimum 180 240 120 120
Weighted Average 337 292 220 322
Remaining Amortization Term(1)
Maximum 359 298 298 359
Minimum 179 237 117 117
Weighted Average 334 289 217 319
</TABLE>
- ---------------------
(1) Excludes the "Inland Loans" described herein, which are the only
Mortgage Loans that provide for payments of interest only for their
entire terms to stated maturity.
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.
Voluntary Prepayment Provisions. In general, as of their respective
dates of origination, the Mortgage Loans provided for:
o a period (a "Lock-out Period") during which voluntary
principal prepayments are prohibited, followed by
o a period (an "Open Period") during which voluntary principal
prepayments may be made without any Prepayment
Consideration.
S-58
<PAGE>
Exceptions to the foregoing include--
(1) Sixty-one (61) Mortgage Loans, representing 8.7% of the
Initial Pool Balance, which provide for:
o a Lock-out Period, followed by
o a period (a "Prepayment Consideration Period")
during which any voluntary principal
prepayment must be accompanied by a form of
Prepayment Consideration, followed by
o an Open Period.
(2) One Mortgage Loan, representing 1.0% of the Initial Pool
Balance, which provides for a Lock-out Period until the
related maturity date.
(3) Partial prepayments of certain Mortgage Loans are required
under certain circumstances, notwithstanding otherwise
applicable Lock-out Periods. See "Certain Terms and
Conditions of the Mortgage Loans--Other Payment Provisions"
below.
The table titled "Characteristics of the Mortgage Loans" on Exhibit
A-1 shows the type of prepayment provision that corresponds to each Mortgage
Loan as of its respective date of origination. In addition, the table titled
"Prepayment Provisions as of the Cut-off Date" on Exhibit A-2 shows a
breakdown of the Mortgage Loans based on (i) remaining term to stated maturity
(or, in the case of the ARD Loans, to their respective Anticipated Repayment
Date) and (ii) the remaining Lock-out Period and/or Prepayment Consideration
Period applicable to each. The prepayment provisions relating to each Mortgage
Loan generally do not apply to prepayments arising out of a casualty or
condemnation of the related Mortgaged Property. The aggregate characteristics
of the prepayment provisions of the Mortgage Pool will vary over time as
Lock-out Periods expire and Mortgage Loans enter periods during which a
Prepayment Premium or Yield Maintenance Charge may be required in connection
with principal prepayments and, thereafter, enter Open Periods, and as
Mortgage Loans are prepaid, repurchased, replaced or liquidated on account of
default or delinquency. The table titled "Mortgage Pool Prepayment Profile" on
Exhibit A-2 shows the percentage of the aggregate Stated Principal Balance of
the Mortgage Loans scheduled to be outstanding immediately prior to the
Distribution Date occurring in December of each year (through 2017) as to
which each type of prepayment provision would be in effect based on the
"Maturity Assumptions". The "Maturity Assumptions" are described under "Yield
and Maturity Considerations--Weighted Average Lives of Certain Classes of
Offered Certificates" in this Prospectus Supplement.
As described below under "--Defeasance Loans", most of the Mortgage
Loans permit the 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 United States
government securities as substitute collateral. The table titled "Prepayment
Type as of the Cut-off Date" on Exhibit A-2 shows a breakdown of the Mortgage
Loans based on (i) the type of combination of prepayment and/or defeasance
provisions and (ii) the remaining Lock-out Period and/or Prepayment
Consideration Period applicable to each.
S-59
<PAGE>
Lock-out Periods. All of the Mortgage Loans provide for Lock-out
Periods as of the Cut-off Date and--
o the maximum remaining Lock-out Period as of the Cut-off
Date is 292 months,
o the minimum remaining Lock-out Period as of the Cut-off
Date is 14 months, and
o the weighted average remaining Lock-out Period as of the
Cut-off Date is 115 months.
Partial prepayments of certain Mortgage Loans are required under
certain circumstances, notwithstanding such Lock-out Periods. See "--Certain
Terms and Conditions of the Mortgage Loans--Other Prepayment Provisions"
below.
Prepayment Consideration. In the case of most Mortgage Loans that
provide for a Prepayment Consideration Period, the applicable Prepayment
Consideration will equal the greater of a Prepayment Premium (in general,
calculated at 1.0% of the amount prepaid) and a Yield Maintenance Charge. With
respect to one Mortgage Loan, representing 0.6% of the Initial Pool Balance,
the applicable Prepayment Consideration will equal a Prepayment Premium
calculated at 1.0% of the amount prepaid.
When applicable, a Yield Maintenance Charge will generally equal the
product of--
(a) the principal amount being prepaid (expressed as a
percentage of the outstanding principal balance of the
prepaid Mortgage Loan, prior to giving effect to the
prepayment), and
(b) as determined on or shortly before the date of prepayment,
the excess, if any, of:
(i) the present value of all future Scheduled P&I
Payments (including the related Balloon Payment) on
the Mortgage Loan through and including maturity,
as determined by discounting at an annual rate
equal to the yield per annum on United States
Treasury securities having a maturity closest to
the maturity of the prepaid Mortgage Loan, over
(ii) the outstanding principal balance of the prepaid
Mortgage Loan immediately prior to the prepayment.
For purposes of calculating a Yield Maintenance Charge in respect of an ARD
Loan, however, such ARD Loan will be treated as if it is a Balloon Loan that
matures on its Anticipated Repayment Date.
Prepayment Premiums and Yield Maintenance Charges received on the
Mortgage Loans will be allocated and distributed to the persons, in the
amounts and in accordance with the priorities described under "Description of
the Offered Certificates--Distributions--Distributions of Prepayment Premiums
and Yield Maintenance Charges" in this Prospectus Supplement. Limitations may
exist under applicable state law on the enforceability of the provisions of
the Mortgage Loans that require payment of Prepayment Premiums or Yield
Maintenance Charges, and the Depositor makes no representation or warranty as
to the collectability of any Prepayment Premium or Yield Maintenance Charge in
respect of any Mortgage Loan. See "Risk Factors--Risks Related to the Mortgage
Loans--Limitations on the Enforceability and Collectability of Prepayment
Premiums and Yield Maintenance Charges" in this Prospectus Supplement and
"Certain Legal Aspects of Mortgage Loans--Default Interest and Limitations on
Prepayments" in the Prospectus.
Open Periods. Where a Mortgage Loan provides for an Open Period, the
Open Period generally begins 5 to 7 months prior to stated maturity (or, in
the case of an ARD Loan, prior to the related Anticipated Repayment Date).
S-60
<PAGE>
Other Prepayment Provisions. Certain of the Mortgage Loans provide
for mandatory partial prepayments, notwithstanding any Lock-out Period that
may otherwise be in effect:
o As discussed under "--Additional Mortgage Loan
Information--Tenant Matters" below, in a limited number of
cases, the related Borrower is required to prepay its
Mortgage Loan in part if a tenant under a ground lease
related to a "pad" or designated portion of the Mortgaged
Property exercises its right to purchase that "pad" or
designated portion under a purchase option granted in the
ground lease.
o In a limited number of cases, the related Borrower
established reserves that will be applied to a partial
prepayment of the respective Mortgage Loan if certain
tenants at the Mortgaged Property do not renew their leases
or take possession of leased space or if certain expense
reductions do not occur by a specified date.
o In a limited number of cases, the related Borrower is
required (upon the expiration of six months from the
origination date and subject to certain conditions) to
prepay its Mortgage Loan in part to the extent (if any)
necessary to achieve a specified debt service coverage ratio
(on a pro forma basis) with respect to the Mortgage Loan
based on post-origination operating results of the related
Mortgaged Property.
In certain of these cases, the applicable Mortgage Loan requires the
Borrower to pay a Prepayment Consideration in connection with a mandatory
partial prepayment. Such Prepayment Consideration may be less than the
Prepayment Consideration that would be required if the Borrower made a
voluntary principal prepayment during any applicable Prepayment Consideration
Period for the subject Mortgage Loan.
Defeasance Loans. Two hundred forty-three (243) Mortgage Loans,
representing 93.0% 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 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 Group, one or more of the related 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 closely as possible, to all
successive Due Dates through and including the
maturity date, and
o will, in the case of each such Due Date, be in an aggregate
amount equal to or greater than the Scheduled P&I Payment
(including, if applicable, the Balloon Payment) due on such
date (with any excess to be returned to the related
Borrower).
For purposes of determining the Defeasance Collateral in respect of an ARD
Loan, however, such ARD Loan will be treated as if it is a Balloon Loan that
matures on its Anticipated Repayment Date.
If fewer than all of the Mortgaged Properties securing any
Cross-Collateralized Group are to be released in connection with any such
defeasance, the amount of the Defeasance Collateral will be calculated based
on the allocated loan amount for the Mortgaged Properties to be released and
the portion of the Scheduled P&I Payments attributable to such allocated loan
amount.
S-61
<PAGE>
In connection with any such defeasance, the related Borrower will be
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.
No such defeasance will be permitted prior to the second anniversary
of the Closing Date.
Substitution. Each of three (3) Cross-Collateralized Groups,
including the "American Real Estate Loans" and the "Inland Loans", permits the
related Borrower the opportunity to obtain the release of one or more of the
related Mortgaged Properties by substituting comparable real estate property.
Any such substitution, however, is subject to the satisfaction of certain
conditions, which generally include:
o limitations on the number and/or aggregate appraised value
of the Mortgaged Properties that may be
replaced;
o a requirement that, unless all of the properties are being
released in such substitution, the property must be
transferred to an entity other than the related Borrower;
o a requirement that, the appraised value of the substitute
property (based on a current appraisal) must not be less
than the greater of (i) the appraised value of the Mortgaged
Property to be released as of the relevant origination date
and (ii) the current appraised value of such Mortgaged
Property;
o a requirement that, after giving effect to the substitution,
the debt service coverage ratio of the applicable
Cross-Collateralized Group (based on all of the Mortgaged
Properties then pledged thereunder) must not be less than
the greater of (i) the debt service coverage ratio for the
applicable Cross-Collateralized Group as of the related
origination date and (ii) the debt service coverage ratio
for the applicable Cross-Collateralized Group immediately
prior to the substitution date;
o in the case of the American Real Estate Loans, a requirement
that the net operating income for the substitute property
must not show a downward trend over the three years
preceding the substitution;
o in the case of the Inland Loans, a limitation that the
"Rivertree Court Shopping Center" may not be
released in connection with the substitution; and
o a requirement that each Rating Agency must have confirmed
that the substitution will not result in a qualification,
downgrade or withdrawal of any of its then-current ratings
of the Certificates.
"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, however, "Risk Factors--Risks Related to the Mortgage Loans--Limitations
on Enforceability of Other Provisions" in this Prospectus Supplement and "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limitations on Enforceability of Due-on-Sale and
Debt-Acceleration Clauses" and "Certain Legal Aspects of Mortgage Loans--Due
on Sale and Due-on-Encumbrance Provisions" in the Prospectus. Certain of the
Mortgage Loans, however, permit one or more of the following:
S-62
<PAGE>
o a one-time or two-time transfer (or, in several cases, an
unlimited number of transfers) of the related Mortgaged
Property if specified conditions are satisfied (which, in
general, include confirmation by each Rating Agency that the
transfer will not result in a qualification, downgrade or
withdrawal of any of its then current ratings of the
Certificates) 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 affiliated with the Borrower; or
o a transfer of certain beneficial interests in the Borrower.
In general, the Master Servicer or the Special Servicer, as
applicable, will be required to determine, in a manner consistent with the
servicing standard described in this Prospectus Supplement under "Servicing of
the Mortgage Loans--General", whether to exercise any right the holder of any
Mortgage may have under either a "due-on-sale" or "due-on-encumbrance clause"
to accelerate payment of the related Mortgage Loan. However, in the case of
certain Mortgage Loans, neither the Master Servicer nor the Special Servicer
may waive its rights or grant its consent under any "due-on-sale" or
"due-on-encumbrance" clause unless it has received written confirmation from
each Rating Agency that such action would not result in the qualification,
downgrade or withdrawal of any of its then-current ratings then assigned by
such Rating Agency to any Class of Certificates. With respect to "due-on-sale"
clauses, this requirement will be applicable only if the outstanding principal
balance of the subject Mortgage Loan (together with the aggregate outstanding
principal balance of all other Mortgage Loans that are cross-collateralized
with the subject Mortgage Loan or have been made to the same Borrower or
affiliated Borrowers) is greater than or equal to a 2% of the then aggregate
principal balance of the Mortgage Pool. In the case of "due-on-encumbrance"
provisions, this requirement will always be applicable.
See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale and
Due-on-Encumbrance" in the Prospectus.
Certain Mortgage Pool Characteristics
General. A detailed presentation of certain characteristics of the
Mortgage Loans and Mortgaged Properties, on an individual basis and in tabular
format, is set forth in Exhibits A-1 and A-2 to this Prospectus Supplement.
Certain capitalized terms that appear in those exhibits, as well as elsewhere
in this Prospectus Supplement, are defined below. Due to rounding, percentages
and amounts in the tables set forth in Exhibits A-1 and A-2 to this Prospectus
Supplement may not add to the indicated totals.
1. "Underwritten Cash Flow", "Underwritten NCF" or "U/W NCF" means,
with respect to any Mortgaged Property, an estimate, made at or about the time
of origination of the related Mortgage Loan, of the total cash flow
anticipated to be available for annual debt service on such Mortgage Loan,
calculated as the excess of Estimated Annual Revenues over Estimated Annual
Operating Expenses. Estimated Annual Revenues and Estimated Annual Operating
Expenses were generally derived in the manner described below.
(a) The "Estimated Annual Revenues" for any Mortgaged
Property generally equal the Base Estimated Annual Revenues for such
Mortgaged Property, adjusted upward or downward, as appropriate, to
reflect any Revenue Modifications made thereto.
S-63
<PAGE>
The "Base Estimated Annual Revenues" for each Mortgaged
Property were generally assumed to equal--
o in the case of Multifamily Rental Properties and Mortgaged
Properties that constitute manufactured housing communities
("Manufactured Housing Properties"), the annualized amounts
of gross potential rents,
o in the case of Mortgaged Properties primarily used for
commercial purposes ("Commercial Properties"), other than
Hospitality Properties, monthly contractual base rents as
reflected in the rent roll or leases, plus tenant
reimbursements, and
o in the case of Hospitality Properties, estimated average
room sales.
The "Revenue Modifications" made to the Base Estimated
Annual Revenues for any Mortgaged Property for purposes of
establishing its Estimated Annual Revenues include--
o adjusting such revenues downwards by applying a combined
vacancy and rent loss (including concessions) adjustment
that reflected then current occupancy (or, in some cases, an
occupancy that was itself adjusted for historical trends or
market rates of occupancy with consideration to competitive
properties),
o adjusting such revenues upwards to reflect, in the case of
some tenants, increases in base rents scheduled
to occur during the year,
o adjusting such revenues upwards for percentage rents based
on contractual requirements, sales history and historical
trends and, additionally, for other estimated income
consisting of, among other items, late fees, laundry income,
application fees, cable television fees, storage charges,
electrical pass throughs, pet charges, janitorial services,
furniture rental and parking fees,
o adjusting such revenues downwards in certain instances where
rental rates were determined to be significantly above
market rates and the subject space was then currently leased
to tenants that did not have long-term leases or were
believed to be unlikely to renew their leases, and
o in the case of Hospitality Properties, adjusting such
revenues upwards to include estimated revenues from food and
beverage, telephones and other hotel related income.
By way of example, Estimated Annual Revenues generally
include:
o for Multifamily Rental Properties and Manufactured Housing
Properties, rental and other revenues;
o for Hospitality Properties, room, food and beverage,
telephone and other revenues; and
o for other Commercial Properties, base rent, percentage rent,
expense reimbursements and other revenues.
In the case of an owner-occupied Mortgaged Property for
which no leases exist, the Estimated Annual Revenues were determined
on the assumption that such property was "net leased" to a single
tenant at market rents and were derived from rental rate and vacancy
information for the surrounding real estate market.
(b) The "Estimated Annual Operating Expenses" for any
Mortgaged Property generally equal the Historical Annual Operating
Expenses for such Mortgaged Property, adjusted upward or downward, as
appropriate, to reflect any Expense Modifications made thereto.
S-64
<PAGE>
The "Historical Annual Operating Expenses" for any Mortgaged
Property generally consist of historical expenses reflected in the
operating statements and/or other financial information provided by
the related Borrower. Such historical expenses with respect to any
Mortgaged Property were generally obtained/estimated--
o from operating statements relating to a complete fiscal year
of the Borrower ended in 1995, 1996 or 1997 or a trailing
12-month period ended in 1997 or 1998,
o by annualizing the amount of expenses for partial 1996, 1997
or 1998 periods for which operating statements were
available, with certain adjustments for certain items deemed
inappropriate for annualization,
o by calculating a stabilized estimate of operating expenses
which takes into consideration historical financial
statements and material changes in the operating position of
the related Mortgaged Property (such as newly signed leases
and market data), or
o if the property was recently constructed, by calculating an
estimate of operating expenses based upon the appraisal of
the Mortgaged Property or market data.
The "Expense Modifications" made to the Historical Annual
Operating Expenses for any Mortgaged Property for purposes of
calculating its Estimated Annual Operating Expenses include--
o assuming that a market rate management fee (in most cases,
equal to approximately 3% to 5% of net rental revenues) was
payable to the property manager,
o adjusting certain historical expense items upwards or
downwards to reflect inflation and/or industry
norms for the particular type of property,
o including the underwritten recurring replacement reserve
amounts (the "U/W Recurring Replacement Reserves"),
o adjusting historical expenses downwards by eliminating
certain items which are considered non-recurring in nature
or which are considered capital improvements, including
recurring capital improvements,
o in the case of Hospitality Properties, adjusting historical
expenses to reflect reserves for furniture, fixtures and
equipment ("FF&E") of between 4% and 5% of net rental
revenues,
o in the case of Hospitality Properties and certain
Multifamily Rental Properties, Retail Properties and
Mortgaged Properties operated for industrial purposes,
adjusting historical expenses upward or downward to result
in an expense-to-room or -total revenues ratio that
approximates historical or industry norms, and
o in the case of certain Mortgaged Properties used primarily
for office, retail and industrial purposes, adjusting
historical expenses to account for stabilized tenant
improvements and leasing commissions ("U/W Leasing
Commissions and Tenant Improvements") at costs consistent
with historical trends or prevailing market conditions
(however, for certain tenants with longer than average lease
terms or which were considered anchor tenants at a
particular Retail Property, or in areas which were
considered not to require such improvements, adjustments
were not made to reflect tenant improvements and leasing
commissions).
S-65
<PAGE>
The amount of any U/W Recurring Replacement Reserves and/or
U/W Leasing Commissions and Tenant Improvements for each Mortgaged
Property is shown in the table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1. The U/W Recurring
Replacement Reserves shown on Exhibit A-1 are expressed as dollars
per Unit in the case of Multifamily Mortgaged Properties, total
departmental revenues in the case of Hospitality Properties and
dollars per Leasable Square Footage in the case of other Commercial
Mortgaged Properties.
By way of example, Estimated Annual Operating Expenses
generally include salaries and wages, the costs or fees of utilities,
repairs and maintenance, replacement reserves, marketing, insurance,
management, landscaping, security (if provided at the property) and
the amount of taxes, general and administrative expenses, ground
lease payments and other costs, but without any deductions for debt
service, depreciation and amortization or capital expenditures or
reserves therefor (except as described above). In the case of
Mortgaged Properties used in whole or in part for retail, office and
industrial purposes, Estimated Annual Operating Expenses include both
expenses that may be recovered from tenants and those that are
non-recoverable. In the case of certain Mortgaged Properties used in
whole or in part for retail, office and industrial purposes,
Estimated Annual Operating Expenses may have included leasing
commissions and tenant improvement costs. In the case of the
Hospitality Properties, Estimated Annual Operating Expenses include
departmental expenses, reserves for FF&E, management fees and (where
applicable) franchise fees.
In the case of an owner-occupied Property for which no
leases exist, Estimated Annual Operating Expenses were determined on
the assumption that the Property was "net leased" to a single tenant,
and that expenses consisted solely of management fees and replacement
reserves for expense or capital items generally not required to be
paid by a tenant under a net lease.
The management fees and reserves assumed in calculating Underwritten
Net Cash Flow differ in many cases from actual management fees and reserves
actually required under the loan documents for the Mortgage Loans. In
addition, actual conditions at the Mortgaged Properties will differ, and may
differ substantially, from the conditions assumed in calculating Underwritten
Net Cash Flow. In particular, in the case of Mortgaged Properties used for
retail, office and industrial purposes, the assumptions regarding tenant
vacancies, tenant improvements and leasing commissions, future rental rates,
future expenses and other conditions used in calculating Underwritten Net Cash
Flow may differ substantially from actual conditions. Furthermore, the
Underwritten Net Cash Flow for a Mortgaged Property does not reflect the
effects of future competition or economic cycles. Accordingly, there can be no
assurance that the Underwritten Net Cash Flow for a Mortgaged Property shown
on Exhibit A-1 to this Prospectus Supplement will be representative of the
actual future net cash flow for such property.
Underwritten Net Cash Flow and the revenues and expenditures used to
determine Underwritten Net Cash Flow for each Mortgaged Property are derived
from generally unaudited information furnished by the related Borrower
(however, in some cases an accounting firm performed agreed upon procedures
that were intended to identify any errors in the information provided by the
related Borrower). Audits of information furnished by Borrowers, particularly
in cases where the information was not the subject of agreed upon procedures,
could result in changes to such information. Such changes could in turn result
in the Underwritten Net Cash Flow shown on Exhibit A-1 to this Prospectus
Supplement being overstated. Net income for a Mortgaged Property as determined
under generally accepted accounting principles ("GAAP") would not be the same
as the Underwritten Net Cash Flow for such Mortgaged Property shown on Exhibit
A-1 to this Prospectus Supplement. In addition, Underwritten Net Cash Flow is
not a substitute for or comparable to operating income as determined in
accordance with GAAP as a measure of the results of a property's operations
nor a substitute for cash flows from operating activities determined in
accordance with GAAP as a measure of liquidity.
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2. "Underwritten Net Operating Income", "Underwritten NOI" or "U/W
NOI" means, with respect to any Mortgaged Property, the Underwritten Net Cash
Flow for such Mortgaged Property, increased by any and all of the following
items that were included in the Estimated Annual Operating Expenses for
purposes of calculating the Underwritten Net Cash Flow for such Mortgaged
Property--
o U/W Recurring Replacement Reserves;
o capital improvements, including recurring capital
improvements;
o in the case of Hospitality Properties, expenses for FF&E;
and
o in the case of certain Mortgaged Properties used primarily
for office, retail and industrial purposes, U/W Leasing
Commissions and Tenant Improvements.
3. "Appraised Value" means, for any Mortgaged Property, the "as is"
(or, if provided, the "as cured") value estimate reflected in the most recent
appraisal. The appraiser's "cured value", as stated in the appraisal, is
generally calculated as the sum of the "as is" value set forth in the related
appraisal plus the estimated costs (as of the date of appraisal of the related
Mortgaged Property), if any, of implementing any deferred maintenance required
to be undertaken immediately or in the short term under the terms of the
Mortgage Loan. In general, the amount of costs assumed by the appraiser for
such purposes is based on an estimate by the individual appraiser, an estimate
by the related Borrower, the estimate set forth in the property condition
assessment conducted in connection with the origination of the related
Mortgage Loan or a combination of such estimates.
4. "Annual Debt Service" means, for any Mortgage Loan, twelve times
the amount of the Scheduled P&I Payment under such Mortgage Loan as of the
first Due Date that follows the Cut-off Date or, in the case of any Balloon
Loan that has an interest-only period followed by an amortization period, the
amount of the Scheduled P&I Payment under such Mortgage Loan as of the
commencement of the amortization period.
5. "Underwritten Debt Service Coverage Ratio", "Underwritten DSCR" or
"U/W DSCR" means, with respect to any Mortgage Loan, the ratio of (a) the
Underwritten Net Cash Flow for the related Mortgaged Property, to (b) the
Annual Debt Service for such Mortgage Loan.
6. "Cut-off Date Loan-to-Value Ratio" or "Cut-off Date LTV Ratio"
means, with respect to any Mortgage Loan, the ratio of (a) the Cut-off Date
Balance of such Mortgage Loan, to (b) the Appraised Value of the related
Mortgaged Property.
7. "Leasable Square Footage", "S.F." or "Sq. Ft." means, in the case
of a Mortgaged Property operated, in whole or in part, for retail, office or
industrial purposes, the square footage of the gross leasable area utilized
for such purposes.
8. "Units" means, (a) in the case of a Mortgaged Property operated,
in whole or in part, as multifamily housing, the number of apartments,
regardless of the size of or number of rooms in such apartments and (b) in the
case of a Mortgaged Property operated as a manufactured housing community, the
number of pads upon which a mobile home can be hooked up.
9. "Rooms" means, in the case of a Hospitality Property, the number
of rooms and/or suites, without regard to the size of rooms in such rooms or
suites.
10. "Occupancy Rate at Underwriting" or "Occupancy Rate at U/W"
generally means the percentage of Leasable Square Footage (in the case of
Commercial Properties other than Hospitality Properties) or Units (in the case
of Multifamily Rental Properties and Manufactured Housing Properties) of the
subject Mortgaged Property that were occupied or leased as of the approximate
date of the original underwriting of the related Mortgage Loan (as updated, in
certain cases when the Depositor deemed appropriate and information was
available, with more current occupancy
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information). Information shown in this Prospectus Supplement with respect to
any weighted average of Occupancy Rates at U/W excludes Hospitality Properties
from the relevant calculations.
11. "Major Tenant" means a tenant of a Commercial Property that
leases 10% or more of the net rentable area of such property.
12. "LC & TI" means, with respect to any Mortgaged Property, leasing
commissions and tenant improvements.
13. "Year Built" means, with respect to any Mortgage Loan, the year
when construction of the related Mortgaged Property was principally completed.
With respect to Mortgage Loans secured by multiple properties or by properties
built in phases, the Year Built may relate to the earliest, latest or average
year in which such properties or phases were built, as the Depositor deems
relevant.
14. "Year Renovated" means, with respect to any Mortgage Loan, the
year when the most recent substantial renovation of the related Mortgaged
Property (or any particular aspect thereof) was principally completed. With
respect to Mortgage Loans secured by multiple properties or by properties
renovated in phases, the Year Renovated may relate to the earliest, latest or
average year in which such properties or phases were renovated, as the
Depositor deems relevant.
15. "Most Recent DSCR" means, with respect to any Mortgage Loan, the
ratio of (a) the Most Recent NOI for the related Mortgaged Property, to (b)
the Annual Debt Service for such Mortgage Loan.
16. "Most Recent Operating Statement Date" means, with respect to
each Mortgage Loan, the date indicated on Exhibit A-1 as the "Most Recent
Operating Statement Date" with respect to such Mortgage Loan. In general, such
date is the end date of the period covered by the latest available annual (or,
in some cases, estimated or annualized partial-year) operating statement.
17. "Most Recent NOI" means, with respect to any Mortgaged Property,
the NOI derived therefrom that was available for debt service, calculated as
Most Recent Revenues less Most Recent Expenses. (See also "NOI" below.) For
purposes of Most Recent NOI--
o "Most Recent Revenues" are the Revenues (see "Revenues" in
Paragraph No. 18 below) received (or annualized or estimated
in certain cases) in respect of a Mortgaged Property for the
12-month period ended as of the Most Recent Operating
Statement Date, based upon the latest available annual
operating statement and other information furnished by the
related Borrower.
o "Most Recent Expenses" are the Expenses (see "Expenses" in
Paragraph No. 18 below) incurred (or annualized or estimated
in certain cases) for a Mortgaged Property for the 12-month
period ended as of the Most Recent Operating Statement End
Date, based upon the latest available annual operating
statement and other information furnished by the related
Borrower.
18. "NOI" means, with respect to any Mortgaged Property, the total
cash flow available for annual debt service on the related Mortgage Loan,
generally calculated as the excess of Revenues over Expenses. For purposes of
NOI:
o "Revenues" generally consist of all revenues received in
respect of a Mortgaged Property, including--
(i) for the Multifamily Rental Properties and Mortgaged
Properties that constitute manufactured housing
communities, rental and other revenues;
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(ii) for the commercial properties other than
Hospitality Properties, base rent, percentage rent,
expense reimbursements and other revenues; and
(iii) for the Hospitality Properties, guest room rates,
food and beverage charges, telephone charges and
other revenues.
o "Expenses" generally consist of all expenses incurred for a
Mortgaged Property, including salaries and wages, the costs
or fees of utilities, repairs and maintenance, marketing,
insurance, management, landscaping, security (if provided at
the property) and the amount of real estate taxes, general
and administrative expenses, ground lease payments and other
costs but without any deductions for debt service,
depreciation, amortization, capital expenditures, leasing
commissions and tenant improvements or FF&E. In the case of
Hospitality Properties, Expenses also include expenses
relating to guest rooms, food and beverage costs, telephone
bills and rental and other expenses, and such operating
expenses as general administrative expenses, marketing
expenses and franchise fees.
19. "Maturity/ARD Balance" means, with respect to any Mortgage Loan,
the principal balance thereof due at stated maturity (or, in the case of any
ARD Loan, on the related Anticipated Repayment Date) pursuant to the payment
schedule for such Mortgage Loan (and otherwise assuming no prepayments,
defaults or extensions).
20. "Maturity/ARD Loan-to-Value Ratio" or "Maturity/ARD LTV" means,
with respect to any Mortgage Loan, the ratio of (a) the Maturity/ARD Balance
for such Mortgage Loan to (b) the Appraised Value of the related Mortgaged
Property.
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.
No "Premium Loans". No Mortgage Loan is a "premium loan", (i.e., no
Borrower received more loan proceeds than the original principal balance of
its Mortgage Loan in exchange for agreeing to a higher Mortgage Rate).
Tenant Matters. Set forth below are certain special considerations
regarding tenants at the Mortgaged Properties--
o Three (3) Mortgage Loans, representing 0.5% of the Initial
Pool Balance, are secured by Retail Properties that are
subject in each case to a triple net (non-bondable) lease (a
"Triple Net Lease") with a single credit tenant that
possesses (or whose guarantor affiliate possesses) a rating
of at least "BBB+" (or the equivalent) by one or both of the
Rating Agencies and is generally responsible for all real
property taxes, utility services and other operating
expenses associated with the Mortgaged Property, but have
termination and abatement rights if certain casualty or
condemnation events occur.
o Certain other Mortgage Loans are each secured by a Retail
Property, an Office Property or a Mortgaged Property used
for industrial purposes that is leased to one or more Major
Tenants.
o Certain companies are Major Tenants with respect to more
than one Mortgaged Property.
o There are several cases in which a particular entity is a
tenant at multiple Mortgaged Properties, and although it may
not be a Major Tenant at any such property, it may be
significant to the success of such properties.
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o Certain of the Multifamily Rental Properties have material
concentrations of student tenants.
In addition, in the case of several Mortgage Loans, the Borrower's
interest in a "pad" or designated portion of the related Mortgaged Property is
subject to a ground lease in favor of a third party tenant and the tenant has
an option to purchase the "pad" or designated portion of the property. In
general, those Mortgage Loans permit a release of the "pad" or designated
portion of the property upon the exercise by the tenant of its purchase option
and a mandatory partial prepayment by the Borrower (notwithstanding any
Lock-out Period that may otherwise be in effect) of the lesser of the purchase
price paid by the tenant and/or the amount necessary to achieve specified
loan-to-value and debt-service coverage ratios (on a pro forma basis) with
respect to the remaining Mortgage Loan and Mortgaged Property (after giving
effect to the partial prepayment and partial release).
Ground Leases. Eight (8) of the Mortgage Loans, representing 9.6% of
the Initial Pool Balance, are secured, in whole or in material part, by a
Mortgage on the Borrower's leasehold interest in the related Mortgaged
Property. In each such case, either:
o the ground lessor has subordinated its interest in the
related Mortgaged Property to the interest of the
holder of the related Mortgage Loan; or
o the ground lessor has agreed to give the holder of the
related Mortgage Loan notice of, and the right to cure, any
default or breach by the lessee and the related ground lease
expires (giving effect to all extension options) more than
10 years after the stated maturity of the related Mortgage
Loan.
See "Certain Legal Aspects of Mortgage Loans--Foreclosure--Leasehold
Considerations" in the Prospectus.
Additional and Other Financing. The Mortgaged Properties are not
encumbered by liens securing subordinated debt other than subordinated debt
that is held by affiliates of the respective Borrowers, which affiliates have
in each case agreed not to foreclose for so long as the related Mortgage Loan
is outstanding. Some of the Mortgage Loans secured by Hospitality Properties
allow the Borrowers to encumber the related Mortgaged Properties so long as--
o the additional indebtedness is used for the purpose of
refurbishing or renovating the property and/or
acquiring certain furniture, fixtures and equipment
for the property; and
o certain loan-to-value and debt service tests are satisfied.
Certain of the Mortgage Loans permit, and certain Borrowers have
incurred, additional indebtedness for operating costs or other purposes.
In the case of the Mortgage Loan secured by the Mortgaged Property
identified on Exhibit A-1 as Jefferson at Treetops, which Mortgage loan
represents 1.8% of the Initial Pool Balance, general and limited partnership
interests in the Borrower secure a loan in the original principal amount of
$2,800,000.
See "Risk Factors--Risks Related to the Mortgage Loans--Risks of
Subordinate Debt and Other Additional Financing" in this Prospectus
Supplement.
Certain Underwriting Matters
General. In connection with the origination of the respective
Mortgage Loans, the related Originator evaluated each Mortgaged Property in a
manner generally consistent with the standards described below. See also
"Description of the Trust Funds--Mortgage Loans--Default and Loss
Considerations with Respect to the Mortgage Loans" in the Prospectus.
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Environmental Assessments. In general, a third-party environmental
consultant conducted a "Phase I" environmental site assessment (or updated a
previously conducted assessment) with respect to each Mortgaged Property
during the 21-month period preceding the Cut-off Date. However, no
environmental assessment was conducted, but environmental insurance was
obtained, as to the Mortgaged Properties identified on Exhibit A-1 to this
Prospectus Supplement as "Run In Foods". In some cases, additional
environmental testing was conducted. Such environmental testing at any
particular Mortgaged Property did not necessarily cover all potential
environmental issues. For example, tests for radon, lead-based paint and lead
in water were performed only at Multifamily Rental Properties and only when
the Originator of the related Mortgage Loan believed such testing was
warranted under the circumstances.
The above-described environmental testing identified various adverse
or potentially adverse environmental conditions at the respective Mortgaged
Properties. In many such cases, the identified condition related to the
presence of ACMs, lead-based paint and/or radon. Where such substances were
present, the environmental consultant generally recommended the establishment
of an operation and maintenance plan (an "O&M Plan") to address the issue or,
in the case of ACMs, an abatement program. Other identified environmental
issues included below average condition of underground storage tanks at some
of the Mortgaged Properties operated as gas stations, for which condition
several Borrowers escrowed funds to cover the cost of upgrading the tanks.
In cases where the environmental consultant recommended specific
remediation of an adverse environmental condition, the related Originator
generally required the related Borrower either: (i) to effect such remediation
prior to closing; or (ii) to effect such remediation post-closing and, in
connection therewith, to deposit with the lender a cash reserve in a sum
sufficient (generally equal to 100% to 125% of the estimated cost) to complete
the remediation.
In several cases, the environmental site assessment for a Mortgaged
Property identified potential environmental problems at nearby properties but
indicated that the subject Mortgaged Property had not been affected (or had
been minimally affected), the potential for the problem to affect the subject
Mortgaged Property was limited and/or a person responsible for remediation had
been identified.
There can be no assurance, however, that such environmental site
assessments identified all adverse or potentially adverse environmental
conditions at each Mortgaged Property.
Property Condition Assessments. Third-party inspection firms
inspected all of the Mortgaged Properties (or updated previously conducted
inspections) during the 18-month period preceding the Cut-off Date to assess
exterior walls, roofing, interior construction, mechanical and electrical
systems and general condition of the site, buildings and other improvements
located at each such Mortgaged Property.
Such inspections identified various deferred maintenance items and
necessary capital improvements at certain of the Mortgaged Properties. The
resulting inspection reports generally included an estimate of cost for any
recommended repairs or replacements at a Mortgaged Property. When repairs or
replacements were recommended, the related Borrower was required to undertake
necessary repairs or replacements and, in some instances, to establish
reserves, generally in the amount of 100% to 125% of the cost estimated in the
inspection report, to fund deferred maintenance or replacement items that the
reports characterized as in need of prompt attention. See the table titled
"Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1 to
this Prospectus Supplement. There can be no assurance that another inspector
would not have discovered additional maintenance problems or risks, or arrived
at different, and perhaps significantly different, judgments regarding the
problems and risks disclosed by the respective inspection reports.
Appraisals and Market Studies. An independent appraiser that is
state-certified and/or a member of the Appraisal Institute conducted an
appraisal of each Mortgaged Property during the 16-month period preceding the
cut-off Date in order to establish the property value of such Mortgaged
Property. Such appraisals (collectively, the "Appraisals") constitute the
basis for the "Appraised Values" set forth for the respective Mortgaged
Properties on Exhibit A-1 to this Prospectus Supplement.
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The Appraisals represent the analysis and opinions of the respective
appraisers at or before the origination of the respective Mortgage Loans. The
Appraisals have not been updated following the origination of the respective
Mortgage Loans and are not guarantees of, and may not be indicative of, the
present or future value of the Mortgaged Properties. There can be no assurance
that another appraiser would not have arrived at a different valuation of any
particular Mortgaged Property, even if such appraiser used the same general
approach to, and the same method of, appraising such Mortgaged Property.
Neither the Depositor nor the Underwriter has confirmed the values of the
respective Mortgaged Properties set forth in the Appraisals.
In general, appraisals seek to establish the amount a typically
motivated buyer would pay a typically motivated seller. However, such amount
could be significantly higher than the amount obtained from the sale of a
Mortgaged Property under a distress or liquidation sale. Implicit in the
Appraised Values for the Mortgaged Properties shown on Exhibit A-1 to this
Prospectus Supplement, is the consummation of a sale as of a specific date and
the passing of title from seller to buyer under conditions whereby:
o buyer and seller are typically motivated;
o both parties are well informed or well advised, and each is
acting in what he considers his own best interests;
o a reasonable time is allowed for exposure in the open market;
o payment is made in terms of cash in U.S. dollars or in terms
of financial arrangements comparable thereto; and
o the price represents the normal consideration for the
property sold unaffected by special or creative financing or
sales concessions granted by anyone associated with the
sale.
Each Appraisal involved a physical inspection of the related
Mortgaged Property and reflects a correlation of value based on indicated
values by the Sales Comparison Approach, the Income Approach and/or the Cost
Approach.
o In the "Sales Comparison Approach", the subject property is
compared to similar properties that have been sold recently
or for which listing prices or offering figures are known.
Data for generally comparable properties are used and
comparisons are made to demonstrate a probable price at
which the subject property would sell if offered on the
market.
o Under the "Income Approach", market value is determined by
using the "discounted cash flow" method of valuation or by
the "direct capitalization" method. The discounted cash flow
analysis is used in order to measure the return on a real
estate investment and to determine the present value of the
future income stream expected to be generated by the
property. The future income of the property, as projected
over an anticipated holding period, and the resulting net
operating incomes or cash flows are then discounted to
present value using an appropriate discount rate. The direct
capitalization method generally converts an estimate of a
single year's income expectancy (or, in some cases, a
hypothetical stabilized single years' income expectancy)
into an indication of value by dividing the income estimate
by an appropriate capitalization rate. An applicable
capitalization method and appropriate capitalization rates
are developed for use in computations that lead to an
indication of value. In utilizing the Income Approach, the
appraiser's method of determination of gross income, gross
expense and net operating income may vary from the method of
determining Underwritten Net Cash Flow, resulting in
variances in the related net operating income values.
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o Under the "Cost Approach" of valuing a property, the
estimated value of the land is added to an estimate of the
current replacement cost of the improvements less
depreciation from all sources.
The Appraisal for each Mortgaged Property contains a statement by the
respective appraiser to the effect that the appraisal guidelines set forth in
Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended ("FIRREA"), were followed in preparing such Appraisal.
However, none of the Depositor, the Underwriter, the Mortgage Loan Seller or
either Third Party Originator has independently verified the accuracy of such
statement.
In the case of certain Mortgage Loans that constitute acquisition
financing, the related Borrower may have acquired the related Mortgaged
Property at a price less than the Appraised Value on which such Mortgage Loan
was underwritten.
Zoning and Building Code Compliance. In connection with the
origination of each Mortgage Loan, the related Originator examined whether the
use and operation of the related Mortgaged Property were in material
compliance with zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders then-applicable to such Mortgaged
Property. Evidence of such compliance may have been in the form of legal
opinions, certifications from government officials and/or representations by
the related Borrower. Where the Mortgaged Property as currently operated
constituted a permitted nonconforming use and/or structure, an analysis was
generally conducted as to (i) the likelihood that a material casualty would
occur that would prevent the Mortgaged Property from being rebuilt in its
current form and (ii) whether existing replacement cost hazard insurance
would, in the event of a material casualty, be sufficient to satisfy the
entire Mortgage Loan or, taking into account the cost of repair, be sufficient
to pay down the Mortgage Loan to a level that the remaining collateral would
constitute adequate security for the remaining loan amount.
Hazard, Liability and Other Insurance. Although exceptions exist,
each Mortgage generally requires the related Borrower to maintain the following
insurance coverage--
o Hazard insurance in an amount that 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. In some cases, however, a Borrower or tenant is
permitted to self-insure the subject Mortgaged Property,
provided that such party maintains a specified net worth.
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) except in certain cases,
the full insurable value of such Mortgaged Property; and
(iii) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended.
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 at least equal to $1 million per occurrence.
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o Business interruption or rent loss insurance in an amount
not less than 100% of the projected rental income or revenue
from such Mortgaged Property for at least six months.
In general, the Mortgaged Properties (including those located in
California) are not insured against earthquake risks. In the case of Mortgaged
Properties (other than those that are manufactured housing communities)
located in California; however, a third party consultant to the related
Originator conducted seismic studies to assess the "probable maximum loss" for
such Mortgaged Property. In general, when the resulting reports concluded that
a Mortgaged Property was likely to experience a "probable maximum loss" in
excess of 20% of the estimated replacement cost of the improvements, the
related Originator required the Borrower to obtain earthquake insurance or
establish reserves to cover the estimated costs of completing seismic
retrofitting recommended by the consultant, unless the original loan-to-value
ratio was relatively low. In particular, in the case of two (2) Mortgaged
Properties, representing security for 0.3% of the Initial Pool Balance, the
respective Borrowers obtained earthquake insurance, and in the case of two (2)
other Mortgaged Properties, representing security for 0.6% of the Initial Pool
Balance, the respective Borrowers established reserves with the lender to
cover the costs of seismic retrofitting recommended by the consultant.
With respect to each Mortgaged Property (including each Mortgaged
Property securing a Specially Serviced Mortgage Loan), the Master Servicer is
required to cause the maintenance of all such insurance coverage as is
required under the related Mortgage and is available at commercially
reasonable rates.
Under the terms of several Mortgage Loans, the related Borrower is
required to keep its Mortgaged Property insured against loss by fire, hazards,
rent loss and such other hazards, casualties, liabilities and contingencies as
the mortgagee determines to require in its discretion and in such amounts and
for such periods as the mortgagee determines to require in its discretion. In
such cases, the Master Servicer will be required to use reasonable efforts
consistent with the Servicing Standard (as defined in this Prospectus
Supplement under "Servicing of the Mortgage Loans--General") to cause the
related Borrowers under the Mortgage Loans to maintain insurance generally in
the amounts, type and scopes of coverage required under the other Mortgage
Loans as described above.
Various forms of insurance maintained with respect to a Mortgaged
Property, including casualty insurance, environmental insurance (in the
limited number of cases where it was obtained), earthquake insurance (in the
limited number cases where it was obtained) or other insurance, may be
provided under a blanket policy that 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. See "Risk Factors--Risks
Related to the Mortgage Loans--Uninsured Loss; Sufficiency of Insurance".
With limited exception, the Mortgage Loans generally provide that
insurance and condemnation proceeds are to be applied either--
o to restore the related Mortgaged Property; or
o towards payment of the related Mortgage Loan.
The Special Servicer is required to maintain for each REO Property
generally the same types of insurance policies (to the extent available at
commercially reasonable rates) providing coverages in the same amounts as were
previously required under the Mortgage that had covered such property.
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The Master Servicer and Special Servicer may each satisfy its
obligations regarding maintenance of the hazard insurance policies referred to
in this Prospectus Supplement by maintaining a blanket policy or master force
placed insurance policy insuring against hazard losses on all of the related
Mortgage Loans. If any such blanket or master policy contains a deductible
clause, the Master Servicer or Special Servicer, as the case may be, will be
required, in the event of a casualty covered by such blanket or master policy,
to deposit or cause to be deposited in the Certificate Account (as defined in
the Prospectus) all sums that would have been deposited therein but for such
deductible clause (but only to the extent such sums would have been paid if an
individual hazard insurance policy referred to above had been in place). See
"Description of the Pooling Agreements--Hazard Insurance Policies" in the
Prospectus.
The applicable Originator and its successors and assigns are the
beneficiaries under separate title insurance policies with respect to each
Mortgage Loan. Each title insurer will enter into such co-insurance and
reinsurance arrangements with respect to the title insurance policy as are
customary in the title insurance industry. Subject to certain exceptions,
including standard exceptions regarding claims made in the context of
insolvency proceedings, the title insurance policy will provide coverage to
the Trustee for the benefit of Certificateholders for claims made against the
Trustee regarding the priority and validity of the Borrowers' title to the
Mortgaged Properties.
Cash Management and Certain Escrows and Reserves
Cash Management. In the case of thirty-four (34) of the Mortgage
Loans, representing approximately 31.0% of the Initial Pool Balance, a "cash
management" system has been implemented whereby the related Borrower or the
manager of the related Mortgaged Property is required to deposit property
revenues into an account under the joint control of the related Borrower and
the Master Servicer. Such Borrower is authorized to make withdrawals from such
account from time to time until the occurrence of an event of default under
such Mortgage Loan, in which case the Master Servicer or the Special Servicer
would be entitled, under preexisting instructions furnished to the depository
institution at which such account is maintained, to direct such depository
institution to no longer honor payment requests made by the Borrower.
Under each of those Mortgage Loans, central accounts ("Central
Accounts") were established and, upon the Closing Date, will be under the sole
control of the Master Servicer, for the purpose of holding amounts required to
be on deposit as reserves for taxes and insurance, capital improvements, FF&E
and certain other purposes as applicable. In certain cases, the related
Borrower established a lockbox account that is under the sole control of the
mortgagee. In general, no later than the related Anticipated Repayment Date,
the Borrower under each ARD Loan will be required (if it has not previously
done so) to enter into a lockbox agreement whereby all revenue from the
related Mortgaged Property will be deposited directly into a designated
account under the sole control of the Master Servicer.
Tax and Insurance Escrows. In the case of two hundred ninety-eight
(298) Mortgage Loans, representing 99.5% of the Initial Pool Balance, tax and
insurance escrows (the "Tax and Insurance Escrows") were established, either
as separate accounts or, if applicable, as sub-accounts of any related Central
Account, and each related Borrower is generally required to deposit on a
monthly basis an amount equal to one-twelfth of the annual real estate taxes
and assessments and one-twelfth of the annual premiums payable on insurance
policies that the Borrower is required to maintain. If an escrow was
established, such funds will generally be applied by the Master Servicer to
pay for items such as taxes, assessments and insurance premiums at the related
Mortgaged Property.
Under certain other Mortgage Loans, the insurance carried by the
related Borrower is in the form of a blanket policy. In such cases, the amount
of the escrow is an estimate of the pro rata share of the premium allocable to
the related Mortgaged Property, or the related Borrower pays the premium
directly. Under certain Mortgage Loans, the related Borrower delivered letters
of credit from third parties in lieu of establishing and funding a deposit
account for tax and insurance escrows. Under certain Mortgage Loans, a tenant
at the related Mortgaged Property is responsible for paying all or a portion
of the real estate taxes and assessments and/or insurance premiums directly.
In such cases, escrows generally are not required.
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Recurring Replacement Reserves. The table titled "Engineering
Reserves and Recurring Replacement Reserves" on Exhibit A-1 to this Prospectus
Supplement shows the replacement reserve deposits that Borrowers are, in each
case, required to make into a separate account or, if applicable, a
sub-account of any related Central Account for certain capital replacements,
repairs, FF&E, tenant improvements and leasing commissions on the related
Mortgaged Property under the terms of the respective Mortgage Loan (a
"Contractual Recurring Replacement Reserve").
The Contractual Recurring Replacement Reserves shown in such table
are expressed as dollars per Unit for Multifamily Rental Properties and
Manufactured Housing Properties, total departmental revenues for Hospitality
Properties and dollars per Leasable Square Foot for other Commercial
Properties. The Contractual Recurring Replacement Reserves set forth in such
table for most of the Mortgaged Properties are initial amounts and may vary
over time. Such amounts include both replacement reserves and/or reserves for
tenant improvements and leasing commissions. In such cases, the related
Mortgage Note and/or other related documents may provide for replacement
reserve deposits to cease upon achieving predetermined maximum amounts in the
reserve account. In addition, in some such cases, replacement reserves were
determined for specific tenant spaces, in which cases, the execution of a
lease covering such space could result in the termination and/or release of
such reserve. Under certain Mortgage Loans, the related Borrowers are
permitted to deliver letters of credit from third parties in lieu of
establishing and funding a deposit account for replacement reserves.
Engineering Reserves. The table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1 to this Prospectus Supplement
shows the reserves (the "Engineering Reserves") established, either as a
separate account (or, if applicable, as a sub-account of any related Central
Account), or in some cases in the form of a letter of credit pledged to the
lender, as a result of the inspections of certain Mortgaged Properties
described above under "--Certain Underwriting Matters--Property Condition
Assessments". The repair/replacement items for which such reserves were
established are generally items identified by the property inspection firm as
in need of repair or replacement in order to restore the Mortgaged Property to
a condition generally consistent with competitive properties of similar age
and quality or to comply with regulatory requirements. Because the Engineering
Reserve for any Mortgaged Property shown in such table reflects only the cost
estimate determined by the respective inspection firm for items that the
related Originator determined significant enough to require a reserve, and/or
because in some cases items identified in a report were corrected prior to
closing of the Mortgage Loan, the Engineering Reserve for certain Mortgage
Loans is less than the cost estimate set forth in the related report.
The Engineering Reserve for several Mortgaged Properties was a
significant amount and substantially in excess of the cost estimate set forth
in the related inspection report because the related Originator required the
Borrower to establish reserves for the completion of major work that had been
commenced. No Engineering Reserve is required to be replenished. The amounts
set forth in such table represent the amounts of the Engineering Reserves
required at the respective dates of origination of the Mortgage Loans, and
there can be no assurance that the work for which reserves were required will
be completed in a timely manner or that the reserved amount will be sufficient
therefor.
Significant Mortgage Loans
Chanin Loan. The "Chanin Loan" is a single Mortgage loan with a
Cut-off Date Balance of $74,732,033, representing 6.7% of the Initial Pool
Balance. It is secured by, among other things, a first priority Mortgage
encumbering the leasehold interest of 122 East 42nd Street, LLC (the "Chanin
Borrower") in an office building identified on Exhibit A-1 as the Chanin
Building (the "Chanin Property"). The Chanin Borrower is a special purpose
entity controlled by Mr. Stanley Stahl. Mr. Stahl's current portfolio
(including family owned properties and properties owned with partners)
encompasses more than 4,000,000 square feet of office space, 2,500 apartments
and 150 retail tenancies.
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The Chanin Loan is an ARD Loan with an Anticipated Repayment Date of
September 1, 2008 and a stated maturity date of June 1, 2022. The Chanin Loan
requires monthly payments of interest and principal based on a 25 year
amortization schedule. The Mortgage Rate for the Chanin Loan is 6.93% per
annum. After the Anticipated Repayment Date, Additional Interest will accrue
at an Additional Interest Rate equal to the lesser of (a) 2% per annum and (b)
the positive excess (if any) of (i) the then applicable 15-year treasury rate
plus 2% over (ii) 6.93% per annum.
The Chanin Loan has a Lock-out Period that expires six months prior
to its Anticipated Repayment Date. [In the event of any involuntary prepayment
during the Lock-out Period, the Chanin Borrower must pay, in addition to all
other amounts, a Prepayment Consideration at least equal to 2% of the amount
of principal being repaid at that time.]
The Chanin Borrower may defease the Chanin Loan at any time after the
second anniversary of the Closing Date. See "--Certain Terms and Conditions of
the Mortgage Loans--Defeasance Loans" above.
The Chanin Property. The Chanin Property consists of a 55-story
office building located on the corner of 42nd Street and Lexington Avenue in
New York City. The Chanin Property has approximately 848,562 Leasable Square
Footage and had an Occupancy Rate at Underwriting of 95.0%. The interest of
the Chanin Borrower in the Chanin Property consists of a ground lease between
the Chanin Borrower as lessee and C.B. Land Associates as lessor, that is
scheduled to expire (giving effect to all extension options) in 2032.
Appraised Value; Cut-off Date LTV Ratio. The Appraised Value of the
Chanin Property is $105,000,000 (as of June 1, 1998). The Cut-off Date
Loan-to-Value Ratio of the Chanin Loan is 71.2%.
Underwritten Debt Service Coverage Ratio. The Chanin Loan has an
Underwritten Debt Service Coverage Ratio of 1.33x.
Lockbox. The Chanin Borrower has established a lockbox account into
which all operating revenues derived from the operation of the Chanin Property
are required to be deposited monthly until the amount on deposit in such
account is sufficient to cover the amount of the succeeding Scheduled P&I
Payment and required reserve and escrow amounts.
Property Management. The Chanin Property is managed by Colliers ABR
Inc. The mortgagee is entitled to terminate the management agreement if an
event of default occurs under the Chanin Loan. The management fees under
the management agreement are subordinated to the Chanin Loan.
The American Real Estate Loans. The "American Real Estate Loans" are eleven
(11) Cross-Collateralized Mortgage Loans that have Cut-off Date Balances
ranging from $1,678,753 to $16,547,710, and an aggregate Cut-off Date Balance
of $65,451,390. The American Real Estate Loans collectively constitute 5.9% of
the Initial Pool Balance. The American Real Estate Loans were made to two
special purpose entities (the "American Real Estate Borrowers"), both of which
are controlled by American Real Estate Investment, LP., and are secured by,
among other things, eleven (11) first priority Mortgages (collectively, the
"American Real Estate Mortgages") encumbering fee simple and leasehold
interests in a number of commercial properties (the "American Real Estate
Properties").
Each American Real Estate Loan is a Balloon Loan with a stated
maturity date of November 1, 2008, and requires monthly payments of interest
and principal based on an original amortization schedule of 360 months.
Each American Real Estate Loan has a Lock-out Period of 114 months
from origination and thereafter provides for an Open Period.
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The American Real Estate Properties. The American Real Estate Loans
are secured by three office properties and eight industrial properties (some
of which also have office space), located in New York, Ohio and Pennsylvania.
The Leasable Square Footages of the American Real Estate Properties range from
39,610 square feet to 655,500 square feet and the aggregate Leasable Square
Footage of the American Real Estate Properties is 2,234,567 square feet. The
Occupancy Rate at Underwriting for each American Real Estate Property was
100.0%, except that the Occupancy Rate at Underwriting for "4, 5 & 8 Marway
Circle" was 98.0%.
Appraised Value; Cut-off Date LTV Ratio. The Appraised Values of the
American Real Estate Properties range from $2,170,000 to $20,700,000 and the
aggregate Appraised Value of the American Real Estate Properties is
$81,945,000. The Cut-off Date Loan-to-Value Ratio of each American Real Estate
Loan is 79.9%, except that the Cut-off Date Loan-to-Value Ratio of the
American Real Estate Loan secured by "One Clinton Square" is 77.4%.
Releases and Substitutions. The American Real Estate Borrowers have
the right to obtain the release of a American Real Estate Property from the
lien of the related Mortgage at any time after the second anniversary of the
Closing Date through defeasance. See "--Certain Terms and Conditions of the
Mortgage Loans--Defeasance Loans" above. The applicable Defeasance Collateral
must generate cash payments sufficient to pay and discharge 125% of the
scheduled payments due under the applicable American Real Estate Loan on all
successive payment dates under the related Mortgage Note (or 100% of such
scheduled payments if all the American Real Estate Properties will have been
defeased).
At any time after the expiration of the Lock-out Period, the American
Real Estate Borrowers are entitled to obtain a release of any American Real
Estate Property from the lien of the related Mortgage, provided that, among
other things, there is no continuing event of default, and the lender receives
payment of an amount equal to one hundred and twenty five percent (125%) of
the outstanding principal balance of the applicable American Real Estate Loan,
plus all accrued and unpaid interest as of the date of the release.
In addition, at any time prior to the expiration of the Lock-out
Period under the American Real Estate Loans, the American Real Estate
Borrowers are generally permitted to substitute another commercial real
property for any American Real Estate Property, subject to certain limitations
and the satisfaction of certain conditions. See "--Certain Terms and
Conditions of the Mortgage Loans--Substitution" above.
The lender must consent to a sale, conveyance or transfer of each
American Real Estate Property in its entirety to any person or entity (the
"Buyer"), provided that certain conditions have been satisfied including:
o there is no continuing default;
o the lender has received confirmation from the Rating
Agencies that the proposed transfer will not result in a
qualification, reduction or withdrawal of any rating
assigned to any Class of the Certificates; and
o the Buyer assumes and agrees to pay the indebtedness secured
by the relevant American Real Estate Mortgage.
Underwritten Debt Service Coverage Ratio. The American Real Estate
Loans have an Underwritten Debt Service Coverage Ratio of 1.43x.
Property Management. The American Real Estate Properties are managed
by American Real Estate Management, Inc. (the "American Real Estate Manager").
The American Real Estate Borrowers have appointed the American Real Estate
Manager to be the manager of the American Real Estate Properties until
December 31, 2000, and thereafter from year to year until terminated. The
American Real Estate Borrowers may terminate the American Real Estate Manager
without cause upon not less than thirty days written notice to the American
Real Estate Manager and for cause at any time.
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Ground Lease Considerations. The interest of the American Real Estate
Borrower in each of 250 South Clinton Street and 507 Plum Street consists of a
leasehold interest in the respective property. Such leasehold interests were
granted under ground leases entered into between the American Real Estate
Borrower lessee and The City of Syracuse Industrial Development Agency lessor.
The leasehold interests expire in 2015. However, the ground lessor has pledged
its fee interests related to 250 South Clinton Street and 507 Plum Street as
security for the American Real Estate Loans. Each ground lease generally
restricts the operations that may be conducted on the leasehold premises to
industrial, manufacturing, warehouse or other commercial activities.
The Mortgage Loan Seller and the Third Party Originators
General. All of the Mortgage Loans were either originated by Column
or acquired by Column, directly or through an affiliate, from the Originator,
as follows:
o Two hundred seventy-five (275) Mortgage Loans, representing
90.7% of the Initial Pool Balance, were originated by
Column. Such Mortgage Loans are referred to in this
Prospectus Supplement as the "Column Mortgage Loans".
o Twenty-six (26) Mortgage Loans, representing 8.0% of the
Initial Pool Balance, were originated by Union Capital and
were acquired by Column, directly or through an affiliate,
from Union Capital; and the one remaining Mortgage Loan,
representing 1.3% of the Initial Pool Balance, was
originated by Apple Bank and acquired by Column, directly or
through an affiliate, from Apple Bank. Such Mortgage Loans
are referred to in this Prospectus Supplement as the "Third
Party Originator Loans".
Column Financial, Inc. Column is a corporation organized under the
laws of Delaware, and its principal offices are in Atlanta, Georgia. Column
underwrites and closes multifamily and commercial mortgage loans through its
own origination offices and various correspondents in local markets across the
country. Loan underwriting and quality control procedures are undertaken
principally in thirteen regional offices located in Bethesda, Maryland;
Dallas, Texas; Chicago, Illinois; Cleveland, Ohio; Denver, Colorado;
Hollywood, Florida; Houston, Texas; Los Angeles, California; New York, New
York; Newport Beach, California; Norwalk, Connecticut; San Francisco,
California and Seattle, Washington. Column has closed more than $6.1 billion
of commercial and multifamily mortgage loans since beginning operations in
1993. Column is a wholly-owned subsidiary of DLJ Mortgage Capital, Inc., which
in turn is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc.,
the parent of the Depositor and the Underwriter.
Union Capital Investments LLC. Union Capital is a limited liability
company, with its principal offices in Atlanta, Georgia. Union Capital is
primarily involved in conduit lending, and it originates, underwrites and
closes first mortgage loans secured by all types of multifamily and commercial
real estate throughout the United States. The principals of Union Capital have
been involved in the conduit lending field since January 1993.
Apple Bank. Apple Bank is a New York State chartered savings bank
that had assets of approximately $5.1 billion as of September 30, 1998. From
its Manhattan offices, Apple Bank originates and services loans secured by all
types of income producing properties in the New York City metropolitan area.
Commercial mortgage loans are originated for the bank's own portfolio, for the
Federal Home Loan Mortgage Corporation (as a Program Plus Seller/Servicer) and
for securitization through various third-party conduit programs. Apple Bank
was established in 1863.
The information set forth in this Prospectus Supplement concerning
the Mortgage Loan Seller and the Third Party Originators has, in each case,
been provided by such party, and neither the Depositor nor the Underwriter
makes any representation or warranty as to the accuracy or completeness of
such information.
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Assignment of the Mortgage Loans
On or before the Closing Date, the following transfers of the
Mortgage Loans will occur. In each case, the transferor will assign the
subject Mortgage Loans, without recourse, to the transferee.
Mortgage
Loan Seller
(Arrow Down) All Mortgage Loans
Depositor
(Arrow Down) All Mortgage Loans
Trust
In connection with the foregoing transfers, the Mortgage Loan Seller
will be required to deliver the following documents, among others, to the
Trustee (and, upon request, to the Master Servicer) with respect to the
Mortgage Loans--
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);
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o originals or copies of all assumption, modifications and
substitution agreements in those instances where the terms
or provisions of the Mortgage or Mortgage Note have been
modified or the Mortgage Loan has been assumed;
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); and
o in those cases where applicable, the original or a copy of
the related ground lease.
The Trustee is required 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. 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
scope of the Trustee's review of each Mortgage File is, in general, limited
solely to confirming that certain of the documents listed above have been
received. None of the Trustee, the Master Servicer, the Special Servicer or
the Custodian is under any duty or obligation to inspect, review or examine
any of the documents relating to the Mortgage Loans to determine whether such
document is valid, effective, enforceable, in recordable form or otherwise
appropriate for the represented purpose.
The Pooling Agreement will require the Trustee, within a specified
period following the later of the Closing Date and the date on which all
recording information necessary to complete the subject document is received
by the Trustee, to cause each of the assignments of recorded loan documents in
its favor described above to be submitted for recording in the real property
records of the jurisdiction in which the related Mortgaged Property is
located. Because the Mortgage Loans are, in general, newly originated, many
such assignments cannot be completed and recorded until the related Mortgage
and/or assignment of leases and rents, reflecting the necessary recording
information, is returned from the applicable recording office.
Representations and Warranties
Column will make with respect to each Column Mortgage Loan and each
Third Party Originator will make with respect to each Third Party Originator
Loan originated by it, as of the Closing Date, certain representations and
warranties generally to the effect listed below, together with such other
representations and warranties as may be required by the Rating Agencies;
provided that the respective representations and warranties of Column and the
Third Party Originators may not be identical. For purposes of this Prospectus
Supplement, Column will constitute the "Warranting Party" with respect to each
Column Mortgage Loan, Union Capital will constitute the "Warranting Party"
with respect to each Third Party Originator Loan originated by Union Capital
and Apple Bank will constitute the "Warranting Party" with respect to the
Third Party Originator Loan originated by Apple Bank. The representations and
warranties to be made in respect of each Mortgage Loan by the related
Warranting Party will include:
o The information relating to such Mortgage Loan,
substantially similar to that set forth in the loan schedule
attached to the Pooling Agreement, will be accurate and
complete in all material respects as of the Cut-off Date.
o Immediately prior to its transfer and assignment of such
Mortgage Loan, such Warranting Party had good and marketable
title to, and was the sole owner of, such Mortgage Loan.
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o The related Mortgage constitutes a valid enforceable first
lien upon the related Mortgaged Property, free and clear of
all liens and encumbrances other than certain permitted
liens and encumbrances.
o The related Mortgage has not been satisfied, canceled,
rescinded or subordinated.
o To such Warranting Party's knowledge, there is no proceeding
pending for the total or partial condemnation of the related
Mortgaged Property.
o The lien of the related Mortgage is insured by an American
Land Title Association or equivalent form of lender's title
insurance policy (or there exists a marked up title
insurance commitment to issue such a policy or a pro forma
policy on which the required premium has been paid) insuring
the related Originator, its successors and assigns, as to
the first priority lien of the related Mortgage in the
original principal amount of such Mortgage Loan after all
advances of principal, subject only to (i) the lien of
current real property taxes, ground rents, water charges,
sewer rents and assessments not yet due and payable and (ii)
such other exceptions (general and specific) set forth in
such policy.
o The proceeds of such Mortgage Loan have been fully disbursed
(except in those cases where the full amount of the Mortgage
Loan has been made, but a portion thereof is being held back
pending satisfaction of certain leasing criteria, repairs
and other matters with respect to the related Mortgaged
Property) and there is no requirement for future advances
thereunder.
o If the related Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been
properly designated and currently so serves.
o To such Warranting Party's knowledge, the related Mortgaged
Property is free and clear of any damage that would
materially and adversely affect its value as security for
such Mortgage Loan.
o Each Mortgage Note, Mortgage and other agreement executed by
or on behalf of the related Borrower in connection with such
Mortgage Loan is the legal, valid and binding obligation of
the related maker thereof (subject to any non-recourse
provisions contained in any of the foregoing agreements and
any applicable state anti-deficiency or market value limit
deficiency legislation), enforceable in accordance with its
terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights
generally, or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
The representations and warranties made by Column and the Third Party
Originators as described above will be assigned by the Depositor to the
Trustee pursuant to the Pooling Agreement. If there exists a breach of any of
the above-described representations and warranties made by Column or either
Third Party Originator, 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 applicable
Warranting Party with respect to any such Material Breach are described under
"--Cures, Repurchases and Substitutions" below.
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Cures, Repurchases and Substitutions
If there exists a Material Breach of any of the representations and
warranties made with respect to any of the Mortgage Loans, as discussed under
"--Representations and Warranties" above, the related Warranting Party will be
required either:
(a) to cure the Material Breach in all material
respects; or
(b) subject to the discussion below regarding
substitution, to repurchase such Mortgage Loan at a
price (the "Purchase Price") generally equal to the
sum of
(i) the unpaid principal balance of such
Mortgage Loan,
(ii) accrued and unpaid interest at the related
Mortgage Rate to but not including the Due
Date occurring in the Collection Period in
which such repurchase occurs and
(iii) the amount of any related unreimbursed
Servicing Advances and, to the extent not
otherwise included in such Servicing
Advances, the costs and expenses of
enforcing such repurchase obligation
(provided that, in the case of a Third
Party Originator Loan, the related Third
Party Originator may be required to
repurchase its Mortgage Loan(s) at a
lesser price, with Column to make up the
difference).
The time period within which the applicable Warranting Party must complete
such cure or repurchase will be limited to 90 days (or, if it is diligently
attempting to correct the problem and certain other conditions are satisfied,
180 days) following its receipt of notice of the subject Material Breach.
Notwithstanding the foregoing, if any Warranting Party is required to
repurchase any Mortgage Loans as a result of a Material Breach of any of its
representations and warranties, as contemplated above, then such Warranting
Party may, at any time during the three-month period commencing on the Closing
Date (or at any time during the two-year period commencing on the Closing Date
if the affected Mortgage Loan is a "defective obligation" within the meaning
of Section 860G(a)(4)(B)(ii) of the Code and Treasury Regulation Section
1.860G-2(f)), in lieu of repurchasing the affected Mortgage Loan (but in no
event later than such repurchase would have to have been completed):
(a) replace such Mortgage Loan with one or more substitute
mortgage loans (each, a "Replacement Mortgage Loan") that (i) has
certain payment terms comparable to the Mortgage Loan to be replaced
and (ii) is otherwise acceptable to the Controlling Class
Representative (or, if none has been appointed, to the Holder(s) of
Certificates representing a majority interest in the Controlling
Class); and
(b) pay an amount (a "Substitution Shortfall Amount")
generally equal to the excess of the applicable Purchase Price for
the Mortgage Loan to be replaced (calculated as if it were to be
repurchased instead of replaced), over the unpaid principal balance
of the applicable Replacement Mortgage Loan(s) as of the date of
substitution, after application of all payments due on or before such
date, whether or not received;
provided that no such substitution will be permitted unless, as confirmed in
writing by each Rating Agency, it would not result in a qualification,
downgrade or withdrawal of the rating then assigned to any Class of
Certificates by either Rating Agency.
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Neither Column nor either Third Party Originator is obligated,
however, to replace (rather than repurchase) any Mortgage Loan as to which
there is a Material Breach. Any such substitution will be at the sole
discretion of the responsible Warranting Party. Furthermore, the
Certificateholders of the Controlling Class and the Controlling Class
Representative, as their representative, will generally have a disincentive to
find any prospective Replacement Mortgage Loan acceptable.
If the applicable Warranting Party fails to repurchase or replace any
Mortgage Loan affected by a Material Breach of such Warranting Party's
representations and warranties, none of the Depositor, the Underwriter or,
except as described in the next paragraph, any other person will have any
obligation to do so.
Notwithstanding the foregoing, Column will make the same
representations and warranties (including those discussed under
"--Representations and Warranties" above) with respect to each Third Party
Originator Loan as it does with respect to each Column Mortgage Loan and will
have similar cure, repurchase or replacement obligations in the event of
Material Breaches thereof. In general, however, if (i) there exists a breach
of any such representation or warranty and a breach of any representation or
warranty made by the related Third Party Originator with respect to such Third
Party Originator Loan, (ii) such breaches otherwise give rise to a cure,
repurchase or replacement obligation on the part of both Column and the
related Third Party Originator and (iii) the related Third Party Originator
fails to satisfy its cure, repurchase or replacement obligation within the
period provided therefor, then Column will be required to cure the Material
Breach of its representation or warranty as to, or repurchase or replace, the
affected Third Party Originator Loan. For this purpose, the cure, repurchase
or replacement period for Column (as otherwise described above) will be deemed
to commence only upon expiration of the cure, repurchase or replacement period
for the related Third Party Originator.
Column and each Third Party Originator may only have limited assets
with which to fulfill any repurchase/substitution obligations that may arise
in respect of breaches of its representations or warranties. There can be no
assurance that Column or either Third Party Originator has or will have
sufficient assets with which to fulfill any repurchase/substitution
obligations that may arise.
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,
one or more Mortgage Loans may be removed from the Mortgage Pool if the
Depositor deems such removal necessary or appropriate. 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 generally representative of the
characteristics of the Mortgage Pool as it will be constituted at the time the
Offered Certificates are issued; however, the range of Mortgage Rates and
maturities, as well as the other characteristics of the Mortgage Loans
described in this Prospectus Supplement, may vary, and the actual Initial Pool
Balance may be as much as 5% larger or smaller than the Initial Pool Balance
set forth in this Prospectus Supplement.
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.
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SERVICING OF THE MORTGAGE LOANS
General
Although the obligations and duties of the Master Servicer and the
Special Servicer with respect to the Mortgage Pool will initially be performed
by a single entity (see "--The Master Servicer and the Special Servicer"
below), the discussion herein is presented so as to reflect an allocation of
responsibilities as if two separate entities were acting as Master Servicer
and Special Servicer. In the event the obligations and duties of the Master
Servicer and the Special Servicer are performed by separate entities, neither
entity will be liable for the actions of the other as Master Servicer or
Special Servicer.
The Pooling Agreement provides that the Master Servicer and Special
Servicer must each service and administer the Mortgage Loans and any REO
Properties for which it is responsible, directly or through sub-servicers, for
the benefit of the Certificateholders, in accordance with any and 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 any
REO Properties for which it is responsible:
o with the higher of (i) the same care, skill, prudence and
diligence with which the Master Servicer or the Special
Servicer, as the case may be, generally services and
administers comparable mortgage loans and real properties
for other third parties pursuant to agreements similar to
the Pooling Agreement, giving due consideration to customary
and usual standards of practice of prudent institutional
commercial mortgage lenders and loan servicers servicing
their own mortgage loans and real properties, and (ii) the
same care, skill, prudence and diligence with which the
Master Servicer or the Special Servicer, as the case may be,
generally services comparable mortgage loans owned by it;
o with a view to the timely collection of all Scheduled P&I
Payments under the Mortgage Loans, the full collection of
all Prepayment Premiums and Yield Maintenance Charges that
may become payable under the Mortgage Loans and, if a
Mortgage Loan comes into and continues in default and no
satisfactory arrangements can be made for the collection of
the delinquent payments (including payments of Prepayment
Premiums and Yield Maintenance Charges), the maximization of
the recovery on such Mortgage Loan to Certificateholders (as
a collective whole) on a present value basis; and
o without regard to:
(i) any relationship that the Master Servicer or the
Special Servicer, as the case may be, or any of its
affiliates may have with the related Borrower or
any other party to the Pooling Agreement;
(ii) the ownership of any Certificate by the Master
Servicer or the Special Servicer, as the case may
be, or by any of its affiliates;
(iii) any obligations of the Master Servicer or the Special
Servicer, as the case may be, to make Advances;
(iv) the right of the Master Servicer or the Special
Servicer, as the case may be, or any of its
affiliates to receive compensation for its services
or reimbursement of costs under the Pooling
Agreement generally or with respect to any
particular transaction; and
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(v) the ownership by the Master Servicer or the Special
Servicer, as the case may be, or any of its
affiliates, of any other mortgage loans or real
property or of the right to service or manage for
others any other mortgage loans or real property.
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).
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").
Corrected Mortgage Loans and Mortgage Loans as to which no Servicing
Transfer Event has occurred are collectively referred to in this Prospectus
Supplement as "Performing Mortgage Loans"; and Specially Serviced Mortgage
Loans and REO Properties are collectively referred to in this Prospectus
Supplement as "Specially Serviced Assets". Performing Mortgage Loans will
include Mortgage Loans which may be delinquent, but not to the point of
resulting in a Servicing Transfer Event.
Despite the foregoing, the Pooling Agreement will require the Master
Servicer to continue to collect information and prepare all reports to the
Trustee required thereunder with respect to any Specially Serviced Assets and,
otherwise, to render certain incidental services with respect to any Specially
Serviced Assets.
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) the failure of the related Borrower to make when due any
Balloon Payment, which failure continues, or the Master
Servicer determines in its good faith and reasonable
judgment will continue, unremedied for 30 days;
(2) the failure of the related Borrower to make when due any
Scheduled P&I Payment (other than a Balloon Payment) or any
other payment required under the related Mortgage Note or
the related Mortgage(s), which failure continues, or the
Master Servicer determines in its good faith and reasonable
judgment will continue, unremedied for 60 days;
(3) the determination by the Master Servicer in its good faith
and reasonable judgment that a default in the making of a
Scheduled P&I Payment (including a Balloon Payment) or any
other payment required under the related Mortgage Note or
the related Mortgage(s) is likely to occur within 30 days
and is either (a) likely to remain unremedied for at least
60 days or, in the case of a Balloon Payment, for at least
30 days or (b) the related Borrower has requested a material
modification of the related Mortgage Loan (other than the
waiver of a "due-on-sale" clause or the extension of the
related maturity date);
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(4) the determination by the Master Servicer in its good faith
and reasonable judgment that a default, other than a payment
default, has occurred that may materially impair the value
of the related Mortgaged Property as security for the
Mortgage Loan, which default continues unremedied for the
applicable cure period under the terms of the Mortgage Loan
(or, if no cure period is specified, for 30 days);
(5) certain events of bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar
proceedings in respect of or relating to the related
Borrower, and certain actions by or on behalf of the related
Borrower indicating its bankruptcy, insolvency or inability
to pay its obligations; or
(6) 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 then 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 clauses (1)
and (2) 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 or by reason of a
modification, waiver or amendment granted or agreed to by
the Master Servicer or the Special Servicer);
(b) with respect to the circumstances described in clauses (3)
and (5) above, such circumstances cease to exist in the good
faith and reasonable judgment of the Special Servicer;
(c) with respect to the circumstances described in clause (4)
above, such default is cured; and
(d) with respect to the circumstances described in clause (6) above,
such proceedings are terminated.
Set forth below is a description of certain pertinent provisions of
the Pooling Agreement relating to the servicing of the Mortgage Loans. You
should also refer to the Prospectus, in particular the section captioned
"Description of the Pooling Agreements", for additional important information
regarding the terms and conditions of the Pooling Agreement as such terms and
conditions relate to the rights and obligations of the Master Servicer and the
Special Servicer.
The Master Servicer and the Special Servicer
Banc One, a Delaware limited liability company, will be the Master
Servicer and Special Servicer with respect to the Mortgage Pool. The principal
offices of Banc One are located at 1717 Main Street, Dallas, Texas 75201.
As of June 30, 1998, Banc One and its affiliates were responsible for
servicing approximately 6,307 commercial and multifamily loans with an
aggregate principal balance of approximately $13.76 billion, the collateral
for which is located in 49 states, Puerto Rico and the District of Columbia.
With respect to such loans, approximately 5,392 loans with an aggregate
principal balance of approximately $9.41 billion pertain to commercial and
multifamily mortgage-backed securities.
It is expected that on or shortly after the Closing Date, Banc One
will acquire an interest in certain Classes of the Private Certificates, and
there is no prohibition against its acquiring additional interests in the
various Classes of Certificates. See "Risk Factors--Risks Related to the
Offered Certificates--Potential Conflicts of Interest" in this Prospectus
Supplement.
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The information concerning Banc One set forth in this Prospectus
Supplement has been provided by it, and none of the Mortgage Loan Seller, the
Depositor or the Underwriter makes any representation or warranty as to the
accuracy thereof. Banc One (except for the information under this heading)
will make no representation as to the validity or sufficiency of the Pooling
Agreement, the Certificates or the Mortgage Loans, this Prospectus Supplement
or related documents.
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.
The "Master Servicing Fee" will--
o be earned in respect of each and every Performing Mortgage
Loan,
o be computed on a 30/360 Basis and accrue at 0.04675% per
annum (the "Master Servicing Fee Rate") on the Stated
Principal Balance outstanding from time to time of each and
every Performing Mortgage Loan, and
o be payable monthly from amounts received in respect of
interest on the particular Mortgage Loan as to which it was
earned.
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 the amount of related Servicing Fees (as
defined below) payable therefrom and any Default Interest
(as defined below) and Additional Interest included therein)
will, to the extent actually collected, constitute a
"Prepayment Interest Excess".
o All modification fees, assumption fees, assumption
application fees and other comparable transaction fees and
charges, if any, collected in respect of Performing Mortgage
Loans.
o All late payment charges and Default Interest, if any,
that were collected in respect of any Mortgage Loan and
that accrued while such Mortgage Loan was a Performing
Mortgage Loan (but only to the extent that any such late
payment charges and Default Interest have not otherwise
been applied to pay the Master Servicer, Special Servicer
or Trustee, 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.
In addition, the Master Servicer will be authorized to invest or
direct the investment of funds held in the Interest Reserve Account (as
defined under "Description of the Offered Certificates--Distributions--
Interest Reserve Account" in this Prospectus Supplement), in any and all
accounts maintained by it that constitute part of the Certificate Account, or
in any and all accounts maintained by it that constitute escrow and/or reserve
accounts, 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, but will be required to cover any losses from its own funds
without any right to reimbursement.
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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 Basic Special Servicing Fees (as defined below) and,
if applicable, exclusive of any related Default Interest or Additional
Interest) on such prepayment will constitute a "Prepayment Interest
Shortfall".
The Pooling Agreement will provide that, if any Prepayment Interest
Shortfalls are incurred with respect to the Mortgage Pool during any
Collection Period, 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 Prepayment Interest Shortfalls incurred
with respect to the Mortgage Pool during such Collection
Period, and
(b) the aggregate of all Master Servicing Fees and Prepayment
Interest Excesses, if any, collected with respect to the
Mortgage Pool during such Collection Period.
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. If the amount of
the Compensating Interest Payment made by the Master Servicer with respect to
any Distribution Date is less than the aggregate of all Prepayment Interest
Shortfalls incurred with respect to the Mortgage Pool during the related
Collection Period, such shortfall (the "Net Aggregate Prepayment Interest
Shortfall" for such Distribution Date) will be allocated among the respective
Classes of REMIC Regular Certificates, in reduction of the interest payable
thereon, as and to the extent described under "Description of the Offered
Certificates--Allocation of Realized Losses and Certain Other Shortfalls and
Expenses" in this Prospectus Supplement.
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. The "Special Servicing Fee" will--
o be earned in respect of each and every Specially Serviced
Mortgage Loan, if any, and each and every Mortgage Loan, if
any, as to which the related Mortgaged Property has become
an REO Property,
o be computed on a 30/360 Basis and accrue at 0.04675% per
annum (or, if Banc One is no longer the Special Servicer, at
0.25% per annum) on the Stated Principal Balance outstanding
from time to time of each and every Specially Serviced
Mortgage Loan, if any, and each and every Mortgage Loan, if
any, as to which the related Mortgaged Property has become
an REO Property, and
o be payable monthly from general collections on all the
Mortgage Loans and any REO Properties on deposit in the
Certificate Account from time to time.
The incremental increase in the Special Servicing Fee in respect of
any Specially Serviced Mortgage Loan or any Mortgage Loan as to which the
related Mortgaged Property has become an REO Property that will result if Banc
One is no longer the Special Servicer is referred to in this Prospectus
Supplement as the "Additional Special Servicing Fee". The portion of the
Special Servicing Fee in respect of any Specially Serviced Mortgage Loan or
any Mortgage Loan as to
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which the related Mortgaged Property has become an REO Property that is
exclusive of any Additional Special Servicing Fee for such Mortgage Loan is
referred to in this Prospectus Supplement as the "Basic Special Servicing
Fee".
Special Servicing Fees and Master Servicing Fees are collectively
referred to in this Prospectus Supplement as "Servicing Fees".
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, 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)
and principal (including scheduled payments, prepayments and Balloon Payments
at maturity) received on such Mortgage Loan for so long as it remains a
Corrected Mortgage Loan (net of any portion of such collection payable or
reimbursable to the Master Servicer, the Special Servicer or the Trustee for
Master Servicing Fees, Advances and interest on Advances). 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
would become payable if and when such Mortgage Loan again became 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
shall not be entitled to any portion of such Workout Fees. Although Workout
Fees are intended to provide the Special Servicer with an incentive to better
perform its duties, the payment of any Workout Fee will reduce amounts
distributable to Certificateholders.
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 in the Prospectus). 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, and net of any portion thereof payable or reimbursable to
the Master Servicer, the Special Servicer or the Trustee for Master Servicing
Fees, Advances and interest on Advances).
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 or replacement of any Mortgage Loan by Column
or a Third Party Originator for a breach of representation
or warranty (see "Description of the Mortgage Pool--Cures,
Repurchases and Substitutions" in this Prospectus
Supplement);
o the purchase of any defaulted Mortgage Loan or REO Property
by the Master Servicer, the Special Servicer or any Holder
or Holders of Certificates evidencing a majority interest in
the Controlling Class (see "--Sale of Defaulted Mortgage
Loans" below); or
o the purchase of all of the Mortgage Loans and REO Properties
by the Master Servicer, the Special Servicer or any Holder
or Holders of Certificates evidencing a majority interest in
the Controlling Class in connection with the termination of
the Trust (see "Description of the Offered
Certificates--Termination" in this Prospectus Supplement).
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Although Liquidation Fees are intended to provide the Special
Servicer with an incentive to better perform its duties, the payment of any
Liquidation Fee will reduce amounts distributable to Certificateholders.
Additional Special Servicing Compensation. As additional special
servicing compensation, the Special Servicer will be entitled to receive--
o all modification fees, assumption fees, assumption
application fees and other comparable transaction fees and
charges, if any, collected in respect of the Specially
Serviced Mortgage Loans, and
o all late payment charges and Default Interest, if any, that
were collected in respect of any Mortgage Loan and that
accrued while such Mortgage Loan was a Specially Serviced
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 or Trustee, as
applicable, interest on Advances made thereby with respect
to the related Mortgage Loan as described in this Prospectus
Supplement).
In addition, the Special Servicer will be authorized to invest or
direct the investment of funds held in any accounts maintained by it that
constitute part of the Certificate Account, in Permitted Investments. The
Special Servicer will be entitled to retain any interest or other income
earned on such funds, but will be required to cover any losses from its own
funds without any right to reimbursement.
Sub-Servicing Compensation. The Master Servicer and the Special
Servicer will each be responsible for all compensation payable to the
sub-servicers retained thereby. Such sub-servicers may, in some cases, be
entitled to a significant portion of the servicing compensation described
above as being payable to Master Servicer or Special Servicer, as applicable.
Payment of Expenses; Servicing Advances. Each of the Master Servicer
and the Special Servicer will be required to pay its overhead and any general
and administrative expenses incurred by it in connection with its servicing
activities under the Pooling Agreement. Neither the Master Servicer nor the
Special Servicer will be entitled to reimbursement for these expenses except
as expressly provided in the Pooling Agreement.
Any and all customary, reasonable and necessary "out of pocket" costs
and expenses 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 (as defined in the Prospectus), Condemnation Proceeds
(also as defined in the Prospectus) and Liquidation Proceeds, on or in respect
of the related Mortgage Loan or REO Property ("Related Proceeds"). In
addition, the Special Servicer may from time to time require the Master
Servicer to reimburse the Special Servicer for any Servicing Advance made by
it. Upon so reimbursing the Special Servicer for any Servicing Advance, the
Master Servicer will thereafter be deemed to have been made such Advance.
In general, 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, in a timely manner that does not adversely
affect the interests of any Certificateholder (and, in any event, to the
extent reasonably practicable, at least five (5) business days 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).
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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.
Notwithstanding the foregoing discussion or anything else to the
contrary in this Prospectus Supplement, none of the Master Servicer, the
Special Servicer or the Trustee will be obligated to make Servicing Advances
that, in the reasonable and good faith judgment of the Master Servicer, the
Special Servicer or the Trustee, 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 or the Trustee makes any Servicing Advance that it subsequently
determines, in its good faith and reasonable judgment, is a Nonrecoverable
Servicing Advance, it may obtain reimbursement for such Servicing Advance out
of general collections on the Mortgage Loans and any REO Properties on deposit
in the Certificate Account from time to time.
The Master Servicer will be permitted to pay, and the Special
Servicer may direct the payment of, certain servicing expenses directly out of
the Certificate Account and at times without regard to the relationship
between the expense and the funds from which it is being paid (including in
connection with the remediation of any adverse environmental circumstance or
condition at a Mortgaged Property or an REO Property). In addition, the
Pooling Agreement will require the Master Servicer (at the direction of the
Special Servicer if a Specially Serviced Asset is involved) to pay directly
out of the Certificate Account any servicing expense that, if paid by the
Master Servicer or the Special Servicer, would constitute a Nonrecoverable
Servicing Advance, provided that the Master Servicer (or the Special Servicer,
if a Specially Serviced Asset is involved) has determined in accordance with
the Servicing Standard that making such payment is in the best interests of
the Certificateholders (as a collective whole).
The Master Servicer, the Special Servicer and the Trustee 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 be payable--
o at any time, out of Default Interest and late payment charges
collected on the related Mortgage Loan, and
o if such Servicing Advance has been reimbursed, out of any
amounts then on deposit in the Certificate Account.
Modifications, Waivers, Amendments and Consents
The Special Servicer (as to Specially Serviced Mortgage Loans) and,
to the limited extent described below, the Master Servicer (as to Performing
Mortgage Loans) each may (consistent with the Servicing Standard) agree to any
modification, waiver or amendment of any term of, extend the maturity of,
forgive interest (including, without limitation, Default Interest and
Additional Interest) on and principal of, forgive Prepayment Premiums, Yield
Maintenance Charges and late payment charges on, defer the payment of interest
on, permit the release, addition or substitution of collateral securing,
and/or permit the release, addition or substitution of the Borrower on or any
guarantor of, any Mortgage Loan it is required to service and administer,
subject, however, to each of the following limitations, conditions and
restrictions:
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o With limited exception (including as described below with
respect to Additional Interest), the Master Servicer may not
agree to any modification, waiver or amendment of any term
of, or take any of the other above-referenced actions with
respect to, any Mortgage Loan without the consent of the
Special Servicer, provided that such consent--
(i) is not to be unreasonably withheld,
(ii) is to be withheld or granted by the Special Servicer
in accordance with the Servicing Standard, and
(iii) will be deemed to have been granted if not
expressly denied within 10 business days following
the Special Servicer's receipt from the Master
Servicer of all information reasonably requested
thereby in order to make an informed decision.
o With limited exception (including as described below with
respect to Additional Interest), the Special Servicer may
not, in the case of Specially Serviced Mortgage Loans, agree
to (or, in the case of Performing Mortgage Loans, consent to
the Master Servicer's agreeing to) any modification, waiver
or amendment of any term of, or, in the case of Specially
Serviced Mortgage Loans, take (or, in the case of Performing
Mortgage Loans, consent to the Master Servicer's taking) any
of the other above- referenced actions with respect to, any
Mortgage Loan that would affect the amount or timing of any
related payment of principal, interest or other amount
payable thereunder or, in the Special Servicer's reasonable,
good faith judgment, would materially impair the security
for such Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon, unless a material default on
such Mortgage Loan has occurred or, in the Special
Servicer's reasonable, good faith judgment, a default in
respect of payment on such Mortgage Loan is reasonably
foreseeable, and such modification, waiver, amendment or
other action is reasonably likely to produce a greater
recovery to Certificateholders on a present value basis than
would liquidation.
o The Special Servicer may not, in the case of Specially
Serviced Mortgage Loans, extend (or, in the case of
Performing Mortgage Loans, consent to the Master Servicer's
extending) the date on which any Balloon Payment is
scheduled to be due on any Mortgage Loan to a date beyond
the earliest of--
(i) the fifth anniversary of such Mortgage Loan's
original stated maturity date,
(ii) two years prior to the Rated Final Distribution Date,
and
(iii) if such Mortgage Loan is secured by a Mortgage
solely or primarily on the related Borrowers'
leasehold interest in the related Mortgaged
Property, ten years prior to the end of the then
current term of the related ground lease.
o Neither the Master Servicer nor the Special Servicer may
make or permit any modification, waiver or amendment of any
term of, or take any of the other above-referenced actions
with respect to, any Mortgage Loan that would cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC
under the Code, result in the imposition of any tax on
"prohibited transactions" or "contributions" after the
startup date of any such REMIC under the REMIC Provisions
(as defined in the Prospectus) or adversely affect the
status of the Grantor Trust as a grantor trust under the
Code;
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o The Special Servicer may not, in the case of Specially
Serviced Mortgage Loans, permit (or, in the case of
Performing Mortgage Loans, consent to the Master Servicer's
permitting) any Borrower to add or substitute any collateral
for its Mortgage Loan, unless the Special Servicer has
first--
(i) determined, in its reasonable, good faith judgment,
based upon an environmental assessment prepared by
an independent person who regularly conducts
environmental assessments, at the expense of the
Borrower, that such additional or substitute
collateral is in compliance with applicable
environmental laws and regulations and that there
are no circumstances or conditions present with
respect to such new collateral relating to the use,
management or disposal of any hazardous materials
for which investigation, testing, monitoring,
containment, clean-up or remediation would be
required under any then applicable environmental
laws and/or regulations, and
(ii) received confirmation from each Rating Agency that
such addition or substitution of collateral will
not result in a qualification, downgrade or
withdrawal of any rating then assigned by such
Rating Agency to a Class of Certificates.
o Subject to limited exceptions, the Special Servicer may not,
in the case of Specially Serviced Mortgage Loans, release
(or, in the case of Performing Mortgage Loans, consent to
the Master Servicer's releasing) any collateral securing an
outstanding Mortgage Loan (other than in accordance with the
terms of, or upon satisfaction of, a Mortgage Loan).
The limitations, conditions and restrictions described above will not
apply to any of the acts referenced in this "--Modifications, Waivers,
Amendments and Consents" section with respect to any Mortgage Loan that is
required under the terms of such Mortgage Loan in effect on the Closing Date
(or, in the case of a Replacement Mortgage Loan, on the related date of
substitution) or that is solely within the control of the related Borrower.
Also, notwithstanding the discussion above, neither the Master Servicer nor
the Special Servicer will be required to oppose the confirmation of a plan in
any bankruptcy or similar proceeding involving a Borrower if, in its good
faith judgment, such opposition would not ultimately prevent the confirmation
of such plan or one substantially similar.
Notwithstanding the provisions described above, after the Anticipated
Repayment Date of any ARD Loan, the Master Servicer will be permitted, in its
discretion, to waive any or all of the accrued Additional Interest if, prior
to the related maturity date, the related Borrower has requested the right to
prepay such ARD Loan in full, together with all payments required by the
related loan documents in connection with such prepayment except for such
accrued Additional Interest. However, the Master Servicer's determination to
waive the Trust's right to receive such accrued Additional Interest must be
reasonably likely to produce a greater payment to Certificateholders on a
present value basis than a refusal to waive the right to such Additional
Interest. The Master Servicer will not have any liability to the Trust, the
Certificateholders or any other person for any such determination that is made
in accordance with the Servicing Standard. The Pooling Agreement will also
limit the Master Servicer's and the Special Servicer's ability to institute an
enforcement action solely for the collection of Additional Interest.
All modifications, waivers and amendments entered into in respect of
the Mortgage Loans are to be in writing. Each of the Master Servicer and the
Special Servicer must deliver to the Trustee for deposit in the related
Mortgage File, an original counterpart of the agreement relating to each such
modification, waiver or amendment agreed to thereby, promptly following the
execution thereof.
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The Controlling Class Representative
Election, Resignation and Removal. The Holders (or, in the case of
Certificates held in book-entry form, the beneficial owners) of Certificates
representing greater than 50% of the aggregate Certificate Principal Balance
of the Controlling Class will be entitled to select a representative (the
"Controlling Class Representative") having certain rights described below or
replace an existing Controlling Class Representative.
Upon (i) the receipt by the Trustee of written requests for the
selection of a Controlling Class Representative from the Holders (or, in the
case of Certificates held in book-entry form, the beneficial owners) of
Certificates representing greater than 50% of the aggregate Certificate
Principal Balance of the Controlling Class, (ii) the resignation or removal of
the person acting as Controlling Class Representative or (iii) a determination
by the Trustee that the Controlling Class has changed, the Trustee will be
required to promptly notify all the Holders (and, in the case of Certificates
held in book-entry form, to the extent actually known to certain designated
officers (each, a "Responsible Officer") of the Trustee, all the beneficial
owners) of Certificates of the Controlling Class that they may select a
Controlling Class Representative.
Such notice will explain the process established by the Trustee in
order to select a Controlling Class Representative. The process may include
the designation of the Controlling Class Representative by any Holder of
Certificates representing a majority interest in the Controlling Class by a
writing delivered to the Trustee. No appointment of any person as a
Controlling Class Representative will be effective until such person provides
the Trustee with written confirmation of its acceptance of such appointment,
an address and telecopy number for the delivery of notices and other
correspondence and a list of officers or employees of such person with whom
the parties to the Pooling Agreement may deal (including their names, titles,
work addresses and telecopy numbers).
Controlling Class. As of any date of determination, the "Controlling
Class" will be the most subordinate Class of Principal Balance Certificates
then outstanding (the Class A-1A and Class A-1B Certificates being treated as
a single Class for this purpose) that has a then-current aggregate Certificate
Principal Balance that is not less than 25% (or, in the case of the Class C
Certificates, 20%) of such Class' initial aggregate Certificate Principal
Balance as of the Closing Date; provided that, if no Class of Principal
Balance Certificates has an aggregate Certificate Principal Balance that
satisfies such requirement, then the "Controlling Class" will be the Class of
Principal Balance Certificates with the largest aggregate Certificate
Principal Balance then outstanding.
The Controlling Class Representative may at any time resign as such
by giving written notice to the Trustee and to each Holder (or, in the case of
Certificates held in book-entry form, each beneficial owner) of Certificates
of the Controlling Class. The Holders (or, in the case of Certificates held in
book-entry form, the beneficial owners) of Certificates representing greater
than 50% of the aggregate Certificate Principal Balance of the Controlling
Class will be entitled to remove any existing Controlling Class Representative
by giving written notice to the Trustee and to such existing Controlling Class
Representative.
Certain Rights of the Controlling Class Representative. Prior to
taking any of the following actions, the Special Servicer must notify the
Controlling Class Representative of its intent to take such action, must
provide the Controlling Class Representative with copies of documentation
relating to its proposed action, must afford the Controlling Class
Representative a 10-business day period following such notice within which to
discuss such action and must provide the Controlling Class Representative with
all reasonably requested information relating to such action:
o any foreclosure upon or other 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;
o any modification, amendment or waiver of a Specially
Serviced Mortgage Loan;
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<PAGE>
o any proposed sale of a defaulted Mortgage Loan or REO
Property (other than in connection with the termination of
the Trust Fund as described under "Description of the
Offered Certificates--Termination" in this Prospectus
Supplement);
o any acceptance of a discounted payoff;
o any determination to bring an REO Property into compliance
with applicable environmental laws or to otherwise address
hazardous materials located at an REO Property;
o any release of collateral for a Mortgage Loan (other than in
accordance with the terms of, or upon satisfaction of, such
Mortgage Loan);
o any acceptance of substitute or additional collateral for a
Mortgage Loan (other than in accordance with the terms of
such Mortgage Loan);
o any determination to seek a deficiency judgment against the
Borrower under any Specially Serviced Mortgage Loan; and
o the appointment of any subservicer with respect to any
Specially Serviced Mortgage Loan or REO Property.
In addition, the Controlling Class Representative may advise the
Special Servicer with respect to such matters as the Controlling Class
Representative may deem advisable or as to which provision is otherwise made
in the Pooling Agreement. Under the Pooling Agreement, the Special Servicer
must, upon reasonable request, provide the Controlling Class Representative
with any information in the Special Servicer's possession regarding such
matters.
The foregoing notwithstanding, the Special Servicer will not be
required to follow any advice given by the Controlling Class Representative
and will, in all cases, remain obligated to service and administer the
Specially Serviced Assets in accordance with the Pooling Agreement, including
the Special Servicer's obligation thereunder to act in accordance with the
Servicing Standard.
Liability to Borrowers. Any and all expenses of the Controlling Class
Representative are to be borne by the Holders (or, if applicable, the
beneficial owners) of the Certificates of the Controlling Class, pro rata
according to their respective percentage interests in such Class, and not by
the Trust.
Notwithstanding the foregoing, if a claim is made against the
Controlling Class Representative by a Borrower with respect to the Pooling
Agreement or any particular Mortgage Loan, the Controlling Class
Representative is to immediately notify the Trustee, the Master Servicer and
the Special Servicer. If (a) the Special Servicer or the Trust are also named
parties to the same action, and (b) in the sole judgment of the Special
Servicer, (i) the Controlling Class Representative acted in good faith,
without gross negligence or willful misfeasance, with regard to the particular
matter at issue, and (ii) there is no potential for the Special Servicer or
the Trust to be an adverse party in such action as regards the Controlling
Class Representative, then the Special Servicer on behalf of the Trust will,
subject to the discussion under "Description of the Pooling
Agreements--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator, the Manager and the Depositor" in the
Prospectus, assume the defense of any such claim against the Controlling Class
Representative.
S-96
<PAGE>
Liability to the Trust and Certificateholders. The Controlling Class
Representative may have special relationships and interests that conflict with
those of the Holders of one or more Classes of Certificates. In addition, the
Controlling Class Representative does not have any duties to the Holders of
any Class of Certificates other than the Controlling Class. It may act solely
in the interests of the Certificateholders of the Controlling Class and will
have no liability to any other Certificateholders for having done so. No
Certificateholder may take any action against the Controlling Class
Representative for having acted solely in the interests of the
Certificateholders of the Controlling Class.
Replacement of the Special Servicer
The Holders (or, in the case of Certificates held in book-entry form,
the beneficial owners) of Certificates representing more than 50% of the
aggregate Certificate Principal Balance of the Controlling Class may terminate
an existing Special Servicer and appoint a successor. Any such appointment of
a successor special servicer will be subject to, among other things,
(i) written confirmation from each Rating Agency that
the appointment will not result in a qualification,
downgrade or withdrawal of any of the ratings then
assigned thereby to any Class of Certificates, and
(ii) the written agreement of the proposed Special
Servicer to be bound by the terms and conditions of
the Pooling Agreement, together with an opinion of
counsel regarding, among other things, the
enforceability of the Pooling Agreement against the
proposed Special Servicer.
Subject to the foregoing, any Holder (or, in the case of Certificates
held in book-entry, form, beneficial owner) of a Certificate or any affiliate
thereof may be appointed as Special Servicer.
If the termination of an existing Special Servicer is without cause,
the costs and expenses of any related transfer of servicing duties are to be
paid by the successor Special Servicer or the Holders (or, if applicable, the
beneficial owners) of Certificates of the Controlling Class that voted to
remove the terminated Special Servicer, as such parties may agree.
Sale of Defaulted Mortgage Loans
The Pooling Agreement grants to the Master Servicer, the Special
Servicer and any Holder or Holders of Certificates evidencing a majority
interest in the Controlling Class a right to purchase from the Trust certain
defaulted Mortgage Loans in the priority described below. If the Special
Servicer has determined, in its reasonable, good faith judgment, that any
defaulted Mortgage Loan will become subject to foreclosure proceedings and
that the sale of such Mortgage Loan under the circumstances described below is
in accordance with the Servicing Standard, the Special Servicer will be
required to give prompt written notice of such determination to the Trustee
and the Master Servicer. The Trustee will then be required, within five days
after receipt of such notice, to provide a similar notice to all Holders of
Certificates of the Controlling Class. Any Holder or Holders of Certificates
evidencing a majority interest in the Controlling Class may at its or their
option purchase from the Trust, at a cash price equal to the applicable
Purchase Price, any such defaulted Mortgage Loan. If such Certificateholders
have not purchased such defaulted Mortgage Loan within 30 days of their having
received notice in respect thereof, either the Special Servicer or the Master
Servicer, in that order of priority, may at its option purchase such defaulted
Mortgage Loan from the Trust at a cash price equal to the applicable Purchase
Price. The Special Servicer may offer to sell any such defaulted Mortgage Loan
not otherwise purchased as described in the two preceding sentences, if and
when the Special Servicer determines, consistent with the Servicing Standard,
that such a sale would be in the best economic interests of the
Certificateholders (as a collective whole). Any such offer must be made in a
commercially reasonable manner for a period of not less than ten days. Subject
to the discussion in the next paragraph, the Special Servicer will be required
to accept the highest cash bid received from any person that constitutes a
"fair price" (determined in accordance with the Pooling Agreement) for such
Mortgage Loan.
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<PAGE>
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). Furthermore, the Special Servicer may accept a lower cash bid (from
any person or entity other than itself or an affiliate) if it determines, in
accordance with the Servicing Standard, that acceptance of such bid would be
in the best interests of the Certificateholders (as a collective whole) (for
example, if the prospective buyer making the lower bid is more likely to
perform its obligations or the terms (other than the price) offered by the
prospective buyer making the lower bid are more favorable).
Neither the Trustee, in its individual capacity, nor any of its
affiliates may bid for or purchase any defaulted Mortgage Loan or any REO
Property.
In connection with the sale of any defaulted Mortgage Loan, the
Special Servicer may charge prospective bidders, and may retain, fees that
approximate the Special Servicer's actual costs in the preparation and
delivery of information pertaining to such sales or evaluating bids without
obligation to deposit such amounts into the Certificate Account.
If a defaulted Mortgage Loan is neither sold as described above in
this "--Sale of Defaulted Mortgage Loans" section nor modified as contemplated
under "--Modifications, Waivers, Amendments and Consents" above, the Special
Servicer is to proceed with respect thereto as described under "Description of
the Pooling Agreements--Realization Upon Defaulted Mortgage Loans" in the
Prospectus.
Inspections; Collection of Operating Information
The Special Servicer will be required, at its expense, to inspect or
cause an inspection of the related Mortgaged Property as soon as practicable
after any Mortgage Loan becomes a Specially Serviced Mortgage Loan. In
addition, beginning in 1999, the Master Servicer will be required, at its
expense, to inspect or cause an inspection of each Mortgaged Property at least
once per calendar year (or, in the case of each Mortgage Loan with an unpaid
principal balance of under $2,000,000, once every two years), if the Special
Servicer has not already done so in that period as described in the preceding
sentence. The Master Servicer and Special Servicer will each be required to
prepare a written report of each such inspection performed by it that
generally describes the condition of the Mortgaged Property and that specifies
(i) any sale, transfer or abandonment of the property of which the Master
Servicer or the Special Servicer, as applicable, is aware or (ii) any change
in the property's condition, occupancy or value that the Master Servicer or
the Special Servicer, as applicable, considers to be material.
The Special Servicer, in the case of each Specially Serviced Mortgage
Loan, and the Master Servicer, in the case of each Performing Mortgage Loan,
will each be required to use reasonable efforts to collect from the related
Borrower and review (i) the annual operating statements, budgets and rent
rolls of the related Mortgaged Property and (ii) the financial statements of
such Borrower. The Special Servicer will also be required to cause quarterly
and annual operating statements, budgets and rent rolls to be prepared for
each REO Property. However, there can be no assurance that any operating
statements required to be delivered by a Borrower will in fact be delivered,
nor is the Master Servicer or Special Servicer likely to have any practical
means of compelling such delivery.
S-98
<PAGE>
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 Fund. The Trust Fund 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 or, in the case of a Replacement
Mortgage Loan, on or before the related date of
substitution);
o the Mortgage Files for the Mortgage Loans;
o any REO Properties;
o such funds or assets as from time to time are deposited in
the Certificate Account (see "Description of the Pooling
Agreements--Certificate Account" in the Prospectus) or the
Interest Reserve Account; and
o certain rights incidental to the representations and
warranties made by Column and the Third Party Originators as
described under "Description of the Mortgage
Pool--Representations and Warranties" and "--Cures,
Repurchases and Substitutions" in this Prospectus
Supplement.
The Certificates will include 17 separate Classes, eight (8) of which
are Classes of Offered Certificates and nine (9) of which are Classes of
Private Certificates. The tables below set forth the Class designation, the
approximate initial aggregate Certificate Principal Balance or Certificate
Notional Amount and the initial Pass-Through Rate for each Class of
Certificates.
The Offered Certificates
<TABLE>
<CAPTION>
Initial
Aggregate Certificate
Principal Balance
or Certificate Approx. % of Initial
Class Designation Notional Amount(1) Initial Pool Balance Pass-Through Rate(3)
- ----------------- ------------------ -------------------- --------------------
<S> <C> <C> <C>
Class S $1,107,680,439(2) N/A 0.8514%
Class A-1A $ 218,044,000 19.68% 5.8800%
Class A-1B $ 579,485,000 52.32% 6.2400%
Class A-2 $ 55,384,000 5.00% 6.4800%
Class A-3 $ 60,923,000 5.50% 6.6500%
Class A-4 $ 13,846,000 1.25% 6.9000%
Class B-1 $ 41,538,000 3.75% 7.0663%
Class B-2 $ 16,615,000 1.50% 7.0663%
</TABLE>
- ---------------
(1) The initial aggregate Certificate Principal Balance or Certificate
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) Aggregate Certificate Notional Amount. The Class S Certificates will
not have Certificate Principal Balances.
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<PAGE>
(3) The Pass-Through Rate for the Class A-1A, Class A-1B and Class A-2
Certificates will be fixed. The Pass-Through Rate for each other
Class of Offered Certificates will be variable or otherwise subject
to change and will be calculated pursuant to a formula described
under "--Distributions--Calculation of Pass-Through Rates" below.
The Private Certificates
<TABLE>
<CAPTION>
Initial
Aggregate Certificate Approx. % of Initial
Class Designation Principal Balance(1) Initial Pool Balance Pass-Through Rate(3)
- ----------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Class B-3 $ 52,615,000 4.75% 6.0400%
Class B-4 $ 11,077,000 1.00% 6.0400%
Class B-5 $ 22,153,000 2.00% 5.9500%
Class B-6 $ 13,846,000 1.25% 5.8300%
Class C $ 22,154,439 2.00% 5.3400%
Class D N/A(2) N/A(2) N/A(2)
Class R-I N/A(2) N/A(2) N/A(2)
Class R-II N/A(2) N/A(2) N/A(2)
Class R-III N/A(2) N/A(2) N/A(2)
</TABLE>
- ------------------
(1) The initial aggregate Certificate Principal Balance of any Class of
Private Certificates may be as much as 5% larger or smaller than the
aggregate principal balance shown above.
(2) The Class D, Class R-I, Class R-II and Class R-III Certificates do not
have Certificate Principal Balances, Certificate Notional Amounts or
Pass-Through Rates.
(3) The Pass-Through Rates for the Class B-3, Class B-4, Class B-5, Class
B-6 and Class C Certificates will, in each case, be fixed.
The "Certificate Principal Balance" of any Principal Balance
Certificate will represent the aggregate distributions of principal to which
the Holder of such Certificate is entitled over time out of payments (or
Advances in lieu thereof) and other collections on the assets of the Trust.
The aggregate Certificate Principal Balance of an entire Class of Principal
Balance Certificates is referred to in this Prospectus Supplement as the
"Class Principal Balance" thereof. On each Distribution Date, the Class
Principal 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 Class Principal 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 S Certificates will not have Certificate Principal Balances
or entitle the Holders thereof to receive distributions of principal. The
"Certificate Notional Amount" of any Class S Certificate will represent the
principal amount on which interest will accrue in respect of such Certificate
from time to time. The aggregate Certificate Notional Amount of all the Class
S Certificates is referred to in this Prospectus Supplement as the "Class
Notional Amount" of such Class.
The Class Notional Amount of the Class S Certificates will equal the
aggregate of the Class Principal Balances of the respective Classes of
Principal Balance Certificates outstanding from time to time. Each such Class
Principal Balance will constitute a separate component (a "Component") of the
Class Notional Amount of the Class S Certificates (such Component to have the
same alphabetical and/or numerical designation as the alphabetical and/or
numerical Class designation for the related Class of Principal Balance
Certificates (e.g., the Class Principal Balance of the Class A-1A
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<PAGE>
Certificates outstanding from time to time will constitute Component A-1A of
the Class Notional Amount of the Class S Certificates)).
For purposes of determining the Certificate Principal Balance or
Certificate Notional Amount of any of your Certificates from time to time, you
can multiply the original Certificate Principal Balance or Certificate
Notional Amount of such Certificate as of the Closing Date, by the then
applicable Certificate Factor for the relevant Class. The "Certificate Factor"
for any Class of Offered Certificates, as of any date of determination, will
be a fraction (expressed as a percentage), the numerator of which will be the
outstanding Class Principal Balance or Class Notional Amount, as applicable,
of such Class as of such date of determination, and the denominator of which
will be the original Class Principal Balance or Class Notional Amount, as
applicable, of such Class as of the Closing Date. Certificate Factors will be
reported monthly in the Trustee Report.
A Class of Offered Certificates will be considered to be outstanding
until its Class Principal Balance or Class 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 Class Principal Balance, if any,
of such Class of Certificates as described under "--Allocations of Realized
Losses and Certain Other Shortfalls and Expenses" in this Prospectus
Supplement, 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 "REMIC Residual Certificates". The Principal
Balance Certificates and the Class S Certificates will evidence REMIC regular
interests and are referred to in this Prospectus Supplement as the "REMIC
Regular Certificates". The Class D Certificates will evidence undivided
interests in the Grantor Trust.
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 S Certificates, $10,000 initial
Certificate Notional Amount and in any whole dollar
denomination in excess thereof;
o in the case of the Class A-1A and Class A-1B Certificates,
$10,000 initial Certificate Principal Balance and in any
whole dollar denomination in excess thereof; and
o in the case of the other Offered Certificates, $100,000
initial Certificate Principal Balance 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 Cede & Co., as nominee of
DTC.
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<PAGE>
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, and notices, reports and statements with respect
to, your Certificates and may have difficulty in pledging your Certificates.
See "Description of the Certificates--Book-Entry Registration and Definitive
Certificates" and "Risk Factors--Book-Entry Registration" in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Certificate Registrar") for purposes of 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.
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 and Additional Trust Fund
Expenses.
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<PAGE>
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
Most Senior Class A-1A, Class A-1B and Class S Most Senior
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2
Class B-3
Class B-4
Class B-5
Class B-6
Class C
Most Subordinate Classes of REMIC Residual 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 (other than the Class D Certificates).
The Class D Certificates will entitle the Holders thereof only to
those amounts, if any, applied as Additional Interest in respect of the ARD
Loans. Accordingly, the Class D Certificates are not necessarily senior or
subordinate to any other Class of Certificates (except to the extent that
amounts received on any particular ARD Loan are applied first to pay amounts
other than Additional Interest).
S-103
<PAGE>
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:
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, an annual rate
equal to (a) the Mortgage Rate for such Mortgage Loan as of
the Cut-off Date, minus (b) 0.05% per annum, and
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 or liquidations, 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) 0.05% per annum; 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 Certificate
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
Certificate 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 (or, in the case
of a Replacement Mortgage Loan, the unpaid principal balance thereof as of the
related date of substitution, after application of all payments of principal
due thereon on or before such date, whether or not received) and will
permanently be reduced on each subsequent 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 REMIC Regular 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.
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Until Definitive Certificates are issued, Cede & Co. will be the
registered holder of your Certificates, and you will receive distributions on
your Certificates through DTC and your DTC Participant. See "--Registration
and Denominations" above.
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--
(1) all payments and other collections on the Mortgage Loans and
any REO Properties that are on deposit in the Certificate
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:
(a) Scheduled P&I Payments due on a Due Date subsequent
to the end of the related Collection Period;
(b) Prepayment Premiums, Yield Maintenance Charges and
Additional Interest (which are separately
distributable on the Certificates as described
below in this Prospectus Supplement);
(c) amounts that are payable or reimbursable to any
person other than the Certificateholders, including
(i) amounts payable to the Master Servicer, the
Special Servicer, any Sub-Servicers or the Trustee
as compensation (including Trustee Fees (as defined
below), Servicing Fees, Workout Fees, Liquidation
Fees, assumption fees, modification fees and, to
the extent not otherwise applied to cover interest
on Advances, Default Interest and late payment
charges), (ii) amounts payable in reimbursement of
outstanding Advances, together with interest
thereon, and (iii) amounts payable in respect of
other expenses of the Trust;
(d) 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 that are
to be transferred with respect to the Actual/360
Mortgage Loans from the Certificate Account to the
Interest Reserve Account during such month and held
for future distribution; and
(e) amounts deposited in the Certificate Account in
error;
(2) any P&I Advances and Compensating Interest Payments made
with respect to such Distribution Date; and
(3) if such Distribution Date occurs during March of any year,
the Interest Reserve Amounts that are to be transferred with
respect to the Actual/360 Mortgage Loans from the Interest
Reserve Account to the Certificate Account during such
month.
See "--Interest Reserve Account" and "--Allocations of Losses and
Certain Other Shortfalls and Expenses" below and "Description of the Pooling
Agreements--Certificate Account" in the Prospectus.
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 Certificate 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 the related Mortgage Rate on the
Stated Principal Balance of such Mortgage Loan outstanding immediately
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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 Certificate 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 Certificate Account will be included in
the Available Distribution Amount for the Distribution Date during the month
of transfer.
Calculations of Interest. Each Class of REMIC Regular 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 Class Principal Balance or Class 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 REMIC Regular 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 REMIC
Regular 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 REMIC Regular 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 REMIC Regular 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.
Calculation of Pass-Through Rates. The Pass-Through Rates for the
Class A-1A, Class A-1B and Class A-2 Certificates will be fixed at 5.88%,
6.24% and 6.48% per annum, respectively. The Pass-Through Rate for the Class
A-3 Certificates for any Distribution Date will equal the lesser of 6.65% per
annum and the Weighted Average Mortgage PassThrough Rate for such Distribution
Date. The Pass-Through Rate for the Class A-4 Certificates for any
Distribution Date will equal the lesser of 6.90% per annum and the Weighted
Average Mortgage Pass-Through Rate for such Distribution Date. The
Pass-Through Rates for the Class B-1 and Class B-2 Certificates for any
Distribution Date will, in the case of each such Class, equal the Weighted
Average Mortgage Pass-Through Rate for such Distribution Date.
The Pass-Through Rate applicable to the Class S Certificates for each
Distribution Date will equal the weighted average of the then applicable Class
S Strip Rates for the respective Components of the Class Notional Amount of
the Class S Certificates (weighted on the basis of the relative sizes of such
Components immediately prior to such Distribution Date). The "Class S Strip
Rate" in respect of any Component of the Class Notional Amount of the Class S
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 Class S Strip Rates for Components B-1 and B-2 of Class Notional Amount of
the Class S Certificates will in all cases be 0% per annum.
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The Pass-Through Rates for the Class B-3, Class B-4, Class B-5, Class
B-6 and Class C Certificates will be fixed at 6.04%, 6.04%, 5.95%, 5.83% and
5.34% per annum, respectively.
The Class D Certificates and the REMIC Residual 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) 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 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) all voluntary principal prepayments received on the
Mortgage Loans during the related Collection Period;
(d) 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 principal portions of all P&I Advances made in
respect of the Mortgage Loans for such Distribution Date.
Priority of Payments.
General. Distributions of interest and principal are to be made to
the Holders of the various Classes of REMIC Regular 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 Class A-1A, Class A-1B and Class S Certificates
(collectively, the "Senior Certificates") prior to making such distributions
in respect of any other Class of REMIC Regular Certificates.
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Distributions of Interest and Principal on the Senior Certificates.
On each Distribution Date, the Trustee will apply the 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-1A and
Class A-1B Certificates (allocable between such two Classes of
Certificateholders as described below), up to an amount equal to the
lesser of (a) the aggregate of the then outstanding Class Principal
Balances of such Classes of Certificates and (b) the Principal
Distribution Amount for such Distribution Date, and
(3) if applicable, to reimburse the Holders of the Class
A-1A and Class A-1B Certificates, up to an amount equal to, and pro
rata as between such two Classes of Certificateholders in accordance
with, the aggregate of all unreimbursed reductions, if any, made to
the Class Principal 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.
In general, all distributions of principal on the Class A-1A and
Class A-1B Certificates on any Distribution Date will be distributable, first,
to the Holders of the Class A-1A Certificates, until the Class Principal
Balance of the Class A-1A Certificates is reduced to zero, and thereafter, to
the Holders of the Class A-1B Certificates. However, if (a) the aggregate
Certificate Principal Balance of the Class A-1A and Class A-1B Certificates
outstanding immediately prior to any Distribution Date, reduced (to not less
than zero) by the lesser of (i) the Principal Distribution Amount for such
Distribution Date and (ii) the portion of the Available Distribution Amount
for such Distribution Date that will remain after all required distributions
of interest on the Senior Certificates have been made, exceeds (b) the
aggregate Stated Principal Balance of the Mortgage Pool expected to be
outstanding immediately following such Distribution Date, then (assuming the
Class A-1A Certificates still remain outstanding) all distributions of
principal in respect of the Class A-1A and Class A-1B Certificates on such
Distribution Date will be made on a pro rata basis in accordance with the
respective Class Principal Balances of such Certificates. Similarly, all
distributions of principal, if any, in respect of the Class A-1A and Class
A-1B Certificates on the final Distribution Date in connection with a
termination of the Trust (see "--Termination" below) will be made on the same
pro rata basis.
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 A-2
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 Class Principal Balances of all more senior
Classes of Principal Balance 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 Class
Principal Balance of such Class of Certificates and (b) the remaining
portion of the Principal Distribution Amount for such Distribution
Date;
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(3) if applicable, to reimburse the Holders of the Class A-2
Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 A-3
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 Class Principal Balances of all more senior
Classes of Principal Balance Certificates have been reduced to zero,
to pay principal to the Holders of the Class A-3 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of 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 A-3
Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 A-4
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 Class Principal Balances of all more senior
Classes of Principal Balance Certificates have been reduced to zero,
to pay principal to the Holders of the Class A-4 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of 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 A-4
Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 B-1
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 Class Principal 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-1 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal Balance of such Class of Certificates and (b) the remaining
portion of the Principal Distribution Amount for such Distribution
Date;
(12) if applicable, to reimburse the Holders of the Class
B-1 Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 B-2
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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(14) if the Class Principal 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-2 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal 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
B-2 Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 B-3
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 Class Principal 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-3 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal 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
B-3 Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 B-4
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 Class Principal 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-4 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal 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
B-4 Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 B-5
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 Class Principal 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-5 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal 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 B-5
Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal Balance
of such Class of
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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 B-6
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;
(26) if the Class Principal 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-6 Certificates, up to
an amount equal to the lesser of (a) the then outstanding Class
Principal 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
B-6 Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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 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;
(29) if the Class Principal 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 Class
Principal 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 C
Certificates, up to an amount equal to the aggregate of all
unreimbursed reductions, if any, made to the Class Principal 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
(31) to pay to the Holders of the REMIC Residual
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) and (29) 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 Class Principal 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).
Distributions of Prepayment Premiums and Yield Maintenance Charges.
If any Prepayment Premium is collected with respect to any Mortgage Loan
during any particular Collection Period (including a Prepayment Premium
collected in respect of a Mortgage Loan that provides for Prepayment
Consideration equal to the greater of a specified Prepayment Premium and a
Yield Maintenance Charge), then such Prepayment Premium will be distributed as
additional interest on the Distribution Date corresponding to such Collection
Period to the Holders of the Class S Certificates.
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If any Yield Maintenance Charge is collected with respect to any
Mortgage Loan during any particular Collection Period (including a Yield
Maintenance Charge collected in respect of a Mortgage Loan that provides for
Prepayment Consideration equal to the greater of a specified Prepayment
Premium and a Yield Maintenance Charge), then such Yield Maintenance Charge
will be distributed as additional interest on the Distribution Date
corresponding to such Collection Period as follows:
o The Holders of the Class (or Classes) of Principal Balance
Certificates then entitled to distributions of principal on
such Distribution Date will be entitled to an aggregate
amount (allocable among such Classes, if more than one, as
described below) equal to the product of (1) the amount of
such Yield Maintenance Charge, multiplied by (2) a fraction
(not greater than one or less than zero), the numerator of
which is equal to the excess, if any, of the Pass-Through
Rate applicable to such Class of Principal Balance
Certificates for such Distribution Date, (or, if two or more
Classes are involved, the Pass- Through Rate applicable to
such of those Classes as has the most senior right of
payment or, in the case of the Class A-1A Class A-1B
Certificates, the earliest Assumed Final Distribution Date)
over the relevant Discount Rate, and the denominator of
which is equal to the excess, if any, of the Mortgage Rate
for the prepaid Mortgage Loan, over the relevant Discount
Rate. If more than one Class of Principal Balance
Certificates is entitled to distributions of principal on
such Distribution Date, the aggregate amount described in
the preceding sentence will be allocated among such Classes
on a pro rata basis in accordance with the relative amounts
of such distributions of principal.
o Any portion of such Yield Maintenance Charge that may remain
after such distributions on the Principal Balance
Certificates will be distributed to the Holders of the Class
S Certificates.
For purposes of the foregoing, the relevant "Discount Rate" will be
the rate which, when compounded monthly, is equivalent to the Treasury Rate
when compounded semi-annually (e.g., a 6% per annum Treasury Rate would equate
to a 5.9263% per annum Discount Rate). The "Treasury Rate" is the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15--Selected Interest Rates under the heading
"U.S. government securities/Treasury constant maturities" for the week ending
prior to the date of the relevant principal prepayment, of U.S. Treasury
constant maturities with a maturity date (one longer and one shorter) most
nearly approximating the stated maturity (or, in the case of an ARD Loan, the
Anticipated Repayment Date) of the prepaid Mortgage Loan. If Release H.15 is
no longer published, the Master Servicer will select a comparable publication
to determine the Treasury Rate.
Neither the Depositor nor the Underwriter makes any representation as
to the enforceability of the provision of any Mortgage Note requiring the
payment of a Prepayment Premium or Yield Maintenance Charge 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.
Distributions of Additional Interest. It is anticipated that the
Class D Certificates will be delivered to and retained by an affiliate of
Column. The Class D Certificates will entitle the Holders thereof to all
amounts, if any, applied as Additional Interest on the ARD Loans.
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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, or to reimburse the Master
Servicer, the Special Servicer and/or the Trustee for the payment of, certain
costs and expenses 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 and the Trustee
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.
Allocation of Realized Losses and Certain Other Shortfalls and Expenses
As a result of Realized Losses and Additional Trust Fund Expenses,
the aggregate Stated Principal Balance of the Mortgage Pool may decline below
the aggregate Certificate Principal Balance of the Principal Balance
Certificates, thereby resulting in a Mortgage Pool Deficit equal to the
difference. The Pooling Agreement provides that if a Mortgage Pool Deficit
exists following the distributions made to Certificateholders on any
Distribution Date, then the respective Class Principal Balances of the various
Classes of Principal Balance Certificates are to 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
Class Principal Balance to be reduced would be that of the most subordinate
Class of Principal Balance Certificates then outstanding. No such reduction
will be made to the Class Principal Balance of any Class of Principal Balance
Certificates until the Class Principal Balance of each more subordinate Class
of Principal Balance Certificates, if any, is reduced to zero. If it is
necessary to make any such reductions in the Class Principal Balances of the
Class A-1A and Class A-1B Certificates at a time when both such Classes are
outstanding, such reductions will be made on a pro rata basis in accordance
with relative sizes of such Class Principal Balances.
The foregoing reductions in the Class Principal 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 the particular Mortgage Pool Deficit. Any such reduction
in the Class Principal Balance of a Class of Principal Balance Certificates
will result in a corresponding reduction in the Notional Amount of the Class S
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.
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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 Additional 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 (to the extent not covered out of late payment
charges and Default Interest actually collected on the
related Mortgage Loans);
o the cost of various opinions of counsel required or permitted
to be obtained in connection with the servicing of the
Mortgage Loans and the administration of the Trust Fund;
o certain unanticipated, non-Mortgage Loan specific expenses of
the Trust, including certain reimbursements and
indemnifications to the Trustee as described under
"Description of the Pooling Agreements--Certain Matters
Regarding the Trustee" in the Prospectus, certain
reimbursements to the Master Servicer, the Special Servicer,
the REMIC Administrator and the Depositor as described under
"Description of the Pooling Agreements--Certain Matters
Regarding the Master Servicer, the Special Servicer, the
REMIC Administrator and the Depositor" in the Prospectus 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"
in this Prospectus Supplement and "Federal Income Tax
Consequences--Taxation of Owners of REMIC Regular
Certificates--Prohibited Transactions Tax and Other Taxes"
in the Prospectus; and
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 "Description of the
Pooling Agreements--Realization Upon Defaulted Mortgage
Loans" in the Prospectus).
The Net Aggregate Prepayment Interest Shortfall, if any, for each
Distribution Date will be allocated on such Distribution Date among the
respective Classes of REMIC Regular Certificates, up to, and on a pro rata
basis, in accordance with, the respective amounts of Accrued Certificate
Interest for each such Class of 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
Certificate 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/or 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 respective Borrowers or
otherwise collected as of the close of business on the last day of the related
Collection Period. Notwithstanding the foregoing, if it is determined that an
Appraisal Reduction Amount (as defined below) exists with respect to any
Required Appraisal 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
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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. See "--The Trustee" below.
The Master Servicer and the Trustee will each be entitled to recover
any P&I Advance made by it out of its own funds from Related Proceeds. Neither
the Master Servicer nor the Trustee 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 or the Trustee makes any
P&I Advance that it subsequently determines, in its reasonable, good faith
judgment, is a Nonrecoverable P&I Advance, it may obtain reimbursement for
such P&I Advance out of general collections on the Mortgage Loans and any REO
Properties on deposit in the Certificate Account from time to time. See
"Description of the Certificates--Advances in Respect of Delinquencies" and
"Description of the Pooling Agreements--Certificate Account" in the
Prospectus.
The Master Servicer and the Trustee 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 at any time, out of Default Interest and late payment
charges collected on the related Mortgage Loan, and
o if such P&I Advance has been reimbursed, out of any amounts
then on deposit in the Certificate 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, interest accrued
on outstanding P&I Advances will result in a reduction in amounts payable on
the Certificates.
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.
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Appraisal Reductions
Promptly following the occurrence of any of the following events
(each, an "Appraisal Trigger Event") with respect to any Mortgage Loan (upon
the occurrence of any such event, a "Required Appraisal Loan"), the Master
Servicer or the Special Servicer, as applicable, 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 becomes a Modified Mortgage Loan (as
defined below).
o The related Borrower fails to make any Scheduled P&I Payment
with respect to such Mortgage Loan and the failure continues
for 60 days (or, in certain cases, 30 days).
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 as of the Determination Date
immediately succeeding the later of the date on which the relevant appraisal
is obtained and the first relevant Appraisal Trigger Event occurred) 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 or the Trustee, all
accrued and unpaid interest (less related Servicing
Fees and excluding Default Interest and, in the
case of an ARD Loan after its Anticipated Repayment
Date, Additional Interest) on the Required
Appraisal Loan through the most recent Due Date
prior to such Determination Date;
(iii) all accrued but unpaid 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
or the Trustee with respect to such Required
Appraisal Loan, together with interest thereon; and
(v) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable,
ground rents in respect of the related Mortgaged
Property (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).
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Appraisal Reduction Amounts are relevant to the determination of the
amount of any P&I Advance required to be made in respect of the related
Required Appraisal Loan. See "--P&I Advances" above.
If, however, any Required Appraisal is not obtained within 60 days of
an Appraisal Trigger Event (and no comparable appraisal had been obtained
during the 12-month period prior to such Appraisal Trigger Event), then until
such Required Appraisal is obtained the "Appraisal Reduction Amount" for the
subject Required Appraisal Loan will be deemed to equal 25% of the Stated
Principal Balance of such Required Appraisal Loan. After receipt of such
Required Appraisal, the Appraisal Reduction Amount, if any, for such Required
Appraisal Loan will be calculated as described above.
For so long as any Mortgage Loan remains a Required Appraisal Loan,
the Special Servicer is required, within 30 days of each anniversary of such
Mortgage Loan's becoming a Required Appraisal Loan, to order an update of the
prior appraisal. Based upon such update, the Special Servicer is to
redetermine and report to the Trustee and the Master Servicer the new
Appraisal Reduction Amount, if any, with respect to such Mortgage Loan. A
Mortgage Loan will cease to be a Required Appraisal Loan if and when 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 cost of each Required Appraisal (and any update thereof) will be
advanced by the Master Servicer and will be reimbursable thereto as a
Servicing Advance.
At any time that an Appraisal Reduction Amount exists with respect to
any Required Appraisal Loan, the Controlling Class Representative will be
entitled, at its own expense, to obtain and deliver to the Master Servicer,
the Special Servicer and the Trustee an appraisal that satisfies certain the
criteria for a Required Appraisal. Upon the written request of the Controlling
Class Representative, the Special Servicer will be required to recalculate the
Appraisal Reduction Amount in respect of such Required Appraisal Loan based on
such appraisal and notify the Trustee, the Master Servicer and the Controlling
Class Representative of the recalculated Appraisal Reduction Amount.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any
Servicing Transfer Event has occurred and which has been modified by the
Special Servicer in a manner that:
(A) affects the amount or timing of any payment of principal or
interest due thereon (other than, or in addition to,
bringing current Scheduled P&I Payments with respect to such
Mortgage Loan);
(B) except as expressly contemplated by the related Mortgage,
results in a release of the lien of the Mortgage on any
material portion of the related Mortgaged Property without a
corresponding principal prepayment in an amount not less
than the fair market value (as is) of the property to be
released; or
(C) in the reasonable, good faith judgment of the Special
Servicer, otherwise materially impairs the security for such
Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.
Reports to Certificateholders; Certain Available Information
Trustee Reports. Based solely on information provided in monthly
reports prepared by the Master Servicer and the Special Servicer and delivered
to the Trustee, the Trustee will prepare and provide or make available
electronically (or, upon request, by first class mail) on each Distribution
Date to each Certificateholder a statement (the "Trustee Report")
substantially in the form of, and containing the information set forth in,
Exhibit B hereto, detailing the distributions on such Distribution Date and
the performance, both in the aggregate and individually to the extent
available, of the Mortgage Loans and Mortgaged Properties.
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Book-Entry Certificates. Even if you hold your Certificates in
book-entry from through DTC, you may obtain direct access to Trustee Reports
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 information contained in the
Trustee Reports 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 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.
Information Available Electronically. The Trustee will make available
each month, to any interested party, the Trustee Report via the Trustee's
Internet Website, electronic bulletin board and fax-on-demand service. In
addition, the Trustee will also make certain Mortgage Loan information as
presented in the CSSA loan setup file and CSSA loan periodic update file
formats available to any Holder or beneficial owner of a Certificate held in
book-entry form, via the Trustee's Internet Website. The Trustee's Internet
Website will initially be located at "www.ctslink.com/cmbs". "CSSA" refers to
the Commercial Real Estate Secondary Market and Securitization Association.
The Trustee's electronic bulletin board may be accessed by calling
(301) 815-6620, and its fax-on-demand service may be accessed by calling (301)
815-6610. For assistance with regard to the above-mentioned services,
investors may call (301) 815-6600.
The Trustee will make no representations or warranties as to the
accuracy or completeness of such documents and will assume no responsibility
therefor. In addition, the Trustee may disclaim responsibility for any
information made available by the Trustee for which it is not the original
source.
In connection with providing access to the Trustee's electronic
bulletin board and Trustee's Internet Website, the Trustee may require
registration and the acceptance of a disclaimer. The Trustee shall not be
liable for the dissemination of information in accordance with the Pooling
Agreement.
With the consent of the Depositor, certain information and reports
with respect to the Offered Certificates and the Mortgage Loans may be made
available on the Internet Web Site of the Master Servicer, "www.bomcm.com".
Other Information. The Pooling Agreement will obligate the Trustee to
make available at its offices, during normal business hours, upon reasonable
advance written notice, for review by any Holder or beneficial owner of an
Offered Certificate or any person identified to the Trustee by any such Holder
or beneficial owner as a prospective transferee of an Offered Certificate or
any interest therein, subject to the discussion in the following paragraph,
originals or copies of, among other things, the following items:
o the Pooling Agreement and any amendments thereto;
o all Trustee Reports delivered to Certificateholders since the
Closing Date;
o all officer's certificates delivered to the Trustee by the
Master Servicer and/or Special Servicer since the Closing
Date as described under "Description of the Pooling
Agreements--Evidence as to Compliance" in the Prospectus;
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o all accountant's reports delivered to the Trustee in respect
of the Master Servicer and/or Special Servicer since the
Closing Date as described under "Description of the Pooling
Agreements--Evidence as to Compliance" in the Prospectus;
o the most recent inspection report in respect of each
Mortgaged Property prepared by the Master Servicer or the
Special Servicer and delivered to the Trustee as described
under "Servicing of the Mortgage Loans--Inspections;
Collection of Operating Information" in this Prospectus
Supplement;
o the most recent appraisal, if any, with respect to each
Mortgaged Property obtained by the Master Servicer or the
Special Servicer and delivered to the Trustee (see
"--Appraisal Reductions" above);
o the most recent quarterly and annual operating statement and
rent roll for each Mortgaged Property and financial
statements of the related Borrower collected by the Master
Servicer or the Special Servicer and delivered to the
Trustee as described under "Servicing of the Mortgage
Loans--Inspections; Collection of Operating Information" in
this Prospectus Supplement; and
o the Mortgage Files, including all documents (e.g.,
modifications, waivers and amendments of the Mortgage Loans)
that are to be added thereto from time to time.
Copies of any and all of the foregoing items will be available from the
Trustee upon request. However, the Trustee will be permitted to require
payment of a sum sufficient to cover the reasonable costs and expenses of
providing such copies.
In connection with providing access to or copies of the items
described above, the Trustee may require:
o 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, generally to the effect that such person or
entity is a beneficial owner of Offered Certificates and
will keep such information confidential; and
o 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, 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. Notwithstanding the
foregoing, however, no Holder, beneficial owner or prospective transferee of
any Certificate or interest therein will be required to keep confidential any
information that has previously been filed with the SEC, and the Trustee will
not be required to obtain either of the confirmations referred to in the
second preceding sentence in connection with providing any information that
has previously been filed with the SEC.
Voting Rights
At all times during the term of the Pooling Agreement, 99% of the
voting rights for the series offered by this Prospectus Supplement (the
"Voting Rights") will be allocated among the respective Classes of Principal
Balance Certificates in proportion to the Class Principal Balances thereof. 1%
of such Voting Rights will be allocated to the Class S Certificates. Voting
Rights allocated to a Class of Certificates will be allocated among such
Certificates in proportion to the percentage interests in such Class evidenced
thereby.
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Termination
The obligations created by the Pooling Agreement will terminate
following the earliest of
(i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or related REO
Property remaining in the Trust Fund, and
(ii) the purchase of all of the Mortgage Loans and REO Properties
remaining in the Trust Fund by the Master Servicer, the
Special Servicer or any Holder or Holders of Certificates
representing a majority interest in the Controlling Class
(in that order of preference).
Written notice of termination of the Pooling Agreement will be given
to each Certificateholder, and the final distribution with respect to each
Certificate will be made only upon surrender and cancellation of such
Certificate at the office of the Certificate Registrar or at such other
location specified in such notice of termination.
Any such purchase by the Master Servicer, the Special Servicer or any
majority Holder or Holders of the Controlling Class of all the Mortgage Loans
and REO Properties remaining in the Trust Fund is required to be made at a
price (the "Termination Price") equal to (a) the sum of (i) the aggregate
Purchase Price of all the Mortgage Loans then included in the Trust Fund
(other than any Mortgage Loans as to which the related Mortgaged Properties
have become REO Properties) and (ii) the appraised value of all REO Properties
then included in the Trust Fund, as determined by an appraiser mutually agreed
upon by the Master Servicer and the Trustee, minus (b) (solely in the case of
a purchase by the Master Servicer or the Special Servicer) the aggregate of
all amounts payable or reimbursable to the purchaser under the Pooling
Agreement. Such purchase will effect early retirement of the then outstanding
Certificates, but the right of the Master Servicer, the Special Servicer or
any majority Holder or Holders of the Controlling Class to effect such
termination is subject to the requirement that the then aggregate Stated
Principal Balance of the Mortgage Pool be less than 1.0% of the Initial Pool
Balance. The Termination Price (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
Norwest Bank Minnesota, National Association ("Norwest Bank") will
act as Trustee pursuant to the Pooling Agreement. Norwest Bank, a direct,
wholly owned subsidiary of Wells Fargo & Company, is a national banking
association originally chartered in 1872 and is engaged in a wide range of
activities typical of a national bank. Norwest Bank maintains an office at
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0113.
Certificate transfer services are conducted at Norwest Bank's offices in
Minneapolis. Norwest Bank otherwise conducts its trustee and securities
administration services at its offices in Columbia, Maryland. Its address
there is 11000 Broken Land Parkway, Columbia, Maryland 21044-3562. In
addition, Norwest Bank maintains a trust office in New York located at 3 New
York Plaza, New York, New York 10004. Certificateholders and other interested
parties should direct their inquiries to the New York office. The telephone
number is (212) 515-5240.
The Trustee is at all times required to be a corporation, bank, trust
company or association organized and doing business under the laws of the
United States of America or any State thereof or the District of Columbia,
authorized under such laws to exercise trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation, bank, trust company or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of the foregoing, the combined capital and surplus of
such corporation, bank, trust company or association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
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The Depositor, the Master Servicer, the Special Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee and any
of its respective affiliates may hold Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Master Servicer and the Trustee acting jointly will have
the power to appoint a co-trustee or separate trustee of all or any part of
the Trust Fund. All rights, powers, duties and obligations conferred or
imposed upon the Trustee will be conferred or imposed upon the Trustee and
such separate trustee or co-trustee jointly (or, in any jurisdiction in which
the Trustee shall be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction of the
Trustee).
The Trustee will be entitled to a monthly fee (the "Trustee Fee") for
its services, which fee will accrue (on a 30/360 Basis) at 0.00325% per annum
on the Stated Principal Balance outstanding from time to time of each and
every Mortgage Loan. The Trustee Fee is payable out of general collections on
the Mortgage Loans and any REO Properties.
For so long as the same entity acts as Trustee and REMIC
Administrator, such entity will be entitled, in its capacity as REMIC
Administrator, to the same limitations on liability and rights to
reimbursement and indemnification as it has in its capacity as Trustee.
See also "Description of the Pooling Agreements--the Trustee",
"--Duties of the Trustee", "--Certain Matters Regarding the Trustee" and
"--Resignation and Removal of the Trustee" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Certificate will depend on (a) the
price at which such Certificate is purchased by an investor and (b) the rate,
timing and amount of distributions on such Certificate. The rate, timing and
amount of distributions on any Offered Certificate will in turn depend on,
among other things,
(i) the Pass-Through Rate for such Certificate,
(ii) the rate and timing of principal payments (including
principal prepayments) and other principal collections on
the Mortgage Loans and the extent to which such amounts are
to be applied or otherwise result in reduction of the
Certificate Principal Balance or Certificate Notional Amount
of such Certificate,
(iii) the rate, timing and severity of Realized Losses and
Additional Trust Fund Expenses and the extent to which such
losses and shortfalls are allocable in reduction of the
Certificate Principal Balance or Certificate Notional Amount
of such Certificate, and
(iv) the timing and severity of any Net Aggregate Prepayment
Interest Shortfalls and the extent to which such shortfalls
are allocable in reduction of the Distributable Certificate
Interest payable on such Certificate.
Pass-Through Rates. The Pass-Through Rate applicable to the Class S
Certificates will be variable and will equal the weighted average of the Class
S Strip Rates at which interest accrues on the respective Components of the
related Class Notional Amount from time to time. Each such strip rate (as well
as the Pass-Through Rates for the Class A-3, Class A-4, Class B-1 and Class
B-2 Certificates) will, in turn, be calculated based on the Weighted Average
Mortgage Pass-Through Rate from time to time. Accordingly, the yields on the
Class S, Class A-3, Class A-4, Class B-1 and Class B-2 Certificates will be
sensitive to changes in the relative composition of the Mortgage Pool as a
result of
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scheduled amortization, voluntary prepayments and liquidations of Mortgage
Loans following default. In addition, the Pass-Through Rate for Class S
Certificates will vary with changes in the relative sizes of the Class
Principal Balances of the respective Classes of 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 S Certificates will be extremely sensitive to, and the yield to maturity
on other Offered Certificates purchased at a discount or premium will be
affected by, the rate and timing of principal payments made in reduction of
the Certificate Principal Balances or Certificate Notional Amounts of such
Certificates. In turn, the rate and timing of principal payments that are
distributed or otherwise result in reduction of the Class Principal Balance or
Class Notional Amount, as the case may be, of each Class of Offered
Certificates will be directly related to the rate and timing of principal
payments on or in respect of the Mortgage Loans, which will be affected by the
amortization schedules thereof, the dates on which Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in
connection with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases or other
removals of Mortgage Loans out of the Trust Fund). Prepayments and, assuming
the respective maturity dates therefor have not occurred, liquidations of the
Mortgage Loans will result in distributions on the 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 at
or near their maturity dates, may result in significant delays in payments of
principal on the Mortgage Loans (and, accordingly, on the Principal Balance
Certificates) while work-outs are negotiated or foreclosures are completed,
and such delays will tend to lengthen the weighted average lives of those
Certificates. See "Servicing of The Mortgage Loans--Modifications, Waivers,
Amendment and Consent" in this Prospectus Supplement. Furthermore, the ability
of a Borrower under an ARD Loan to repay its Mortgage Loan on the related
Anticipated Repayment Date will generally depend on its ability to either
refinance the Mortgage Loan or sell the related Mortgaged Property. In
addition, such Borrower may have little incentive to repay its Mortgage Loan
on the related Anticipated Repayment Date if then prevailing interest rates
are relatively high. Accordingly, there can be no assurance that any ARD Loan
will be paid in full as of its Anticipated Repayment Date.
The extent to which the yield to maturity on any Certificate may vary
from the anticipated yield will depend upon the degree to which such
Certificate is purchased at a discount or premium and when, and to what
degree, payments of principal on the Mortgage Loans are in turn distributed or
otherwise result in a reduction of the Certificate Principal Balance or
Certificate Notional Amount of such Certificate. 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 Class S Certificates or if you purchase any other Offered
Certificates 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
a premium, the earlier a payment of principal on or in respect of the Mortgage
Loans is distributed or otherwise results in reduction of the Certificate
Principal Balance or Certificate 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 contemplating an investment in the Class S 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.
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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 Certificate Principal Balance or Certificate
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 Certificate Principal Balance or
Certificate Notional Amount of your Certificates will also affect your actual
yield to maturity, 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 Certificate Principal Balance or
Certificate 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 the payment of Prepayment Premiums and Yield
Maintenance Charges, provisions requiring Lock-out Periods
and amortization terms that require Balloon Payments);
o the demographics and relative economic vitality of the areas
in which the Mortgaged Properties are located;
o the general supply and demand for rental apartments, office
space, retail shopping space, hotel and motel rooms,
industrial space or mobile home park pads, as the case may
be, in such areas;
o the quality of management of the Mortgaged Properties;
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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 "Description of the Pooling Agreements" and "Yield and Maturity
Considerations--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, in the case of 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 mortgagors may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation 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 aggregate principal balance of the Mortgage Loans
that will be prepaid or as to which a default will have occurred as of any
date or as to the overall rate of prepayment or default on the Mortgage Loans.
CPR Model. Prepayments on mortgage loans are commonly measured
relative to a prepayment standard or model. The prepayment model used in this
Prospectus Supplement is the "constant prepayment rate" ("CPR") model, which
represents an assumed constant rate of prepayment each month (which is quoted
on a per annum basis) relative to the then outstanding principal balance of a
pool of mortgage loans for the life of such mortgage loans. The CPR model does
not purport to be either an historical description of the prepayment
experience of any pool of mortgage loans or a prediction of the anticipated
rate of prepayment of any pool of mortgage loans, including the Mortgage Pool.
The Depositor does not make any representations about the appropriateness of
the CPR model.
Unpaid Distributable Certificate Interest. If the portion of the
Available Distribution Amount distributable in respect of interest on any
Class of Offered Certificates on any Distribution Date is less than the
Distributable Certificate Interest then payable for such Class, the shortfall
will be distributable to Holders of such Class of Certificates on subsequent
Distribution Dates, to the extent of available funds. Any such shortfall will
not bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Certificates for so long as it is outstanding.
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Weighted Average Lives of Certain Classes of Offered Certificates
For purposes in this Prospectus Supplement, weighted average life
refers to the average amount of time that will elapse from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor (assuming no losses). For purposes of this "Yield and
Maturity Considerations" section and Exhibit C to this Prospectus Supplement,
the weighted average life of a Principal Balance Certificate (such as a Class
A-1A, Class A-1B, Class A-2, Class A-3, Class A-4, Class B-1 or Class B-2
Certificate) is determined by (i) multiplying the amount of each principal
distribution thereon by the number of years from the Assumed Settlement Date
(as defined below) to the related Distribution Date, (ii) summing the results
and (iii) dividing the sum by the aggregate amount of the reductions in the
Certificate Principal Balance of such Principal Balance Certificate. The
weighted average life of any Principal Balance Certificate will be influenced
by, among other things, the rate at which principal of the Mortgage Loans is
paid, which may be in the form of scheduled amortization, Balloon Payments,
prepayments or liquidations with respect to the Mortgage Loans as described in
this Prospectus Supplement. The weighted average life of any Principal Balance
Certificate may also be affected to the extent that additional distributions
in reduction of the Certificate Principal Balance of such Certificate occur as
a result of the purchase of a Mortgage Loan from the Trust or the optional
termination of the Trust as described under "Description of the Offered
Certificates--Termination" in this Prospectus Supplement. Such a purchase from
the Trust will have the same effect on distributions to the Certificateholders
as if the related Mortgage Loan(s) had prepaid in full, except that no
Prepayment Premiums or Yield Maintenance Charges are made in respect thereof.
The tables set forth on Exhibit C to this Prospectus Supplement have
been prepared on the basis of the following assumptions (the "Maturity
Assumptions") regarding the characteristics of the Certificates and the
Mortgage Loans and the performance thereof:
o as of the date of issuance of the Certificates, the Mortgage
Loans have the terms identified in the table titled
"Characteristics of the Mortgage Loans" in Exhibit A-1 to
this Prospectus Supplement;
o each ARD Loan is paid in full on its Anticipated Repayment
Date, no Mortgage Loan is prepaid during its Lock-out
Period, during any Prepayment Consideration Period during
which a Yield Maintenance Charge is required or during any
period that defeasance thereof may be required and,
otherwise, each Mortgage Loan is assumed to prepay at the
specified CPR;
o no Mortgage Loan is repurchased or replaced as a result of a
Material Breach of a representation or warranty, and none of
the Master Servicer, the Special Servicer or any Holder of
Certificates evidencing a majority interest in the
Controlling Class exercises its option to purchase the
Mortgage Loans and thereby cause a termination of the Trust;
o there are no delinquencies or Realized Losses on the Mortgage
Loans, and there is no extension of the maturity date of any
Mortgage Loan;
o payments on the Certificates will be made on the 12th day of
each month, commencing in January 1999;
o payments on the Mortgage Loans earn no reinvestment return;
o there are no additional ongoing Trust expenses payable out
of the Trust Fund other than the Master Servicing Fee (out
of which the primary servicing fees will be paid) and the
Trustee Fee (which, together with the Master Servicing Fee,
will accrue at a combined rate of 0.05% per annum), and
there are no Additional Trust Fund Expenses;
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o the respective Classes of REMIC Regular Certificates will,
in each such case, be issued with the initial Class
Principal Balance or Class Notional Amount set forth in this
Prospectus Supplement;
o the Pass-Through Rates for the respective Classes of REMIC
Regular Certificates will be as set forth or described in
this Prospectus Supplement; and
o the Certificates will be settled with investors on December
10, 1998 (the "Assumed Settlement Date").
The actual characteristics and performance of the Mortgage Loans will
differ from the Maturity Assumptions used in calculating the tables set forth
on Exhibit C to this Prospectus Supplement, which are hypothetical in nature
and are provided only to give a general sense of how the principal cash flows
might behave under the assumed prepayment and loss scenarios. Any difference
between such assumptions and the actual characteristics and performance of the
Mortgage Loans, or actual prepayment or loss experience, will affect the
percentages of initial Class Principal Balances outstanding over time and the
weighted average lives of the respective Classes of Principal Balance
Certificates. You must make your own decisions as to the appropriate
prepayment, liquidation and loss assumptions to be used in deciding whether to
purchase any Offered Certificate.
Subject to the foregoing discussion and assumptions, the tables set
forth on Exhibit C to this Prospectus Supplement indicate the respective
weighted average lives of those Classes of the Offered Certificates with Class
Principal Balances, and set forth the percentages of the respective initial
Class Principal Balances of such Classes of Offered Certificates that would be
outstanding after the Distribution Dates in each of the calendar months shown.
Yield Sensitivity of the Class S Certificates
The yield to investors on the Class S Certificates will be highly
sensitive to the rate and timing of principal payments (including prepayments)
on the Mortgage Loans. If you are contemplating an investment in the Class S
Certificates, you should fully consider the associated risks, including the
risk that an extremely rapid rate of prepayment on and/or liquidation of the
Mortgage Loans could result in your the failure to recoup fully your initial
investment.
The tables set forth on Exhibit D to this Prospectus Supplement show
pre-tax corporate bond equivalent ("CBE") yields for the Class S Certificates
based on the Maturity Assumptions and assuming the specified purchase prices
and the indicated prepayment scenarios. Assumed purchase prices are expressed
in 32nds (e.g., 5-12 means 5.3750%) as a percentage of the initial Class
Notional Amount of the Class S Certificates and are exclusive of accrued
interest.
The yields set forth in the tables on Exhibit D to this Prospectus
Supplement were calculated by determining the monthly discount rates that,
when applied to the assumed stream of cash flows to be paid on the Class S
Certificates, would cause the discounted present value of each assumed stream
of cash flows to equal the assumed aggregate purchase prices of such Class of
Certificates, plus accrued interest at the initial Pass-Through Rate for such
Class of Certificates from and including the Cut-off Date to but excluding the
Assumed Settlement Date, and converting such monthly rates to corporate bond
equivalent rates. Such calculations do not take into account variations that
may occur in the interest rates at which investors may be able to reinvest
funds received by them as distributions on the Class S Certificates and
consequently do not purport to reflect the return on any investment on such
Class of Certificates when such reinvestment rates are considered.
There can be no assurance that the Mortgage Loans will prepay in
accordance with the assumptions used in preparing the tables on Exhibit D to
this Prospectus Supplement, that the Mortgage Loans will prepay as assumed at
any of the rates shown in such tables, that the Mortgage Loans will not
experience losses, that Mortgage Loans will not be liquidated during any
applicable Lock-out Period, that the ARD Loans will be paid in full on their
respective Anticipated Repayment Dates, that the cash flows on the Class S
Certificates will correspond to the cash flows shown in this Prospectus
Supplement or that the aggregate purchase price of the
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Class S Certificates will be as assumed. It is unlikely that the Mortgage
Loans will prepay as assumed at any of the specified percentages of CPR until
maturity or that all of the Mortgage Loans will so prepay at the same rate.
Actual yields to maturity for investors in the Class S Certificates may be
materially different than those indicated on Exhibit D to this Prospectus
Supplement and, under certain circumstances, could be negative. Timing of
changes in rate of prepayments and other liquidations may significantly affect
the actual yield to maturity to investors, even if the average rate of
principal prepayments and other liquidations is consistent with the
expectations of investors. You must make your own decisions as to the
appropriate prepayment, liquidation and loss assumptions to be used in
deciding whether to purchase any Offered Certificates.
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
Upon the issuance of the Certificates, Sidley & Austin, counsel to
the Depositor, will deliver its opinion generally to the effect that, assuming
compliance with the Pooling Agreement (and subject to certain other
assumptions set forth in such opinion), REMIC I, REMIC II AND REMIC III,
respectively, will each qualify as a REMIC under the Code. The assets of REMIC
I will include the Mortgage Loans, any REO Properties acquired on behalf of
the Certificateholders, the Certificate Account and the Interest Reserve
Account, but will exclude any collections of Additional Interest on the ARD
Loans. For federal income tax purposes, (a) the separate non-certificated
regular interests in REMIC I will be the "regular interests" in REMIC I and
will constitute the assets of REMIC II, (b) the Class R-I Certificates will
evidence the sole class of "residual interests" in REMIC I, (c) the separate
non-certificated regular interests in REMIC II will be the "regular interests"
in REMIC II and will constitute the assets of REMIC III, (d) the Class R-II
Certificates will evidence the sole class of "residual interests" in REMIC II,
(e) the REMIC Regular Certificates will evidence the "regular interests" in,
and will generally be treated as debt obligations of, REMIC III, and (f) the
Class R-III Certificates will evidence the sole class of "residual interests"
in REMIC III. The Class D Certificates will represent beneficial interests in
the portion of the Trust Fund consisting of any amounts applied as Additional
Interest on the ARD Loans, and such portion will be treated as a grantor trust
for federal income tax purposes.
Discount and Premium; Prepayment Consideration
For federal income tax reporting purposes, it is anticipated that the
Class S and Class B-2 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 (the "Prepayment Assumption") that
subsequent to the date of any determination the ARD Loans will be paid in full
on their respective Anticipated Repayment Dates, no Mortgage Loan will
otherwise be prepaid prior to maturity and there will be no extensions of
maturity for any Mortgage Loan. However, no representation is made as to the
actual rate at which the Mortgage Loans will prepay, if at all. See "Federal
Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates" in the Prospectus.
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The Internal Revenue Service (the "IRS") has issued regulations (the
"OID Regulations") under Sections 1271 to 1275 of the Code generally
addressing the treatment of debt instruments issued with original issue
discount. 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 with 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 with respect to any
Holder of Certificates, a possibility of particular relevance to a Holder of
Class S Certificates, the amount of original issue discount allocable to such
period would be zero and such Holder would be permitted to offset such
negative amount only against future original issue discount (if any)
attributable to such Certificates. Although the matter is not free from doubt,
a Holder of a Class S Certificate may be permitted to deduct a loss to the
extent that his or her respective remaining basis in such Certificate exceeds
the maximum amount of future payments to which such Holder is entitled,
assuming no further prepayments of the Mortgage Loans. Any such loss might be
treated as a capital loss.
The OID regulations provide in general that original issue discount
with respect to debt instruments issued in connection with the same or related
transactions are treated as a single debt instrument for purposes of computing
the accrual of original issue discount with respect to such debt instruments.
This aggregation rule ordinarily is only to be applied when single debt
instruments are issued by a single issuer to a single holder. Although it is
not clear that this aggregation rule technically applies to REMIC regular
interests or other instruments subject to Section 1272(a)(6) of the Code,
information reports or returns sent to Certificateholders and the IRS with
respect to the Class S Certificates, which evidence the ownership of multiple
regular interests, will be based on such aggregate method of computing the
yield on the related regular interests. If you are contemplating the purchase
of Class S 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 S Certificates.
Certain Classes of the Offered Certificates may be treated for
federal income tax purposes as having been issued at a premium. Whether any
Holder of such a Class of Certificates will be treated as holding a
Certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made
on such Certificate at the time of its acquisition by such Certificateholder.
If you acquire an interest in any such Class of Certificates, you should
consider consulting your own tax advisor regarding the possibility of making
an election to amortize such premium. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--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,
Prepayment Premiums or Yield Maintenance Charges will be treated as income to
the Holders of a Class of Certificates entitled thereto only after the Master
Servicer's actual receipt thereof. The IRS 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. If 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 you should
consider consulting your own tax advisors concerning the treatment of
Prepayment Premiums and Yield Maintenance Charges.
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Constructive Sales of Class S Certificates
The Taxpayer Relief Act of 1997 added a provision to the Code that
requires the recognition of gain upon the "constructive sale of an appreciated
financial position". A constructive sale of a financial position occurs if a
taxpayer enters into certain transactions or series of such transactions that
have the effect of substantially eliminating the taxpayer's risk of loss and
opportunity for gain with respect to the financial instrument. Debt
instruments that (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 S Certificates,
which do not have a Certificate Principal Balance, could be subject to this
provision and only if a Holder of a Class S Certificate engages in a
constructive sale transaction.
Characterization of Investments in Offered Certificates
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 Offered Certificates will be treated as assets
qualifying under that section to only a limited extent. Accordingly,
investment in the Offered Certificates may not be suitable for thrift
institutions seeking to be treated as a "domestic building and loan
association" under Section 7701(a)(19)(C) of the 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 and "Federal Income Tax
Consequences--REMICs--Characterization of Investments in REMIC Certificates"
in the Prospectus.
Possible Taxes on Income From Foreclosure Property and Other Taxes
In general, the Special Servicer will be obligated to operate and
manage any Mortgaged Property acquired as REO Property in a manner that would,
to the extent commercially reasonable, maximize the Trust's net after-tax
proceeds from such REO Property. After the Special Servicer reviews the
operation of such REO 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 REO Property,
the Special Servicer could determine that it would not be commercially
reasonable to manage and operate such REO 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 (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 (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
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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 hospitality property that
becomes an 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 Prohibited
Transactions Tax (as defined in the Prospectus), Contributions Tax (also as
defined in the Prospectus) or tax on "net income from foreclosure property"
that may be imposed on 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.
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 "Federal Income Tax Consequences--REMICs--Prohibited
Transactions Tax and Other Taxes" in the Prospectus.
Reporting and Other Administrative Matters
Reporting of interest income, including any original issue discount,
if any, with respect to the REMIC Regular Certificates is required annually,
and may be required more frequently under Treasury regulations. These
information reports generally are required to be sent to individual Holders of
REMIC Regular Certificates and the IRS; Holders of REMIC Regular Certificates
that are corporations, trusts, securities dealers and certain other
non-individuals will be provided interest and original issue discount income
information and the information set forth in the following paragraph upon
request in accordance with the requirements of the applicable regulations. The
information must be provided by the later of 30 days after the end of the
quarter for which the information was requested, or two weeks after the
receipt of the request. The Trust must also comply with rules requiring a
REMIC Regular Certificate issued with original issue discount to disclose on
its face the amount of original issue discount and the issue date, and
requiring such information to be reported to the IRS.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular
Certificate at the beginning of each accrual period. In addition, the reports
will include information required by regulations with respect to computing the
accrual of any market discount. Because exact computation of the accrual of
market discount on a constant yield method would require information relating
to the Holder's purchase price that the Trust may not have, such regulations
only require that information pertaining to the appropriate proportionate
method of accruing market discount be provided.
For further information regarding the federal income tax consequences
of investing in the Offered Certificates, see "Federal Income Tax
Consequences--REMICs" in the Prospectus.
S-130
<PAGE>
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 90-83). Subject to the
satisfaction of certain conditions set forth therein, PTE 90-83 (referred to
in this Prospectus Supplement as 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,
(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 Senior 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, Fitch, Duff & Phelps
Credit Rating Co. ("DCR") or Standard & Poor's Ratings
Service, a Division of the McGraw-Hill Companies, Inc.
("S&P").
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 Master Servicer, the Special Servicer, any
sub-servicers, the Mortgage Loan Seller, each Borrower, if
any, with respect to Mortgage Loans constituting more than
5% of the aggregate unamortized principal balance of the
Mortgage Pool as of the date of initial issuance of the
Certificates and any and all affiliates of any of the
aforementioned persons;
S-131
<PAGE>
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 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 Senior Certificates be rated not lower than "Aaa" by Moody's
and "AAA" by Fitch. In addition, the initial Trustee is not an affiliate of
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 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 and fifth 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 a Senior
Certificate; 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 a
Senior Certificate.
The Depositor has confirmed to its satisfaction that such requirements have
been satisfied as of the date in this Prospectus Supplement.
If the general conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with (i) the direct or indirect sale, exchange or
transfer of Senior Certificates acquired by a Plan upon initial issuance from
the Depositor or an Exemption-Favored Party when the Depositor, the Mortgage
Loan Seller, the Trustee, the Master Servicer, the Special Servicer or any
sub-servicer, provider of credit support, Exemption-Favored Party or Mortgagor
is a Party in Interest (as defined in the Prospectus) with respect to the
investing Plan, (ii) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (iii) the continued
holding of Senior Certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Senior Certificate on behalf of an Excluded
Plan (as defined in the following sentence) by any
S-132
<PAGE>
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.
Moreover, if the general conditions of the Exemption, as well as
certain other conditions set forth in the Exemption, are satisfied, the
Exemption may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Code in connection with (i) the direct or indirect sale,
exchange or transfer of Senior Certificates in the initial issuance of Senior
Certificates between the Depositor or an Exemption-Favored Party and a Plan
when the person who has discretionary authority or renders investment advice
with respect to the investment of Plan assets in such Certificates is (a) a
Borrower with respect to 5% or less of the fair market value of the Mortgage
Loans or (b) an affiliate of such a person, (ii) the direct or indirect
acquisition or disposition in the secondary market of Senior Certificates by a
Plan, and (iii) the holding of Senior Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as
certain other conditions set forth in the Exemption, are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code, for transactions
in connection with the servicing, management and operation of the Trust Fund.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the
Code if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan
by virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Senior Certificates.
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 general and other conditions set forth in the Exemption
and the other requirements set forth in the Exemption would
be satisfied at the time of such purchase.
In addition to making its own determination as to the availability of
the exemptive relief provided in the Exemption, a Plan fiduciary considering
an investment in Senior Certificates should consider the availability of any
other prohibited transaction exemptions. See "ERISA Considerations" in the
Prospectus. There can be no assurance that any such class exemptions will
apply with respect to any particular Plan investment in Senior Certificates
or, even if it were deemed to apply, that any exemption would apply to all
prohibited transactions that may occur in connection with such investment. A
purchaser of Senior Certificates should be aware, however, that even if the
conditions specified in one or more exemptions are satisfied, the scope of
relief provided by an exemption may not cover all acts which might be
construed as prohibited transactions.
The characteristics of the Class A-2, Class A-3, Class A-4, Class B-1
and Class B-2 Certificates do not meet the requirements of the Exemption.
Accordingly, the Certificates of those Classes may not be acquired by or on
behalf of a Plan or with Plan assets, except in the case of an insurance
company using funds in its general account, which may be able to rely on
Section III of PTCE 95-60 (discussed below).
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
S-133
<PAGE>
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 A-2, Class A-3, Class A-4, Class B-1 and Class
B-2 Certificates) that do not meet the requirements of the Exemptions 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 Exemptions would have to be satisfied in order for
PTCE 95-60 to be available. Before purchasing Class A-2, Class A-3, Class A-4,
Class B-1 and Class B-2 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 Class S, Class A-1A, Class A-1B and Class A-2
Certificates (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 A-3, Class A-4, Class B-1 and Class B-2 Certificates will
not be "mortgage related securities" for purposes of SMMEA. As a result, the
appropriate characterization of such Offered Certificates under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase such Offered Certificates, is subject to significant
interpretive uncertainties.
The Depositor makes no representation as to the ability of particular
investors to purchase 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.
S-134
<PAGE>
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 an Underwriting
Agreement dated November 20, 1998 (the "Underwriting Agreement"), between the
Depositor and the Underwriter, the Underwriter has agreed to purchase from the
Depositor and the Depositor has agreed to sell to the Underwriter each Class
of the Offered Certificates. It is expected that delivery of the Certificates
will be made to the Underwriter in book-entry form through the Same Day Funds
Settlement System of DTC on or about December 3, 1998, against payment
therefor in immediately available funds.
The Underwriting Agreement provides that the obligation of the
Underwriter to pay for and accept delivery of the Offered Certificates is
subject to, among other things, the receipt of certain legal opinions and to
the conditions, among others, that no stop order suspending the effectiveness
of the Depositor's Registration Statement shall be in effect, and that no
proceedings for such purpose shall be pending before or threatened by the
Commission.
The distribution of the Offered Certificates by the Underwriter may
be effected from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
the Depositor from the sale of the Offered Certificates, before deducting
expenses payable by the Depositor, will be approximately 102.0% of the
aggregate Certificate Principal Balance of the Offered Certificates plus
accrued interest thereon from the Cut-off Date. The Underwriter may effect
such transactions by selling the Offered Certificates to or through dealers,
and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Underwriter for whom they act
as agent. In connection with the sale of the Offered Certificates, the
Underwriter may be deemed to have received compensation from the Depositor in
the form of underwriting compensation. The Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered
Certificates may be deemed to be underwriters and any profit on the resale of
the Offered Certificates positioned by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter, and that under limited circumstances the Underwriter will
indemnify the Depositor, against certain civil liabilities under the
Securities Act or contribute to payments required to be made in respect
thereof.
S-135
<PAGE>
The Depositor has also been advised by the Underwriter that the
Underwriter presently intends to make a market in the Offered Certificates;
however, the Underwriter has no obligation to do so, any market making may be
discontinued at any time and there can be no assurance that an active public
market for the Offered Certificates will develop. See "Risk Factors--Risks
Related to the Certificates--Risks Associated With Liquidity and Market Value"
in this Prospectus Supplement and "Risk Factors--Limited Liquidity of Offered
Certificates" in the Prospectus.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed
upon for each of the Depositor and the Underwriter by Sidley & Austin, New
York, New York.
RATINGS
It is a condition to the issuance of the Certificates that the
respective Classes of Offered Certificates receive the following credit
ratings from Moody's and Fitch:
Class Moody's Fitch
- ----- ------- -----
Class S Aaa AAA
Class A-1A Aaa AAA
Class A-1B Aaa AAA
Class A-2 Aa2 AA
Class A-3 A2 A
Class A-4 A3 A-
Class B-1 Baa2 BBB
Class B-2 Baa3 BBB-
The ratings on the Offered Certificates address the likelihood of the
timely receipt by Holders thereof of all payments of interest to which they
are entitled on each Distribution Date and, except in the case of the Class S
Certificates, the ultimate receipt by the Holders thereof of all payments of
principal to which they are entitled on or before 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 interest and/or principal required under the Offered
Certificates.
The ratings on the respective Classes of Offered Certificates do not
represent any assessment of--
o The tax attributes of the Offered Certificates or of the
Trust.
o Whether or to what extent prepayments of principal may be
received on the Mortgage Loans.
o The likelihood or frequency of prepayments of principal on
the Mortgage Loans.
o The degree to which the amount or frequency of such
prepayments might differ from those originally anticipated.
S-136
<PAGE>
o Whether or to what extent the interest distributable on any
Class of Certificates may be reduced in connection with Net
Aggregate Prepayment Interest Shortfalls.
o Whether and to what extent Prepayment Premiums, Yield
Maintenance Charges, Default Interest and/or Additional
Interest will be received.
Also a security rating does not represent any assessment of the yield
to maturity that investors may experience or the possibility that the Class S
Certificateholders might not fully recover their investment in the event of
rapid prepayments and/or other liquidations of the Mortgage Loans. In general,
the ratings address credit risk and not prepayment risk. As described in this
Prospectus Supplement, the amounts payable with respect to the Class S
Certificates consist only of interest (and, to the extent described in this
Prospectus Supplement, may consist of a portion of the Yield Maintenance
Charges and Prepayment Premiums actually collected on the Mortgage Loans).
Even if the entire pool were to prepay in the initial month, with the result
that the Class S Certificateholders receive only a single month's
Distributable Certificate Interest and thus suffer a nearly complete loss of
their investment, all amounts "due" to such Certificateholders will
nevertheless have been paid. Such result would be consistent with the
respective ratings received on the Class S Certificates. The Class Notional
Amount of the Class S Certificates is subject to reduction by the payment of
principal on, and the allocation of Realized Losses and Additional Trust Fund
Expenses to, some or all of the respective Classes of Principal Balance
Certificates as described in this Prospectus Supplement. The ratings of the
Class S Certificates do not address the timing or magnitude of reduction of
the Class Notional Amount of such Certificates, but only the obligation to pay
interest timely on such Class Notional Amount as so reduced from time to time.
There can be no assurance as to whether any rating agency not
requested to rate the Offered Certificates will nonetheless issue a rating to
any Class thereof and, if so, what such rating would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been
requested by the Depositor to do so may be lower than the rating assigned
thereto by either Rating Agency.
The ratings on the Offered Certificates should be evaluated
independently from similar ratings on other types of securities. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating. See "Risk Factors--Limited Nature of Ratings" in the
Prospectus.
S-137
<PAGE>
<TABLE>
<CAPTION>
INDEX OF PRINCIPAL DEFINITIONS
<S> <C>
30/360 Basis ............................................ S-56
30/360 Mortgage Loans......................................... S-56
Accelerated Amortization Payments............................. S-56
Accrued Certificate Interest.................................. S-106
ACMs ............................................ S-46
Actual/360 Basis ............................................ S-56
Actual/360 Mortgage Loans..................................... S-56
ADA ............................................ S-51
Additional Interest........................................... S-56
Additional Interest Rate...................................... S-56
Additional Special Servicing Fee.............................. S-89
Additional Trust Fund Expense................................. S-114
Advances ............................................ S-22
American Real Estate Borrowers................................ S-77
American Real Estate Loans.................................... S-77
American Real Estate Manager.................................. S-78
American Real Estate Mortgages................................ S-77
American Real Estate Properties............................... S-77
Annual Debt Service........................................... S-67
Anticipated Repayment Date.................................... S-30
Apple Bank ............................................ S-8
Appraisal Reduction Amount....................... S-22, S-116, S-117
Appraisal Trigger Event....................................... S-116
Appraisal Trigger Events...................................... S-22
Appraisals ............................................ S-71
Appraised Value ............................................ S-67
ARD ............................................ S-30
ARD Loan ............................................ S-56
ARD Loans ............................................ S-30
Assumed Final Distribution Date............................... S-10
Assumed P&I Payment........................................... S-115
Assumed Settlement Date....................................... S-126
Available Distribution Amount................................. S-105
Balloon Loan ....................................... S-30, S-57
Balloon Payment ..............................................S-30
Banc One ..............................................S-34
Base Estimated Annual Revenues..................................S-64
Basic Special Servicing Fee.....................................S-90
Borrower ..............................................S-22
Buyer ..............................................S-78
CBE .............................................S-126
Central Accounts ..............................................S-75
CERCLA ..............................................S-46
Certificate Factor.............................................S-101
Certificate Notional Amount....................................S-100
Certificate Principal Balance..................................S-100
Certificate Registrar..........................................S-102
Certificateholders...............................................S-7
Certificates ...............................................S-7
Chanin Borrower ..............................................S-76
Chanin Loan ..............................................S-76
Chanin Property ..............................................S-76
Class ...............................................S-7
Class Notional Amount..........................................S-100
Class Principal Balance........................................S-100
Class S Strip Rate.............................................S-106
Closing Date ...............................................S-9
Collection Period ...............................................S-9
Column ...............................................S-8
Column Mortgage Loans...........................................S-79
Commercial Properties...........................................S-64
Compensating Interest Payment...................................S-89
Component .............................................S-100
Contractual Recurring Replacement Reserve.......................S-76
Controlling Class ..............................................S-95
Controlling Class Representative................................S-95
Corrected Mortgage Loan.........................................S-87
Cost Approach ..............................................S-73
CPR .............................................S-124
Cross-Collateralized Group......................................S-48
Cross-Collateralized Mortgage Loans.............................S-48
CSSA .............................................S-118
Cut-off Date ...............................................S-9
Cut-off Date Balance............................................S-51
Cut-off Date Loan-to-Value Ratio................................S-67
Cut-off Date LTV Ratio..........................................S-67
DCR .............................................S-131
Default Interest ..............................................S-88
Defeasance Collateral...........................................S-61
Defeasance Loan ..............................................S-61
Defeasance Loans ..............................................S-32
Definitive Certificate.........................................S-102
Determination Date...............................................S-9
Discount Rate .............................................S-112
Distributable Certificate Interest.............................S-106
Distribution Date ...............................................S-9
DTC ..............................................S-12
DTC Participants .............................................S-102
Due Date ..............................................S-30
Engineering Reserves............................................S-76
ERISA .............................................S-131
Estimated Annual Operating Expenses.............................S-64
Estimated Annual Revenues.......................................S-63
Excluded Plan .............................................S-133
S-138
<PAGE>
Exemption .............................................S-131
Exemption Favored Parties......................................S-131
Expense Modifications...........................................S-65
Expenses ..............................................S-69
FF&E ..............................................S-65
FIRREA ..............................................S-73
Fitch ...............................................S-2
Form 8-K ...............................................S-7
Fully Amortizing Loan...........................................S-57
Fully Amortizing Loans..........................................S-31
GAAP ..............................................S-66
Grantor Trust ..............................................S-13
Historical Annual Operating Expenses............................S-65
Holders ...............................................S-7
Hospitality Properties..........................................S-41
Income Approach ..............................................S-72
Inland Loans ..............................................S-50
Interest Accrual Period..........................................S-9
Interest Reserve Account.......................................S-105
Interest Reserve Amount........................................S-105
IRS .............................................S-128
LC & TI ..............................................S-68
Leasable Square Footage.........................................S-67
Liquidation Fee ..............................................S-90
Liquidation Fee Rate............................................S-90
Lock-out Period ..............................................S-58
LUSTs ..............................................S-47
Major Tenant ..............................................S-68
Manufactured Housing Properties.................................S-64
Master Servicer ...............................................S-7
Master Servicing Fee............................................S-88
Master Servicing Fee Rate.......................................S-88
Material Breach ..............................................S-82
Maturity Assumptions...........................................S-125
Maturity/ARD Balance............................................S-69
Maturity/ARD Loan-to-Value Ratio................................S-69
Maturity/ARD LTV ..............................................S-69
Modified Mortgage Loan.........................................S-117
Moody's ...............................................S-2
Mortgage ..............................................S-52
Mortgage File ..............................................S-81
Mortgage Loan Seller.............................................S-8
Mortgage Loans ...............................................S-7
Mortgage Note ..............................................S-52
Mortgage Pass-Through Rate.....................................S-104
Mortgage Pool ..............................................S-22
Mortgage Pool Deficit...........................................S-21
Mortgage Rate ..............................................S-30
Mortgaged Property..............................................S-22
Most Recent DSCR ..............................................S-68
Most Recent Expenses............................................S-68
Most Recent NOI ..............................................S-68
Most Recent Operating Statement Date............................S-68
Most Recent Revenues............................................S-68
Multifamily Rental Properties...................................S-38
Net Aggregate Prepayment
Interest Shortfall............................................S-89
NOI ..............................................S-68
Non-REMIC Assets ..............................................S-13
Nonrecoverable P&I Advance.....................................S-115
Nonrecoverable Servicing Advance................................S-92
Norwest Bank .............................................S-120
O&M Plan ..............................................S-71
Occupancy Rate at U/W...........................................S-67
Occupancy Rate at Underwriting..................................S-67
Offered Certificates............................................S-10
Office Properties ..............................................S-39
OID Regulations .............................................S-128
Open Period ..............................................S-58
Originators ...............................................S-8
P&I Advance ..............................................S-21
Pass-Through Rate ..............................................S-11
Performing Mortgage Loans.......................................S-86
Permitted Investments...........................................S-88
Plan .............................................S-131
Plan Assets .............................................S-131
Pooling Agreement ...............................................S-7
Prepayment Assumption..........................................S-127
Prepayment Consideration........................................S-48
Prepayment Consideration Period.................................S-59
Prepayment Interest Excess......................................S-88
Prepayment Interest Shortfall...................................S-89
Prepayment Premium..............................................S-48
Principal Balance Certificates..................................S-19
Principal Distribution Amount..................................S-107
Private Certificates............................................S-10
Prospectus ...............................................S-2
Prospectus Supplement............................................S-2
PTCE ..............................................S-35
PTCE 95-60 .............................................S-133
PTE .............................................S-131
Purchase Price ..............................................S-83
Rated Final Distribution Date....................................S-9
Rating Agencies ...............................................S-2
Realized Losses .............................................S-113
Record Date ...............................................S-9
Related Proceeds ..............................................S-91
REMIC ..............................................S-13
REMIC Administrator..............................................S-8
REMIC I ..............................................S-13
S-139
<PAGE>
REMIC II ..............................................S-13
REMIC III ..............................................S-13
REMIC Regular Certificates.....................................S-101
REMIC Residual Certificates....................................S-101
REO Property ..............................................S-86
REO Tax .............................................S-129
Replacement Mortgage Loan.......................................S-83
Required Appraisal.............................................S-116
Required Appraisal Loan........................................S-116
Responsible Officer.............................................S-95
Restricted Group .............................................S-131
Retail Properties ..............................................S-39
Revenue Modifications...........................................S-64
Revenues ..............................................S-68
Revised Rate ..............................................S-56
Rooms ..............................................S-67
S.F. ..............................................S-67
S&P .............................................S-131
Sales Comparison Approach.......................................S-72
Scheduled P&I Payments..........................................S-30
SEC ...............................................S-3
Securities Act ...............................................S-3
Senior Certificates............................................S-107
Servicing Advance ..............................................S-21
Servicing Fees ..............................................S-90
Servicing Standard..............................................S-85
Servicing Transfer Event........................................S-86
Similar Law .............................................S-134
SMMEA ..............................................S-15
SMMEA Certificates.............................................S-134
Special Servicer ...............................................S-8
Special Servicing Fee...........................................S-89
Specially Serviced Assets.......................................S-86
Specially Serviced Mortgage Loan................................S-86
Sq. Ft. ..............................................S-67
Stated Principal Balance.......................................S-104
Subordinate Available
Distribution Amount.........................................S-108
Subordinate Certificates.......................................S-108
Substitution Shortfall Amount...................................S-83
Tax and Insurance Escrows.......................................S-75
Termination Price .............................................S-120
Third Party Originator Loans....................................S-79
Third Party Originators..........................................S-8
Treasury Rate .............................................S-112
Triple Net Lease ..............................................S-69
Trust ...............................................S-7
Trust Fund ...............................................S-7
Trustee ...............................................S-8
Trustee Fee .............................................S-121
Trustee Report .............................................S-117
U/W DSCR ..............................................S-67
U/W Leasing Commissions and
Tenant Improvements...........................................S-65
U/W NCF ..............................................S-63
U/W NOI ..............................................S-67
U/W Recurring Replacement Reserves..............................S-65
Underwriter ...............................................S-1
Underwriting Agreement.........................................S-135
Underwritten Debt Service Coverage Ratio.......................S-67
Underwritten Cash Flow..........................................S-63
Underwritten DSCR ..............................................S-67
Underwritten NCF ..............................................S-63
Underwritten Net Operating Income...............................S-67
Underwritten NOI ..............................................S-67
Union Capital ...............................................S-8
Units ..............................................S-67
Voting Rights .............................................S-119
Warranting Party ..............................................S-81
Weighted Average Mortgage
Pass-Through Rate............................................S-107
Workout Fee ..............................................S-90
Workout Fee Rate ..............................................S-90
Year Built ..............................................S-68
Year Renovated ..............................................S-68
Yield Maintenance Charge........................................S-48
S-140
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE
MORTGAGE LOANS AND MORTGAGED PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Mortgaged Properties
Descriptions of the Mortgaged Properties
Characteristics of the Mortgage Loans
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Mortgaged Properties
Additional Mortgage Loan Information
Multifamily Schedule
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Managers and Locations of the Mortgaged Properties
</TABLE>
<TABLE>
<CAPTION>
# Property Name Manager
- ----- ------------- -------
<S> <C>
1 Chanin Building Colliers ABR, Inc.
2 250 South Clinton Street (1A) American Real Estate Management, Inc.
3 GATX Warehouse (1A) American Real Estate Management, Inc.
4 1001 and 1011 Airport Industrial Park (1A) American Real Estate Management, Inc.
5 Northeast Industrial Park Building # 21 (1A) American Real Estate Management, Inc.
6 507 Plum Street (1A) American Real Estate Management, Inc.
7 Zanesville (1A) American Real Estate Management, Inc.
8 Northeast Industrial Park Building # 8 (1A) American Real Estate Management, Inc.
9 Northeast Industrial Park Building # 22 (1A) American Real Estate Management, Inc.
10 4, 5 & 8 Marway Circle (1A) American Real Estate Management, Inc.
11 Marysville (1A) American Real Estate Management, Inc.
12 One Clinton Square (1A) American Real Estate Management, Inc.
13 The Center at Rancho Niguel (1B) Pacific West Asset Management
Corporation
14 The Edwards Center at Rancho Niguel (1B) Pacific West Asset Management
Corporation
15 Rivertree Court Shopping Center (1C) Inland Commercial Property Management
16 Woodland Heights Shopping Center (1C) Inland Commercial Property Management
17 Winnetka Commons Shopping Center (1C) Inland Commercial Property Management
18 Berwyn Plaza Shopping Center (1C) Inland Commercial Property Management
19 Walgreen's Store (1C) Inland Commercial Property Management
20 Heritage Pointe Mid America Management Corp.
21 Best Western Inn of Chicago Shell Hospitality Group, Inc.
22 Christiana Hilton Inn - Newark, DE MJ Hotels of Wilmington, Inc.
23 Embassy Crossing (2) Infinity Property Management Corp.
24 Jefferson at Treetops Apartments JPI Apartment Management, LP
25 Dominion Tower & Parking Garage I.D.M. Management, Inc.
26 Holiday Inn Hurstbourne Ridgewood Hotels, Inc.
27 Blue Ash Portfolio (1D) Community Management Corporation
28 Springdale Office Center (1D) Community Management Corporation
29 Executive Center East (1D) Community Management Corporation
30 McDonald's (1D) Community Management Corporation
31 11 Park Place Williams Real Estate Co., Inc.
32 Twin Creek Apartments CPG Holdings, Inc.
33 Storage Box / Stowaway Storage (1E) Owner Managed
34 Maplewood Mobile Estates (1E) Owner Managed
35 Corporate Office Park Chase Commercial Real Estate
Services, Inc.
36 Knights Bridge II Apartments Grady Holdings, LLP
37 Preston Stonebrooke Shopping Center Netzer Management, Inc.
38 Run in Foods DP #4 (1F) RUN IN Food Stores, Inc.
39 Run in Foods DP #7 (1F) RUN IN Food Stores, Inc.
40 Run in Foods #401 (1F) RUN IN Food Stores, Inc.
41 Run in Foods #406 (1F) RUN IN Food Stores, Inc.
42 Run in Foods #402 (1F) RUN IN Food Stores, Inc.
43 Run in Foods #403 (1F) RUN IN Food Stores, Inc.
44 Run in Foods #404 (1F) RUN IN Food Stores, Inc.
45 Run in Foods #410 (1F) RUN IN Food Stores, Inc.
46 Super 8-Midtown (1G) DVC
47 Super 8-East (1G) DVC
48 Super 8-West (1G) DVC
49 Wellington Woods & Lakes Harbor Group Management Company
50 Hampton Inn - Indianapolis, IN Indy Downtown, Inc.
51 Chidlaw Building Fieldhill Properties
52 Grandview Garden Apartments J & P Realty Corp.
53 Cornerstone Office Park Asset Management Associates, Inc.
54 160 Pine Street Trammell Crow NW, Inc.
55 River Run Apartments Harbor Group Management Company
56 180 N. Michigan Avenue Office Building M & J Wilkow, Ltd.
57 Oak Hills Apartments Hartex Property Group, Inc.
58 145 Rosemary Street Twenty-First Century Corporation
59 Holiday Inn-Metroplex-Youngstown, OH Youngstown Management Corp.
60 MCOM Building Owner Managed
61 Mayport Trace Apartments CNC Investments, Inc.
62 Mercantile Bank Building H.T. Paul Company, Inc.
63 Brook Forest Apartments Mid-America Management Corp.
64 Midfield Shopping Center The Brookhill Group
65 Far East Plaza Pioneer West, Inc.
66 Highland Square Shopping Center Phillips Investments, Inc.
67 Spanish Villa Apartments Fulcrum Properties, Inc.
68 Greens Corner Shopping Center (3) Infinity Property Management Corp.
69 Mountain Ridge Apartments Suncase Corporation
70 Radisson Suites - Huntsville, AL Yedla Management Company
71 Holiday Campground Owner Managed
72 Plantation Meadows Apartments Spyros Papageorge
73 Gresham Townhomes Seltzer-Doren Management Company, Inc.
<CAPTION>
# Property Name Address
- ----- ------------- -------
<S> <C>
1 Chanin Building 122 East 42nd Street
2 250 South Clinton Street (1A) 250 South Clinton Street
3 GATX Warehouse (1A) 4472 and 4580 Steelway Boulevard
4 1001 and 1011 Airport Industrial Park (1A) 1001 and 1011 Air Park Drive
5 Northeast Industrial Park Building # 21 (1A) Route 146
6 507 Plum Street (1A) 507 Plum Street
7 Zanesville (1A) 3530 East Pike
8 Northeast Industrial Park Building # 8 (1A) Route 146
9 Northeast Industrial Park Building # 22 (1A) Route 146
10 4, 5 & 8 Marway Circle (1A) 4, 5 & 8 Marway Circle
11 Marysville (1A) 16725 Square Drive
12 One Clinton Square (1A) One Clinton Square
13 The Center at Rancho Niguel (1B) 28121-28141 Crown Valley Parkway & 28201-28251 Crown
Valley Parkway
14 The Edwards Center at Rancho Niguel (1B) 25461-25471 Rancho Niguel Road
15 Rivertree Court Shopping Center (1C) 701 N. Milwaukee Avenue
16 Woodland Heights Shopping Center (1C) 225 Irving Park Road
17 Winnetka Commons Shopping Center (1C) 3540 Winnetka Avenue North
18 Berwyn Plaza Shopping Center (1C) 6901 West Ogden Avenue
19 Walgreen's Store (1C) 331 North Irving
20 Heritage Pointe 10018 Holly Lane
21 Best Western Inn of Chicago 162 East Ohio Street
22 Christiana Hilton Inn Newark, DE 100 Continental Drive
23 Embassy Crossing (2) 9570 U.S. Highway 19
24 Jefferson at Treetops Apartments 5217 Old Spicewood Springs Road
25 Dominion Tower & Parking Garage 1400 NW 10th Avenue
26 Holiday Inn Hurstbourne 1325 South Hurstbourne Parkway
27 Blue Ash Portfolio (1D) 10925 Reed Hartman Highway
28 Springdale Office Center (1D) 230, 260 & 270 Northland Blvd.
29 Executive Center East (1D) 4030 Mt. Carmel Tobasco Road
30 McDonald's (1D) 5055 Old Taylor Mill Road
31 11 Park Place 11 Park Place
32 Twin Creek Apartments 1111 James Donlon Boulevard
33 Storage Box / Stowaway Storage (1E) 810 Jimmy Ann Drive / 3742 Nova Road
34 Maplewood Mobile Estates (1E) 5608 Newman Drive
35 Corporate Office Park 4900-4970 Corporate Drive
36 Knights Bridge II Apartments 4000 Greencastle Road
37 Preston Stonebrooke Shopping Center SWC of Preston Road & Stonebrooke Parkway
38 Run in Foods DP #4 (1F) 1551 Florida State Route 559
39 Run in Foods DP #7 (1F) 29502 Florida State Route 52
40 Run in Foods #401 (1F) 11511 North U.S. Highway 301
41 Run in Foods #406 (1F) 4911 N. 110th Avenue
42 Run in Foods #402 (1F) 3002 North U.S. Highway 301
43 Run in Foods #403 (1F) 401 East Sligh Avenue
44 Run in Foods #404 (1F) 18226 Powell Road
45 Run in Foods #410 (1F) 6513 W. 14th Street
46 Super 8-Midtown (1G) 2500 University Boulevard
47 Super 8-East (1G) 450 Paisano Street
48 Super 8-West (1G) 6030 Iliff Road
49 Wellington Woods & Lakes 136 Wellington Lakes Drive & 1704 Lafayette Boulevard
50 Hampton Inn - Indianapolis, IN 105 S. Meridian Street
51 Chidlaw Building 2221 E. Bijou Street
52 Grandview Garden Apartments 1500 S. Waterford Drive
53 Cornerstone Office Park 1289-1335 S. Linden Road
54 160 Pine Street 160 Pine Street
55 River Run Apartments 141 Old Orange Park Road
56 180 N. Michigan Avenue Office Building 180 N. Michigan Avenue
57 Oak Hills Apartments 1913 Estrada Parkway Drive
58 145 Rosemary Street 145 Rosemary Street
59 Holiday Inn - Metroplex-Youngstown, OH 1620 Motor Inn Drive
60 MCOM Building 1045 Firestone Parkway
61 Mayport Trace Apartments 2160 Mayport Road
62 Mercantile Bank Building 800 SW Jackson Street
63 Brook Forest Apartments 3300-3400 169th Street
64 Midfield Shopping Center 201 Midfield Street
65 Far East Plaza 727 North Broadway
66 Highland Square Shopping Center 2010 S. Caraway Road
67 Spanish Villa Apartments 10611 Abercorn Extension
68 Greens Corner Shopping Center (3) 4975 Jimmy Carter Boulevard
69 Mountain Ridge Apartments 2626 Duncanville Road
70 Radisson Suites - Huntsville, AL 6000 S. Memorial Parkway
71 Holiday Campground 10000 Park Boulevard
72 Plantation Meadows Apartments 7221 NW 16th Street
73 Gresham Townhomes 21051 Gresham Street
<CAPTION>
Zip
# Property Name City County State Code
- ---- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C>
1 Chanin Building New York New York NY 10168
2 250 South Clinton Street (1A) Syracuse Onondaga NY 13202
3 GATX Warehouse (1A) Clay Onondaga NY 13080
4 1001 and 1011 Airport Industrial Park (1A) Swatara Dauphin PA 17057
5 Northeast Industrial Park Building # 21 (1A) Guilderland Albany NY 12084
6 507 Plum Street (1A) Syracuse Onondaga NY 13204
7 Zanesville (1A) Zanesville Muskingum OH 43701
8 Northeast Industrial Park Building # 8 (1A) Guilderland Albany NY 12084
9 Northeast Industrial Park Building # 22 (1A) Guilderland Albany NY 12084
10 4, 5 & 8 Marway Circle (1A) Gates Monroe NY 14624
11 Marysville (1A) Marysville Union OH 43040
12 One Clinton Square (1A) Syracuse Onondaga NY 13202
13 The Center at Rancho Niguel (1B) Laguna Niguel Orange CA 92677
14 The Edwards Center at Rancho Niguel (1B) Laguna Niguel Orange CA 92677
15 Rivertree Court Shopping Center (1C) Vernon Hills Lake IL 60061
16 Woodland Heights Shopping Center (1C) Streamwood Cook IL 60107
17 Winnetka Commons Shopping Center (1C) New Hope Hennepin MN 55427
18 Berwyn Plaza Shopping Center (1C) Berwyn Cook IL 60402
19 Walgreen's Store (1C) Woodstock McHenry IL 60098
20 Heritage Pointe Des Plaines Cook IL 60016
21 Best Western Inn of Chicago Chicago Cook IL 60611
22 Christiana Hilton Inn Newark, DE Newark New Castle DE 19713
23 Embassy Crossing (2) Port Richey Pasco FL 34668
24 Jefferson at Treetops Apartments Austin Travis TX 78759
25 Dominion Tower & Parking Garage Miami Dade FL 33128
26 Holiday Inn Hurstbourne Louisville Jefferson KY 40222
27 Blue Ash Portfolio (1D) Blue Ash Hamilton OH 45242
28 Springdale Office Center (1D) Springdale Hamilton OH 45246
29 Executive Center East (1D) Union Township Clermont OH 45255
30 McDonald's (1D) Taylor Mill Kenton KY 41015
31 11 Park Place New York New York NY 10007
32 Twin Creek Apartments Antioch Contra Costa CA 94509
33 Storage Box / Stowaway Storage (1E) Daytona Beach
/ Port Orange Volusia FL 32119
34 Maplewood Mobile Estates (1E) Port Orange Volusia FL 32127
35 Corporate Office Park Huntsville Madison AL 35804
36 Knights Bridge II Apartments Silver Spring Montgomery MD 20866
37 Preston Stonebrooke Shopping Center Frisco Collin TX 75034
38 Run in Foods DP #4 (1F) Polk City Polk FL 33868
39 Run in Foods DP #7 (1F) San Antonio Pasco FL 33576
40 Run in Foods #401 (1F) Thonotosassa Hillsborough FL 33592
41 Run in Foods #406 (1F) Pinellas Park Pinellas FL 33609
42 Run in Foods #402 (1F) Tampa Hillsborough FL 33619
43 Run in Foods #403 (1F) Tampa Hillsborough FL 33604
44 Run in Foods #404 (1F) Brooksville Hernando FL 33609
45 Run in Foods #410 (1F) Bradenton Manatee FL 34207
46 Super 8-Midtown (1G) Albuquerque Bernalillo NM 87107
47 Super 8-East (1G) Albuquerque Bernalillo NM 87123
48 Super 8-West (1G) Albuquerque Bernalillo NM 87121
49 Wellington Woods & Lakes Fredericksburg N/A VA 22401
50 Hampton Inn - Indianapolis, IN Indianapolis Marion IN 46225
51 Chidlaw Building Colorado Springs El Paso CO 80909
52 Grandview Garden Apartments Florissant St. Louis MO 63033
53 Cornerstone Office Park Flint Township Genesee MI 48532
54 160 Pine Street San Francisco San Francisco CA 94111
55 River Run Apartments Orange Park Clay FL 32073
56 180 N. Michigan Avenue Office Building Chicago Cook IL 60601
57 Oak Hills Apartments Irving Dallas TX 75061
58 145 Rosemary Street Needham Norfolk MA 02194
59 Holiday Inn - Metroplex-Youngstown, OH Youngstown Trumbull OH 44420
60 MCOM Building Nashville Davidson TN 37086
61 Mayport Trace Apartments Jacksonville Duval FL 32233
62 Mercantile Bank Building Topeka Shawnee KS 66612
63 Brook Forest Apartments Hammond Lake IN 46323
64 Midfield Shopping Center Midfield/Birmingham Jefferson AL 35228
65 Far East Plaza Los Angeles Los Angeles CA 90012
66 Highland Square Shopping Center Jonesboro Craighead AR 72401
67 Spanish Villa Apartments Savannah Chatham GA 31419
68 Greens Corner Shopping Center (3) Atlanta Gwinnett GA 30093
69 Mountain Ridge Apartments Dallas Dallas TX 75211
70 Radisson Suites - Huntsville, AL Huntsville Madison AL 35802
71 Holiday Campground Seminole Pinellas FL 33777
72 Plantation Meadows Apartments Plantation Broward FL 33313
73 Gresham Townhomes Canoga Park Los Angeles CA 91306
</TABLE>
<PAGE>
Managers and Locations of the Mortgaged Properties
<TABLE>
<CAPTION>
# Property Name Manager
- ----- ------------- -------
<S> <C>
74 Lakewood Apartments Mid-America Management Corp.
75 Imperial Plaza Shopping Center Continental Equities
76 Super 8 - Las Vegas, NV KVC
77 Thunder Hollow Harbor Group Management Company
78 K-Mart Montwood Point Owner Managed
79 Trabuco Marketplace O Hill Partners Inc.
80 Indian Valley Apartments CNC Investments, Inc.
81 Flamingo West Centre MDL Group
82 Mill Creek Shopping Center Richard J. McGoldrich
83 High Vista Apartments EMES Management Corp.
84 Woodland Office Center Orvick Management Group
85 Bayfair Apartments Fuller Enterprises
86 University Green Apartments JMG Realty, Inc.
87 El Dorado Mobile Home Estates Synergised Real Estate
88 Holiday Inn - Danbury, CT Motel Hotel Associates, Inc.
89 Country Inn & Suites Hotel Yedla Management Company
90 Center Ridge Apartments Westmark Management Company
91 The Marriott Building EEI Holding Corporation
92 Silicon Valley Inn Owner Managed
93 Best Western - Sunnyvale Owner Managed
94 Golden Valley Commons Tri-Star Management, Inc.
95 West Park Place Universal Management Corporation
96 Naperville Office Court M & J Wilkow, Ltd.
97 Holiday Inn Express Hotel & Suites - Mountain View, CA Owner Managed
98 Best Buy / Drug Emporium Owner Managed
99 Medical Arts Building Butler Commercial Realty
100 Comfort Inn - Sunnyvale Owner Managed
101 Holiday Inn North Denver Doramar Hotels, inc.
102 Windlands Shopping Center (4) Infinity Property Management Corp.
103 Northborough Woods Apartments CNC Investments, Inc.
104 Madison Building Owner Managed
105 Victory Townhomes Seltzer-Doren Management Company, Inc.
106 Dairy Plaza Shopping Center Vanguard Commercial Realty, Inc.
107 Comfort Inn - Concord, NH Linchris Hotel Corporation
108 Peconic Plaza Volta Realty II LLC
109 Bayou Village Place Apartments Tarantino Properties, Inc.
110 Country Suites - Chattanooga, TN Owner Managed
111 531 West Deming The Hayman Company
112 Camelot Apartments Property Services Group, Inc.
113 Sevilla Apartments Suncase Corporation
114 The Way III Apartments Alton Management Corp.
115 Glenview Office and Industrial Park Schmid Management, Inc.
116 Hampton Inn - Decatur, AL Yedla Management Company
117 Mission Industrial Park (1H) Birkeland, Cooper & Associates
118 Jurupa Business Park (1H) Birkeland, Cooper & Associates
119 Colony Square Shopping Center Larry Blumberg & Associates, Inc.
120 Vintage Business Park Owner Managed
121 Crossroads Shopping Center Collett & Associates, Inc.
122 High Country Plaza Sanders & Associates
123 Glencoe Avenue Industrial Owner Managed
124 St. Charles Apartments (1I) Owner Managed
125 St. James Apartments (1I) Owner Managed
126 Plaza at Sunrise Wessman Development Company
127 Shannon Arms III Apartments Owner Managed
128 River Valley Square Shopping Center Russell Development, Inc.
129 Rio Commercial Center Owner Managed
130 Alexis Apartment Complex Greco Rentals Management Company, LLC
131 Beltway Plaza 4710 Kenwood Management Company, LLC
132 Casa Linda MHP Follett Investment Properties, Inc.
133 Mesa Ridge Apartments Owner Managed
134 Vintage Business Park II Owner Managed
135 Mountain Village Shopping Center Brantley Properties, Inc.
136 Rock River Tower Apartments Superior Investment Development Corp.
137 Durango Plaza Retail Center Crossroads Realty and Development
138 Beatrice Avenue Industrial William D. Feldman & Associates
139 Miller Apartments Jean McDaniel
140 University Square Outlet Mall Graham Associates, Ltd.
141 Ridgewood Plaza Mid-Northern Equities Management, Ltd.
142 Chase Village Apartments Carlisle Apartments, Inc.
143 Warsaw Village Shopping Center Barnett Properties, Inc.
144 Provident Place Office Building Regent Development Corporation
145 920 S. Waukegan Road New Horizons Management Company
146 Amberley Suite Hotel Yedla Management Company
<CAPTION>
# Property Name Address
------- ------------- -------
<S> <C>
74 Lakewood Apartments 2121 Stone Lake
75 Imperial Plaza Shopping Center 303-319 Havendale Boulevard
76 Super 8 - Las Vegas, NV 4250 Koval Lane
77 Thunder Hollow 3780 Idlebrook Circle
78 K-Mart Montwood Point 11330-60 Montwood Drive
79 Trabuco Marketplace 21602, 21612 & 21702 Plano Trabuo Road
80 Indian Valley Apartments 3536 Indian Creek Road
81 Flamingo West Centre 4850 West Flamingo Road
82 Mill Creek Shopping Center 9 & 50 Market Street
83 High Vista Apartments 5041 Alabama Street
84 Woodland Office Center 500 East Calaveras Street
85 Bayfair Apartments 16077 Ashland Avenue
86 University Green Apartments 1620 Bay Area Boulevard
87 El Dorado Mobile Home Estates 4525 West Twain Avenue
88 Holiday Inn - Danbury, CT 80 Newtown Road
89 Country Inn & Suites Hotel 4880 University Drive
90 Center Ridge Apartments 700 West Center Street
91 The Marriott Building 509 South Sixth Street
92 Silicon Valley Inn 690 N. Mathilda Avenue
93 Best Western - Sunnyvale 940 W. Weddell Drive
94 Golden Valley Commons 7700 Olson Memorial Highway
95 West Park Place 7400 West Greenfield Avenue
96 Naperville Office Court 1801-1813 N. Mill Street
97 Holiday Inn Express Hotel & Suites - Mountain View, CA 93 El Camino Real (SR 82)
98 Best Buy / Drug Emporium 1580 Southlake Parkway
99 Medical Arts Building 1307 8th Avenue
100 Comfort Inn - Sunnyvale 595 N. Mathilda Avenue
101 Holiday Inn North Denver 4849 Bannock Street
102 Windlands Shopping Center (4) 3760 Nolensville Pike
103 Northborough Woods Apartments 13502 Northborough Drive
104 Madison Building 412 Madison Street
105 Victory Townhomes 22301 Victory Boulevard
106 Dairy Plaza Shopping Center 1527-1561 N. Singleton Avenue
107 Comfort Inn - Concord, NH 71 Hall Street
108 Peconic Plaza North Side of Old Country Road (Route 58)
109 Bayou Village Place Apartments 6310 Dumfries Drive
110 Country Suites - Chattanooga, TN 7051 McCutcheon Road
111 531 West Deming 531 West Deming
112 Camelot Apartments 2906 Washtenaw Avenue
113 Sevilla Apartments 1455 North Perry Road
114 The Way III Apartments 5301 Marvin D. Love Freeway
115 Glenview Office and Industrial Park 1800-1884 Johns Drive
116 Hampton Inn - Decatur, AL 2041 Beltline Road
117 Mission Industrial Park (1H) 4748 Mission Boulevard
118 Jurupa Business Park (1H) 7101 Jurupa Avenue
119 Colony Square Shopping Center 3074 Ross Clark Circle
120 Vintage Business Park 3000 Vintage Drive, 3017-3025 Clinton Drive
121 Crossroads Shopping Center US Highway 52
122 High Country Plaza 15817 Bernardo Center Drive
123 Glencoe Avenue Industrial 4040 Del Rey Avenue and 4051 Glencoe Avenue
124 St. Charles Apartments (1I) 1034 Elm Avenue
125 St. James Apartments (1I) 1008 E. 24th Avenue
126 Plaza at Sunrise SWC Ramon Road & Sunrise Way
127 Shannon Arms III Apartments 9029 Jamacha Road
128 River Valley Square Shopping Center NWC Telegraph Rd. & Lorain St.
129 Rio Commercial Center 779-895 NE Dixie Highway
130 Alexis Apartment Complex 3500 Foothills Road
131 Beltway Plaza 4710 4710 Auth Place
132 Casa Linda MHP 5250 E. Lake Mead Boulevard
133 Mesa Ridge Apartments 8000 Creek Bend Drive
134 Vintage Business Park II 3030-3032 Vintage Drive
135 Mountain Village Shopping Center 749 E. Main Street
136 Rock River Tower Apartments 913 Main Street
137 Durango Plaza Retail Center 4420-4450 South Durango Drive
138 Beatrice Avenue Industrial 12636 Beatrice Street
139 Miller Apartments 2335 Stuart Avenue
140 University Square Outlet Mall 816 College Road
141 Ridgewood Plaza SWC Ridge Rd. & Manor Ave.
142 Chase Village Apartments 8028 Gessner Drive
143 Warsaw Village Shopping Center US Highway 360
144 Provident Place Office Building 2220 San Jacinto Blvd.
145 920 S. Waukegan Road 920 S. Waukegan Road
146 Amberley Suite Hotel 807 Bank St.
<CAPTION>
# Property Name City County State Code
----- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C>
74 Lakewood Apartments Woodstock McHenry IL 60098
75 Imperial Plaza Shopping Center Auburndale Polk FL 33823
76 Super 8 - Las Vegas, NV Las Vegas Clark NV 89109
77 Thunder Hollow Casselberry Seminole FL 32707
78 K-Mart Montwood Point El Paso El Paso TX 79936
79 Trabuco Marketplace Rancho Santa
Margarita Orange CA 92679
80 Indian Valley Apartments Clarkston Dekalb GA 30021
81 Flamingo West Centre Las Vegas Clark NV 89103
82 Mill Creek Shopping Center South Portland Cumberland ME 04112
83 High Vista Apartments El Paso El Paso TX 79930
84 Woodland Office Center Milpitas Santa Clara CA 95035
85 Bayfair Apartments San Lorenzo Alameda CA 94502
86 University Green Apartments Houston Harris TX 77058
87 El Dorado Mobile Home Estates Las Vegas Clark NV 89103
88 Holiday Inn - Danbury, CT Danbury Fairfield CT 06810
89 Country Inn & Suites Hotel Huntsville Madison AL 35816
90 Center Ridge Apartments Duncanville Dallas TX 75116
91 The Marriott Building Springfield Sangamon IL 62701
92 Silicon Valley Inn Sunnyvale Santa Clara CA 94086
93 Best Western - Sunnyvale Sunnyvale Santa Clara CA 94089
94 Golden Valley Commons Golden Valley Hennepin MN 55427
95 West Park Place West Allis Milwaukee WI 53214
96 Naperville Office Court Naperville DuPage IL 60563
97 Holiday Inn Express Hotel
& Suites - Mountain View, CA Mountain View Santa Clara CA 94040
98 Best Buy / Drug Emporium Morrow Clayton GA 30260
99 Medical Arts Building Fort Worth Tarrant TX 76104
100 Comfort Inn - Sunnyvale Sunnyvale Santa Clara CA 94086
101 Holiday Inn North Denver Denver Denver CO 80216
102 Windlands Shopping Center (4) Nashville Davidson TN 37211
103 Northborough Woods Apartments Houston Harris TX 77067
104 Madison Building Tampa Hillsborough FL 33602
105 Victory Townhomes Woodland Hills Los Angeles CA 91303
106 Dairy Plaza Shopping Center Titusville Brevard FL 32796
107 Comfort Inn - Concord, NH Concord Merrimack NH 03301
108 Peconic Plaza Riverhead Suffolk NY 11901
109 Bayou Village Place Apartments Houston Harris TX 77096
110 Country Suites - Chattanooga, TN Chattanooga Hamilton TN 37421
111 531 West Deming Chicago Cook IL 60614
112 Camelot Apartments Ypsilanti Township Washtenaw MI 48197
113 Sevilla Apartments Carrollton Dallas TX 75006
114 The Way III Apartments Dallas Dallas TX 75232
115 Glenview Office and Industrial Park Glenview Cook IL 60025
116 Hampton Inn - Decatur, AL Decatur Morgan AL 35601
117 Mission Industrial Park (1H) Ontario San Bernardino CA 91762
118 Jurupa Business Park (1H) Riverside Riverside CA 92504
119 Colony Square Shopping Center Dothan Houston AL 36301
120 Vintage Business Park Juneau Juneau AK 99801
121 Crossroads Shopping Center Darlington Darlington SC 29532
122 High Country Plaza San Diego San Diego CA 92127
123 Glencoe Avenue Industrial Los Angeles Los Angeles CA 90292
124 St. Charles Apartments (1I) Americus Sumter GA 31709
125 St. James Apartments (1I) Cordele Crisp GA 31015
126 Plaza at Sunrise Palm Springs Riverside CA 92264
127 Shannon Arms III Apartments Spring Valley San Diego CA 91977
128 River Valley Square Shopping Center Monroe Monroe MI 48162
129 Rio Commercial Center Jensen Beach Martin FL 34957
130 Alexis Apartment Complex Las Cruces Dona Ana NM 88011
131 Beltway Plaza 4710 Camp Springs Prince George MD 20746
132 Casa Linda MHP Las Vegas Clark NV 89114
133 Mesa Ridge Apartments Houston Harris TX 77071
134 Vintage Business Park II Juneau Juneau AK 99801
135 Mountain Village Shopping Center Jefferson Ashe NC 28640
136 Rock River Tower Apartments Rockford Winnebago IL 61103
137 Durango Plaza Retail Center Las Vegas Clark NV 89117
138 Beatrice Avenue Industrial Los Angeles Los Angeles CA 90066
139 Miller Apartments Albany Dougherty GA 31707
140 University Square Outlet Mall Wilmington New Hanover NC 28402
141 Ridgewood Plaza Munster Lake IN 46321
142 Chase Village Apartments Austin Travis TX 78753
143 Warsaw Village Shopping Center Warsaw Richmond VA 22572
144 Provident Place Office Building Denton Denton TX 76205
145 920 S. Waukegan Road Lake Forest Lake IL 60045
146 Amberley Suite Hotel Decatur Morgan AL 35601
</TABLE>
<PAGE>
Managers and Locations of the Mortgaged Properties
<TABLE>
<CAPTION>
# Property Name Manager
- ------- ------------- -------
<S> <C>
147 Rite-Aid of Maine, Inc. (5) Commercial Properties, Inc.
148 Stuart Towne Apartments John M. Trask, Jr.
149 Santa Ana Villa Sequoia Real Estate
150 Orland Park Outlots Terraco, Inc.
151 Brazos Square Shopping Center DH Real Estate Investment Company
152 Community Mall Crossroads Realty, Inc.
153 Comfort Inn - Fife, WA Hans Motel Investment Inc.
154 Aspen Business Center Crown Properties, LLC
155 Hampton Inn - Ft. Pierce, FL Owner Managed
156 Oak Tree Mobile Home Park Owner Managed
157 Walnut Square Apartments Laurence Wolf Properties
158 Royal Oaks Mobile Home Park Bruce E. Davis and Douglas M. Davis
159 Plymouth Square Apartments Dietz Management Company
160 Watchung View Apartments Kamson Corporation
161 Embassy Apartments Vinod K. Luthra
162 Best Buy - West Dundee L and N Bolton Living Trust
163 1400 Destrehan Avenue Michael M. Seago
164 Breckenridge Condominiums Sherron Associates of Texas, Inc.
165 Rosemont Terrace Apartments Saratoga Capital, Inc.
166 Days Inn - Dover, DE Owner Managed
167 Iberia Center Boardwalk Development, Inc.
168 Shadydale Village Mobile Home Park Love Properties, Inc.
169 Park Terrace Shopping Center Park City Developments, Inc.
170 Hanover Village Apartments Westmark Management Company
171 Travelodge Hotel--Seatac Travelodge Hotels Inc.
172 Harlem Furniture Owner Managed
173 Tree Tops Apartments Westmark Management Company
174 Old Town Place Apartments Owner Managed
175 The Meadows Apartments Saratoga Capital, Inc.
176 Chapman & Feldner Shopping Center Owner Managed
177 BCH Office Building Carson Development Co., Inc.
178 Colonial Pines Mobile Estates Owner Managed
179 NationsBank Professional Center Kew Management Corporation
180 Belmeade Office Park 46 Corp.
181 Central Building Owner Managed
182 710 Amsterdam Avenue Weinstein Industries, Inc.
183 Sandstone Apartments & Vista North Apartments Owner Managed
184 Highland Park Place Shopping Center First Commercial Realty
& Development Co., Inc.
185 Salem Creek Apartment Complex Carlisle Apartments, Inc.
186 Country Greens Apartments Alton Management Corp.
187 Sahara West Plaza Americana Commercial Group
188 Walgreen's Owner Managed
189 Econolodge - Bangor, ME Diamond Properties, Inc.
190 Comfort Inn - Bangor, ME C.C. Management, Inc.
191 Point Clinton Aram Papazian
192 Rite-Aid Pharmacy Baxter Property Management
193 Taft and Cleveland Paradise Apartments Owner Managed
194 Tyrone Village MHP Town & Country Investments, LLC
195 Steamboat Road Owner Managed
196 Kerr Station Village Graham Associates, Ltd.
197 Meadow Run Apartments Westmark Management Company
198 45 Church Street Amdour, Inc.
199 New Brunswick Apartments Kamson Corporation
200 Fiesta RV Resort Owner Managed
201 Cedar Place Office Park David Epstein Company
202 Oak Hollow Mobile Home Park Owner Managed
203 Centerline Plaza Apartments Ivanhoe Investment Limited Partnership
204 Southport Place David A. Mack Properties, LLC
205 Bell Building EEI Holding Corporation
206 Days Inn - Bangor, ME Diamond Properties, Inc.
207 Stratford Shopping Center Robert Mark Associates
208 Country Aire Manor Owner Managed
209 Corlett Creek Apartments Mid-America Management Corp.
210 Anchor Bay Apartments Ivanhoe Investment Limited Partnership
211 Tall Pines Shopping Center Stanaland Realty Company
212 Skyline Professional Building Owner Managed
213 Southwood Acres MHP Owner Managed
214 Nalbert Apartments Owner Managed
215 1220 South University Avenue Suburban Campus Properties Inc.
216 49 Commerce Drive / 81 Ethan Allen Drive K.P.S. Management L.L.C.
217 3211 Battleground Kotis Properties, Inc.
218 Gardner Building Ashley North Avenue, Inc.
219 778 Main Street MacBride Management, Inc.
<CAPTION>
# Property Name Address
------- ------------- -------
<S> <C>
147 Rite-Aid of Maine, Inc. (5) 37 Portland Street--U.S. Route 1
148 Stuart Towne Apartments 1901 Old Shell Road
149 Santa Ana Villa 2204 North Peach Avenue
150 Orland Park Outlots 9310-9396 159th Street
151 Brazos Square Shopping Center 120 State Highway 332
152 Community Mall Route 37 West
153 Comfort Inn - Fife, WA 5601 Pacific Highway East
154 Aspen Business Center 9942 and 9934 N. Alpine Road
155 Hampton Inn - Ft. Pierce, FL 2831 Reynolds Drive
156 Oak Tree Mobile Home Park 565 Diamond Road
157 Walnut Square Apartments 1440 Linden Road
158 Royal Oaks Mobile Home Park 4069 South Pacific Highway
159 Plymouth Square Apartments 9421 Marguerite Road
160 Watchung View Apartments 650 Somerset Avenue
161 Embassy Apartments 4, 20, 34, 42 & 45 Embassy Square
162 Best Buy - West Dundee 979 Main Street
163 1400 Destrehan Avenue 1400 Destrehan Avenue
164 Breckenridge Condominiums 1701 Big Sur Drive
165 Rosemont Terrace Apartments 3690 South Port Drive
166 Days Inn - Dover, DE 272 North Dupont Highway
167 Iberia Center 16588 Bernardo Center Drive
168 Shadydale Village Mobile Home Park 100 Apollo Avenue
169 Park Terrace Shopping Center 2223 NC Highway 54
170 Hanover Village Apartments S/W/S of Division Street
171 Travelodge Hotel--Seatac 14845 Pacific Highway South
172 Harlem Furniture 2575 N. Elston Avenue
173 Tree Tops Apartments 3421 Old Vineyard Road
174 Old Town Place Apartments 1506 School Road
175 The Meadows Apartments 10108 Malaga Way
176 Chapman & Feldner Shopping Center 1708-1724 West Chapman Avenue
177 BCH Office Building 1717 Second St & 1722 Third St
178 Colonial Pines Mobile Estates 2101 Colonial Avenue
179 NationsBank Professional Center 8181 W. Broward Blvd.
180 Belmeade Office Park 2910 Belmeade, 2410 & 2420 Tarpley Road
181 Central Building 245 Main Street
182 710 Amsterdam Avenue 710 Amsterdam Avenue
183 Sandstone Apartments & Vista North Apartments 1502 and 1616 Calle Del Norte
184 Highland Park Place Shopping Center 14461-14529 Woodward Avenue
185 Salem Creek Apartment Complex 802-803 Flame Circle
186 Country Greens Apartments 630 Stevens Village Drive
187 Sahara West Plaza 4601 West Sahara Avenue
188 Walgreen's 2690 Mission Street
189 Econolodge - Bangor, ME 327 Odlin Road
190 Comfort Inn - Bangor, ME 750 Hogan Road
191 Point Clinton 186 Center Street
192 Rite-Aid Pharmacy 1623 White Mountain Highway - Routes 16 & 302
193 Taft and Cleveland Paradise Apartments 2545 Taft Street & 1720 Cleveland Street
194 Tyrone Village MHP 13618 North Florida Avenue
195 Steamboat Road 702-708 Steamboat Road
196 Kerr Station Village S. Kerr Ave. & Franklin
197 Meadow Run Apartments 3301 Abbeville Highway
198 45 Church Street 45 Church Street
199 New Brunswick Apartments 119 Livingston Ave.
200 Fiesta RV Resort 46421 Madison Street
201 Cedar Place Office Park 813 East 86th Street
202 Oak Hollow Mobile Home Park 2746 North Oak Harbor Drive
203 Centerline Plaza Apartments 25005 Lawrence Street
204 Southport Place 30 Jelliff Lane
205 Bell Building 424 S. 5th Street
206 Days Inn - Bangor, ME 250 Odlin Road
207 Stratford Shopping Center 2541 South White Horse Pike
208 Country Aire Manor 17102 Meridian Street East
209 Corlett Creek Apartments 1105 N. Chipman St.
210 Anchor Bay Apartments 50620 Jefferson Road
211 Tall Pines Shopping Center 905-911 Pine Crest Drive
212 Skyline Professional Building 12940 Harriet Avenue South
213 Southwood Acres MHP Irish Hill Road & Lexington Mill Road
214 Nalbert Apartments 1301, 1315, 1317 and 1319 Ft. Meyer Drive
215 1220 South University Avenue 1220 South University Avenue
216 49 Commerce Drive / 81 Ethan Allen Drive 49 Commerce Dr. & 81 Ethan Allen Drive
217 3211 Battleground 3211 Battleground Avenue
218 Gardner Building 17-19 Gardner Road
219 778 Main Street 778 Main Street
<CAPTION>
Zip
# Property Name City County State Code
----- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) Kennebunk York ME 04043
148 Stuart Towne Apartments Port Royal Beaufort SC 29935
149 Santa Ana Villa Clovis Fresno CA 93612
150 Orland Park Outlots Orland Park Cook IL 60462
151 Brazos Square Shopping Center Lake Jackson Brazoria TX 77566
152 Community Mall Toms River Ocean NJ 08753
153 Comfort Inn - Fife, WA Fife Pierce WA 98424
154 Aspen Business Center Machesney Park Winnebago IL 60115
155 Hampton Inn - Ft. Pierce, FL Ft. Pierce St. Lucie FL 34945
156 Oak Tree Mobile Home Park Jackson Township Ocean NJ 08527
157 Walnut Square Apartments Flint Genesee MI 48532
158 Royal Oaks Mobile Home Park Medford Jackson OR 97051
159 Plymouth Square Apartments Plymouth Township Wayne MI 48170
160 Watchung View Apartments North Plainfield Somerset NJ 07060
161 Embassy Apartments Tonawanda Erie NY 14150
162 Best Buy - West Dundee West Dundee Kane IL 60118
163 1400 Destrehan Avenue Harvey Jefferson LA 70058
164 Breckenridge Condominiums Arlington Tarrant TX 75007
165 Rosemont Terrace Apartments Rancho Cordova Sacramento CA 95670
166 Days Inn - Dover, DE Dover Kent DE 19901
167 Iberia Center San Diego San Diego CA 92128
168 Shadydale Village Mobile Home Park Fayetteville Fayette GA 30214
169 Park Terrace Shopping Center Durham Durham NC 27713
170 Hanover Village Apartments Hanover Township Luzerne PA 18702
171 Travelodge Hotel--Seatac Tukwila King WA 98168
172 Harlem Furniture Chicago Cook IL 60606
173 Tree Tops Apartments Winston-Salem Forsyth NC 27103
174 Old Town Place Apartments Carrollton Dallas TX 75006
175 The Meadows Apartments Rancho Cordova Sacramento CA 95670
176 Chapman & Feldner Shopping Center Orange Orange CA 92668
177 BCH Office Building Sacramento Sacramento CA 95814
178 Colonial Pines Mobile Estates Navarre Santa Rosa FL 32566
179 NationsBank Professional Center Plantation Broward FL 33324
180 Belmeade Office Park Carrollton Dallas TX 75006
181 Central Building Salinas Monterey CA 93901
182 710 Amsterdam Avenue New York New York NY 10025
183 Sandstone Apartments &
Vista North Apartments Laredo Webb TX 78041
184 Highland Park Place Shopping Center Highland Park Wayne MI 48203
185 Salem Creek Apartment Complex San Antonio Bexar TX 78221
186 Country Greens Apartments Dallas Dallas TX 75208
187 Sahara West Plaza Las Vegas Clark NV 89108
188 Walgreen's San Francisco San Francisco CA 94110
189 Econolodge - Bangor, ME Bangor Penobscot ME 04401
190 Comfort Inn - Bangor, ME Bangor Penobscot ME 04401
191 Point Clinton Clinton Hunterdon NJ 08809
192 Rite-Aid Pharmacy Conway Carroll NH 03818
193 Taft and Cleveland Paradise Apartments Hollywood Broward FL 33020
194 Tyrone Village MHP Tampa Hillsborough FL 33613
195 Steamboat Road Greenwich Fairfield CT 06830
196 Kerr Station Village Wilmington New Hanover NC 28402
197 Meadow Run Apartments Anderson Anderson SC 29624
198 45 Church Street Stamford Fairfield CT 06906
199 New Brunswick Apartments New Brunswick Middlesex NJ 13760
200 Fiesta RV Resort Indio Riverside CA 92201
201 Cedar Place Office Park Indianapolis Marion IN 46240
202 Oak Hollow Mobile Home Park Oak Harbor Island WA 98277
203 Centerline Plaza Apartments Warren Macomb MI 48091
204 Southport Place Southport Fairfield CT 06490
205 Bell Building Springfield Sangamon IL 62701
206 Days Inn - Bangor, ME Bangor Penobscot ME 04401
207 Stratford Shopping Center Stratford Camden NJ 08084
208 Country Aire Manor Puyallup Pierce WA 98375
209 Corlett Creek Apartments Owosso Shiawassee MI 48867
210 Anchor Bay Apartments New Baltimore Macomb MI 48047
211 Tall Pines Shopping Center Marshall Harrison TX 75670
212 Skyline Professional Building Burnsville Dakota MN 55337
213 Southwood Acres MHP Magnolia Kent DE 19962
214 Nalbert Apartments Arlington Arlington VA 22209
215 1220 South University Avenue Ann Arbor Washtenaw MI 48104
216 49 Commerce Drive / 81 Ethan Allen Drive South Burlington Chittenden VT 05403
217 3211 Battleground Greensboro Guilford NC 27408
218 Gardner Building Fairfield Essex NJ 07004
219 778 Main Street South Portland Cumberland ME 04106
</TABLE>
<PAGE>
Managers and Locations of the Mortgaged Properties
<TABLE>
<CAPTION>
# Property Name Manager
- ------- ------------- -------
<S> <C>
220 Briarwood Apartments CIH Properties, Inc.
221 Walton Village Shopping Center L.G. Bones, L.L.C.
222 Rancho Santa Fe Shopping Center Realty 2000, Inc.
223 Winston Place Apartments Westmark Management Company
224 Hondo Park Apartments Larry Jennings
225 Allegheny Apartments MJW Investments, Inc.
226 Huntington North Apartments Owner Managed
227 Rite Aid - Yarmouth Owner Managed
228 Sylvan Apartments MJW Investments, Inc.
229 Finger Lakes/Farmington Court Apartments Indus Associates
230 Walnut Villas Apartments Westmark Management Company
231 Portsmouth Place Apartments Portsmouth Housing Authority
232 70 Warren Avenue Owner Managed
233 Martinsville Plaza Owner Managed
234 Route 66 Business World Owner Managed
235 Woodwinds Condominiums Sherron Associates, Inc.
236 College Square Apartments National Realty Management, Inc.
237 Car Engineering Building DiFelice B.C. Inc.
238 Executive Townhomes Weeden Management, LLC
239 Hartford Crossing Retail Plaza Capstone Properties Inc.
240 Cypress Plaza Shopping Center Investment Concepts, Inc.
241 Sarasota Place Apartments Owner Managed
242 Clayton Forest Apartments DEL Development Corporation
243 Checker Auto Parts Store Owner Managed
244 Southpointe Center Investment Concepts, Inc.
245 Maple Court Apartments Kamson Corporation
246 Crestwood MHP Owner Managed
247 Hyde Park Place Apartments Eaglestar Group
248 Allen Medical Office Building Swearingen Realty Group
249 Canyon View Offices Owner Managed
250 Firehouse Square Key Investment Properties, Inc.
251 Plymouth Place Plaza Plymouth Plaza Investors, LLC
252 Meridian Mobile Estates Owner Managed
253 Country Mobile Estates Owner Managed
254 Village Apartments Owner Managed
255 Ackels Mobile Home Park Goodman/Maple Management Associates
256 Redford Manor Apartments Cormorant Company, Inc.
257 Doms Business Park Owner Managed
258 Bradfield Creek Townhomes Owner Managed
259 San Remo Apartments Burlington Ventures, Inc.
260 Consolidated Printing Owner Managed
261 Knightsbridge Apartments Habitat America, LLC
262 Whispering Meadows California Property Management Inc.
263 Buckingham Court Apartments Owner Managed
264 Homestead Apartments Westmark Management Company
265 4th Avenue West Estates Owner Managed
266 Treaty Oaks Apartments United Management Services Inc.
267 Wilshire Estates MHP VSOP, Inc.
268 Hollywood Video Owner Managed
269 5 Milk Street Fore River Company
270 Cardi Building DiFelice B.C. Inc.
271 Boulevard of Chevy Chase Apartments Town & Country Investments, LLC
272 10 McKinley Street B & B Realty, LLC
273 Londonaire Townhouses Vinod K. Luthra
274 Heon Court Apartments Theresa Dube
275 One Cameron Place Shopping Center British American Cattle Company
276 197 U.S. Route One Owner Managed
277 980 Forest Avenue Owner Managed
278 Chandler Crossing Apartments Cascavilla Properties
279 Kingswood Place Apartments Alori Properties
280 4525-4535 McEwen Road Owner Managed
281 Doms Metroplex Park EED Enterprises
282 Baxter Mills Apartments Owner Managed
283 Seven Eleven Mosbacher Properties, Inc.
284 3314 Mount Pleasant Apartments Owner Managed
285 Virginia Apartments Owner Managed
286 Pagewood Oval Apartments Lannan Company, Inc.
287 Creekview Condominiums Owner Managed
288 Park Hill Apartments Bhoopinder S. Mehta
289 Amherst Gardens Owner Managed
290 Arlington Arms Apartments Arlington Arms LLC
291 Barstow Plaza Owner Managed
292 Fleur de Lis Apartments Owner Managed
<CAPTION>
# Property Name Address
------- ------------- -------
<S> <C> <C>
220 Briarwood Apartments 3500 Briarwood Drive
221 Walton Village Shopping Center 3021-3095 Walton Boulevard
222 Rancho Santa Fe Shopping Center 5081 North Rainbow Boulevard
223 Winston Place Apartments 3108 Winston Place
224 Hondo Park Apartments 2544 Hondo Avenue
225 Allegheny Apartments 12001-12021 Allegheny Street
226 Huntington North Apartments 298-326 Auburn Street
227 Rite Aid- Yarmouth US Route 1
228 Sylvan Apartments 13727-13749 Sylvan Street
229 Finger Lakes/Farmington Court Apartments 1214 Mertensia Road
230 Walnut Villas Apartments 1027 East Florence Avenue
231 Portsmouth Place Apartments 263 Rockland Avenue
232 70 Warren Avenue 70 Warren Avenue
233 Martinsville Plaza 1966 Washington Valley Road
234 Route 66 Business World 7215 New Market Court
235 Woodwinds Condominiums 3947 Pleasant Run Road
236 College Square Apartments 6210-6220 South 51st Street
237 Car Engineering Building 51 Victor Heights Parkway
238 Executive Townhomes 2501 N. Bishop Street
239 Hartford Crossing Retail Plaza 550 Hartford Avenue
240 Cypress Plaza Shopping Center 9801-9969 Walker Street & 5481 Ball Road
241 Sarasota Place Apartments 4815-4845 Bradenton Road
242 Clayton Forest Apartments 4711 Waldrop Drive
243 Checker Auto Parts Store 911 North Circle Drive / 1005 West
Highway 50
244 Southpointe Center 24021 Alessandro Boulevard
245 Maple Court Apartments 25 Teaneck Road
246 Crestwood MHP 4404 Ruddell Road SE
247 Hyde Park Place Apartments 3627 Gillham Road
248 Allen Medical Office Building 515 W. Main Street
249 Canyon View Offices 21308 Pathfinder Road
250 Firehouse Square 602/620 Auburn Way South
251 Plymouth Place Plaza 34706-34730 Plymouth Road
252 Meridian Mobile Estates 202 27th Avenue SE
253 Country Mobile Estates 16308 B Street East
254 Village Apartments 2458 Westgate Drive
255 Ackels Mobile Home Park 25151 Dequindre Road
256 Redford Manor Apartments 27000 Joy Road
257 Doms Business Park 41995 Boardwalk
258 Bradfield Creek Townhomes 2122 Woodnote
259 San Remo Apartments 2204 San Gabriel Street
260 Consolidated Printing 1301-B Governor Court
261 Knightsbridge Apartments 5906-5912 Park Heights Avenue
262 Whispering Meadows 640-660 South Porter Street
263 Buckingham Court Apartments 3524 Buckingham Road
264 Homestead Apartments 5401 56th Street
265 4th Avenue West Estates 11100 4th Avenue West
266 Treaty Oaks Apartments 3700 Manchaca Road
267 Wilshire Estates MHP 228 Billy Avenue
268 Hollywood Video 6473 Niles Street
269 5 Milk Street 5 Milk Street
270 Cardi Building 833 Phillips Road
271 Boulevard of Chevy Chase Apartments 4733 Bradley Boulevard
272 10 McKinley Street 10 McKinley Street
273 Londonaire Townhouses 6119 Strauss Road
274 Heon Court Apartments 109-111 Allds Street
275 One Cameron Place Shopping Center 7901 Cameron Road
276 197 U.S. Route One 197 US Route 1
277 980 Forest Avenue 980 Forest Avenue
278 Chandler Crossing Apartments 809 N. Broad
279 Kingswood Place Apartments 4318 Bull Creek Road
280 4525-4535 McEwen Road 4525-4535 McEwen Road
281 Doms Metroplex Park 72-096 Dunham Way
282 Baxter Mills Apartments 80 Buffumsville Road
283 Seven Eleven 112-05/11 Liberty Avenue
284 3314 Mount Pleasant Apartments 3314 Mount Pleasant
285 Virginia Apartments 2010 Betty Lane
286 Pagewood Oval Apartments 6 Page Road
287 Creekview Condominiums 1601 Beltline Road
288 Park Hill Apartments 250 Johnson Street
289 Amherst Gardens 464 Boston Post Road
290 Arlington Arms Apartments 18 1/2 Arlington Street
291 Barstow Plaza 1303-1311 E. Main Street
292 Fleur de Lis Apartments 100 South Williams Street
<CAPTION>
Zip
# Property Name City County State Code
----- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C>
220 Briarwood Apartments Dumfries Prince William VA 22026
221 Walton Village Shopping Center Auburn Hills Oakland MI 48321
222 Rancho Santa Fe Shopping Center Las Vegas Clark NV 89103
223 Winston Place Apartments Manhattan Riley KS 66502
224 Hondo Park Apartments Dallas Dallas TX 75219
225 Allegheny Apartments Sun Valley Los Angeles CA 91352
226 Huntington North Apartments Portland Cumberland ME 04102
227 Rite Aid - Yarmouth Yarmouth Cumberland ME 04096
228 Sylvan Apartments Los Angeles Los Angeles CA 91401
229 Finger Lakes/Farmington Court Apartments Farmington Ontario NY 14425
230 Walnut Villas Apartments Vineland Cumberland NJ 08360
231 Portsmouth Place Apartments Portsmouth Rockingham NH 03101
232 70 Warren Avenue Chelsea Suffolk MA 01250
233 Martinsville Plaza Martinsville Somerset NJ 08836
234 Route 66 Business World Manassas Prince George's VA 22110
235 Woodwinds Condominiums Irving Dallas TX 75038
236 College Square Apartments Greendale Milwaukee WI 53129
237 Car Engineering Building Victor Ontario NY 14564
238 Executive Townhomes San Marcos Hays TX 78666
239 Hartford Crossing Retail Plaza Providence Providence RI 02903
240 Cypress Plaza Shopping Center Cypress Orange CA 90630
241 Sarasota Place Apartments Sarasota Sarasota FL 34234
242 Clayton Forest Apartments Forest Park Clayton GA 30297
243 Checker Auto Parts Store Colorado Springs/Pueblo El Paso and Pueblo C Various
244 Southpointe Center Moreno Valley Riverside CA 92553
245 Maple Court Apartments Ridgefield Park Bergen NJ 07660
246 Crestwood MHP Lacey Thurston WA 98503
247 Hyde Park Place Apartments Kansas City Jackson MO 64111
248 Allen Medical Office Building Allen Collin TX 75013
249 Canyon View Offices Diamond Bar Los Angeles CA 91765
250 Firehouse Square Auburn King WA 98002
251 Plymouth Place Plaza Livonia Wayne MI 48150
252 Meridian Mobile Estates Puyallup Pierce WA 98374
253 Country Mobile Estates Spanaway Pierce WA 98445
254 Village Apartments Commerce Hunt TX 75148
255 Ackels Mobile Home Park Madison Heights Oakland MI 48071
256 Redford Manor Apartments Redford Wayne MI 48239
257 Doms Business Park Palm Desert Riverside CA 92211
258 Bradfield Creek Townhomes Garland Dallas TX 75040
259 San Remo Apartments Austin Travis TX 78705
260 Consolidated Printing Abingdon Harford MD 21040
261 Knightsbridge Apartments Baltimore Baltimore MD 21215
262 Whispering Meadows Manchester Hillsborough NH 03103
263 Buckingham Court Apartments Garland Dallas TX 75042
264 Homestead Apartments Lubbock Lubbock TX 79414
265 4th Avenue West Estates Everett Snohomish WA 98204
266 Treaty Oaks Apartments Austin Travis TX 78704
267 Wilshire Estates MHP Warner Robins Houston GA 31093
268 Hollywood Video Bakersfield Kern CA 93301
269 5 Milk Street Portland Cumberland ME 04112
270 Cardi Building Victor Ontario NY 14564
271 Boulevard of Chevy Chase Apartments Bethesda Montgomery MD 20815
272 10 McKinley Street Closter Bergen NJ 07624
273 Londonaire Townhouses Lockport Niagara NY 14094
274 Heon Court Apartments Nashua Hillsborough NH 03060
275 One Cameron Place Shopping Center Austin Travis TX 78753
276 197 U.S. Route One Scarborough Cumberland ME 04074
277 980 Forest Avenue Portland Cumberland ME 04103
278 Chandler Crossing Apartments Chandler Henderson TX 75758
279 Kingswood Place Apartments Austin Travis TX 78731
280 4525-4535 McEwen Road Farmers Branch Dallas TX 75244
281 Doms Metroplex Park Thousand Palms Riverside CA 92211
282 Baxter Mills Apartments Somersworth Strafford NH 03878
283 Seven Eleven Ozone Park Queens NY 11419
284 3314 Mount Pleasant Apartments Washington Lucas DC 20010
285 Virginia Apartments Richmond Henrico VA 23226
286 Pagewood Oval Apartments Litchfield Hillsborough NH 03052
287 Creekview Condominiums Garland Dallas TX 75044
288 Park Hill Apartments Palmyra Wayne NY 14522
289 Amherst Gardens Amherst Hillsborough NH 03031
290 Arlington Arms Apartments Nashua Hillsborough NH 03060
291 Barstow Plaza Barstow San Bernardino CA 92311
292 Fleur de Lis Apartments Natchitoches Natchitoches LA 71457
</TABLE>
<PAGE>
Managers and Locations of the Mortgaged Properties
<TABLE>
<CAPTION>
# Property Name Manager
- ------- ------------- -------
<S> <C>
293 2602 Penny Lane 213 West 4th St. Partners G.P.
294 3246 Navarre Avenue Tom Helberg (husband of 50% of borrower)
295 Tara Apartments Owner Managed
296 Mark V Apartments 213 West 4th St. Partners G.P.
297 Hallmark Apartments Alori Properties Management
298 Mirage Apartments Kit Lane Condominiums
299 Main Street Studios Owner Managed
300 Summertree Apartments Bobby R. Collins
301 Prestige State Bank West Clinton Associates LLC
302 Masonic Temple Radhey Khanna
<CAPTION>
# Property Name Address
------- ------------- -------
<S> <C>
293 2602 Penny Lane 2602 Penny Lane
294 3246 Navarre Avenue 3246 Navarre Avenue
295 Tara Apartments 65 Lambert Street
296 Mark V Apartments 3914 Avenue D
297 Hallmark Apartments 710 W. 34th Street
298 Mirage Apartments 13343 Maham Road
299 Main Street Studios 4311 Main Street
300 Summertree Apartments 312 Second Street
301 Prestige State Bank 92 Old Highway 22 (SR 173)
302 Masonic Temple 90 Washington Street
<CAPTION>
Zip
# Property Name City County State Code
----- ------------- ---- ------ ----- ----
<S> <C> <C> <C> <C>
293 2602 Penny Lane Austin Travis TX 78757
294 3246 Navarre Avenue Oregon Lucas OH 43616
295 Tara Apartments Portland Cumberland ME 04102
296 Mark V Apartments Austin Travis TX 78751
297 Hallmark Apartments Austin Travis TX 78703
298 Mirage Apartments Dallas Dallas TX 75240
299 Main Street Studios Dallas Dallas TX 75226
300 Summertree Apartments Natchitoches Natchitoches LA 71457
301 Prestige State Bank Clinton Hunterdon NJ 08809
302 Masonic Temple Dover Strafford NH 03840
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building #
21, 507 Plum Street, Zanesville, Northeast Industrial Building # 8,
Northeast Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville
and One Clinton Square, respectively, are cross-collateralized and
cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The
Edwards Center at Rancho Niguel, respectively, are cross-collateralized
and cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office
Center, Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and
Maplewood Mobile Estates, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Run in Foods DP #4, Run in Foods Unit DP
#7, Run in Foods #401, Run in Foods #406, Run in Foods #402, Run in
Foods #403, Run in Foods #404, Run in Foods Unit #410, respectively,
are cross-collateralized and cross-defaulted. The appraised value of each
such Mortgage Loan includes as estimated enterprise value and an
appraised real estate value. The aggregate of the appraised real estate
values (including FF&E) of such Mortgage Loans is $12,240,000.
(1G) The Mortgage Loans secured by Super 8-Midtown, Super 8-East and Super
8-West, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa
Business Park, respectively, are cross-collateralized and
cross-defaulted.
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336
months with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July
2008. The Underwritten DSCR presented herein with respect to the
mortgage loan is based on the monthly payment in effect as of December 1,
1998.
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Sq. Ft./
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Pads Leasehold Built
- ----------------- ------------- ---- --------- -----
<S> <C> <C> <C> <C>
1 Chanin Building Office 848,562 Leasehold 1929
2 250 South Clinton Street (1A) Office 182,446 Fee/Leasehold 1991
3 GATX Warehouse (1A) Industrial 655,500 Fee 1972
4 1001 and 1011 Airport Industrial Park (1A) Industrial 284,262 Fee 1991
5 Northeast Industrial Park Building # 21 (1A) Industrial 100,000 Fee 1988
6 507 Plum Street (1A) Office 71,449 Fee/Leasehold 1991
7 Zanesville (1A) Industrial 300,000 Fee 1992
8 Northeast Industrial Park Building # 8 (1A) Industrial 192,645 Fee 1947
9 Northeast Industrial Park Building # 22 (1A) Industrial 104,000 Fee 1989
10 4, 5 & 8 Marway Circle (1A) Industrial 171,155 Fee 1975
11 Marysville (1A) Industrial 133,500 Fee 1987
12 One Clinton Square (1A) Office 39,610 Fee 1875
13 The Center at Rancho Niguel (1B) Retail 120,867 Fee 1988
14 The Edwards Center at Rancho Niguel (1B) Retail 35,600 Fee 1988
15 Rivertree Court Shopping Center (1C) Retail 299,055 Fee 1988
16 Woodland Heights Shopping Center (1C) Retail 120,436 Fee 1956
17 Winnetka Commons Shopping Center (1C) Retail 42,415 Fee 1990
18 Berwyn Plaza Shopping Center (1C) Retail 18,138 Fee 1983
19 Walgreen's Store (1C) Retail 15,856 Fee 1956
20 Heritage Pointe Multifamily 924 Fee 1973
21 Best Western Inn of Chicago Hotel 358 Fee 1929
22 Christiana Hilton Inn - Newark, DE Hotel 266 Fee 1986
23 Embassy Crossing (2) Retail 336,777 Fee 1987
24 Jefferson at Treetops Apartments Multifamily 240 Fee 1996
25 Dominion Tower & Parking Garage Mixed Use 209,313 Fee 1968
26 Holiday Inn Hurstbourne Hotel 267 Fee 1968
27 Blue Ash Portfolio (1D) Mixed Use 232,526 Fee 1980
28 Springdale Office Center (1D) Office 88,040 Fee 1973
29 Executive Center East (1D) Office 25,260 Fee 1973
30 McDonald's (1D) Retail 4,575 Fee 1993
31 11 Park Place Office 189,530 Fee 1927
32 Twin Creek Apartments Multifamily 240 Fee 1986
33 Storage Box / Stowaway Storage (1E) Self Storage 148,992 Fee 1983
34 Maplewood Mobile Estates (1E) Manufactured Housing 268 Fee 1972
35 Corporate Office Park Office 184,844 Fee 1985
36 Knights Bridge II Apartments Multifamily 208 Fee 1985
37 Preston Stonebrooke Shopping Center Retail 61,853 Fee 1997
38 Run in Foods DP #4 (1F) Convenience Store 11,163 Fee 1988
39 Run in Foods DP #7 (1F) Convenience Store 12,069 Fee 1990
40 Run in Foods #401 (1F) Convenience Store 6,837 Fee 1988
41 Run in Foods #406 (1F) Convenience Store 5,106 Fee 1988
42 Run in Foods #402 (1F) Convenience Store 9,292 Fee 1984
43 Run in Foods #403 (1F) Convenience Store 3,912 Fee 1985
44 Run in Foods #404 (1F) Convenience Store 3,963 Fee 1976
45 Run in Foods #410 (1F) Convenience Store 3,825 Leasehold 1986
46 Super 8-Midtown (1G) Hotel 243 Fee 1985
47 Super 8-East (1G) Hotel 100 Fee 1996
48 Super 8-West (1G) Hotel 98 Fee 1990
49 Wellington Woods & Lakes Multifamily 274 Fee 1972
50 Hampton Inn - Indianapolis, IN Hotel 180 Fee 1929
51 Chidlaw Building Office 281,561 Fee 1962
52 Grandview Garden Apartments Multifamily 424 Fee 1958
53 Cornerstone Office Park Office 93,633 Fee 1988
54 160 Pine Street Mixed Use 97,436 Fee 1956
55 River Run Apartments Multifamily 284 Fee 1972
56 180 N. Michigan Avenue Office Building Office 210,353 Fee 1927
57 Oak Hills Apartments Multifamily 244 Fee 1983
58 145 Rosemary Street Office 86,269 Fee 1954
59 Holiday Inn - Metroplex-Youngstown, OH Hotel 153 Fee 1973
60 MCOM Building Industrial 172,825 Fee 1997
61 Mayport Trace Apartments Multifamily 203 Fee 1988
62 Mercantile Bank Building Office 109,271 Fee 1969
63 Brook Forest Apartments Multifamily 353 Fee 1969
64 Midfield Shopping Center Retail 166,180 Fee 1977
65 Far East Plaza Retail 46,314 Fee 1979
66 Highland Square Shopping Center Retail 214,550 Fee 1980
67 Spanish Villa Apartments Multifamily 232 Fee 1969
68 Greens Corner Shopping Center (3) Retail 193,467 Fee 1986
69 Mountain Ridge Apartments Multifamily 236 Fee 1987
70 Radisson Suites - Huntsville, AL Hotel 153 Fee 1989
71 Holiday Campground RV Park 650 Fee 1986
72 Plantation Meadows Apartments Multifamily 170 Fee 1973
73 Gresham Townhomes Multifamily 81 Fee 1982
<CAPTION>
Occupancy
Year Rate at Appraised Cut-off Date Maturity/ARD
# Property Name (1) Renovated U/W (6) Value LTV Ratio Balance
- ----------------- --------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
1 Chanin Building 1997 95.0% $ 105,000,000 71.2% $59,863,684
2 250 South Clinton Street (1A) N/A 100.0% 20,700,000 79.9% 14,629,627
3 GATX Warehouse (1A) 1978 100.0% 13,900,000 79.9% 9,823,759
4 1001 and 1011 Airport Industrial Park (1A) N/A 100.0% 9,100,000 79.9% 6,431,381
5 Northeast Industrial Park Building # 21 (1A) N/A 100.0% 6,600,000 79.9% 4,664,518
6 507 Plum Street (1A) N/A 100.0% 6,500,000 79.9% 4,593,845
7 Zanesville (1A) N/A 100.0% 5,750,000 79.9% 4,063,785
8 Northeast Industrial Park Building # 8 (1A) 1992 100.0% 5,400,000 79.9% 3,816,424
9 Northeast Industrial Park Building # 22 (1A) N/A 100.0% 4,600,000 79.9% 3,251,029
10 4, 5 & 8 Marway Circle (1A) N/A 98.0% 4,425,000 79.9% 3,127,348
11 Marysville (1A) N/A 100.0% 2,800,000 79.9% 1,978,888
12 One Clinton Square (1A) 1997 100.0% 2,170,000 77.4% 1,484,166
13 The Center at Rancho Niguel (1B) N/A 100.0% 28,500,000 80.6% 19,864,500
14 The Edwards Center at Rancho Niguel (1B) N/A 100.0% 7,100,000 80.2% 4,922,941
15 Rivertree Court Shopping Center (1C) N/A 99.0% 32,500,000 56.0% 18,190,000
16 Woodland Heights Shopping Center (1C) 1997 86.0% 9,650,000 32.1% 3,100,000
17 Winnetka Commons Shopping Center (1C) N/A 100.0% 4,700,000 50.5% 2,375,000
18 Berwyn Plaza Shopping Center (1C) N/A 100.0% 1,900,000 38.9% 740,000
19 Walgreen's Store (1C) 1985 100.0% 1,200,000 49.6% 595,000
20 Heritage Pointe N/A 96.0% 36,000,000 69.4% 22,223,087
21 Best Western Inn of Chicago 1981 N/A 30,700,000 71.3% 15,218,904
22 Christiana Hilton Inn - Newark, DE 1997 N/A 33,000,000 65.0% 17,190,022
23 Embassy Crossing (2) 1993 97.0% 25,000,000 80.0% 17,773,135
24 Jefferson at Treetops Apartments N/A 93.0% 24,800,000 78.8% 17,009,502
25 Dominion Tower & Parking Garage 1989 100.0% 23,500,000 79.2% 15,121,397
26 Holiday Inn Hurstbourne 1986 N/A 25,000,000 73.6% 14,982,403
27 Blue Ash Portfolio (1D) 1996 95.0% 15,380,000 70.3% 9,458,097
28 Springdale Office Center (1D) N/A 94.0% 5,380,000 69.8% 3,286,206
29 Executive Center East (1D) 1987 97.0% 1,600,000 69.8% 977,310
30 McDonald's (1D) N/A 100.0% 550,000 49.9% 239,964
31 11 Park Place 1991 93.0% 20,500,000 72.9% 13,075,369
32 Twin Creek Apartments N/A 100.0% 16,000,000 79.7% 11,112,768
33 Storage Box / Stowaway Storage (1E) 1995 83.0% 8,300,000 73.9% 4,969,655
34 Maplewood Mobile Estates (1E) N/A 100.0% 7,300,000 79.8% 5,079,080
35 Corporate Office Park 1988 86.0% 14,800,000 75.8% 10,005,169
36 Knights Bridge II Apartments N/A 96.0% 12,200,000 78.8% 8,407,333
37 Preston Stonebrooke Shopping Center N/A 96.0% 11,500,000 77.3% 7,670,702
38 Run in Foods DP #4 (1F) N/A 100.0% 3,630,000 71.0% 1,870,504
39 Run in Foods DP #7 (1F) N/A 100.0% 3,425,000 70.2% 1,744,799
40 Run in Foods #401 (1F) N/A 100.0% 1,250,000 69.8% 633,558
41 Run in Foods #406 (1F) N/A 100.0% 1,220,000 69.7% 617,520
42 Run in Foods #402 (1F) N/A 100.0% 1,100,000 70.4% 561,726
43 Run in Foods #403 (1F) N/A 100.0% 900,000 69.5% 453,977
44 Run in Foods #404 (1F) N/A 100.0% 620,000 70.8% 318,827
45 Run in Foods #410 (1F) N/A 100.0% 95,000 70.3% 48,468
46 Super 8-Midtown (1G) 1994 N/A 10,350,000 55.8% 188,290
47 Super 8-East (1G) N/A N/A 2,900,000 55.0% 51,944
48 Super 8-West (1G) N/A N/A 3,100,000 38.6% 38,955
49 Wellington Woods & Lakes 1997 92.0% 11,200,000 72.9% 7,148,961
50 Hampton Inn Indianapolis, IN 1996 N/A 13,500,000 59.3% 6,505,515
51 Chidlaw Building 1995 82.0% 11,350,000 70.3% 7,007,541
52 Grandview Garden Apartments 1997 96.0% 9,775,000 79.1% 5,906,938
53 Cornerstone Office Park 1996 92.0% 9,600,000 78.1% 6,514,679
54 160 Pine Street 1987 97.0% 17,000,000 44.0% 6,577,119
55 River Run Apartments 1997 92.0% 9,450,000 79.0% 6,538,684
56 180 N. Michigan Avenue Office Building 1985 95.0% 9,500,000 76.6% 6,389,370
57 Oak Hills Apartments N/A 96.0% 9,200,000 78.2% 6,803,982
58 145 Rosemary Street 1995 100.0% 9,600,000 72.7% 5,593,252
59 Holiday Inn - Metroplex-Youngstown, OH 1990 N/A 10,100,000 69.1% 5,690,823
60 MCOM Building N/A 100.0% 9,515,000 71.9% 0
61 Mayport Trace Apartments N/A 93.0% 9,140,000 74.3% 5,926,475
62 Mercantile Bank Building 1992 96.0% 9,250,000 73.3% 5,451,374
63 Brook Forest Apartments N/A 89.0% 11,300,000 58.2% 5,772,149
64 Midfield Shopping Center N/A 89.0% 8,200,000 79.1% 5,614,614
65 Far East Plaza N/A 94.0% 9,080,000 71.4% 4,078,268
66 Highland Square Shopping Center N/A 100.0% 10,900,000 58.1% 5,132,116
67 Spanish Villa Apartments 1998 99.0% 8,400,000 74.8% 0
68 Greens Corner Shopping Center (3) N/A 90.0% 7,850,000 79.5% 5,576,306
69 Mountain Ridge Apartments 1993 94.0% 7,790,000 79.3% 5,428,815
70 Radisson Suites - Huntsville, AL N/A N/A 9,500,000 63.3% 105,492
71 Holiday Campground 1987 76.0% 8,510,000 70.3% 5,299,845
72 Plantation Meadows Apartments 1990 99.0% 7,300,000 79.9% 5,082,306
73 Gresham Townhomes N/A 98.0% 7,200,000 78.1% 4,911,334
<CAPTION>
Maturity/ARD U/W U/W
# Property Name (1) LTV Ratio (7) NCF (8) DSCR (9)
- ----------------- ------------- ------- -------
<S> <C> <C> <C>
1 Chanin Building 57.0% $ 8,387,294 1.33x
2 250 South Clinton Street (1A) 70.7% 2,093,634 1.51
3 GATX Warehouse (1A) 70.7% 1,324,630 1.42
4 1001 and 1011 Airport Industrial Park (1A) 70.7% 813,025 1.33
5 Northeast Industrial Park Building # 21 (1A) 70.7% 650,172 1.47
6 507 Plum Street (1A) 70.7% 668,968 1.53
7 Zanesville (1A) 70.7% 477,390 1.24
8 Northeast Industrial Park Building # 8 (1A) 70.7% 524,124 1.45
9 Northeast Industrial Park Building # 22 (1A) 70.7% 430,785 1.40
10 4, 5 & 8 Marway Circle (1A) 70.7% 418,896 1.41
11 Marysville (1A) 70.7% 270,593 1.44
12 One Clinton Square (1A) 68.4% 170,590 1.21
13 The Center at Rancho Niguel (1B) 69.7% 2,387,689 1.35
14 The Edwards Center at Rancho Niguel (1B) 69.3% 611,938 1.40
15 Rivertree Court Shopping Center (1C) 56.0% 2,935,214 2.23
16 Woodland Heights Shopping Center (1C) 32.1% 516,533 2.30
17 Winnetka Commons Shopping Center (1C) 50.5% 394,135 2.29
18 Berwyn Plaza Shopping Center (1C) 38.9% 123,043 2.30
19 Walgreen's Store (1C) 49.6% 98,931 2.30
20 Heritage Pointe 61.7% 3,450,664 1.61
21 Best Western Inn of Chicago 49.6% 3,279,579 1.55
22 Christiana Hilton Inn - Newark, DE 52.1% 3,251,846 1.79
23 Embassy Crossing (2) 71.1% 2,239,065 1.36
24 Jefferson at Treetops Apartments 68.6% 2,044,305 1.33
25 Dominion Tower & Parking Garage 64.3% 2,117,226 1.29
26 Holiday Inn Hurstbourne 59.9% 2,536,354 1.56
27 Blue Ash Portfolio (1D) 61.5% 1,292,436 1.49
28 Springdale Office Center (1D) 61.1% 558,353 1.85
29 Executive Center East (1D) 61.1% 161,426 1.80
30 McDonald's (1D) 43.6% 38,933 1.77
31 11 Park Place 63.8% 1,592,867 1.33
32 Twin Creek Apartments 69.5% 1,293,138 1.29
33 Storage Box / Stowaway Storage (1E) 59.9% 725,163 1.35
34 Maplewood Mobile Estates (1E) 69.6% 601,539 1.30
35 Corporate Office Park 67.6% 1,214,662 1.27
36 Knights Bridge II Apartments 68.9% 1,004,695 1.31
37 Preston Stonebrooke Shopping Center 66.7% 950,413 1.40
38 Run in Foods DP #4 (1F) 51.5% 412,783 1.52
39 Run in Foods DP #7 (1F) 50.9% 385,173 1.52
40 Run in Foods #401 (1F) 50.7% 139,435 1.52
41 Run in Foods #406 (1F) 50.6% 136,676 1.52
42 Run in Foods #402 (1F) 51.1% 124,248 1.52
43 Run in Foods #403 (1F) 50.4% 100,780 1.53
44 Run in Foods #404 (1F) 51.4% 70,467 1.52
45 Run in Foods #410 (1F) 51.0% 11,043 1.57
46 Super 8-Midtown (1G) 1.8% 1,035,700 1.92
47 Super 8-East (1G) 1.8% 186,214 1.25
48 Super 8-West (1G) 1.3% 271,737 2.43
49 Wellington Woods & Lakes 63.8% 893,565 1.37
50 Hampton Inn Indianapolis, IN 48.2% 1,192,057 1.70
51 Chidlaw Building 61.7% 890,623 1.37
52 Grandview Garden Apartments 60.4% 903,278 1.47
53 Cornerstone Office Park 67.9% 821,236 1.39
54 160 Pine Street 38.7% 842,920 1.38
55 River Run Apartments 69.2% 818,454 1.37
56 180 N. Michigan Avenue Office Building 67.3% 801,532 1.36
57 Oak Hills Apartments 74.0% 879,980 1.34
58 145 Rosemary Street 58.3% 740,305 1.25
59 Holiday Inn - Metroplex-Youngstown, OH 56.3% 863,480 1.39
60 MCOM Building 0.0% 929,357 1.40
61 Mayport Trace Apartments 64.8% 728,348 1.35
62 Mercantile Bank Building 58.9% 733,973 1.26
63 Brook Forest Apartments 51.1% 766,997 1.44
64 Midfield Shopping Center 68.5% 682,357 1.36
65 Far East Plaza 44.9% 805,777 1.48
66 Highland Square Shopping Center 47.1% 875,698 1.58
67 Spanish Villa Apartments 0.0% 732,501 1.37
68 Greens Corner Shopping Center (3) 71.0% 675,021 1.28
69 Mountain Ridge Apartments 69.7% 724,155 1.44
70 Radisson Suites - Huntsville, AL 1.1% 1,060,022 1.64
71 Holiday Campground 62.3% 709,750 1.41
72 Plantation Meadows Apartments 69.6% 647,710 1.41
73 Gresham Townhomes 68.2% 604,764 1.36
</TABLE>
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Sq. Ft./
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Pads Leasehold Built
- ----------------- ------------- ---- --------- -----
<S> <C> <C> <C> <C>
74 Lakewood Apartments Multifamily 320 Fee 1973
75 Imperial Plaza Shopping Center Retail 125,010 Fee 1977
76 Super 8 - Las Vegas, NV Hotel 290 Fee 1989
77 Thunder Hollow Multifamily 160 Fee 1985
78 K-Mart Montwood Point Retail 102,017 Fee 1990
79 Trabuco Marketplace Retail 24,311 Fee 1989
80 Indian Valley Apartments Multifamily 208 Fee 1968
81 Flamingo West Centre Retail 69,369 Fee 1986
82 Mill Creek Shopping Center Retail 72,471 Fee 1955
83 High Vista Apartments Multifamily 242 Fee 1974
84 Woodland Office Center Office 47,270 Fee 1985
85 Bayfair Apartments Multifamily 135 Fee 1974
86 University Green Apartments Multifamily 194 Fee 1977
87 El Dorado Mobile Home Estates Manufactured Housing 295 Fee 1974
88 Holiday Inn - Danbury, CT Hotel 114 Fee 1974
89 Country Inn & Suites Hotel Hotel 170 Fee 1984
90 Center Ridge Apartments Multifamily 224 Fee 1978
91 The Marriott Building Office 94,586 Fee 1923
92 Silicon Valley Inn Hotel 101 Fee 1975
93 Best Western - Sunnyvale Hotel 88 Fee 1974
94 Golden Valley Commons Retail 37,955 Fee 1996
95 West Park Place Senior Housing 131 Fee 1963
96 Naperville Office Court Office 66,738 Fee 1980
97 Holiday Inn Express Hotel & Suites - Mountain View, CA Hotel 58 Fee 1961
98 Best Buy / Drug Emporium Retail 73,799 Fee 1986
99 Medical Arts Building Office 88,804 Fee 1985
100 Comfort Inn - Sunnyvale Hotel 52 Fee 1989
101 Holiday Inn North Denver Hotel 204 Fee 1967
102 Windlands Shopping Center (4) Retail 106,634 Fee 1975
103 Northborough Woods Apartments Multifamily 240 Fee 1980
104 Madison Building Office 94,554 Leasehold 1966
105 Victory Townhomes Multifamily 45 Fee 1985
106 Dairy Plaza Shopping Center Retail 82,200 Fee 1985
107 Comfort Inn - Concord, NH Hotel 100 Fee 1989
108 Peconic Plaza Mixed Use 38,108 Fee 1972
109 Bayou Village Place Apartments Multifamily 313 Fee 1972
110 Country Suites - Chattanooga, TN Hotel 82 Fee 1994
111 531 West Deming Multifamily 90 Fee 1965
112 Camelot Apartments Multifamily 135 Fee 1967
113 Sevilla Apartments Multifamily 104 Fee 1983
114 The Way III Apartments Multifamily 200 Fee 1974
115 Glenview Office and Industrial Park Industrial 83,672 Fee 1987
116 Hampton Inn - Decatur, AL Hotel 91 Fee 1994
117 Mission Industrial Park (1H) Industrial 100,602 Fee 1955
118 Jurupa Business Park (1H) Industrial 51,014 Fee 1987
119 Colony Square Shopping Center Retail 48,047 Fee 1988
120 Vintage Business Park Office 27,700 Fee 1984
121 Crossroads Shopping Center Retail 44,800 Fee 1997
122 High Country Plaza Retail 20,582 Fee 1987
123 Glencoe Avenue Industrial Industrial 41,030 Fee 1980
124 St. Charles Apartments (1I) Multifamily 42 Fee 1996
125 St. James Apartments (1I) Multifamily 36 Fee 1996
126 Plaza at Sunrise Mixed Use 41,495 Fee 1990
127 Shannon Arms III Apartments Multifamily 80 Fee 1985
128 River Valley Square Shopping Center Retail 36,838 Fee 1991
129 Rio Commercial Center Industrial 105,400 Fee 1980
130 Alexis Apartment Complex Multifamily 94 Fee 1996
131 Beltway Plaza 4710 Office 71,429 Fee 1975
132 Casa Linda MHP Manufactured Housing 107 Fee 1975
133 Mesa Ridge Apartments Multifamily 257 Fee 1970
134 Vintage Business Park II Office 26,657 Leasehold 1985
135 Mountain Village Shopping Center Retail 103,135 Fee 1982
136 Rock River Tower Apartments Multifamily 110 Fee 1964
137 Durango Plaza Retail Center Retail 28,980 Fee 1997
138 Beatrice Avenue Industrial Industrial 44,750 Fee 1971
139 Miller Apartments Multifamily 120 Fee 1971
140 University Square Outlet Mall Retail 48,358 Fee 1983
141 Ridgewood Plaza Retail 36,307 Fee 1997
142 Chase Village Apartments Multifamily 128 Fee 1980
143 Warsaw Village Shopping Center Retail 60,300 Fee 1992
144 Provident Place Office Building Office 40,394 Fee 1986
145 920 S. Waukegan Road Office 19,072 Fee 1991
146 Amberley Suite Hotel Hotel 110 Fee 1986
<CAPTION>
Occupancy
Year Rate at Appraised Cut-off Date Maturity/ARD
# Property Name (1) Renovated U/W (6) Value LTV Ratio Balance
- ----------------- --------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
74 Lakewood Apartments N/A 98.0% 9,300,000 60.0% 4,897,581
75 Imperial Plaza Shopping Center 1998 91.0% 7,100,000 77.9% 4,718,380
76 Super 8 - Las Vegas, NV N/A N/A 13,150,000 40.9% 175,307
77 Thunder Hollow N/A 91.0% 7,100,000 75.7% 4,707,853
78 K-Mart Montwood Point 1992 99.0% 6,750,000 77.4% 136,567
79 Trabuco Marketplace 1992 100.0% 7,300,000 71.1% 3,898,481
80 Indian Valley Apartments 1997 95.0% 7,100,000 73.0% 4,532,151
81 Flamingo West Centre N/A 95.0% 7,700,000 67.3% 4,175,151
82 Mill Creek Shopping Center 1996 99.0% 7,580,000 68.0% 202,379
83 High Vista Apartments N/A 93.0% 6,900,000 73.7% 4,449,075
84 Woodland Office Center N/A 100.0% 8,300,000 61.2% 4,047,667
85 Bayfair Apartments N/A 100.0% 7,000,000 72.6% 4,469,772
86 University Green Apartments 1997 99.0% 6,300,000 79.2% 4,330,787
87 El Dorado Mobile Home Estates N/A 98.0% 10,300,000 48.4% 4,310,147
88 Holiday Inn - Danbury, CT 1997 N/A 7,330,000 67.9% 4,063,215
89 Country Inn & Suites Hotel 1996 N/A 9,600,000 51.8% 87,182
90 Center Ridge Apartments 1996 95.0% 6,320,000 75.9% 4,218,668
91 The Marriott Building 1996 100.0% 7,825,000 61.1% 2,540,588
92 Silicon Valley Inn 1996 N/A 8,550,000 54.9% 3,799,036
93 Best Western - Sunnyvale 1998 N/A 7,800,000 58.9% 3,731,696
94 Golden Valley Commons N/A 97.0% 6,100,000 74.5% 3,486,210
95 West Park Place 1984 95.0% 7,000,000 64.1% 3,579,405
96 Naperville Office Court N/A 99.0% 5,935,000 75.6% 3,939,238
97 Holiday Inn Express Hotel & Suites - Mountain View, CA 1998 N/A 7,000,000 62.6% 160,600
98 Best Buy / Drug Emporium 1993 100.0% 5,680,000 74.1% 3,411,561
99 Medical Arts Building N/A 90.0% 5,200,000 79.6% 3,950,573
100 Comfort Inn - Sunnyvale 1996 N/A 5,900,000 69.4% 3,326,078
101 Holiday Inn North Denver 1980 N/A 9,650,000 42.3% 3,351,385
102 Windlands Shopping Center (4) N/A 98.0% 4,900,000 79.6% 3,478,645
103 Northborough Woods Apartments 1992 98.0% 5,500,000 70.5% 3,400,600
104 Madison Building 1971 81.0% 5,200,000 73.6% 3,101,828
105 Victory Townhomes N/A 100.0% 4,850,000 79.0% 3,357,418
106 Dairy Plaza Shopping Center 1996 98.0% 4,700,000 79.6% 3,021,341
107 Comfort Inn - Concord, NH N/A N/A 5,000,000 74.8% 2,998,261
108 Peconic Plaza 1987 97.0% 4,950,000 74.0% 2,959,795
109 Bayou Village Place Apartments 1990 88.0% 4,900,000 73.4% 3,139,214
110 Country Suites - Chattanooga, TN N/A N/A 5,330,000 66.5% 2,867,391
111 531 West Deming N/A 98.0% 4,800,000 72.8% 3,034,029
112 Camelot Apartments 1987 96.0% 4,300,000 81.1% 3,056,597
113 Sevilla Apartments N/A 92.0% 4,400,000 79.2% 3,054,627
114 The Way III Apartments 1997 99.0% 5,150,000 67.6% 2,216,033
115 Glenview Office and Industrial Park N/A 100.0% 4,500,000 76.8% 2,998,538
116 Hampton Inn - Decatur, AL N/A N/A 5,450,000 62.9% 60,155
117 Mission Industrial Park (1H) 1993 99.0% 2,470,000 74.8% 1,468,223
118 Jurupa Business Park (1H) N/A 87.0% 2,060,000 74.9% 1,354,345
119 Colony Square Shopping Center N/A 100.0% 4,950,000 68.5% 2,739,990
120 Vintage Business Park 1996 94.0% 4,755,000 71.1% 2,735,908
121 Crossroads Shopping Center N/A 100.0% 4,160,000 77.0% 2,057,713
122 High Country Plaza 1993 100.0% 4,350,000 73.5% 2,782,585
123 Glencoe Avenue Industrial 1985 100.0% 4,400,000 72.6% 2,788,188
124 St. Charles Apartments (1I) N/A 100.0% 2,150,000 73.9% 1,075,884
125 St. James Apartments (1I) N/A 100.0% 1,900,000 83.6% 1,075,882
126 Plaza at Sunrise N/A 93.0% 4,875,000 62.3% 2,455,353
127 Shannon Arms III Apartments N/A 100.0% 3,850,000 78.9% 2,664,002
128 River Valley Square Shopping Center N/A 100.0% 3,900,000 76.0% 2,609,039
129 Rio Commercial Center N/A 99.0% 4,040,000 73.1% 2,373,483
130 Alexis Apartment Complex N/A 99.0% 4,111,000 71.5% 2,276,550
131 Beltway Plaza 4710 1988 94.0% 4,000,000 73.0% 2,554,373
132 Casa Linda MHP N/A 98.0% 3,630,000 79.2% 2,528,533
133 Mesa Ridge Apartments 1995 90.0% 3,650,000 77.9% 2,297,778
134 Vintage Business Park II N/A 100.0% 3,833,000 74.2% 2,233,144
135 Mountain Village Shopping Center 1998 100.0% 3,845,000 73.7% 2,289,090
136 Rock River Tower Apartments N/A 93.0% 3,500,000 79.9% 2,401,778
137 Durango Plaza Retail Center N/A 77.0% 4,830,000 57.8% 2,254,702
138 Beatrice Avenue Industrial 1996 100.0% 4,100,000 66.8% 2,220,228
139 Miller Apartments 1978 97.0% 4,150,000 65.4% 2,367,778
140 University Square Outlet Mall N/A 96.0% 4,100,000 65.8% 2,149,604
141 Ridgewood Plaza N/A 65.0% 4,900,000 54.9% 2,361,954
142 Chase Village Apartments N/A 99.0% 3,500,000 76.9% 2,373,393
143 Warsaw Village Shopping Center N/A 100.0% 3,635,000 72.8% 2,086,320
144 Provident Place Office Building N/A 100.0% 3,550,000 74.5% 2,299,687
145 920 S. Waukegan Road N/A 100.0% 3,575,000 73.9% 2,071,651
146 Amberley Suite Hotel 1998 N/A 4,100,000 64.2% 46,208
<CAPTION>
Maturity/ARD U/W U/W
# Property Name (1) LTV Ratio (7) NCF (8) DSCR (9)
- ----------------- ------------- --------- -------
<S> <C> <C> <C>
74 Lakewood Apartments 52.7% 752,027 1.67
75 Imperial Plaza Shopping Center 66.5% 563,328 1.30
76 Super 8 - Las Vegas, NV 1.3% 1,147,400 2.28
77 Thunder Hollow 66.3% 560,489 1.30
78 K-Mart Montwood Point 2.0% 616,502 1.20
79 Trabuco Marketplace 53.4% 582,125 1.47
80 Indian Valley Apartments 63.8% 585,852 1.42
81 Flamingo West Centre 54.2% 804,767 1.81
82 Mill Creek Shopping Center 2.7% 653,397 1.29
83 High Vista Apartments 64.5% 625,704 1.54
84 Woodland Office Center 48.8% 554,375 1.31
85 Bayfair Apartments 63.9% 562,480 1.36
86 University Green Apartments 68.7% 509,363 1.31
87 El Dorado Mobile Home Estates 41.8% 839,709 2.20
88 Holiday Inn - Danbury, CT 55.4% 681,493 1.54
89 Country Inn & Suites Hotel 0.9% 738,031 1.38
90 Center Ridge Apartments 66.8% 531,420 1.36
91 The Marriott Building 32.5% 601,615 1.37
92 Silicon Valley Inn 44.4% 727,234 1.77
93 Best Western - Sunnyvale 47.8% 726,781 1.79
94 Golden Valley Commons 57.2% 480,378 1.32
95 West Park Place 51.1% 577,860 1.54
96 Naperville Office Court 66.4% 546,704 1.50
97 Holiday Inn Express Hotel & Suites - Mountain View, CA 2.3% 673,560 1.60
98 Best Buy / Drug Emporium 60.1% 499,976 1.36
99 Medical Arts Building 76.0% 432,481 1.25
100 Comfort Inn - Sunnyvale 56.4% 611,071 1.69
101 Holiday Inn North Denver 34.7% 485,279 1.31
102 Windlands Shopping Center (4) 71.0% 414,798 1.27
103 Northborough Woods Apartments 61.8% 396,203 1.28
104 Madison Building 59.7% 399,771 1.20
105 Victory Townhomes 69.2% 414,388 1.35
106 Dairy Plaza Shopping Center 64.3% 433,916 1.34
107 Comfort Inn - Concord, NH 60.0% 613,068 1.93
108 Peconic Plaza 59.8% 415,316 1.31
109 Bayou Village Place Apartments 64.1% 410,978 1.43
110 Country Suites - Chattanooga, TN 53.8% 504,628 1.63
111 531 West Deming 63.2% 390,537 1.43
112 Camelot Apartments 71.1% 396,220 1.41
113 Sevilla Apartments 69.4% 358,395 1.28
114 The Way III Apartments 43.0% 476,844 1.60
115 Glenview Office and Industrial Park 66.6% 345,103 1.28
116 Hampton Inn - Decatur, AL 1.1% 531,020 1.44
117 Mission Industrial Park (1H) 59.4% 236,480 1.54
118 Jurupa Business Park (1H) 65.7% 185,326 1.47
119 Colony Square Shopping Center 55.4% 373,469 1.27
120 Vintage Business Park 57.5% 474,225 1.62
121 Crossroads Shopping Center 49.5% 364,317 1.31
122 High Country Plaza 64.0% 376,116 1.49
123 Glencoe Avenue Industrial 63.4% 361,154 1.42
124 St. Charles Apartments (1I) 50.0% 191,952 1.32
125 St. James Apartments (1I) 56.6% 163,167 1.12
126 Plaza at Sunrise 50.4% 423,549 1.61
127 Shannon Arms III Apartments 69.2% 335,465 1.37
128 River Valley Square Shopping Center 66.9% 361,606 1.49
129 Rio Commercial Center 58.7% 339,988 1.35
130 Alexis Apartment Complex 55.4% 327,592 1.37
131 Beltway Plaza 4710 63.9% 375,454 1.60
132 Casa Linda MHP 69.7% 315,848 1.34
133 Mesa Ridge Apartments 63.0% 303,816 1.23
134 Vintage Business Park II 58.3% 348,556 1.53
135 Mountain Village Shopping Center 59.5% 321,965 1.32
136 Rock River Tower Apartments 68.6% 301,933 1.44
137 Durango Plaza Retail Center 46.7% 365,732 1.51
138 Beatrice Avenue Industrial 54.2% 345,962 1.44
139 Miller Apartments 57.1% 282,282 1.30
140 University Square Outlet Mall 52.4% 315,462 1.40
141 Ridgewood Plaza 48.2% 357,430 1.64
142 Chase Village Apartments 67.8% 293,486 1.32
143 Warsaw Village Shopping Center 57.4% 317,284 1.48
144 Provident Place Office Building 64.8% 280,033 1.35
145 920 S. Waukegan Road 57.9% 298,729 1.42
146 Amberley Suite Hotel 1.1% 450,185 1.59
</TABLE>
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Sq. Ft./
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Pads Leasehold Built
- ----------------- ------------- ---- --------- -----
<S> <C> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) Triple Net Lease 12,240 Fee 1998
148 Stuart Towne Apartments Multifamily 96 Fee 1968
149 Santa Ana Villa Multifamily 130 Fee 1972
150 Orland Park Outlots Retail 21,200 Fee 1996
151 Brazos Square Shopping Center Retail 65,423 Fee 1985
152 Community Mall Office 38,746 Fee 1971
153 Comfort Inn - Fife, WA Hotel 70 Fee 1990
154 Aspen Business Center Office 51,500 Fee 1997
155 Hampton Inn - Ft. Pierce, FL Hotel 72 Fee 1993
156 Oak Tree Mobile Home Park Manufactured Housing 260 Fee 1968
157 Walnut Square Apartments Multifamily 92 Fee 1973
158 Royal Oaks Mobile Home Park Manufactured Housing 144 Fee 1962
159 Plymouth Square Apartments Multifamily 68 Fee 1973
160 Watchung View Apartments Multifamily 68 Fee 1964
161 Embassy Apartments Multifamily 106 Fee 1970
162 Best Buy - West Dundee Retail 36,262 Fee 1993
163 1400 Destrehan Avenue Industrial 88,962 Fee 1980
164 Breckenridge Condominiums Multifamily 68 Fee 1985
165 Rosemont Terrace Apartments Multifamily 100 Fee 1970
166 Days Inn - Dover, DE Hotel 81 Fee 1988
167 Iberia Center Retail 9,872 Fee 1997
168 Shadydale Village Mobile Home Park Manufactured Housing 214 Fee 1973
169 Park Terrace Shopping Center Retail 24,813 Fee 1987
170 Hanover Village Apartments Multifamily 152 Fee 1972
171 Travelodge Hotel-Seatac Hotel 72 Fee 1979
172 Harlem Furniture Retail 20,198 Fee 1988
173 Tree Tops Apartments Multifamily 102 Fee 1983
174 Old Town Place Apartments Multifamily 88 Fee 1984
175 The Meadows Apartments Multifamily 88 Fee 1971
176 Chapman & Feldner Shopping Center Retail 15,557 Fee 1985
177 BCH Office Building Mixed Use 38,531 Fee 1977
178 Colonial Pines Mobile Estates Manufactured Housing 176 Fee 1968
179 NationsBank Professional Center Office 25,619 Fee 1982
180 Belmeade Office Park Industrial 58,800 Fee 1983
181 Central Building Mixed Use 30,804 Fee 1930
182 710 Amsterdam Avenue Multifamily 18 Fee 1920
183 Sandstone Apartments & Vista North Apartments Multifamily 97 Fee 1986
184 Highland Park Place Shopping Center Retail 22,280 Fee 1996
185 Salem Creek Apartment Complex Multifamily 78 Fee 1986
186 Country Greens Apartments Multifamily 116 Fee 1974
187 Sahara West Plaza Retail 29,156 Fee 1974
188 Walgreen's Retail 23,000 Fee 1953
189 Econolodge - Bangor, ME Hotel 127 Fee 1984
190 Comfort Inn - Bangor, ME Hotel 96 Fee 1986
191 Point Clinton Mixed Use 20,296 Fee 1992
192 Rite-Aid Pharmacy Triple Net Lease 11,180 Fee 1998
193 Taft and Cleveland Paradise Apartments Multifamily 70 Fee 1969
194 Tyrone Village MHP Manufactured Housing 110 Fee 1970
195 Steamboat Road Multifamily 29 Fee 1830
196 Kerr Station Village Mixed Use 37,297 Fee 1971
197 Meadow Run Apartments Multifamily 96 Fee 1980
198 45 Church Street Office 24,978 Fee 1971
199 New Brunswick Apartments Multifamily 71 Fee 1932
200 Fiesta RV Resort RV Park 200 Fee 1983
201 Cedar Place Office Park Office 29,013 Fee 1986
202 Oak Hollow Mobile Home Park Manufactured Housing 88 Fee 1960
203 Centerline Plaza Apartments Multifamily 61 Fee 1970
204 Southport Place Office 16,182 Fee 1985
205 Bell Building Office 25,066 Fee 1910
206 Days Inn - Bangor, ME Hotel 101 Fee/Leasehold 1979
207 Stratford Shopping Center Retail 31,500 Fee 1971
208 Country Aire Manor Manufactured Housing 69 Fee 1984
209 Corlett Creek Apartments Multifamily 77 Fee 1972
210 Anchor Bay Apartments Multifamily 58 Fee 1970
211 Tall Pines Shopping Center Retail 50,246 Fee 1982
212 Skyline Professional Building Office 24,881 Fee 1979
213 Southwood Acres MHP Manufactured Housing 101 Fee 1968
214 Nalbert Apartments Multifamily 34 Fee 1949
215 1220 South University Avenue Retail 20,203 Fee 1986
216 49 Commerce Drive / 81 Ethan Allen Drive Industrial 44,351 Fee 1988
217 3211 Battleground Retail 10,000 Fee 1997
218 Gardner Building Industrial 56,400 Fee 1974
219 778 Main Street Office 28,837 Fee 1988
<CAPTION>
Occupancy
Year Rate at Appraised Cut-off Date Maturity/ARD
# Property Name (1) Renovated U/W (6) Value LTV Ratio Balance
- ----------------- --------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) N/A 100.0% 2,860,000 91.2% 94,966
148 Stuart Towne Apartments N/A 97.0% 3,266,000 78.9% 1,843,968
149 Santa Ana Villa N/A 94.0% 3,535,000 72.0% 2,205,684
150 Orland Park Outlots N/A 86.0% 3,700,000 67.3% 2,199,009
151 Brazos Square Shopping Center N/A 92.0% 4,700,000 52.9% 1,997,035
152 Community Mall 1978 100.0% 3,700,000 66.7% 30,893
153 Comfort Inn - Fife, WA N/A N/A 3,400,000 71.9% 1,990,298
154 Aspen Business Center N/A 97.0% 3,260,000 74.3% 2,121,316
155 Hampton Inn - Ft. Pierce, FL N/A N/A 3,250,000 73.7% 1,823,080
156 Oak Tree Mobile Home Park N/A 99.0% 3,590,000 66.7% 1,898,333
157 Walnut Square Apartments N/A 98.0% 3,100,000 77.1% 2,080,818
158 Royal Oaks Mobile Home Park N/A 100.0% 3,300,000 71.1% 2,014,679
159 Plymouth Square Apartments 1992 97.0% 2,925,000 79.6% 1,492,911
160 Watchung View Apartments 1996 96.0% 2,975,000 77.5% 1,772,711
161 Embassy Apartments N/A 94.0% 2,925,000 77.5% 1,937,731
162 Best Buy - West Dundee N/A 100.0% 4,000,000 56.1% 1,605,914
163 1400 Destrehan Avenue N/A 100.0% 2,775,000 80.0% 1,754,818
164 Breckenridge Condominiums N/A 94.0% 2,950,000 72.1% 1,844,916
165 Rosemont Terrace Apartments N/A 91.0% 3,010,000 70.5% 1,856,703
166 Days Inn - Dover, DE 1997 N/A 3,050,000 68.8% 1,702,065
167 Iberia Center N/A 100.0% 3,000,000 69.9% 1,831,695
168 Shadydale Village Mobile Home Park N/A 93.0% 2,970,000 70.5% 1,685,825
169 Park Terrace Shopping Center N/A 95.0% 2,700,000 77.6% 1,826,616
170 Hanover Village Apartments N/A 100.0% 3,450,000 60.7% 1,832,237
171 Travelodge Hotel-Seatac 1994 N/A 3,100,000 67.4% 1,723,143
172 Harlem Furniture 1998 100.0% 2,800,000 74.6% 72,074
173 Tree Tops Apartments N/A 88.0% 4,200,000 49.6% 1,945,416
174 Old Town Place Apartments N/A 100.0% 2,850,000 72.8% 1,829,698
175 The Meadows Apartments N/A 92.0% 2,630,000 78.2% 1,800,042
176 Chapman & Feldner Shopping Center N/A 100.0% 2,900,000 68.8% 1,612,476
177 BCH Office Building N/A 100.0% 2,750,000 72.5% 1,599,362
178 Colonial Pines Mobile Estates 1995 80.0% 2,890,000 69.0% 1,741,520
179 NationsBank Professional Center N/A 100.0% 2,650,000 73.5% 1,692,680
180 Belmeade Office Park N/A 100.0% 2,630,000 74.0% 1,563,956
181 Central Building 1988 100.0% 3,000,000 64.1% 1,333,952
182 710 Amsterdam Avenue 1984 100.0% 2,500,000 76.5% 1,661,398
183 Sandstone Apartments & Vista North Apartments N/A 97.0% 2,550,000 74.4% 1,629,779
184 Highland Park Place Shopping Center N/A 100.0% 2,450,000 75.3% 1,463,299
185 Salem Creek Apartment Complex N/A 97.0% 2,375,000 77.6% 1,623,271
186 Country Greens Apartments N/A 100.0% 2,420,000 76.0% 1,177,623
187 Sahara West Plaza N/A 97.0% 2,500,000 71.8% 1,585,109
188 Walgreen's 1998 100.0% 3,400,000 52.7% 493,083
189 Econolodge - Bangor, ME 1997 N/A 2,750,000 65.2% 1,466,696
190 Comfort Inn - Bangor, ME 1996 N/A 2,700,000 66.4% 1,466,696
191 Point Clinton N/A 94.0% 2,400,000 74.6% 1,242,967
192 Rite-Aid Pharmacy N/A 100.0% 1,960,000 89.1% 56,444
193 Taft and Cleveland Paradise Apartments N/A 100.0% 2,180,000 79.8% 1,126,096
194 Tyrone Village MHP N/A 96.0% 2,130,000 79.7% 1,482,587
195 Steamboat Road 1960 97.0% 2,200,000 77.2% 1,370,360
196 Kerr Station Village 1987 91.0% 2,650,000 64.1% 1,353,454
197 Meadow Run Apartments N/A 98.0% 2,100,000 80.6% 1,490,700
198 45 Church Street 1997 93.0% 2,500,000 67.6% 1,379,262
199 New Brunswick Apartments N/A 97.0% 2,425,000 68.9% 1,285,409
200 Fiesta RV Resort N/A 30.0% 2,200,000 74.8% 1,333,542
201 Cedar Place Office Park N/A 100.0% 2,400,000 68.6% 1,439,788
202 Oak Hollow Mobile Home Park N/A 99.0% 2,300,000 71.5% 1,315,762
203 Centerline Plaza Apartments N/A 95.0% 2,330,000 70.4% 1,430,666
204 Southport Place N/A 100.0% 2,150,000 74.3% 1,084,611
205 Bell Building 1997 100.0% 2,140,000 74.6% 1,207,369
206 Days Inn - Bangor, ME 1996 N/A 2,285,000 69.8% 1,301,148
207 Stratford Shopping Center 1997 100.0% 2,200,000 72.4% 1,408,809
208 Country Aire Manor N/A 100.0% 2,050,000 77.7% 1,401,185
209 Corlett Creek Apartments 1997 99.0% 1,960,000 80.3% 1,251,987
210 Anchor Bay Apartments N/A 93.0% 2,160,000 72.0% 1,356,740
211 Tall Pines Shopping Center N/A 93.0% 2,000,000 76.6% 1,039,427
212 Skyline Professional Building 1989 98.0% 2,050,000 74.3% 1,197,002
213 Southwood Acres MHP 1992 95.0% 2,325,000 65.2% 1,318,389
214 Nalbert Apartments N/A 100.0% 1,900,000 79.7% 1,223,437
215 1220 South University Avenue N/A 92.0% 2,350,000 63.7% 1,307,658
216 49 Commerce Drive / 81 Ethan Allen Drive 1997 95.0% 2,000,000 74.5% 0
217 3211 Battleground N/A 100.0% 2,000,000 74.4% 929,381
218 Gardner Building 1997 100.0% 2,325,000 63.0% 1,181,734
219 778 Main Street N/A 100.0% 1,950,000 74.3% 1,150,768
<CAPTION>
Maturity/ARD U/W U/W
# Property Name (1) LTV Ratio (7) NCF (8) DSCR (9)
- ----------------- ----------- ------- -------
<S> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) 3.3% 248,105 1.12
148 Stuart Towne Apartments 56.5% 290,983 1.23
149 Santa Ana Villa 62.4% 284,014 1.44
150 Orland Park Outlots 59.4% 273,197 1.33
151 Brazos Square Shopping Center 42.5% 412,383 1.95
152 Community Mall 0.8% 396,980 1.28
153 Comfort Inn - Fife, WA 58.5% 353,535 1.63
154 Aspen Business Center 65.1% 255,209 1.30
155 Hampton Inn - Ft. Pierce, FL 56.1% 300,937 1.43
156 Oak Tree Mobile Home Park 52.9% 302,298 1.53
157 Walnut Square Apartments 67.1% 263,608 1.41
158 Royal Oaks Mobile Home Park 61.1% 253,374 1.44
159 Plymouth Square Apartments 51.0% 254,139 1.26
160 Watchung View Apartments 59.6% 255,005 1.37
161 Embassy Apartments 66.2% 271,706 1.63
162 Best Buy - West Dundee 40.1% 333,746 1.84
163 1400 Destrehan Avenue 63.2% 234,239 1.29
164 Breckenridge Condominiums 62.5% 227,096 1.37
165 Rosemont Terrace Apartments 61.7% 234,290 1.38
166 Days Inn - Dover, DE 55.8% 274,488 1.48
167 Iberia Center 61.1% 249,946 1.49
168 Shadydale Village Mobile Home Park 56.8% 218,298 1.21
169 Park Terrace Shopping Center 67.7% 224,109 1.35
170 Hanover Village Apartments 53.1% 250,903 1.50
171 Travelodge Hotel-Seatac 55.6% 301,595 1.57
172 Harlem Furniture 2.6% 268,835 1.35
173 Tree Tops Apartments 46.3% 239,256 1.37
174 Old Town Place Apartments 64.2% 267,705 1.56
175 The Meadows Apartments 68.4% 214,137 1.30
176 Chapman & Feldner Shopping Center 55.6% 237,244 1.37
177 BCH Office Building 58.2% 235,567 1.39
178 Colonial Pines Mobile Estates 60.3% 210,868 1.33
179 NationsBank Professional Center 63.9% 209,516 1.37
180 Belmeade Office Park 59.5% 226,176 1.36
181 Central Building 44.5% 243,777 1.31
182 710 Amsterdam Avenue 66.5% 209,662 1.40
183 Sandstone Apartments & Vista North Apartments 63.9% 212,489 1.49
184 Highland Park Place Shopping Center 59.7% 236,321 1.56
185 Salem Creek Apartment Complex 68.3% 225,165 1.49
186 Country Greens Apartments 48.7% 234,150 1.48
187 Sahara West Plaza 63.4% 218,878 1.47
188 Walgreen's 14.5% 264,270 1.66
189 Econolodge - Bangor, ME 53.3% 264,514 1.64
190 Comfort Inn - Bangor, ME 54.3% 245,290 1.52
191 Point Clinton 51.8% 211,385 1.22
192 Rite-Aid Pharmacy 2.9% 172,524 1.06
193 Taft and Cleveland Paradise Apartments 51.7% 197,084 1.29
194 Tyrone Village MHP 69.6% 196,751 1.45
195 Steamboat Road 62.3% 198,831 1.35
196 Kerr Station Village 51.1% 188,451 1.32
197 Meadow Run Apartments 71.0% 208,972 1.51
198 45 Church Street 55.2% 205,288 1.37
199 New Brunswick Apartments 53.0% 197,755 1.47
200 Fiesta RV Resort 60.6% 212,765 1.48
201 Cedar Place Office Park 60.0% 183,644 1.39
202 Oak Hollow Mobile Home Park 57.2% 200,748 1.45
203 Centerline Plaza Apartments 61.4% 178,938 1.38
204 Southport Place 50.4% 185,686 1.26
205 Bell Building 56.4% 174,229 1.36
206 Days Inn - Bangor, ME 56.9% 221,866 1.56
207 Stratford Shopping Center 64.0% 196,996 1.49
208 Country Aire Manor 68.4% 164,663 1.27
209 Corlett Creek Apartments 63.9% 190,460 1.46
210 Anchor Bay Apartments 62.8% 163,121 1.32
211 Tall Pines Shopping Center 52.0% 217,293 1.49
212 Skyline Professional Building 58.4% 184,180 1.43
213 Southwood Acres MHP 56.7% 236,617 1.99
214 Nalbert Apartments 64.4% 185,003 1.41
215 1220 South University Avenue 55.6% 167,102 1.40
216 49 Commerce Drive / 81 Ethan Allen Drive 0.0% 215,809 1.35
217 3211 Battleground 46.5% 182,744 1.21
218 Gardner Building 50.8% 214,245 1.68
219 778 Main Street 59.0% 156,331 1.30
</TABLE>
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Sq. Ft./
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Pads Leasehold Built
- ----------------- ------------- ---- --------- -----
<S> <C> <C> <C> <C>
220 Briarwood Apartments Multifamily 70 Fee 1974
221 Walton Village Shopping Center Retail 40,849 Fee 1988
222 Rancho Santa Fe Shopping Center Retail 13,727 Fee 1996
223 Winston Place Apartments Multifamily 80 Fee 1975
224 Hondo Park Apartments Multifamily 67 Fee 1968
225 Allegheny Apartments Multifamily 54 Fee 1964
226 Huntington North Apartments Multifamily 48 Fee 1973
227 Rite-Aid - Yarmouth Triple Net Lease 11,180 Leasehold 1998
228 Sylvan Apartments Multifamily 48 Fee 1947
229 Finger Lakes/Farmington Court Apartments Multifamily 64 Fee 1966
230 Walnut Villas Apartments Multifamily 100 Fee 1971
231 Portsmouth Place Apartments Multifamily 48 Fee 1926
232 70 Warren Avenue Multifamily 36 Fee 1971
233 Martinsville Plaza Retail 11,750 Fee 1994
234 Route 66 Business World Retail 21,825 Fee 1988
235 Woodwinds Condominiums Multifamily 53 Fee 1983
236 College Square Apartments Multifamily 70 Fee 1971
237 Car Engineering Building Industrial 37,000 Fee 1991
238 Executive Townhomes Multifamily 61 Fee 1978
239 Hartford Crossing Retail Plaza Retail 40,272 Fee 1987
240 Cypress Plaza Shopping Center Retail 91,637 Fee 1967
241 Sarasota Place Apartments Multifamily 48 Fee 1973
242 Clayton Forest Apartments Multifamily 64 Fee 1964
243 Checker Auto Parts Store Retail 14,000 Fee 1998
244 Southpointe Center Retail 42,648 Fee 1990
245 Maple Court Apartments Multifamily 34 Fee 1965
246 Crestwood MHP Manufactured Housing 60 Fee 1987
247 Hyde Park Place Apartments Multifamily 60 Fee 1965
248 Allen Medical Office Building Office 15,000 Fee 1984
249 Canyon View Offices Office 15,531 Fee 1977
250 Firehouse Square Retail 21,020 Fee 1988
251 Plymouth Place Plaza Retail 17,400 Fee 1959
252 Meridian Mobile Estates Manufactured Housing 51 Fee 1960
253 Country Mobile Estates Manufactured Housing 78 Fee 1968
254 Village Apartments Multifamily 100 Fee 1970
255 Ackels Mobile Home Park Manufactured Housing 116 Fee 1957
256 Redford Manor Apartments Multifamily 32 Fee 1961
257 Doms Business Park Mixed Use 25,854 Fee 1987
258 Bradfield Creek Townhomes Multifamily 26 Fee 1982
259 San Remo Apartments Multifamily 16 Fee 1993
260 Consolidated Printing Industrial 21,600 Fee 1998
261 Knightsbridge Apartments Multifamily 54 Fee 1959
262 Whispering Meadows Multifamily 31 Fee 1986
263 Buckingham Court Apartments Multifamily 52 Fee 1983
264 Homestead Apartments Multifamily 100 Fee 1972
265 4th Avenue West Estates Manufactured Housing 35 Fee 1996
266 Treaty Oaks Apartments Multifamily 48 Fee 1963
267 Wilshire Estates MHP Manufactured Housing 172 Fee 1972
268 Hollywood Video Retail 7,000 Fee 1997
269 5 Milk Street Office 25,106 Fee 1880
270 Cardi Building Office 20,548 Fee 1985
271 Boulevard of Chevy Chase Apartments Multifamily 14 Fee 1989
272 10 McKinley Street Office 12,180 Fee 1975
273 Londonaire Townhouses Multifamily 48 Fee 1970
274 Heon Court Apartments Multifamily 24 Fee 1900
275 One Cameron Place Shopping Center Retail 8,732 Fee 1986
276 197 U.S. Route One Mixed Use 22,965 Fee 1974
277 980 Forest Avenue Office 17,548 Fee 1976
278 Chandler Crossing Apartments Multifamily 46 Fee 1978
279 Kingswood Place Apartments Multifamily 32 Fee 1968
280 4525-4535 McEwen Road Industrial 36,122 Fee 1968
281 Doms Metroplex Park Industrial 23,573 Fee 1990
282 Baxter Mills Apartments Multifamily 25 Fee 1946
283 Seven Eleven Retail 6,500 Fee 1972
284 3314 Mount Pleasant Apartments Multifamily 36 Fee 1922
285 Virginia Apartments Multifamily 31 Fee 1965
286 Pagewood Oval Apartments Multifamily 30 Fee 1975
287 Creekview Condominiums Multifamily 22 Fee 1984
288 Park Hill Apartments Multifamily 32 Fee 1968
289 Amherst Gardens Manufactured Housing 53 Fee 1950
290 Arlington Arms Apartments Multifamily 19 Fee 1981
291 Barstow Plaza Retail 64,874 Fee 1974
292 Fleur de Lis Apartments Multifamily 31 Fee 1973
<CAPTION>
Occupancy
Year Rate at Appraised Cut-off Date Maturity/ARD
# Property Name (1) Renovated U/W (6) Value LTV Ratio Balance
- ----------------- --------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
220 Briarwood Apartments N/A 99.0% 2,050,000 70.6% 1,248,679
221 Walton Village Shopping Center N/A 100.0% 3,575,000 40.4% 675,059
222 Rancho Santa Fe Shopping Center N/A 100.0% 2,040,000 70.8% 1,163,506
223 Winston Place Apartments N/A 96.0% 1,850,000 77.7% 1,248,154
224 Hondo Park Apartments 1992 97.0% 2,090,000 68.1% 1,247,664
225 Allegheny Apartments 1997 100.0% 1,850,000 76.7% 1,239,836
226 Huntington North Apartments N/A 100.0% 1,878,000 75.3% 51,215
227 Rite-Aid - Yarmouth N/A 100.0% 1,620,000 87.3% 36,338
228 Sylvan Apartments 1997 97.0% 1,850,000 75.6% 1,212,620
229 Finger Lakes/Farmington Court Apartments N/A 98.0% 1,900,000 73.6% 1,199,528
230 Walnut Villas Apartments N/A 99.0% 2,000,000 69.8% 1,213,483
231 Portsmouth Place Apartments 1987 100.0% 1,750,000 79.6% 1,113,065
232 70 Warren Avenue 1994 100.0% 1,730,000 79.1% 1,114,566
233 Martinsville Plaza N/A 100.0% 2,050,000 65.7% 1,175,194
234 Route 66 Business World 1994 100.0% 1,800,000 73.4% 1,073,745
235 Woodwinds Condominiums N/A 96.0% 2,450,000 53.2% 1,130,336
236 College Square Apartments N/A 97.0% 2,100,000 61.8% 1,095,303
237 Car Engineering Building 1997 100.0% 1,750,000 74.2% 1,055,875
238 Executive Townhomes N/A 97.0% 2,100,000 61.8% 1,055,875
239 Hartford Crossing Retail Plaza 1997 97.0% 1,760,000 73.6% 1,146,699
240 Cypress Plaza Shopping Center N/A 75.0% 5,010,000 25.5% 0
241 Sarasota Place Apartments 1991 100.0% 1,625,000 78.0% 1,031,004
242 Clayton Forest Apartments 1993 94.0% 1,600,000 77.9% 1,086,104
243 Checker Auto Parts Store N/A 100.0% 2,037,000 60.9% 45,903
244 Southpointe Center N/A 78.0% 2,350,000 52.3% 0
245 Maple Court Apartments N/A 100.0% 1,650,000 74.1% 940,073
246 Crestwood MHP N/A 100.0% 1,700,000 71.8% 1,062,951
247 Hyde Park Place Apartments N/A 100.0% 1,525,000 79.8% 1,059,900
248 Allen Medical Office Building N/A 100.0% 1,950,000 62.1% 26,277
249 Canyon View Offices N/A 95.0% 1,700,000 70.5% 981,904
250 Firehouse Square N/A 71.0% 1,500,000 79.8% 1,104,572
251 Plymouth Place Plaza 1986 100.0% 1,600,000 74.7% 969,297
252 Meridian Mobile Estates 1981 100.0% 1,630,000 73.3% 963,065
253 Country Mobile Estates N/A 100.0% 2,300,000 50.8% 721,789
254 Village Apartments N/A 92.0% 1,665,000 67.4% 913,912
255 Ackels Mobile Home Park 1995 99.0% 2,500,000 43.9% 863,206
256 Redford Manor Apartments N/A 100.0% 1,400,000 78.1% 957,265
257 Doms Business Park N/A 100.0% 1,730,000 62.4% 877,190
258 Bradfield Creek Townhomes N/A 100.0% 1,540,000 68.0% 852,984
259 San Remo Apartments N/A 100.0% 1,300,000 79.8% 907,634
260 Consolidated Printing N/A 100.0% 1,400,000 73.1% 848,459
261 Knightsbridge Apartments 1989 100.0% 1,260,000 79.3% 826,966
262 Whispering Meadows N/A 100.0% 1,250,000 79.7% 807,601
263 Buckingham Court Apartments N/A 100.0% 1,420,000 70.2% 881,066
264 Homestead Apartments N/A 100.0% 1,300,000 76.7% 873,544
265 4th Avenue West Estates N/A 100.0% 1,600,000 62.1% 17,625
266 Treaty Oaks Apartments N/A 92.0% 1,300,000 73.0% 771,601
267 Wilshire Estates MHP N/A 100.0% 1,360,000 69.2% 18,261
268 Hollywood Video N/A 100.0% 1,260,000 73.0% 640,113
269 5 Milk Street 1982 100.0% 1,775,000 50.6% 730,991
270 Cardi Building N/A 100.0% 1,300,000 69.2% 730,991
271 Boulevard of Chevy Chase Apartments N/A 100.0% 1,150,000 78.0% 788,879
272 10 McKinley Street N/A 93.0% 1,160,000 73.2% 690,379
273 Londonaire Townhouses 1998 92.0% 1,100,000 77.1% 728,286
274 Heon Court Apartments 1997 100.0% 1,060,000 79.1% 672,029
275 One Cameron Place Shopping Center N/A 100.0% 1,160,000 71.0% 670,074
276 197 U.S. Route One N/A 100.0% 1,100,000 74.8% 666,162
277 980 Forest Avenue N/A 91.0% 1,130,000 71.4% 654,831
278 Chandler Crossing Apartments 1998 98.0% 1,000,000 79.7% 648,237
279 Kingswood Place Apartments N/A 100.0% 1,150,000 68.0% 549,700
280 4525-4535 McEwen Road 1996 100.0% 1,140,000 65.7% 612,770
281 Doms Metroplex Park N/A 100.0% 1,330,000 56.3% 609,160
282 Baxter Mills Apartments 1995 92.0% 925,000 79.8% 599,344
283 Seven Eleven 1996 100.0% 985,000 73.4% 582,731
284 3314 Mount Pleasant Apartments N/A 100.0% 950,000 74.5% 583,027
285 Virginia Apartments 1996 100.0% 880,000 79.5% 566,413
286 Pagewood Oval Apartments 1997 100.0% 960,000 70.1% 544,965
287 Creekview Condominiums N/A 100.0% 790,000 79.6% 511,791
288 Park Hill Apartments 1986 100.0% 940,000 65.3% 526,936
289 Amherst Gardens N/A 100.0% 1,000,000 59.9% 483,743
290 Arlington Arms Apartments 1997 100.0% 740,000 78.9% 468,020
291 Barstow Plaza N/A 85.0% 2,000,000 25.0% 410,325
292 Fleur de Lis Apartments N/A 100.0% 625,000 79.7% 415,991
<CAPTION>
Maturity/ARD U/W U/W
# Property Name (1) LTV Ratio (7) NCF (8) DSCR (9)
- ----------------- ------------ ------- -------
<S> <C> <C> <C>
220 Briarwood Apartments 60.9% 173,713 1.57
221 Walton Village Shopping Center 18.9% 269,224 1.72
222 Rancho Santa Fe Shopping Center 57.0% 153,310 1.24
223 Winston Place Apartments 67.5% 162,495 1.45
224 Hondo Park Apartments 59.7% 146,241 1.27
225 Allegheny Apartments 67.0% 156,527 1.39
226 Huntington North Apartments 2.7% 175,824 1.30
227 Rite-Aid - Yarmouth 2.2% 142,495 1.14
228 Sylvan Apartments 65.5% 179,016 1.64
229 Finger Lakes/Farmington Court Apartments 63.1% 164,818 1.58
230 Walnut Villas Apartments 60.7% 167,156 1.53
231 Portsmouth Place Apartments 63.6% 166,053 1.42
232 70 Warren Avenue 64.4% 171,244 1.41
233 Martinsville Plaza 57.3% 134,690 1.26
234 Route 66 Business World 59.7% 155,566 1.33
235 Woodwinds Condominiums 46.1% 155,449 1.53
236 College Square Apartments 52.2% 177,402 1.94
237 Car Engineering Building 60.3% 174,441 1.51
238 Executive Townhomes 50.3% 178,812 1.55
239 Hartford Crossing Retail Plaza 65.2% 135,737 1.25
240 Cypress Plaza Shopping Center 0.0% 361,394 1.98
241 Sarasota Place Apartments 63.4% 155,842 1.40
242 Clayton Forest Apartments 67.9% 129,267 1.31
243 Checker Auto Parts Store 2.3% 159,183 1.33
244 Southpointe Center 0.0% 212,607 1.35
245 Maple Court Apartments 57.0% 142,890 1.45
246 Crestwood MHP 62.5% 125,378 1.31
247 Hyde Park Place Apartments 69.5% 166,704 1.74
248 Allen Medical Office Building 1.3% 176,220 1.29
249 Canyon View Offices 57.8% 169,489 1.56
250 Firehouse Square 73.6% 145,895 1.40
251 Plymouth Place Plaza 60.6% 142,544 1.36
252 Meridian Mobile Estates 59.1% 127,952 1.25
253 Country Mobile Estates 31.4% 190,203 1.87
254 Village Apartments 54.9% 152,975 1.53
255 Ackels Mobile Home Park 34.5% 246,133 2.79
256 Redford Manor Apartments 68.4% 121,735 1.38
257 Doms Business Park 50.7% 131,645 1.37
258 Bradfield Creek Townhomes 55.4% 130,983 1.41
259 San Remo Apartments 69.8% 126,351 1.52
260 Consolidated Printing 60.6% 135,244 1.41
261 Knightsbridge Apartments 65.6% 115,110 1.33
262 Whispering Meadows 64.6% 114,626 1.31
263 Buckingham Court Apartments 62.0% 121,543 1.47
264 Homestead Apartments 67.2% 102,777 1.28
265 4th Avenue West Estates 1.1% 132,903 1.24
266 Treaty Oaks Apartments 59.4% 118,484 1.41
267 Wilshire Estates MHP 1.3% 139,610 1.34
268 Hollywood Video 50.8% 114,457 1.28
269 5 Milk Street 41.2% 113,342 1.42
270 Cardi Building 56.2% 106,667 1.34
271 Boulevard of Chevy Chase Apartments 68.6% 95,177 1.30
272 10 McKinley Street 59.5% 96,493 1.28
273 Londonaire Townhouses 66.2% 97,434 1.54
274 Heon Court Apartments 63.4% 101,399 1.42
275 One Cameron Place Shopping Center 57.8% 98,433 1.35
276 197 U.S. Route One 60.6% 101,481 1.41
277 980 Forest Avenue 57.9% 89,544 1.26
278 Chandler Crossing Apartments 64.8% 94,648 1.34
279 Kingswood Place Apartments 47.8% 95,122 1.23
280 4525-4535 McEwen Road 53.8% 90,309 1.33
281 Doms Metroplex Park 45.8% 89,803 1.35
282 Baxter Mills Apartments 64.8% 92,454 1.42
283 Seven Eleven 59.2% 84,552 1.36
284 3314 Mount Pleasant Apartments 61.4% 87,541 1.35
285 Virginia Apartments 64.4% 87,729 1.43
286 Pagewood Oval Apartments 56.8% 86,977 1.48
287 Creekview Condominiums 64.8% 80,206 1.44
288 Park Hill Apartments 56.1% 72,749 1.58
289 Amherst Gardens 48.4% 94,905 1.82
290 Arlington Arms Apartments 63.2% 66,559 1.34
291 Barstow Plaza 20.5% 107,050 2.34
292 Fleur de Lis Apartments 66.6% 60,581 1.27
</TABLE>
<PAGE>
Descriptions of the Mortgaged Properties
<TABLE>
<CAPTION>
Units/
Sq. Ft./
Rooms/ Fee Simple/ Year
# Property Name (1) Property Type Pads Leasehold Built
- ----------------- ------------- ---- --------- -----
<S> <C> <C> <C> <C>
293 2602 Penny Lane Multifamily 20 Fee 1971
294 3246 Navarre Avenue Mixed Use 9,816 Fee 1988
295 Tara Apartments Multifamily 16 Fee 1980
296 Mark V Apartments Multifamily 16 Fee 1969
297 Hallmark Apartments Multifamily 16 Fee 1967
298 Mirage Apartments Multifamily 18 Fee 1983
299 Main Street Studios Multifamily 5 Fee 1986
300 Summertree Apartments Multifamily 48 Fee 1974
301 Prestige State Bank Retail 3,305 Fee 1976
302 Masonic Temple Mixed Use 17,074 Fee 1907
<CAPTION>
Occupancy
Year Rate at Appraised Cut-off Date Maturity/ARD
# Property Name (1) Renovated U/W (6) Value LTV Ratio Balance
- ----------------- --------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
293 2602 Penny Lane 1995 100.0% 605,000 79.8% 396,580
294 3246 Navarre Avenue N/A 100.0% 610,000 74.8% 371,658
295 Tara Apartments N/A 100.0% 630,000 71.2% 16,230
296 Mark V Apartments N/A 100.0% 560,000 74.9% 343,755
297 Hallmark Apartments 1997 100.0% 510,000 78.2% 330,745
298 Mirage Apartments 1998 100.0% 485,000 79.8% 320,363
299 Main Street Studios 1997 100.0% 600,000 63.2% 339,200
300 Summertree Apartments N/A 96.0% 525,000 70.4% 308,667
301 Prestige State Bank 1997 100.0% 500,000 71.9% 298,486
302 Masonic Temple 1971 94.0% 560,000 62.4% 286,867
----------------------------------------------------------
Total/Weighted Average 96.0% $ 1,578,020,000 71.6% $861,932,605
==========================================================
Maximum: 100.0% $ 105,000,000 91.2% $ 59,863,684
Minimum: 30.0% $ 95,000 25.0% $ --
<CAPTION>
Maturity/ARD U/W U/W
# Property Name (1) LTV Ratio (7) NCF (8) DSCR (9)
- ----------------- ----------- ------- -------
<S> <C> <C> <C>
293 2602 Penny Lane 65.6% 61,456 1.40
294 3246 Navarre Avenue 60.9% 51,751 1.28
295 Tara Apartments 2.6% 54,332 1.26
296 Mark V Apartments 61.4% 49,057 1.29
297 Hallmark Apartments 64.9% 51,245 1.37
298 Mirage Apartments 66.1% 46,134 1.28
299 Main Street Studios 56.5% 42,386 1.28
300 Summertree Apartments 58.8% 46,162 1.31
301 Prestige State Bank 59.7% 42,660 1.26
302 Masonic Temple 51.2% 44,497 1.40
---------------------------------
Total/Weighted Average 60.3% $136,278,189 1.46x
=================================
Maximum: 76.0% $ 8,387,294 2.79x
Minimum: 3.3% $ 11,043 1.06x
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building # 21,
507 Plum Street, Zanesville, Northeast Industrial Building # 8, Northeast
Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville and One
Clinton Square, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The Edwards
Center at Rancho Niguel, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office
Center, Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and Maplewood
Mobile Estates, respectively, are cross-collateralized and cross-defaulted.
(1F) The Mortgage Loans secured by Run in Foods DP #4, Run in Foods Unit DP #7,
Run in Foods #401, Run in Foods #406, Run in Foods #402, Run in Foods
#403, Run in Foods #404, Run in Foods Unit #410, respectively, are
cross-collateralized and cross-defaulted. The appraised value of each such
Mortgage Loan includes an estimated enterprise value and an appraised real
estate value. The aggregate of the appraised real estate values (including
FF & E) of such Mortgage Loans is $12,240,000.
(1G) The Mortgage Loans secured by Super 8-Midtown, Super 8-East and Super
8-West, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa Business
Park, respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from origination
and thereafter is scheduled to amortize over 336 months with the payment
presented reflecting the amount due during the amortization term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July 2008.
The Underwritten DSCR presented herein with respect to the mortgage loan
is based on the monthly payment in effect as of December 1, 1998.
(6) Does not include any Mortgage Loans secured by hotel properties.
(7) At maturity with respect to Balloon Loans, Fully Amortizing Loans or at
the ARD in the case of ARD Loans. There can be no assurance that the
value of any particular Mortgaged Property will not have declined from the
original appraised value. Weighted Average, Maximum and Minimum presented
are calculated without any regard to any Fully Amortizing Loans.
(8) Underwriting NCF reflects the Net Cash Flow after U/W Replacement
Reserves, U/W LC's and TI's and FF&E.
(9) U/W DSCR is based on the amount of the monthly payments presented.
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Original Remaining Original
Original Percentage of Amortization Amortization Term to
Principal Cut-off Date Initial Term Term Maturity
# Property Name(1) Balance Balance(6) Pool Balance (months) (months) (months)(7)
------------------ ------- ----------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 Chanin Building $ 75,000,000 $ 74,732,033 6.7% 300 297 120
2 250 South Clinton Street (1A) 16,560,000 16,547,710 1.5% 360 359 120
3 GATX Warehouse (1A) 11,120,000 11,111,747 1.0% 360 359 120
4 1001 and 1011 Airport Industrial Park (1A) 7,280,000 7,274,597 0.7% 360 359 120
5 Northeast Industrial Park Building # 21 (1A) 5,280,000 5,276,081 0.5% 360 359 120
6 507 Plum Street (1A) 5,200,000 5,196,141 0.5% 360 359 120
7 Zanesville (1A) 4,600,000 4,596,586 0.4% 360 359 120
8 Northeast Industrial Park Building # 8 (1A) 4,320,000 4,316,794 0.4% 360 359 120
9 Northeast Industrial Park Building # 22 (1A) 3,680,000 3,677,269 0.3% 360 359 120
10 4, 5 & 8 Marway Circle (1A) 3,540,000 3,537,373 0.3% 360 359 120
11 Marysville (1A) 2,240,000 2,238,338 0.2% 360 359 120
12 One Clinton Square (1A) 1,680,000 1,678,753 0.2% 360 359 120
13 The Center at Rancho Niguel (1B) 23,000,000 22,979,767 2.1% 360 359 120
14 The Edwards Center at Rancho Niguel (1B) 5,700,000 5,694,986 0.5% 360 359 120
15 Rivertree Court Shopping Center (1C) 18,190,000 18,190,000 1.6% IO IO 120
16 Woodland Heights Shopping Center (1C) 3,100,000 3,100,000 0.3% IO IO 120
17 Winnetka Commons Shopping Center (1C) 2,375,000 2,375,000 0.2% IO IO 120
18 Berwyn Plaza Shopping Center (1C) 740,000 740,000 0.1% IO IO 120
19 Walgreen's Store (1C) 595,000 595,000 0.1% IO IO 120
20 Heritage Pointe 25,000,000 24,982,355 2.3% 360 359 120
21 Best Western Inn of Chicago 22,000,000 21,883,901 2.0% 240 237 120
22 Christiana Hilton Inn - Newark, DE 21,500,000 21,450,788 1.9% 300 298 120
23 Embassy Crossing (2) 20,000,000 20,000,000 1.8% 336 336 120
24 Jefferson at Treetops Apartments 19,600,000 19,540,212 1.8% 360 356 120
25 Dominion Tower & Parking Garage 18,700,000 18,600,917 1.7% 300 295 120
26 Holiday Inn Hurstbourne 18,500,000 18,402,920 1.7% 300 295 120
27 Blue Ash Portfolio (1D) 10,839,000 10,814,420 1.0% 360 357 120
28 Springdale Office Center (1D) 3,766,000 3,757,460 0.3% 360 357 120
29 Executive Center East (1D) 1,120,000 1,117,460 0.1% 360 357 120
30 McDonald's (1D) 275,000 274,376 0.0% 360 357 120
31 11 Park Place 15,000,000 14,946,276 1.3% 360 355 120
32 Twin Creek Apartments 12,800,000 12,752,406 1.2% 360 355 120
33 Storage Box / Stowaway Storage (1E) 6,160,000 6,133,110 0.6% 300 296 120
34 Maplewood Mobile Estates (1E) 5,840,000 5,822,523 0.5% 360 356 120
35 Corporate Office Park 11,300,000 11,222,769 1.0% 360 350 120
36 Knights Bridge II Apartments 9,650,000 9,615,263 0.9% 360 355 120
37 Preston Stonebrooke Shopping Center 8,900,000 8,885,682 0.8% 360 358 120
38 Run in Foods DP #4 (1F) 2,604,000 2,576,894 0.2% 240 233 120
39 Run in Foods DP #7 (1F) 2,429,000 2,403,716 0.2% 240 233 120
40 Run in Foods #401 (1F) 882,000 872,819 0.1% 240 233 120
41 Run in Foods #406 (1F) 859,675 850,726 0.1% 240 233 120
42 Run in Foods #402 (1F) 782,000 773,860 0.1% 240 233 120
43 Run in Foods #403 (1F) 632,000 625,421 0.1% 240 233 120
44 Run in Foods #404 (1F) 443,850 439,230 0.0% 240 233 120
45 Run in Foods #410 (1F) 67,475 66,773 0.0% 240 233 120
46 Super 8-Midtown (1G) 5,800,000 5,778,801 0.5% 240 238 240
47 Super 8-East (1G) 1,600,000 1,594,152 0.1% 240 238 240
48 Super 8-West (1G) 1,200,000 1,195,614 0.1% 240 238 240
49 Wellington Woods & Lakes 8,200,000 8,163,754 0.7% 360 354 120
50 Hampton Inn - Indianapolis, IN 8,050,000 8,007,182 0.7% 300 295 120
51 Chidlaw Building 8,000,000 7,977,577 0.7% 360 356 120
52 Grandview Garden Apartments 7,750,000 7,732,025 0.7% 360 357 180
53 Cornerstone Office Park 7,500,000 7,493,668 0.7% 360 359 120
54 160 Pine Street 7,500,000 7,483,711 0.7% 360 357 120
55 River Run Apartments 7,500,000 7,466,848 0.7% 360 354 120
56 180 N. Michigan Avenue Office Building 7,300,000 7,279,388 0.7% 360 356 120
57 Oak Hills Apartments 7,240,000 7,198,183 0.6% 360 350 84
58 145 Rosemary Street 7,000,000 6,983,919 0.6% 300 298 120
59 Holiday Inn-Metroplex-Youngstown, OH 7,000,000 6,977,499 0.6% 300 297 120
60 MCOM Building 6,900,000 6,836,759 0.6% 240 235 240
61 Mayport Trace Apartments 6,800,000 6,790,078 0.6% 360 358 120
62 Mercantile Bank Building 6,800,000 6,776,289 0.6% 300 297 120
63 Brook Forest Apartments 6,600,000 6,581,227 0.6% 360 356 120
64 Midfield Shopping Center 6,500,000 6,489,738 0.6% 360 358 120
65 Far East Plaza 6,500,000 6,484,764 0.6% 300 298 180
66 Highland Square Shopping Center 6,350,000 6,336,379 0.6% 300 298 120
67 Spanish Villa Apartments 6,300,000 6,284,400 0.6% 300 298 300
68 Greens Corner Shopping Center (3) 6,240,000 6,240,000 0.6% 336 336 120
69 Mountain Ridge Apartments 6,200,000 6,178,732 0.6% 360 355 120
70 Radisson Suites - Huntsville, AL 6,050,000 6,012,231 0.5% 180 178 180
71 Holiday Campground 6,000,000 5,981,166 0.5% 360 355 120
72 Plantation Meadows Apartments 5,850,000 5,832,325 0.5% 360 356 120
73 Gresham Townhomes 5,650,000 5,624,359 0.5% 360 354 120
<CAPTION>
Remaining
Term to First
Maturity Mortgage Monthly Payment Maturity
# Property Name(1) (months)(7) Rate Payment Date Date ARD(8)
----------------- ------------ -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
1 Chanin Building 117 6.930% $ 526,739.98 10/1/98 6/1/22 9/1/08
2 250 South Clinton Street (1A) 119 7.500% 115,789.92 12/1/98 11/1/08
3 GATX Warehouse (1A) 119 7.500% 77,752.65 12/1/98 11/1/08
4 1001 and 1011 Airport Industrial Park (1A) 119 7.500% 50,902.82 12/1/98 11/1/08
5 Northeast Industrial Park Building # 21 (1A) 119 7.500% 36,918.53 12/1/98 11/1/08
6 507 Plum Street (1A) 119 7.500% 36,359.15 12/1/98 11/1/08
7 Zanesville (1A) 119 7.500% 32,163.87 12/1/98 11/1/08
8 Northeast Industrial Park Building # 8 (1A) 119 7.500% 30,206.07 12/1/98 11/1/08
9 Northeast Industrial Park Building # 22 (1A) 119 7.500% 25,731.09 12/1/98 11/1/08
10 4, 5 & 8 Marway Circle (1A) 119 7.500% 24,752.19 12/1/98 11/1/08
11 Marysville (1A) 119 7.500% 15,662.40 12/1/98 11/1/08
12 One Clinton Square (1A) 119 7.500% 11,746.80 12/1/98 11/1/08
13 The Center at Rancho Niguel (1B) 119 6.640% 147,499.71 12/1/98 11/1/08
14 The Edwards Center at Rancho Niguel (1B) 119 6.640% 36,554.28 12/1/98 11/1/08
15 Rivertree Court Shopping Center (1C) 119 7.000% 109,645.28 12/1/98 11/1/08
16 Woodland Heights Shopping Center (1C) 119 7.000% 18,686.11 12/1/98 11/1/08
17 Winnetka Commons Shopping Center (1C) 119 7.000% 14,315.97 12/1/98 11/1/08
18 Berwyn Plaza Shopping Center (1C) 119 7.000% 4,460.56 12/1/98 11/1/08
19 Walgreen's Store (1C) 119 7.000% 3,586.53 12/1/98 11/1/08
20 Heritage Pointe 119 7.750% 179,103.06 12/1/98 11/1/08
21 Best Western Inn of Chicago 117 7.450% 176,558.50 10/1/98 9/1/18 9/1/08
22 Christiana Hilton Inn - Newark, DE 118 6.980% 151,683.33 11/1/98 10/1/23 10/1/08
23 Embassy Crossing (2) 116 7.090% 137,109.41 9/1/98 8/1/08
24 Jefferson at Treetops Apartments 116 6.810% 127,907.92 9/1/98 8/1/08
25 Dominion Tower & Parking Garage 115 7.340% 136,251.07 8/1/98 7/1/08
26 Holiday Inn Hurstbourne 115 7.390% 135,392.43 8/1/98 7/1/23 7/1/08
27 Blue Ash Portfolio (1D) 117 7.020% 72,257.78 10/1/98 9/1/08
28 Springdale Office Center (1D) 117 7.020% 25,105.90 10/1/98 9/1/08
29 Executive Center East (1D) 117 7.020% 7,466.44 10/1/98 9/1/08
30 McDonald's (1D) 117 7.020% 1,833.28 10/1/98 9/1/08
31 11 Park Place 115 6.970% 99,493.34 8/1/98 7/1/08
32 Twin Creek Apartments 115 6.820% 83,617.02 8/1/98 7/1/08
33 Storage Box / Stowaway Storage (1E) 116 7.270% 44,604.31 9/1/98 8/1/08
34 Maplewood Mobile Estates (1E) 116 6.890% 38,423.19 9/1/98 8/1/08
35 Corporate Office Park 110 7.610% 79,864.12 3/1/98 1/31/08
36 Knights Bridge II Apartments 115 6.950% 63,877.97 8/1/98 7/1/08
37 Preston Stonebrooke Shopping Center 118 6.560% 56,605.70 11/1/98 10/1/08
38 Run in Foods DP #4 (1F) 113 8.520% 22,631.09 6/1/98 5/1/08
39 Run in Foods DP #7 (1F) 113 8.520% 21,110.18 6/1/98 5/1/08
40 Run in Foods #401 (1F) 113 8.520% 7,665.37 6/1/98 5/1/08
41 Run in Foods #406 (1F) 113 8.520% 7,471.34 6/1/98 5/1/08
42 Run in Foods #402 (1F) 113 8.520% 6,796.28 6/1/98 5/1/08
43 Run in Foods #403 (1F) 113 8.520% 5,492.65 6/1/98 5/1/08
44 Run in Foods #404 (1F) 113 8.520% 3,857.45 6/1/98 5/1/08
45 Run in Foods #410 (1F) 113 8.520% 586.42 6/1/98 5/1/08
46 Super 8-Midtown (1G) 238 7.000% 44,967.34 11/1/98 10/1/18
47 Super 8-East (1G) 238 7.000% 12,404.78 11/1/98 10/1/18
48 Super 8-West (1G) 238 7.000% 9,303.59 11/1/98 10/1/18
49 Wellington Woods & Lakes 114 6.980% 54,444.71 7/1/98 6/1/08
50 Hampton Inn - Indianapolis, IN 115 7.320% 58,549.49 8/1/98 7/1/23 7/1/08
51 Chidlaw Building 116 7.160% 54,086.60 9/1/98 8/1/08
52 Grandview Garden Apartments 177 6.920% 51,145.23 10/1/98 9/1/13
53 Cornerstone Office Park 119 6.850% 49,144.44 12/1/98 11/1/08
54 160 Pine Street 117 7.210% 50,959.90 10/1/98 9/1/08
55 River Run Apartments 114 6.980% 49,796.99 7/1/98 6/1/08
56 180 N. Michigan Avenue Office Building 116 7.130% 49,206.09 9/1/98 8/1/08
57 Oak Hills Apartments 74 8.330% 54,799.42 3/1/98 2/1/05
58 145 Rosemary Street 118 6.960% 49,296.07 11/1/98 10/1/08
59 Holiday Inn-Metroplex-Youngstown, OH 117 7.530% 51,866.06 10/1/98 9/1/23 9/1/08
60 MCOM Building 235 7.480% 55,501.58 8/1/98 7/1/18
61 Mayport Trace Apartments 118 6.970% 45,103.65 11/1/98 10/1/08
62 Mercantile Bank Building 117 7.070% 48,365.07 10/1/98 9/1/08
63 Brook Forest Apartments 116 7.100% 44,354.11 9/1/98 8/1/08
64 Midfield Shopping Center 118 6.640% 41,684.70 11/1/98 10/1/08
65 Far East Plaza 178 6.850% 45,320.55 11/1/98 10/1/13
66 Highland Square Shopping Center 118 7.330% 46,226.03 11/1/98 10/1/08
67 Spanish Villa Apartments 298 7.000% 44,527.09 11/1/98 10/1/23
68 Greens Corner Shopping Center (3) 115 7.350% 43,856.09 8/1/98 7/1/08
69 Mountain Ridge Apartments 115 7.140% 41,833.34 8/1/98 7/1/08
70 Radisson Suites - Huntsville, AL 178 6.810% 53,738.48 11/1/98 10/1/13
71 Holiday Campground 115 7.480% 41,870.73 8/1/98 7/1/08
72 Plantation Meadows Apartments 116 6.850% 38,332.66 9/1/98 8/1/08
73 Gresham Townhomes 114 6.870% 37,097.60 7/1/98 6/1/08
<CAPTION>
Prepayment Provision Defeasance
# Property Name(1) as of Origination (9) Option (10)
----------------- --------------------- -----------
<S> <C> <C>
1 Chanin Building L (9.5), O (0.5) Yes
2 250 South Clinton Street (1A) L (9.5), O (0.5) Yes
3 GATX Warehouse (1A) L (9.5), O (0.5) Yes
4 1001 and 1011 Airport Industrial Park (1A) L (9.5), O (0.5) Yes
5 Northeast Industrial Park Building # 21 (1A) L (9.5), O (0.5) Yes
6 507 Plum Street (1A) L (9.5), O (0.5) Yes
7 Zanesville (1A) L (9.5), O (0.5) Yes
8 Northeast Industrial Park Building # 8 (1A) L (9.5), O (0.5) Yes
9 Northeast Industrial Park Building # 22 (1A) L (9.5), O (0.5) Yes
10 4, 5 & 8 Marway Circle (1A) L (9.5), O (0.5) Yes
11 Marysville (1A) L (9.5), O (0.5) Yes
12 One Clinton Square (1A) L (9.5), O (0.5) Yes
13 The Center at Rancho Niguel (1B) L (9.5), O (0.5) Yes
14 The Edwards Center at Rancho Niguel (1B) L (9.5), O (0.5) Yes
15 Rivertree Court Shopping Center (1C) L (9.5), O (0.5) Yes
16 Woodland Heights Shopping Center (1C) L (9.5), O (0.5) Yes
17 Winnetka Commons Shopping Center (1C) L (9.5), O (0.5) Yes
18 Berwyn Plaza Shopping Center (1C) L (9.5), O (0.5) Yes
19 Walgreen's Store (1C) L (9.5), O (0.5) Yes
20 Heritage Pointe L (9.5), O (0.5) Yes
21 Best Western Inn of Chicago L (9.5), O (0.5) Yes
22 Christiana Hilton Inn - Newark, DE L (9.5), O (0.5) Yes
23 Embassy Crossing (2) L (9.5), O (0.5) Yes
24 Jefferson at Treetops Apartments L (9.5), O (0.5) Yes
25 Dominion Tower & Parking Garage L (9.5), O (0.5) Yes
26 Holiday Inn Hurstbourne L (9.5), O (0.5) Yes
27 Blue Ash Portfolio (1D) L (9.5), O (0.5) Yes
28 Springdale Office Center (1D) L (9.5), O (0.5) Yes
29 Executive Center East (1D) L (9.5), O (0.5) Yes
30 McDonald's (1D) L (9.5), O (0.5) Yes
31 11 Park Place L (9.5), O (0.5) Yes
32 Twin Creek Apartments L (9.5), O (0.5) Yes
33 Storage Box / Stowaway Storage (1E) L (9.5), O (0.5) Yes
34 Maplewood Mobile Estates (1E) L (9.5), O (0.5) Yes
35 Corporate Office Park L (10) Yes
36 Knights Bridge II Apartments L (5), YM 1% (4.5), O (0.5) No
37 Preston Stonebrooke Shopping Center L (9.5), O (0.5) Yes
38 Run in Foods DP #4 (1F) L (9.42), O (0.58) Yes
39 Run in Foods DP #7 (1F) L (9.42), O (0.58) Yes
40 Run in Foods #401 (1F) L (9.42), O (0.58) Yes
41 Run in Foods #406 (1F) L (9.42), O (0.58) Yes
42 Run in Foods #402 (1F) L (9.42), O (0.58) Yes
43 Run in Foods #403 (1F) L (9.42), O (0.58) Yes
44 Run in Foods #404 (1F) L (9.42), O (0.58) Yes
45 Run in Foods #410 (1F) L (9.42), O (0.58) Yes
46 Super 8-Midtown (1G) L (19.42), O (0.58) Yes
47 Super 8-East (1G) L (19.42), O (0.58) Yes
48 Super 8-West (1G) L (19.42), O (0.58) Yes
49 Wellington Woods & Lakes L (5), YM 1% (4.42), O (0.58) Both
50 Hampton Inn - Indianapolis, IN L (9.5), O (0.5) Yes
51 Chidlaw Building L (9.5), O (0.5) Yes
52 Grandview Garden Apartments L (14.5), O (0.5) Yes
53 Cornerstone Office Park L (9.5), O (0.5) Yes
54 160 Pine Street L (9.5), O (0.5) Yes
55 River Run Apartments L (5), YM 1% (4.42), O (0.58) Both
56 180 N. Michigan Avenue Office Building L (9.5), O (0.5) Yes
57 Oak Hills Apartments L (2), 1% (3), O (2) No
58 145 Rosemary Street L (9.5), O (0.5) Yes
59 Holiday Inn-Metroplex-Youngstown, OH L (9.5), O (0.5) Yes
60 MCOM Building L (19.5), O (0.5) Yes
61 Mayport Trace Apartments L (9.5), O (0.5) Yes
62 Mercantile Bank Building L (9.5), O (0.5) Yes
63 Brook Forest Apartments L (9.5), O (0.5) Yes
64 Midfield Shopping Center L (9.5), O (0.5) Yes
65 Far East Plaza L (14.5), O (0.5) Yes
66 Highland Square Shopping Center L (9.5), O (0.5) Yes
67 Spanish Villa Apartments L (24.5), O (0.5) Yes
68 Greens Corner Shopping Center (3) L (9.5), O (0.5) Yes
69 Mountain Ridge Apartments L (9.5), O (0.5) Yes
70 Radisson Suites - Huntsville, AL L (14.5), O (0.5) Yes
71 Holiday Campground L (9.5), O (0.5) Yes
72 Plantation Meadows Apartments L (9.5), O (0.5) Yes
73 Gresham Townhomes L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Original Remaining Original
Original Percentage of Amortization Amortization Term to
Principal Cut-off Date Initial Term Term Maturity
# Property Name(1) Balance Balance(6) Pool Balance (months) (months) (months)(7)
----------------- ------- ----------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
74 Lakewood Apartments 5,600,000 5,584,071 0.5% 360 356 120
75 Imperial Plaza Shopping Center 5,393,936 5,389,365 0.5% 355 354 115
76 Super 8 - Las Vegas, NV 5,400,000 5,380,263 0.5% 240 238 240
77 Thunder Hollow 5,400,000 5,376,131 0.5% 360 354 120
78 K-Mart Montwood Point 5,250,000 5,226,550 0.5% 216 214 216
79 Trabuco Marketplace 5,200,000 5,191,635 0.5% 360 358 180
80 Indian Valley Apartments 5,200,000 5,184,735 0.5% 360 356 120
81 Flamingo West Centre 5,200,000 5,182,026 0.5% 300 297 120
82 Mill Creek Shopping Center 5,200,000 5,156,062 0.5% 240 235 240
83 High Vista Apartments 5,100,000 5,088,408 0.5% 360 357 120
84 Woodland Office Center 5,100,000 5,081,203 0.5% 300 297 120
85 Bayfair Apartments 5,100,000 5,078,525 0.5% 360 354 120
86 University Green Apartments 5,000,000 4,992,290 0.5% 360 358 120
87 El Dorado Mobile Home Estates 5,000,000 4,987,467 0.4% 360 357 120
88 Holiday Inn - Danbury, CT 5,000,000 4,979,134 0.4% 300 296 120
89 Country Inn & Suites Hotel 5,000,000 4,968,786 0.4% 180 178 180
90 Center Ridge Apartments 4,816,000 4,795,622 0.4% 360 354 120
91 The Marriott Building 4,800,000 4,779,387 0.4% 228 226 144
92 Silicon Valley Inn 4,700,000 4,694,503 0.4% 300 299 120
93 Best Western - Sunnyvale 4,600,000 4,594,723 0.4% 300 299 120
94 Golden Valley Commons 4,550,000 4,543,457 0.4% 360 358 180
95 West Park Place 4,500,000 4,483,613 0.4% 300 297 120
96 Naperville Office Court 4,500,000 4,484,524 0.4% 360 355 120
97 Holiday Inn Express Hotel &
Suites - Mountain View, CA 4,400,000 4,384,751 0.4% 240 238 240
98 Best Buy / Drug Emporium 4,230,000 4,211,500 0.4% 300 296 120
99 Medical Arts Building 4,150,000 4,136,799 0.4% 360 355 60
100 Comfort Inn - Sunnyvale 4,100,000 4,095,296 0.4% 300 299 120
101 Holiday Inn North Denver 4,100,000 4,079,752 0.4% 300 295 120
102 Windlands Shopping Center (4) 3,900,000 3,900,000 0.4% 336 336 120
103 Northborough Woods Apartments 3,900,000 3,880,220 0.4% 360 353 120
104 Madison Building 3,850,000 3,829,125 0.3% 300 295 120
105 Victory Townhomes 3,850,000 3,833,023 0.3% 360 354 120
106 Dairy Plaza Shopping Center 3,760,000 3,743,186 0.3% 300 296 120
107 Comfort Inn - Concord, NH 3,750,000 3,741,417 0.3% 300 298 120
108 Peconic Plaza 3,675,000 3,662,519 0.3% 300 297 120
109 Bayou Village Place Apartments 3,600,000 3,594,772 0.3% 360 358 120
110 Country Suites - Chattanooga, TN 3,550,000 3,542,357 0.3% 300 298 120
111 531 West Deming 3,500,000 3,494,642 0.3% 360 358 120
112 Camelot Apartments 3,500,000 3,487,684 0.3% 360 355 120
113 Sevilla Apartments 3,500,000 3,484,678 0.3% 360 354 120
114 The Way III Apartments 3,500,000 3,480,251 0.3% 300 295 180
115 Glenview Office and Industrial Park 3,460,000 3,454,690 0.3% 360 358 120
116 Hampton Inn - Decatur, AL 3,450,000 3,428,463 0.3% 180 178 180
117 Mission Industrial Park (1H) 1,850,000 1,847,624 0.2% 300 299 120
118 Jurupa Business Park (1H) 1,545,000 1,542,864 0.1% 360 358 120
119 Colony Square Shopping Center 3,400,000 3,388,493 0.3% 300 297 120
120 Vintage Business Park 3,400,000 3,381,424 0.3% 300 295 120
121 Crossroads Shopping Center 3,225,000 3,203,312 0.3% 300 294 180
122 High Country Plaza 3,200,000 3,197,320 0.3% 360 359 120
123 Glencoe Avenue Industrial 3,200,000 3,195,319 0.3% 360 358 120
124 St. Charles Apartments (1I) 1,595,000 1,588,971 0.1% 240 238 120
125 St. James Apartments (1I) 1,595,000 1,588,971 0.1% 240 238 120
126 Plaza at Sunrise 3,050,000 3,036,512 0.3% 300 296 120
127 Shannon Arms III Apartments 3,050,000 3,036,744 0.3% 360 354 120
128 River Valley Square Shopping Center 2,975,000 2,964,951 0.3% 360 355 120
129 Rio Commercial Center 2,962,500 2,952,134 0.3% 300 297 120
130 Alexis Apartment Complex 2,950,000 2,939,984 0.3% 360 355 180
131 Beltway Plaza 4710 2,925,000 2,918,412 0.3% 360 357 120
132 Casa Linda MHP 2,880,000 2,876,077 0.3% 360 358 120
133 Mesa Ridge Apartments 2,850,000 2,843,795 0.3% 300 298 120
134 Vintage Business Park II 2,850,000 2,842,693 0.3% 300 298 120
135 Mountain Village Shopping Center 2,850,000 2,834,250 0.3% 300 295 120
136 Rock River Tower Apartments 2,800,000 2,795,314 0.3% 360 358 120
137 Durango Plaza Retail Center 2,800,000 2,793,858 0.3% 300 298 120
138 Beatrice Avenue Industrial 2,750,000 2,740,791 0.2% 300 297 120
139 Miller Apartments 2,715,000 2,712,775 0.2% 360 359 120
140 University Square Outlet Mall 2,700,000 2,696,587 0.2% 300 299 120
141 Ridgewood Plaza 2,700,000 2,692,339 0.2% 360 356 120
142 Chase Village Apartments 2,700,000 2,691,090 0.2% 360 355 120
143 Warsaw Village Shopping Center 2,650,000 2,646,461 0.2% 300 299 120
144 Provident Place Office Building 2,650,000 2,645,982 0.2% 360 358 120
145 920 S. Waukegan Road 2,650,000 2,643,121 0.2% 300 298 120
146 Amberley Suite Hotel 2,650,000 2,633,457 0.2% 180 178 180
<CAPTION>
Remaining
Term to First
Maturity Mortgage Monthly Payment Maturity
# Property Name(1) (months)(7) Rate Payment Date Date ARD(8)
----------------- ----------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
74 Lakewood Apartments 116 7.100% 37,633.79 9/1/98 8/1/08
75 Imperial Plaza Shopping Center 114 7.000% 36,035.41 12/1/98 6/1/08
76 Super 8 - Las Vegas, NV 238 7.000% 41,866.14 11/1/98 10/1/18
77 Thunder Hollow 114 6.980% 35,853.83 7/1/98 6/1/08
78 K-Mart Montwood Point 214 6.990% 42,783.20 11/1/98 10/1/16
79 Trabuco Marketplace 178 6.560% 33,072.99 11/1/98 10/1/13
80 Indian Valley Apartments 116 6.970% 34,491.02 9/1/98 8/1/08
81 Flamingo West Centre 117 7.120% 37,151.54 10/1/98 9/1/08
82 Mill Creek Shopping Center 235 7.550% 42,049.97 8/1/98 7/1/18
83 High Vista Apartments 117 7.010% 33,964.69 10/1/98 9/1/08
84 Woodland Office Center 117 6.750% 35,236.49 10/1/98 9/1/23 9/1/08
85 Bayfair Apartments 114 7.180% 34,549.18 7/1/98 6/1/08
86 University Green Apartments 118 6.740% 32,396.68 11/1/98 10/1/08
87 El Dorado Mobile Home Estates 117 6.570% 31,833.93 10/1/98 9/1/08
88 Holiday Inn - Danbury, CT 116 7.510% 36,982.09 9/1/98 8/1/23 8/1/08
89 Country Inn & Suites Hotel 178 6.810% 44,411.97 11/1/98 10/1/13
90 Center Ridge Apartments 114 7.160% 32,560.13 7/1/98 6/1/08
91 The Marriott Building 142 6.500% 36,713.09 11/1/98 10/1/10
92 Silicon Valley Inn 119 7.340% 34,244.92 12/1/98 11/1/08
93 Best Western - Sunnyvale 119 7.460% 33,874.00 12/1/98 11/1/08
94 Golden Valley Commons 178 7.030% 30,362.99 11/1/98 10/1/13
95 West Park Place 117 6.820% 31,290.22 10/1/98 9/1/08
96 Naperville Office Court 115 7.130% 30,332.52 8/1/98 7/1/08
97 Holiday Inn Express Hotel &
Suites - Mountain View, CA 238 7.390% 35,150.74 11/1/98 10/1/18
98 Best Buy / Drug Emporium 116 7.260% 30,601.99 9/1/98 8/1/08
99 Medical Arts Building 55 7.430% 28,818.74 8/1/98 7/1/03
100 Comfort Inn - Sunnyvale 119 7.460% 30,192.04 12/1/98 11/1/08
101 Holiday Inn North Denver 115 7.700% 30,834.02 8/1/98 7/1/23 7/1/08
102 Windlands Shopping Center (4) 115 7.260% 27,176.07 8/1/98 7/1/08
103 Northborough Woods Apartments 113 6.980% 25,894.43 6/1/98 5/1/08
104 Madison Building 115 7.220% 27,753.70 8/1/98 7/1/08
105 Victory Townhomes 114 6.990% 25,588.29 7/1/98 6/1/08
106 Dairy Plaza Shopping Center 116 7.140% 26,911.64 9/1/98 8/1/08
107 Comfort Inn - Concord, NH 118 6.980% 26,456.39 11/1/98 10/1/08
108 Peconic Plaza 117 7.220% 26,492.16 10/1/98 9/1/08
109 Bayou Village Place Apartments 118 6.990% 23,926.72 11/1/98 10/1/08
110 Country Suites - Chattanooga, TN 118 7.310% 25,797.03 11/1/98 10/1/08
111 531 West Deming 118 6.770% 22,747.48 11/1/98 10/1/08
112 Camelot Apartments 115 7.040% 23,379.69 8/1/98 7/1/08
113 Sevilla Apartments 114 7.020% 23,332.62 7/1/98 6/1/08
114 The Way III Apartments 175 7.010% 24,759.60 8/1/98 7/1/13
115 Glenview Office and Industrial Park 118 6.760% 22,464.50 11/1/98 10/1/08
116 Hampton Inn - Decatur, AL 178 6.810% 30,644.26 11/1/98 10/1/13
117 Mission Industrial Park (1H) 119 6.750% 12,781.86 12/1/98 11/1/08
118 Jurupa Business Park (1H) 118 7.190% 10,476.82 11/1/98 10/1/08
119 Colony Square Shopping Center 117 7.240% 24,553.53 10/1/98 9/1/08
120 Vintage Business Park 115 7.180% 24,422.31 8/1/98 7/1/08
121 Crossroads Shopping Center 174 7.160% 23,123.85 7/1/98 6/1/13
122 High Country Plaza 119 6.890% 21,053.80 12/1/98 11/1/08
123 Glencoe Avenue Industrial 118 6.960% 21,203.78 11/1/98 10/1/08
124 St. Charles Apartments (1I) 118 6.750% 12,127.80 11/1/98 10/1/08
125 St. James Apartments (1I) 118 6.750% 12,127.81 11/1/98 10/1/08
126 Plaza at Sunrise 116 7.200% 21,947.46 9/1/98 8/1/08
127 Shannon Arms III Apartments 114 7.050% 20,394.25 7/1/98 6/1/08
128 River Valley Square Shopping Center 115 7.200% 20,193.95 8/1/98 7/1/08
129 Rio Commercial Center 117 7.050% 21,032.92 10/1/98 9/1/08
130 Alexis Apartment Complex 175 7.180% 19,984.33 8/1/98 7/1/13
131 Beltway Plaza 4710 117 7.050% 19,558.42 10/1/98 9/1/08
132 Casa Linda MHP 118 7.250% 19,646.68 11/1/98 10/1/08
133 Mesa Ridge Apartments 118 7.250% 20,600.00 11/1/98 10/1/08
134 Vintage Business Park II 118 6.350% 18,977.13 11/1/98 10/1/08
135 Mountain Village Shopping Center 115 7.120% 20,361.90 8/1/98 7/1/08
136 Rock River Tower Apartments 118 6.390% 17,495.84 11/1/98 10/1/08
137 Durango Plaza Retail Center 118 7.210% 20,166.49 11/1/98 10/1/08
138 Beatrice Avenue Industrial 117 7.300% 19,965.86 10/1/98 9/1/08
139 Miller Apartments 119 7.000% 18,062.96 12/1/98 11/1/08
140 University Square Outlet Mall 119 6.850% 18,825.46 12/1/98 11/1/08
141 Ridgewood Plaza 116 7.110% 18,163.07 9/1/98 8/1/08
142 Chase Village Apartments 115 7.290% 18,492.07 8/1/98 7/1/08
143 Warsaw Village Shopping Center 119 6.500% 17,892.99 12/1/98 11/1/08
144 Provident Place Office Building 118 6.810% 17,293.67 11/1/98 10/1/08
145 920 S. Waukegan Road 118 6.280% 17,530.41 11/1/98 10/1/08
146 Amberley Suite Hotel 178 6.810% 23,538.34 11/1/98 10/1/13
<CAPTION>
Prepayment Provision Defeasance
# Property Name(1) as of Origination(9) Option(10)
------------------ --------------------- -----------
<S> <C> <C>
74 Lakewood Apartments L (9.5), O (0.5) Yes
75 Imperial Plaza Shopping Center L (3), YM 1% (6.5), O (0.08) No
76 Super 8 - Las Vegas, NV L (19.42), O (0.58) Yes
77 Thunder Hollow L (5), YM 1% (4.42), O (0.58) Both
78 K-Mart Montwood Point L (17.5), O (0.5) Yes
79 Trabuco Marketplace L (14.5), O (0.5) Yes
80 Indian Valley Apartments L (9.5), O (0.5) Yes
81 Flamingo West Centre L (9.5), O (0.5) Yes
82 Mill Creek Shopping Center L (19.5), O (0.5) Yes
83 High Vista Apartments L (9.5), O (0.5) Yes
84 Woodland Office Center L (9.5), O (0.5) Yes
85 Bayfair Apartments L (9.5), O (0.5) Yes
86 University Green Apartments L (9.5), O (0.5) Yes
87 El Dorado Mobile Home Estates L (9.5), O (0.5) Yes
88 Holiday Inn - Danbury, CT L (9.5), O (0.5) Yes
89 Country Inn & Suites Hotel L (14.5), O (0.5) Yes
90 Center Ridge Apartments L (9.5), O (0.5) Yes
91 The Marriott Building L (11.5), O (0.5) Yes
92 Silicon Valley Inn L (9.5), O (0.5) Yes
93 Best Western - Sunnyvale L (9.5), O (0.5) Yes
94 Golden Valley Commons L (14.5), O (0.5) Yes
95 West Park Place L (9.5), O (0.5) Yes
96 Naperville Office Court L (9.5), O (0.5) Yes
97 Holiday Inn Express Hotel &
Suites - Mountain View, CA L (19.5), O (0.5) Yes
98 Best Buy / Drug Emporium L (9.5), O (0.5) Yes
99 Medical Arts Building L (4.5), O (0.5) Yes
100 Comfort Inn - Sunnyvale L (9.5), O (0.5) Yes
101 Holiday Inn North Denver L (9.5), O (0.5) Yes
102 Windlands Shopping Center (4) L (9.5), O (0.5) Yes
103 Northborough Woods Apartments L (9.5), O (0.5) Yes
104 Madison Building L (9.5), O (0.5) Yes
105 Victory Townhomes L (9.5), O (0.5) Yes
106 Dairy Plaza Shopping Center L (9.5), O (0.5) Yes
107 Comfort Inn - Concord, NH L (9.5), O (0.5) Yes
108 Peconic Plaza L (9.5), O (0.5) Yes
109 Bayou Village Place Apartments L (9.5), O (0.5) Yes
110 Country Suites - Chattanooga, TN L (9.5), O (0.5) Yes
111 531 West Deming L (9.5), O (0.5) Yes
112 Camelot Apartments L (9.5), O (0.5) Yes
113 Sevilla Apartments L (9.5), O (0.5) Yes
114 The Way III Apartments L (14.5), O (0.5) Yes
115 Glenview Office and Industrial Park L (9.5), O (0.5) Yes
116 Hampton Inn - Decatur, AL L (14.5), O (0.5) Yes
117 Mission Industrial Park (1H) L (9.5), O (0.5) Yes
118 Jurupa Business Park (1H) L (9.5), O (0.5) Yes
119 Colony Square Shopping Center L (9.5), O (0.5) Yes
120 Vintage Business Park L (9.5), O (0.5) Yes
121 Crossroads Shopping Center L (14.5), O (0.5) Yes
122 High Country Plaza L (9.5), O (0.5) Yes
123 Glencoe Avenue Industrial L (9.5), O (0.5) Yes
124 St. Charles Apartments (1I) L (9.5), O (0.5) Yes
125 St. James Apartments (1I) L (9.5), O (0.5) Yes
126 Plaza at Sunrise L (9.5), O (0.5) Yes
127 Shannon Arms III Apartments L (9.5), O (0.5) Yes
128 River Valley Square Shopping Center L (9.5), O (0.5) Yes
129 Rio Commercial Center L (9.5), O (0.5) Yes
130 Alexis Apartment Complex L (14.5), O (0.5) Yes
131 Beltway Plaza 4710 L (9.5), O (0.5) Yes
132 Casa Linda MHP L (9.5), O (0.5) Yes
133 Mesa Ridge Apartments L (9.5), O (0.5) Yes
134 Vintage Business Park II L (9.5), O (0.5) Yes
135 Mountain Village Shopping Center L (9.5), O (0.5) Yes
136 Rock River Tower Apartments L (9.5), O (0.5) Yes
137 Durango Plaza Retail Center L (9.5), O (0.5) Yes
138 Beatrice Avenue Industrial L (9.5), O (0.5) Yes
139 Miller Apartments L (9.5), O (0.5) Yes
140 University Square Outlet Mall L (9.5), O (0.5) Yes
141 Ridgewood Plaza L (9.5), O (0.5) Yes
142 Chase Village Apartments L (9.5), O (0.5) Yes
143 Warsaw Village Shopping Center L (9.5), O (0.5) Yes
144 Provident Place Office Building L (9.5), O (0.5) Yes
145 920 S. Waukegan Road L (9.5), O (0.5) Yes
146 Amberley Suite Hotel L (14.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Original Remaining Original
Original Percentage of Amortization Amortization Term to
Principal Cut-off Date Initial Term Term Maturity
# Property Name(1) Balance Balance(6) Pool Balance (months) (months) (months)(7)
----------------- ------- ------------ ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) 2,625,000 2,608,053 0.2% 307 301 240
148 Stuart Towne Apartments 2,600,000 2,578,376 0.2% 252 247 120
149 Santa Ana Villa 2,550,000 2,546,021 0.2% 360 358 120
150 Orland Park Outlots 2,500,000 2,489,830 0.2% 360 354 120
151 Brazos Square Shopping Center 2,500,000 2,488,424 0.2% 300 296 120
152 Community Mall 2,500,000 2,467,051 0.2% 144 141 144
153 Comfort Inn - Fife, WA 2,450,000 2,444,911 0.2% 300 298 120
154 Aspen Business Center 2,425,000 2,421,580 0.2% 360 358 120
155 Hampton Inn - Ft. Pierce, FL 2,400,000 2,396,482 0.2% 276 275 120
156 Oak Tree Mobile Home Park 2,400,000 2,394,157 0.2% 300 298 120
157 Walnut Square Apartments 2,400,000 2,390,965 0.2% 360 355 120
158 Royal Oaks Mobile Home Park 2,350,000 2,347,823 0.2% 360 359 120
159 Plymouth Square Apartments 2,340,000 2,329,575 0.2% 300 296 180
160 Watchung View Apartments 2,310,000 2,304,820 0.2% 360 357 180
161 Embassy Apartments 2,270,000 2,266,050 0.2% 360 358 120
162 Best Buy - West Dundee 2,250,000 2,244,978 0.2% 360 357 204
163 1400 Destrehan Avenue 2,225,000 2,219,495 0.2% 300 298 120
164 Breckenridge Condominiums 2,130,000 2,126,716 0.2% 360 358 120
165 Rosemont Terrace Apartments 2,130,000 2,122,371 0.2% 360 355 120
166 Days Inn - Dover, DE 2,100,000 2,097,579 0.2% 300 299 120
167 Iberia Center 2,100,000 2,096,958 0.2% 360 358 120
168 Shadydale Village Mobile Home Park 2,100,000 2,095,307 0.2% 300 298 120
169 Park Terrace Shopping Center 2,100,000 2,095,107 0.2% 360 357 120
170 Hanover Village Apartments 2,100,000 2,093,895 0.2% 360 356 120
171 Travelodge Hotel -- Seatac 2,100,000 2,089,894 0.2% 300 295 120
172 Harlem Furniture 2,100,000 2,088,578 0.2% 240 237 240
173 Tree Tops Apartments 2,100,000 2,084,949 0.2% 360 350 84
174 Old Town Place Apartments 2,080,000 2,075,606 0.2% 360 357 120
175 The Meadows Apartments 2,065,000 2,057,604 0.2% 360 355 120
176 Chapman & Feldner Shopping Center 2,000,000 1,995,645 0.2% 300 298 120
177 BCH Office Building 2,000,000 1,992,928 0.2% 300 297 120
178 Colonial Pines Mobile Estates 2,000,000 1,992,764 0.2% 360 355 120
179 NationsBank Professional Center 1,950,000 1,947,050 0.2% 360 358 120
180 Belmeade Office Park 1,950,000 1,945,618 0.2% 300 298 120
181 Central Building 1,925,000 1,921,524 0.2% 240 239 120
182 710 Amsterdam Avenue 1,915,000 1,912,089 0.2% 360 358 120
183 Sandstone Apartments &
Vista North Apartments 1,900,000 1,896,820 0.2% 360 358 120
184 Highland Park Place Shopping Center 1,850,000 1,845,496 0.2% 300 298 120
185 Salem Creek Apartment Complex 1,850,000 1,843,783 0.2% 360 355 120
186 Country Greens Apartments 1,850,000 1,839,757 0.2% 300 295 180
187 Sahara West Plaza 1,800,000 1,794,168 0.2% 360 355 120
188 Walgreen's 1,800,000 1,792,496 0.2% 276 273 240
189 Econolodge - Bangor, ME 1,800,000 1,792,615 0.2% 300 296 120
190 Comfort Inn - Bangor, ME 1,800,000 1,792,615 0.2% 300 296 120
191 Point Clinton 1,800,000 1,790,438 0.2% 240 237 120
192 Rite-Aid Pharmacy 1,760,000 1,746,971 0.2% 240 236 240
193 Taft and Cleveland Paradise Apartments 1,750,000 1,738,574 0.2% 300 294 180
194 Tyrone Village MHP 1,700,000 1,698,607 0.2% 360 359 120
195 Steamboat Road 1,700,000 1,697,983 0.2% 300 299 120
196 Kerr Station Village 1,700,000 1,697,851 0.2% 300 299 120
197 Meadow Run Apartments 1,700,000 1,692,877 0.2% 360 354 120
198 45 Church Street 1,700,000 1,691,182 0.2% 300 295 120
199 New Brunswick Apartments 1,675,000 1,671,244 0.2% 360 357 180
200 Fiesta RV Resort 1,650,000 1,646,461 0.1% 300 298 120
201 Cedar Place Office Park 1,650,000 1,646,258 0.1% 360 357 120
202 Oak Hollow Mobile Home Park 1,650,000 1,644,074 0.1% 300 297 120
203 Centerline Plaza Apartments 1,645,000 1,640,077 0.1% 360 356 120
204 Southport Place 1,600,000 1,596,887 0.1% 240 239 120
205 Bell Building 1,600,000 1,595,934 0.1% 300 298 132
206 Days Inn - Bangor, ME 1,600,000 1,594,866 0.1% 300 297 120
207 Stratford Shopping Center 1,600,000 1,593,556 0.1% 360 354 120
208 Country Aire Manor 1,600,000 1,593,213 0.1% 360 354 120
209 Corlett Creek Apartments 1,580,000 1,574,126 0.1% 300 297 120
210 Anchor Bay Apartments 1,560,000 1,555,331 0.1% 360 356 120
211 Tall Pines Shopping Center 1,550,000 1,532,164 0.1% 240 234 120
212 Skyline Professional Building 1,525,000 1,523,886 0.1% 360 359 180
213 Southwood Acres MHP 1,520,000 1,515,341 0.1% 360 356 120
214 Nalbert Apartments 1,520,000 1,514,819 0.1% 300 297 120
215 1220 South University Avenue 1,500,000 1,497,817 0.1% 360 358 120
216 49 Commerce Drive / 81 Ethan Allen Drive 1,500,000 1,490,301 0.1% 180 178 180
217 3211 Battleground 1,500,000 1,487,111 0.1% 216 212 120
218 Gardner Building 1,466,000 1,464,261 0.1% 300 299 120
219 778 Main Street 1,450,000 1,448,138 0.1% 300 299 120
<CAPTION>
Remaining
Term to First
Maturity Mortgage Monthly Payment Maturity
# Property Name(1) (months)(7) Rate Payment Date Date ARD(8)
----------------- ----------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) 234 7.080% 18,528.39 7/1/98 6/1/18
148 Stuart Towne Apartments 115 6.960% 19,657.07 8/1/98 7/1/08
149 Santa Ana Villa 118 6.690% 16,437.68 11/1/98 10/1/08
150 Orland Park Outlots 114 7.320% 17,173.27 7/1/98 6/1/08
151 Brazos Square Shopping Center 116 6.950% 17,589.82 9/1/98 8/1/08
152 Community Mall 141 7.060% 25,789.56 10/1/98 9/1/10
153 Comfort Inn - Fife, WA 118 7.500% 18,105.28 11/1/98 10/1/08
154 Aspen Business Center 118 7.110% 16,313.13 11/1/98 10/1/08
155 Hampton Inn - Ft. Pierce, FL 119 7.000% 17,518.06 12/1/98 11/1/08
156 Oak Tree Mobile Home Park 118 6.640% 16,415.55 11/1/98 10/1/08
157 Walnut Square Apartments 115 6.770% 15,598.27 8/1/98 7/1/08
158 Royal Oaks Mobile Home Park 119 6.375% 14,660.94 12/1/98 11/1/08
159 Plymouth Square Apartments 176 7.160% 16,778.24 9/1/98 8/1/13
160 Watchung View Apartments 177 7.070% 15,477.24 10/1/98 9/1/13
161 Embassy Apartments 118 6.220% 13,932.52 11/1/98 10/1/08
162 Best Buy - West Dundee 201 7.090% 15,105.55 10/1/98 9/1/15
163 1400 Destrehan Avenue 118 6.550% 15,092.95 11/1/98 10/1/08
164 Breckenridge Condominiums 118 6.740% 13,800.98 11/1/98 10/1/08
165 Rosemont Terrace Apartments 115 6.970% 14,128.05 8/1/98 7/1/08
166 Days Inn - Dover, DE 119 7.430% 15,423.32 12/1/98 11/1/08
167 Iberia Center 118 7.000% 13,971.35 11/1/98 10/1/08
168 Shadydale Village Mobile Home Park 118 7.110% 14,990.05 11/1/98 10/1/08
169 Park Terrace Shopping Center 117 6.900% 13,830.60 10/1/98 9/1/08
170 Hanover Village Apartments 116 7.010% 13,985.46 9/1/98 8/1/08
171 Travelodge Hotel-- Seatac 115 7.830% 15,972.36 8/1/98 7/1/08
172 Harlem Furniture 237 7.220% 16,559.75 10/1/98 9/1/18
173 Tree Tops Apartments 74 7.400% 14,539.98 3/1/98 2/1/05
174 Old Town Place Apartments 117 7.330% 14,302.31 10/1/98 9/1/08
175 The Meadows Apartments 115 6.970% 13,696.92 8/1/98 7/1/08
176 Chapman & Feldner Shopping Center 118 7.250% 14,456.14 11/1/98 10/1/08
177 BCH Office Building 117 6.990% 14,122.83 10/1/98 9/1/08
178 Colonial Pines Mobile Estates 115 6.930% 13,212.16 8/1/98 7/1/08
179 NationsBank Professional Center 118 6.820% 12,738.53 11/1/98 10/1/08
180 Belmeade Office Park 118 7.080% 13,881.87 11/1/98 10/1/08
181 Central Building 119 7.500% 15,507.67 12/1/98 11/1/08
182 710 Amsterdam Avenue 118 6.800% 12,484.37 11/1/98 10/1/08
183 Sandstone Apartments &
Vista North Apartments 118 6.390% 11,872.17 11/1/98 10/1/08
184 Highland Park Place Shopping Center 118 6.640% 12,653.65 11/1/98 10/1/08
185 Salem Creek Apartment Complex 115 7.220% 12,582.64 8/1/98 7/1/08
186 Country Greens Apartments 175 7.110% 13,205.52 8/1/98 7/1/13
187 Sahara West Plaza 115 7.360% 12,413.76 8/1/98 7/1/08
188 Walgreen's 237 7.090% 13,239.70 10/1/98 9/1/18
189 Econolodge - Bangor, ME 116 7.600% 13,419.14 9/1/98 8/1/08
190 Comfort Inn - Bangor, ME 116 7.600% 13,419.14 9/1/98 8/1/08
191 Point Clinton 117 7.400% 14,390.81 10/1/98 9/1/08
192 Rite-Aid Pharmacy 236 6.950% 13,592.49 9/1/98 8/1/18
193 Taft and Cleveland Paradise Apartments 174 7.320% 12,728.15 7/1/98 6/1/13
194 Tyrone Village MHP 119 7.000% 11,310.14 12/1/98 11/1/08
195 Steamboat Road 119 7.250% 12,287.72 12/1/98 11/1/08
196 Kerr Station Village 119 6.850% 11,853.07 12/1/98 11/1/08
197 Meadow Run Apartments 114 7.200% 11,539.40 7/1/98 6/1/08
198 45 Church Street 115 7.450% 12,507.61 8/1/98 7/1/08
199 New Brunswick Apartments 177 7.070% 11,222.67 10/1/98 9/1/13
200 Fiesta RV Resort 118 7.330% 12,011.49 11/1/98 10/1/08
201 Cedar Place Office Park 117 7.020% 10,999.66 10/1/98 9/1/08
202 Oak Hollow Mobile Home Park 117 6.900% 11,556.81 10/1/98 9/1/08
203 Centerline Plaza Apartments 116 6.890% 10,822.97 9/1/98 8/1/08
204 Southport Place 119 6.890% 12,299.36 12/1/98 11/1/08
205 Bell Building 130 6.400% 10,703.55 11/1/98 10/1/09
206 Days Inn - Bangor, ME 117 7.540% 11,865.52 10/1/98 9/1/08
207 Stratford Shopping Center 114 7.360% 11,034.45 7/1/98 6/1/08
208 Country Aire Manor 114 7.150% 10,806.51 7/1/98 6/1/08
209 Corlett Creek Apartments 117 6.700% 10,866.57 10/1/98 9/1/08
210 Anchor Bay Apartments 116 6.890% 10,263.73 9/1/98 8/1/08
211 Tall Pines Shopping Center 114 7.130% 12,138.38 7/1/98 6/1/08
212 Skyline Professional Building 179 7.580% 10,746.68 12/1/98 11/1/13
213 Southwood Acres MHP 116 6.790% 9,899.14 9/1/98 8/1/08
214 Nalbert Apartments 117 7.200% 10,937.75 10/1/98 9/1/08
215 1220 South University Avenue 118 6.980% 9,959.40 11/1/98 10/1/08
216 49 Commerce Drive / 81 Ethan Allen Drive 178 6.750% 13,273.64 11/1/98 10/1/13
217 3211 Battleground 116 7.370% 12,558.91 9/1/98 8/1/08
218 Gardner Building 119 7.250% 10,596.35 12/1/98 11/1/08
219 778 Main Street 119 6.750% 10,018.22 12/1/98 11/1/08
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Prepayment Provision Defeasance
# Property Name(1) as of Origination(9) Option(10)
------------------ -------------------- -----------
<S> <C> <C>
147 Rite-Aid of Maine, Inc. (5) L (19.5), O (0.5) Yes
148 Stuart Towne Apartments L (9.5), O (0.5) Yes
149 Santa Ana Villa L (9.5), O (0.5) Yes
150 Orland Park Outlots L (9.5), O (0.5) Yes
151 Brazos Square Shopping Center L (9.5), O (0.5) Yes
152 Community Mall L (11.5), O (0.5) Yes
153 Comfort Inn - Fife, WA L (9.5), O (0.5) Yes
154 Aspen Business Center L (9.5), O (0.5) Yes
155 Hampton Inn - Ft. Pierce, FL L (9.5), O (0.5) Yes
156 Oak Tree Mobile Home Park L (9.5), O (0.5) Yes
157 Walnut Square Apartments L (9.5), O (0.5) Yes
158 Royal Oaks Mobile Home Park L (9.5), O (0.5) Yes
159 Plymouth Square Apartments L (7), YM 1% (5), O (3) No
160 Watchung View Apartments L (14.5), O (0.5) Yes
161 Embassy Apartments L (9.5), O (0.5) Yes
162 Best Buy - West Dundee L (16.5), O (0.5) Yes
163 1400 Destrehan Avenue L (9.5), O (0.5) Yes
164 Breckenridge Condominiums L (9.5), O (0.5) Yes
165 Rosemont Terrace Apartments L (5), YM 1% (4.5), O (0.5) No
166 Days Inn - Dover, DE L (9.5), O (0.5) Yes
167 Iberia Center L (9.5), O (0.5) Yes
168 Shadydale Village Mobile Home Park L (9.5), O (0.5) Yes
169 Park Terrace Shopping Center L (9.5), O (0.5) Yes
170 Hanover Village Apartments L (9.5), O (0.5) Yes
171 Travelodge Hotel -- Seatac L (9.5), O (0.5) Yes
172 Harlem Furniture L (19.5), O (0.5) Yes
173 Tree Tops Apartments L (5), O (2) No
174 Old Town Place Apartments L (9.5), O (0.5) Yes
175 The Meadows Apartments L (5), YM 1% (4.5), O (0.5) No
176 Chapman & Feldner Shopping Center L (3), YM 1% (6.58), O (0.42) No
177 BCH Office Building L (9.5), O (0.5) Yes
178 Colonial Pines Mobile Estates L (9.5), O (0.5) Yes
179 NationsBank Professional Center L (9.5), O (0.5) Yes
180 Belmeade Office Park L (9.5), O (0.5) Yes
181 Central Building L (3), YM 1% (6.58), O (0.42) No
182 710 Amsterdam Avenue L (9.5), O (0.5) Yes
183 Sandstone Apartments &
Vista North Apartments L (9.5), O (0.5) Yes
184 Highland Park Place Shopping Center L (9.5), O (0.5) Yes
185 Salem Creek Apartment Complex L (9.5), O (0.5) Yes
186 Country Greens Apartments L (14.5), O (0.5) Yes
187 Sahara West Plaza L (9.5), O (0.5) Yes
188 Walgreen's L (19.5), O (0.5) Yes
189 Econolodge - Bangor, ME L (9.5), O (0.5) Yes
190 Comfort Inn - Bangor, ME L (9.5), O (0.5) Yes
191 Point Clinton L (9.5), O (0.5) Yes
192 Rite-Aid Pharmacy L (19.5), O (0.5) Yes
193 Taft and Cleveland Paradise Apartments L (14.5), O (0.5) Yes
194 Tyrone Village MHP L (9.5), O (0.5) Yes
195 Steamboat Road L (3), YM 1% (6.5), O (0.5) No
196 Kerr Station Village L (9.5), O (0.5) Yes
197 Meadow Run Apartments L (9.5), O (0.5) Yes
198 45 Church Street L (9.5), O (0.5) Yes
199 New Brunswick Apartments L (14.5), O (0.5) Yes
200 Fiesta RV Resort L (9.5), O (0.5) Yes
201 Cedar Place Office Park L (9.5), O (0.5) Yes
202 Oak Hollow Mobile Home Park L (9.5), O (0.5) Yes
203 Centerline Plaza Apartments L (9.5), O (0.5) Yes
204 Southport Place L (9.5), O (0.5) Yes
205 Bell Building L (10.5), O (0.5) Yes
206 Days Inn - Bangor, ME L (9.5), O (0.5) Yes
207 Stratford Shopping Center L (9.5), O (0.5) Yes
208 Country Aire Manor L (9.5), O (0.5) Yes
209 Corlett Creek Apartments L (9.5), O (0.5) Yes
210 Anchor Bay Apartments L (9.5), O (0.5) Yes
211 Tall Pines Shopping Center L (9.5), O (0.5) Yes
212 Skyline Professional Building L (14.5), O (0.5) Yes
213 Southwood Acres MHP L (9.5), O (0.5) Yes
214 Nalbert Apartments L (3), YM 1% (6.58), O (0.42) No
215 1220 South University Avenue L (5), YM 1% (4.5), O (0.5) No
216 49 Commerce Drive / 81 Ethan Allen Drive L (14.5), O (0.5) Yes
217 3211 Battleground L (9.5), O (0.5) Yes
218 Gardner Building L (3), YM 1% (6.5), O (0.5) No
219 778 Main Street L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Original Remaining Original
Original Percentage of Amortization Amortization Term to
Principal Cut-off Date Initial Term Term Maturity
# Property Name(1) Balance Balance (6) Pool Balance (months) (months) (months)(7)
------------------ ------- ----------- ------------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
220 Briarwood Apartments 1,450,000 1,447,651 0.1% 360 358 120
221 Walton Village Shopping Center 1,450,000 1,445,425 0.1% 180 179 120
222 Rancho Santa Fe Shopping Center 1,450,000 1,444,971 0.1% 300 297 120
223 Winston Place Apartments 1,440,000 1,436,546 0.1% 360 357 120
224 Hondo Park Apartments 1,425,000 1,423,866 0.1% 360 359 120
225 Allegheny Apartments 1,425,000 1,419,806 0.1% 360 355 120
226 Huntington North Apartments 1,420,000 1,415,052 0.1% 240 238 240
227 Rite Aid - Yarmouth 1,420,000 1,414,258 0.1% 240 238 240
228 Sylvan Apartments 1,400,000 1,397,841 0.1% 360 358 120
229 Finger Lakes/Farmington Court Apartments 1,400,000 1,397,635 0.1% 360 358 120
230 Walnut Villas Apartments 1,400,000 1,396,642 0.1% 360 357 120
231 Portsmouth Place Apartments 1,400,000 1,393,339 0.1% 300 296 120
232 70 Warren Avenue 1,372,000 1,369,150 0.1% 300 298 120
233 Martinsville Plaza 1,350,000 1,346,876 0.1% 360 357 120
234 Route 66 Business World 1,322,000 1,320,493 0.1% 300 299 120
235 Woodwinds Condominiums 1,305,000 1,302,988 0.1% 360 358 120
236 College Square Apartments 1,300,000 1,298,650 0.1% 360 359 120
237 Car Engineering Building 1,300,000 1,298,518 0.1% 300 299 120
238 Executive Townhomes 1,300,000 1,298,518 0.1% 300 299 120
239 Hartford Crossing Retail Plaza 1,300,000 1,294,855 0.1% 360 354 120
240 Cypress Plaza Shopping Center 1,300,000 1,277,569 0.1% 120 117 120
241 Sarasota Place Apartments 1,275,000 1,268,244 0.1% 300 295 120
242 Clayton Forest Apartments 1,250,000 1,247,061 0.1% 360 357 120
243 Checker Auto Parts Store 1,250,000 1,241,293 0.1% 240 236 240
244 Southpointe Center 1,250,000 1,228,185 0.1% 144 140 144
245 Maple Court Apartments 1,225,000 1,222,253 0.1% 360 357 180
246 Crestwood MHP 1,225,000 1,220,422 0.1% 360 355 120
247 Hyde Park Place Apartments 1,220,000 1,216,314 0.1% 360 356 120
248 Allen Medical Office Building 1,225,000 1,210,700 0.1% 180 176 180
249 Canyon View Offices 1,200,000 1,198,686 0.1% 300 299 120
250 Firehouse Square 1,200,000 1,197,382 0.1% 300 298 60
251 Plymouth Place Plaza 1,200,000 1,194,801 0.1% 300 296 120
252 Meridian Mobile Estates 1,200,000 1,194,594 0.1% 300 296 120
253 Country Mobile Estates 1,175,000 1,167,889 0.1% 300 295 180
254 Village Apartments 1,125,000 1,122,663 0.1% 300 298 120
255 Ackels Mobile Home Park 1,100,000 1,098,508 0.1% 300 299 120
256 Redford Manor Apartments 1,096,000 1,092,844 0.1% 360 356 120
257 Doms Business Park 1,080,000 1,078,769 0.1% 300 299 120
258 Bradfield Creek Townhomes 1,050,000 1,047,819 0.1% 300 298 120
259 San Remo Apartments 1,040,000 1,036,984 0.1% 360 356 120
260 Consolidated Printing 1,025,000 1,023,948 0.1% 300 299 120
261 Knightsbridge Apartments 1,000,000 998,938 0.1% 312 311 120
262 Whispering Meadows 1,000,000 996,657 0.1% 300 297 120
263 Buckingham Court Apartments 1,000,000 996,777 0.1% 360 355 120
264 Homestead Apartments 1,000,000 996,490 0.1% 360 355 120
265 4th Avenue West Estates 1,000,000 993,781 0.1% 180 178 180
266 Treaty Oaks Apartments 950,000 948,917 0.1% 300 299 120
267 Wilshire Estates MHP 950,000 941,325 0.1% 180 177 180
268 Hollywood Video 925,000 920,125 0.1% 240 237 120
269 5 Milk Street 900,000 898,974 0.1% 300 299 120
270 Cardi Building 900,000 898,974 0.1% 300 299 120
271 Boulevard of Chevy Chase Apartments 900,000 896,944 0.1% 360 355 120
272 10 McKinley Street 850,000 849,031 0.1% 300 299 120
273 Londonaire Townhouses 850,000 848,564 0.1% 360 358 120
274 Heon Court Apartments 840,000 838,084 0.1% 300 298 120
275 One Cameron Place Shopping Center 825,000 824,060 0.1% 300 299 120
276 197 U.S. Route One 825,000 823,220 0.1% 300 298 120
277 980 Forest Avenue 809,000 807,281 0.1% 300 298 120
278 Chandler Crossing Apartments 800,000 797,377 0.1% 300 297 120
279 Kingswood Place Apartments 785,000 782,426 0.1% 240 238 120
280 4525-4535 McEwen Road 750,000 749,172 0.1% 300 299 120
281 Doms Metroplex Park 750,000 749,145 0.1% 300 299 120
282 Baxter Mills Apartments 740,000 738,433 0.1% 300 298 120
283 Seven Eleven 725,000 723,392 0.1% 300 298 120
284 3314 Mount Pleasant Apartments 710,000 707,854 0.1% 300 297 120
285 Virginia Apartments 700,000 699,186 0.1% 300 299 120
286 Pagewood Oval Apartments 675,000 672,740 0.1% 300 297 120
287 Creekview Condominiums 630,000 628,691 0.1% 300 298 120
288 Park Hill Apartments 615,000 613,961 0.1% 360 358 120
289 Amherst Gardens 600,000 598,694 0.1% 300 298 120
290 Arlington Arms Apartments 585,000 583,666 0.1% 300 298 120
291 Barstow Plaza 500,000 499,461 0.0% 300 299 120
292 Fleur de Lis Apartments 500,000 498,217 0.0% 300 296 120
<CAPTION>
Remaining
Term to First
Maturity Mortgage Monthly Payment Maturity
# Property Name(1) (months)(7) Rate Payment Date Date ARD(8)
----------------- ----------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
220 Briarwood Apartments 118 6.530% 9,193.61 11/1/98 10/1/08
221 Walton Village Shopping Center 119 7.000% 13,033.01 12/1/98 11/1/08
222 Rancho Santa Fe Shopping Center 117 7.100% 10,340.98 10/1/98 9/1/08
223 Winston Place Apartments 117 6.770% 9,358.96 10/1/98 9/1/08
224 Hondo Park Apartments 119 7.150% 9,624.55 12/1/98 11/1/08
225 Allegheny Apartments 115 6.900% 9,385.05 8/1/98 7/1/08
226 Huntington North Apartments 238 7.350% 11,309.54 11/1/98 10/1/18
227 Rite Aid - Yarmouth 238 6.240% 10,370.91 11/1/98 10/1/18
228 Sylvan Apartments 118 6.740% 9,071.07 11/1/98 10/1/08
229 Finger Lakes/Farmington Court Apartments 118 6.350% 8,711.30 11/1/98 10/1/08
230 Walnut Villas Apartments 117 6.770% 9,098.99 10/1/98 9/1/08
231 Portsmouth Place Apartments 116 6.800% 9,717.01 9/1/98 8/1/08
232 70 Warren Avenue 118 7.500% 10,138.96 11/1/98 10/1/08
233 Martinsville Plaza 117 6.930% 8,918.21 10/1/98 9/1/08
234 Route 66 Business World 119 7.500% 9,769.46 12/1/98 11/1/08
235 Woodwinds Condominiums 118 6.740% 8,455.53 11/1/98 10/1/08
236 College Square Apartments 119 5.780% 7,611.24 12/1/98 11/1/08
237 Car Engineering Building 119 7.500% 9,606.89 12/1/98 11/1/08
238 Executive Townhomes 119 7.500% 9,606.89 12/1/98 11/1/08
239 Hartford Crossing Retail Plaza 114 7.430% 9,027.56 7/1/98 6/1/08
240 Cypress Plaza Shopping Center 117 7.190% 15,221.71 10/1/98 9/1/08
241 Sarasota Place Apartments 115 7.340% 9,289.85 8/1/98 7/1/08
242 Clayton Forest Apartments 117 6.860% 8,199.09 10/1/98 9/1/08
243 Checker Auto Parts Store 236 7.400% 9,993.62 9/1/98 8/1/18
244 Southpointe Center 140 7.430% 13,143.06 9/1/98 8/1/10
245 Maple Court Apartments 177 7.070% 8,207.63 10/1/98 9/1/13
246 Crestwood MHP 115 6.800% 7,986.08 8/1/98 7/1/08
247 Hyde Park Place Apartments 116 6.850% 7,994.16 9/1/98 8/1/08
248 Allen Medical Office Building 176 7.590% 11,418.64 9/1/98 8/1/13
249 Canyon View Offices 119 7.750% 9,063.95 12/1/98 11/1/08
250 Firehouse Square 58 7.240% 8,665.95 11/1/98 10/1/03
251 Plymouth Place Plaza 116 7.310% 8,720.12 9/1/98 8/1/08
252 Meridian Mobile Estates 116 7.100% 8,558.06 9/1/98 8/1/08
253 Country Mobile Estates 175 7.200% 8,455.17 8/1/98 7/1/13
254 Village Apartments 118 7.500% 8,313.65 11/1/98 10/1/08
255 Ackels Mobile Home Park 119 6.400% 7,358.69 12/1/98 11/1/08
256 Redford Manor Apartments 116 7.050% 7,328.56 9/1/98 8/1/08
257 Doms Business Park 119 7.500% 7,981.10 12/1/98 11/1/08
258 Bradfield Creek Townhomes 118 7.500% 7,759.41 11/1/98 10/1/08
259 San Remo Apartments 116 7.020% 6,933.12 9/1/98 8/1/08
260 Consolidated Printing 119 8.150% 8,013.24 12/1/98 11/1/08
261 Knightsbridge Apartments 119 7.400% 7,228.43 12/1/98 11/1/08
262 Whispering Meadows 117 7.310% 7,266.77 10/1/98 9/1/08
263 Buckingham Court Apartments 115 7.380% 6,910.16 8/1/98 7/1/08
264 Homestead Apartments 115 7.050% 6,686.64 8/1/98 7/1/08
265 4th Avenue West Estates 178 6.850% 8,904.63 11/1/98 10/1/13
266 Treaty Oaks Apartments 119 7.500% 7,020.42 12/1/98 11/1/08
267 Wilshire Estates MHP 177 7.230% 8,661.49 10/1/98 9/1/13
268 Hollywood Video 117 7.460% 7,429.13 10/1/98 9/1/08
269 5 Milk Street 119 7.500% 6,650.92 12/1/98 11/1/08
270 Cardi Building 119 7.500% 6,650.92 12/1/98 11/1/08
271 Boulevard of Chevy Chase Apartments 115 7.180% 6,096.91 8/1/98 7/1/08
272 10 McKinley Street 119 7.500% 6,281.43 12/1/98 11/1/08
273 Londonaire Townhouses 118 6.350% 5,289.00 11/1/98 10/1/08
274 Heon Court Apartments 118 7.000% 5,936.95 11/1/98 10/1/08
275 One Cameron Place Shopping Center 119 7.500% 6,096.68 12/1/98 11/1/08
276 197 U.S. Route One 118 7.300% 5,989.76 11/1/98 10/1/08
277 980 Forest Avenue 118 7.380% 5,915.44 11/1/98 10/1/08
278 Chandler Crossing Apartments 117 7.420% 5,870.36 10/1/98 9/1/08
279 Kingswood Place Apartments 118 7.790% 6,463.83 11/1/98 10/1/08
280 45254535 McEwen Road 119 7.700% 5,640.47 12/1/98 11/1/08
281 Doms Metroplex Park 119 7.500% 5,542.43 12/1/98 11/1/08
282 Baxter Mills Apartments 118 7.400% 5,420.49 11/1/98 10/1/08
283 Seven Eleven 118 7.150% 5,193.73 11/1/98 10/1/08
284 3314 Mount Pleasant Apartments 117 7.870% 5,418.89 10/1/98 9/1/08
285 Virginia Apartments 119 7.375% 5,116.16 12/1/98 11/1/08
286 Pagewood Oval Apartments 117 7.300% 4,900.71 10/1/98 9/1/08
287 Creekview Condominiums 118 7.500% 4,655.64 11/1/98 10/1/08
288 Park Hill Apartments 118 6.350% 3,826.75 11/1/98 10/1/08
289 Amherst Gardens 118 7.250% 4,336.84 11/1/98 10/1/08
290 Arlington Arms Apartments 118 7.000% 4,134.66 11/1/98 10/1/08
291 Barstow Plaza 119 7.850% 3,809.53 12/1/98 11/1/08
292 Fleur de Lis Apartments 116 8.320% 3,965.67 9/1/98 8/1/08
<CAPTION>
Prepayment Provision Defeasance
# Property Name(1) as of Origination(9) Option (10)
----------------- -------------------- -----------
<S> <C> <C>
220 Briarwood Apartments L (9.5), O (0.5) Yes
221 Walton Village Shopping Center L (9.5), O (0.5) Yes
222 Rancho Santa Fe Shopping Center L (9.5), O (0.5) Yes
223 Winston Place Apartments L (9.5), O (0.5) Yes
224 Hondo Park Apartments L (9.5), O (0.5) Yes
225 Allegheny Apartments L (9.5), O (0.5) Yes
226 Huntington North Apartments L (10), YM 1% (9.5), O (0.5) No
227 Rite-Aid - Yarmouth L (19.5), O (0.5) Yes
228 Sylvan Apartments L (9.5), O (0.5) Yes
229 Finger Lakes/Farmington Court Apartments L (9.5), O (0.5) Yes
230 Walnut Villas Apartments L (9.5), O (0.5) Yes
231 Portsmouth Place Apartments L (9.5), O (0.5) Yes
232 70 Warren Avenue L (3), YM 1% (6.5), O (0.5) No
233 Martinsville Plaza L (9.5), O (0.5) Yes
234 Route 66 Business World L (3), YM 1% (6.58), O (0.42) No
235 Woodwinds Condominiums L (9.5), O (0.5) Yes
236 College Square Apartments L (9.5), O (0.5) Yes
237 Car Engineering Building L (3), YM 1% (6.5), O (0.5) No
238 Executive Townhomes L (3), YM 1% (6.58), O (0.42) No
239 Hartford Crossing Retail Plaza L (9.5), O (0.5) Yes
240 Cypress Plaza Shopping Center L (9.5), O (0.5) Yes
241 Sarasota Place Apartments L (3), YM 1% (6.5), O (0.5) No
242 Clayton Forest Apartments L (9.5), O (0.5) Yes
243 Checker Auto Parts Store L (19.5), O (0.5) Yes
244 Southpointe Center L (11.5), O (0.5) Yes
245 Maple Court Apartments L (14.5), O (0.5) Yes
246 Crestwood MHP L (9.5), O (0.5) Yes
247 Hyde Park Place Apartments L (9.5), O (0.5) Yes
248 Allen Medical Office Building L (14.5), O (0.5) Yes
249 Canyon View Offices L (3), YM 1% (6.5), O (0.5) No
250 Firehouse Square L (4.5), O (0.5) Yes
251 Plymouth Place Plaza L (9.5), O (0.5) Yes
252 Meridian Mobile Estates L (9.5), O (0.5) Yes
253 Country Mobile Estates L (14.5), O (0.5) Yes
254 Village Apartments L (3), YM 1% (6.5), O (0.5) No
255 Ackels Mobile Home Park L (9.5), O (0.5) Yes
256 Redford Manor Apartments L (9.5), O (0.5) Yes
257 Doms Business Park L (3), YM 1% (6.58), O (0.42) No
258 Bradfield Creek Townhomes L (3), YM 1% (6.5), O (0.5) No
259 San Remo Apartments L (9.5), O (0.5) Yes
260 Consolidated Printing L (3), YM 1% (6.5), O (0.5) No
261 Knightsbridge Apartments L (3), YM 1% (6.5), O (0.5) No
262 Whispering Meadows L (3), YM 1% (6.5), O (0.5) No
263 Buckingham Court Apartments L (9.5), O (0.5) Yes
264 Homestead Apartments L (9.5), O (0.5) Yes
265 4th Avenue West Estates L (14.5), O (0.5) Yes
266 Treaty Oaks Apartments L (3), YM 1% (6.58), O (0.42) No
267 Wilshire Estates MHP L (14.5), O (0.5) Yes
268 Hollywood Video L (3), YM 1% (6.58), O (0.42) No
269 5 Milk Street L (3), YM 1% (6.5), O (0.5) No
270 Cardi Building L (3), YM 1% (6.5), O (0.5) No
271 Boulevard of Chevy Chase Apartments L (9.5), O (0.5) Yes
272 10 McKinley Street L (3.08), YM 1% (6.42), O (0.5) No
273 Londonaire Townhouses L (9.5), O (0.5) Yes
274 Heon Court Apartments L (3), YM 1% (6.5), O (0.5) No
275 One Cameron Place Shopping Center L (3), YM 1% (6.58), O (0.42) No
276 197 U.S. Route One L (3), YM 1% (6.5), O (0.5) No
277 980 Forest Avenue L (3), YM 1% (6.5), O (0.5) No
278 Chandler Crossing Apartments L (3), YM 1% (6.5), O (0.5) No
279 Kingswood Place Apartments L (3), YM 1% (6.58), O (0.42) No
280 45254535 McEwen Road L (3), YM 1% (6.5), O (0.5) No
281 Doms Metroplex Park L (3), YM 1% (6.58), O (0.42) No
282 Baxter Mills Apartments L (3), YM 1% (6.5), O (0.5) No
283 Seven Eleven L (3), YM 1% (6.58), O (0.42) No
284 3314 Mount Pleasant Apartments L (3), YM 1% (6.58), O (0.42) No
285 Virginia Apartments L (3), YM 1% (6.58), O (0.42) No
286 Pagewood Oval Apartments L (3), YM 1% (6.5), O (0.5) No
287 Creekview Condominiums L (3), YM 1% (6.5), O (0.5) No
288 Park Hill Apartments L (9.5), O (0.5) Yes
289 Amherst Gardens L (3), YM 1% (6.5), O (0.5) No
290 Arlington Arms Apartments L (3), YM 1% (6.5), O (0.5) No
291 Barstow Plaza L (3), YM 1% (6.58), O (0.42) No
292 Fleur de Lis Apartments L (3), YM 1% (6.5), O (0.5) No
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
Original Remaining Original
Original Percentage of Amortization Amortization Term to
Principal Cut-off Date Initial Term Term Maturity
# Property Name(1) Balance Balance(6) Pool Balance (months) (months) (months)(7)
----------------- ------- ----------- ------------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
293 2602 Penny Lane 484,000 483,049 0.0% 300 298 120
294 3246 Navarre Avenue 457,500 456,550 0.0% 300 298 120
295 Tara Apartments 450,000 448,432 0.0% 240 238 240
296 Mark V Apartments 420,000 419,168 0.0% 300 298 120
297 Hallmark Apartments 400,000 398,843 0.0% 300 297 120
298 Mirage Apartments 388,000 386,867 0.0% 300 297 120
299 Main Street Studios 380,000 379,302 0.0% 360 357 120
300 Summertree Apartments 371,000 369,677 0.0% 300 296 120
301 Prestige State Bank 360,000 359,347 0.0% 300 298 120
302 Masonic Temple 350,000 349,314 0.0% 300 298 120
========================================================================================
Total/Weighted Average $ 1,111,112,936 $ 1,107,680,439 100.0% 322 319 130
========================================================================================
Maximum: $ 75,000,000 $ 74,732,033 6.7% 360 359 300
Minimum: $ 67,475 $ 66,773 0.0% 120 117 60
<CAPTION>
Remaining
Term to First
Maturity Mortgage Monthly Payment Maturity
# Property Name(1) (months)(7) Rate Payment Date Date ARD(8)
---------------- ----------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
293 2602 Penny Lane 118 7.790% 3,668.51 11/1/98 10/1/08
294 3246 Navarre Avenue 118 7.500% 3,380.88 11/1/98 10/1/08
295 Tara Apartments 238 7.350% 3,584.01 11/1/98 10/1/18
296 Mark V Apartments 118 7.750% 3,172.28 11/1/98 10/1/08
297 Hallmark Apartments 117 8.110% 3,116.47 10/1/98 9/1/08
298 Mirage Apartments 117 8.060% 3,010.09 10/1/98 9/1/08
299 Main Street Studios 117 7.920% 2,767.14 10/1/98 9/1/08
300 Summertree Apartments 116 8.320% 2,942.52 9/1/98 8/1/08
301 Prestige State Bank 118 8.200% 2,826.40 11/1/98 10/1/08
302 Masonic Temple 118 7.800% 2,655.15 11/1/98 10/1/08
============================================================================================================
126 7.116% $ 7,811,395 9/25/98 7/7/11
============================================================================================================
298 8.520% $ 526,740 12/1/98 10/1/23
55 5.780% $ 586 3/1/98 7/1/03
<CAPTION>
Prepayment Provision Defeasance
# Property Name(1) as of Origination(9) Option(10)
----------------- -------------------- ----------
<S> <C> <C>
293 2602 Penny Lane L (3), YM 1% (6.58), O (0.42) No
294 3246 Navarre Avenue L (3), YM 1% (6.5), O (0.5) No
295 Tara Apartments L (10), YM 1% (9.5), O (0.5) No
296 Mark V Apartments L (3), YM 1% (6.58), O (0.42) No
297 Hallmark Apartments L (3), YM 1% (6.58), O (0.42) No
298 Mirage Apartments L (3), YM 1% (6.5), O (0.5) No
299 Main Street Studios L (3), YM 1% (6.58), O (0.42) No
300 Summertree Apartments L (3), YM 1% (6.5), O (0.5) No
301 Prestige State Bank L (3), YM 1% (6.5), O (0.5) No
302 Masonic Temple L (3), YM 1% (6.5), O (0.5) No
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building
# 21, 507 Plum Street, Zanesville, Northeast Industrial Building # 8,
Northeast Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville
and One Clinton Square, respectively, are cross-collateralized and
cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The
Edwards Center at Rancho Niguel, respectively, are cross-collateralized
and cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office
Center, Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and
Maplewood Mobile Estates, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Run in Foods DP #4, Run in Foods Unit DP
#7, Run in Foods #401, Run in Foods #406, Run in Foods #402, Run in
Foods #403, Run in Foods #404, Run in Foods Unit #410, respectively,
are cross-collateralized and cross-defaulted. The appraised value of each
such Mortgage Loan includes as estimated enterprise value and an
appraised real estate value. The aggregate of the appraised real estate
values (including FF&E) of such Mortgage Loans is $12,240,000.
(1G) The Mortgage Loans secured by Super 8-Midtown, Super 8-East and Super
8-West, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa
Business Park, respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July
2008. The Underwritten DSCR presented herein with respect to the
mortgage loan is based on the monthly payment in effect as of December
1, 1998.
(6) Assumes a Cut-off Date of December 1, 1998.
(7) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of
the indicated column.
(8) Anticipated Repayment Date.
(9) Prepayment Provision as of Origination:
L(x) = Lockout or Defeasance for x years
YM A%(x) = Greater of Yield Maintenance Premium and A% Prepayment for x
years
O(x) = Prepayable at par for x years
(10) "Yes" means that defeasance is permitted (as otherwise described in this
Prospectus Supplement) notwithstanding the Lockout Period. "Both" means
that the Mortgage Loan provides for a Lockout Period followed by a
period during which defeasance is permitted and, for purposes of the
"Prepayment Provision" set forth in this table and described in this
Prospectus Supplement, the two periods are together presented as a
"Lockout Period" during which defeasance is permitted (as otherwise
described in this Prospectus Supplement).
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual
Engineering Recurring
Property Reserve at Replacement
# Property Name (1) Type Origination Reserve
- ----------------- ---- ----------- -------
<S> <C> <C> <C>
1 Chanin Building Office $3,438 $0.20
2 250 South Clinton Street (1A) Office N/A $0.25
3 GATX Warehouse (1A) Industrial $3,500 $0.12
4 1001 and 1011 Airport Industrial Park (1A) Industrial $8,875 $0.10
5 Northeast Industrial Park Building # 21 (1A) Industrial $12,649 $0.10
6 507 Plum Street (1A) Office $1,038 $0.31
7 Zanesville (1A) Industrial $23,750 $0.10
8 Northeast Industrial Park Building # 8 (1A) Industrial $8,815 $0.10
9 Northeast Industrial Park Building # 22 (1A) Industrial $10,349 $0.10
10 4, 5 & 8 Marway Circle (1A) Industrial $116,438 $0.12
11 Marysville (1A) Industrial $12,500 $0.10
12 One Clinton Square (1A) Office $1,875 $0.20
13 The Center at Rancho Niguel (1B) Retail $39,704 N/A
14 The Edwards Center at Rancho Niguel (1B) Retail $14,446 N/A
15 Rivertree Court Shopping Center (1C) Retail $191,875 N/A
16 Woodland Heights Shopping Center (1C) Retail $6,875 N/A
17 Winnetka Commons Shopping Center (1C) Retail N/A N/A
18 Berwyn Plaza Shopping Center (1C) Retail N/A N/A
19 Walgreen's Store (1C) Retail $6,875 N/A
20 Heritage Pointe Multifamily N/A $250
21 Best Western Inn of Chicago Hotel $18,750 4.50%
22 Christiana Hilton Inn - Newark, DE Hotel $750 4.00%
23 Embassy Crossing (2) Retail $28,299 $0.15
24 Jefferson at Treetops Apartments Multifamily N/A $205
25 Dominion Tower & Parking Garage Mixed Use $21,875 $0.16
26 Holiday Inn Hurstbourne Hotel $28,125 4.00%
27 Blue Ash Portfolio (1D) Mixed Use $23,125 N/A
28 Springdale Office Center (1D) Office $41,750 N/A
29 Executive Center East (1D) Office $10,250 N/A
30 McDonald's (1D) Retail $625 N/A
31 11 Park Place Office $191,250 $0.25
32 Twin Creek Apartments Multifamily N/A $250
33 Storage Box / Stowaway Storage (1E) Self Storage N/A $0.20
34 Maplewood Mobile Estates (1E) Manufactured Housing N/A N/A
35 Corporate Office Park Office N/A $0.15
36 Knights Bridge II Apartments Multifamily $155,855 $200
37 Preston Stonebrooke Shopping Center Retail $37,885 N/A
38 Run in Foods DP #4 (1F) Convenience Store $23,744 N/A
39 Run in Foods DP #7 (1F) Convenience Store $41,774 N/A
40 Run in Foods #401 (1F) Convenience Store N/A N/A
41 Run in Foods #406 (1F) Convenience Store $2,754 N/A
42 Run in Foods #402 (1F) Convenience Store N/A N/A
43 Run in Foods #403 (1F) Convenience Store $3,092 N/A
44 Run in Foods #404 (1F) Convenience Store $19,636 N/A
45 Run in Foods #410 (1F) Convenience Store N/A N/A
46 Super 8-Midtown (1G) Hotel $1,345 4.00%
47 Super 8-East (1G) Hotel $377 4.00%
48 Super 8-West (1G) Hotel $403 4.00%
49 Wellington Woods & Lakes Multifamily $1,625 $250
50 Hampton Inn - Indianapolis, IN Hotel N/A 4.00%
51 Chidlaw Building Office N/A N/A
52 Grandview Garden Apartments Multifamily $46,750 $250
53 Cornerstone Office Park Office $48,750 N/A
54 160 Pine Street Mixed Use N/A N/A
55 River Run Apartments Multifamily $2,650 $250
56 180 N. Michigan Avenue Office Building Office $148,875 N/A
57 Oak Hills Apartments Multifamily $375,000 $250
58 145 Rosemary Street Office $16,375 $0.20
59 Holiday Inn - Metroplex-Youngstown, OH Hotel $71,200 4.00%
60 MCOM Building Industrial N/A N/A
61 Mayport Trace Apartments Multifamily $13,938 $251
62 Mercantile Bank Building Office $43,625 N/A
63 Brook Forest Apartments Multifamily N/A $250
64 Midfield Shopping Center Retail $15,000 $0.15
65 Far East Plaza Retail $1,875 N/A
66 Highland Square Shopping Center Retail N/A N/A
67 Spanish Villa Apartments Multifamily $76,410 $250
68 Greens Corner Shopping Center (3) Retail $45,986 $0.15
69 Mountain Ridge Apartments Multifamily $10,250 $250
70 Radisson Suites - Huntsville, AL Hotel N/A 4.00%
71 Holiday Campground RV Park $1,875 N/A
72 Plantation Meadows Apartments Multifamily N/A $250
73 Gresham Townhomes Multifamily N/A $250
<CAPTION>
U/W
Recurring U/W Tax &
Replacement LC&TI Insurance
# Property Name (1) Reserve Per Sq. Ft. Escrows
- ----------------- ------- ----------- -------
<S> <C> <C> <C>
1 Chanin Building $0.20 $2.20 Both
2 250 South Clinton Street (1A) $0.25 $1.59 Both
3 GATX Warehouse (1A) $0.15 $0.23 Both
4 1001 and 1011 Airport Industrial Park (1A) $0.10 $0.28 Both
5 Northeast Industrial Park Building # 21 (1A) $0.10 $0.27 Both
6 507 Plum Street (1A) $0.31 $1.49 Both
7 Zanesville (1A) $0.10 $0.24 Both
8 Northeast Industrial Park Building # 8 (1A) $0.10 $0.25 Both
9 Northeast Industrial Park Building # 22 (1A) $0.10 $0.25 Both
10 4, 5 & 8 Marway Circle (1A) $0.20 $0.25 Both
11 Marysville (1A) $0.10 $0.26 Both
12 One Clinton Square (1A) $0.20 $1.29 Both
13 The Center at Rancho Niguel (1B) $0.15 $0.47 Both
14 The Edwards Center at Rancho Niguel (1B) $0.10 $0.15 Both
15 Rivertree Court Shopping Center (1C) $0.17 $0.60 Both
16 Woodland Heights Shopping Center (1C) $0.15 $0.30 Both
17 Winnetka Commons Shopping Center (1C) $0.15 $0.91 Both
18 Berwyn Plaza Shopping Center (1C) $0.15 $1.12 Both
19 Walgreen's Store (1C) $0.20 N/A Both
20 Heritage Pointe $250 N/A Both
21 Best Western Inn of Chicago 4.00% N/A Both
22 Christiana Hilton Inn - Newark, DE 5.00% N/A Both
23 Embassy Crossing (2) $0.17 $0.41 Both
24 Jefferson at Treetops Apartments $250 N/A Both
25 Dominion Tower & Parking Garage $0.33 $0.63 Both
26 Holiday Inn Hurstbourne 5.00% N/A Both
27 Blue Ash Portfolio (1D) $0.15 $0.76 Both
28 Springdale Office Center (1D) $0.15 $0.59 Both
29 Executive Center East (1D) $0.19 $1.03 Both
30 McDonald's (1D) $0.23 N/A Both
31 11 Park Place $0.25 $1.49 Both
32 Twin Creek Apartments $250 N/A Both
33 Storage Box / Stowaway Storage (1E) $0.20 N/A Both
34 Maplewood Mobile Estates (1E) $50 N/A Both
35 Corporate Office Park $0.15 $0.75 Both
36 Knights Bridge II Apartments $250 N/A Both
37 Preston Stonebrooke Shopping Center $0.15 $1.01 Both
38 Run in Foods DP #4 (1F) N/A N/A Both
39 Run in Foods DP #7 (1F) N/A N/A Both
40 Run in Foods #401 (1F) N/A N/A Both
41 Run in Foods #406 (1F) N/A N/A Both
42 Run in Foods #402 (1F) N/A N/A Both
43 Run in Foods #403 (1F) N/A N/A Both
44 Run in Foods #404 (1F) N/A N/A Both
45 Run in Foods #410 (1F) N/A N/A Both
46 Super 8-Midtown (1G) 5.00% N/A Both
47 Super 8-East (1G) 5.00% N/A Both
48 Super 8-West (1G) 5.00% N/A Both
49 Wellington Woods & Lakes $250 N/A Both
50 Hampton Inn - Indianapolis, IN 4.00% N/A Both
51 Chidlaw Building $0.16 $0.44 Both
52 Grandview Garden Apartments $250 N/A Both
53 Cornerstone Office Park $0.15 $1.26 Both
54 160 Pine Street $0.20 $1.46 Both
55 River Run Apartments $250 N/A Both
56 180 N. Michigan Avenue Office Building $0.22 $1.11 Both
57 Oak Hills Apartments $250 N/A Both
58 145 Rosemary Street $0.20 $1.12 Both
59 Holiday Inn - Metroplex-Youngstown, OH 5.00% N/A Both
60 MCOM Building $0.15 $0.30 Both
61 Mayport Trace Apartments $250 N/A Both
62 Mercantile Bank Building $0.19 $1.07 Both
63 Brook Forest Apartments $250 N/A Both
64 Midfield Shopping Center $0.15 $0.39 Both
65 Far East Plaza $0.15 $0.67 Both
66 Highland Square Shopping Center $0.17 $0.49 Both
67 Spanish Villa Apartments $250 N/A Both
68 Greens Corner Shopping Center (3) $0.15 $0.28 Both
69 Mountain Ridge Apartments $250 N/A Both
70 Radisson Suites - Huntsville, AL 4.00% N/A Both
71 Holiday Campground $50 N/A Both
72 Plantation Meadows Apartments $250 N/A Both
73 Gresham Townhomes $250 N/A Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual
Engineering Recurring
Property Reserve at Replacement
# Property Name (1) Type Origination Reserve
- ----------------- ---- ----------- -------
<S> <C> <C> <C>
74 Lakewood Apartments Multifamily $78,125 $250
75 Imperial Plaza Shopping Center Retail $4,438 $0.20
76 Super 8 - Las Vegas, NV Hotel N/A 4.00%
77 Thunder Hollow Multifamily N/A $250
78 K-Mart Montwood Point Retail N/A $0.15
79 Trabuco Marketplace Retail N/A N/A
80 Indian Valley Apartments Multifamily $43,380 $250
81 Flamingo West Centre Retail N/A N/A
82 Mill Creek Shopping Center Retail $40,688 N/A
83 High Vista Apartments Multifamily N/A $250
84 Woodland Office Center Office N/A N/A
85 Bayfair Apartments Multifamily $258,000 $250
86 University Green Apartments Multifamily $3,050 $250
87 El Dorado Mobile Home Estates Manufactured Housing N/A N/A
88 Holiday Inn - Danbury, CT Hotel N/A 4.00%
89 Country Inn & Suites Hotel Hotel $7,725 4.00%
90 Center Ridge Apartments Multifamily $247,000 $250
91 The Marriott Building Office $36,250 N/A
92 Silicon Valley Inn Hotel $2,850 4.00%
93 Best Western - Sunnyvale Hotel $1,806 4.00%
94 Golden Valley Commons Retail N/A N/A
95 West Park Place Senior Housing $625 $250
96 Naperville Office Court Office $26,563 N/A
97 Holiday Inn Express Hotel & Suites - Mountain
View, CA Hotel N/A 4.00%
98 Best Buy / Drug Emporium Retail N/A $0.23
99 Medical Arts Building Office N/A N/A
100 Comfort Inn - Sunnyvale Hotel N/A 4.00%
101 Holiday Inn North Denver Hotel N/A 4.00%
102 Windlands Shopping Center (4) Retail $6,025 $0.15
103 Northborough Woods Apartments Multifamily $23,111 $250
104 Madison Building Office $28,125 $0.20
105 Victory Townhomes Multifamily N/A $250
106 Dairy Plaza Shopping Center Retail $12,250 N/A
107 Comfort Inn - Concord, NH Hotel $38,688 4.00%
108 Peconic Plaza Mixed Use $625 $0.19
109 Bayou Village Place Apartments Multifamily $199,563 $251
110 Country Suites - Chattanooga, TN Hotel N/A 4.00%
111 531 West Deming Multifamily N/A $250
112 Camelot Apartments Multifamily $80,125 $250
113 Sevilla Apartments Multifamily $8,250 $250
114 The Way III Apartments Multifamily $65,250 $250
115 Glenview Office and Industrial Park Industrial $16,250 N/A
116 Hampton Inn - Decatur, AL Hotel N/A 4.00%
117 Mission Industrial Park (1H) Industrial $1,563 N/A
118 Jurupa Business Park (1H) Industrial $9,337 N/A
119 Colony Square Shopping Center Retail N/A $0.15
120 Vintage Business Park Office $22,388 N/A
121 Crossroads Shopping Center Retail N/A N/A
122 High Country Plaza Retail N/A N/A
123 Glencoe Avenue Industrial Industrial N/A N/A
124 St. Charles Apartments (1I) Multifamily N/A $250
125 St. James Apartments (1I) Multifamily N/A $250
126 Plaza at Sunrise Mixed Use N/A N/A
127 Shannon Arms III Apartments Multifamily N/A $250
128 River Valley Square Shopping Center Retail $10,625 N/A
129 Rio Commercial Center Industrial N/A N/A
130 Alexis Apartment Complex Multifamily $875 $250
131 Beltway Plaza 4710 Office $25,875 N/A
132 Casa Linda MHP Manufactured Housing $23,938 N/A
133 Mesa Ridge Apartments Multifamily $1,938 $252
134 Vintage Business Park II Office N/A N/A
135 Mountain Village Shopping Center Retail $76,456 N/A
136 Rock River Tower Apartments Multifamily $213,981 $250
137 Durango Plaza Retail Center Retail N/A N/A
138 Beatrice Avenue Industrial Industrial N/A N/A
139 Miller Apartments Multifamily $2,906 $250
140 University Square Outlet Mall Retail $11,125 N/A
141 Ridgewood Plaza Retail N/A N/A
142 Chase Village Apartments Multifamily $9,063 $250
143 Warsaw Village Shopping Center Retail N/A N/A
144 Provident Place Office Building Office $2,000 N/A
145 920 S. Waukegan Road Office $625 N/A
146 Amberley Suite Hotel Hotel N/A 4.00%
<CAPTION>
U/W
Recurring U/W Tax &
Replacement LC&TI Insurance
# Property Name (1) Reserve Per Sq. Ft. Escrows
- ----------------- ------- ----------- -------
<S> <C> <C> <C>
74 Lakewood Apartments $250 N/A Both
75 Imperial Plaza Shopping Center $0.25 $0.42 Both
76 Super 8 - Las Vegas, NV 5.00% N/A Both
77 Thunder Hollow $250 N/A Both
78 K-Mart Montwood Point $0.15 $0.15 Both
79 Trabuco Marketplace $0.16 $1.10 Both
80 Indian Valley Apartments $250 N/A Both
81 Flamingo West Centre $0.31 $1.29 Both
82 Mill Creek Shopping Center $0.15 $0.88 Both
83 High Vista Apartments $250 N/A Both
84 Woodland Office Center $0.23 $1.56 Both
85 Bayfair Apartments $250 N/A Both
86 University Green Apartments $250 N/A Both
87 El Dorado Mobile Home Estates $50 N/A Both
88 Holiday Inn - Danbury, CT 5.00% N/A Both
89 Country Inn & Suites Hotel 4.00% N/A Both
90 Center Ridge Apartments $250 N/A Both
91 The Marriott Building $0.20 $1.09 Both
92 Silicon Valley Inn 4.00% N/A Both
93 Best Western - Sunnyvale 4.00% N/A Both
94 Golden Valley Commons $0.15 $0.87 Both
95 West Park Place $250 N/A Both
96 Naperville Office Court $0.21 $0.98 Both
97 Holiday Inn Express Hotel & Suites - Mountain View, CA 4.00% N/A Both
98 Best Buy / Drug Emporium $0.23 N/A Both
99 Medical Arts Building $0.17 $1.10 Both
100 Comfort Inn - Sunnyvale 4.00% N/A Both
101 Holiday Inn North Denver 5.00% N/A Both
102 Windlands Shopping Center (4) $0.15 $0.51 Both
103 Northborough Woods Apartments $250 N/A Both
104 Madison Building $0.20 $0.82 Both
105 Victory Townhomes $250 N/A Both
106 Dairy Plaza Shopping Center $0.18 $0.26 Both
107 Comfort Inn - Concord, NH 4.00% N/A Both
108 Peconic Plaza $0.19 $1.57 Both
109 Bayou Village Place Apartments $251 N/A Both
110 Country Suites - Chattanooga, TN 5.00% N/A Both
111 531 West Deming $250 N/A Both
112 Camelot Apartments $250 N/A Both
113 Sevilla Apartments $250 N/A Both
114 The Way III Apartments $250 N/A Both
115 Glenview Office and Industrial Park $0.26 $0.42 Both
116 Hampton Inn - Decatur, AL 4.00% N/A Both
117 Mission Industrial Park (1H) $0.10 $0.25 Both
118 Jurupa Business Park (1H) $0.16 $0.27 Both
119 Colony Square Shopping Center $0.15 $0.43 Both
120 Vintage Business Park $0.15 $1.35 Both
121 Crossroads Shopping Center $0.10 $0.14 Both
122 High Country Plaza $0.18 $0.99 Both
123 Glencoe Avenue Industrial $0.16 $0.71 Both
124 St. Charles Apartments (1I) $250 N/A Both
125 St. James Apartments (1I) $250 N/A Both
126 Plaza at Sunrise $0.15 $1.07 Both
127 Shannon Arms III Apartments $250 N/A Both
128 River Valley Square Shopping Center $0.17 $0.71 Both
129 Rio Commercial Center $0.15 $0.20 Both
130 Alexis Apartment Complex $250 N/A Both
131 Beltway Plaza 4710 $0.26 $1.02 Both
132 Casa Linda MHP $50 N/A Both
133 Mesa Ridge Apartments $252 N/A Both
134 Vintage Business Park II $0.20 $1.47 Both
135 Mountain Village Shopping Center $0.12 $0.56 Both
136 Rock River Tower Apartments $250 N/A Both
137 Durango Plaza Retail Center $0.15 $1.53 Both
138 Beatrice Avenue Industrial $0.15 $0.63 Both
139 Miller Apartments $250 N/A Both
140 University Square Outlet Mall $0.23 $0.95 Both
141 Ridgewood Plaza $0.15 $0.58 Both
142 Chase Village Apartments $250 N/A Both
143 Warsaw Village Shopping Center $0.15 $0.35 Both
144 Provident Place Office Building $0.15 $1.12 Both
145 920 S. Waukegan Road $0.15 $1.35 Both
146 Amberley Suite Hotel 4.00% N/A Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual
Engineering Recurring
Property Reserve at Replacement
# Property Name (1) Type Origination Reserve
- ----------------- ---- ----------- -------
<S> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) Triple Net Lease N/A N/A
148 Stuart Towne Apartments Multifamily $93,382 $250
149 Santa Ana Villa Multifamily $120,000 $350
150 Orland Park Outlots Retail N/A N/A
151 Brazos Square Shopping Center Retail N/A N/A
152 Community Mall Office $165,686 N/A
153 Comfort Inn - Fife, WA Hotel N/A 4.00%
154 Aspen Business Center Office $5,625 N/A
155 Hampton Inn - Ft. Pierce, FL Hotel $1,250 4.00%
156 Oak Tree Mobile Home Park Manufactured Housing $400,000 N/A
157 Walnut Square Apartments Multifamily $12,750 $250
158 Royal Oaks Mobile Home Park Manufactured Housing $40,331 N/A
159 Plymouth Square Apartments Multifamily $7,500 $250
160 Watchung View Apartments Multifamily N/A $250
161 Embassy Apartments Multifamily $24,180 $287
162 Best Buy - West Dundee Retail $4,375 N/A
163 1400 Destrehan Avenue Industrial N/A $0.10
164 Breckenridge Condominiums Multifamily $12,188 $250
165 Rosemont Terrace Apartments Multifamily $45,575 $399
166 Days Inn - Dover, DE Hotel $12,431 3.70%
167 Iberia Center Retail N/A N/A
168 Shadydale Village Mobile Home Park Manufactured Housing N/A N/A
169 Park Terrace Shopping Center Retail $2,063 $0.15
170 Hanover Village Apartments Multifamily $137,813 $250
171 Travelodge Hotel--Seatac Hotel $2,031 4.00%
172 Harlem Furniture Retail N/A N/A
173 Tree Tops Apartments Multifamily $6,875 $250
174 Old Town Place Apartments Multifamily $6,344 $250
175 The Meadows Apartments Multifamily N/A $250
176 Chapman & Feldner Shopping Center Retail N/A $0.64
177 BCH Office Building Mixed Use $12,200 N/A
178 Colonial Pines Mobile Estates Manufactured Housing N/A N/A
179 NationsBank Professional Center Office $5,188 $0.15
180 Belmeade Office Park Industrial $15,000 N/A
181 Central Building Mixed Use $65,000 $0.20
182 710 Amsterdam Avenue Multifamily $5,813 $319
183 Sandstone Apartments & Vista North Apartments Multifamily $14,750 $258
184 Highland Park Place Shopping Center Retail N/A N/A
185 Salem Creek Apartment Complex Multifamily $2,125 $250
186 Country Greens Apartments Multifamily $3,625 $250
187 Sahara West Plaza Retail $5,200 N/A
188 Walgreen's Retail N/A $0.15
189 Econolodge - Bangor, ME Hotel $19,188 5.00%
190 Comfort Inn - Bangor, ME Hotel $12,125 5.00%
191 Point Clinton Mixed Use N/A N/A
192 Rite-Aid Pharmacy Triple Net Lease N/A N/A
193 Taft and Cleveland Paradise Apartments Multifamily N/A $279
194 Tyrone Village MHP Manufactured Housing $13,000 N/A
195 Steamboat Road Multifamily N/A $197
196 Kerr Station Village Mixed Use $5,000 N/A
197 Meadow Run Apartments Multifamily $11,375 $250
198 45 Church Street Office $88,172 N/A
199 New Brunswick Apartments Multifamily $41,875 $250
200 Fiesta RV Resort RV Park N/A N/A
201 Cedar Place Office Park Office N/A N/A
202 Oak Hollow Mobile Home Park Manufactured Housing $3,525 N/A
203 Centerline Plaza Apartments Multifamily $6,125 $250
204 Southport Place Office $90 N/A
205 Bell Building Office N/A N/A
206 Days Inn - Bangor, ME Hotel $34,994 5.00%
207 Stratford Shopping Center Retail $55,250 $0.15
208 Country Aire Manor Manufactured Housing N/A N/A
209 Corlett Creek Apartments Multifamily $23,650 $261
210 Anchor Bay Apartments Multifamily $3,038 $250
211 Tall Pines Shopping Center Retail $7,813 $0.17
212 Skyline Professional Building Office N/A N/A
213 Southwood Acres MHP Manufactured Housing N/A N/A
214 Nalbert Apartments Multifamily N/A $170
215 1220 South University Avenue Retail $2,388 N/A
216 49 Commerce Drive / 81 Ethan Allen Drive Industrial $3,313 N/A
217 3211 Battleground Retail N/A N/A
218 Gardner Building Industrial $620 $0.15
219 778 Main Street Office $1,500 N/A
<CAPTION>
U/W
Recurring U/W Tax &
Replacement LC&TI Insurance
# Property Name (1) Reserve Per Sq. Ft. Escrows
- ----------------- ------- ----------- -------
<S> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) $0.10 N/A Both
148 Stuart Towne Apartments $250 N/A Both
149 Santa Ana Villa $350 N/A Both
150 Orland Park Outlots $0.15 $0.63 Both
151 Brazos Square Shopping Center $0.15 $0.94 Both
152 Community Mall $0.39 $0.68 Both
153 Comfort Inn - Fife, WA 4.00% N/A Both
154 Aspen Business Center $0.15 $0.72 Both
155 Hampton Inn - Ft. Pierce, FL 4.00% N/A Both
156 Oak Tree Mobile Home Park $174 N/A Both
157 Walnut Square Apartments $250 N/A Both
158 Royal Oaks Mobile Home Park $49 N/A Both
159 Plymouth Square Apartments $250 N/A Both
160 Watchung View Apartments $250 N/A Both
161 Embassy Apartments $314 N/A Both
162 Best Buy - West Dundee $0.15 $0.20 None
163 1400 Destrehan Avenue $0.10 N/A Both
164 Breckenridge Condominiums $250 N/A Both
165 Rosemont Terrace Apartments $257 N/A Both
166 Days Inn - Dover, DE 4.00% N/A Both
167 Iberia Center $0.15 $1.00 Both
168 Shadydale Village Mobile Home Park $50 N/A Both
169 Park Terrace Shopping Center $0.18 $1.00 Both
170 Hanover Village Apartments $276 N/A Both
171 Travelodge Hotel--Seatac 4.00% N/A Both
172 Harlem Furniture $0.15 N/A Both
173 Tree Tops Apartments $250 N/A Both
174 Old Town Place Apartments $250 N/A Both
175 The Meadows Apartments $311 N/A Both
176 Chapman & Feldner Shopping Center $0.17 $1.00 Both
177 BCH Office Building $0.16 $0.76 Both
178 Colonial Pines Mobile Estates $50 N/A Both
179 NationsBank Professional Center $0.15 $1.22 Both
180 Belmeade Office Park $0.15 $0.56 Both
181 Central Building $0.20 $0.75 Both
182 710 Amsterdam Avenue $319 N/A Both
183 Sandstone Apartments & Vista North Apartments $258 N/A Both
184 Highland Park Place Shopping Center $0.15 $0.79 Both
185 Salem Creek Apartment Complex $250 N/A Both
186 Country Greens Apartments $250 N/A Both
187 Sahara West Plaza $0.20 $0.63 Both
188 Walgreen's $0.15 N/A Both
189 Econolodge - Bangor, ME 5.00% N/A Both
190 Comfort Inn - Bangor, ME 5.00% N/A Both
191 Point Clinton $0.15 $1.08 Both
192 Rite-Aid Pharmacy $0.15 N/A Both
193 Taft and Cleveland Paradise Apartments $250 N/A Both
194 Tyrone Village MHP $66 N/A Both
195 Steamboat Road $250 N/A Both
196 Kerr Station Village $0.19 $0.95 Both
197 Meadow Run Apartments $250 N/A Both
198 45 Church Street $0.15 $1.41 Both
199 New Brunswick Apartments $250 N/A Both
200 Fiesta RV Resort $50 N/A Both
201 Cedar Place Office Park $0.21 $0.67 Both
202 Oak Hollow Mobile Home Park $49 N/A Both
203 Centerline Plaza Apartments $250 N/A Both
204 Southport Place $0.15 $1.74 Both
205 Bell Building $0.20 $1.09 Both
206 Days Inn - Bangor, ME 5.00% N/A Both
207 Stratford Shopping Center $0.15 $0.88 Both
208 Country Aire Manor $50 N/A Both
209 Corlett Creek Apartments $261 N/A Both
210 Anchor Bay Apartments $250 N/A Both
211 Tall Pines Shopping Center $0.15 $0.11 Both
212 Skyline Professional Building $0.19 $1.42 Both
213 Southwood Acres MHP $50 N/A Both
214 Nalbert Apartments $250 N/A Both
215 1220 South University Avenue $0.15 $1.71 Both
216 49 Commerce Drive / 81 Ethan Allen Drive $0.18 $0.51 Both
217 3211 Battleground $0.10 $0.95 Both
218 Gardner Building $0.15 $0.30 Both
219 778 Main Street $0.27 $0.95 Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual
Engineering Recurring
Property Reserve at Replacement
# Property Name (1) Type Origination Reserve
- ----------------- ---- ----------- -------
<S> <C> <C> <C>
220 Briarwood Apartments Multifamily $119,625 $250
221 Walton Village Shopping Center Retail $41,938 N/A
222 Rancho Santa Fe Shopping Center Retail N/A N/A
223 Winston Place Apartments Multifamily $65,875 $264
224 Hondo Park Apartments Multifamily $1,250 $250
225 Allegheny Apartments Multifamily $21,875 $250
226 Huntington North Apartments Multifamily $3,119 $250
227 Rite Aid - Yarmouth Triple Net Lease $1,250 N/A
228 Sylvan Apartments Multifamily $8,750 $250
229 Finger Lakes/Farmington Court Apartments Multifamily $37,500 $280
230 Walnut Villas Apartments Multifamily $136,235 $250
231 Portsmouth Place Apartments Multifamily $12,350 $250
232 70 Warren Avenue Multifamily $2,125 $185
233 Martinsville Plaza Retail $6,588 N/A
234 Route 66 Business World Retail N/A $0.15
235 Woodwinds Condominiums Multifamily $7,313 $250
236 College Square Apartments Multifamily $74,250 $250
237 Car Engineering Building Industrial N/A $0.17
238 Executive Townhomes Multifamily $2,500 $256
239 Hartford Crossing Retail Plaza Retail $53,500 N/A
240 Cypress Plaza Shopping Center Retail $138,639 N/A
241 Sarasota Place Apartments Multifamily $23,837 $295
242 Clayton Forest Apartments Multifamily $1,250 $221
243 Checker Auto Parts Store Retail N/A N/A
244 Southpointe Center Retail $4,375 N/A
245 Maple Court Apartments Multifamily $11,375 $250
246 Crestwood MHP Manufactured Housing N/A N/A
247 Hyde Park Place Apartments Multifamily $8,125 $250
248 Allen Medical Office Building Office $3,250 N/A
249 Canyon View Offices Office $1,438 $0.23
250 Firehouse Square Retail N/A N/A
251 Plymouth Place Plaza Retail $8,688 N/A
252 Meridian Mobile Estates Manufactured Housing $3,500 N/A
253 Country Mobile Estates Manufactured Housing $5,034 N/A
254 Village Apartments Multifamily $2,343 $150
255 Ackels Mobile Home Park Manufactured Housing $7,719 $50
256 Redford Manor Apartments Multifamily $5,738 $275
257 Doms Business Park Mixed Use $2,500 $0.23
258 Bradfield Creek Townhomes Multifamily N/A $250
259 San Remo Apartments Multifamily N/A $319
260 Consolidated Printing Industrial N/A $0.15
261 Knightsbridge Apartments Multifamily N/A $250
262 Whispering Meadows Multifamily $27,470 $387
263 Buckingham Court Apartments Multifamily $36,875 $250
264 Homestead Apartments Multifamily $38,125 $250
265 4th Avenue West Estates Manufactured Housing N/A N/A
266 Treaty Oaks Apartments Multifamily $10,000 $250
267 Wilshire Estates MHP Manufactured Housing $3,750 N/A
268 Hollywood Video Retail N/A $1.27
269 5 Milk Street Office N/A $0.28
270 Cardi Building Office N/A $0.20
271 Boulevard of Chevy Chase Apartments Multifamily N/A $250
272 10 McKinley Street Office N/A $0.15
273 Londonaire Townhouses Multifamily $12,110 $264
274 Heon Court Apartments Multifamily N/A $250
275 One Cameron Place Shopping Center Retail N/A N/A
276 197 U.S. Route One Mixed Use N/A $0.15
277 980 Forest Avenue Office N/A $0.16
278 Chandler Crossing Apartments Multifamily N/A $250
279 Kingswood Place Apartments Multifamily N/A $250
280 4525-4535 McEwen Road Industrial N/A $0.18
281 Doms Metroplex Park Industrial $2,688 $0.21
282 Baxter Mills Apartments Multifamily N/A $250
283 Seven Eleven Retail $18,025 $0.36
284 3314 Mount Pleasant Apartments Multifamily N/A $250
285 Virginia Apartments Multifamily N/A $195
286 Pagewood Oval Apartments Multifamily N/A $250
287 Creekview Condominiums Multifamily N/A $250
288 Park Hill Apartments Multifamily $10,000 $276
289 Amherst Gardens Manufactured Housing N/A $50
290 Arlington Arms Apartments Multifamily N/A $250
291 Barstow Plaza Retail $940 $0.19
292 Fleur de Lis Apartments Multifamily N/A $371
<CAPTION>
U/W
Recurring U/W Tax &
Replacement LC&TI Insurance
# Property Name (1) Reserve Per Sq. Ft. Escrows
- ----------------- ------- ----------- -------
<S> <C> <C> <C>
220 Briarwood Apartments $250 N/A Both
221 Walton Village Shopping Center $0.25 $1.07 Both
222 Rancho Santa Fe Shopping Center $0.15 $1.00 Both
223 Winston Place Apartments $264 N/A Both
224 Hondo Park Apartments $250 N/A Both
225 Allegheny Apartments $250 N/A Both
226 Huntington North Apartments $250 N/A Both
227 Rite Aid - Yarmouth $0.15 N/A Both
228 Sylvan Apartments $250 N/A Both
229 Finger Lakes/Farmington Court Apartments $250 N/A Both
230 Walnut Villas Apartments $250 N/A Both
231 Portsmouth Place Apartments $250 N/A Both
232 70 Warren Avenue $250 N/A Both
233 Martinsville Plaza $0.16 $1.01 Both
234 Route 66 Business World $0.15 $1.00 Both
235 Woodwinds Condominiums $250 N/A Both
236 College Square Apartments $250 N/A Both
237 Car Engineering Building $0.17 $0.30 Both
238 Executive Townhomes $256 N/A Both
239 Hartford Crossing Retail Plaza $0.25 $0.68 Both
240 Cypress Plaza Shopping Center $0.26 $1.00 Both
241 Sarasota Place Apartments $263 N/A Both
242 Clayton Forest Apartments $250 N/A Both
243 Checker Auto Parts Store $0.15 N/A None
244 Southpointe Center $0.15 $0.67 Both
245 Maple Court Apartments $250 N/A Both
246 Crestwood MHP $50 N/A Both
247 Hyde Park Place Apartments $250 N/A Both
248 Allen Medical Office Building $0.17 $1.05 Both
249 Canyon View Offices $0.23 $1.00 Both
250 Firehouse Square $0.15 $0.92 Both
251 Plymouth Place Plaza $0.15 $0.77 Both
252 Meridian Mobile Estates $50 N/A Both
253 Country Mobile Estates $50 N/A Both
254 Village Apartments $275 N/A Both
255 Ackels Mobile Home Park $50 N/A Both
256 Redford Manor Apartments $277 N/A Both
257 Doms Business Park $0.23 $0.50 Both
258 Bradfield Creek Townhomes $250 N/A Both
259 San Remo Apartments $300 N/A Both
260 Consolidated Printing $0.15 $0.30 Both
261 Knightsbridge Apartments $250 N/A Both
262 Whispering Meadows $306 N/A Tax
263 Buckingham Court Apartments $250 N/A Both
264 Homestead Apartments $250 N/A Both
265 4th Avenue West Estates $50 N/A Both
266 Treaty Oaks Apartments $300 N/A Both
267 Wilshire Estates MHP $50 N/A Both
268 Hollywood Video $0.15 $0.38 Both
269 5 Milk Street $0.28 $1.15 Both
270 Cardi Building $0.20 $1.00 Both
271 Boulevard of Chevy Chase Apartments $250 N/A Both
272 10 McKinley Street $0.15 $1.00 Both
273 Londonaire Townhouses $264 N/A Both
274 Heon Court Apartments $250 N/A Both
275 One Cameron Place Shopping Center $0.15 $1.00 Both
276 197 U.S. Route One $0.15 $0.70 Both
277 980 Forest Avenue $0.16 $1.09 Both
278 Chandler Crossing Apartments $250 N/A Both
279 Kingswood Place Apartments $250 N/A Both
280 4525-4535 McEwen Road $0.18 $0.30 Both
281 Doms Metroplex Park $0.21 $0.50 Both
282 Baxter Mills Apartments $250 N/A Both
283 Seven Eleven $0.30 $0.60 Insurance
284 3314 Mount Pleasant Apartments $250 N/A Both
285 Virginia Apartments $250 N/A Both
286 Pagewood Oval Apartments $250 N/A Both
287 Creekview Condominiums $250 N/A Both
288 Park Hill Apartments $250 N/A Both
289 Amherst Gardens $50 N/A Both
290 Arlington Arms Apartments $250 N/A Both
291 Barstow Plaza $0.19 $0.64 Both
292 Fleur de Lis Apartments $371 N/A Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual
Engineering Recurring
Property Reserve at Replacement
# Property Name (1) Type Origination Reserve
- ----------------- ---- ----------- -------
<S> <C> <C> <C>
293 2602 Penny Lane Multifamily N/A $250
294 3246 Navarre Avenue Mixed Use $313 $0.16
295 Tara Apartments Multifamily $3,750 $250
296 Mark V Apartments Multifamily $625 $251
297 Hallmark Apartments Multifamily N/A $250
298 Mirage Apartments Multifamily N/A $274
299 Main Street Studios Multifamily N/A $250
300 Summertree Apartments Multifamily N/A $212
301 Prestige State Bank Retail N/A $0.37
302 Masonic Temple Mixed Use $23,313 $0.15
<CAPTION>
U/W
Recurring U/W Tax &
Replacement LC&TI Insurance
# Property Name (1) Reserve Per Sq. Ft. Escrows
- ----------------- ------- ----------- -------
<S> <C> <C> <C>
293 2602 Penny Lane $250 N/A Both
294 3246 Navarre Avenue $0.20 $0.75 Both
295 Tara Apartments $250 N/A Both
296 Mark V Apartments $250 N/A Both
297 Hallmark Apartments $250 N/A Both
298 Mirage Apartments $274 N/A Both
299 Main Street Studios $250 N/A Both
300 Summertree Apartments $250 N/A Both
301 Prestige State Bank $0.15 $1.00 Both
302 Masonic Temple $0.15 $1.00 Both
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building # 21,
507 Plum Street, Zanesville, Northeast Industrial Building # 8, Northeast
Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville and One
Clinton Square, respectively, are cross-collateralized and
cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The Edwards
Center at Rancho Niguel, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office
Center, Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and Maplewood
Mobile Estates, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Run in Foods DP #4, Run in Foods Unit DP #7,
Run in Foods #401, Run in Foods #406, Run in Foods #402, Run in Foods
#403, Run in Foods #404, Run in Foods Unit #410, respectively, are
cross-collateralized and cross-defaulted. The appraised value of each such
Mortgage Loan includes an estimated enterprise value and an appraised real
estate value. The aggregate of the appraised real estate values (including
FF&E) of such Mortgage Loans is $12,240,000.
(1G) The Mortgage Loans secured by Super 8-Midtown, Super 8-East and Super
8-West, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa Business
Park, respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from origination
and thereafter is scheduled to amortize over 336 months with the payment
presented reflecting the amount due during the amortization term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July 2008.
The Underwritten DSCR presented herein with respect to the mortgage loan
is based on the monthly payment in effect as of December 1, 1998.
<PAGE>
Major Tenants of the Commercial Mortgaged Properties (6)
<TABLE>
<CAPTION>
Property Major Tenant #1
# Property Name (1) Type Sq. Ft. Name
- - ----------------- ---- ---- ----
<S> <C> <C> <C> <C>
1 Chanin Building Office 848,562 N/A
2 250 South Clinton Street (1A) Office 182,446 AT&T Communications
3 GATX Warehouse (1A) Industrial 655,500 GATX Logistics, Inc.
4 1001 and 1011 Airport Industrial Park (1A) Industrial 284,262 Bayard Sales
5 Northeast Industrial Park Building # 21 (1A) Industrial 100,000 Distribution Unlimited
6 507 Plum Street (1A) Office 71,449 Unity Mutual Life
7 Zanesville (1A) Industrial 300,000 Ownes Brockway Glass
8 Northeast Industrial Park Building # 8 (1A) Industrial 192,645 Moran Foods, Inc.
9 Northeast Industrial Park Building # 22 (1A) Industrial 104,000 Ameriserve Food
10 4, 5 & 8 Marway Circle (1A) Industrial 171,155 Anixter, Inc.
11 Marysville (1A) Industrial 133,500 Midwest Express, Inc.
12 One Clinton Square (1A) Office 39,610 Fleet Bank
13 The Center at Rancho Niguel (1B) Retail 120,867 Hughes Market
14 The Edwards Center at Rancho Niguel (1B) Retail 35,600 Edwards Theaters
15 Rivertree Court Shopping Center (1C) Retail 299,055 Best Buy
16 Woodland Heights Shopping Center (1C) Retail 120,436 Jewel Food Store
17 Winnetka Commons Shopping Center (1C) Retail 42,415 Walgreens
18 Berwyn Plaza Shopping Center (1C) Retail 18,138 Walgreens
19 Walgreen's Store (1C) Retail 15,856 Walgreens
23 Embassy Crossing (2) Retail 336,777 Wal-Mart
25 Dominion Tower & Parking Garage Mixed Use 209,313 N/A
27 Blue Ash Portfolio (1D) Mixed Use 232,526 N/A
28 Springdale Office Center (1D) Office 88,040 N/A
29 Executive Center East (1D) Office 25,260 N/A
30 McDonald's (1D) Retail 4,575 McDonald's Corporation
31 11 Park Place Office 189,530 State of New York Liquor Authority
33 Storage Box / Stowaway Storage (1E) Self Storage 148,992 N/A
35 Corporate Office Park Office 184,844 N/A
37 Preston Stonebrooke Shopping Center Retail 61,853 N/A
51 Chidlaw Building Office 281,561 American Teleconferencing Services, Ltd.
53 Cornerstone Office Park Office 93,633 TheraCare
54 160 Pine Street Mixed Use 97,436 KPMG Peat Marwick
56 180 N. Michigan Avenue Office Building Office 210,353 N/A
58 145 Rosemary Street Office 86,269 Lanart
60 MCOM Building Industrial 172,825 Music City Optical Media, Inc.
62 Mercantile Bank Building Office 109,271 Kansas Dept. of Human Resources
64 Midfield Shopping Center Retail 166,180 Alabama Thrift
65 Far East Plaza Retail 46,314 Wing Hop Fung
66 Highland Square Shopping Center Retail 214,550 K Mart
68 Greens Corner Shopping Center (3) Retail 193,467 K-Mart
75 Imperial Plaza Shopping Center Retail 125,010 Winn-Dixie
78 K-Mart Montwood Point Retail 102,017 K-Mart
79 Trabuco Marketplace Retail 24,311 Blockbuster Video
81 Flamingo West Centre Retail 69,369 N/A
82 Mill Creek Shopping Center Retail 72,471 Shopper's Hardware, Inc.
84 Woodland Office Center Office 47,270 San Jose Medical Group
91 The Marriott Building Office 94,586 Illinois Department of Public Aid
94 Golden Valley Commons Retail 37,955 Hollywood Entertainment Corporation
96 Naperville Office Court Office 66,738 Amoco Oil Company
98 Best Buy / Drug Emporium Retail 73,799 Best Buy Co., Inc.
99 Medical Arts Building Office 88,804 N/A
102 Windlands Shopping Center (4) Retail 106,634 Finders Keepers
104 Madison Building Office 94,554 WorldCom
106 Dairy Plaza Shopping Center Retail 82,200 Winn Dixie
108 Peconic Plaza Mixed Use 38,108 NY State Department of Motor Vehicles
115 Glenview Office and Industrial Park Industrial 83,672 N/A
117 Mission Industrial Park (1H) Industrial 100,602 N/A
118 Jurupa Business Park (1H) Industrial 51,014 N/A
119 Colony Square Shopping Center Retail 48,047 Office Depot
120 Vintage Business Park Office 27,700 State of AK, DYFS
121 Crossroads Shopping Center Retail 44,800 Food Lion
122 High Country Plaza Retail 20,582 Southland Corp. (7-Eleven)
123 Glencoe Avenue Industrial Industrial 41,030 N/A
126 Plaza at Sunrise Mixed Use 41,495 Verite Entertainment Cor
128 River Valley Square Shopping Center Retail 36,838 Arbor Drugs
129 Rio Commercial Center Industrial 105,400 N/A
131 Beltway Plaza 4710 Office 71,429 Strayer College
134 Vintage Business Park II Office 26,657 State of Alaska (Post Education)
135 Mountain Village Shopping Center Retail 103,135 Rose's Store, Inc.
137 Durango Plaza Retail Center Retail 28,980 Charlie's Bar
138 Beatrice Avenue Industrial Industrial 44,750 North Hall Productions, Inc.
140 University Square Outlet Mall Retail 48,358 Hollywood Video
141 Ridgewood Plaza Retail 36,307 Hollywood Video
143 Warsaw Village Shopping Center Retail 60,300 Food Lion
144 Provident Place Office Building Office 40,394 Provident Bank
145 920 S. Waukegan Road Office 19,072 Johnson Heritage Bancorp, Ltd.
147 Rite-Aid of Maine, Inc. (5) Triple Net Lease 12,240 Rite Aid of Maine, Inc.
150 Orland Park Outlots Retail 21,200 Hollywood Entertainment
151 Brazos Square Shopping Center Retail 65,423 Olympic Nautilus
152 Community Mall Office 38,746 Community Medical Center
154 Aspen Business Center Office 51,500 Ron Weber
162 Best Buy - West Dundee Retail 36,262 Best Buy
<CAPTION>
Major Tenant #1 Major Tenant #1 Major Tenant #2
# Property Name (1) Sq.Ft. Lease Expiration Date Name
- - ----------------- --------------- -------------------- ----------------
<S> <C> <C> <C> <C>
1 Chanin Building N/A N/A N/A
2 250 South Clinton Street (1A) 86,602 10/31/00 Pioneer Development
3 GATX Warehouse (1A) 655,500 5/31/01 N/A
4 1001 and 1011 Airport Industrial Park (1A) 91,440 9/1/02 FDA Packaging
5 Northeast Industrial Park Building # 21 (1A) 73,000 4/30/08 Moran Foods, Inc.
6 507 Plum Street (1A) 41,000 2/28/04 Niagara Mohawk Power
7 Zanesville (1A) 300,000 2/9/02 N/A
8 Northeast Industrial Park Building # 8 (1A) 192,645 1/31/03 N/A
9 Northeast Industrial Park Building # 22 (1A) 104,000 12/31/04 N/A
10 4, 5 & 8 Marway Circle (1A) 66,075 6/30/00 Anixter, Inc.
11 Marysville (1A) 133,500 11/30/00 N/A
12 One Clinton Square (1A) 39,609 12/31/05 N/A
13 The Center at Rancho Niguel (1B) 36,300 2/1/14 N/A
14 The Edwards Center at Rancho Niguel (1B) 32,000 6/1/09 First Bank & Trust
15 Rivertree Court Shopping Center (1C) 44,384 1/1/11 Plitt Theaters, Inc.
16 Woodland Heights Shopping Center (1C) 60,626 11/1/12 U.S. Postal Service
17 Winnetka Commons Shopping Center (1C) 11,890 5/1/30 Big Wheel Auto Stores
18 Berwyn Plaza Shopping Center (1C) 13,506 7/1/23 Tandy Corporation
19 Walgreen's Store (1C) 15,856 3/31/30 N/A
23 Embassy Crossing (2) 118,379 8/28/07 Sports Authority of Florida
25 Dominion Tower & Parking Garage N/A N/A N/A
27 Blue Ash Portfolio (1D) N/A N/A N/A
28 Springdale Office Center (1D) N/A N/A N/A
29 Executive Center East (1D) N/A N/A N/A
30 McDonald's (1D) 4,575 12/26/13 N/A
31 11 Park Place 41,700 12/01/03 NYC Housing Authority
33 Storage Box / Stowaway Storage (1E) N/A N/A N/A
35 Corporate Office Park N/A N/A N/A
37 Preston Stonebrooke Shopping Center N/A N/A N/A
51 Chidlaw Building 106,320 9/1/06 CCC II, Inc.
53 Cornerstone Office Park 11,892 8/1/00 N/A
54 160 Pine Street 19,432 5/24/99 Robinson, Mills & Williams
56 180 N. Michigan Avenue Office Building N/A N/A N/A
58 145 Rosemary Street 21,541 7/1/01 Lily Truck
60 MCOM Building 172,825 7/1/18 N/A
62 Mercantile Bank Building 29,408 6/30/00 Mercantile Bank of Topeka
64 Midfield Shopping Center 45,000 8/31/02 Piggly Wiggly
65 Far East Plaza 17,138 2/1/06 N/A
66 Highland Square Shopping Center 92,000 9/30/05 Stein Mart
68 Greens Corner Shopping Center (3) 89,342 5/31/06 Drug Emporium
75 Imperial Plaza Shopping Center 52,870 9/30/10 Big Lots
78 K-Mart Montwood Point 86,479 12/31/15 N/A
79 Trabuco Marketplace 5,308 12/1/02 Pro Top Salon
81 Flamingo West Centre N/A N/A N/A
82 Mill Creek Shopping Center 10,979 7/1/02 Fleet Bank
84 Woodland Office Center 20,523 4/30/10 N/A
91 The Marriott Building 94,586 3/1/03 N/A
94 Golden Valley Commons 7,410 12/21/06 FTL Corp. (MGM Liquor Warehouse)
96 Naperville Office Court 15,890 7/31/00 A-T Financial Information, Inc.
98 Best Buy / Drug Emporium 44,599 1/31/09 Drug Emporium, Inc.
99 Medical Arts Building N/A N/A N/A
102 Windlands Shopping Center (4) 43,046 3/31/08 Johnson-Pendergrass
104 Madison Building 15,486 7/31/99 N/A
106 Dairy Plaza Shopping Center 58,900 2/28/11 N/A
108 Peconic Plaza 11,970 4/1/07 Health Insurance Plan of New York
115 Glenview Office and Industrial Park N/A N/A N/A
117 Mission Industrial Park (1H) N/A N/A N/A
118 Jurupa Business Park (1H) N/A N/A N/A
119 Colony Square Shopping Center 25,167 2/8/09 N/A
120 Vintage Business Park 6,925 12/31/07 USFW
121 Crossroads Shopping Center 29,000 12/1/17 CVS Pharmacy
122 High Country Plaza 3,000 9/1/02 Sports Cafe
123 Glencoe Avenue Industrial N/A N/A N/A
126 Plaza at Sunrise 6,000 10/31/03 N/A
128 River Valley Square Shopping Center 10,880 11/1/10 Blockbuster Video
129 Rio Commercial Center N/A N/A N/A
131 Beltway Plaza 4710 19,372 10/1/00 N/A
134 Vintage Business Park II 11,730 10/31/03 State of Alaska (DOI)
135 Mountain Village Shopping Center 45,495 2/1/07 Food Lion
137 Durango Plaza Retail Center 4,500 5/30/17 Baja Broiler Inc.
138 Beatrice Avenue Industrial 44,750 4/30/02 N/A
140 University Square Outlet Mall 7,500 9/30/07 Tuesday Morning
141 Ridgewood Plaza 6,610 1/15/03 Applebee's Bar & Grill
143 Warsaw Village Shopping Center 29,000 11/30/12 Rite Aid
144 Provident Place Office Building 11,283 8/1/00 Foundation Management Services
145 920 S. Waukegan Road 9,538 6/30/06 New Horizons Electronics Marketing
147 Rite-Aid of Maine, Inc. (5) 12,240 5/31/18 N/A
150 Orland Park Outlots 8,000 8/1/12 The Casual Male, Inc.
151 Brazos Square Shopping Center 8,748 10/31/02 N/A
152 Community Mall 19,300 8/31/07 Community Medical (Storage)
154 Aspen Business Center 22,000 1/15/05 Micrograms, Inc.
162 Best Buy - West Dundee 36,262 2/23/15 N/A
<CAPTION>
Major Tenant #2 Major Tenant #2 Major Tenant #3
# Property Name (1) Sq. Ft. Lease Expiration Date Name
- - ----------------- ---------------- --------------------- ----------------
<S> <C> <C> <C> <C>
1 Chanin Building N/A N/A N/A
2 250 South Clinton Street (1A) 20,126 2/28/01 N/A
3 GATX Warehouse (1A) N/A N/A N/A
4 1001 and 1011 Airport Industrial Park (1A) 64,000 3/31/02 Tyson Co.
5 Northeast Industrial Park Building # 21 (1A) 27,000 1/17/03 N/A
6 507 Plum Street (1A) 30,449 9/29/01 N/A
7 Zanesville (1A) N/A N/A N/A
8 Northeast Industrial Park Building # 8 (1A) N/A N/A N/A
9 Northeast Industrial Park Building # 22 (1A) N/A N/A N/A
10 4, 5 & 8 Marway Circle (1A) 45,000 9/30/99 N/A
11 Marysville (1A) N/A N/A N/A
12 One Clinton Square (1A) N/A N/A N/A
13 The Center at Rancho Niguel (1B) N/A N/A N/A
14 The Edwards Center at Rancho Niguel (1B) 3,600 8/1/06 N/A
15 Rivertree Court Shopping Center (1C) 40,000 3/1/08 N/A
16 Woodland Heights Shopping Center (1C) 17,750 11/1/04 N/A
17 Winnetka Commons Shopping Center (1C) 6,227 3/1/02 N/A
18 Berwyn Plaza Shopping Center (1C) 2,000 2/1/04 N/A
19 Walgreen's Store (1C) N/A N/A N/A
23 Embassy Crossing (2) 50,400 11/30/07 N/A
25 Dominion Tower & Parking Garage N/A N/A N/A
27 Blue Ash Portfolio (1D) N/A N/A N/A
28 Springdale Office Center (1D) N/A N/A N/A
29 Executive Center East (1D) N/A N/A N/A
30 McDonald's (1D) N/A N/A N/A
31 11 Park Place 20,507 12/1/99 N/A
33 Storage Box / Stowaway Storage (1E) N/A N/A N/A
35 Corporate Office Park N/A N/A N/A
37 Preston Stonebrooke Shopping Center N/A N/A N/A
51 Chidlaw Building 57,896 10/1/07 Memorial Hospital
53 Cornerstone Office Park N/A N/A N/A
54 160 Pine Street 12,516 12/31/01 Forell/Elsesser Engineers
56 180 N. Michigan Avenue Office Building N/A N/A N/A
58 145 Rosemary Street 17,316 12/1/04 Creative Movement
60 MCOM Building N/A N/A N/A
62 Mercantile Bank Building 27,134 12/31/05 N/A
64 Midfield Shopping Center 25,000 11/30/01 Aaron's Rental
65 Far East Plaza N/A N/A N/A
66 Highland Square Shopping Center 41,000 5/31/08 Silk Tree Factory
68 Greens Corner Shopping Center (3) 24,583 11/30/05 N/A
75 Imperial Plaza Shopping Center 19,600 10/31/01 N/A
78 K-Mart Montwood Point N/A N/A N/A
79 Trabuco Marketplace 2,743 4/1/03 Optometrist
81 Flamingo West Centre N/A N/A N/A
82 Mill Creek Shopping Center 10,605 6/1/03 CVS
84 Woodland Office Center N/A N/A N/A
91 The Marriott Building N/A N/A N/A
94 Golden Valley Commons 6,760 4/30/08 Paper Warehouse
96 Naperville Office Court 7,901 1/31/01 N/A
98 Best Buy / Drug Emporium 29,200 2/28/06 N/A
99 Medical Arts Building N/A N/A N/A
102 Windlands Shopping Center (4) 15,400 2/28/03 Dollar General
104 Madison Building N/A N/A N/A
106 Dairy Plaza Shopping Center N/A N/A N/A
108 Peconic Plaza 5,600 11/1/01 American Specialty Equipment
115 Glenview Office and Industrial Park N/A N/A N/A
117 Mission Industrial Park (1H) N/A N/A N/A
118 Jurupa Business Park (1H) N/A N/A N/A
119 Colony Square Shopping Center N/A N/A N/A
120 Vintage Business Park 4,238 7/30/03 N/A
121 Crossroads Shopping Center 9,600 10/1/12 N/A
122 High Country Plaza 2,700 7/1/01 N/A
123 Glencoe Avenue Industrial N/A N/A N/A
126 Plaza at Sunrise N/A N/A N/A
128 River Valley Square Shopping Center 6,018 10/1/00 N/A
129 Rio Commercial Center N/A N/A N/A
131 Beltway Plaza 4710 N/A N/A N/A
134 Vintage Business Park II 7,782 6/30/02 Coeur Alaska
135 Mountain Village Shopping Center 21,000 10/1/07 Eckerd Drugs
137 Durango Plaza Retail Center 3,600 9/30/00 N/A
138 Beatrice Avenue Industrial N/A N/A N/A
140 University Square Outlet Mall 5,500 1/15/04 Esquire Ltd.
141 Ridgewood Plaza 5,600 12/21/02 N/A
143 Warsaw Village Shopping Center 9,600 12/31/10 Dollar General
144 Provident Place Office Building 6,885 10/1/01 Hammerle and Finley
145 920 S. Waukegan Road 4,832 5/31/08 Edward Jacks and Company
147 Rite-Aid of Maine, Inc. (5) N/A N/A N/A
150 Orland Park Outlots 2,725 12/1/07 N/A
151 Brazos Square Shopping Center N/A N/A N/A
152 Community Mall 4,200 5/31/98 N/A
154 Aspen Business Center 6,500 7/1/03 US Xchange
162 Best Buy - West Dundee N/A N/A N/A
<CAPTION>
Major Tenant #3 Major Tenant #3
# Property Name (1) Sq. Ft. Lease Expiration Date
- - ----------------- --------------- ---------------------
<S> <C> <C> <C>
1 Chanin Building N/A N/A
2 250 South Clinton Street (1A) N/A N/A
3 GATX Warehouse (1A) N/A N/A
4 1001 and 1011 Airport Industrial Park (1A) 40,320 2/28/01
5 Northeast Industrial Park Building # 21 (1A) N/A N/A
6 507 Plum Street (1A) N/A N/A
7 Zanesville (1A) N/A N/A
8 Northeast Industrial Park Building # 8 (1A) N/A N/A
9 Northeast Industrial Park Building # 22 (1A) N/A N/A
10 4, 5 & 8 Marway Circle (1A) N/A N/A
11 Marysville (1A) N/A N/A
12 One Clinton Square (1A) N/A N/A
13 The Center at Rancho Niguel (1B) N/A N/A
14 The Edwards Center at Rancho Niguel (1B) N/A N/A
15 Rivertree Court Shopping Center (1C) N/A N/A
16 Woodland Heights Shopping Center (1C) N/A N/A
17 Winnetka Commons Shopping Center (1C) N/A N/A
18 Berwyn Plaza Shopping Center (1C) N/A N/A
19 Walgreen's Store (1C) N/A N/A
23 Embassy Crossing (2) N/A N/A
25 Dominion Tower & Parking Garage N/A N/A
27 Blue Ash Portfolio (1D) N/A N/A
28 Springdale Office Center (1D) N/A N/A
29 Executive Center East (1D) N/A N/A
30 McDonald's (1D) N/A N/A
31 11 Park Place N/A N/A
33 Storage Box / Stowaway Storage (1E) N/A N/A
35 Corporate Office Park N/A N/A
37 Preston Stonebrooke Shopping Center N/A N/A
51 Chidlaw Building 37,484 8/1/04
53 Cornerstone Office Park N/A N/A
54 160 Pine Street 12,516 5/31/99
56 180 N. Michigan Avenue Office Building N/A N/A
58 145 Rosemary Street 10,019 3/1/02
60 MCOM Building N/A N/A
62 Mercantile Bank Building N/A N/A
64 Midfield Shopping Center 22,600 1/31/00
65 Far East Plaza N/A N/A
66 Highland Square Shopping Center 35,000 10/31/07
68 Greens Corner Shopping Center (3) N/A N/A
75 Imperial Plaza Shopping Center N/A N/A
78 K-Mart Montwood Point N/A N/A
79 Trabuco Marketplace 1,808 7/1/00
81 Flamingo West Centre N/A N/A
82 Mill Creek Shopping Center 10,035 12/1/00
84 Woodland Office Center N/A N/A
91 The Marriott Building N/A N/A
94 Golden Valley Commons 6,175 2/29/12
96 Naperville Office Court N/A N/A
98 Best Buy / Drug Emporium N/A N/A
99 Medical Arts Building N/A N/A
102 Windlands Shopping Center (4) 14,725 2/28/03
104 Madison Building N/A N/A
106 Dairy Plaza Shopping Center N/A N/A
108 Peconic Plaza 4,500 MTM
115 Glenview Office and Industrial Park N/A N/A
117 Mission Industrial Park (1H) N/A N/A
118 Jurupa Business Park (1H) N/A N/A
119 Colony Square Shopping Center N/A N/A
120 Vintage Business Park N/A N/A
121 Crossroads Shopping Center N/A N/A
122 High Country Plaza N/A N/A
123 Glencoe Avenue Industrial N/A N/A
126 Plaza at Sunrise N/A N/A
128 River Valley Square Shopping Center N/A N/A
129 Rio Commercial Center N/A N/A
131 Beltway Plaza 4710 N/A N/A
134 Vintage Business Park II 6,387 8/1/01
135 Mountain Village Shopping Center 8,640 11/1/06
137 Durango Plaza Retail Center N/A N/A
138 Beatrice Avenue Industrial N/A N/A
140 University Square Outlet Mall 5,307 4/30/01
141 Ridgewood Plaza N/A N/A
143 Warsaw Village Shopping Center 7,150 12/31/99
144 Provident Place Office Building 5,375 3/1/00
145 920 S. Waukegan Road 4,702 5/31/08
147 Rite-Aid of Maine, Inc. (5) N/A N/A
150 Orland Park Outlots N/A N/A
151 Brazos Square Shopping Center N/A N/A
152 Community Mall N/A N/A
154 Aspen Business Center 6,500 8/1/03
162 Best Buy - West Dundee N/A N/A
</TABLE>
<PAGE>
Major Tenants of the Commercial Mortgaged Properties (6)
<TABLE>
<CAPTION>
Property Major Tenant #1
# Property Name (1) Type Sq. Ft. Name
- - ----------------- ---- ---- ----
<S> <C> <C> <C> <C>
163 1400 Destrehan Avenue Industrial 88,962 Detroit Diesel Realty, Inc.
167 Iberia Center Retail 9,872 Boston Market
169 Park Terrace Shopping Center Retail 24,813 PJ's Sports Bar
172 Harlem Furniture Retail 20,198 Harlem Furniture, Inc.
176 Chapman & Feldner Shopping Center Retail 15,557 Chief Auto Parts
177 BCH Office Building Mixed Use 38,531 John F. Otto, Inc.
179 NationsBank Professional Center Office 25,619 Nationsbank of Florida
180 Belmeade Office Park Industrial 58,800 N/A
181 Central Building Mixed Use 30,804 Barlocker Insurance
184 Highland Park Place Shopping Center Retail 22,280 Imperial Sports
187 Sahara West Plaza Retail 29,156 Satellite Scanners, Inc.
188 Walgreen's Retail 23,000 Walgreen Co.
191 Point Clinton Mixed Use 20,296 DeMaxims, Inc.
192 Rite-Aid Pharmacy Triple Net Lease 11,180 Rite Aid of New Hampshire, Inc.
196 Kerr Station Village Mixed Use 37,297 N/A
198 45 Church Street Office 24,978 Americas Games
201 Cedar Place Office Park Office 29,013 Mortgage Network
204 Southport Place Office 16,182 Pappas MacDonnell
205 Bell Building Office 25,066 Illinois Department of Public Aid
207 Stratford Shopping Center Retail 31,500 Blockbuster Videos, Inc.
211 Tall Pines Shopping Center Retail 50,246 Brookshire Grocery Company
212 Skyline Professional Building Office 24,881 Burnsville Family Physicians, P.A.
215 1220 South University Avenue Retail 20,203 Touchdown Cafe
216 49 Commerce Drive / 81 Ethan Allen Drive Industrial 44,351 VT Pure
217 3211 Battleground Retail 10,000 Hollywood Video
218 Gardner Building Industrial 56,400 H&T Tool
219 778 Main Street Office 28,837 Deluca Hoffman Associates
221 Walton Village Shopping Center Retail 40,849 World's Gym
222 Rancho Santa Fe Shopping Center Retail 13,727 Santa Fe Dental
227 Rite Aid - Yarmouth Triple Net Lease 11,180 Rite Aid of Maine, Inc.
233 Martinsville Plaza Retail 11,750 1st Strike Karate
234 Route 66 Business World Retail 21,825 Manassas Health Club
237 Car Engineering Building Industrial 37,000 Car Engineering
239 Hartford Crossing Retail Plaza Retail 40,272 Save A Lot
240 Cypress Plaza Shopping Center Retail 91,637 Players Choice
243 Checker Auto Parts Store Retail 14,000 CSK Auto, Inc.
244 Southpointe Center Retail 42,648 Video Tron
248 Allen Medical Office Building Office 15,000 John R. Connolly, M.D. and Patty Connolly
249 Canyon View Offices Office 15,531 N/A
250 Firehouse Square Retail 21,020 Schuck's Auto Supply
251 Plymouth Place Plaza Retail 17,400 Kitchen Suppliers
257 Doms Business Park Mixed Use 25,854 Foresite Escrow
260 Consolidated Printing Industrial 21,600 MacBain Printing Company, Inc.
268 Hollywood Video Retail 7,000 Hollywood Video
269 5 Milk Street Office 25,106 LSM/New England Group
270 Cardi Building Office 20,548 Info Directions
272 10 McKinley Street Office 12,180 Unicyn Financial
275 One Cameron Place Shopping Center Retail 8,732 Circle K
276 197 U.S. Route One Mixed Use 22,965 Indisco Kitchens
277 980 Forest Avenue Office 17,548 Otis, Atwell & Timberlake
280 4525-4535 McEwen Road Industrial 36,122 World Wide Parts & Accessories Corp.
281 Doms Metroplex Park Industrial 23,573 Rock Christian Fellowship
283 Seven Eleven Retail 6,500 Southland Corporation
291 Barstow Plaza Retail 64,874 Heilig-Meyers
294 3246 Navarre Avenue Mixed Use 9,816 Medi-Care Orthopedic
301 Prestige State Bank Retail 3,305 Prestige State Bank
302 Masonic Temple Mixed Use 17,074 Empire Beauty
<CAPTION>
Major Tenant #1 Major Tenant #1 Major Tenant #2
# Property Name (1) Sq. Ft. Lease Expiration Date Name
- - ----------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C>
163 1400 Destrehan Avenue 88,962 3/15/13 N/A
167 Iberia Center 3,200 12/14/07 Companion Care Animal Hospital
169 Park Terrace Shopping Center 3,672 4/30/00 China Express
172 Harlem Furniture 20,198 3/31/18 N/A
176 Chapman & Feldner Shopping Center 3,744 10/31/00 Lampost Pizza
177 BCH Office Building 9,996 12/31/03 Department of Developmental Services
179 NationsBank Professional Center 4,992 4/30/03 Barrington Int'l
180 Belmeade Office Park N/A N/A N/A
181 Central Building 16,104 9/30/02 Lady's Fitness Center
184 Highland Park Place Shopping Center 6,000 12/13/02 T&S Men's Wear
187 Sahara West Plaza 7,320 2/28/02 Sahara Laundryland & Dry Clean
188 Walgreen's 23,000 8/31/58 N/A
191 Point Clinton 2,903 4/1/03 Sherwin Williams Company
192 Rite-Aid Pharmacy 11,180 3/31/18 N/A
196 Kerr Station Village N/A N/A N/A
198 45 Church Street 4,128 11/1/02 Sterling Capital & William Pitt
201 Cedar Place Office Park 3,066 4/1/03 N/A
204 Southport Place 5,294 2/1/00 Pepe and Hazard
205 Bell Building 25,066 4/3/03 N/A
207 Stratford Shopping Center 7,000 1/31/02 House of Bargains
211 Tall Pines Shopping Center 28,000 1/1/02 K & B Texas Corporation (Rite Aid)
212 Skyline Professional Building 7,706 4/30/99 Quick Test
215 1220 South University Avenue 5,029 3/1/01 Linc's (Web Chateau)
216 49 Commerce Drive / 81 Ethan Allen Drive 4,766 4/1/00 N/A
217 3211 Battleground 7,500 4/1/08 Bruegger's Fresh Bagel Bakery
218 Gardner Building 10,000 4/30/00 N/A
219 778 Main Street 8,046 2/15/00 Connors Brunswick
221 Walton Village Shopping Center 10,581 2/28/07 N/A
222 Rancho Santa Fe Shopping Center 2,380 9/30/01 Golden Sky Systems
227 Rite Aid - Yarmouth 11,180 8/25/18 N/A
233 Martinsville Plaza 2,000 6/1/02 Starline Nails
234 Route 66 Business World 16,663 4/30/04 Las Vegas Discount Tennis & Golf
237 Car Engineering Building 37,000 12/31/12 N/A
239 Hartford Crossing Retail Plaza 14,579 2/28/05 Family Dollar
240 Cypress Plaza Shopping Center 20,089 11/30/02 N/A
243 Checker Auto Parts Store 7,000 11/30/17 CSK Auto, Inc.
244 Southpointe Center 7,523 5/31/02 High 9
248 Allen Medical Office Building 3,020 5/1/01 Walter L. Mason, M.D.
249 Canyon View Offices N/A N/A N/A
250 Firehouse Square 5,400 2/1/08 Mei Bo, Inc.
251 Plymouth Place Plaza 4,600 1/1/99 Mattress Warehouse
257 Doms Business Park 6,479 8/1/00 Master Pool Supply
260 Consolidated Printing 21,600 12/31/12 N/A
268 Hollywood Video 7,000 1/16/12 N/A
269 5 Milk Street 7,032 10/14/00 Watson Technologies, Inc.
270 Cardi Building 5,888 5/1/00 Great Lakes
272 10 McKinley Street 3,830 8/31/99 Norton Development
275 One Cameron Place Shopping Center 2,680 3/31/03 Sea 4 Chicken
276 197 U.S. Route One 5,855 6/30/03 Risbara Bros.
277 980 Forest Avenue 6,110 6/30/03 Lutheran Social Services
280 4525-4535 McEwen Road 21,025 6/30/01 Lotus International Inc.
281 Doms Metroplex Park 4,411 4/1/00 US Communications, Inc.
283 Seven Eleven 6,500 9/30/08 N/A
291 Barstow Plaza 23,500 2/1/07 Silver Screen Video
294 3246 Navarre Avenue 3,467 10/26/00 Healthsouth Corporation
301 Prestige State Bank 2,205 8/31/02 RBZ Enterprises, Inc.
302 Masonic Temple 2,300 7/31/03 Ron's Place
<CAPTION>
Major Tenant #2 Major Tenant #2 Major Tenant #3
# Property Name (1) Sq. Ft. Lease Expiration Date Name
- - ----------------- --------------- --------------------- ---------------
<S> <C> <C> <C> <C>
163 1400 Destrehan Avenue N/A N/A N/A
167 Iberia Center 1,972 7/1/08 Quizno's Classic Subs
169 Park Terrace Shopping Center 3,099 12/31/03 Sal's Pizza
172 Harlem Furniture N/A N/A N/A
176 Chapman & Feldner Shopping Center 3,700 2/28/05 7-Eleven
177 BCH Office Building 8,000 6/30/01 N/A
179 NationsBank Professional Center 3,086 11/30/01 Suite 300 Corporation
180 Belmeade Office Park N/A N/A N/A
181 Central Building 14,700 2/28/06 N/A
184 Highland Park Place Shopping Center 5,119 6/30/02 Athletic Lady
187 Sahara West Plaza 3,236 10/14/98 N/A
188 Walgreen's N/A N/A N/A
191 Point Clinton 2,530 8/1/99 Krause's Florist
192 Rite-Aid Pharmacy N/A N/A N/A
196 Kerr Station Village N/A N/A N/A
198 45 Church Street 3,281 4/1/02 Essential Data Corp.
201 Cedar Place Office Park N/A N/A N/A
204 Southport Place 3,917 4/1/00 Money Consultants d/b/a Moneco
205 Bell Building N/A N/A N/A
207 Stratford Shopping Center 6,500 2/28/00 Lady Fitness Centers
211 Tall Pines Shopping Center 15,000 6/1/03 N/A
212 Skyline Professional Building 3,920 5/31/00 Associates Commercial Group
215 1220 South University Avenue 3,170 11/1/00 McDonald's
216 49 Commerce Drive / 81 Ethan Allen Drive N/A N/A N/A
217 3211 Battleground 2,500 7/1/07 N/A
218 Gardner Building N/A N/A N/A
219 778 Main Street 5,458 11/30/00 Taylor Communications Company
221 Walton Village Shopping Center N/A N/A N/A
222 Rancho Santa Fe Shopping Center 1,800 6/30/00 Golf Carts, USA
227 Rite Aid - Yarmouth N/A N/A N/A
233 Martinsville Plaza 1,500 8/31/00 Quality Cleaners
234 Route 66 Business World 5,162 7/31/02 N/A
237 Car Engineering Building N/A N/A N/A
239 Hartford Crossing Retail Plaza 8,141 12/31/02 Western Auto
240 Cypress Plaza Shopping Center N/A N/A N/A
243 Checker Auto Parts Store 7,000 4/30/18 N/A
244 Southpointe Center 6,290 5/31/99 Kragen Auto Parts
248 Allen Medical Office Building 2,839 9/1/99 William J. Weise, M.D.
249 Canyon View Offices N/A N/A N/A
250 Firehouse Square 3,000 11/1/05 N/A
251 Plymouth Place Plaza 3,200 3/1/99 Mr. Pita
257 Doms Business Park 2,875 6/1/99 N/A
260 Consolidated Printing N/A N/A N/A
268 Hollywood Video N/A N/A N/A
269 5 Milk Street 4,212 3/31/00 Pan Atlantic Consulting
270 Cardi Building 5,021 3/31/99 Vordex
272 10 McKinley Street 1,535 6/30/01 Ross Martin Company
275 One Cameron Place Shopping Center 1,800 3/31/01 Thundercloud Subs
276 197 U.S. Route One 4,101 9/30/03 Maine Prop
277 980 Forest Avenue 2,108 4/30/01 Dept. of Veteran Affairs
280 4525-4535 McEwen Road 15,097 5/31/00 N/A
281 Doms Metroplex Park 4,411 10/1/99 Plumerex Specialty Product
283 Seven Eleven N/A N/A N/A
291 Barstow Plaza 14,915 1/30/00 Melvin Tseng
294 3246 Navarre Avenue 2,760 10/31/99 American Family Insurance
301 Prestige State Bank 1,100 12/31/99 N/A
302 Masonic Temple 2,100 9/30/02 N/A
<CAPTION>
Major Tenant #3 Major Tenant #3
# Property Name (1) Sq. Ft. Lease Expiration Date
- - ----------------- -------------- ---------------------
<S> <C> <C> <C>
163 1400 Destrehan Avenue N/A N/A
167 Iberia Center 1,400 7/1/08
169 Park Terrace Shopping Center 2,720 10/31/98
172 Harlem Furniture N/A N/A
176 Chapman & Feldner Shopping Center 2,624 9/30/01
177 BCH Office Building N/A N/A
179 NationsBank Professional Center 3,032 10/31/99
180 Belmeade Office Park N/A N/A
181 Central Building N/A N/A
184 Highland Park Place Shopping Center 3,200 1/31/01
187 Sahara West Plaza N/A N/A
188 Walgreen's N/A N/A
191 Point Clinton 2,475 12/1/02
192 Rite-Aid Pharmacy N/A N/A
196 Kerr Station Village N/A N/A
198 45 Church Street 2,572 2/1/02
201 Cedar Place Office Park N/A N/A
204 Southport Place 2,350 1/1/99
205 Bell Building N/A N/A
207 Stratford Shopping Center 4,800 3/31/01
211 Tall Pines Shopping Center N/A N/A
212 Skyline Professional Building 3,735 1/31/01
215 1220 South University Avenue 2,800 12/1/01
216 49 Commerce Drive / 81 Ethan Allen Drive N/A N/A
217 3211 Battleground N/A N/A
218 Gardner Building N/A N/A
219 778 Main Street 4,651 2/28/02
221 Walton Village Shopping Center N/A N/A
222 Rancho Santa Fe Shopping Center 1,747 12/31/02
227 Rite Aid - Yarmouth N/A N/A
233 Martinsville Plaza 1,500 10/31/00
234 Route 66 Business World N/A N/A
237 Car Engineering Building N/A N/A
239 Hartford Crossing Retail Plaza 8,000 10/31/01
240 Cypress Plaza Shopping Center N/A N/A
243 Checker Auto Parts Store N/A N/A
244 Southpointe Center 6,050 2/28/17
248 Allen Medical Office Building 1,770 9/1/99
249 Canyon View Offices N/A N/A
250 Firehouse Square N/A N/A
251 Plymouth Place Plaza 2,400 3/1/01
257 Doms Business Park N/A N/A
260 Consolidated Printing N/A N/A
268 Hollywood Video N/A N/A
269 5 Milk Street 4,212 3/31/03
270 Cardi Building 3,945 5/31/00
272 10 McKinley Street 1,380 11/30/99
275 One Cameron Place Shopping Center 1,252 4/30/00
276 197 U.S. Route One 4,086 9/30/03
277 980 Forest Avenue 2,000 9/30/00
280 4525-4535 McEwen Road N/A N/A
281 Doms Metroplex Park 4,230 MTM
283 Seven Eleven N/A N/A
291 Barstow Plaza 7,196 12/31/04
294 3246 Navarre Avenue 2,251 12/31/00
301 Prestige State Bank N/A N/A
302 Masonic Temple N/A N/A
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building # 21,
507 Plum Street, Zanesville, Northeast Industrial Building # 8, Northeast
Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville and One
Clinton Square, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The Edwards
Center at Rancho Niguel, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office Center,
Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and Maplewood
Mobile Estates, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa Business
Park, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from origination
and thereafter is scheduled to amortize over 336 months with the payment
presented reflecting the amount due during the amortization term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July 2008.
The Underwritten DSCR presented herein with respect to the mortgage loan is
based on the monthly payment in effect as of December 1, 1998.
(6) Only those tenants which occupy 10% or more of the property area.
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Occupancy Date of
Property Hotel Rate at Occupancy
# Property Name (1) Type Franchise Underwriting (6) Rate
- ----------------- ---- --------- ---------------- ----
<S> <C> <C> <C> <C>
1 Chanin Building Office 95.0% 6/30/98
2 250 South Clinton Street (1A) Office 100.0% 9/1/98
3 GATX Warehouse (1A) Industrial 100.0% 10/19/98
4 1001 and 1011 Airport Industrial Park (1A) Industrial 100.0% 10/12/98
5 Northeast Industrial Park Building # 21 (1A) Industrial 100.0% 10/12/98
6 507 Plum Street (1A) Office 100.0% 10/12/98
7 Zanesville (1A) Industrial 100.0% 10/12/98
8 Northeast Industrial Park Building # 8 (1A) Industrial 100.0% 10/12/98
9 Northeast Industrial Park Building # 22 (1A) Industrial 100.0% 9/1/98
10 4, 5 & 8 Marway Circle (1A) Industrial 98.0% 9/1/98
11 Marysville (1A) Industrial 100.0% 10/12/98
12 One Clinton Square (1A) Office 100.0% 10/12/98
13 The Center at Rancho Niguel (1B) Retail 100.0% 7/1/98
14 The Edwards Center at Rancho Niguel (1B) Retail 100.0% 9/1/98
15 Rivertree Court Shopping Center (1C) Retail 99.0% 8/31/98
16 Woodland Heights Shopping Center (1C) Retail 86.0% 9/30/98
17 Winnetka Commons Shopping Center (1C) Retail 100.0% 9/30/98
18 Berwyn Plaza Shopping Center (1C) Retail 100.0% 9/30/98
19 Walgreen's Store (1C) Retail 100.0% 7/31/98
20 Heritage Pointe Multifamily 96.0% 9/9/98
21 Best Western Inn of Chicago Hotel Best Western N/A 12/31/97
22 Christiana Hilton Inn - Newark, DE Hotel Hilton Inns, Inc. N/A 12/31/97
23 Embassy Crossing (2) Retail 97.0% 7/2/98
24 Jefferson at Treetops Apartments Multifamily 93.0% 8/20/98
25 Dominion Tower & Parking Garage Mixed Use 100.0% 4/1/98
26 Holiday Inn Hurstbourne Hotel Holiday Inn N/A 11/30/97
27 Blue Ash Portfolio (1D) Mixed Use 95.0% 2/28/98
28 Springdale Office Center (1D) Office 94.0% 4/29/98
29 Executive Center East (1D) Office 97.0% 2/28/98
30 McDonald's (1D) Retail 100.0% 8/19/98
31 11 Park Place Office 93.0% 4/1/98
32 Twin Creek Apartments Multifamily 100.0% 10/14/98
33 Storage Box / Stowaway Storage (1E) Self Storage 83.0% 6/30/98
34 Maplewood Mobile Estates (1E) Manufactured Housing 100.0% 7/27/98
35 Corporate Office Park Office 86.0% 10/2/98
36 Knights Bridge II Apartments Multifamily 96.0% 4/3/98
37 Preston Stonebrooke Shopping Center Retail 96.0% 4/30/98
38 Run in Foods DP #4 (1F) Convenience Store 100.0% 5/21/98
39 Run in Foods DP #7 (1F) Convenience Store 100.0% 5/21/98
40 Run in Foods #401 (1F) Convenience Store 100.0% 5/22/98
41 Run in Foods #406 (1F) Convenience Store 100.0% 5/25/98
42 Run in Foods #402 (1F) Convenience Store 100.0% 5/22/98
43 Run in Foods #403 (1F) Convenience Store 100.0% 5/22/98
44 Run in Foods #404 (1F) Convenience Store 100.0% 5/21/98
45 Run in Foods #410 (1F) Convenience Store 100.0% 5/25/98
46 Super 8-Midtown (1G) Hotel Super 8 N/A 12/31/97
47 Super 8-East (1G) Hotel Super 8 N/A 2/28/98
48 Super 8-West (1G) Hotel Super 8 N/A 2/28/98
49 Wellington Woods & Lakes Multifamily 92.0% 7/24/98
50 Hampton Inn - Indianapolis, IN Hotel Hampton Inn N/A 7/31/97
51 Chidlaw Building Office 82.0% 12/31/97
52 Grandview Garden Apartments Multifamily 96.0% 5/1/98
53 Cornerstone Office Park Office 92.0% 8/28/98
54 160 Pine Street Mixed Use 97.0% 6/30/98
55 River Run Apartments Multifamily 92.0% 7/24/98
56 180 N. Michigan Avenue Office Building Office 95.0% 5/1/98
57 Oak Hills Apartments Multifamily 96.0% 12/17/97
58 145 Rosemary Street Office 100.0% 7/1/98
59 Holiday Inn - Metroplex-Youngstown, OH Hotel Holiday Inn N/A 12/31/97
60 MCOM Building Industrial 100.0% 6/19/98
61 Mayport Trace Apartments Multifamily 93.0% 6/24/98
62 Mercantile Bank Building Office 96.0% 7/1/98
63 Brook Forest Apartments Multifamily 89.0% 5/27/98
64 Midfield Shopping Center Retail 89.0% 1/1/98
65 Far East Plaza Retail 94.0% 8/1/98
66 Highland Square Shopping Center Retail 100.0% 1/1/98
67 Spanish Villa Apartments Multifamily 99.0% 6/1/98
68 Greens Corner Shopping Center (3) Retail 90.0% 6/19/98
69 Mountain Ridge Apartments Multifamily 94.0% 4/30/98
70 Radisson Suites - Huntsville, AL Hotel Radisson N/A 4/30/98
71 Holiday Campground RV Park 76.0% 3/9/98
72 Plantation Meadows Apartments Multifamily 99.0% 9/1/98
73 Gresham Townhomes Multifamily 98.0% 2/1/98
<CAPTION>
Most Recent
Operating Most Most Most Most
Statement Recent Recent Recent Recent
# Property Name (1) Date Revenue Expenses NOI DSCR (7)
- ----------------- ---- ------- -------- --- --------
<S> <C> <C> <C> <C> <C>
1 Chanin Building 12/31/97 $23,704,147 $13,243,056 $10,461,091 1.66x
2 250 South Clinton Street (1A) 12/31/97 4,075,835 1,287,951 2,787,884 2.01
3 GATX Warehouse (1A) 12/31/97 1,770,745 10,537 1,760,208 1.89
4 1001 and 1011 Airport Industrial Park (1A) 12/31/97 1,239,218 193,752 1,045,466 1.71
5 Northeast Industrial Park Building # 21 (1A) 12/31/97 796,692 209,192 587,500 1.33
6 507 Plum Street (1A) 6/30/98 1,527,492 541,390 986,102 2.26
7 Zanesville (1A) 12/31/97 882,535 34,209 848,326 2.20
8 Northeast Industrial Park Building # 8 (1A) 9/1/98 718,000 144,000 574,000 1.58
9 Northeast Industrial Park Building # 22 (1A) 12/31/97 626,462 71,410 555,052 1.80
10 4, 5 & 8 Marway Circle (1A) 5/7/98 792,330 267,655 524,675 1.77
11 Marysville (1A) 12/31/97 388,900 66,691 322,209 1.71
12 One Clinton Square (1A) 6/30/98 665,686 410,332 255,354 1.81
13 The Center at Rancho Niguel (1B) 6/30/98 3,054,643 474,562 2,580,081 1.46
14 The Edwards Center at Rancho Niguel (1B) 6/30/98 763,032 103,057 659,975 1.50
15 Rivertree Court Shopping Center (1C) 8/31/98 4,927,242 1,342,305 3,584,937 2.72
16 Woodland Heights Shopping Center (1C) 12/31/97 1,363,902 858,601 505,301 2.25
17 Winnetka Commons Shopping Center (1C) 12/31/97 773,810 327,566 446,244 2.60
18 Berwyn Plaza Shopping Center (1C) 12/31/97 316,710 135,830 180,880 3.38
19 Walgreen's Store (1C) 7/31/98 110,800 3,522 107,278 2.49
20 Heritage Pointe 7/31/98 7,294,643 3,619,750 3,674,893 1.71
21 Best Western Inn of Chicago 4/30/98 11,914,464 7,647,590 4,266,874 2.01
22 Christiana Hilton Inn - Newark, DE 6/30/98 11,756,473 7,892,034 3,864,439 2.12
23 Embassy Crossing (2) 4/30/98 2,470,079 492,833 1,977,246 1.20
24 Jefferson at Treetops Apartments 8/20/98 3,187,997 807,994 2,380,003 1.55
25 Dominion Tower & Parking Garage 3/31/98 3,740,563 1,146,917 2,593,646 1.59
26 Holiday Inn Hurstbourne 2/28/98 7,880,645 4,810,864 3,069,781 1.89
27 Blue Ash Portfolio (1D) 2/28/98 2,535,441 926,615 1,608,826 1.86
28 Springdale Office Center (1D) 2/28/98 1,073,864 520,957 552,907 1.84
29 Executive Center East (1D) 2/28/98 336,847 143,128 193,719 2.16
30 McDonald's (1D) 4/8/98 46,000 0 46,000 2.09
31 11 Park Place 4/30/98 3,885,558 1,948,043 1,937,515 1.62
32 Twin Creek Apartments 12/31/97 2,020,508 717,862 1,302,646 1.30
33 Storage Box / Stowaway Storage (1E) 4/30/98 1,167,794 352,663 815,131 1.52
34 Maplewood Mobile Estates (1E) 4/30/98 840,242 191,547 648,695 1.41
35 Corporate Office Park 5/31/98 1,678,936 536,211 1,142,725 1.19
36 Knights Bridge II Apartments 2/28/98 1,824,077 777,233 1,046,844 1.37
37 Preston Stonebrooke Shopping Center 4/30/98 484,138 279,834 204,304 0.30
38 Run in Foods DP #4 (1F) 12/31/97 1,298,022 896,493 401,529 1.48
39 Run in Foods DP #7 (1F) 12/31/97 1,210,789 836,245 374,544 1.48
40 Run in Foods #401 (1F) 12/31/97 439,652 303,650 136,002 1.48
41 Run in Foods #406 (1F) 12/31/97 428,524 295,965 132,559 1.48
42 Run in Foods #402 (1F) 12/31/97 389,806 269,223 120,583 1.48
43 Run in Foods #403 (1F) 12/31/97 315,034 217,582 97,452 1.48
44 Run in Foods #404 (1F) 12/31/97 221,247 152,807 68,440 1.48
45 Run in Foods #410 (1F) 12/31/97 33,634 23,230 10,404 1.48
46 Super 8-Midtown (1G) 2/28/98 2,875,008 1,501,987 1,373,021 2.54
47 Super 8-East (1G) 2/28/98 665,010 417,550 247,460 1.66
48 Super 8-West (1G) 2/28/98 1,181,800 720,883 460,917 4.13
49 Wellington Woods & Lakes 7/31/98 1,745,468 760,477 984,991 1.51
50 Hampton Inn - Indianapolis, IN 7/31/98 3,584,109 2,236,923 1,347,186 1.92
51 Chidlaw Building 12/31/97 569,721 261,110 308,611 0.48
52 Grandview Garden Apartments 5/31/98 1,790,936 746,088 1,044,848 1.70
53 Cornerstone Office Park 5/31/98 1,167,006 322,259 844,747 1.43
54 160 Pine Street 12/31/97 2,065,465 1,006,615 1,058,850 1.73
55 River Run Apartments 7/31/98 1,692,097 792,447 899,650 1.51
56 180 N. Michigan Avenue Office Building 2/28/98 3,252,191 2,196,953 1,055,238 1.79
57 Oak Hills Apartments 8/31/98 1,564,404 705,923 858,481 1.31
58 145 Rosemary Street 5/31/98 1,420,348 562,958 857,390 1.45
59 Holiday Inn - Metroplex-Youngstown, OH 6/30/98 5,346,741 4,176,970 1,169,771 1.88
60 MCOM Building 4/20/98 1,070,779 32,123 1,038,656 1.56
61 Mayport Trace Apartments 6/30/98 1,311,456 583,708 727,748 1.34
62 Mercantile Bank Building 3/31/98 1,836,807 863,921 972,886 1.68
63 Brook Forest Apartments 4/30/98 2,152,049 1,320,920 831,129 1.56
64 Midfield Shopping Center 12/31/97 1,042,396 168,909 873,487 1.75
65 Far East Plaza 3/31/98 1,288,618 451,016 837,602 1.54
66 Highland Square Shopping Center 12/31/97 987,877 52,188 935,689 1.69
67 Spanish Villa Apartments 6/30/98 1,417,264 685,074 732,190 1.37
68 Greens Corner Shopping Center (3) 3/10/98 1,072,503 421,242 651,261 1.24
69 Mountain Ridge Apartments 4/30/98 1,416,583 681,140 735,443 1.47
70 Radisson Suites - Huntsville, AL 4/30/98 3,801,309 2,553,257 1,248,052 1.94
71 Holiday Campground 12/31/97 1,688,041 856,619 831,422 1.65
72 Plantation Meadows Apartments 6/30/98 1,241,162 512,515 728,647 1.58
73 Gresham Townhomes 12/31/97 904,932 278,297 626,635 1.41
<CAPTION>
U/W U/W U/W
# Property Name (1) NOI NCF DSCR (7)
- ----------------- --- --- --------
<S> <C> <C> <C>
1 Chanin Building $10,416,196 $8,387,294 1.33x
2 250 South Clinton Street (1A) 2,428,788 2,093,634 1.51
3 GATX Warehouse (1A) 1,573,811 1,324,630 1.42
4 1001 and 1011 Airport Industrial Park (1A) 920,137 813,025 1.33
5 Northeast Industrial Park Building # 21 (1A) 687,220 650,172 1.47
6 507 Plum Street (1A) 797,643 668,968 1.53
7 Zanesville (1A) 579,210 477,390 1.24
8 Northeast Industrial Park Building # 8 (1A) 591,226 524,124 1.45
9 Northeast Industrial Park Building # 22 (1A) 467,358 430,785 1.40
10 4, 5 & 8 Marway Circle (1A) 495,524 418,896 1.41
11 Marysville (1A) 318,787 270,593 1.44
12 One Clinton Square (1A) 229,535 170,590 1.21
13 The Center at Rancho Niguel (1B) 2,462,420 2,387,689 1.35
14 The Edwards Center at Rancho Niguel (1B) 620,898 611,938 1.40
15 Rivertree Court Shopping Center (1C) 3,165,755 2,935,214 2.23
16 Woodland Heights Shopping Center (1C) 571,135 516,533 2.30
17 Winnetka Commons Shopping Center (1C) 438,957 394,135 2.29
18 Berwyn Plaza Shopping Center (1C) 146,111 123,043 2.30
19 Walgreen's Store (1C) 102,102 98,931 2.30
20 Heritage Pointe 3,681,664 3,450,664 1.61
21 Best Western Inn of Chicago 3,747,968 3,279,579 1.55
22 Christiana Hilton Inn - Newark, DE 3,839,656 3,251,846 1.79
23 Embassy Crossing (2) 2,434,061 2,239,065 1.36
24 Jefferson at Treetops Apartments 2,104,305 2,044,305 1.33
25 Dominion Tower & Parking Garage 2,319,173 2,117,226 1.29
26 Holiday Inn Hurstbourne 2,928,692 2,536,354 1.56
27 Blue Ash Portfolio (1D) 1,504,628 1,292,436 1.49
28 Springdale Office Center (1D) 623,097 558,353 1.85
29 Executive Center East (1D) 192,278 161,426 1.80
30 McDonald's (1D) 40,000 38,933 1.77
31 11 Park Place 1,922,402 1,592,867 1.33
32 Twin Creek Apartments 1,353,138 1,293,138 1.29
33 Storage Box / Stowaway Storage (1E) 754,600 725,163 1.35
34 Maplewood Mobile Estates (1E) 614,939 601,539 1.30
35 Corporate Office Park 1,381,818 1,214,662 1.27
36 Knights Bridge II Apartments 1,056,695 1,004,695 1.31
37 Preston Stonebrooke Shopping Center 1,021,854 950,413 1.40
38 Run in Foods DP #4 (1F) 412,783 412,783 1.52
39 Run in Foods DP #7 (1F) 385,173 385,173 1.52
40 Run in Foods #401 (1F) 139,435 139,435 1.52
41 Run in Foods #406 (1F) 136,676 136,676 1.52
42 Run in Foods #402 (1F) 124,248 124,248 1.52
43 Run in Foods #403 (1F) 100,780 100,780 1.53
44 Run in Foods #404 (1F) 70,467 70,467 1.52
45 Run in Foods #410 (1F) 11,043 11,043 1.57
46 Super 8-Midtown (1G) 1,174,766 1,035,700 1.92
47 Super 8-East (1G) 219,363 186,214 1.25
48 Super 8-West (1G) 322,687 271,737 2.43
49 Wellington Woods & Lakes 962,065 893,565 1.37
50 Hampton Inn - Indianapolis, IN 1,337,456 1,192,057 1.70
51 Chidlaw Building 1,058,366 890,623 1.37
52 Grandview Garden Apartments 1,009,278 903,278 1.47
53 Cornerstone Office Park 954,059 821,236 1.39
54 160 Pine Street 1,004,572 842,920 1.38
55 River Run Apartments 889,454 818,454 1.37
56 180 N. Michigan Avenue Office Building 1,081,050 801,532 1.36
57 Oak Hills Apartments 940,980 879,980 1.34
58 145 Rosemary Street 854,067 740,305 1.25
59 Holiday Inn - Metroplex-Youngstown, OH 1,130,821 863,480 1.39
60 MCOM Building 1,007,129 929,357 1.40
61 Mayport Trace Apartments 779,098 728,348 1.35
62 Mercantile Bank Building 871,770 733,973 1.26
63 Brook Forest Apartments 855,247 766,997 1.44
64 Midfield Shopping Center 772,201 682,357 1.36
65 Far East Plaza 843,953 805,777 1.48
66 Highland Square Shopping Center 1,017,312 875,698 1.58
67 Spanish Villa Apartments 790,501 732,501 1.37
68 Greens Corner Shopping Center (3) 759,164 675,021 1.28
69 Mountain Ridge Apartments 783,155 724,155 1.44
70 Radisson Suites - Huntsville, AL 1,212,079 1,060,022 1.64
71 Holiday Campground 742,250 709,750 1.41
72 Plantation Meadows Apartments 690,210 647,710 1.41
73 Gresham Townhomes 625,014 604,764 1.36
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Occupancy Date of
Property Hotel Rate at Occupancy
# Property Name (1) Type Franchise Underwriting(6) Rate
- ----------------- ---- --------- ---------------- ----
<S> <C> <C> <C> <C> <C>
74 Lakewood Apartments Multifamily 98.0% 5/1/98
75 Imperial Plaza Shopping Center Retail 91.0% 9/1/98
76 Super 8 - Las Vegas, NV Hotel Super 8 N/A 12/31/97
77 Thunder Hollow Multifamily 91.0% 7/24/98
78 K-Mart Montwood Point Retail 99.0% 4/2/98
79 Trabuco Marketplace Retail 100.0% 9/1/98
80 Indian Valley Apartments Multifamily 95.0% 6/30/98
81 Flamingo West Centre Retail 95.0% 8/1/98
82 Mill Creek Shopping Center Retail 99.0% 2/1/98
83 High Vista Apartments Multifamily 93.0% 6/10/98
84 Woodland Office Center Office 100.0% 8/12/98
85 Bayfair Apartments Multifamily 100.0% 7/27/98
86 University Green Apartments Multifamily 99.0% 7/31/98
87 El Dorado Mobile Home Estates Manufactured Housing 98.0% 8/1/98
88 Holiday Inn - Danbury, CT Hotel Holiday Inn N/A 3/31/98
89 Country Inn & Suites Hotel Hotel Country Inn & Suites N/A 4/30/98
90 Center Ridge Apartments Multifamily 95.0% 2/1/98
91 The Marriott Building Office 100.0% 3/31/98
92 Silicon Valley Inn Hotel N/A N/A 6/30/98
93 Best Western - Sunnyvale Hotel Best Western N/A 6/30/98
94 Golden Valley Commons Retail 97.0% 5/31/98
95 West Park Place Senior Housing 95.0% 3/13/98
96 Naperville Office Court Office 99.0% 3/1/98
97 Holiday Inn Express Hotel & Suites -
Mountain View, CA Hotel Holiday Inn N/A 12/31/97
98 Best Buy / Drug Emporium Retail 100.0% 7/9/98
99 Medical Arts Building Office 90.0% 6/22/98
100 Comfort Inn - Sunnyvale Hotel Comfort Inn N/A 9/1/98
101 Holiday Inn North Denver Hotel Holiday Inn N/A 1/31/98
102 Windlands Shopping Center (4) Retail 98.0% 6/1/98
103 Northborough Woods Apartments Multifamily 98.0% 3/26/98
104 Madison Building Office 81.0% 5/1/98
105 Victory Townhomes Multifamily 100.0% 2/1/98
106 Dairy Plaza Shopping Center Retail 98.0% 5/1/98
107 Comfort Inn - Concord, NH Hotel Comfort Inn N/A 12/31/97
108 Peconic Plaza Mixed Use 97.0% 4/1/98
109 Bayou Village Place Apartments Multifamily 88.0% 5/31/98
110 Country Suites - Chattanooga, TN Hotel Country Suites N/A 3/30/98
111 531 West Deming Multifamily 98.0% 6/9/98
112 Camelot Apartments Multifamily 96.0% 3/2/98
113 Sevilla Apartments Multifamily 92.0% 4/3/98
114 The Way III Apartments Multifamily 99.0% 4/14/98
115 Glenview Office and Industrial Park Industrial 100.0% 9/10/98
116 Hampton Inn - Decatur, AL Hotel Hampton Inn N/A 11/30/97
117 Mission Industrial Park (1H) Industrial 99.0% 7/10/98
118 Jurupa Business Park (1H) Industrial 87.0% 6/29/98
119 Colony Square Shopping Center Retail 100.0% 9/1/98
120 Vintage Business Park Office 94.0% 6/23/98
121 Crossroads Shopping Center Retail 100.0% 4/1/98
122 High Country Plaza Retail 100.0% 7/1/98
123 Glencoe Avenue Industrial Industrial 100.0% 8/24/98
124 St. Charles Apartments (1I) Multifamily 100.0% 6/23/98
125 St. James Apartments (1I) Multifamily 100.0% 6/16/98
126 Plaza at Sunrise Mixed Use 93.0% 7/21/98
127 Shannon Arms III Apartments Multifamily 100.0% 5/15/98
128 River Valley Square Shopping Center Retail 100.0% 4/1/98
129 Rio Commercial Center Industrial 99.0% 7/23/98
130 Alexis Apartment Complex Multifamily 99.0% 4/30/98
131 Beltway Plaza 4710 Office 94.0% 5/1/98
132 Casa Linda MHP Manufactured Housing 98.0% 8/1/98
133 Mesa Ridge Apartments Multifamily 90.0% 6/30/98
134 Vintage Business Park II Office 100.0% 9/30/98
135 Mountain Village Shopping Center Retail 100.0% 1/1/98
136 Rock River Tower Apartments Multifamily 93.0% 7/17/98
137 Durango Plaza Retail Center Retail 77.0% 8/19/98
138 Beatrice Avenue Industrial Industrial 100.0% 4/14/98
139 Miller Apartments Multifamily 97.0% 9/30/98
140 University Square Outlet Mall Retail 96.0% 10/9/98
141 Ridgewood Plaza Retail 65.0% 9/3/98
142 Chase Village Apartments Multifamily 99.0% 5/21/98
143 Warsaw Village Shopping Center Retail 100.0% 7/15/98
144 Provident Place Office Building Office 100.0% 6/1/98
145 920 S. Waukegan Road Office 100.0% 3/31/98
146 Amberley Suite Hotel Hotel Country Inn & Suites N/A 5/1/98
<CAPTION>
Most Recent
Operating Most Most Most Most
Statement Recent Recent Recent Recent
# Property Name (1) Date Revenue Expenses NOI DSCR(7)
- ----------------- ---- ------- -------- --- --------
<S> <C> <C> <C> <C> <C>
74 Lakewood Apartments 4/30/98 2,055,120 1,271,848 783,272 1.73
75 Imperial Plaza Shopping Center 12/31/97 575,198 167,128 408,070 0.94
76 Super 8 - Las Vegas, NV 2/28/98 3,410,931 1,857,823 1,553,108 3.09
77 Thunder Hollow 2/28/98 1,074,888 505,199 569,689 1.32
78 K-Mart Montwood Point 6/15/98 723,241 77,409 645,832 1.26
79 Trabuco Marketplace 6/30/98 1,054,964 322,569 732,395 1.85
80 Indian Valley Apartments 8/31/98 1,169,289 467,019 702,270 1.70
81 Flamingo West Centre 6/30/98 1,101,272 295,509 805,763 1.81
82 Mill Creek Shopping Center 12/31/97 1,013,972 265,792 748,180 1.48
83 High Vista Apartments 5/31/98 1,363,808 664,679 699,129 1.72
84 Woodland Office Center 5/31/98 993,603 286,136 707,467 1.67
85 Bayfair Apartments 9/30/98 1,105,950 414,233 691,717 1.67
86 University Green Apartments 7/31/98 1,065,156 575,097 490,059 1.26
87 El Dorado Mobile Home Estates 6/30/98 1,458,450 590,314 868,136 2.27
88 Holiday Inn - Danbury, CT 5/31/98 4,086,245 3,004,380 1,081,865 2.44
89 Country Inn & Suites Hotel 4/30/98 2,746,194 1,833,658 912,536 1.71
90 Center Ridge Apartments 9/30/98 1,421,202 721,621 699,581 1.79
91 The Marriott Building 3/31/98 965,070 369,630 595,440 1.35
92 Silicon Valley Inn 6/30/98 2,064,517 924,884 1,139,633 2.77
93 Best Western - Sunnyvale 6/30/98 2,070,554 1,195,731 874,823 2.15
94 Golden Valley Commons 5/31/98 732,738 300,721 432,017 1.19
95 West Park Place 4/30/98 1,595,880 795,213 800,667 2.13
96 Naperville Office Court 2/28/98 951,521 387,310 564,211 1.55
97 Holiday Inn Express Hotel & Suites -
Mountain View, CA 3/31/98 1,669,167 959,906 709,261 1.68
98 Best Buy / Drug Emporium 12/31/97 592,506 71,683 520,823 1.42
99 Medical Arts Building 3/31/98 1,040,342 523,784 516,558 1.49
100 Comfort Inn - Sunnyvale 6/30/98 1,645,988 595,785 1,050,203 2.90
101 Holiday Inn North Denver 1/31/98 5,288,030 4,443,295 844,735 2.28
102 Windlands Shopping Center (4) 4/30/98 310,923 116,889 194,034 0.59
103 Northborough Woods Apartments 12/31/97 971,662 602,379 369,283 1.19
104 Madison Building 10/31/97 1,175,066 720,620 454,446 1.36
105 Victory Townhomes 12/31/97 621,737 171,254 450,483 1.47
106 Dairy Plaza Shopping Center 3/31/98 533,800 149,066 384,734 1.19
107 Comfort Inn - Concord, NH 3/31/98 2,030,144 1,297,693 732,451 2.31
108 Peconic Plaza 3/31/98 654,810 201,925 452,885 1.42
109 Bayou Village Place Apartments 5/31/98 1,425,556 931,828 493,728 1.72
110 Country Suites - Chattanooga, TN 3/31/98 1,991,157 1,396,367 594,790 1.92
111 531 West Deming 5/31/98 799,936 403,128 396,808 1.45
112 Camelot Apartments 6/30/98 799,190 419,129 380,061 1.35
113 Sevilla Apartments 2/28/98 743,701 376,121 367,580 1.31
114 The Way III Apartments 12/31/97 1,229,023 667,360 561,663 1.89
115 Glenview Office and Industrial Park 4/30/98 687,506 296,411 391,095 1.45
116 Hampton Inn - Decatur, AL 4/30/98 1,590,757 994,614 596,143 1.62
117 Mission Industrial Park (1H) 6/30/98 375,086 70,034 305,052 1.99
118 Jurupa Business Park (1H) 6/30/98 259,824 47,334 212,490 1.69
119 Colony Square Shopping Center 8/31/98 475,413 65,456 409,957 1.39
120 Vintage Business Park 12/31/97 728,220 215,844 512,376 1.75
121 Crossroads Shopping Center 4/10/98 451,159 80,758 370,401 1.33
122 High Country Plaza 6/30/98 506,840 96,236 410,604 1.63
123 Glencoe Avenue Industrial 12/31/97 524,273 124,290 399,983 1.57
124 St. Charles Apartments (1I) 4/30/98 267,013 45,167 221,846 1.52
125 St. James Apartments (1I) 4/30/98 203,326 26,225 177,101 1.22
126 Plaza at Sunrise 4/30/98 655,487 156,753 498,734 1.89
127 Shannon Arms III Apartments 12/31/97 559,600 226,493 333,107 1.36
128 River Valley Square Shopping Center 3/31/98 538,104 115,483 422,621 1.74
129 Rio Commercial Center 7/31/98 559,882 153,143 406,739 1.61
130 Alexis Apartment Complex 9/30/98 595,046 216,049 378,997 1.58
131 Beltway Plaza 4710 4/30/98 772,945 326,880 446,065 1.90
132 Casa Linda MHP 6/30/98 504,364 150,360 354,004 1.50
133 Mesa Ridge Apartments 7/31/98 928,465 479,094 449,371 1.82
134 Vintage Business Park II 12/31/97 533,183 180,464 352,719 1.55
135 Mountain Village Shopping Center 12/31/97 457,990 64,504 393,486 1.61
136 Rock River Tower Apartments 5/31/98 827,024 533,194 293,830 1.40
137 Durango Plaza Retail Center 6/3/98 550,428 59,738 490,690 2.03
138 Beatrice Avenue Industrial 1/23/98 408,120 16,325 391,795 1.64
139 Miller Apartments 6/30/98 533,805 215,966 317,839 1.47
140 University Square Outlet Mall 5/31/98 419,677 126,735 292,942 1.30
141 Ridgewood Plaza 3/25/98 510,967 83,728 427,239 1.96
142 Chase Village Apartments 5/13/98 679,699 360,766 318,933 1.44
143 Warsaw Village Shopping Cter 8/26/98 450,963 64,117 386,846 1.80
144 Provident Place Office Buding 5/31/98 627,332 325,415 301,917 1.45
145 920 S. Waukegan Road 3/31/98 467,028 110,930 356,098 1.69
146 Amberley Suite Hotel 4/30/98 1,843,180 1,369,349 473,831 1.68
<CAPTION>
U/W U/W U/W
# Property Name (1) NOI NCF DSCR(7)
- ----------------- --- --- -------
<S> <C> <C> <C>
74 Lakewood Apartments 832,027 752,027 1.67
75 Imperial Plaza Shopping Center 647,611 563,328 1.30
76 Super 8 - Las Vegas, NV 1,312,009 1,147,400 2.28
77 Thunder Hollow 600,489 560,489 1.30
78 K-Mart Montwood Point 647,400 616,502 1.20
79 Trabuco Marketplace 612,963 582,125 1.47
80 Indian Valley Apartments 637,852 585,852 1.42
81 Flamingo West Centre 915,460 804,767 1.81
82 Mill Creek Shopping Center 728,376 653,397 1.29
83 High Vista Apartments 686,204 625,704 1.54
84 Woodland Office Center 639,208 554,375 1.31
85 Bayfair Apartments 596,230 562,480 1.36
86 University Green Apartments 557,863 509,363 1.31
87 El Dorado Mobile Home Estates 854,459 839,709 2.20
88 Holiday Inn - Danbury, CT 885,805 681,493 1.54
89 Country Inn & Suites Hotel 848,046 738,031 1.38
90 Center Ridge Apartments 587,420 531,420 1.36
91 The Marriott Building 723,518 601,615 1.37
92 Silicon Valley Inn 799,959 727,234 1.77
93 Best Western - Sunnyvale 801,763 726,781 1.79
94 Golden Valley Commons 519,239 480,378 1.32
95 West Park Place 610,610 577,860 1.54
96 Naperville Office Court 626,337 546,704 1.50
97 Holiday Inn Express Hotel & Suites -
Mountain View, CA 737,347 673,560 1.60
98 Best Buy / Drug Emporium 516,950 499,976 1.36
99 Medical Arts Building 544,550 432,481 1.25
100 Comfort Inn - Sunnyvale 669,669 611,071 1.69
101 Holiday Inn North Denver 749,681 485,279 1.31
102 Windlands Shopping Center (4) 485,223 414,798 1.27
103 Northborough Woods Apartments 456,203 396,203 1.28
104 Madison Building 496,400 399,771 1.20
105 Victory Townhomes 425,638 414,388 1.35
106 Dairy Plaza Shopping Center 470,124 433,916 1.34
107 Comfort Inn - Concord, NH 691,867 613,068 1.93
108 Peconic Plaza 482,421 415,316 1.31
109 Bayou Village Place Apartments 489,478 410,978 1.43
110 Country Suites - Chattanooga, TN 600,626 504,628 1.63
111 531 West Deming 413,037 390,537 1.43
112 Camelot Apartments 429,970 396,220 1.41
113 Sevilla Apartments 384,395 358,395 1.28
114 The Way III Apartments 526,844 476,844 1.60
115 Glenview Office and Industrial Park 401,915 345,103 1.28
116 Hampton Inn - Decatur, AL 594,566 531,020 1.44
117 Mission Industrial Park (1H) 271,690 236,480 1.54
118 Jurupa Business Park (1H) 207,292 185,326 1.47
119 Colony Square Shopping Center 401,366 373,469 1.27
120 Vintage Business Park 515,771 474,225 1.62
121 Crossroads Shopping Center 375,053 364,317 1.31
122 High Country Plaza 400,148 376,116 1.49
123 Glencoe Avenue Industrial 396,911 361,154 1.42
124 St. Charles Apartments (1I) 202,452 191,952 1.32
125 St. James Apartments (1I) 172,167 163,167 1.12
126 Plaza at Sunrise 474,062 423,549 1.61
127 Shannon Arms III Apartments 355,465 335,465 1.37
128 River Valley Square Shopping Center 394,105 361,606 1.49
129 Rio Commercial Center 376,483 339,988 1.35
130 Alexis Apartment Complex 351,092 327,592 1.37
131 Beltway Plaza 4710 466,853 375,454 1.60
132 Casa Linda MHP 321,198 315,848 1.34
133 Mesa Ridge Apartments 368,568 303,816 1.23
134 Vintage Business Park II 393,002 348,556 1.53
135 Mountain Village Shopping Center 391,693 321,965 1.32
136 Rock River Tower Apartments 329,433 301,933 1.44
137 Durango Plaza Retail Center 414,440 365,732 1.51
138 Beatrice Avenue Industrial 380,766 345,962 1.44
139 Miller Apartments 312,282 282,282 1.30
140 University Square Outlet Mall 372,342 315,462 1.40
141 Ridgewood Plaza 384,098 357,430 1.64
142 Chase Village Apartments 325,486 293,486 1.32
143 Warsaw Village Shopping Center 347,300 317,284 1.48
144 Provident Place Office Buildin 331,329 280,033 1.35
145 920 S. Waukegan Road 327,420 298,729 1.42
146 Amberley Suite Hotel 516,411 450,185 1.59
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Occupancy Date of
Property Hotel Rate at Occupancy
# Property Name (1) Type Franchise Underwriting (6) Rate
- ----------------- ---- --------- ---------------- ----
<S> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) Triple Net Lease 100.0% 5/15/98
148 Stuart Towne Apartments Multifamily 97.0% 5/20/98
149 Santa Ana Villa Multifamily 94.0% 7/31/98
150 Orland Park Outlots Retail 86.0% 5/1/98
151 Brazos Square Shopping Center Retail 92.0% 6/5/98
152 Community Mall Office 100.0% 4/9/98
153 Comfort Inn - Fife, WA Hotel Comfort Inn N/A 12/31/97
154 Aspen Business Center Office 97.0% 7/1/98
155 Hampton Inn - Ft. Pierce, FL Hotel Hampton Inn N/A 12/31/97
156 Oak Tree Mobile Home Park Manufactured Housing 99.0% 8/1/98
157 Walnut Square Apartments Multifamily 98.0% 12/25/97
158 Royal Oaks Mobile Home Park Manufactured Housing 100.0% 3/18/98
159 Plymouth Square Apartments Multifamily 97.0% 3/31/98
160 Watchung View Apartments Multifamily 96.0% 6/9/98
161 Embassy Apartments Multifamily 94.0% 6/1/98
162 Best Buy - West Dundee Retail 100.0% 4/8/98
163 1400 Destrehan Avenue Industrial 100.0% 9/15/98
164 Breckenridge Condominiums Multifamily 94.0% 7/21/98
165 Rosemont Terrace Apartments Multifamily 91.0% 4/1/98
166 Days Inn - Dover, DE Hotel Days Inn N/A 5/31/98
167 Iberia Center Retail 100.0% 8/1/98
168 Shadydale Village Mobile Home Park Manufactured Housing 93.0% 8/31/98
169 Park Terrace Shopping Center Retail 95.0% 3/20/98
170 Hanover Village Apartments Multifamily 100.0% 2/18/98
171 Travelodge Hotel--Seatac Hotel Travelodge N/A 12/31/97
172 Harlem Furniture Retail 100.0% 8/17/98
173 Tree Tops Apartments Multifamily 88.0% 8/21/98
174 Old Town Place Apartments Multifamily 100.0% 5/1/98
175 The Meadows Apartments Multifamily 92.0% 3/1/98
176 Chapman & Feldner Shopping Center Retail 100.0% 6/29/98
177 BCH Office Building Mixed Use 100.0% 7/15/98
178 Colonial Pines Mobile Estates Manufactured Housing 80.0% 5/1/98
179 NationsBank Professional Center Office 100.0% 9/28/98
180 Belmeade Office Park Industrial 100.0% 5/12/98
181 Central Building Mixed Use 100.0% 8/10/98
182 710 Amsterdam Avenue Multifamily 100.0% 10/1/98
183 Sandstone Apartments & Vista North Apartments Multifamily 97.0% 4/30/98
184 Highland Park Place Shopping Center Retail 100.0% 3/1/98
185 Salem Creek Apartment Complex Multifamily 97.0% 4/29/98
186 Country Greens Apartments Multifamily 100.0% 2/1/98
187 Sahara West Plaza Retail 97.0% 5/27/98
188 Walgreen's Retail 100.0% 7/13/98
189 Econolodge - Bangor, ME Hotel Econolodge N/A 12/31/97
190 Comfort Inn - Bangor, ME Hotel Comfort Inn N/A 12/31/97
191 Point Clinton Mixed Use 94.0% 2/26/98
192 Rite-Aid Pharmacy Triple Net Lease 100.0% 7/1/98
193 Taft and Cleveland Paradise Apartments Multifamily 100.0% 5/21/98
194 Tyrone Village MHP Manufactured Housing 96.0% 9/1/98
195 Steamboat Road Multifamily 97.0% 8/15/98
196 Kerr Station Village Mixed Use 91.0% 6/1/98
197 Meadow Run Apartments Multifamily 98.0% 5/6/98
198 45 Church Street Office 93.0% 4/1/98
199 New Brunswick Apartments Multifamily 97.0% 6/9/98
200 Fiesta RV Resort RV Park 30.0% 12/31/97
201 Cedar Place Office Park Office 100.0% 5/1/98
202 Oak Hollow Mobile Home Park Manufactured Housing 99.0% 3/1/98
203 Centerline Plaza Apartments Multifamily 95.0% 3/4/98
204 Southport Place Office 100.0% 8/1/98
205 Bell Building Office 100.0% 9/21/98
206 Days Inn - Bangor, ME Hotel Days Inn N/A 3/31/98
207 Stratford Shopping Center Retail 100.0% 5/1/98
208 Country Aire Manor Manufactured Housing 100.0% 5/13/98
209 Corlett Creek Apartments Multifamily 99.0% 8/8/98
210 Anchor Bay Apartments Multifamily 93.0% 3/4/98
211 Tall Pines Shopping Center Retail 93.0% 3/1/98
212 Skyline Professional Building Office 98.0% 11/1/97
213 Southwood Acres MHP Manufactured Housing 95.0% 7/22/98
214 Nalbert Apartments Multifamily 100.0% 5/31/98
215 1220 South University Avenue Retail 92.0% 4/1/98
216 49 Commerce Drive / 81 Ethan Allen Drive Industrial 95.0% 1/1/98
217 3211 Battleground Retail 100.0% 7/7/98
218 Gardner Building Industrial 100.0% 6/1/98
219 778 Main Street Office 100.0% 5/27/98
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Most Recent
Operating Most Most Most Most
Statement Recent Recent Recent Recent
# Property Name (1) Date Revenue Expenses NOI DSCR (7)
- ----------------- ---- ------- -------- --- --------
<S> <C> <C> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) 4/30/98 257,040 1,500 255,540 1.15
148 Stuart Towne Apartments 12/31/97 541,845 195,810 346,035 1.47
149 Santa Ana Villa 6/30/98 619,872 298,320 321,552 1.63
150 Orland Park Outlots 2/28/98 179,394 60,268 119,126 0.58
151 Brazos Square Shopping Center 3/31/98 657,495 164,357 493,138 2.34
152 Community Mall 12/31/97 437,196 78,430 358,766 1.16
153 Comfort Inn - Fife, WA 4/30/98 900,036 487,473 412,563 1.90
154 Aspen Business Center 6/30/98 252,298 57,362 194,936 1.00
155 Hampton Inn - Ft. Pierce, FL 5/31/98 1,255,161 849,956 405,205 1.93
156 Oak Tree Mobile Home Park 6/30/97 727,325 311,711 415,614 2.11
157 Walnut Square Apartments 12/25/97 543,517 248,370 295,147 1.58
158 Royal Oaks Mobile Home Park 6/30/98 428,687 165,727 262,960 1.49
159 Plymouth Square Apartments 3/31/98 647,588 267,752 379,836 1.89
160 Watchung View Apartments 3/31/98 486,755 207,010 279,745 1.51
161 Embassy Apartments 3/31/98 655,387 327,566 327,821 1.96
162 Best Buy - West Dundee 12/31/97 375,950 1,284 374,666 2.07
163 1400 Destrehan Avenue 8/28/98 260,000 2,600 257,400 1.42
164 Breckenridge Condominiums 12/31/97 489,594 253,311 236,283 1.43
165 Rosemont Terrace Apartments 1/31/98 557,987 277,366 280,621 1.66
166 Days Inn - Dover, DE 5/31/98 1,050,763 514,306 536,457 2.90
167 Iberia Center 8/18/98 343,668 56,973 286,695 1.71
168 Shadydale Village Mobile Home Park 3/31/98 496,356 244,130 252,226 1.40
169 Park Terrace Shopping Center 2/28/98 363,404 89,459 273,945 1.65
170 Hanover Village Apartments 12/31/97 1,059,288 748,610 310,678 1.85
171 Travelodge Hotel--Seatac 12/31/97 823,353 494,170 329,183 1.72
172 Harlem Furniture 3/10/98 296,911 15,000 281,911 1.42
173 Tree Tops Apartments 12/31/97 503,336 287,824 215,512 1.24
174 Old Town Place Apartments 5/31/98 506,088 136,608 369,480 2.15
175 The Meadows Apartments 12/31/97 458,889 224,841 234,048 1.42
176 Chapman & Feldner Shopping Center 5/31/98 327,212 59,816 267,396 1.54
177 BCH Office Building 12/31/97 425,094 139,875 285,219 1.68
178 Colonial Pines Mobile Estates 12/31/97 304,529 84,582 219,947 1.39
179 NationsBank Professional Center 6/30/98 461,208 198,946 262,262 1.72
180 Belmeade Office Park 6/15/98 367,120 109,127 257,993 1.55
181 Central Building 12/31/97 338,450 28,867 309,583 1.66
182 710 Amsterdam Avenue 8/7/98 338,781 109,448 229,333 1.53
183 Sandstone Apartments & Vista North Apartments 5/31/98 388,477 148,249 240,228 1.69
184 Highland Park Place Shopping Center 3/31/98 323,179 100,331 222,848 1.47
185 Salem Creek Apartment Complex 4/30/98 460,572 212,349 248,223 1.64
186 Country Greens Apartments 12/31/97 636,853 354,481 282,372 1.78
187 Sahara West Plaza 12/31/97 338,576 107,177 231,399 1.55
188 Walgreen's 4/1/98 276,000 3,910 272,090 1.71
189 Econolodge - Bangor, ME 3/31/98 990,535 685,300 305,235 1.90
190 Comfort Inn - Bangor, ME 3/31/98 1,126,927 856,705 270,222 1.68
191 Point Clinton 2/28/98 378,398 121,430 256,968 1.49
192 Rite-Aid Pharmacy 4/30/98 179,589 1,500 178,089 1.09
193 Taft and Cleveland Paradise Apartments 7/31/98 418,637 158,299 260,338 1.70
194 Tyrone Village MHP 12/31/97 341,052 125,658 215,394 1.59
195 Steamboat Road 7/31/98 329,594 127,383 202,211 1.37
196 Kerr Station Village 5/31/98 321,051 138,975 182,076 1.28
197 Meadow Run Apartments 12/31/97 487,156 226,108 261,048 1.89
198 45 Church Street 2/28/98 202,051 122,962 79,089 0.53
199 New Brunswick Apartments 3/31/98 435,756 224,846 210,910 1.57
200 Fiesta RV Resort 5/31/98 509,128 265,214 243,914 1.69
201 Cedar Place Office Park 4/30/98 331,854 127,666 204,188 1.55
202 Oak Hollow Mobile Home Park 3/31/98 290,516 78,840 211,676 1.53
203 Centerline Plaza Apartments 8/31/98 399,442 196,733 202,709 1.56
204 Southport Place 7/31/98 445,599 159,369 286,230 1.94
205 Bell Building 5/12/98 311,224 74,308 236,916 1.84
206 Days Inn - Bangor, ME 3/31/98 1,149,978 885,224 264,754 1.86
207 Stratford Shopping Center 12/31/97 337,273 96,372 240,901 1.82
208 Country Aire Manor 12/31/97 269,022 85,681 183,341 1.41
209 Corlett Creek Apartments 6/30/98 395,566 213,354 182,212 1.40
210 Anchor Bay Apartments 8/31/98 380,653 209,227 171,426 1.39
211 Tall Pines Shopping Center 12/31/97 314,440 53,686 260,754 1.79
212 Skyline Professional Building 12/31/97 385,511 206,410 179,101 1.39
213 Southwood Acres MHP 12/31/97 289,898 73,647 216,251 1.82
214 Nalbert Apartments 12/31/97 305,196 102,100 203,096 1.55
215 1220 South University Avenue 4/1/98 408,050 163,777 244,273 2.04
216 49 Commerce Drive / 81 Ethan Allen Drive 2/28/98 268,263 39,342 228,921 1.44
217 3211 Battleground 12/10/97 203,350 6,101 197,249 1.31
218 Gardner Building 12/31/97 364,162 77,227 286,935 2.26
219 778 Main Street 4/30/98 303,603 112,504 191,099 1.59
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
U/W U/W U/W
# Property Name (1) NOI NCF DSCR (7)
- ----------------- --- --- --------
<S> <C> <C> <C>
147 Rite-Aid of Maine, Inc. (5) 249,329 248,105 1.12
148 Stuart Towne Apartments 314,983 290,983 1.23
149 Santa Ana Villa 329,514 284,014 1.44
150 Orland Park Outlots 289,693 273,197 1.33
151 Brazos Square Shopping Center 483,760 412,383 1.95
152 Community Mall 438,483 396,980 1.28
153 Comfort Inn - Fife, WA 389,414 353,535 1.63
154 Aspen Business Center 300,053 255,209 1.30
155 Hampton Inn - Ft. Pierce, FL 351,196 300,937 1.43
156 Oak Tree Mobile Home Park 347,448 302,298 1.53
157 Walnut Square Apartments 286,608 263,608 1.41
158 Royal Oaks Mobile Home Park 260,424 253,374 1.44
159 Plymouth Square Apartments 271,139 254,139 1.26
160 Watchung View Apartments 272,005 255,005 1.37
161 Embassy Apartments 304,990 271,706 1.63
162 Best Buy - West Dundee 346,437 333,746 1.84
163 1400 Destrehan Avenue 243,000 234,239 1.29
164 Breckenridge Condominiums 244,096 227,096 1.37
165 Rosemont Terrace Apartments 259,990 234,290 1.38
166 Days Inn - Dover, DE 306,738 274,488 1.48
167 Iberia Center 261,342 249,946 1.49
168 Shadydale Village Mobile Home Park 228,998 218,298 1.21
169 Park Terrace Shopping Center 253,274 224,109 1.35
170 Hanover Village Apartments 292,870 250,903 1.50
171 Travelodge Hotel--Seatac 334,357 301,595 1.57
172 Harlem Furniture 271,865 268,835 1.35
173 Tree Tops Apartments 264,756 239,256 1.37
174 Old Town Place Apartments 289,705 267,705 1.56
175 The Meadows Apartments 241,505 214,137 1.30
176 Chapman & Feldner Shopping Center 255,446 237,244 1.37
177 BCH Office Building 270,706 235,567 1.39
178 Colonial Pines Mobile Estates 219,668 210,868 1.33
179 NationsBank Professional Center 244,707 209,516 1.37
180 Belmeade Office Park 267,814 226,176 1.36
181 Central Building 273,072 243,777 1.31
182 710 Amsterdam Avenue 215,410 209,662 1.40
183 Sandstone Apartments & Vista North Apartments 237,489 212,489 1.49
184 Highland Park Place Shopping Center 257,259 236,321 1.56
185 Salem Creek Apartment Complex 244,665 225,165 1.49
186 Country Greens Apartments 263,150 234,150 1.48
187 Sahara West Plaza 243,112 218,878 1.47
188 Walgreen's 267,720 264,270 1.66
189 Econolodge - Bangor, ME 310,970 264,514 1.64
190 Comfort Inn - Bangor, ME 301,533 245,290 1.52
191 Point Clinton 236,421 211,385 1.22
192 Rite-Aid Pharmacy 174,201 172,524 1.06
193 Taft and Cleveland Paradise Apartments 214,584 197,084 1.29
194 Tyrone Village MHP 203,993 196,751 1.45
195 Steamboat Road 206,081 198,831 1.35
196 Kerr Station Village 230,765 188,451 1.32
197 Meadow Run Apartments 232,972 208,972 1.51
198 45 Church Street 244,239 205,288 1.37
199 New Brunswick Apartments 215,505 197,755 1.47
200 Fiesta RV Resort 222,765 212,765 1.48
201 Cedar Place Office Park 209,256 183,644 1.39
202 Oak Hollow Mobile Home Park 205,098 200,748 1.45
203 Centerline Plaza Apartments 194,188 178,938 1.38
204 Southport Place 216,308 185,686 1.26
205 Bell Building 206,621 174,229 1.36
206 Days Inn - Bangor, ME 277,046 221,866 1.56
207 Stratford Shopping Center 229,311 196,996 1.49
208 Country Aire Manor 168,113 164,663 1.27
209 Corlett Creek Apartments 210,557 190,460 1.46
210 Anchor Bay Apartments 177,621 163,121 1.32
211 Tall Pines Shopping Center 230,529 217,293 1.49
212 Skyline Professional Building 224,057 184,180 1.43
213 Southwood Acres MHP 241,667 236,617 1.99
214 Nalbert Apartments 193,503 185,003 1.41
215 1220 South University Avenue 184,452 167,102 1.40
216 49 Commerce Drive / 81 Ethan Allen Drive 246,269 215,809 1.35
217 3211 Battleground 193,224 182,744 1.21
218 Gardner Building 239,625 214,245 1.68
219 778 Main Street 191,521 156,331 1.30
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Occupancy Date of
Property Hotel Rate at Occupancy
# Property Name (1) Type Franchise Underwriting (6) Rate
- ----------------- ---- --------- ---------------- ----
<S> <C> <C> <C> <C>
220 Briarwood Apartments Multifamily 99.0% 9/3/98
221 Walton Village Shopping Center Retail 100.0% 6/22/98
222 Rancho Santa Fe Shopping Center Retail 100.0% 8/12/98
223 Winston Place Apartments Multifamily 96.0% 2/1/98
224 Hondo Park Apartments Multifamily 97.0% 6/30/98
225 Allegheny Apartments Multifamily 100.0% 6/10/98
226 Huntington North Apartments Multifamily 100.0% 8/18/98
227 Rite Aid - Yarmouth Triple Net Lease 100.0% 9/25/98
228 Sylvan Apartments Multifamily 97.0% 9/1/98
229 Finger Lakes/Farmington Court Apartments Multifamily 98.0% 3/30/98
230 Walnut Villas Apartments Multifamily 99.0% 7/13/98
231 Portsmouth Place Apartments Multifamily 100.0% 4/22/98
232 70 Warren Avenue Multifamily 100.0% 8/1/98
233 Martinsville Plaza Retail 100.0% 7/27/98
234 Route 66 Business World Retail 100.0% 8/24/98
235 Woodwinds Condominiums Multifamily 96.0% 7/21/98
236 College Square Apartments Multifamily 97.0% 6/23/98
237 Car Engineering Building Industrial 100.0% 8/15/98
238 Executive Townhomes Multifamily 97.0% 9/24/98
239 Hartford Crossing Retail Plaza Retail 97.0% 5/13/98
240 Cypress Plaza Shopping Center Retail 75.0% 8/4/98
241 Sarasota Place Apartments Multifamily 100.0% 5/1/98
242 Clayton Forest Apartments Multifamily 94.0% 9/28/98
243 Checker Auto Parts Store Retail 100.0% 7/8/98
244 Southpointe Center Retail 78.0% 5/26/98
245 Maple Court Apartments Multifamily 100.0% 5/5/98
246 Crestwood MHP Manufactured Housing 100.0% 8/15/98
247 Hyde Park Place Apartments Multifamily 100.0% 11/1/97
248 Allen Medical Office Building Office 100.0% 10/1/97
249 Canyon View Offices Office 95.0% 4/15/98
250 Firehouse Square Retail 71.0% 7/31/98
251 Plymouth Place Plaza Retail 100.0% 1/30/98
252 Meridian Mobile Estates Manufactured Housing 100.0% 5/1/98
253 Country Mobile Estates Manufactured Housing 100.0% 5/20/98
254 Village Apartments Multifamily 92.0% 7/1/98
255 Ackels Mobile Home Park Manufactured Housing 99.0% 7/31/98
256 Redford Manor Apartments Multifamily 100.0% 5/18/98
257 Doms Business Park Mixed Use 100.0% 9/1/98
258 Bradfield Creek Townhomes Multifamily 100.0% 8/1/98
259 San Remo Apartments Multifamily 100.0% 6/1/98
260 Consolidated Printing Industrial 100.0% 1/1/98
261 Knightsbridge Apartments Multifamily 100.0% 8/25/98
262 Whispering Meadows Multifamily 100.0% 5/26/98
263 Buckingham Court Apartments Multifamily 100.0% 2/10/98
264 Homestead Apartments Multifamily 100.0% 3/3/98
265 4th Avenue West Estates Manufactured Housing 100.0% 5/1/98
266 Treaty Oaks Apartments Multifamily 92.0% 9/14/98
267 Wilshire Estates MHP Manufactured Housing 100.0% 4/14/98
268 Hollywood Video Retail 100.0% 9/15/98
269 5 Milk Street Office 100.0% 7/1/98
270 Cardi Building Office 100.0% 6/17/98
271 Boulevard of Chevy Chase Apartments Multifamily 100.0% 3/31/98
272 10 McKinley Street Office 93.0% 8/11/98
273 Londonaire Townhouses Multifamily 92.0% 6/1/98
274 Heon Court Apartments Multifamily 100.0% 7/1/98
275 One Cameron Place Shopping Center Retail 100.0% 9/18/98
276 197 U.S. Route One Mixed Use 100.0% 6/6/98
277 980 Forest Avenue Office 91.0% 8/19/98
278 Chandler Crossing Apartments Multifamily 98.0% 7/22/98
279 Kingswood Place Apartments Multifamily 100.0% 6/30/98
280 4525-4535 McEwen Road Industrial 100.0% 8/12/98
281 Doms Metroplex Park Industrial 100.0% 9/15/98
282 Baxter Mills Apartments Multifamily 92.0% 8/1/98
283 Seven Eleven Retail 100.0% 8/3/98
284 3314 Mount Pleasant Apartments Multifamily 100.0% 6/24/98
285 Virginia Apartments Multifamily 100.0% 8/25/98
286 Pagewood Oval Apartments Multifamily 100.0% 6/1/98
287 Creekview Condominiums Multifamily 100.0% 8/1/98
288 Park Hill Apartments Multifamily 100.0% 3/30/98
289 Amherst Gardens Manufactured Housing 100.0% 3/9/98
290 Arlington Arms Apartments Multifamily 100.0% 7/1/98
291 Barstow Plaza Retail 85.0% 7/25/98
292 Fleur de Lis Apartments Multifamily 100.0% 6/4/98
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Most Recent
Operating Most Most Most Most
Statement Recent Recent Recent Recent
# Property Name (1) Date Revenue Expenses NOI DSCR (7)
- ----------------- ---- ------- -------- --- --------
<S> <C> <C> <C> <C> <C>
220 Briarwood Apartments 6/30/98 456,348 266,837 189,511 1.72
221 Walton Village Shopping Center 12/31/97 460,351 169,485 290,866 1.86
222 Rancho Santa Fe Shopping Center 8/31/98 217,225 47,541 169,684 1.37
223 Winston Place Apartments 7/25/98 436,057 274,716 161,341 1.44
224 Hondo Park Apartments 9/30/98 395,737 225,454 170,283 1.47
225 Allegheny Apartments 4/30/98 293,948 124,161 169,787 1.51
226 Huntington North Apartments 8/31/98 339,611 111,261 228,350 1.68
227 Rite Aid - Yarmouth 7/1/98 204,817 55,500 149,317 1.20
228 Sylvan Apartments 6/30/98 301,789 93,439 208,350 1.91
229 Finger Lakes/Farmington Court Apartments 4/30/98 385,709 209,336 176,373 1.69
230 Walnut Villas Apartments 12/31/97 662,162 473,001 189,161 1.73
231 Portsmouth Place Apartments 3/31/98 346,495 165,693 180,802 1.55
232 70 Warren Avenue 12/31/97 272,220 95,259 176,961 1.45
233 Martinsville Plaza 12/31/97 192,544 60,013 132,531 1.24
234 Route 66 Business World 12/31/97 230,174 40,772 189,402 1.62
235 Woodwinds Condominiums 12/31/97 399,756 236,910 162,846 1.60
236 College Square Apartments 6/30/98 427,652 220,014 207,638 2.27
237 Car Engineering Building 12/31/97 137,092 54 137,038 1.19
238 Executive Townhomes 7/31/98 421,439 221,445 199,994 1.73
239 Hartford Crossing Retail Plaza 11/30/97 240,071 121,043 119,028 1.10
240 Cypress Plaza Shopping Center 12/31/97 632,610 217,943 414,667 2.27
241 Sarasota Place Apartments 5/13/98 293,431 115,769 177,662 1.59
242 Clayton Forest Apartments 5/31/98 318,510 200,884 117,626 1.20
243 Checker Auto Parts Store 6/1/98 178,278 0 178,278 1.49
244 Southpointe Center 12/31/97 335,119 182,974 152,145 0.96
245 Maple Court Apartments 3/31/98 278,773 122,016 156,757 1.59
246 Crestwood MHP 3/31/98 176,900 32,943 143,957 1.50
247 Hyde Park Place Apartments 12/31/97 306,828 95,545 211,283 2.20
248 Allen Medical Office Building 12/31/97 265,657 72,169 193,488 1.41
249 Canyon View Offices 12/31/97 279,227 81,126 198,101 1.82
250 Firehouse Square 7/31/98 254,836 86,089 168,747 1.62
251 Plymouth Place Plaza 12/31/97 252,417 51,587 200,830 1.92
252 Meridian Mobile Estates 7/31/98 216,718 57,805 158,913 1.55
253 Country Mobile Estates 12/31/97 289,974 78,042 211,932 2.09
254 Village Apartments 6/30/98 454,124 221,888 232,236 2.33
255 Ackels Mobile Home Park 12/31/97 380,366 136,272 244,094 2.76
256 Redford Manor Apartments 5/31/98 204,259 48,775 155,484 1.77
257 Doms Business Park 8/31/98 211,742 35,511 176,231 1.84
258 Bradfield Creek Townhomes 7/31/98 216,021 63,464 152,557 1.64
259 San Remo Apartments 3/31/98 206,319 71,244 135,075 1.62
260 Consolidated Printing 5/14/98 181,440 21,015 160,425 1.67
261 Knightsbridge Apartments 8/31/98 346,732 231,827 114,905 1.32
262 Whispering Meadows 12/31/97 215,720 99,465 116,255 1.33
263 Buckingham Court Apartments 12/31/97 271,041 119,658 151,383 1.83
264 Homestead Apartments 12/31/97 430,518 270,813 159,705 1.99
265 4th Avenue West Estates 12/31/97 173,611 32,570 141,041 1.32
266 Treaty Oaks Apartments 6/30/98 213,284 82,164 131,120 1.56
267 Wilshire Estates MHP 3/31/98 292,900 121,792 171,108 1.65
268 Hollywood Video 4/10/98 121,789 1,218 120,571 1.35
269 5 Milk Street 7/31/98 289,881 129,002 160,879 2.02
270 Cardi Building 12/31/97 171,124 58,539 112,585 1.41
271 Boulevard of Chevy Chase Apartments 12/31/97 146,573 48,579 97,994 1.34
272 10 McKinley Street 12/31/97 196,340 62,181 134,159 1.78
273 Londonaire Townhouses 5/31/98 251,826 138,155 113,671 1.79
274 Heon Court Apartments 7/31/98 188,400 39,661 148,739 2.09
275 One Cameron Place Shopping Center 6/30/98 175,476 20,015 155,461 2.12
276 197 U.S. Route One 7/31/98 195,917 47,645 148,272 2.06
277 980 Forest Avenue 12/31/97 171,904 42,578 129,326 1.82
278 Chandler Crossing Apartments 4/30/98 213,306 110,916 102,390 1.45
279 Kingswood Place Apartments 4/30/98 186,483 81,165 105,318 1.36
280 4525-4535 McEwen Road 12/31/97 162,900 35,928 126,972 1.88
281 Doms Metroplex Park 8/31/98 172,067 26,731 145,336 2.19
282 Baxter Mills Apartments 7/31/98 157,051 44,510 112,541 1.73
283 Seven Eleven 6/26/98 97,204 1,972 95,232 1.53
284 3314 Mount Pleasant Apartments 6/23/98 183,504 80,720 102,784 1.58
285 Virginia Apartments 7/31/98 147,430 37,503 109,927 1.79
286 Pagewood Oval Apartments 7/7/98 200,319 96,890 103,429 1.76
287 Creekview Condominiums 7/31/98 141,136 36,324 104,812 1.88
288 Park Hill Apartments 4/30/98 200,675 114,445 86,230 1.88
289 Amherst Gardens 6/30/98 177,836 70,068 107,768 2.07
290 Arlington Arms Apartments 6/30/98 130,140 45,347 84,793 1.71
291 Barstow Plaza 6/30/98 318,849 99,698 219,151 4.79
292 Fleur de Lis Apartments 6/30/98 139,025 58,073 80,952 1.70
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
U/W U/W U/W
# Property Name (1) NOI NCF DSCR (7)
- ----------------- --- --- --------
<S> <C> <C> <C>
220 Briarwood Apartments 191,213 173,713 1.57
221 Walton Village Shopping Center 322,804 269,224 1.72
222 Rancho Santa Fe Shopping Center 169,061 153,310 1.24
223 Winston Place Apartments 183,615 162,495 1.45
224 Hondo Park Apartments 162,991 146,241 1.27
225 Allegheny Apartments 170,027 156,527 1.39
226 Huntington North Apartments 187,824 175,824 1.30
227 Rite Aid - Yarmouth 144,172 142,495 1.14
228 Sylvan Apartments 191,016 179,016 1.64
229 Finger Lakes/Farmington Court Apartments 180,818 164,818 1.58
230 Walnut Villas Apartments 192,156 167,156 1.53
231 Portsmouth Place Apartments 178,053 166,053 1.42
232 70 Warren Avenue 180,244 171,244 1.41
233 Martinsville Plaza 148,452 134,690 1.26
234 Route 66 Business World 180,665 155,566 1.33
235 Woodwinds Condominiums 168,699 155,449 1.53
236 College Square Apartments 194,902 177,402 1.94
237 Car Engineering Building 191,779 174,441 1.51
238 Executive Townhomes 194,428 178,812 1.55
239 Hartford Crossing Retail Plaza 173,218 135,737 1.25
240 Cypress Plaza Shopping Center 477,023 361,394 1.98
241 Sarasota Place Apartments 168,466 155,842 1.40
242 Clayton Forest Apartments 145,267 129,267 1.31
243 Checker Auto Parts Store 161,283 159,183 1.33
244 Southpointe Center 247,548 212,607 1.35
245 Maple Court Apartments 151,390 142,890 1.45
246 Crestwood MHP 128,378 125,378 1.31
247 Hyde Park Place Apartments 181,704 166,704 1.74
248 Allen Medical Office Building 194,424 176,220 1.29
249 Canyon View Offices 188,565 169,489 1.56
250 Firehouse Square 168,434 145,895 1.40
251 Plymouth Place Plaza 158,527 142,544 1.36
252 Meridian Mobile Estates 130,502 127,952 1.25
253 Country Mobile Estates 194,103 190,203 1.87
254 Village Apartments 180,475 152,975 1.53
255 Ackels Mobile Home Park 251,933 246,133 2.79
256 Redford Manor Apartments 130,599 121,735 1.38
257 Doms Business Park 150,555 131,645 1.37
258 Bradfield Creek Townhomes 137,483 130,983 1.41
259 San Remo Apartments 131,151 126,351 1.52
260 Consolidated Printing 144,964 135,244 1.41
261 Knightsbridge Apartments 128,610 115,110 1.33
262 Whispering Meadows 124,126 114,626 1.31
263 Buckingham Court Apartments 134,543 121,543 1.47
264 Homestead Apartments 127,777 102,777 1.28
265 4th Avenue West Estates 134,653 132,903 1.24
266 Treaty Oaks Apartments 132,884 118,484 1.41
267 Wilshire Estates MHP 148,210 139,610 1.34
268 Hollywood Video 118,135 114,457 1.28
269 5 Milk Street 149,245 113,342 1.42
270 Cardi Building 131,295 106,667 1.34
271 Boulevard of Chevy Chase Apartments 98,677 95,177 1.30
272 10 McKinley Street 110,500 96,493 1.28
273 Londonaire Townhouses 110,106 97,434 1.54
274 Heon Court Apartments 107,399 101,399 1.42
275 One Cameron Place Shopping Center 108,475 98,433 1.35
276 197 U.S. Route One 121,001 101,481 1.41
277 980 Forest Avenue 111,518 89,544 1.26
278 Chandler Crossing Apartments 106,148 94,648 1.34
279 Kingswood Place Apartments 103,122 95,122 1.23
280 4525-4535 McEwen Road 107,648 90,309 1.33
281 Doms Metroplex Park 106,623 89,803 1.35
282 Baxter Mills Apartments 98,704 92,454 1.42
283 Seven Eleven 90,402 84,552 1.36
284 3314 Mount Pleasant Apartments 96,541 87,541 1.35
285 Virginia Apartments 95,479 87,729 1.43
286 Pagewood Oval Apartments 94,477 86,977 1.48
287 Creekview Condominiums 85,706 80,206 1.44
288 Park Hill Apartments 80,749 72,749 1.58
289 Amherst Gardens 97,555 94,905 1.82
290 Arlington Arms Apartments 71,309 66,559 1.34
291 Barstow Plaza 160,750 107,050 2.34
292 Fleur de Lis Apartments 72,082 60,581 1.27
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
Occupancy Date of
Property Hotel Rate at Occupancy
# Property Name (1) Type Franchise Underwriting(6) Rate
- ----------------- ---- --------- ---------------- ----
<S> <C> <C> <C> <C>
293 2602 Penny Lane Multifamily 100.0% 6/15/98
294 3246 Navarre Avenue Mixed Use 100.0% 2/18/98
295 Tara Apartments Multifamily 100.0% 8/26/98
296 Mark V Apartments Multifamily 100.0% 9/2/98
297 Hallmark Apartments Multifamily 100.0% 5/1/98
298 Mirage Apartments Multifamily 100.0% 7/17/98
299 Main Street Studios Multifamily 100.0% 7/6/98
300 Summertree Apartments Multifamily 96.0% 4/30/98
301 Prestige State Bank Retail 100.0% 12/31/97
302 Masonic Temple Mixed Use 94.0% 8/4/98
------------------------------
Total/Weighted Average 96.0% 5/28/98
==============================
Maximum: 100.0% 10/19/98
Minimum: 30.0% 7/31/97
<CAPTION>
Most Recent
Operating Most Most Most Most
Statement Recent Recent Recent Recent
# Property Name (1) Date Revenue Expenses NOI DSCR(7)
- ----------------- ---- ------- -------- --- --------
<S> <C> <C> <C> <C> <C>
293 2602 Penny Lane 7/31/98 109,888 38,894 70,994 1.61
294 3246 Navarre Avenue 6/30/98 78,526 18,134 60,392 1.49
295 Tara Apartments 12/31/97 89,498 30,289 59,209 1.38
296 Mark V Apartments 6/30/98 99,431 48,104 51,327 1.35
297 Hallmark Apartments 4/30/98 92,796 23,097 69,699 1.86
298 Mirage Apartments 6/30/98 96,019 35,643 60,376 1.67
299 Main Street Studios 6/15/98 90,114 32,924 57,190 1.72
300 Summertree Apartments 12/31/97 138,154 71,605 66,549 1.88
301 Prestige State Bank 7/31/98 88,872 39,500 49,372 1.46
302 Masonic Temple 7/31/98 131,010 81,775 49,235 1.55
---------------------------------------------------------
Total/Weighted Average $299,225,168 $142,995,242 $156,229,926 1.65x
=========================================================
Maximum: $23,704,147 $13,243,056 $10,461,091 4.79x
Minimum: $ 33,634 $ - $ $10,404 0.30x
<CAPTION>
U/W U/W U/W
# Property Name (1) NOI NCF DSCR(7)
- ----------------- --- --- -------
<S> <C> <C> <C>
293 2602 Penny Lane 66,456 61,456 1.40
294 3246 Navarre Avenue 61,076 51,751 1.28
295 Tara Apartments 58,332 54,332 1.26
296 Mark V Apartments 53,057 49,057 1.29
297 Hallmark Apartments 55,245 51,245 1.37
298 Mirage Apartments 51,066 46,134 1.28
299 Main Street Studios 43,636 42,386 1.28
300 Summertree Apartments 58,162 46,162 1.31
301 Prestige State Bank 46,461 42,660 1.26
302 Masonic Temple 64,132 44,497 1.40
---------------------------------------
Total/Weighted Average $153,189,051 $136,278,189 1.46x
=======================================
Maximum: $10,416,196 $8,387,294 2.79x
Minimum: $11,043 $11,043 1.06x
</TABLE>
(1A) The Mortgage Loans secured by 250 South Clinton Street, GATX Warehouse,
1001 and 1011 Airport Industrial Park, Northeast Industrial Building # 21,
507 Plum Street, Zanesville, Northeast Industrial Building # 8, Northeast
Industrial Building # 22, 4, 5 & 8 Marway Circle, Marysville and One
Clinton Square, respectively, are cross-collateralized and
cross-defaulted.
(1B) The Mortgage Loans secured by The Center at Rancho Niguel and The Edwards
Center at Rancho Niguel, respectively, are cross-collateralized and
cross-defaulted.
(1C) The Mortgage Loans secured by Rivertree Court Shopping Center, Woodland
Heights Shopping Center, Winnetka Commons Shopping Center, Berwyn Plaza
Shopping Center and Walgreen's Store, respectively, are
cross-collateralized and cross-defaulted. Such Mortgage Loans require
payments of interest only for their entire terms.
(1D) The Mortgage Loans secured by Blue Ash Portfolio, Springdale Office
Center, Executive Center East and McDonald's, respectively, are
cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by Storage Box / Stowaway Storage and Maplewood
Mobile Estates, respectively, are cross-collateralized and
cross-defaulted.
(1F) The Mortgage Loans secured by Run in Foods DP #4, Run in Foods Unit DP #7,
Run in Foods #401, Run in Foods #406, Run in Foods #402, Run in Foods
#403, Run in Foods #404, Run in Foods Unit #410, respectively, are
cross-collateralized and cross-defaulted. The appraised value of each such
Mortgage Loan includes an estimated enterprise value and an appraised real
estate value. The aggregate of the appraised real estate values
(including FF&E) of such Mortgage Loans is $12,240,000.
(1G) The Mortgage Loans secured by Super 8-Midtown, Super 8-East and Super
8-West, respectively, are cross-collateralized and cross-defaulted.
(1H) The Mortgage Loans secured by Mission Industrial Park and Jurupa Business
Park, respectively, are cross-collateralized and cross-defaulted.
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Embassy Crossing has an interest only period of 24 months from origination
and thereafter is scheduled to amortize over 336 months with the payment
presented reflecting the amount due during the amortization term.
(3) Green's Corner Shopping Center has an interest only period of 24 months
from origination and thereafter is scheduled to amortize over 336 months
with the payment presented reflecting the amount due during the
amortization term.
(4) Windlands Shopping Center has an interest only period of 24 months from
origination and thereafter is scheduled to amortize over 336 months with
the payment presented reflecting the amount due during the amortization
term.
(5) The Mortgage Loan secured by Rite-Aid of Maine, Inc. provides for an
increase in the amount of the monthly payment to $24,426.87 in July 2008.
The Underwritten DSCR presented herein with respect to the mortgage loan
is based on the monthly payment in effect as of December 1, 1998.
(6) Does not include any Mortgage Loans secured by hotel properties.
(7) DSCR is based on the amount of the monthly payments presented.
<PAGE>
Multifamily Schedule
<TABLE>
<CAPTION>
Utilities Subject Subject Subject
Cut-off Date Tenant Elevator Studio Studio Studio
# Property Name (1) Balance (2) Pays (Y/N) Units Avg. Rent Max. Rent
- ----------------- ----------- --------- ----- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
20 Heritage Pointe $24,982,355 Electric No 0 $0 $0
24 Jefferson at Treetops Apartments 19,540,212 Electric/Water No 0 $0 $0
32 Twin Creek Apartments 12,752,406 Electric/Gas No 0 $0 $0
36 Knights Bridge II Apartments 9,615,263 Electric/Gas/Water/Sewer No 0 $0 $0
49 Wellington Woods & Lakes (3) 8,163,754 Electric No 0 $0 $0
52 Grandview Garden Apartments 7,732,025 Electric/Gas No 0 $0 $0
55 RiverRun Apartments 7,466,848 Electric No 0 $0 $0
57 Oak Hills Apartments 7,198,183 Electric No 0 $0 $0
61 Mayport Trace Apartments 6,790,078 Electric No 0 $0 $0
63 Brook Forest Apartments 6,581,227 None Yes 15 $479 $479
67 Spanish Villa Apartments 6,284,400 Electric No 0 $0 $0
69 Mountain Ridge Apartments 6,178,732 Electric/Water No 0 $0 $0
72 Plantation Meadows Apartments 5,832,325 Electric No 0 $0 $0
73 Gresham Townhomes 5,624,359 Electric/Gas No 0 $0 $0
74 Lakewood Apartments 5,584,071 None No 26 $504 $519
77 Thunder Hollow 5,376,131 Electric/Gas No 0 $0 $0
80 Indian Valley Apartments 5,184,735 Electric No 0 $0 $0
83 High Vista Apartments 5,088,408 Electric No 0 $0 $0
85 Bayfair Apartments 5,078,525 Electric/Gas Yes 0 $0 $0
86 University Green Apartments 4,992,290 Electric No 0 $0 $0
90 Center Ridge Apartments 4,795,622 Electric No 0 $0 $0
103 Northborough Woods Apartments 3,880,220 Electric No 0 $0 $0
105 Victory Townhomes 3,833,023 Electric/Gas No 0 $0 $0
109 Bayou Village Place Apartments 3,594,772 Electric No 0 $0 $0
111 531 West Deming 3,494,642 Electric Yes 36 $631 $650
112 Camelot Apartments 3,487,684 Electric/Sewer No 0 $0 $0
113 Sevilla Apartments 3,484,678 Electric No 0 $0 $0
114 The Way III Apartments 3,480,251 Electric/Gas No 0 $0 $0
124 St. Charles Apartments (1I) 1,588,971 Electric/Water/Sewer No 0 $0 $0
125 St. James Apartments (1I) 1,588,971 Electric/Gas/Water/Sewer No 0 $0 $0
127 Shannon Arms III Apartments 3,036,744 Electric/Gas No 0 $0 $0
130 Alexis Apartment Complex 2,939,984 Electric No 0 $0 $0
133 Mesa Ridge Apartments 2,843,795 Electric/Gas/Water/Sewer No 0 $0 $0
136 Rock River Tower Apartments 2,795,314 Electric Yes 29 $484 $540
139 Miller Apartments 2,712,775 Electric No 0 $0 $0
142 Chase Village Apartments 2,691,090 Electric No 0 $0 $0
148 Stuart Towne Apartments 2,578,376 Electric/Water No 0 $0 $0
149 Santa Ana Villa 2,546,021 Electric/Gas No 0 $0 $0
157 Walnut Square Apartments 2,390,965 Electric/Gas No 0 $0 $0
159 Plymouth Square Apartments 2,329,575 Electric/Gas No 0 $0 $0
160 Watchung View Apartments 2,304,820 Electric No 14 $542 $565
161 Embassy Apartments 2,266,050 None No 0 $0 $0
164 Breckenridge Condominiums 2,126,716 Electric No 0 $0 $0
165 Rosemont Terrace Apartments 2,122,371 Electric/Gas No 0 $0 $0
170 Hanover Village Apartments 2,093,895 None No 0 $0 $0
173 Tree Tops Apartments 2,084,949 Electric/Gas No 0 $0 $0
174 Old Town Place Apartments 2,075,606 Electric No 0 $0 $0
175 The Meadows Apartments 2,057,604 Electric No 2 $380 $385
182 710 Amsterdam Avenue 1,912,089 Electric No 0 $0 $0
183 Sandstone Apartments & Vista
North Apartments 1,896,820 Electric/Gas No 0 $0 $0
185 Salem Creek Apartment Complex 1,843,783 Electric No 0 $0 $0
186 Country Greens Apartments 1,839,757 Electric No 0 $0 $0
193 Taft and Cleveland Paradise
Apartments 1,738,574 Electric No 1 $350 $350
195 Steamboat Road 1,697,983 Electric/Gas No 7 $679 $925
206 Meadow Run Apartments 1,692,877 Electric/Gas No 0 $0 $0
199 New Brunswick Apartments 1,671,244 Electric Yes 36 $479 $535
203 Centerline Plaza Apartments 1,640,077 Electric No 0 $0 $0
209 Corlett Creek Apartments 1,574,126 Electric No 0 $0 $0
210 Anchor Bay Apartments 1,555,331 Electric No 0 $0 $0
214 Nalbert Apartments 1,514,819 None No 0 $0 $0
220 Briarwood Apartments 1,447,651 Electric No 0 $0 $0
223 Winston Place Apartments 1,436,546 Electric No 3 $385 $385
224 Hondo Park Apartments 1,423,866 None No 0 $0 $0
225 Allegheny Apartments 1,419,806 None No 13 $361 $375
226 Huntington North Apartments 1,415,052 Electric No 2 $415 $425
228 Sylvan Apartments 1,397,841 None No 1 $350 $350
229 Finger Lakes/Farmington
Court Apartments 1,397,635 Electric No 0 $0 $0
230 Walnut Villas Apartments 1,396,642 None No 0 $0 $0
231 Portsmouth Place Apartments 1,393,339 None Yes 6 $530 $530
232 70 Warren Avenue 1,369,150 Electric Yes 1 $525 $525
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject
1 BR 1 BR 1 BR 2 BR 2 BR 2 BR 3 BR
# Property Name (1) Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent Units
- ----------------- ----- --------- --------- ----- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
20 Heritage Pointe 464 $652 $758 460 $768 $840 0
24 Jefferson at Treetops Apartments 89 $934 $1,045 109 $1,275 $1,430 42
32 Twin Creek Apartments 96 $668 $695 144 $833 $880 0
36 Knights Bridge II Apartments 40 $759 $770 156 $826 $875 12
49 Wellington Woods & Lakes (3) 64 $528 $545 168 $584 $605 42
52 Grandview Garden Apartments 272 $355 $385 152 $423 $445 0
55 RiverRun Apartments 100 $450 $475 92 $555 $590 92
57 Oak Hills Apartments 120 $499 $540 124 $665 $731 0
61 Mayport Trace Apartments 47 $461 $470 137 $556 $575 19
63 Brook Forest Apartments 90 $539 $569 223 $610 $639 25
67 Spanish Villa Apartments 64 $446 $469 138 $555 $595 30
69 Mountain Ridge Apartments 152 $514 $520 84 $694 $740 0
72 Plantation Meadows Apartments 76 $595 $615 94 $706 $745 0
73 Gresham Townhomes 0 $0 $0 62 $995 $995 19
74 Lakewood Apartments 198 $536 $620 96 $647 $739 0
77 Thunder Hollow 56 $581 $595 80 $674 $705 24
80 Indian Valley Apartments 52 $480 $549 128 $557 $575 28
83 High Vista Apartments 140 $457 $565 70 $596 $620 32
85 Bayfair Apartments 93 $655 $695 42 $762 $830 0
86 University Green Apartments 120 $433 $515 74 $566 $690 0
90 Center Ridge Apartments 32 $439 $450 112 $531 $585 80
103 Northborough Woods Apartments 168 $383 $450 72 $517 $540 0
105 Victory Townhomes 0 $0 $0 39 $1,113 $1,150 6
109 Bayou Village Place Apartments 56 $345 $345 225 $435 $485 32
111 531 West Deming 53 $782 $830 1 $950 $950 0
112 Camelot Apartments 68 $492 $510 67 $601 $615 0
113 Sevilla Apartments 52 $587 $649 52 $730 $780 0
114 The Way III Apartments 104 $388 $410 68 $538 $550 28
124 St. Charles Apartments (1I) 0 $0 $0 39 $527 $550 3
125 St. James Apartments (1I) 0 $0 $0 36 $500 $549 0
127 Shannon Arms III Apartments 0 $0 $0 40 $590 $610 40
130 Alexis Apartment Complex 57 $492 $495 37 $606 $650 0
133 Mesa Ridge Apartments 197 $303 $325 60 $451 $650 0
136 Rock River Tower Apartments 55 $639 $725 26 $947 $1,115 0
139 Miller Apartments 32 $371 $385 80 $422 $510 8
142 Chase Village Apartments 86 $467 $485 42 $582 $605 0
148 Stuart Towne Apartments 4 $443 $450 78 $466 $550 14
149 Santa Ana Villa 0 $0 $0 130 $452 $520 0
157 Walnut Square Apartments 20 $475 $475 72 $525 $525 0
159 Plymouth Square Apartments 44 $580 $625 24 $648 $690 0
160 Watchung View Apartments 54 $634 $675 0 $0 $0 0
161 Embassy Apartments 20 $476 $490 86 $558 $580 0
164 Breckenridge Condominiums 48 $600 $675 20 $756 $820 0
165 Rosemont Terrace Apartments 34 $428 $428 64 $520 $520 2
170 Hanover Village Apartments 24 $329 $457 28 $404 $500 100
173 Tree Tops Apartments 0 $0 $0 90 $473 $473 12
174 Old Town Place Apartments 32 $404 $440 55 $522 $575 0
175 The Meadows Apartments 36 $425 $445 50 $534 $575 0
182 710 Amsterdam Avenue 0 $0 $0 15 $1,079 $1,700 3
183 Sandstone Apartments & Vista
North Apartments 67 $371 $375 26 $468 $475 4
185 Salem Creek Apartment Complex 40 $440 $455 38 $555 $585 0
186 Country Greens Apartments 50 $397 $425 50 $535 $565 16
193 Taft and Cleveland
Paradise Apartments 52 $460 $493 17 $595 $625 0
195 Steamboat Road 18 $1,079 $1,425 4 $1,323 $1,410 0
206 Meadow Run Apartments 22 $392 $392 60 $419 $419 14
199 New Brunswick Apartments 32 $556 $625 3 $748 $750 0
203 Centerline Plaza Apartments 36 $545 $570 25 $610 $650 0
209 Corlett Creek Apartments 17 $435 $445 60 $490 $510 0
210 Anchor Bay Apartments 22 $540 $560 36 $625 $665 0
214 Nalbert Apartments 22 $680 $700 12 $880 $880 0
220 Briarwood Apartments 30 $532 $560 30 $611 $650 10
223 Winston Place Apartments 30 $428 $440 47 $499 $510 0
224 Hondo Park Apartments 67 $565 $665 0 $0 $0 0
225 Allegheny Apartments 19 $461 $495 22 $601 $625 0
226 Huntington North Apartments 22 $550 $570 24 $625 $685 0
228 Sylvan Apartments 41 $581 $644 6 $613 $644 0
229 Finger Lakes/Farmington
Court Apartments 32 $496 $500 32 $549 $575 0
230 Walnut Villas Apartments 20 $393 $504 50 $429 $564 30
231 Portsmouth Place Apartments 42 $635 $635 0 $0 $0 0
232 70 Warren Avenue 17 $643 $658 18 $769 $800 0
<CAPTION>
Subject Subject Subject Subject Subject
3 BR 3 BR 4 BR 4 BR 4 BR
# Property Name (1) Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- ----------------- --------- --------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
20 Heritage Pointe $0 $0 0 $0 $0
24 Jefferson at Treetops Apartments $1,616 $1,845 0 $0 $0
32 Twin Creek Apartments $0 $0 0 $0 $0
36 Knights Bridge II Apartments $959 $975 0 $0 $0
49 Wellington Woods & Lakes (3) $647 $670 0 $0 $0
52 Grandview Garden Apartments $0 $0 0 $0 $0
55 RiverRun Apartments $648 $690 0 $0 $0
57 Oak Hills Apartments $0 $0 0 $0 $0
61 Mayport Trace Apartments $689 $699 0 $0 $0
63 Brook Forest Apartments $759 $759 0 $0 $0
67 Spanish Villa Apartments $654 $1,100 0 $0 $0
69 Mountain Ridge Apartments $0 $0 0 $0 $0
72 Plantation Meadows Apartments $0 $0 0 $0 $0
73 Gresham Townhomes $1,095 $1,150 0 $0 $0
74 Lakewood Apartments $0 $0 0 $0 $0
77 Thunder Hollow $780 $780 0 $0 $0
80 Indian Valley Apartments $659 $679 0 $0 $0
83 High Vista Apartments $630 $935 0 $0 $0
85 Bayfair Apartments $0 $0 0 $0 $0
86 University Green Apartments $0 $0 0 $0 $0
90 Center Ridge Apartments $625 $680 0 $0 $0
103 Northborough Woods Apartments $0 $0 0 $0 $0
105 Victory Townhomes $1,301 $1,325 0 $0 $0
109 Bayou Village Place Apartments $590 $590 0 $0 $0
111 531 West Deming $0 $0 0 $0 $0
112 Camelot Apartments $0 $0 0 $0 $0
113 Sevilla Apartments $0 $0 0 $0 $0
114 The Way III Apartments $680 $680 0 $0 $0
124 St. Charles Apartments (1I) $608 $625 0 $0 $0
125 St. James Apartments (1I) $0 $0 0 $0 $0
127 Shannon Arms III Apartments $710 $750 0 $0 $0
130 Alexis Apartment Complex $0 $0 0 $0 $0
133 Mesa Ridge Apartments $0 $0 0 $0 $0
136 Rock River Tower Apartments $0 $0 0 $0 $0
139 Miller Apartments $428 $475 0 $0 $0
142 Chase Village Apartments $0 $0 0 $0 $0
148 Stuart Towne Apartments $556 $650 0 $0 $0
149 Santa Ana Villa $0 $0 0 $0 $0
157 Walnut Square Apartments $0 $0 0 $0 $0
159 Plymouth Square Apartments $0 $0 0 $0 $0
160 Watchung View Apartments $0 $0 0 $0 $0
161 Embassy Apartments $0 $0 0 $0 $0
164 Breckenridge Condominiums $0 $0 0 $0 $0
165 Rosemont Terrace Apartments $700 $700 0 $0 $0
170 Hanover Village Apartments $473 $561 0 $0 $0
173 Tree Tops Apartments $580 $580 0 $0 $0
174 Old Town Place Apartments $0 $0 0 $0 $0
175 The Meadows Apartments $0 $0 0 $0 $0
182 710 Amsterdam Avenue $2,061 $2,115 0 $0 $0
183 Sandstone Apartments & Vista North Apartments $600 $610 0 $0 $0
185 Salem Creek Apartment Complex $0 $0 0 $0 $0
186 Country Greens Apartments $584 $600 0 $0 $0
193 Taft and Cleveland Paradise Apartments $0 $0 0 $0 $0
195 Steamboat Road $0 $0 0 $0 $0
206 Meadow Run Apartments $499 $499 0 $0 $0
199 New Brunswick Apartments $0 $0 0 $0 $0
203 Centerline Plaza Apartments $0 $0 0 $0 $0
209 Corlett Creek Apartments $0 $0 0 $0 $0
210 Anchor Bay Apartments $0 $0 0 $0 $0
214 Nalbert Apartments $0 $0 0 $0 $0
220 Briarwood Apartments $630 $735 0 $0 $0
223 Winston Place Apartments $0 $0 0 $0 $0
224 Hondo Park Apartments $0 $0 0 $0 $0
225 Allegheny Apartments $0 $0 0 $0 $0
226 Huntington North Apartments $0 $0 0 $0 $0
228 Sylvan Apartments $0 $0 0 $0 $0
229 Finger Lakes/Farmington Court Apartments $0 $0 0 $0 $0
230 Walnut Villas Apartments $502 $651 0 $0 $0
231 Portsmouth Place Apartments $0 $0 0 $0 $0
232 70 Warren Avenue $0 $0 0 $0 $0
</TABLE>
<PAGE>
Multifamily Schedule
<TABLE>
<CAPTION>
Utilities Subject Subject Subject
Cut-off Date Tenant Elevator Studio Studio Studio
# Property Name (1) Balance (2) Pays (Y/N) Units Avg. Rent Max. Rent
- ----------------- ------------ ---- ----- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
235 Woodwinds Condominiums 1,302,988 Electric No 0 $0 $0
236 College Square Apartments 1,298,650 Electric No 10 $421 $425
238 Executive Townhomes 1,298,518 Electric No 0 $0 $0
241 Sarasota Place Apartments 1,268,244 Electric/Gas No 0 $0 $0
242 Clayton Forest Apartments 1,247,061 Electric/Gas No 0 $0 $0
245 Maple Court Apartments 1,222,253 Electric No 0 $0 $0
247 Hyde Park Place Apartments 1,216,314 Electric/Gas No 10 $372 $425
254 Village Apartments 1,122,663 Electric/Gas No 0 $0 $0
256 Redford Manor Apartments 1,092,844 Electric/Gas No 0 $0 $0
258 Bradfield Creek Townhomes 1,047,819 Electric/Gas/Water/Sewer No 0 $0 $0
259 San Remo Apartments 1,036,984 Electric No 0 $0 $0
261 Knightsbridge Apartments 998,938 Electric No 0 $0 $0
262 Whispering Meadows 996,657 Electric No 0 $0 $0
263 Buckingham Court Apartments 996,777 Electric/Gas No 8 $350 $350
264 Homestead Apartments 996,490 None No 40 $348 $348
266 Treaty Oaks Apartments 948,917 Electric No 0 $0 $0
271 Boulevard of Chevy Chase
Apartments 896,944 Electric/Gas/Sewer No 1 $650 $650
273 Londonaire Townhouses 848,564 Electric/Water No 0 $0 $0
274 Heon Court Apartments 838,084 Electric/Gas No 0 $0 $0
278 Chandler Crossing Apartments 797,377 Electric No 0 $0 $0
279 Kingswood Place Apartments 782,426 Electric No 0 $0 $0
282 Baxter Mills Apartments 738,433 Electric No 1 $475 $475
284 3314 Mount Pleasant Apartments 707,854 Electric/Gas No 6 $400 $425
285 Virginia Apartments 699,186 Electric/Gas/Sewer No 0 $0 $0
286 Pagewood Oval Apartments 672,740 Electric No 0 $0 $0
287 Creekview Condominiums 628,691 Electric/Gas/Water/Sewer No 0 $0 $0
288 Park Hill Apartments 613,961 Electric No 0 $0 $0
290 Arlington Arms Apartments 583,666 Gas No 2 $444 $449
292 Fleur de Lis Apartments 498,217 Electric/Gas No 3 $287 $295
293 2602 Penny Lane 483,049 Electric No 0 $0 $0
295 Tara Apartments 448,432 Electric No 0 $0 $0
296 Mark V Apartments 419,168 Electric No 0 $0 $0
297 Hallmark Apartments 398,843 Electric No 0 $0 $0
298 Mirage Apartments 386,867 Electric/Gas No 0 $0 $0
299 Main Street Studios 379,302 Electric/Gas/Water/Sewer No 5 $1,630 $2,050
300 Summertree Apartments 369,677 Electric No 36 $255 $268
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject
1 BR 1 BR 1 BR 2 BR 2 BR 2 BR 3 BR
# Property Name (1) Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent Units
- ----------------- ----- --------- --------- ----- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
235 Woodwinds Condominiums 17 $605 $660 36 $790 $850 0
236 College Square Apartments 36 $507 $520 24 $571 $580 0
238 Executive Townhomes 0 $0 $0 61 $650 $650 0
241 Sarasota Place Apartments 0 $0 $0 48 $532 $560 0
242 Clayton Forest Apartments 0 $0 $0 64 $485 $495 0
245 Maple Court Apartments 27 $694 $715 7 $812 $820 0
247 Hyde Park Place Apartments 34 $418 $525 16 $518 $550 0
254 Village Apartments 28 $351 $360 52 $425 $440 20
256 Redford Manor Apartments 8 $490 $502 24 $572 $595 0
258 Bradfield Creek Townhomes 0 $0 $0 17 $687 $735 9
259 San Remo Apartments 4 $593 $630 6 $900 $950 6
261 Knightsbridge Apartments 36 $531 $576 18 $598 $625 0
262 Whispering Meadows 0 $0 $0 30 $608 $625 1
263 Buckingham Court Apartments 16 $450 $475 20 $605 $650 8
264 Homestead Apartments 40 $382 $382 20 $417 $417 0
266 Treaty Oaks Apartments 47 $470 $470 1 $695 $695 0
271 Boulevard of Chevy Chase Apartments 9 $851 $925 4 $1,124 $1,295 0
273 Londonaire Townhouses 0 $0 $0 48 $472 $485 0
274 Heon Court Apartments 2 $550 $550 20 $682 $725 2
278 Chandler Crossing Apartments 8 $305 $325 38 $422 $495 0
279 Kingswood Place Apartments 22 $469 $495 10 $569 $595 0
282 Baxter Mills Apartments 21 $568 $600 3 $650 $650 0
284 3314 Mount Pleasant Apartments 25 $430 $525 5 $498 $695 0
285 Virginia Apartments 0 $0 $0 30 $383 $495 1
286 Pagewood Oval Apartments 0 $0 $0 30 $569 $640 0
287 Creekview Condominiums 6 $489 $495 16 $584 $620 0
288 Park Hill Apartments 0 $0 $0 32 $546 $550 0
290 Arlington Arms Apartments 5 $615 $629 12 $668 $699 0
292 Fleur de Lis Apartments 4 $331 $335 24 $402 $425 0
293 2602 Penny Lane 20 $432 $465 0 $0 $0 0
295 Tara Apartments 2 $388 $425 14 $548 $550 0
296 Mark V Apartments 16 $555 $560 0 $0 $0 0
297 Hallmark Apartments 16 $483 $495 0 $0 $0 0
298 Mirage Apartments 18 $422 $430 0 $0 $0 0
299 Main Street Studios 0 $0 $0 0 $0 $0 0
300 Summertree Apartments 0 $0 $0 12 $293 $317 0
<CAPTION>
Subject Subject Subject Subject Subject
3 BR 3 BR 4 BR 4 BR 4 BR
# Property Name (1) Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- ----------------- --------- --------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
235 Woodwinds Condominiums $0 $0 0 $0 $0
236 College Square Apartments $0 $0 0 $0 $0
238 Executive Townhomes $0 $0 0 $0 $0
241 Sarasota Place Apartments $0 $0 0 $0 $0
242 Clayton Forest Apartments $0 $0 0 $0 $0
245 Maple Court Apartments $0 $0 0 $0 $0
247 Hyde Park Place Apartments $0 $0 0 $0 $0
254 Village Apartments $475 $500 0 $0 $0
256 Redford Manor Apartments $0 $0 0 $0 $0
258 Bradfield Creek Townhomes $767 $775 0 $0 $0
259 San Remo Apartments $1,525 $1,575 0 $0 $0
261 Knightsbridge Apartments $0 $0 0 $0 $0
262 Whispering Meadows $695 $695 0 $0 $0
263 Buckingham Court Apartments $650 $650 0 $0 $0
264 Homestead Apartments $0 $0 0 $0 $0
266 Treaty Oaks Apartments $0 $0 0 $0 $0
271 Boulevard of Chevy Chase Apartments $0 $0 0 $0 $0
273 Londonaire Townhouses $0 $0 0 $0 $0
274 Heon Court Apartments $699 $730 0 $0 $0
278 Chandler Crossing Apartments $0 $0 0 $0 $0
279 Kingswood Place Apartments $0 $0 0 $0 $0
282 Baxter Mills Apartments $0 $0 0 $0 $0
284 3314 Mount Pleasant Apartments $0 $0 0 $0 $0
285 Virginia Apartments $495 $495 0 $0 $0
286 Pagewood Oval Apartments $0 $0 0 $0 $0
287 Creekview Condominiums $0 $0 0 $0 $0
288 Park Hill Apartments $0 $0 0 $0 $0
290 Arlington Arms Apartments $0 $0 0 $0 $0
292 Fleur de Lis Apartments $0 $0 0 $0 $0
293 2602 Penny Lane $0 $0 0 $0 $0
295 Tara Apartments $0 $0 0 $0 $0
296 Mark V Apartments $0 $0 0 $0 $0
297 Hallmark Apartments $0 $0 0 $0 $0
298 Mirage Apartments $0 $0 0 $0 $0
299 Main Street Studios $0 $0 0 $0 $0
300 Summertree Apartments $0 $0 0 $0 $0
</TABLE>
(1I) The Mortgage Loans secured by St. Charles Apartments and St. James
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) The subject property consists of two multifamily developments, Wellington
Woods and Wellington Lakes. Rents presented are for Wellington Woods. The
one bedroom average monthly rent, one bedroom maximum monthly rent, two
bedroom average monthly rent, and two bedroom maximum monthly rent for
Wellington Lakes are $538, $555, $584, and $605 respectively.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Rates
Cut-off Date Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Years Built/Years Renovated
Occupancy Rates at Underwriting
Underwriting Debt Service Coverage Ratios
Cut-off Date Loan-to-Value Ratios
Mortgage Loans by State
Mortgage Loans by Property Type
Prepayment Option
Prepayment Provision as of the Cut-off Date
Mortgage Pool Prepayment Profile
A-2-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Mortgage Rates
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Range of Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Mortgage Rates of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3) Renovated (4)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.780% - 6.499% 13 $ 23,059,334 2.1% $ 31,983,000 73.4% $ 2,762,047 1.56 x 97.7% 1980
6.500% - 6.749% 18 83,501,903 7.5% 114,270,000 74.4% 9,465,099 1.45 98.0% 1987
6.750% - 6.999% 67 351,667,202 31.7% 486,811,000 72.8% 41,019,721 1.40 95.7% 1991
7.000% - 7.249% 87 287,107,155 25.9% 435,541,000 68.6% 36,438,705 1.53 95.4% 1988
7.250% - 7.499% 53 185,921,648 16.8% 264,285,000 71.2% 24,169,495 1.46 94.3% 1988
7.500% - 7.999% 49 157,578,676 14.2% 219,645,000 73.1% 19,780,511 1.45 97.6% 1985
8.000% - 8.520% 15 18,844,521 1.7% 25,485,000 74.1% 2,642,611 1.42 98.4% 1986
-------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
=============================================================================================================
</TABLE>
Maximum Mortgage Rate: 8.520% per annum
Minimum Mortgage Rate: 5.780% per annum
Wtd. Avg. Mortgage Rate: 7.116% per annum
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
Cut-off Date Balances (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average
Aggregate Percentage of Aggregate Average Weighted Occupancy
Range of Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at
Cut-off Date Balances of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 66,773 - 749,999 29 $ 15,253,961 1.4% $ 24,115,000 67.5% $2,034,292 1.52 x 98.9%
750,000 - 1,249,999 43 43,909,542 4.0% 65,182,000 69.3% 5,816,170 1.47 97.2%
1,250,000 - 1,999,999 72 114,835,948 10.4% 164,563,000 71.6% 14,074,546 1.43 96.5%
2,000,000 - 2,999,999 52 128,521,172 11.6% 183,475,000 71.1% 15,720,143 1.45 95.9%
3,000,000 - 3,999,999 26 91,068,250 8.2% 129,325,000 72.5% 11,134,047 1.47 96.1%
4,000,000 - 4,999,999 18 82,124,985 7.4% 127,640,000 66.6% 10,664,469 1.50 97.6%
5,000,000 - 5,999,999 20 108,125,357 9.8% 156,140,000 71.1% 13,538,987 1.49 96.2%
6,000,000 - 9,999,999 26 185,683,003 16.8% 262,300,000 72.1% 21,854,932 1.40 94.0%
10,000,000 - 14,999,999 5 60,847,618 5.5% 80,580,000 75.7% 6,717,733 1.36 94.8%
15,000,000 - 19,999,999 5 91,281,760 8.2% 126,500,000 73.5% 11,726,733 1.58 97.9%
20,000,000 - 24,999,999 5 111,296,811 10.0% 153,200,000 73.1% 14,608,843 1.53 97.6%
25,000,000 - $ 74,732,033 1 74,732,033 6.7% 105,000,000 71.2% 8,387,294 1.33 95.0%
--------------------------------------------------------------------------------------------------------
Total/Weighted Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0%
========================================================================================================
</TABLE>
Weighted
Average
Range of Year Built/
Cut-off Date Balances Renovated (4)
- ----------------------------------------------
$ 66,773 - 749,999 1983
750,000 - 1,249,999 1983
1,250,000 - 1,999,999 1985
2,000,000 - 2,999,999 1986
3,000,000 - 3,999,999 1987
4,000,000 - 4,999,999 1992
5,000,000 - 5,999,999 1987
6,000,000 - 9,999,999 1990
10,000,000 - 14,999,999 1988
15,000,000 - 19,999,999 1990
20,000,000 - 24,999,999 1986
25,000,000 - $ 74,732,033 1997
----------
Total/Weighted Average: 1988
==========
Maximum Cut-off Date Balance: $74,732,033
Minimum Cut-off Date Balance: $66,773
Average Cut-off Date Balance: $3,667,816
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Original Amortization Terms (1)
<TABLE>
<CAPTION>
Weighted
Range of Weighted Average Weighted
Original Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Amortization Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Terms (Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (4) Renovated (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
120 - 239 15 $ 39,590,32 3.6% $ 66,770,00 62.2% $ 6,084,866 1.42 x 96.8% 1991
240 - 299 33 87,663,187 7.9% 133,386,000 67.8% 12,809,771 1.52 99.2% 1989
300 - 311 116 384,174,533 34.7% 554,523,000 70.2% 48,112,306 1.45 96.1% 1990
312 - 360 133 571,252,399 51.6% 773,391,000 74.7% 65,203,390 1.41 95.6% 1986
--------------------------------------------------------------------------------------------------------------
Total/Weighted
Average 297 $1,082,680,439 97.7% $1,528,070,000 72.1% $132,210,333 1.44 x 96.0% 1988
==============================================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 120
Wtd. Avg. Original Amortization Term (Months): 322
(1) Excludes Mortgage Loans that require payment of interest only until
maturity.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Does not reflect any Mortgage Loans secured by hotel properties.
(5) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Original Terms Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
to Maturity (Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (4) Renovated (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60 - 108 4 $ 14,617,313 1.3% $ 20,100,00 74.6% $ 1,697,612 1.32 x 91.1% 1984
109 - 120 253 957,102,637 86.4% 1,351,814,000 72.1% 116,089,947 1.45 95.8% 1988
121 - 204 28 81,368,004 7.3% 120,176,000 68.8% 10,758,694 1.45 97.7% 1989
205 - 300 17 54,592,486 4.9% 85,930,000 66.8% 7,731,936 1.51 99.5% 1995
--------------------------------------------------------------------------------------------------------------
Total/Weighted
Average 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
==============================================================================================================
</TABLE>
Maximum Original Term to Maturity (Months): 300
Minimum Original Term to Maturity (Months): 60
Wtd. Avg. Original Term to Maturity (Months): 130
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Does not reflect any Mortgage Loans secured by hotel properties.
(5) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Remaining Amortization Terms (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Remaining Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Amort. Terms Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
(Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (4) Renovated (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
117 - 176 4 $ 6,183,504 0.6% $ 13,010,000 54.4% $ 1,147,201 1.44 x 90.5% 1979
177 - 236 24 58,529,505 5.3% 89,092,000 67.0% 8,450,024 1.41 99.3% 1993
237 - 272 18 58,351,521 5.3% 91,404,000 66.5% 8,732,205 1.58 99.0% 1987
273 - 296 31 114,960,951 10.4% 165,625,000 70.9% 14,701,122 1.46 96.2% 1990
297 - 332 88 274,401,497 24.8% 396,808,000 69.9% 34,091,501 1.45 96.1% 1991
333 - 355 44 203,350,472 18.4% 267,601,000 76.3% 22,332,340 1.35 94.3% 1988
356 - 359 88 366,902,989 33.1% 504,530,000 73.8% 42,755,940 1.45 96.4% 1985
----------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 297 $1,082,680,439 97.7% $1,528,070,000 72.1% $132,210,333 1.44 x 96.0% 1988
================================================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 117
Wtd. Avg. Remaining Amortization Term (Months): 319
(1) Excludes Mortgage Loans that require payment of interest only until
maturity.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Does not reflect any Mortgage Loans secured by hotel properties.
(5) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Remaining Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Terms to Stated Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Maturity (Months) of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (4) Renovated (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 - 90 4 $ 14,617,313 1.3% $ 20,100,000 74.6% $ 1,697,612 1.32 x 91.1% 1984
91 - 126 253 957,102,637 86.4% 1,351,814,000 72.1% 116,089,947 1.45 95.8% 1988
127 - 162 4 10,070,557 0.9% 16,015,000 63.5% 1,385,431 1.34 97.3% 1991
163 - 186 23 69,052,469 6.2% 100,161,000 70.0% 9,039,517 1.45 97.7% 1989
187 - 298 18 56,837,463 5.1% 89,930,000 66.4% 8,065,682 1.53 99.6% 1995
----------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $ 1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
================================================================================================================
</TABLE>
Maximum Remaining Term to Maturity (Months): 298
Minimum Remaining Term to Maturity (Months): 55
Wtd. Avg. Remaining Term to Maturity (Months): 126
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Does not reflect any Mortgage Loans secured by hotel properties.
(5) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Years Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Built/Renovated of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (4) Renovated (1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1922 - 1950 4 $ 4,492,611 0.4% $ 6,275,000 72.2% $ 565,204 1.48 x 98.9% 1939
1951 - 1960 2 3,342,057 0.3% 4,500,000 74.4% 399,579 1.40 98.0% 1960
1961 - 1970 22 41,860,229 3.8% 62,951,000 69.6% 5,111,394 1.46 94.8% 1967
1971 - 1980 49 156,489,779 14.1% 226,308,000 70.7% 19,453,621 1.48 96.7% 1975
1981 - 1990 100 373,784,274 33.7% 534,653,000 71.7% 46,725,875 1.48 96.2% 1986
1991 - 1998 125 527,711,489 47.6% 743,333,000 72.0% 64,022,516 1.43 95.8% 1995
-----------------------------------------------------------------------------------------------------------
Total/Weighted Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
===========================================================================================================
</TABLE>
Most Recent Year Built/Renovated: 1998
Oldest Year Built/Renovated: 1922
Wtd. Avg. Year Built/Renovated: 1988
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Does not reflect any Mortgage Loans secured by hotel properties.
Occupancy Rates at Underwriting (1)
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Occupancy Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Rates at U/W of Loans Balance (2) Pool Balance Value LTV Ratio U/W NCF (3) U/W DSCR U/W (1) Renovated (4)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30.0% - 69.9% 2 $ 4,338,800 0.4% $ 7,100,000 62.5% $ 570,195 1.58 x 51.7% 1992
70.0% - 79.9% 5 12,478,159 1.1% 22,200,000 62.1% 1,795,378 1.48 75.8% 1988
80.0% - 89.9% 13 57,538,187 5.2% 88,550,000 68.5% 6,622,781 1.41 85.5% 1986
90.0% - 100.0% 254 877,290,342 79.2% 1,212,625,000 73.3% 103,760,871 1.42 97.2% 1988
-------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 274 $951,645,487 85.9% $1,330,475,000 72.8% $112,749,225 1.42 x 96.0% 1988
==============================================================================================================
</TABLE>
Maximum Occupancy Rate at Underwriting: 100.0%
Minimum Occupancy Rate at Underwriting: 30.0%
Wtd. Avg. Occupancy Rate at Underwriting: 96.0%
(1) Does not include any Mortgage Loans secured by hotel properties.
(2) Assumes a Cut-off Date of December 1, 1998.
(3) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Underwriting Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted Average Weighted
Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Range of Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
U/W DSCRs of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3) Renovated (4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.060x - 1.190 4 $ 7,358,253 0.7% $ 8,340,000 88.3% $ 726,291 1.11 x 100.0% 1998
1.200 - 1.290 48 145,855,109 13.2% 193,996,000 75.5% 16,091,002 1.26 96.5% 1987
1.300 - 1.390 93 427,433,941 38.6% 591,481,000 73.3% 47,768,326 1.34 95.6% 1990
1.400 - 1.490 71 207,079,613 18.7% 279,960,000 74.4% 24,617,293 1.44 95.9% 1986
1.500 - 1.590 40 134,672,016 12.2% 189,918,000 71.5% 18,335,889 1.54 97.9% 1985
1.600 - 1.690 17 75,268,173 6.8% 113,360,000 66.8% 10,706,760 1.63 94.6% 1985
1.700 - 1.790 7 41,683,312 3.8% 68,500,000 61.6% 6,372,779 1.77 100.0% 1996
1.800 - 1.890 6 14,068,507 1.3% 21,980,000 64.7% 2,143,400 1.83 96.3% 1981
1.900 - 1.990 6 16,100,202 1.5% 29,485,000 58.7% 2,836,564 1.94 90.4% 1987
2.000 - 2.790 x 10 38,161,313 3.4% 81,000,000 48.9% 6,679,885 2.27 97.5% 1987
---------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
================================================================================================================
</TABLE>
Maximum Underwriting DSCR: 2.79 x
Minimum Underwriting DSCR: 1.06 x
Wtd. Avg. Underwriting DSCR: 1.46 x
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
Cut-off Date Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Range of Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Cut-off Date Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
LTV Ratios of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3) Renovated (4)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25.00% - 50.00% 14 $ 34,242,096 3.1% $ 83,785,000 41.9% $ 5,587,542 1.89 x 94.0% 1985
50.01% - 60.00% 22 86,662,794 7.8% 154,435,000 56.2% 12,919,958 1.79 94.5% 1988
60.01% - 70.00% 64 188,625,316 17.0% 284,792,000 66.4% 25,729,839 1.54 96.9% 1987
70.01% - 75.00% 100 380,968,921 34.4% 526,514,000 72.4% 45,452,248 1.40 95.0% 1989
75.01% - 80.00% 93 374,393,619 33.8% 476,194,000 78.6% 42,067,032 1.36 96.6% 1988
80.01% - 85.00% 6 37,018,411 3.3% 45,860,000 80.7% 3,958,446 1.37 99.5% 1988
85.01% - 91.20% 3 5,769,282 0.5% 6,440,000 89.6% 563,124 1.11 100.0% 1998
------------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
==================================================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio: 91.2%
Minimum Cut-off Date LTV Ratio: 25.0%
Wtd. Avg. Cut-off Date LTV Ratio: 71.6%
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves, U/W
LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Mortgage Loans by State
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
State of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3) Renovated (4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New York 19 $ 154,641,881 14.0% $ 208,145,000 74.5% $ 17,859,305 1.38 x 96.6% 1992
California 39 144,512,421 13.0% 213,190,000 70.4% 17,360,290 1.44 97.2% 1987
Texas 44 121,646,831 11.0% 163,000,000 75.1% 13,975,366 1.38 95.5% 1989
Florida 27 117,568,068 10.6% 153,605,000 76.7% 13,536,350 1.35 94.4% 1989
Illinois 19 114,847,294 10.4% 176,785,000 66.9% 15,747,360 1.66 97.0% 1982
Alabama 7 38,143,937 3.4% 56,600,000 68.7% 5,049,746 1.40 89.2% 1989
Georgia 10 32,095,046 2.9% 43,160,000 74.6% 3,617,926 1.32 96.1% 1990
Michigan 14 31,611,268 2.9% 44,150,000 73.8% 3,812,387 1.47 96.2% 1987
Ohio 7 29,958,311 2.7% 41,620,000 72.2% 3,675,429 1.48 96.5% 1990
Delaware 3 25,063,708 2.3% 38,375,000 65.3% 3,762,951 1.78 95.0% 1997
Nevada 7 24,458,829 2.2% 44,150,000 58.5% 3,845,644 1.84 94.2% 1984
Maine 12 20,199,567 1.8% 28,258,000 72.8% 2,466,521 1.34 99.2% 1992
Indiana 4 18,927,006 1.7% 32,100,000 59.1% 2,500,128 1.57 84.7% 1986
New Jersey 12 18,859,677 1.7% 26,975,000 70.2% 2,358,553 1.41 98.2% 1979
Kentucky 2 18,677,296 1.7% 25,550,000 73.3% 2,575,287 1.56 100.0% 1986
Virginia 6 15,792,365 1.4% 21,465,000 73.7% 1,812,860 1.41 95.8% 1989
Maryland 5 15,453,506 1.4% 20,010,000 77.3% 1,725,680 1.37 96.4% 1987
Tennessee 3 14,279,115 1.3% 19,745,000 72.7% 1,848,783 1.42 99.3% 1990
Washington 9 13,546,161 1.2% 19,580,000 70.1% 1,742,872 1.47 96.0% 1984
Colorado 3 13,298,622 1.2% 23,037,000 60.8% 1,535,085 1.35 84.4% 1991
North Carolina 6 12,895,856 1.2% 19,495,000 67.6% 1,471,987 1.34 95.2% 1989
New Hampshire 10 11,659,314 1.1% 15,205,000 77.4% 1,553,062 1.54 99.0% 1989
New Mexico 4 11,508,552 1.0% 20,461,000 57.9% 1,821,243 1.74 99.0% 1994
Connecticut 4 9,965,187 0.9% 14,180,000 70.5% 1,271,298 1.43 96.6% 1989
Pennsylvania 2 9,368,492 0.8% 12,550,000 75.6% 1,063,928 1.37 100.0% 1987
Missouri 2 8,948,338 0.8% 11,300,000 79.2% 1,069,982 1.51 96.5% 1993
Minnesota 3 8,442,343 0.8% 12,850,000 67.7% 1,058,693 1.61 98.0% 1993
Massachusetts 2 8,353,069 0.8% 11,330,000 73.7% 911,549 1.28 100.0% 1995
Kansas 2 8,212,836 0.7% 11,100,000 74.1% 896,468 1.29 96.0% 1989
South Carolina 3 7,474,564 0.7% 9,526,000 78.5% 864,272 1.33 98.5% 1983
Arkansas 1 6,336,379 0.6% 10,900,000 58.1% 875,698 1.58 100.0% 1980
Alaska 2 6,224,117 0.6% 8,588,000 72.5% 822,781 1.58 96.7% 1991
Wisconsin 2 5,782,263 0.5% 9,100,000 63.6% 755,262 1.63 95.4% 1981
Louisiana 3 3,087,389 0.3% 3,925,000 78.8% 340,982 1.29 99.5% 1978
Oregon 1 2,347,823 0.2% 3,300,000 71.1% 253,374 1.44 100.0% 1962
Vermont 1 1,490,301 0.1% 2,000,000 74.5% 215,809 1.35 95.0% 1997
Rhode Island 1 1,294,855 0.1% 1,760,000 73.6% 135,737 1.25 97.0% 1997
District of
Columbia 1 707,854 0.1% 950,000 74.5% 87,541 1.35 100.0% 1922
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
====================================================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Mortgage Loans by Property Type
<TABLE>
<CAPTION>
Weighted
Weighted Average Weighted
Aggregate Percentage of Aggregate Average Weighted Occupancy Average
Number Cut-off Date Initial Appraised Cut-off Date Aggregate Average Rate at Year Built/
Property Type of Loans Balance (1) Pool Balance Value LTV Ratio U/W NCF (2) U/W DSCR U/W (3) Renovated (4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 106 $ 308,230,423 27.8% $ 416,020,000 74.6% $ 35,461,004 1.41 x 96.1% 1984
Office 38 224,653,725 20.3% 309,938,000 72.8% 25,850,224 1.37 95.0% 1992
Retail 61 220,707,607 19.9% 325,437,000 70.5% 27,337,681 1.51 96.3% 1990
Hotel 28 156,034,952 14.1% 247,545,000 64.5% 23,528,964 1.65 N/A 1991
Industrial 23 75,539,424 6.8% 99,010,000 76.6% 9,033,251 1.40 99.5% 1988
Mixed Use 13 53,708,672 4.8% 80,505,000 69.2% 6,300,001 1.37 97.5% 1989
Manufactured
Housing 18 36,182,566 3.3% 54,875,000 68.2% 4,597,797 1.56 97.5% 1975
Other 11 20,720,678 1.9% 29,950,000 69.3% 2,880,980 1.49 86.4% 1986
Self Storage 1 6,133,110 0.6% 8,300,000 73.9% 725,163 1.35 83.0% 1995
Triple Net Lease 3 5,769,282 0.5% 6,440,000 89.6% 563,124 1.11 100.0% 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted
Average: 302 $1,107,680,439 100.0% $1,578,020,000 71.6% $136,278,189 1.46 x 96.0% 1988
====================================================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1998.
(2) Underwriting NCF reflects Net Cash Flow after U/W Replacement Reserves,
U/W LC's and TI's and FF&E.
(3) Does not reflect any Mortgage Loans secured by hotel properties.
(4) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
<PAGE>
Prepayment Provision as of the Cut-off Date
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Remaining Remaining Remaining Weighted
Range of Aggregate Percentage of Lockout Lockout Lockout Plus Average
Remaining Terms to Number of Cut-off Date Initial Period Plus YM Period Premium Period Maturity
Stated Maturity (Years) (1) Loans Balance (2) Pool Balance (Years) (Years) (Years) (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4.0 - 4.9 2 $ 5,334,181 0.5% 4.1 4.1 4.1 4.6
6.0 - 6.9 2 9,283,132 0.8% 1.8 1.8 4.2 6.2
9.0 - 9.9 253 957,102,637 86.4% 8.7 9.2 9.2 9.7
10.0 - 10.9 1 1,595,934 0.1% 10.3 10.3 10.3 10.8
11.0 - 11.9 3 8,474,623 0.8% 11.3 11.3 11.3 11.8
14.0 - 14.9 23 69,052,469 6.2% 14.0 14.2 14.2 14.8
16.0 - 16.9 1 2,244,978 0.2% 16.3 16.3 16.3 16.8
17.0 - 17.9 1 5,226,550 0.5% 17.3 17.3 17.3 17.8
19.0 - 19.9 15 43,081,535 3.9% 18.8 19.2 19.2 19.7
24.0 - 24.9 1 6,284,400 0.6% 24.3 24.3 24.3 24.8
------------------------------------------------------------------------------------------------------
Total/Weighted Average: 302 $1,107,680,439 100.0% 9.5 10.0 10.0 10.5
======================================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(2) Assumes a Cut-off Date of December 1, 1998.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Remaining Remaining Remaining Weighted
Aggregate Percentage of Lockout Lockout Lockout Plus Average
Number of Cut-off Date Initial Period Plus YM Period Premium Period Maturity
Prepayment Option Loans Balance (1) Pool Balance (Years) (Years) (Years) (Years) (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 240 $ 1,009,059,222 91.1% 10.1 10.1 10.1 10.6
Lockout / Yield Maintenance 57 68,331,352 6.2% 3.6 9.7 9.7 10.2
Defeasance / Yield Maintenance(3) 3 21,006,733 1.9% 4.5 8.9 8.9 9.5
Lockout / Prepayment Penalty 1 7,198,183 0.6% 1.2 1.2 4.2 6.2
Lockout 1 2,084,949 0.2% 4.2 4.2 4.2 6.2
------------------------------------------------------------------------------------------------------
Total/Weighted Average: 302 $ 1,107,680,439 100.0% 9.5 10.0 10.0 10.5
======================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1998.
(2) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
table.
(3) "Defeasance / Yield Maintenance" means that the Mortgage Loan provides
for a Lockout Period followed by a period during which defeasance is
permitted. The two periods are together presented as a Lockout Period
during which defeasance is permitted.
<PAGE>
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool
As of the Cut-off Date Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout 100.0% 100.0% 99.3% 95.0% 94.9% 91.4% 91.3% 91.9%
Yield Maint. Premium 0.0% 0.0% 0.0% 4.3% 4.4% 7.8% 7.8% 8.1%
1% to 5% Prepayment Premium 0.0% 0.0% 0.7% 0.7% 0.7% 0.0% 0.0% 0.0%
Open 0.0% 0.0% 0.0% 0.0% 0.0% 0.9% 0.9% 0.0%
---------------------------------------------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===================================================================================================
Outstanding
Balance (mm): $1,107.7 $1,093.7 $1,078.8 $1,062.4 $1,044.8 $1,020.8 $1,000.7 $970.3
Number of Loans: 302 302 302 302 302 300 300 298
<CAPTION>
Prepayment Provision % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool % of Pool
As of the Cut-off Date Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout 91.9% 90.8% 96.7% 96.6% 96.4% 96.3% 96.2% 96.9%
Yield Maint. Premium 8.1% 6.1% 3.3% 3.4% 1.4% 1.4% 1.4% 3.1%
1% to 5% Prepayment Premium 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Open 0.0% 3.1% 0.0% 0.0% 2.2% 2.3% 2.4% 0.0%
---------------------------------------------------------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===================================================================================================
Outstanding
Balance (mm): $947.0 $921.9 $94.1 $86.7 $77.8 $71.6 $64.9 $24.6
Number of Loans: 298 298 45 44 41 41 41 18
<CAPTION>
Prepayment Provision % of Pool % of Pool % of Pool % of Pool
As of the Cut-off Date Dec-14 Dec-15 Dec-16 Dec-17
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lockout 96.9% 96.7% 96.7% 97.1%
Yield Maint. Premium 3.1% 3.3% 3.3% 2.9%
1% to 5% Prepayment Premium 0.0% 0.0% 0.0% 0.0%
Open 0.0% 0.0% 0.0% 0.0%
-------------------------------------------------
Total: 100.0% 100.0% 100.0% 100.0%
=================================================
Outstanding
Balance (mm): $20.9 $15.3 $11.0 $7.0
Number of Loans: 18 17 16 16
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the ARD Loans are
assumed to pay in full on their respective Anticipated Repayment
Dates. Otherwise calculated based on Maturity Assumptions to be set forth
in the final prospectus supplement.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
DISTRIBUTION DATE STATEMENT
Table of Contents
STATEMENT SECTIONS PAGE(s)
- ------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
<TABLE>
<CAPTION>
Underwriter Master Servicer Special Servicer
<S> <C> <C>
Donaldson, Lufkin & Jenrette Banc One Mortgage Capital Markets, LLC Banc One Mortgage Capital Markets, LLC
Securities Corporation 1717 Main Street, 14th Floor 1717 Main Street, 14th Floor
277 Park Avenue Dallas, TX 75201 Dallas, TX 75201
New York, NY 10172
Contact: N. Dante LaRocca Contact: Paul G. Smyth Contact: Paul G. Smyth
Phone Number: (212) 892-3000 Phone Number: (214) 290-2505 Phone Number: (214) 290-2505
</TABLE>
This report has been compiled from information provided to Norwest by
various third parties, which may include the Servicer, Master Servicer,
Special Servicer and others. Norwest has not independently confirmed the
accuracy of information received from these third parties and assumes no
duty to do so. Norwest expressly disclaims any responsibility for the
accuracy or completeness of information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Certificate Distribution Detail
<TABLE>
<CAPTION>
Realized
Loss/
Additional
Trust Total Current
Pass-Through Original Beginning Principal Interest Prepayment Fund Distri- Ending Subordination
Class CUSIP Rate Balance Balance Distribution Distribution Penalties Expenses bution Balance Level(1)
- ----- ----- ---- ------- ------- ------------ ------------ --------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-1B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-5 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B-6 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
Totals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
----- ----- ---- ------ ------ ------------ --------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) Calculated by taking (A) the sum of the ending certificate balance of
all classes less (B) the sum of (i) the ending certificate balance of the
designated class and (ii) the ending certificate balance of all classes
which are not subordinate to the designated class and dividing the result by
(A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
----- ----- ------- ------------ ------------ --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
A-1B 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
A-2 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
A-3 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
A-4 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-1 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-2 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-3 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-4 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-5 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
B-6 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
C 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
D 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
R-I 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
R-II 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
R-III 0.00000000 0.00000000 0.0000000 0.0000000 0.0000000 0.0000000
</TABLE>
<TABLE>
<CAPTION>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Penalties Amount
----- ----- ------ ------------ --------- ------
<S> <C> <C> <C> <C> <C>
S 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Reconciliation Detail
<TABLE>
<CAPTION>
Advance Summary Servicing Fee Breakdowns
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Master Servicing Fees 0.00
Less Reductions Master to Servicing Fees 0.00
Reimbursement for Interest on Advances 0.00 Plus Master Servicing Fees for Delinquent
paid from general collections Payments Received 0.00
Plus Adjustments for Prior Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
</TABLE>
Certificate Interest Reconciliation
<TABLE>
<CAPTION>
Net
Aggregate Distributable Remaining Unpaid
Accrued Prepayment Distributable Certificate Additional Distributable
Certificate Interest Certificate Interest Trust Fund Interest Certificate
Class Interest Shortfall Interest Adjustment Expenses Distribution Interest
- ----- -------- --------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
S 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Other Required Information
Available Distribution Amount 0.00
Original Number of Loans 0
Aggregate Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Amount of Master Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
- --------------------------------------------------------------------------------
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Appraisal Reduction Amount
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
------ ------ --------
Total
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Rating Detail
<TABLE>
<CAPTION>
Original Ratings Current Ratings (1)
----------------------------------- -----------------------------------
Class CUSIP DCR FITCH MOODY'S S&P DCR FITCH MOODY'S S&P
----- ----- --- ----- ------- --- --- ----- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S
A-1A
A-1B
A-2
A-3
A-4
B-1
B-2
B-3
B-4
B-5
B-6
C
D
</TABLE>
NR - Designates that the class was not rated by the above agency at the
time of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any
particular rating agency, no request has been made subsequent to issuance to
obtain rating information, if any, from such rating agency. The current
ratings were obtained directly from the applicable rating agency within 30
days of the payment date listed above. The ratings may have changed since
they were obtained. Because the ratings may have changed, you may want to
obtain current ratings directly from the rating agencies.
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-3100
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
(212) 908-0500
Moody's Investors Service
99 Church Street
New York, New York 10007
(212) 553-0300
Standard & Poor's Rating Services
26 Broadway
New York, New York 10004
(212) 208-8000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
<TABLE>
<CAPTION>
Scheduled # of Scheduled % of Weighted
Balance Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
State (3)
<TABLE>
<CAPTION>
# of Scheduled % of Weighted
State Props. Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
----- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Debt Service Coverage Ratio
<TABLE>
<CAPTION>
Debt Service # of Scheduled % of Weighted
Coverage Ratio Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
-------------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Note Rate
<TABLE>
<CAPTION>
Note # of Scheduled % of Weighted
Rate Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
---- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Property Type (3)
<TABLE>
<CAPTION>
Property # of Scheduled % of Weighted
Type Props. Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
-------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Seasoning
<TABLE>
<CAPTION>
# of Scheduled % of Weighted
Seasoning Loans. Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
-------------- ------ ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Anticipated Remaining # of Scheduled % of Weighted
Term (2) Loans Balance Agg. Bal. WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Stated Term (Fully Amortizing Loans)
<TABLE>
<CAPTION>
Remaining Stated # of Scheduled % of Weighted
Term Loans Balance Agg. Bal. WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Amortization Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Remaining Amortization # of Scheduled % of Weighted
Term Loans Balance Agg. Bal. WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Age of Most Recent NOI
<TABLE>
<CAPTION>
Age of Most # of Scheduled % of Weighted
Recent NOI Loans Balance Agg. Bal. WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures become available from
borrowers on an asset level. The Trustee makes no representations as to the
accuracy of the data provided by the borrower for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
MORTGAGE LOAN DETAIL
<TABLE>
<CAPTION>
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N)
- ------ ---- --------- ---- ----- -------- ---------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Totals:
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number Balance Balance Date Date Amount (2) (3)
- ------ ---------- ---------- ----- ---------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code (3) Modification Code
---------------------- --------------------------- --------------------
<S> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 7 - REO 1 - Maturity Date Extension
RT - Retail MU - Mixed Use 2 - Foreclosure 8 - Resolved 2 - Amortization Change
HC - Health Care LO - Lodging 3 - Bankruptcy 9 - Pending Return 3 - Principal Write-Off
IN - Industrial SS - Self Storage 4 - Extension to Master Servicer 4 - Combination
WH - Warehouse OT - Other 5 - Note Sale 10 - Deed in Lieu Of
MH - Mobile Home Park 6 - DPO Foreclosure
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
--------------------------- --------------------
Loan Number Offering Document
Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenace Premium
- ------------ ------------------ ---------------- ------------------- ------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Totals
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Historical Detail
<TABLE>
<CAPTION>
Delinquencies Prepayments Rate and Maturities
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff Next Weighted Ag. WAM
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount Coupon Remit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering #of Current Outstanding Status of Resolution
Document Months Paid Through P&I P&I Mortgage Strategy Servicing Foreclosure
Loan Number Cross-Reference Delinq. Date Advances Advances** Loan (1) Code (2) Transfer Date Date
- ----------- --------------- ------- ------------ -------- ----------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
Current Outstanding
Servicing Servicing REO
Loan Number Advances Advances Bankruptcy Date Date
- ----------- --------- ----------- --------------- ------
<S> <C> <C> <C> <C>
Totals
</TABLE>
(1) Status of Mortgage Loan
---------------------------
A - Payment Not Received 2 - Two Months Delinquent
But Still in Grace Period 3 - Three Or More Months Delinquent
B - Late Payment But Less 4 - Assumed Scheduled Payment
Than 1 Month Delinquent (Performing Matured Balloon)
0 - Current 7 - Foreclosure
1 - One Month Delinquent 9 - REO
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed in Lieu Of
6 - DPO Foreclosure
** Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate
- ------------ ------ --------------- ---------- ---------- ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Net Remaining
Distribution Actual Operating NOI Note Maturity Amortization
Date Balance Income Date DSCR Date Date Term
- ------------ ------- ---------- ---- ----- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
(1) Resolution Strategy Code (2) Property Type Code
---------------------------- ----------------------
<S> <C>
1 - Modification 7 - REO MF - Multi-Family OF - Office
2 - Foreclosure 8 - Resolved RT - Retail MU - Mixed Use
3 - Bankruptcy 9 - Pending Return HC - Health Care LO - Lodging
4 - Extension to Master Servicer IN - Industrial SS - Self Storage
5 - Note Sale 10 - Deed in Lieu Of WH - Warehouse OT - Other
6 - DPO Foreclosure MH - Mobile Home Park
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Specially Serviced Loan Detail-Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Data Date Value Property Revenue Comment
----------- ------ --------------- --------- ---------- ------------ ------ ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
(1) Resolution Strategy Code
<S> <C> <C> <C> <C> <C>
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed in Lieu Of
6 - DPO Foreclosure
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Modified Loan Detail
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification Modification Date Modification Description
Number Cross-Reference Balance
<S> <C> <C> <C> <C>
Total
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. DLJ Commercial Mortgage Corp. Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1998-CF2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 01/13/1999
Record Date: 12/31/1998
</TABLE>
Liquidated Loan Detail
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
<S> <C> <C> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
</TABLE>
<TABLE>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses* Proceeds Actual Balance Loss (Y/N)
<S> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
</TABLE>
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT C
DECREMENT TABLES FOR CLASS A, CLASS B-1
AND CLASS B-2 CERTIFICATES
Percentage of Initial Class Principal Balance Outstanding For:
Class A-1A Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................. 100% 100% 100% 100% 100%
December 1999........................... 94% 94% 94% 94% 94%
December 2000........................... 87% 86% 85% 85% 84%
December 2001........................... 79% 78% 77% 76% 76%
December 2002........................... 71% 69% 68% 68% 68%
December 2003........................... 60% 58% 57% 56% 56%
December 2004........................... 51% 48% 47% 47% 47%
December 2005........................... 37% 37% 37% 37% 37%
December 2006........................... 26% 26% 26% 26% 26%
December 2007........................... 15% 14% 14% 13% 2%
December 2008 and thereafter............ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................... 5.7 5.6 5.6 5.5 5.5
</TABLE>
Class A-1B Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................. 100% 100% 100% 100% 100%
December 1999........................... 100% 100% 100% 100% 100%
December 2000........................... 100% 100% 100% 100% 100%
December 2001........................... 100% 100% 100% 100% 100%
December 2002........................... 100% 100% 100% 100% 100%
December 2003........................... 100% 100% 100% 100% 100%
December 2004........................... 100% 100% 100% 100% 100%
December 2005........................... 100% 100% 100% 100% 100%
December 2006........................... 100% 100% 100% 100% 100%
December 2007........................... 100% 100% 100% 100% 100%
December 2008 and thereafter............ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................... 9.7 9.7 9.6 9.6 9.3
</TABLE>
C-1
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class A-2 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date........................... 100% 100% 100% 100% 100%
December 1999......................... 100% 100% 100% 100% 100%
December 2000......................... 100% 100% 100% 100% 100%
December 2001......................... 100% 100% 100% 100% 100%
December 2002......................... 100% 100% 100% 100% 100%
December 2003......................... 100% 100% 100% 100% 100%
December 2004......................... 100% 100% 100% 100% 100%
December 2005......................... 100% 100% 100% 100% 100%
December 2006......................... 100% 100% 100% 100% 100%
December 2007......................... 100% 100% 100% 100% 100%
December 2008 and thereafter.......... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................. 9.9 9.9 9.8 9.8 9.5
</TABLE>
Class A-3 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date........................... 100% 100% 100% 100% 100%
December 1999......................... 100% 100% 100% 100% 100%
December 2000......................... 100% 100% 100% 100% 100%
December 2001......................... 100% 100% 100% 100% 100%
December 2002......................... 100% 100% 100% 100% 100%
December 2003......................... 100% 100% 100% 100% 100%
December 2004......................... 100% 100% 100% 100% 100%
December 2005......................... 100% 100% 100% 100% 100%
December 2006......................... 100% 100% 100% 100% 100%
December 2007......................... 100% 100% 100% 100% 100%
December 2008 and thereafter.......... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................. 9.9 9.9 9.9 9.8 9.5
</TABLE>
C-2
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class A-4 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................. 100% 100% 100% 100% 100%
December 1999........................... 100% 100% 100% 100% 100%
December 2000........................... 100% 100% 100% 100% 100%
December 2001........................... 100% 100% 100% 100% 100%
December 2002........................... 100% 100% 100% 100% 100%
December 2003........................... 100% 100% 100% 100% 100%
December 2004........................... 100% 100% 100% 100% 100%
December 2005........................... 100% 100% 100% 100% 100%
December 2006........................... 100% 100% 100% 100% 100%
December 2007........................... 100% 100% 100% 100% 100%
December 2008 and thereafter............ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................... 9.9 9.9 9.9 9.9 9.5
</TABLE>
Class B-1 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................. 100% 100% 100% 100% 100%
December 1999........................... 100% 100% 100% 100% 100%
December 2000........................... 100% 100% 100% 100% 100%
December 2001........................... 100% 100% 100% 100% 100%
December 2002........................... 100% 100% 100% 100% 100%
December 2003........................... 100% 100% 100% 100% 100%
December 2004........................... 100% 100% 100% 100% 100%
December 2005........................... 100% 100% 100% 100% 100%
December 2006........................... 100% 100% 100% 100% 100%
December 2007........................... 100% 100% 100% 100% 100%
December 2008 and thereafter............ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):.................... 9.9 9.9 9.9 9.9 9.5
</TABLE>
C-3
<PAGE>
Percentage of Initial Class Principal Balance Outstanding For:
Class B-2 Certificates
<TABLE>
<CAPTION>
Distribution Date 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Closing Date............................ 100% 100% 100% 100% 100%
December 1999.......................... 100% 100% 100% 100% 100%
December 2000.......................... 100% 100% 100% 100% 100%
December 2001.......................... 100% 100% 100% 100% 100%
December 2002.......................... 100% 100% 100% 100% 100%
December 2003.......................... 100% 100% 100% 100% 100%
December 2004.......................... 100% 100% 100% 100% 100%
December 2005.......................... 100% 100% 100% 100% 100%
December 2006.......................... 100% 100% 100% 100% 100%
December 2007.......................... 100% 100% 100% 100% 100%
December 2008 and thereafter........... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):................... 9.9 9.9 9.9 9.9 9.5
</TABLE>
C-4
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT D
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent (CBE) Yield of the
Class S Certificates at Various CPRs
0.8514% Initial Pass-Through Rate
Initial Class Notional Amount $1,107,680,439
<TABLE>
<CAPTION>
Price (32nds)* 0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
-------------- --------- ---------- ---------- ---------- -----------
CBE CBE CBE CBE CBE
Yield % Yield % Yield % Yield % Yield %
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
5-12 10.67% 10.51% 10.40% 10.29% 9.91%
5-16 10.09% 9.94% 9.82% 9.72% 9.33%
5-20 9.53% 9.38% 9.27% 9.16% 8.77%
5-24 8.99% 8.84% 8.73% 8.62% 8.23%
5-28 8.47% 8.32% 8.21% 8.10% 7.71%
6-00 7.97% 7.82% 7.71% 7.60% 7.20%
6-04 7.49% 7.34% 7.23% 7.12% 6.72%
6-08 7.02% 6.87% 6.76% 6.65% 6.24%
6-12 6.56% 6.42% 6.31% 6.20% 5.79%
Avg. Life (yrs.)** 9.4 9.3 9.3 9.3 9.0
</TABLE>
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* Exclusive of accrued interest.
** Of Class Notional Amount.
D-1
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<PAGE>
DLJ COMMERCIAL MORTGAGE CORP.
Mortgage Pass-Through Certificates
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series (each, a "Series"). The Offered
Certificates of any Series, together with any other mortgage pass-through
certificates of such Series, are collectively referred to herein as the
"Certificates". Each Series will consist of one or more classes (each, a
"Class") of Certificates.
Each Series will represent in the aggregate the entire beneficial
ownership interest in a trust fund (with respect to any Series, the "Trust
Fund") to be formed by DLJ Commercial Mortgage Corp. (the "Depositor") and
including a segregated pool (a "Mortgage Asset Pool") of various types of
multifamily and commercial mortgage loans ("Mortgage Loans"), mortgage-backed
securities ("MBS") that evidence interests in, or that are secured by pledges
of, one or more of various types of multifamily or commercial mortgage loans, or
a combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). The
Mortgage Loans in (and the mortgage loans underlying the MBS in) any Trust Fund
will be secured by first or junior liens on, or security interests in, fee
and/or leasehold estates in, or cooperative shares with respect to, one or more
of the following types of real property: (i) residential properties consisting
of rental or cooperatively-owned buildings with multiple dwelling units,
manufactured housing communities and mobile home parks; (ii) commercial
properties consisting of office buildings, properties related to the sales of
consumer goods and other products and/or related to providing entertainment,
recreation or personal services to the general public, hospitality properties,
casinos, health care-related facilities, recreational vehicle parks, golf
courses, marinas, ski resorts, amusement parks and other resort and recreational
properties, arenas, warehouse facilities, mini-warehouse facilities,
self-storage facilities, industrial facilities, parking lots and garages,
churches and other religious facilities, and restaurants; and (iii) mixed use
properties (that is, any combination of the foregoing) and unimproved land.
Multifamily properties consisting of rental or cooperatively owned buildings
with multiple dwelling units, office properties, properties related to the sale
of consumer goods and other products and/or providing entertainment, recreation
and personal services to the general public and hospitality properties will
represent security for a material concentration of the Mortgage Loans (and the
mortgage loans underlying the MBS) constituting the Trust Fund for any Series,
based on principal balance at the time such Series is issued. If so specified in
the related Prospectus Supplement, the Trust Fund for a Series may also include
letters of credit, surety bonds, insurance policies, guarantees, reserve funds,
guaranteed investment contracts, interest rate exchange agreements, interest
rate cap or floor agreements, or other agreements designed to reduce the effects
of interest rate fluctuations on the Mortgage Assets. See "Description of the
Trust Funds", "Description of the Certificates" and "Description of Credit
Support".
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(cover continued on next page)
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION, THE MASTER SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE REMIC ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, TRUSTEES, BENEFICIARIES, SHAREHOLDERS, EMPLOYEES OR AGENTS.
NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS WILL BE GUARANTEED OR
INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES OR, UNLESS OTHERWISE SPECIFIED
IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
Prospective investors should review the information appearing on page
17 herein under the caption "Risk Factors" and such information as may be set
forth under the caption "Risk Factors" in the related Prospectus Supplement
before purchasing any Offered Certificate.
The Offered Certificates of any Series may be offered through one or
more different methods, including offerings through underwriters, as described
herein under "Method of Distribution" and in the related Prospectus Supplement.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any Series unless
accompanied by the Prospectus Supplement for such Series.
The date of this Prospectus is November 20, 1998.
<PAGE>
(cover continued)
The yield on each Class of a Series will be affected by, among other
things, the rate of payment of principal (including prepayments) on the Mortgage
Assets in the related Trust Fund and the timing of receipt of such payments as
described herein and in the related Prospectus Supplement. See "Yield and
Maturity Considerations". A Trust Fund may be subject to early termination under
the circumstances described herein and in the related Prospectus Supplement. See
"Description of the Certificates--Termination; Retirement of the Certificates".
As described in the related Prospectus Supplement, the Certificates of
each Series, including the Offered Certificates of such Series, may consist of
one or more Classes of Certificates that: (i) provide for the accrual of
interest thereon based on a fixed, variable or adjustable interest rate; (ii)
are senior or subordinate to one or more other Classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled to
distributions of principal, with disproportionate, nominal or no distributions
of interest; (iv) are entitled to distributions of interest, with
disproportionate, nominal or no distributions of principal; (v) provide for
distributions of interest thereon or principal thereof that commence only
following the occurrence of certain events, such as the retirement of one or
more other Classes of Certificates of such Series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology. Distributions in respect of the
Certificates of each Series will be made on a monthly, quarterly, semi-annual,
annual or other periodic basis as specified in the related Prospectus
Supplement. See "Description of the Certificates".
If so provided in the related Prospectus Supplement, one or more
elections may be made to treat the related Trust Fund or a designated portion
thereof as a "real estate mortgage investment conduit" (each, a "REMIC") for
federal income tax purposes. If applicable, the Prospectus Supplement for the
Offered Certificates of any Series will specify which Class or Classes of
Certificates of such Series will be considered to be regular interests in the
related REMIC and which Class of Certificates of such Series or other interests
will be designated as the residual interest in the related REMIC. See "Federal
Income Tax Consequences".
There will be no secondary market for the Offered Certificates of any
Series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if one does develop, that
it will continue. Unless otherwise provided in the related Prospectus
Supplement, the Certificates will not be listed on any securities exchange.
An Index of Principal Definitions is included at the end of this
Prospectus specifying the location of definitions of important or frequently
used defined terms.
-2-
<PAGE>
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (of which this Prospectus forms a
part) under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Certificates. This Prospectus and the Prospectus
Supplement relating to the Offered Certificates of each Series will contain
summaries of the material terms of the documents referred to herein and therein,
but do not contain all of the information set forth in the Registration
Statement pursuant to the rules and regulations of the Commission. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at its Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Regional Offices located as follows: Chicago Regional Office, 500
West Madison, 14th Floor, Chicago, Illinois 60661; New York Regional Office,
Seven World Trade Center, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates and electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
system at the Commission's Web site (http://www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information herein since the date hereof or therein since the date
thereof. This Prospectus and any related Prospectus Supplement are not an offer
to sell or a solicitation of an offer to buy any security in any jurisdiction in
which it is unlawful to make such offer or solicitation.
The Master Servicer, the Trustee or another specified person will cause
to be provided to registered holders of the Offered Certificates of each Series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a Class or Series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described herein, then unless otherwise provided in the
related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the Offered
Certificates. Conveyance of notices and other communications by DTC to its
participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable Offered
Certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates--Reports to Certificateholders" and
"--Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (i) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (ii) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor will
file or cause to be filed with the Commission as to each Trust Fund the periodic
unaudited reports to holders of the Offered Certificates referenced in the
preceding paragraph; however, because of the nature of the Trust Funds, it is
unlikely that any significant additional information will be filed. In addition,
because of the limited number of Certificateholders expected for each Series,
the Depositor anticipates that a significant portion
-3-
<PAGE>
of such reporting requirements will be permanently suspended following the first
fiscal year for the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports
filed or caused to be filed by the Depositor with respect to a Trust Fund
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of an offering of Offered Certificates evidencing interests therein.
The Depositor will provide or cause to be provided without charge to each person
to whom this Prospectus is delivered in connection with the offering of one or
more Classes of Offered Certificates, upon written or oral request of such
person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such Classes of such Offered Certificates, other than the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Such requests to the Depositor should be directed in writing
to the Depositor at 277 Park Avenue, 9th Floor, New York, New York 10172,
Attention: N. Dante LaRocca, or by telephone at (212) 892-3000.
-4-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
SUMMARY OF PROSPECTUS.............................................................................................8
RISK FACTORS.....................................................................................................17
Limited Liquidity of Offered Certificates...............................................................17
Limited Assets..........................................................................................18
Credit Support Limitations..............................................................................18
Effect of Prepayments on Average Life of Certificates...................................................19
Effect of Prepayments on Yield of Certificates..........................................................20
Limited Nature of Ratings...............................................................................20
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans.......................21
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset Pool.......................28
Federal Tax Considerations Regarding REMIC Residual Certificates........................................28
Book-Entry Registration.................................................................................29
Potential Conflicts of Interest.........................................................................29
Termination.............................................................................................30
DESCRIPTION OF THE TRUST FUNDS...................................................................................30
General.................................................................................................30
Mortgage Loans..........................................................................................30
MBS.....................................................................................................42
Undelivered Mortgage Assets.............................................................................43
Certificate Accounts....................................................................................43
Credit Support..........................................................................................43
Cash Flow Agreements....................................................................................43
YIELD AND MATURITY CONSIDERATIONS................................................................................44
General.................................................................................................44
Pass-Through Rate.......................................................................................44
Payment Delays..........................................................................................44
Certain Shortfalls in Collections of Interest...........................................................44
Yield and Prepayment Considerations.....................................................................45
Weighted Average Life and Maturity......................................................................47
Other Factors Affecting Yield, Weighted Average Life and Maturity.......................................47
THE DEPOSITOR....................................................................................................49
DESCRIPTION OF THE CERTIFICATES..................................................................................50
General.................................................................................................50
Distributions...........................................................................................50
Distributions of Interest on the Certificates...........................................................51
Distributions of Principal of the Certificates..........................................................52
Distributions on the Certificates in Respect of Prepayment Premiums
or in Respect of Equity Participations..............................................................53
Allocation of Losses and Shortfalls.....................................................................53
Advances in Respect of Delinquencies....................................................................53
Reports to Certificateholders...........................................................................54
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
Voting Rights...........................................................................................55
Termination.............................................................................................55
Book-Entry Registration and Definitive Certificates.....................................................56
DESCRIPTION OF THE POOLING AGREEMENTS............................................................................57
General.................................................................................................57
Assignment of Mortgage Assets...........................................................................58
Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies.......................................................................59
Collection and Other Servicing Procedures with respect to Mortgage Loans................................60
Sub-Servicers...........................................................................................62
Collection of Payments on MBS...........................................................................62
Certificate Account.....................................................................................63
Modifications, Waivers and Amendments of Mortgage Loans.................................................66
Realization Upon Defaulted Mortgage Loans...............................................................66
Hazard Insurance Policies...............................................................................68
Due-on-Sale and Due-on-Encumbrance Provisions...........................................................69
Servicing Compensation and Payment of Expenses..........................................................69
Evidence as to Compliance...............................................................................70
Certain Matters Regarding the Master Servicer, the Special Servicer,
the REMIC Administrator, the Manager and the Depositor ..............................................70
Events of Default.......................................................................................71
Rights Upon Event of Default............................................................................72
Amendment...............................................................................................73
List of Certificateholders..............................................................................74
The Trustee.............................................................................................74
Duties of the Trustee...................................................................................74
Certain Matters Regarding the Trustee...................................................................75
Resignation and Removal of the Trustee..................................................................75
DESCRIPTION OF CREDIT SUPPORT....................................................................................75
General.................................................................................................75
Subordinate Certificates................................................................................76
Insurance or Guarantees with Respect to Mortgage Loans..................................................76
Letter of Credit........................................................................................76
Certificate Insurance and Surety Bonds..................................................................77
Reserve Funds...........................................................................................77
Credit Support with Respect to MBS......................................................................77
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS..........................................................................78
General.................................................................................................78
Types of Mortgage Instruments...........................................................................78
Leases and Rents........................................................................................78
Personalty..............................................................................................79
Foreclosure.............................................................................................79
Bankruptcy Laws.........................................................................................82
Environmental Considerations............................................................................84
Due-on-Sale and Due-on-Encumbrance Provisions...........................................................86
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
Junior Liens; Rights of Holders of Senior Liens.........................................................86
Subordinate Financing...................................................................................86
Default Interest and Limitations on Prepayments.........................................................87
Applicability of Usury Laws.............................................................................87
Certain Laws and Regulations............................................................................87
Americans with Disabilities Act.........................................................................87
Soldiers' and Sailors' Civil Relief Act of 1940.........................................................88
Forfeitures in Drug and RICO Proceedings................................................................88
FEDERAL INCOME TAX CONSEQUENCES..................................................................................89
General.................................................................................................89
REMICs..................................................................................................90
Grantor Trust Funds....................................................................................107
STATE AND OTHER TAX CONSEQUENCES................................................................................116
ERISA CONSIDERATIONS............................................................................................116
General................................................................................................116
Plan Asset Regulations.................................................................................117
Prohibited Transaction Exemptions......................................................................118
Insurance Company General Accounts.....................................................................118
Consultation With Counsel..............................................................................119
Tax Exempt Investors...................................................................................119
LEGAL INVESTMENT................................................................................................119
USE OF PROCEEDS.................................................................................................121
METHOD OF DISTRIBUTION..........................................................................................121
LEGAL MATTERS...................................................................................................123
FINANCIAL INFORMATION...........................................................................................123
RATING..........................................................................................................123
INDEX OF PRINCIPAL DEFINITIONS..................................................................................124
</TABLE>
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<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in
its entirety by reference to the more detailed information appearing elsewhere
in this Prospectus and by reference to the information with respect to each
Series of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
Series. An Index of Principal Definitions is included at the end of this
Prospectus.
<TABLE>
<S> <C>
Securities Offered................................. Mortgage pass-through certificates.
Depositor.......................................... DLJ Commercial Mortgage Corp., a Delaware corporation.
See "The Depositor".
Trustee............................................ The trustee (the "Trustee") for each Series will be named in
the related Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee".
Master Servicer.................................... If a Trust Fund includes Mortgage Loans, then the master
servicer (the "Master Servicer") for the corresponding Series
will be named in the related Prospectus Supplement. See
"Description of the Pooling Agreements".
Special Servicer................................... If a Trust Fund includes Mortgage Loans, then the special
servicer (the "Special Servicer") for the corresponding Series
will be named, or the circumstances under which a Special
Servicer may be appointed will be described, in the related
Prospectus Supplement. See "Description of the Pooling
Agreements--Collection and Other Servicing Procedures
with respect to Mortgage Loans".
MBS Administrator.................................. If a Trust Fund includes MBS, then the entity responsible for
administering such MBS (the "MBS Administrator") will be
named in the related Prospectus Supplement. If an entity
other than the Trustee or the Master Servicer is the MBS
Administrator, such entity will be referred to herein as the
"Manager".
REMIC Administrator................................ The person (the "REMIC Administrator") responsible for the
various tax-related administration duties for a Series as to
which one or more REMIC elections have been made will be
named in the related Prospectus Supplement. See "Federal
Income Tax Consequences" and "REMICs".
The Mortgage Assets................................ The Mortgage Assets will be the primary assets of any Trust
Fund. The Mortgage Assets with respect to each Series will,
in general, consist of a pool of mortgage loans ("Mortgage
Loans") secured by first or junior liens on, or security
interests in, fee and/or leasehold estates in, or cooperative
shares with respect to, one or more of the following types of
real property: (i) residential properties consisting of rental
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
or cooperatively-owned buildings with multiple dwelling
units, manufactured housing communities and mobile home
parks; (ii) commercial properties consisting of office
buildings, properties related to the sale of goods and other
products (such as shopping centers, malls, factory outlet
centers, automotive sales centers and individual stores,
shops and businesses related to sales of consumer goods and
other products, including individual department stores and
other retail stores, grocery stores, specialty shops,
convenience stores and gas stations), properties related to
providing entertainment, recreation or personal services
(such as movie theaters, fitness centers, bowling alleys,
salons, dry cleaners and automotive service centers),
hospitality properties (such as hotels, motels and other
lodging facilities) casinos, health care-related facilities
(such as hospitals, skilled nursing facilities, nursing
homes, congregate care facilities and, in some cases, senior
housing), recreational and resort properties (such as
recreational vehicle parks, golf courses, marinas, ski
resorts, amusement parks and other recreational properties),
arenas, storage properties (such as warehouse facilities,
mini-warehouse facilities and self-storage facilities),
industrial facilities, parking lots and garages, churches and
other religious facilities and restaurants; and (iii) mixed
use properties (that is, any combination of the foregoing)
and unimproved land. The Mortgage Loans will not be
guaranteed or insured by the Depositor or any of its
affiliates or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency or
instrumentality or by any other person. If so specified in
the related Prospectus Supplement, some Mortgage Loans may be
delinquent or nonperforming as of the date the related Trust
Fund is formed.
As and to the extent described in the related Prospectus
Supplement, a Mortgage Loan (i) may provide for no accrual of
interest or for accrual of interest thereon at an interest
rate (a "Mortgage Rate") that is fixed over its term or that
adjusts from time to time, or that may be converted at the
borrower's election from an adjustable to a fixed Mortgage
Rate, or from a fixed to an adjustable Mortgage Rate, (ii)
may provide for level payments to maturity or for payments
that adjust from time to time to accommodate changes in the
Mortgage Rate or to reflect the occurrence of certain events,
and may permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or nonamortizing,
with a balloon payment due on its stated maturity date, (iv)
may prohibit over its term or for a certain period
prepayments and/or require payment of a premium or a yield
maintenance payment in connection with certain prepayments
and (v) may provide for payments of principal, interest or
</TABLE>
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<TABLE>
<S> <C>
both, on due dates that occur monthly, quarterly,
semi-annually or at such other interval as is specified in
the related Prospectus Supplement. Each Mortgage Loan will
have had an original term to maturity of not more than
approximately 40 years. No Mortgage Loan will have been
originated by the Depositor. See "Description of the Trust
Funds--Mortgage Loans".
If any Mortgage Loan, or group of related Mortgage Loans (by
reason of cross-collateralization, common borrower or
affiliation of borrowers), constitutes a material
concentration of credit risk, financial statements or other
financial information with respect to the related Mortgaged
Property or Mortgaged Properties will be included in the
related Prospectus Supplement. See "Description of the Trust
Funds--Mortgage Loans--Mortgage Loan Information" in the
Prospectus Supplement.
If and to the extent specified in the related Prospectus
Supplement, the Mortgage Assets with respect to a Series may
also include, or consist of, mortgage participations,
mortgage pass-through certificates, collateralized mortgage
obligations and/or other mortgage-backed securities
(collectively, "MBS"), that evidence an interest in, or are
secured by a pledge of, one or more mortgage loans that
conform to the descriptions of the Mortgage Loans contained
herein and which may or may not be issued, insured or
guaranteed by the United States or an agency or
instrumentality thereof. See "Description of the Trust
Funds--MBS".
Unless otherwise specified in the related Prospectus
Supplement, the aggregate outstanding principal balance of a
Mortgage Asset Pool as of the date it is formed (the "Cutoff
Date") will equal or exceed the aggregate outstanding
principal balance of the related Series as of the date the
Certificates of such Series are initially issued (the
"Closing Date"). In the event that the Mortgage Assets
initially delivered do not have an aggregate outstanding
principal balance as of the related Cut-off Date at least
equal to the aggregate outstanding principal balance of the
related Series as of the related Closing Date, the Depositor
may deposit cash or Permitted Investments (as defined herein)
on an interim basis with the Trustee for such Series on the
related Closing Date in lieu of delivering Mortgage Assets
(the "Undelivered Mortgage Assets") with an aggregate
outstanding principal balance as of the related Cut-off Date
equal to the shortfall amount. During the 90-day period
following the related Closing Date, the Depositor will be
entitled to obtain a release of such cash or Permitted
</TABLE>
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<TABLE>
<S> <C>
Investments to the extent that the Depositor delivers a
corresponding amount of the Undelivered Mortgage Assets. If
and to the extent that all the Undelivered Mortgage Assets
are not delivered during the 90-day period following the
related Closing Date, such cash or, following liquidation,
such Permitted Investments will be applied to pay a
corresponding amount of principal of the Certificates of such
Series to the extent set forth, and on the dates specified,
in the related Prospectus Supplement.
The Certificates................................... Each Series will be issued in one or more Classes of
Certificates pursuant to a pooling and servicing agreement or
other agreement specified in the related Prospectus
Supplement (in any case, a "Pooling Agreement") and will
represent in the aggregate the entire beneficial ownership
interest in the related Trust Fund.
As described in the related Prospectus Supplement, the
Certificates of each Series, including the Offered
Certificates of such Series, may consist of one or more
Classes of Certificates that, among other things: (i) are
senior (collectively, "Senior Certificates") or subordinate
(collectively, "Subordinate Certificates") to one or more
other Classes of Certificates of the same Series in
entitlement to certain distributions on the Certificates;
(ii) are entitled to distributions of principal, with
disproportionate, nominal or no distributions of interest
(collectively, "Stripped Principal Certificates"); (iii) are
entitled to distributions of interest, with disproportionate,
nominal or no distributions of principal (collectively,
"Stripped Interest Certificates"); (iv) provide for
distributions of interest thereon or principal thereof that
commence only after the occurrence of certain events, such as
the retirement of one or more other Classes of Certificates
of such Series; (v) provide for distributions of principal
thereof to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or
other collections of principal are received on the Mortgage
Assets in the related Trust Fund; (vi) provide for
distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment
schedule or other methodology; or (vii) provide for
distributions based on collections on the Mortgage Assets in
the related Trust Fund attributable to prepayment premiums,
yield maintenance payments or equity participations.
If so specified in the related Prospectus Supplement, a
Series may include one or more "Controlled Amortization
Classes", which will entitle the holders thereof to receive
principal
</TABLE>
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<TABLE>
<S> <C>
distributions according to a specified principal payment
schedule. Although prepayment risk cannot be eliminated
entirely for any Class of Certificates, a Controlled
Amortization Class will generally provide a relatively stable
cash flow so long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains relatively
constant at the rate, or within the range of rates, of
prepayment used to establish the specific principal payment
schedule for such Certificates. Prepayment risk with respect
to a given Mortgage Asset Pool does not disappear, however,
and the stability afforded to a Controlled Amortization Class
comes at the expense of one or more other Classes of
Certificates of the same Series, any of which other Classes
of Certificates may also be a Class of Offered Certificates.
See "Risk Factors--Effect of Prepayments on Average Life of
Certificates" and "--Effect of Prepayments on Yield of
Certificates".
Each Certificate, other than certain Stripped Interest
Certificates and certain REMIC Residual Certificates (as
defined herein), will have an initial stated principal amount
(a "Certificate Principal Balance"); and each Certificate,
other than certain Stripped Principal Certificates and
certain REMIC Residual Certificates, will accrue interest on
its Certificate Principal Balance or, in the case of certain
Stripped Interest Certificates, on a notional amount (a
"Certificate Notional Amount"), based on a fixed, variable or
adjustable interest rate (a "Pass-Through Rate"). The related
Prospectus Supplement will specify the aggregate Certificate
Principal Balance, aggregate Certificate Notional Amount
and/or Pass-Through Rate (or, in the case of a variable or
adjustable Pass-Through Rate, the method for determining such
rate), as applicable, for each Class of Offered Certificates.
If so specified in the related Prospectus Supplement, a Class
of Offered Certificates may have two or more component parts,
each having characteristics that are otherwise described
herein as being attributable to separate and distinct
Classes.
The Certificates will not be guaranteed or insured by the
Depositor or any of its affiliates, by any governmental
agency or instrumentality or by any other person or entity,
unless otherwise provided in the related Prospectus
Supplement. See "Risk Factors--Limited Assets".
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Distributions of Interest on the
Certificates....................................... Interest on each Class of Offered Certificates (other than
certain Classes of Stripped Principal Certificates and
certain Classes of REMIC Residual Certificates) of each
Series will accrue at the applicable Pass-Through Rate on the
aggregate Certificate Principal Balance or, in the case of
certain Classes of Stripped Interest Certificates, the
aggregate Certificate Notional Amount thereof outstanding
from time to time and will be distributed to
Certificateholders as provided in the related Prospectus
Supplement (each of the specified dates on which
distributions are to be made, a "Distribution Date").
Distributions of interest with respect to one or more Classes
of Certificates (collectively, "Accrual Certificates") may
not commence until the occurrence of certain events, such as
the retirement of one or more other Classes of Certificates,
and interest accrued with respect to a Class of Accrual
Certificates prior to the occurrence of such an event will
either be added to the Certificate Principal Balance thereof
or otherwise deferred as described in the related Prospectus
Supplement. Distributions of interest with respect to one or
more Classes of Certificates may be reduced to the extent of
certain delinquencies, losses and other contingencies
described herein and in the related Prospectus Supplement.
See "Risk Factors--Effect of Prepayments on Average Life of
Certificates" and "--Effect of Prepayments on Yield of
Certificates", "Yield and Maturity Considerations--Certain
Shortfalls in Collections of Interest" and "Description of
the Certificates--Distributions of Interest on the
Certificates".
Distributions of Principal of the
Certificates....................................... Each Class of Certificates of each Series (other than certain
Classes of Stripped Interest Certificates and certain Classes
of REMIC Residual Certificates) will have an aggregate
Certificate Principal Balance. The aggregate Certificate
Principal Balance of a Class of Certificates outstanding from
time to time will represent the maximum amount that the
holders thereof are then entitled to receive in respect of
principal from future cash flow on the assets in the related
Trust Fund. Unless otherwise specified in the related
Prospectus Supplement, the initial aggregate Certificate
Principal Balance of all Classes of a Series will not be
greater than the outstanding principal balance of the related
Mortgage Assets as of the related Cut-off Date. As and to the
extent described in each Prospectus Supplement, distributions
of principal with respect to the related Series will be made
on each Distribution Date to the holders of the Class or
Classes of Certificates of such Series then entitled thereto
until the Certificate Principal Balances of such Certificates
have been reduced to zero. Distributions of
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principal with respect to one or more Classes of
Certificates: (i) may be made at a rate that is faster (and,
in some cases, substantially faster) or slower (and, in some
cases, substantially slower) than the rate at which payments
or other collections of principal are received on the
Mortgage Assets in the related Trust Fund; (ii) may not
commence until the occurrence of certain events, such as the
retirement of one or more other Classes of Certificates of
the same Series; (iii) may be made, subject to certain
limitations, based on a specified principal payment schedule;
or (iv) may be contingent on the specified principal payment
schedule for another Class of the same Series and the rate at
which payments and other collections of principal on the
Mortgage Assets in the related Trust Fund are received.
Unless otherwise specified in the related Prospectus
Supplement, distributions of principal of any Class of
Offered Certificates will be made on a pro rata basis among
all of the Certificates of such Class. See "Description of
the Certificates--Distributions of Principal of the
Certificates".
Credit Support and Cash
Flow Agreements.................................... If so provided in the related Prospectus Supplement, partial
or full protection against certain defaults and losses on the
Mortgage Assets in the related Trust Fund may be provided to
one or more Classes of Certificates of the related Series in
the form of subordination of one or more other Classes of
Certificates of such Series, which other Classes may include
one or more Classes of Offered Certificates, or by one or
more other types of credit support, which may include a
letter of credit, a surety bond, an insurance policy, a
guarantee, a reserve fund, or a combination thereof (any such
coverage with respect to the Certificates of any Series,
"Credit Support"). If so provided in the related Prospectus
Supplement, a Trust Fund may include: (i) guaranteed
investment contracts pursuant to which moneys held in the
funds and accounts established for the related Series will be
invested at a specified rate; or (ii) interest rate exchange
agreements, interest rate cap or floor agreements, or other
agreements designed to reduce the effects of interest rate
fluctuations on the Mortgage Assets or on one or more Classes
of Certificates (any such agreement, in the case of clause
(i) or (ii), a "Cash Flow Agreement"). Certain relevant
information regarding any Credit Support or Cash Flow
Agreement applicable to the Offered Certificates of any
Series will be set forth in the related Prospectus
Supplement. See "Risk Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit Support" and "--Cash
Flow Agreements" and "Description of Credit Support".
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Advances........................................... If and to the extent provided in the related Prospectus
Supplement, if a Trust Fund includes Mortgage Loans, the
Master Servicer, the Special Servicer, the Trustee, any
provider of Credit Support and/or any other specified person
may be obligated to make, or have the option of making,
certain advances with respect to delinquent scheduled
payments of principal and/or interest on such Mortgage Loans.
Any such advances made with respect to a particular Mortgage
Loan will be reimbursable from subsequent recoveries in
respect of such Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus Supplement.
See "Description of the Certificates--Advances in Respect of
Delinquencies". If and to the extent provided in the
Prospectus Supplement for the Offered Certificates of any
Series, any entity making such advances may be entitled to
receive interest thereon for a specified period during which
certain or all of such advances are outstanding, payable from
amounts in the related Trust Fund. See "Description of the
Certificates--Advances in Respect of Delinquencies". If a
Trust Fund includes MBS, any comparable advancing obligation
of a party to the related Pooling Agreement, or of a party to
the related MBS Agreement, will be described in the related
Prospectus Supplement.
Optional Termination............................... If so specified in the related Prospectus Supplement, a Trust
Fund may be subject to optional early termination through
the repurchase of the Mortgage Assets included in such Trust
Fund by the party or parties specified in such Prospectus
Supplement, under the circumstances and in the manner set
forth therein, thereby resulting in early retirement for the
Certificates of the related Series. If so provided in the related
Prospectus Supplement, upon the reduction of the aggregate
Certificate Principal Balance of a specified Class or Classes
of Certificates by a specified percentage or amount or upon
a specified date, a party specified therein may be authorized
or required to solicit bids for the purchase of all of the
Mortgage Assets of the related Trust Fund, or of a sufficient
portion of such Mortgage Assets to retire such Class or
Classes, under the circumstances and in the manner set forth
therein. See "Description of the Certificates--Termination".
Federal Income Tax Consequences.................... The Certificates of each Series will constitute or evidence
ownership of either (i) "regular interests" ("REMIC Regular
Certificates") and "residual interests" ("REMIC Residual
Certificates") in a Trust Fund, or a designated portion
thereof, treated as a REMIC under Sections 860A through
860G of the Internal Revenue Code of 1986 (the "Code"), or
(ii) interests ("Grantor Trust Certificates") in a Trust Fund
treated as a grantor trust under applicable provisions of the
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Code. It is recommended that Investors consult their tax
advisors concerning the specific tax consequences to them of
the purchase, ownership and disposition of the Offered
Certificates and to review "Federal Income Tax
Consequences" herein and in the related Prospectus
Supplement.
ERISA Considerations............................... Fiduciaries of employee benefit plans and certain other
retirement plans and arrangements, including individual
retirement accounts, annuities, Keogh plans, and collective
investment funds and separate accounts in which such plans,
accounts, annuities or arrangements are invested, that are
subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code,
should review with their legal advisors whether the purchase
or holding of Offered Certificates could give rise to a
transaction that is prohibited or is not otherwise permissible
either under ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in the related Prospectus
Supplement.
Legal Investment................................... The Offered Certificates will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA"), only if so
specified in the related Prospectus Supplement. Investors
whose investment authority is subject to legal restrictions
should consult their legal advisors to determine whether and
to what extent the Offered Certificates constitute legal
investments for them. See "Legal Investment" herein and in
the related Prospectus Supplement.
Rating............................................. At their respective dates of issuance, each Class of Offered
Certificates will be rated not lower than investment grade by
one or more nationally recognized statistical rating agencies
(each, a "Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
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RISK FACTORS
In considering an investment in the Offered Certificates of any Series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
Limited Liquidity of Offered Certificates
General. The Offered Certificates of any Series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each Series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any Series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for the Offered Certificates of any Series may indicate
that an underwriter specified therein intends to establish a secondary market in
such Offered Certificates; however, no underwriter will be obligated to do so.
Any such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any Series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement as
described herein under the heading "Description of the Certificates--Reports to
Certificateholders". There can be no assurance that any additional ongoing
information regarding the Offered Certificates of any Series will be available
through any other source. The limited nature of such information in respect of
the Offered Certificates of any Series may adversely affect the liquidity
thereof, even if a secondary market for such Certificates does develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to Offered Certificates of any Series
or with respect to any Class thereof, the market value of such Certificates will
be affected by several factors, including the perceived liquidity thereof, the
anticipated cash flow thereon (which may vary widely depending upon the
prepayment and default assumptions applied in respect of the underlying Mortgage
Loans) and prevailing interest rates. The price payable at any given time in
respect of certain Classes of Offered Certificates (in particular, a Class with
a relatively long average life, a Companion Class (as defined herein) or a Class
of Stripped Interest Certificates or Stripped Principal Certificates) may be
extremely sensitive to small fluctuations in prevailing interest rates; and the
relative change in price for an Offered Certificate in response to an upward or
downward movement in prevailing interest rates may not necessarily equal the
relative change in price for such Offered Certificate in response to an equal
but opposite movement in such rates. Accordingly, the sale of Offered
Certificates by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The Depositor is not aware of any
source through which price information about the Offered Certificates will be
generally available on an ongoing basis.
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Limited Assets
Unless otherwise specified in the related Prospectus Supplement,
neither the Offered Certificates of any Series nor the Mortgage Assets in the
related Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any Series will represent a claim
against or security interest in the Trust Fund for any other Series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a Series of Offered Certificates, no other assets will be available for
payment of the deficiency, and the holders of one or more Classes of such
Offered Certificates will be required to bear the consequent loss. Furthermore,
certain amounts on deposit from time to time in certain funds or accounts
constituting part of a Trust Fund, including the Certificate Account (as defined
herein) and any accounts maintained as Credit Support, may be withdrawn under
certain conditions, if and to the extent described in the related Prospectus
Supplement, for purposes other than the payment of principal of or interest on
the Certificates of the related Series. If and to the extent so provided in the
Prospectus Supplement relating to a Series consisting of one or more Classes of
Subordinate Certificates, on any Distribution Date in respect of which losses or
shortfalls in collections on the Mortgage Assets have been incurred, all or a
portion of the amount of such losses or shortfalls will be borne first by one or
more Classes of the Subordinate Certificates, and, thereafter, by the remaining
Classes of Certificates, in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
Credit Support Limitations
Limitations Regarding Types of Losses Covered. The Prospectus
Supplement for the Offered Certificates of any Series will describe any Credit
Support provided with respect thereto. Use of Credit Support will be subject to
the conditions and limitations described herein and in the related Prospectus
Supplement. Moreover, such Credit Support may not cover all potential losses;
for example, Credit Support may or may not cover loss by reason of fraud or
negligence by a mortgage loan originator or other parties. Any such losses not
covered by Credit Support may, at least in part, be allocated to one or more
Classes of Offered Certificates.
Disproportionate Benefits to Certain Classes and Series. A Series may
include one or more Classes of Subordinate Certificates (which may include
Offered Certificates), if so provided in the related Prospectus Supplement.
Although subordination is intended to reduce the likelihood of temporary
shortfalls and ultimate losses to holders of Senior Certificates, the amount of
subordination will be limited and may decline under certain circumstances. In
addition, if principal payments on one or more Classes of Offered Certificates
of a Series are made in a specified order of priority, any related Credit
Support may be exhausted before the principal of the later paid Classes of
Offered Certificates of such Series has been repaid in full. As a result, the
impact of losses and shortfalls experienced with respect to the Mortgage Assets
may fall primarily upon those Classes of Offered Certificates having a later
right of payment. Moreover, if a form of Credit Support covers the Offered
Certificates of more than one Series and losses on the related Mortgage Assets
exceed the amount of such Credit Support, it is possible that the holders of
Offered Certificates of one (or more) such Series will be disproportionately
benefited by such Credit Support to the detriment of the holders of Offered
Certificates of one (or more) other such Series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more Classes of Offered
Certificates, including the subordination of one or more other Classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such Classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and certain
other factors. There can, however, be no assurance that the loss experience on
the related Mortgage Assets will not exceed such assumed levels. See
"Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support". If the losses on the related Mortgage Assets do
exceed such
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assumed levels, the holders of one or more Classes of Offered Certificates will
be required to bear such additional losses.
Effect of Prepayments on Average Life of Certificates
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related Series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more Classes of Certificates of the related Series than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more Classes of Certificates of the related Series, including a Class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. For example, if
prevailing interest rates fall significantly below the Mortgage Rates borne by
the Mortgage Loans included in a Trust Fund, then, subject to the particular
terms of the Mortgage Loans (e.g., provisions that prohibit voluntary
prepayments during specified periods or impose penalties in connection
therewith) and the ability of borrowers to obtain new financing, principal
prepayments on such Mortgage Loans are likely to be higher than if prevailing
interest rates remain at or above the rates borne by those Mortgage Loans.
Conversely, if prevailing interest rates rise significantly above the Mortgage
Rates borne by the Mortgage Loans included in a Trust Fund, then principal
prepayments on such Mortgage Loans are likely to be lower than if prevailing
interest rates remain at or below the Mortgage Rates borne by those Mortgage
Loans. There can be no assurance as to the actual rate of prepayment on the
Mortgage Loans in any Trust Fund or that such rate of prepayment will conform to
any model described herein or in any Prospectus Supplement. As a result,
depending on the anticipated rate of prepayment for the Mortgage Loans in any
Trust Fund, the retirement of any Class of Certificates of the related Series
could occur significantly earlier or later, and the average life thereof could
be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any Class of Certificates of the related
Series will depend on the terms and provisions of such Certificates. A Class of
Certificates, including a Class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A Class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such Class ("Call Risk") if the
rate of prepayment is relatively fast; while a Class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such Class ("Extension Risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
Classes of Certificateholders of any Series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more Classes of Certificates of such Series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A Series may include one or more Controlled Amortization Classes, which
will entitle the holders thereof to receive principal distributions according to
a specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any Class of Certificates, a Controlled Amortization
Class will generally provide a relatively stable cash flow so long as the actual
rate of prepayment on the Mortgage Loans in the related Trust Fund remains
relatively constant at the rate, or within the range of rates, of prepayment
used to establish the specific principal payment schedule for such Certificates.
Prepayment risk with respect to a given Mortgage
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Asset Pool does not disappear, however, and the stability afforded to a
Controlled Amortization Class comes at the expense of one or more Companion
Classes of the same Series, any of which Companion Classes may also be a Class
of Offered Certificates. In general, and as more specifically described in the
related Prospectus Supplement, a Companion Class may entitle the holders thereof
to a disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively fast, and/or may
entitle the holders thereof to a disproportionately small share of prepayments
on the Mortgage Loans in the related Trust Fund when the rate of prepayment is
relatively slow. As and to the extent described in the related Prospectus
Supplement, a Companion Class absorbs some (but not all) of the Call Risk and/or
Extension Risk that would otherwise belong to the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans in the
related Trust Fund were allocated on a pro rata basis.
Effect of Prepayments on Yield of Certificates
A Series may include one or more Classes of Offered Certificates
offered at a premium or discount. Yields on such Classes of Certificates will be
sensitive, and in some cases extremely sensitive, to prepayments on the Mortgage
Loans in the related Trust Fund and, where the amount of interest payable with
respect to a Class is disproportionately large, as compared to the amount of
principal, as with certain Classes of Stripped Interest Certificates, a holder
might fail to recover its original investment under some prepayment scenarios.
The extent to which the yield to maturity of any Class of Offered Certificates
may vary from the anticipated yield will depend upon the degree to which such
Certificates are purchased at a discount or premium and the amount and timing of
distributions thereon. An investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans could result in an actual yield
to such investor that is lower than the anticipated yield and, in the case of
any Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield to such
investor that is lower than the anticipated yield. See "Yield and Maturity
Considerations".
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a Class of Offered
Certificates will reflect only its assessment of the likelihood that holders of
such Offered Certificates will receive payments to which such Certificateholders
are entitled under the related Pooling Agreement. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the related Trust Fund. Furthermore, such rating
will not address the possibility that prepayment of the related Mortgage Loans
at a higher or lower rate than anticipated by an investor may cause such
investor to experience a lower than anticipated yield or that an investor that
purchases an Offered Certificate at a significant premium might fail to recover
its initial investment under certain prepayment scenarios. Hence, a rating
assigned by a Rating Agency does not guarantee or ensure the realization of any
anticipated yield on a Class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a Series will be determined on the basis of criteria established by
each Rating Agency rating one or more Classes of the Certificates of such
Series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any Series
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may be insufficient to fully protect the holders thereof from losses on the
related Mortgage Asset Pool. See "Description of Credit Support" and "Rating".
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans
General. The payment performance of the Offered Certificates of any
Series will be directly related to the payment performance of the underlying
Mortgage Loans. Set forth below is a discussion of certain factors that will
affect the full and timely payment of the Mortgage Loans in any Trust Fund. In
addition, a description of certain material considerations associated with
investments in mortgage loans is included herein under "Certain Legal Aspects of
Mortgage Loans".
The Offered Certificates will be directly or indirectly backed by
mortgage loans secured by multifamily and/or commercial properties. Mortgage
loans made on the security of multifamily or commercial property may have a
greater likelihood of delinquency and foreclosure, and a greater likelihood of
loss in the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans". The
ability of a borrower to repay a loan secured by an income-producing property
typically is dependent primarily upon the successful operation of such property
rather than upon the existence of independent income or assets of the borrower;
thus, the value of an income-producing property is directly related to the net
operating income derived from such property. If the net operating income of the
property is reduced (for example, if rental or occupancy rates decline or real
estate tax rates or other operating expenses increase), the borrower's ability
to repay the loan may be impaired. A number of the Mortgage Loans may be secured
by liens on owner-occupied Mortgaged Properties or on Mortgaged Properties
leased to a single tenant or a small number of significant tenants. Accordingly,
a decline in the financial condition of the borrower or a significant tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by factors generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; increases in competition, changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; natural disasters and civil disturbances such as earthquakes,
hurricanes, floods, eruptions or riots; and other circumstances, conditions or
events beyond the control of a borrower, a Master Servicer or a Special
Servicer.
Additional considerations may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals, nursing homes and other health care-related facilities, as well as
casinos, may present special risks to lenders due to the significant
governmental regulation of the ownership, operation, maintenance and/or
financing of such properties. Hotel, motel and restaurant properties are often
operated pursuant to franchise, management or operating agreements, which may be
terminable by the franchisor or operator. Moreover, the transferability of a
hotel's or restaurant's operating, liquor and other licenses upon a transfer of
the hotel or restaurant, as the case may be, whether through purchase or
foreclosure, is subject to local law requirements. Because of the nature of
their business, recreational and entertainment facilities (including arenas,
golf courses, marinas, ski resorts, amusement parks, movie theaters, bowling
alleys and similar type businesses), hotels and motels and restaurants will tend
to be adversely affected more quickly by a general economic downturn than other
types of commercial properties as potential patrons respond to having less
disposable income. In addition, marinas will be affected by various statutes and
government regulations that govern the use of, and construction on, rivers,
lakes and other waterways. Certain recreational properties, as well as certain
hotels and motels, may have seasonal fluctuations and/or may be adversely
affected by prolonged unfavorable weather conditions. Churches and other
religious facilities may be highly dependent on donations which are likely to
decline as economic conditions decline. Properties used as gas stations, dry
cleaners and
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industrial facilities may be more likely to have environmental issues. Many
types of commercial properties are not readily convertible to alternative uses
if the use for which any such property was originally intended is not
successful.
In addition, the concentration of default, foreclosure and loss risks
in individual Mortgage Loans in a particular Trust Fund will generally be
greater than for pools of single-family loans because Mortgage Loans in a Trust
Fund will generally consist of a smaller number of higher balance loans than
would a pool of single-family loans of comparable aggregate unpaid principal
balance.
Risks Particular to Multifamily Rental Properties. Adverse economic
conditions, either local, regional or national, may limit the amount of rent
that can be charged for rental units, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction in
occupancy levels without a corresponding decrease in expenses. Occupancy and
rent levels may also be affected by construction of additional housing units,
local military base closings, company relocations and closings and national and
local politics, including current or future rent stabilization and rent control
laws and agreements. Multifamily apartment units are typically leased on a
short-term basis, and consequently, the occupancy rate of a multifamily rental
property may be subject to rapid decline, including for some of the foregoing
reasons. In addition, the level of mortgage interest rates may encourage tenants
in multifamily rental properties to purchase single-family housing rather than
continue to lease housing or the characteristics of the neighborhood in which a
multifamily rental property is located may change over time in relation to newer
developments. Further, the cost of operating a multifamily rental property may
increase, including the cost of utilities and the costs of required capital
expenditures. Also, multifamily rental properties may be subject to rent control
laws which could impact the future cash flows of such properties.
Certain multifamily rental properties are eligible to receive
low-income housing tax credits pursuant to Section 42 of the Code ("Section 42
Properties"). However, rent limitations associated therewith may adversely
affect the ability of the applicable borrowers to increase rents to maintain
such Mortgaged Properties in proper condition during periods of rapid inflation
or declining market value of such Mortgaged Properties. In addition, the income
restrictions on tenants imposed by Section 42 of the Code may reduce the number
of eligible tenants in such Mortgaged Properties and result in a reduction in
occupancy rates applicable thereto. Furthermore, some eligible tenants may not
find any differences in rents between the Section 42 Properties and other
multifamily rental properties in the same area to be a sufficient economic
incentive to reside at a Section 42 Property, which may have fewer amenities or
otherwise be less attractive as a residence. Additionally, the characteristics
of a neighborhood may change over time or in relation to newer developments. All
of these conditions and events may increase the possibility that a borrower may
be unable to meet its obligations under its Mortgage Loan.
Risks Particular to Cooperatively-Owned Apartment Buildings. Generally,
a tenant-shareholder of a cooperative corporation must make a monthly
maintenance payment to the cooperative corporation that owns the subject
apartment building representing such tenant-shareholder's pro rata share of the
corporation's payments in respect of the Mortgage Loan secured by, and all real
property taxes, maintenance expenses and other capital and ordinary expenses
with respect to, such property, less any other income that the cooperative
corporation may realize. Adverse economic conditions, either local regional or
national, may adversely affect tenant-shareholders' ability to make required
maintenance payments, either because such adverse economic conditions have
impaired the individual financial conditions of such tenant-shareholders or
their ability to sub-let the subject apartments. To the extent that a large
number of tenant-shareholders in a cooperatively-owned apartment building rely
on subletting their apartments to make maintenance payments, the lender on any
mortgage loan secured by such building will be subject to all the risks that it
would have in connection with lending on the security of a multifamily rental
property. See "--Risks Particular to Multifamily Rental Properties" above. In
addition, if in connection with any cooperative conversion of an apartment
building, the sponsor holds the shares allocated to a large number
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of the apartment units, any lender secured by a mortgage on such building will
be subject to a risk associated with such sponsor's creditworthiness.
Risks Particular to Office Properties. In addition to risks generally
associated with real estate, Mortgage Loans secured by office properties are
also affected significantly by adverse changes in population and employment
growth (which generally creates demand for office space), local competitive
conditions (such as the supply of office space or the existence or construction
of new competitive office buildings), the quality and management philosophy of
management, the attractiveness of the properties to tenants and their customers
or clients, the attractiveness of the surrounding neighborhood and the need to
make major repairs or improvements to satisfy the needs of major tenants. Office
properties that are not equipped to accommodate the needs of modern business may
become functionally obsolete and thus noncompetitive. In addition, office
properties may be adversely affected by an economic decline in the business
operated by their tenants. Such decline may result in one or more significant
tenants ceasing operations at such locations (which may occur on account of a
voluntary decision not to renew a lease, bankruptcy or insolvency of such
tenants, such tenants' general cessation of business activities or for other
reasons). The risk of such an economic decline is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
Risks Particular to Retail Sales and Service Properties. In addition to
risks generally associated with real estate, Retail Sales and Service Properties
(as defined herein) are also affected significantly by adverse changes in
consumer spending patterns, local competitive conditions (such as the supply of
retail space or the existence or construction of new competitive shopping
centers, malls or individual stores, shops and consumer oriented businesses),
alternative forms of retailing (such as direct mail, video shopping networks and
selling through the Internet, which reduce the need for retail space by retail
companies), the quality and management philosophy of management, the
attractiveness of the properties and the surrounding neighborhood to tenants and
their customers, the public perception of the safety of customers (at shopping
centers and malls, for example) and the need to make major repairs or
improvements to satisfy the needs of major tenants.
Retail Sales and Service Properties may be adversely affected if a
significant tenant ceases operations at such locations (which may occur on
account of a voluntary decision not to renew a lease, bankruptcy or insolvency
of such tenant, such tenant's general cessation of business activities or for
other reasons). Significant tenants at a retail property play an important part
in generating customer traffic and making a retail property a desirable location
for other tenants at such property. In addition, certain tenants at retail
properties may be entitled to terminate their leases if an anchor tenant ceases
operations at such property. In such cases, there can be no assurance that any
such anchor tenants will continue to occupy space in the related shopping
centers.
Risks Particular to Hospitality Properties. Hospitality properties are
subject to operating risks common to the lodging industry. These risks include,
among other things, a high level of continuing capital expenditures to keep
necessary furniture, fixtures and equipment updated, competition from other
hospitality properties, increases in operating costs (which increases may not
necessarily in the future be offset by increased room rates), dependence on
business and commercial travelers and tourism, increases in energy costs and
other expenses of travel and adverse effects of general and local economic
conditions. These factors could adversely affect the related borrower's ability
to make payments on the related Mortgage Loans. Since limited service hotels and
motels are relatively quick and inexpensive to construct and may quickly reflect
a positive value, an over-building of such hotels and motels could occur in any
given region, which would likely adversely affect occupancy and daily room
rates. Further, because rooms at hospitality properties are generally rented for
short periods of time, such properties tend to be more sensitive to adverse
economic conditions and competition than many other types of commercial
properties. Additionally, the revenues of certain hospitality properties,
particularly those located in regions whose economies depend upon tourism, may
be highly seasonal in nature.
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A hospitality property may present additional risks as compared to
other commercial property types in that: (i) hospitality properties may be
operated pursuant to franchise, management and operating agreements that may be
terminable by the franchisor, the manager or the operator; (ii) the
transferability of any operating, liquor and other licenses to the entity
acquiring a hospitality property (either through purchase or foreclosure) is
subject to local law requirements; (iii) it may be difficult to terminate an
ineffective operator of a hospitality property subsequent to a foreclosure of
such property; and (iv) future occupancy rates may be adversely affected by,
among other factors, any negative perception of a hospitality property based
upon its historical reputation.
Hospitality properties may be operated pursuant to franchise
agreements. The continuation of franchises is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hospitality property to maintain such standards or
adhere to such other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the related
borrower determines are too expensive or are otherwise unwarranted in light of
general economic conditions or the operating results or prospects of the
affected hospitality properties. In that event, the related borrower may elect
to allow the franchise license to lapse. In any case, if the franchise is
terminated, the related borrower may seek to obtain a suitable replacement
franchise or to operate any such hospitality property independently of a
franchise license. The loss of a franchise license could have a material adverse
effect upon the operations or the underlying value of the hospitality property
covered by the franchise because of the loss of associated name recognition,
marketing support and centralized reservation systems provided by the
franchisor.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that
some or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans-Foreclosure--Anti-Deficiency Legislation".
Dependence on Management. In general, a Mortgaged Property will be
managed by a manager (which may be the borrower or an affiliate of the
borrower), which is responsible for responding to changes in the local market
for the facilities offered at the property, planning and implementing the rental
or pricing structure, including staggering durations of leases and establishing
levels of rent payments, and causing maintenance and capital improvements to be
carried out in a timely fashion. Management errors may adversely affect the
long-term viability of a Mortgaged Property. In the case of certain Trust Funds,
multiple Mortgaged Properties may be managed by the same property manager. A
concentration of property management of Mortgaged Properties securing or
underlying the Mortgage Assets in any Trust Fund will increase the risk that the
poor performance of a single property manager will have widespread effect on the
related Mortgage Asset Pool.
Dependence on Tenants. In most cases, the Mortgaged Properties will be
subject to leases, and the related borrowers will rely on periodic lease or
rental payments from tenants to pay for maintenance and other operating expenses
of such Mortgaged Properties, to fund capital improvements at such Mortgaged
Properties and to service the related Mortgage Loans and any other outstanding
debt or obligations they may have outstanding. Generally, there will be existing
leases that expire during the term of the related Mortgage Loans. There can be
no guaranty that tenants will renew leases upon expiration or, in the case of a
commercial tenant, that it will continue operations throughout the term of its
lease. Such borrowers' income would be adversely affected if tenants were unable
to pay rent, if space were unable to be rented on favorable terms or at all, or
if a
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significant tenant were to become a debtor in a bankruptcy case under the United
States Bankruptcy Code. For example, if any such borrower were to relet or renew
the existing leases for a significant amount of retail or office space at rental
rates significantly lower than expected rates, then such borrower's funds from
operations may be adversely affected. Changes in payment patterns by tenants may
result from a variety of social, legal and economic factors, including, without
limitation, the rate of inflation and unemployment levels and may be reflected
in the rental rates offered for comparable space. In addition, upon reletting or
renewing existing leases at commercial properties, borrowers will likely be
required to pay leasing commissions and tenant improvement costs which may
adversely affect cash flow from the related Mortgaged Property. There can be no
assurances whether, or to what extent, economic, legal or social factors will
affect future rental or repayment patterns.
In the case of Mortgaged Properties used for certain commercial
purposes, the performance and liquidation value of such properties may be
dependent upon the business operated by tenants, the creditworthiness of such
tenants and/or the number of tenants. In some cases, a single tenant or a
relatively small number of tenants may account for all or a disproportionately
large share of the rentable space or rental income of a Mortgaged Property.
Accordingly, a decline in the financial condition of a significant or sole
tenant, as the case may be, or other adverse circumstances of such a tenant
(such as bankruptcy or insolvency), may have a disproportionately greater effect
on the net operating income derived from such property than would be the case if
rentable space or rental income were more evenly distributed among a greater
number of tenants at such property.
Property Location and Condition. The location and construction quality
of a particular Mortgaged Property may affect the occupancy level as well as the
rents that may be charged. The characteristics of an area or neighborhood in
which a Mortgaged Property is located may change over time or in relation to
competing facilities. The effects of poor construction quality will increase
over time in the form of increased maintenance and capital improvements. Even
good construction will deteriorate over time if the management company does not
schedule and perform adequate maintenance in a timely fashion. Although the
Master Servicer or the Special Servicer, as applicable, generally will be
required to inspect the related Mortgaged Properties (but not mortgaged
properties securing mortgage loans underlying MBS) periodically, there can be no
assurance that such inspections will detect damage or prevent a default.
Competition. Other comparable multifamily/commercial properties located
in the same areas will compete with the Mortgaged Properties to attract
residents, retail sellers, tenants, customers, patients and/or guests. The
leasing of real estate is highly competitive. The principal means of competition
are price, location and the nature and condition of the facility to be leased. A
mortgagor competes with all lessors and developers of comparable types of real
estate in the area in which the related Mortgaged Property is located. Such
lessors or developers could have lower rents, lower operating costs, more
favorable locations or better facilities. While a mortgagor may renovate,
refurbish or expand the related Mortgaged Property to maintain such Mortgaged
Property and remain competitive, such renovation, refurbishment or expansion may
itself entail significant risks. Increased competition could adversely affect
income from and the market value of the Mortgaged Properties. In addition, the
business conducted at each Mortgaged Property may face competition from other
industries and industry segments.
Changes in Laws. Increases in income, service or other taxes (other
than real estate taxes) in respect of a Mortgaged Property generally are not
passed through to tenants under leases and may adversely affect the related
mortgagor's funds from operations. Similarly, changes in laws increasing the
potential liability for environmental conditions existing on a Mortgaged
Property or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures, which could adversely affect
the related mortgagor's funds from operations. See "--Risks of Liability Arising
From Environmental Conditions" herein. In the case of properties used as
casinos, gambling could become prohibited in the relevant jurisdiction.
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Litigation. There may be legal proceedings pending and, from time to
time, threatened against certain mortgagors under the Mortgage Loans, managers
of the Mortgaged Properties and their respective affiliates arising out of the
ordinary business of such mortgagors, managers and affiliates. There can be no
assurance that such litigation may not have a material adverse effect on
distributions to Certificateholders of the related Trust Fund.
Limitations on Enforceability of Assignments of Leases and Rents. In
general, any Mortgage Loan that is secured by a Mortgaged Property subject to
leases, will be secured by an assignment of leases and rents pursuant to which
the borrower assigns to the lender its right, title and interest as landlord
under the leases of the related Mortgaged Property, and the income derived
therefrom, as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. If the borrower
defaults, the license terminates and the lender is entitled to collect rents.
Some state laws may require that the lender take possession of the Mortgaged
Property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, if bankruptcy or similar proceedings
are commenced by or in respect of the borrower, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents".
Limitations on Enforceability of Cross-Collateralization. A Mortgage
Asset Pool may include groups of Mortgage Loans which are cross-collateralized
and cross-defaulted. These arrangements are designed primarily to ensure that
all of the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are available
to support debt service on, and ultimate repayment of, the aggregate
indebtedness evidenced by those Mortgage Loans. These arrangements thus seek to
reduce the risk that the inability of one or more of the Mortgaged Properties
securing any such group of Mortgage Loans to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged
Properties securing a group of cross-collateralized Mortgage Loans. In such an
instance, creditors of one or more of the related borrowers could challenge the
cross-collateralization arrangement as a fraudulent conveyance. Generally, under
federal and state fraudulent conveyance statutes, the incurring of an obligation
or the transfer of property by a person will be subject to avoidance under
certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and was
then insolvent or was rendered insolvent by such obligation or transfer.
Accordingly, a creditor seeking to realize against a Mortgaged Property subject
to such cross-collateralization to repay such creditor's claim against the
related borrower could assert (i) that such borrower was insolvent at the time
the cross-collateralized Mortgage Loans were made and (ii) that such borrower
did not, when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other Mortgage Loans in the group of
cross-collateralized Mortgage Loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, there can be no
assurance that such exchanged "guarantees" would be found to constitute fair
consideration or be of reasonably equivalent value, and no unqualified legal
opinion to that effect will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof
may be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of a
power of sale, and because, in general, foreclosure actions are brought in state
court, and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under any such Mortgage Loan
to foreclose on the related Mortgaged Properties in a particular order rather
than simultaneously in order to ensure that the lien of the related Mortgages is
not impaired or released.
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Increased Risk of Default Associated With Balloon Payments. Certain of
the Mortgage Loans included in a Trust Fund may be nonamortizing or only
partially amortizing over their terms to maturity and, thus, will require
substantial payments of principal and interest (that is, balloon payments) at
their stated maturity. Mortgage Loans of this type involve a greater likelihood
of default than self-amortizing loans because the ability of a borrower to make
a balloon payment typically will depend upon its ability either to refinance the
loan or to sell the related Mortgaged Property. The ability of a borrower to
accomplish either of these goals will be affected by a number of factors,
including the value of the related Mortgaged Property, the level of available
mortgage rates at the time of sale or refinancing, the borrower's equity in the
related Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "Description of the Pooling Agreements--
Realization Upon Defaulted Mortgage Loans". While the Master Servicer or the
Special Servicer generally will be required to determine that any such extension
or modification is reasonably likely to produce a greater recovery than
liquidation, taking into account the time value of money, there can be no
assurance that any such extension or modification will in fact increase the
present value of receipts from or proceeds of the affected Mortgage Loans.
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration
Clauses. Mortgages may contain a due-on- sale clause, which permits the lender
to accelerate the maturity of the Mortgage Loan if the borrower sells, transfers
or conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or nonmonetary default of the
mortgagor. Such clauses are generally enforceable subject to certain exceptions.
The courts of all states will enforce clauses providing for acceleration in the
event of a material payment default. The equity courts of any state, however,
may refuse the foreclosure of a mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or unjust or the circumstances would
render the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws
of certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under the
laws of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, a lender may be liable, as
an "owner" or "operator", for costs of addressing releases or threatened
releases of hazardous substances at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or threat was caused by the
borrower or a prior owner. A lender also risks such liability on foreclosure of
the mortgage. Unless otherwise specified in the related Prospectus Supplement,
if a Trust Fund includes Mortgage Loans, then the related Pooling Agreement will
contain provisions generally to the effect that neither the Master Servicer nor
the Special Servicer may, on behalf of the Trust Fund, acquire title to a
Mortgaged Property or assume control of its operation unless the Special
Servicer, based upon a report prepared by a person who regularly conducts
environmental site assessments, has made the determination that it is
appropriate to do so, as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". See "Certain Legal
Aspects of Mortgage Loans--Environmental Considerations".
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Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore
will not contain identical terms and conditions, most such policies typically do
not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals
and certain other kinds of risks. Unless the related Mortgage specifically
requires the mortgagor to insure against physical damage arising from such
causes, then, to the extent any consequent losses are not covered by Credit
Support, such losses may be borne, at least in part, by the holders of one or
more Classes of Offered Certificates of the related Series.
See "Description of the Pooling Agreements--Hazard Insurance Policies".
Risks of Geographic Concentration. Certain geographic regions of the
United States from time to time will experience weaker regional economic
conditions and housing markets, and, consequently, will experience higher rates
of loss and delinquency than will be experienced on mortgage loans generally.
For example, a region's economic condition and housing market may be directly,
or indirectly, adversely affected by natural disasters or civil disturbances
such as earthquakes, hurricanes, floods, eruptions or riots. The economic impact
of any of these types of events may also be felt in areas beyond the region
immediately affected by the disaster or disturbance. The Mortgage Loans
underlying certain Series may be concentrated in these regions, and such
concentration may present risk considerations in addition to those generally
present for similar mortgage-backed securities without such concentration.
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset
Pool
If so provided in the related Prospectus Supplement, the Trust Fund for
a particular Series may include Mortgage Loans that are past due or are
nonperforming. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by the Special Servicer;
however, the same entity may act as both Master Servicer and Special Servicer.
Credit Support provided with respect to a particular Series may not cover all
losses related to such delinquent or nonperforming Mortgage Loans, and investors
should consider the risk that the inclusion of such Mortgage Loans in the Trust
Fund may adversely affect the rate of defaults and prepayments in respect of the
subject Mortgage Asset Pool and the yield on the Offered Certificates of such
Series. See "Description of the Trust Funds--Mortgage Loans--General".
Federal Tax Considerations Regarding REMIC Residual Certificates
Holders of REMIC Residual Certificates will be required to report on
their federal income tax returns as ordinary income their pro rata share of the
taxable income of the related REMIC, regardless of the amount or timing of their
possible receipt of cash payments, if any, from such REMIC, as described under
"Federal Income Tax Consequences--REMICs". REMIC Residual Certificates may have
"phantom income" associated with them. That is, taxable income may be reportable
with respect to a REMIC Residual Certificate early in the term of the related
REMIC with a corresponding amount of tax losses reportable in later years of
that REMIC's term. Under these circumstances, the present value of the tax
detriments with respect to the related REMIC Residual Certificate may
significantly exceed the present value of the related tax benefits accruing
later. Therefore, the
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after-tax yield on a REMIC Residual Certificate may be significantly less than
that of a corporate bond or stripped instrument having similar cash flow
characteristics, and certain REMIC Residual Certificates may have a negative
"value". The requirement that holders of REMIC Residual Certificates report
their pro rata share of the taxable income and net loss of the related REMIC
will continue until the Certificate Principal Balances of all Certificates of
the related Series have been reduced to zero. All or a portion of such
Certificateholder's share of the related REMIC's taxable income may be treated
as "excess inclusion" income to such holder, which (i) generally will not be
subject to offset by losses from other activities, (ii) for a tax-exempt holder,
will be treated as unrelated business taxable income and (iii) for a foreign
holder, will not qualify for exemption from withholding tax. Moreover, because
an amount of gross income equal to the fees and non-interest expenses of each
REMIC will be allocated to the REMIC Residual Certificates, but such expenses
will be deductible by holders of REMIC Residual Certificates who are individuals
only as miscellaneous itemized deductions, REMIC Residual Certificates will
generally not be appropriate investments for individuals, estates or trusts or
for pass-through entities (including partnerships and S corporations)
beneficially owned by, or having as partners or shareholders, one or more
individuals, estates or trusts. In addition, REMIC Residual Certificates are
subject to certain restrictions on transfer, including, but not limited to
prohibition on transfers to investors that are not U.S. persons. See "Federal
Income Tax Consequences" and "REMICs - Taxation of Owners of REMIC Residual
Certificates".
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more
Classes of the Offered Certificates of any Series will be issued as Book-Entry
Certificates. Each Class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any Class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("DTC Participants").
In addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. Conveyance
of notices and other communications by DTC to DTC Participants, and directly and
indirectly through such DTC Participants to Certificate Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time. Furthermore, as described herein,
Certificate Owners may suffer delays in the receipt of payments on the
Book-Entry Certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Book-Entry
Certificates may be limited due to the lack of physical certificate evidencing
such interest. See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates".
Potential Conflicts of Interest
If so specified in the related Prospectus Supplement, the Master
Servicer may also perform the duties of Special Servicer, and the Master
Servicer, the Special Servicer or the Trustee may also perform the duties of
REMIC Administrator and/or MBS Administrator, as applicable. If so specified in
the related Prospectus Supplement, an affiliate of the Depositor, or the
Mortgage Asset Seller or an affiliate thereof, may perform the functions of
Master Servicer, Special Servicer, REMIC Administrator and/or MBS Administrator,
as applicable. In addition, any party to a Pooling Agreement or any affiliate
thereof may own Certificates. Investors in the Offered Certificates should
consider that any resulting conflicts of interest could affect the performance
of duties under the related Pooling Agreement. For example, if the Master
Servicer or Special Servicer for any Trust Fund owns a significant portion of
any Class of Certificates of the related Series, then, notwithstanding the
applicable servicing standard imposed by the related Pooling Agreement, such
fact could influence servicing decisions in respect of the Mortgage Loans in
such Trust Fund. Also, if specified in the related Prospectus Supplement, the
holders of a specified Class or Classes of Subordinate Certificates may have the
ability to replace the Special Servicer or direct the Special Servicer's actions
in connection with liquidating or modifying defaulted Mortgage
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Loans. Investors in such specified Class or Classes of Subordinate Certificates
may have interests when dealing with defaulted Mortgage Loans that are in
conflict with those of the holders of the Offered Certificates of the same
Series.
Termination
If so provided in the related Prospectus Supplement, upon a specified
date or upon the reduction of the aggregate Certificate Principal Balance of a
specified Class or Classes of Certificates to a specified amount, a party
designated therein may be authorized or required to solicit bids for the
purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such Class or Classes,
under the circumstances and in the manner set forth therein. The solicitation of
bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. In addition, if so specified in
the related Prospectus Supplement, upon the reduction of the aggregate principal
balance of some or all of the Mortgage Assets to a specified amount, a party or
parties designated therein may be authorized to purchase such Mortgage Assets,
generally at a price equal to, in the case of any Mortgage Asset, the unpaid
principal balance thereof plus accrued interest (or, in some cases, at fair
market value). However, circumstances may arise in which such fair market value
may be less than the unpaid balance of the related Mortgage Assets sold or
purchased, together with interest thereon, and therefore, as a result of such a
sale or purchase, the Certificateholders of one or more Classes of Certificates
may receive an amount less than the aggregate Certificate Principal Balance of,
and accrued unpaid interest on, their Certificates. See "Description of the
Certificates--Termination".
DESCRIPTION OF THE TRUST FUNDS
General
The primary assets of each Trust Fund will consist of (i) various types
of multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates, collateralized mortgage obligations
or other mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans or (iii) a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). Each Trust Fund will be established by the
Depositor. Each Mortgage Asset will be selected by the Depositor for inclusion
in a Trust Fund from among those purchased, either directly or indirectly, from
a prior holder thereof (a "Mortgage Asset Seller"), which prior holder may or
may not be the originator of such Mortgage Loan or the issuer of such MBS. The
Mortgage Assets will not be guaranteed or insured by the Depositor or any of its
affiliates or, unless otherwise provided in the related Prospectus Supplement,
by any governmental agency or instrumentality or by any other person. The
discussion below under the heading "--Mortgage Loans", unless otherwise noted,
applies equally to mortgage loans underlying any MBS included in a particular
Trust Fund.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") and secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on, or security
interests in, fee or leasehold estates in, or cooperative shares with respect
to, properties (the "Mortgaged Properties") consisting of one or more of the
following types of real property: (i) residential properties ("Multifamily
Properties") consisting of rental or cooperatively-owned buildings with multiple
dwelling units, manufactured housing communities and mobile home parks; (ii)
commercial properties ("Commercial Properties") consisting of office buildings,
properties related to the sale of consumer goods and other products (such as
shopping centers, malls, factory outlet centers, automotive sales centers and
individual stores, shops and businesses related to sales of consumer goods and
other products, including individual
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department stores and other retail stores, grocery stores, specialty shops,
convenience stores and gas stations), properties related to providing
entertainment, recreation and personal services (such as movie theaters, fitness
centers, bowling alleys, salons, dry cleaners and automotive service centers),
hospitality properties (such as hotels, motels and other lodging facilities),
casinos, health care-related facilities (such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and, in some cases, senior
housing), recreational and resort properties (such as recreational vehicle
parks, golf courses, marinas, ski resorts, amusement parks and other
recreational properties), arenas, storage properties (such as warehouse
facilities, mini-warehouse facilities and self-storage facilities), industrial
facilities, parking lots and garages, churches and other religious facilities,
and restaurants; and (iii) mixed use properties (that is, any combination of the
foregoing) and unimproved land. The Mortgaged Properties may include commercial
and/or residential structures owned by private cooperative corporations
("Cooperatives"). Unless otherwise specified in the related Prospectus
Supplement, each Mortgage will create a first priority mortgage lien on a fee
estate in a Mortgaged Property. If a Mortgage creates a lien on a borrower's
leasehold estate in a property, then, unless otherwise specified in the related
Prospectus Supplement, the term of any such leasehold (together with any
extension options) will exceed the term of the Mortgage Note by at least ten
years. Unless otherwise specified in the related Prospectus Supplement, each
Mortgage Loan will have been originated by a person (the "Originator") other
than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets
for a Series may include Mortgage Loans secured by junior liens, and the loans
secured by the related senior liens ("Senior Liens") may not be included in the
Mortgage Asset Pool. The primary risk to holders of Mortgage Loans secured by
junior liens is the possibility that adequate funds will not be received in
connection with a foreclosure of the related Senior Liens to satisfy fully both
the Senior Liens and the Mortgage Loan. In the event that a holder of a Senior
Lien forecloses on a Mortgaged Property, the proceeds of the foreclosure or
similar sale will be applied first to the payment of court costs and fees in
connection with the foreclosure, second to real estate taxes, third in
satisfaction of all principal, interest, prepayment or acceleration penalties,
if any, and any other sums due and owing to the holder of the Senior Liens. The
claims of the holders of the Senior Liens will be satisfied in full out of
proceeds of the liquidation of the related Mortgaged Property, if such proceeds
are sufficient, before the Trust Fund as holder of the junior lien receives any
payments in respect of the Mortgage Loan. If the Master Servicer were to
foreclose on any Mortgage Loan, it would do so subject to any related Senior
Liens. In order for the debt related to such Mortgage Loan to be paid in full at
such sale, a bidder at the foreclosure sale of such Mortgage Loan would have to
bid an amount sufficient to pay off all sums due under the Mortgage Loan and any
Senior Liens or purchase the Mortgaged Property subject to such Senior Liens. In
the event that such proceeds from a foreclosure or similar sale of the related
Mortgaged Property are insufficient to satisfy all Senior Liens and the Mortgage
Loan in the aggregate, the Trust Fund, as the holder of the junior lien, and,
accordingly, holders of one or more Classes of the Certificates of the related
Series bear (i) the risk of delay in distributions while a deficiency judgment
against the borrower is obtained and (ii) the risk of loss if the deficiency
judgment is not obtained and satisfied. Moreover, deficiency judgments may not
be available in certain jurisdictions, or the particular Mortgage Loan may be a
nonrecourse loan, which means that, absent special facts, recourse in the case
of default will be limited to the Mortgaged Property and such other assets, if
any, that were pledged to secure repayment of the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage
Assets for a particular Series may include Mortgage Loans that are delinquent or
nonperforming as of the date such Certificates are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency or nonperformance,
any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
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Mortgage Loans Secured by Multifamily Rental Properties. Significant
factors determining the value and successful operation of a multifamily rental
property are the location of the property, the number of competing residential
developments in the local market (such as apartment buildings, manufactured
housing communities and site-built single family homes), the physical attributes
of the multifamily building (such as its age and appearance) and state and local
regulations affecting such property. In addition, the successful operation of an
apartment building will depend upon other factors such as its reputation, the
ability of management to provide adequate maintenance and insurance, and the
types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from terminating
a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not provide for decontrol
of rental rates upon vacancy of individual units. Any limitations on a
borrower's ability to raise property rents may impair such borrower's ability to
repay its Mortgage Loan from its net operating income or the proceeds of a sale
or refinancing of the related Mortgaged Property.
Adverse economic conditions, either local, regional or national, may
limit the amount of rent that can be charged, may adversely affect tenants'
ability to pay rent and may result in a reduction in timely rent payments or a
reduction in occupancy levels. Occupancy and rent levels may also be affected by
construction of additional housing units, local military base closings, company
relocations and closings and national and local politics, including current or
future rent stabilization and rent control laws and agreements. Multifamily
apartment units are typically leased on a short-term basis, and consequently,
the occupancy rate of a multifamily rental property may be subject to rapid
decline, including for some of the foregoing reasons. In addition, the level of
mortgage interest rates may encourage tenants to purchase single-family housing
rather than continue to lease housing. The location and construction quality of
a particular building may affect the occupancy level as well as the rents that
may be charged for individual units. The characteristics of a neighborhood may
change over time or in relation to newer developments.
Mortgage Loans Secured by Cooperatively-Owned Apartment Buildings. A
cooperative apartment building and the land under the building are owned or
leased by a non-profit cooperative corporation. The cooperative corporation is
in turn owned by tenant-shareholders who, through ownership of stock, shares or
membership certificates in the corporation, receive proprietary leases or
occupancy agreements which confer exclusive rights to occupy specific apartments
or units. Generally, a tenant-shareholder of a cooperative corporation must make
a monthly maintenance payment to the corporation representing such
tenant-shareholder's pro rata share of the corporation's payments in respect of
any mortgage loan secured by, and all real property taxes, maintenance expenses
and other capital and ordinary expenses with respect to, the real property owned
by such cooperative corporation, less any other income that the cooperative
corporation may realize. Such payments to the cooperative corporation are in
addition to any payments of principal and interest the tenant-shareholder must
make on any loans of the tenant-shareholder secured by its shares in the
corporation.
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A cooperative corporation is directly responsible for building
management and payment of real estate taxes and hazard and liability insurance
premiums. A cooperative corporation's ability to meet debt service obligations
on a mortgage loan secured by the real property owned by such corporation, as
well as to pay all other operating expenses of such property, is dependent
primarily upon the receipt of maintenance payments from the tenant-shareholders,
together with any rental income from units or commercial space that the
cooperative corporation might control. Unanticipated expenditures may in some
cases have to be paid by special assessments on the tenant-shareholders. A
cooperative corporation's ability to pay the amount of any balloon payment due
at the maturity of a mortgage loan secured by the real property owned by such
cooperative corporation depends primarily on its ability to refinance the
mortgage loan. Neither the Depositor nor any other person will have any
obligation to provide refinancing for any of the Mortgage Loans.
In a typical cooperative conversion plan, the owner of a rental
apartment building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by the owner or
sponsor, and the current tenants have a certain period to subscribe at prices
discounted from the prices to be offered to the public after such period. As
part of the consideration for the sale, the owner or sponsor receives all the
unsold shares of the cooperative corporation. The sponsor usually also controls
the corporation's board of directors and management for a limited period of
time.
Each purchaser of shares in the cooperative corporation generally
enters into a long-term proprietary lease which provides the shareholder with
the right to occupy a particular apartment unit. However, many cooperative
conversion plans are "non-eviction" plans. Under a non-eviction plan, a tenant
at the time of conversion who chooses not to purchase shares is entitled to
reside in the unit as a subtenant from the owner of the shares allocated to such
apartment unit. Any applicable rent control or rent stabilization laws would
continue to be applicable to such subtenancy, and the subtenant may be entitled
to renew its lease for an indefinite number of times, with continued protection
from rent increases above those permitted by any applicable rent control and
rent stabilization laws. The shareholder is responsible for the maintenance
payments to the cooperative without regard to its receipt or non-receipt of rent
from the subtenant, which may be lower than maintenance payments on the unit.
Newly-formed cooperative corporations typically have the greatest concentration
of non-tenant shareholders.
Mortgage Loans Secured by Office Properties. Significant factors
affecting the value of office properties include, without limitation, the
quality of the tenants in the building, the physical attributes of the building
in relation to competing buildings, the location of the building with respect to
the central business district or population centers, demographic trends within
the metropolitan area to move away from or towards the central business
district, social trends combined with space management trends (which may change
towards options such as telecommuting or hoteling to satisfy space needs), tax
incentives offered to businesses or property owners by cities or suburbs
adjacent to or near where the building is located and the strength and stability
of the area where the building is located as a desirable business location.
Office properties may be adversely affected by an economic decline in the
business operated by their tenants. The risk of such an economic decline is
increased if revenue is dependent on a single tenant or if there is a
significant concentration of tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competition is affected by a building's age,
condition, design (including floor sizes and layout), access to transportation,
availability of parking and ability to offer certain amenities to its tenants
(including sophisticated building systems, such as fiberoptic cables, satellite
communications or other base building technological features). Office properties
that are not equipped to accommodate the needs of modern business may become
functionally obsolete and thus non-competitive.
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The success of an office property also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by such factors as labor cost and quality, tax environment and
quality of life matters, such as schools and cultural amenities. A central
business district may have a substantially different economy from that of a
suburb. The local economy will affect an office property's ability to attract
stable tenants on a consistent basis. In addition, the cost of refitting office
space for a new tenant is often higher than for other property types.
Mortgage Loans Secured by Retail Sales and Service Properties. Retail
properties and other properties related to the sale of consumer goods and other
products and/or providing entertainment, recreation and personal services to the
general public ("Retail Sales and Service Properties") may include shopping
centers, factory outlet centers, malls, automotive sales and service centers and
other individual stores, shops and consumer oriented businesses, such as
department stores and other retail stores, grocery stores, convenience stores,
specialty shops, gas stations, movie theaters, fitness centers, bowling alleys,
salons and dry cleaners. Such properties (if not owner occupied) generally
derive all or a substantial percentage of their income from lease payments from
commercial tenants. Income from and the market value of Retail Sales and Service
Properties is dependent on various factors including, but not limited to, the
ability to lease space in such properties, the ability of tenants to meet their
lease obligations, and the possibility of a significant tenant becoming bankrupt
or insolvent. Retail Sales and Service Properties will be affected by
perceptions by prospective customers of the safety, convenience, services and
attractiveness of such property and by market demographics, consumer habits and
traffic patterns, the access to and visibility of such property and the
availability of parking at such property.
The correlation between the success of tenant businesses and property
value is more direct with respect to Retail Sales and Service Properties than
other types of commercial property because a significant component of the total
rent paid by such tenants is often tied to a percentage of gross sales or
revenues. Declines in sales or revenues of tenants of such types of properties
will likely cause a corresponding decline in percentage rents and such tenants
may become unable to pay their rent or other occupancy costs. The default by a
tenant under its lease could result in delays and costs in enforcing the
lessor's rights. Repayment of the related Mortgage Loans will be affected by the
expiration of space leases and the ability of the respective borrowers to renew
or relet the space on comparable terms. Even if vacated space is successfully
relet, the costs associated with reletting, including tenant improvements,
leasing commissions and free rent, could be substantial and could reduce cash
flow from Retail Sales and Service Properties. The correlation between the
success of the shops and other businesses at a Retail Sales and Service Property
and the value of such property is increased when the property is a single tenant
property or is largely owner occupied. Retail Sales and Service Properties would
be expected to be directly and adversely affected by a decline in the local,
regional and/or national economy and reduced consumer spending.
Whether a mall or shopping center is "anchored" or "unanchored" is also
an important distinction. Anchor tenants in malls and shopping centers
traditionally have been a major factor in the public's perception of such types
of properties. The anchor tenants at a mall or shopping center play an important
part in generating customer traffic and making the property a desirable location
for other tenants. The failure of an anchor tenant to renew its leases, the
termination of an anchor tenant's lease, the bankruptcy or economic decline of
an anchor tenant, or the cessation of the business of an anchor tenant
(notwithstanding any continued payment of rent) can have a material negative
effect on the economic performance of a mall or shopping center.
Unlike certain other types of commercial properties, Retail Sales and
Service Properties also face competition from sources outside a given real
estate market. Catalogue retailers, home shopping networks, telemarketing,
selling through the Internet, and outlet centers all compete with more
traditional retail properties for consumer dollars. Similarly, home movie
rentals and pay-per-view movies provide alternate sources of entertainment to
movie theaters. Continued growth of these alternative retail outlets (which are
often
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characterized by lower operating costs) and entertainment sources could
adversely affect the rents collectible at Retail Sales and Service Properties.
Gas stations, automotive sales and service centers and dry cleaners
also pose unique environmental risks because of the nature of their businesses.
Some Retail Sales and Service Properties, such as malls and shopping
centers, include food and beverage establishments, and prospective investors
should also consider risks associated with such properties.
Mortgage Loans Secured by Hospitality Properties. Hospitality
properties may involve different types of hotels and motels, including full
service hotels, resort hotels with many amenities, limited service hotels,
hotels and motels associated with national franchise chains, hotels and motels
associated with regional franchise chains, hotels that are not affiliated with
any franchise chain but may have their own brand identity, and other lodging
facilities. Various factors, including location, quality and franchise
affiliation affect the economic performance of a hospitality property. Adverse
economic conditions, either local, regional or national, may limit the amount
that can be charged for a room and may result in a reduction in occupancy
levels. The construction of competing hospitality properties can have similar
effects. To meet competition in the industry and to maintain economic values,
continuing expenditures must be made for modernizing, refurbishing, and
maintaining existing facilities prior to the expiration of their anticipated
useful lives. Because rooms at hospitality properties generally are rented for
short periods of time, such properties tend to respond more quickly to adverse
economic conditions and competition than do many other types of commercial
properties. Furthermore, the financial strength and capabilities of the owner
and operator of a hospitality property may have an impact on such property's
quality of service and economic performance. Additionally, the lodging industry,
in certain locations, is seasonal in nature and this seasonality can be expected
to cause periodic fluctuations in room and other revenues, occupancy levels,
room rates and operating expenses. The demand for particular accommodations may
also be affected by changes in travel patterns caused by changes in energy
prices, strikes, relocation of highways, construction of additional highways and
other factors.
The viability of any hospitality property that is a franchise of a
national or a regional hotel or motel chain depends in part on the continued
existence and financial strength of the franchisor, the public perception of the
franchise service mark and the duration of the franchise licensing agreement.
The transferability of franchise license agreements may be restricted and, in
the event of a foreclosure on any such hotel or motel property, the consent of
the franchisor for the continued use of the franchise license by the hotel or
motel property would be required. Conversely, a lender may be unable to remove a
franchisor that it desires to replace following a foreclosure. Further, in the
event of a foreclosure on a hospitality property, it is unlikely that the
purchaser (or the trustee, servicer or special servicer, as the case may be) of
such hospitality property may be entitled to the rights under any associated
liquor license, and such party would be required to apply in its own right for
such license or licenses. There can be no assurance that a new license could be
obtained or that it could be obtained promptly.
The extent to which a hospitality property may be affected by any of
the factors described above, including competition from other hospitality
properties, may depend on the nature and quality of services provided by, and
facilities (in addition to guest rooms) included at, the subject property. For
example, a full service hotel with restaurants and a health club would be
expected to attract more guests than a hospitality property that provides just
rooms (subject to market demographics and the cost of the rooms).
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Mortgage Loans Secured by Other Types of Mortgaged Properties. A
Mortgage Asset Pool may also include Mortgage Loans secured by any of the
following types of real property:
Casinos. Various factors, including location and appearance, affect the
economic performance of a casino. Adverse economic conditions, either local,
regional or national, may limit the amount of disposable income that potential
patrons may have for gambling. The construction of competing casinos can also
have an adverse affect on the performance of a casino property. To meet
competition, significant expenditures must be made to attract potential patrons,
including, but not limited to, improving facilities, providing alternative forms
of entertainment and providing free or low-cost food and lodging. Depending on
the geographic location of a casino property, it may be heavily dependent on
tourism for its clientele. In addition, the ownership and operation of casino
properties is often subject to local or state governmental regulation, and a
governmental agency or authority may have jurisdiction or influence with respect
to the foreclosure of a casino property, the holding and transfer of a gaming
license and/or the bankruptcy or insolvency of a casino owner or operator.
Health Care-Related Properties. Health-care related properties include
hospitals, skilled nursing facilities, nursing homes, congregate care facilities
and, in some cases, depending on the services provided, senior housing. Certain
types of health care-related facilities (including nursing homes) typically
receive a substantial portion of their revenues from government reimbursement
programs, primarily Medicaid and Medicare. Medicaid and Medicare are subject to
statutory and regulatory changes, retroactive rate adjustments, administrative
rulings, policy interpretations, delays by fiscal intermediaries and government
funding restrictions, all of which can adversely affect revenues from operation.
Moreover, governmental payors have employed cost-containment measures that limit
payments to health care providers, and there are currently under consideration
various proposals for national health care relief that could further limit these
payments. In addition, providers of long-term nursing care and other medical
services are highly regulated by federal, state and local law and are subject
to, among other things, federal and state licensing requirements, facility
inspection, rate setting, reimbursement policies, and laws relating to the
adequacy of medical care, distribution of pharmaceuticals, equipment, personnel
operating policies and maintenance of and additions to facilities and services,
any or all of which factors can increase the cost of operation, limit growth
and, in extreme cases, require or result in suspension or cessation of
operations.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements are generally not permitted to be made to any person
other than the provider who actually furnished the related medical goods and
services. Accordingly, in the event of foreclosure on a Mortgaged Property that
is operated as a health care-related facility, none of the Trustee, the Special
Servicer or a subsequent lessee or operator of the Mortgaged Property would
generally be entitled to obtain from federal or state governments any
outstanding reimbursement payments relating to services furnished at the
respective Mortgaged Properties prior to such foreclosure. Furthermore, in the
event of foreclosure, there can be no assurance that the Trustee (or Special
Servicer) or purchaser in a foreclosure sale would be entitled to the rights
under any required licenses and regulatory approvals and such party may have to
apply in its own right for such licenses and approvals. There can be no
assurance that a new license could be obtained or that a new approval would be
granted. In addition, health care-related facilities are generally "special
purpose" properties that could not be readily converted to general residential,
retail or office use, and transfers of health care-related facilities are
subject to regulatory approvals under such state, and in some cases federal, law
not required for transfers of most other types of commercial operations and
other types of real estate, all of which may adversely affect the liquidation
value.
Industrial Properties. Significant factors determining the value of
industrial properties are the quality of tenants, building design and
adaptability, the functionality of the finish-out and the location of the
property. Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment and/or
by a general slow down in the economy, and an industrial property that suited
the particular needs of its original tenant may be difficult to relet to another
tenant or may become
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functionally obsolete relative to newer properties. Furthermore, industrial
properties may be adversely affected by the availability of labor sources or a
change in the proximity of other supply sources. Because industrial properties
frequently have a single tenant, any such property is heavily dependent on the
success of such tenant's business. In addition, depending upon the business
conducted at the particular property, an industrial property may be more likely
than other types of commercial properties to have environmental issues.
Warehouse, Mini-Warehouse and Self-Storage Facilities. Warehouse,
mini-warehouse and self-storage properties (collectively, "Storage Properties")
are considered vulnerable to competition because both acquisition costs and
break-even occupancy are relatively low. The conversion of Storage Properties to
alternative uses would generally require substantial capital expenditures. Thus,
if the operation of a Storage Property becomes unprofitable due to decreased
demand, competition, age of improvements or other factors such that the borrower
becomes unable to meet its obligations under the related Mortgage Loan, the
liquidation value of that Storage Property may be substantially less, relative
to the amount owing on the Mortgage Loan, than would be the case if the Storage
Property were readily adaptable to other uses. Tenant privacy, anonymity and
efficient access are important to the success of a Storage Property, as is
building design and location.
Restaurants. Various factors may affect the economic viability of
individual restaurants and other establishments that are part of the food and
beverage service industry ("Restaurants"), including but not limited to
competition from facilities having businesses similar to the particular
Restaurant; perceptions by prospective customers of the safety, convenience,
services and attractiveness of the Restaurant; the cost, quality and
availability of food and beverage products, negative publicity resulting from
instances of food contamination, food-borne illness and similar events; changes
in demographics, consumer habits and traffic patterns; the ability to provide or
contract for capable management and adequate maintenance; and retroactive
changes to building codes, similar ordinances and other legal requirements.
Adverse economic conditions, whether local, regional or national, may limit the
amount that may be charged for food and beverages and the extent to which
customers dine out, and may result in a reduction in customers. The construction
of competing food/drink establishments can have similar effects. Because of the
nature of the business, Restaurants tend to respond to adverse economic
conditions more quickly than do many other types of commercial properties.
Furthermore, the transferability of any operating, liquor and other licenses to
an entity acquiring a Restaurant (either through purchase or foreclosure) is
subject to local law requirements.
Additional factors that can affect the success of a regionally or
nationally-known chain Restaurant include actions and omissions of any
franchisor (including management practices that adversely affect the nature of
the business or that require renovation, refurbishment, expansion or other
expenditures); the degree of support provided or arranged by any franchisor,
such franchisor's franchisee organizations and third-party providers of products
or services; the bankruptcy or business discontinuation of any such franchisor
or third-party provider; and increases in operating expenses. Chain Restaurants
may be operated under franchise agreements, and such agreements typically do not
contain provisions protective of lenders. A lender may be unable to succeed to
the rights of the franchisee under the related franchise agreement, or the
transferability of a franchise may be subject to numerous restrictions.
Manufactured Housing Communities, Mobile Home Parks and Recreational
Vehicle Parks. The successful operation of a Mortgaged Property operated as a
manufactured housing community, mobile home park or recreational vehicle park
will generally depend on the number of comparable competing properties in the
local market, as well as upon other factors such as its age, appearance,
reputation, management and the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete against
alternative forms of residential housing, including multifamily rental
properties, cooperatively-owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging (for example,
staying at a hotel at the beach).
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Manufactured housing communities, mobile home parks and recreational
vehicle parks are "special purpose" properties that could not be readily
converted to general residential, retail or office use. Thus, if the operation
of any Mortgaged Property constituting a manufactured housing community, mobile
home park or recreational vehicle park becomes unprofitable due to competition,
age of the improvements or other factors such that the borrower becomes unable
to meet its obligations on the related Mortgage Loan, the liquidation value of
that Mortgaged Property may be substantially less, relative to the amount owing
on the Mortgage Loan, than would be the case if the Mortgaged Property were
readily adaptable to other uses.
Recreational and Resort Properties. The Mortgaged Properties may
include various recreational and resort properties such as recreational vehicle
parks, golf courses, marinas, ski resorts and amusement parks ("R&R
Properties"). Various factors, including the location and appearance of and the
appeal of the recreational activities offered by the subject property, affect
the economic performance of an R&R Property. The construction of competing
properties of the same type can also have an adverse effect on the performance
of an R&R Property. In many cases, different types of R&R Properties compete
with each other for patrons. In the case of certain types of R&R Properties,
significant expenditures must be made to maintain, refurbish, improve and/or
expand facilities in order to attract potential patrons. Depending on the
geographic location of an R&R Property, it may be heavily dependent on tourism
for its clientele and, accordingly, may be affected by changes in travel
patterns caused by changes in energy prices, strikes, location of highways,
construction of additional highways and similar factors. In some cases, business
of an R&R Property may be seasonal in nature and this seasonality can be
expected to cause periodic fluctuations in operating revenues and expenses.
Furthermore, business at such properties can be very weather sensitive. The
performance of an R&R Property will also be affected by local, regional and
national economic conditions insofar as such conditions affect the amount of
disposable income that potential patrons have to spend at such property. Because
of the nature of the business, R&R Properties tend to respond to adverse
economic conditions more quickly than do many other types of commercial
properties. In addition, a marina or other R&R Properties located next to water
will be affected by various statutes and government regulations that govern the
use of, and construction on, rivers, lakes and other waterways.
Arenas. The success of an arena generally depends on its ability to
attract patrons to a variety of events, including (depending on the nature of
the arena) sporting events, musical events, theatrical events, animal shows and
circuses. Such ability will depend on, among other things, the appeal of the
particular event, the cost of admission, perceptions by prospective patrons of
the safety, convenience, services and attractiveness of the arena, and the
alternative forms of entertainment available in the particular locale. In some
cases, an arena's success will depend on its ability to attract and keep a
sporting team as a tenant. An arena may become unprofitable (or unacceptable to
such a tenant) due to decreased attendance, competition and age of improvements.
Often, substantial expenditures must be made to modernize, refurbish and/or
maintain existing facilities. Arenas constitute "special purpose" properties
which could not be readily convertible to alternative uses.
Churches and Other Religious Facilities. Churches and other religious
facilities ("Religious Facilities") generally depend on charitable donations to
meet expenses and pay for maintenance and capital expenditures. The extent of
such donations is dependent on the attendance at any particular Religious
Facility and the extent to which attendees are prepared to make donations, all
of which is influenced by a variety of social, political and economic factors.
It would be expected, however, that adverse economic conditions would adversely
affect donations as disposable income of patrons declines. Religious Facilities
are "special purpose" properties that are not readily convertible to alternative
uses.
Parking Lots and Garages. The primary source of income for parking lots
and garages is the rental fees charged for and in connection with parking
spaces. The amount of such fees will depend on the number of spaces rented and
the rates at which they are rented, which, in turn, will depend on a number of
factors, including the proximity of the lot or garage to locations where large
numbers of people work, shop or live, the amount of alternative parking space
(including free parking space) in the area where the lot or garage is located,
whether
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the area where the lot or garage is located is otherwise accessible by mass
transit (thereby limiting the number of potential vehicles requiring parking
spaces) and the perceptions of potential patrons of the safety, convenience and
services of the lot or garage.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, as noted above, some or all of the
Mortgage Loans included in a particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
likelihood of default on such a loan. Unless otherwise defined in the related
Prospectus Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at
any given time is the ratio of (i) the Net Operating Income derived from the
related Mortgaged Property for a twelve-month period to (ii) the annualized
scheduled payments of principal and/or interest on the Mortgage Loan and any
other loans senior thereto that are secured by the related Mortgaged Property.
Unless otherwise defined in the related Prospectus Supplement, "Net Operating
Income" means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
noncash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner-occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, recreational vehicle parks, and
mini-warehouse and self-storage facilities, tend to be affected more rapidly by
changes in market or business conditions than do properties typically leased for
longer periods, such as warehouses, retail stores, office buildings and
industrial facilities. Commercial Properties may be owner-occupied or leased to
a small number of tenants. Thus, the Net Operating Income of such a Mortgaged
Property may depend substantially on the financial condition of the borrower or
a tenant, and Mortgage Loans secured by liens on such properties may pose a
greater likelihood of default and loss than loans secured by liens on
Multifamily Properties or on multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property must be liquidated
following a default. Unless otherwise defined in the related Prospectus
Supplement, the "Loan-to-Value Ratio" of a Mortgage Loan at any given time is
the ratio (expressed as a percentage) of (i) the then outstanding principal
balance of the Mortgage Loan and any other loans senior thereto that are secured
by the related Mortgaged Property to (ii) the Value of the related Mortgaged
Property. Unless
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otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate
measure of the likelihood of liquidation loss in a pool of Mortgage Loans. For
example, the Value of a Mortgaged Property as of the date of initial issuance of
the Certificates of the related Series may be less than the Value determined at
loan origination, and will likely continue to fluctuate from time to time based
upon certain factors including changes in economic conditions and the real
estate market. Moreover, even when current, an appraisal is not necessarily a
reliable estimate of value. Appraised values of income-producing properties are
generally based on the market comparison method (recent resale value of
comparable properties at the date of the appraisal), the cost replacement method
(the cost of replacing the property at such date), the income capitalization
method (a projection of value based upon the property's projected net cash
flow), or upon a selection from or interpolation of the values derived from such
methods. Each of these appraisal methods can present analytical difficulties. It
is often difficult to find truly comparable properties that have recently been
sold; the replacement cost of a property may have little to do with its current
market value; and income capitalization is inherently based on inexact
projections of income and expense and the selection of an appropriate
capitalization rate and discount rate. Where more than one of these appraisal
methods are used and provide significantly different results, an accurate
determination of value and, correspondingly, a reliable analysis of the
likelihood of default and loss, is even more difficult.
Although there may be multiple methods for determining the Value of a
Mortgaged Property, Value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the Value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and
"--Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans--Increased Risk of Default Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans
will (i) have had original terms to maturity of not more than approximately 40
years and (ii) provide for scheduled payments of principal, interest or both, to
be made on specified dates ("Due Dates") that occur monthly, quarterly,
semi-annually or annually. A Mortgage Loan (i) may provide for no accrual of
interest or for accrual of interest thereon at a Mortgage Rate that is fixed
over its term or that adjusts from time to time, or that may be converted at the
borrower's election from an adjustable to a fixed Mortgage Rate, or from a fixed
to an adjustable Mortgage Rate, (ii) may provide for level payments to maturity
or for payments that adjust from time to time to accommodate changes in the
Mortgage Rate or to reflect the occurrence of certain events, and may permit
negative amortization, (iii) may be fully amortizing or may be partially
amortizing or nonamortizing, with a balloon payment due on its stated maturity
date, and (iv) may prohibit over its term or for a certain period prepayments
(the period of such prohibition, a "Lock-out Period" and its date of expiration,
a "Lock-out Date") and/or require payment of a premium or a yield maintenance
payment (a "Prepayment Premium") in connection with certain prepayments, in each
case as described in the related Prospectus Supplement. A Mortgage Loan may also
contain a provision
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that entitles the lender to a share of appreciation of the related Mortgaged
Property, or profits realized from the operation or disposition of such
Mortgaged Property or the benefit, if any, resulting from the refinancing of the
Mortgage Loan (any such provision, an "Equity Participation"), as described in
the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the
Loan-to-Value Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such
Loan-to-Value Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or
the range thereof, and the weighted average Mortgage Rate borne by the Mortgage
Loans, (vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (viii) information regarding the
payment characteristics of the Mortgage Loans, including, without limitation,
balloon payment and other amortization provisions, Lock-out Periods and
Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans
(either at origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a Series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision
in the Offered Certificates of the related Series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may be so materially different from those of the related Mortgage
Asset Pool that such prepayment experience would not be meaningful to an
investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's multifamily
and/or commercial mortgage loan servicing portfolio.
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MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities or (ii) certificates
issued and/or insured or guaranteed by the Federal Home Loan Mortgage
Corporation ("FHLMC"; and such certificates issued and/or insured or guaranteed
thereby, "FHLMC Certificates"), the Federal National Mortgage Association
("FN\MA"; and such certificates issued and/or insured or guaranteed thereby,
"FNMA Certificates"), the Governmental National Mortgage Association ("GNMA";
and such certificates issued and/or insured or guaranteed thereby, "GNMA
Certificates") or the Federal Agricultural Mortgage Corporation ("FAMC"; and
such certificates issued and/or insured or guaranteed thereby, "FAMC
Certificates"), provided that, unless otherwise specified in the related
Prospectus Supplement, each MBS will evidence an interest in, or will be secured
by a pledge of, mortgage loans that conform to the descriptions of the Mortgage
Loans contained herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, or unless otherwise discussed with
the Commission, each MBS included in a Mortgage Asset Pool: (a) either will (i)
have been acquired (other than from the Depositor or an affiliate thereof) in
bona fide secondary market transactions or (ii) if so specified in the related
Prospectus Supplement, be part of the Depositor's (or an affiliate's) unsold
allotments from the Depositor's (or an affiliate's) previous offerings; and (b)
unless it was issued by the Depositor or a trust established thereby, will
either (i) have been previously registered under the Securities Act, (ii) be
exempt from such registration requirements or (iii) have been held for at least
the holding period specified in Rule 144(k) under the Securities Act.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with
characteristics similar to the Classes of Certificates described herein.
Distributions in respect of the MBS will be made by the MBS Issuer, the MBS
Servicer or the MBS Trustee on the dates specified in the related Prospectus
Supplement. The MBS Issuer or the MBS Servicer or another person specified in
the related Prospectus Supplement may have the right or obligation to repurchase
or substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a Series that evidence interests in MBS
will specify: (i) the aggregate approximate initial and outstanding principal
amount(s) and type of the MBS to be included in the Trust Fund, (ii) the
original and remaining term(s) to stated maturity of the MBS, if applicable,
(iii) the pass-through or bond rate(s) of the MBS or the formula for determining
such rate(s), (iv) the payment characteristics of the MBS, (v) the MBS Issuer,
MBS Servicer and MBS Trustee, as applicable, of each of the MBS, (vi) a
description of the related credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and,
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to the extent appropriate under the circumstances, such other information in
respect of the underlying mortgage loans described under "--Mortgage
Loans--Mortgage Loan Information in Prospectus Supplements", and (x) the
characteristics of any cash flow agreements that relate to the MBS.
The Depositor will provide the same information regarding the MBS in
any Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports if
such MBS was publicly offered or the reports the related MBS Issuer provides the
related MBS Trustee if such MBS was privately issued.
Undelivered Mortgage Assets
Unless otherwise specified in the related Prospectus Supplement, the
aggregate outstanding principal balance of a Mortgage Asset Pool as of the
related Cut-off Date will equal or exceed the aggregate Certificate Principal
Balance of the related Series as of the related Closing Date. In the event that
Mortgage Assets initially delivered do not have an aggregate outstanding
principal balance as of the related Cut-off Date at least equal to the aggregate
Certificate Principal Balance of the related Series as of the related Closing
Date, the Depositor may deposit cash or Permitted Investments on an interim
basis with the Trustee for such Series on the related Closing Date in lieu of
delivering Mortgage Assets with an aggregate outstanding principal balance as of
the related Cutoff Date equal to the shortfall amount. During the 90-day period
following the related Closing Date, the Depositor will be entitled to obtain a
release of such cash or Permitted Investments to the extent that the Depositor
delivers a corresponding amount of the Undelivered Mortgage Assets. If and to
the extent all the Undelivered Mortgage Assets are not delivered during the
90-day period following the related Closing Date, such cash or, following
liquidation, such Permitted Investments will be applied to pay a corresponding
amount of principal of the Certificates of such Series to the extent set forth,
and on the dates specified, in the related Prospectus Supplement.
Certificate Accounts
Each Trust Fund will include a Certificate Account consisting of one or
more accounts established and maintained on behalf of the Certificateholders
into which all payments and collections received or advanced with respect to the
Mortgage Assets and other assets in the Trust Fund will be deposited to the
extent described herein and in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Certificate Account".
Credit Support
If so provided in the Prospectus Supplement for the Offered
Certificates of any Series, partial or full protection against certain defaults
and losses on the Mortgage Assets in the related Trust Fund may be provided to
one or more Classes of Certificates of such Series in the form of subordination
of one or more other Classes of Certificates of such Series or by one or more
other types of Credit Support, which may include a letter of credit, a surety
bond, an insurance policy, a guarantee, a reserve fund or any combination
thereof. The amount and types of such Credit Support, the identity of the entity
providing it (if applicable) and related information with respect to each type
of Credit Support, if any, will be set forth in the Prospectus Supplement for
the Offered Certificate of any Series. See "Risk Factors--Credit Support
Limitations" and "Description of Credit Support".
Cash Flow Agreements
If so provided in the Prospectus Supplement for the Offered
Certificates of any Series, the related Trust Fund may include guaranteed
investment contracts pursuant to which moneys held in the funds and accounts
established for such Series will be invested at a specified rate. The Trust Fund
may also include interest rate exchange agreements, interest rate cap or floor
agreements, or other agreements designed to reduce the effects
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of interest rate fluctuations on the Mortgage Assets on one or more Classes of
Certificates. The principal terms of any such Cash Flow Agreement, including,
without limitation, provisions relating to the timing, manner and amount of
payments thereunder and provisions relating to the termination thereof, will be
described in the related Prospectus Supplement. The related Prospectus
Supplement will also identify the obligor under the Cash Flow Agreement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Certificate will depend on the price paid by
the Certificateholder, the Pass-Through Rate of the Certificate and the amount
and timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a Class of Certificates as will the characteristics and behavior
of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect, if any, that the payment characteristics of
the MBS may have on the yield to maturity and weighted average lives of the
Offered Certificates of the related Series.
Pass-Through Rate
The Certificates of any Class within a Series may have a fixed,
variable or adjustable Pass-Through Rate, which may or may not be based upon the
interest rates borne by the Mortgage Loans in the related Trust Fund. The
Prospectus Supplement with respect to the Offered Certificates of any Series
will specify the Pass-Through Rate for each Class of such Offered Certificates
or, in the case of a Class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more Classes of such Offered Certificates; and whether the distributions of
interest on any Class of such Offered Certificates will be dependent, in whole
or in part, on the performance of any obligor under a Cash Flow Agreement.
Payment Delays
With respect to any Series, a period of time will elapse between the
date upon which payments on the Mortgage Loans in the related Trust Fund are due
and the Distribution Date on which such payments are passed through to
Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
Certain Shortfalls in Collections of Interest
When a principal prepayment in full or in part is made on a Mortgage
Loan, the borrower is generally charged interest on the amount of such
prepayment only through the date of such prepayment, instead of through the Due
Date for the next succeeding scheduled payment. However, interest accrued on the
Offered Certificates of any Series and distributable thereon on any Distribution
Date will generally correspond to interest accrued on the Mortgage Loans to
their respective Due Dates during the related Due Period. A "Due Period" will be
a specified time period (generally corresponding in length to the period between
Distribution Dates) and all scheduled payments on the Mortgage Loans in the
related Trust Fund that are due during a given Due Period will, to the extent
received the related Determination Date (as defined herein) or otherwise
advanced by the related Master Servicer, Special Servicer or other specified
person, be distributed to the holders of the Certificates of
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such Series on the next succeeding Distribution Date. Consequently, if a
prepayment on any Mortgage Loan is distributable to Certificateholders on a
particular Distribution Date, but such prepayment is not accompanied by interest
thereon to the Due Date for such Mortgage Loan in the related Due Period, then
the interest charged to the borrower (net of servicing and administrative fees)
may be less (such shortfall, a "Prepayment Interest Shortfall") than the
corresponding amount of interest accrued and otherwise payable on the
Certificates of the related Series. If and to the extent that any such shortfall
is allocated to a Class of Offered Certificates, the yield thereon will be
adversely affected. The Prospectus Supplement for the Offered Certificates of
each Series will describe the manner in which any such shortfalls will be
allocated among the respective Classes of Certificates of such Series. The
related Prospectus Supplement will also describe any amounts available to offset
such shortfalls.
Yield and Prepayment Considerations
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the Certificate Principal Balance (or the
Certificate Notional Amount, if applicable) of such Certificate. The rate of
principal payments on the Mortgage Loans in any Trust Fund will in turn be
affected by the amortization schedules thereof (which, in the case of ARM Loans,
may change periodically to accommodate adjustments to the Mortgage Rates
thereon), the dates on which any balloon payments are due, and the rate of
principal prepayments thereon (including for this purpose, voluntary prepayments
by borrowers and also prepayments resulting from liquidations of Mortgage Loans
due to defaults, casualties or condemnations affecting the related Mortgaged
Properties, or purchases of Mortgage Loans out of the related Trust Fund).
Because the rate of principal prepayments on the Mortgage Loans in any Trust
Fund will depend on future events and a variety of factors (as described below),
no assurance can be given as to such rate.
The extent to which the yield to maturity of a Class of Offered
Certificates of any Series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a Class of
Stripped Interest Certificates, result in the reduction of the aggregate
Certificate Notional Amount thereof). An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans in the related
Trust Fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments on
such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
in reduction of the Certificate Principal Balance or Certificate Notional Amount
of such investor's Offered Certificate at a rate slower (or faster) than the
rate anticipated by the investor during any particular period, any consequent
adverse effects on such investor's yield would not be fully offset by a
subsequent like increase (or decrease) in the rate of principal payments.
In general, the aggregate Certificate Notional Amount of a Class of
Stripped Interest Certificates will either (i) be based on the principal
balances of some or all of the Mortgage Assets in the related Trust Fund or (ii)
equal the aggregate Certificate Principal Balance of one or more of the other
Classes of Certificates of the same Series.
Accordingly, the yield on such Stripped Interest Certificates will be
inversely related to the rate at which payments and other collections of
principal are received on such Mortgage Assets or distributions are made in
reduction of the aggregate Certificate Principal Balance of such Class or
Classes of Certificates, as the case may be.
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Consistent with the foregoing, if a Class of Certificates of any Series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a Series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any
Trust Fund may be affected by a number of factors, including, without
limitation, the availability of mortgage credit, the relative economic vitality
of the area in which the Mortgaged Properties are located, the quality of
management of the Mortgaged Properties, the servicing of the Mortgage Loans,
possible changes in tax laws and other opportunities for investment. In general,
those factors which increase the attractiveness of selling a Mortgaged Property
or refinancing a Mortgage Loan or which enhance a borrower's ability to do so,
as well as those factors which increase the likelihood of default under a
Mortgage Loan, would be expected to cause the rate of prepayment in respect of
any Mortgage Asset Pool to accelerate. In contrast, those factors having an
opposite effect would be expected to cause the rate of prepayment of any
Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund
may also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a disincentive (in the case of a Prepayment Premium) to a
borrower's voluntarily prepaying its Mortgage Loan, thereby slowing the rate of
prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a comparable
type, term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan. Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
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Weighted Average Life and Maturity
The rate at which principal payments are received on the Mortgage Loans
in any Trust Fund will affect the ultimate maturity and the weighted average
life of one or more Classes of the Certificates of the related Series. Unless
otherwise specified in the related Prospectus Supplement, weighted average life
refers to the average amount of time that will elapse from the date of issuance
of an instrument until each dollar allocable as principal of such instrument is
repaid to the investor.
The weighted average life and maturity of a Class of Certificates of
any Series will be influenced by the rate at which principal on the related
Mortgage Loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary prepayments by
borrowers and also prepayments resulting from liquidations of Mortgage Loans due
to default, casualties or condemnations affecting the related Mortgaged
Properties and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such Class. Prepayment rates on loans are commonly measured relative to
a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of mortgage loans for the life of such loans. SPA represents an assumed
variable rate of prepayment each month (expressed as an annual percentage)
relative to the then outstanding principal balance of a pool of mortgage loans,
with different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption
purports to be a historical description of prepayment experience or a prediction
of the anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to the Offered Certificates of
any Series will contain tables, if applicable, setting forth the projected
weighted average life of each Class of Offered Certificates of such Series with
an aggregate Certificate Principal Balance, and the percentage of the initial
aggregate Certificate Principal Balance of each such Class that would be
outstanding on specified Distribution Dates, based on the assumptions stated in
such Prospectus Supplement, including assumptions that prepayments on the
related Mortgage Loans are made at rates corresponding to various percentages of
CPR or SPA, or at such other rates specified in such Prospectus Supplement. Such
tables and assumptions will illustrate the sensitivity of the weighted average
lives of the Certificates to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, the actual weighted average lives of the Certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage
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Loans, the Master Servicer or the Special Servicer, to the extent and under the
circumstances set forth herein and in the related Prospectus Supplement, may be
authorized to modify Mortgage Loans that are in default or as to which a payment
default is imminent. Any defaulted balloon payment or modification that extends
the maturity of a Mortgage Loan may delay distributions of principal on a Class
of Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a Class of
Certificates can be affected by Mortgage Loans that permit negative amortization
to occur (that is, Mortgage Loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues
thereon, with the unpaid portion of such interest being added to the related
principal balance). Negative amortization on one or more Mortgage Loans in any
Trust Fund may result in negative amortization on the Offered Certificates of
the related Series. The related Prospectus Supplement will describe, if
applicable, the manner in which negative amortization in respect of the Mortgage
Loans in any Trust Fund is allocated among the respective Classes of
Certificates of the related Series. The portion of any Mortgage Loan negative
amortization allocated to a Class of Certificates may result in a deferral of
some or all of the interest payable thereon, which deferred interest may be
added to the aggregate Certificate Principal Balance thereof. In addition, an
ARM Loan that permits negative amortization would be expected during a period of
increasing interest rates to amortize at a slower rate (and perhaps not at all)
than if interest rates were declining or were remaining constant. Such slower
rate of Mortgage Loan amortization would correspondingly be reflected in a
slower rate of amortization for one or more Classes of Certificates of the
related Series. Accordingly, the weighted average lives of Mortgage Loans that
permit negative amortization (and that of the Classes of Certificates to which
any such negative amortization would be allocated or that would bear the effects
of a slower rate of amortization on such Mortgage Loans) may increase as a
result of such feature.
Negative amortization may occur in respect of an ARM Loan that (i)
limits the amount by which its scheduled payment may adjust in response to a
change in its Mortgage Rate, (ii) provides that its scheduled payment will
adjust less frequently than its Mortgage Rate or (iii) provides for constant
scheduled payments notwithstanding adjustments to its Mortgage Rate.
Accordingly, during a period of declining interest rates, the scheduled payment
on such a Mortgage Loan may exceed the amount necessary to amortize the loan
fully over its remaining amortization schedule and pay interest at the then
applicable Mortgage Rate, thereby resulting in the accelerated amortization of
such Mortgage Loan. Any such acceleration in amortization of its principal
balance will shorten the weighted average life of such Mortgage Loan and,
correspondingly, the weighted average lives of those Classes of Certificates
entitled to a portion of the principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be
affected by the inclusion in the related Trust Fund of Mortgage Loans that
permit negative amortization, will depend upon (i) whether such Offered
Certificate was purchased at a premium or a discount and (ii) the extent to
which the payment characteristics of such Mortgage Loans delay or accelerate the
distributions of principal on such Certificate (or, in the case of a Stripped
Interest Certificate, delay or accelerate the reduction of the Certificate
Notional Amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related Series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
Series.
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Losses and Shortfalls on the Mortgage Assets. The yield to holders of
the Offered Certificates of any Series will directly depend on the extent to
which such holders are required to bear the effects of any losses or shortfalls
in collections arising out of defaults on the Mortgage Loans in the related
Trust Fund and the timing of such losses and shortfalls. In general, the earlier
that any such loss or shortfall occurs, the greater will be the negative effect
on yield for any Class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective Classes of Certificates of the related Series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates.
The yield to maturity on a Class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the
holders thereof to a specified portion (which may during specified periods range
from none to all) of the principal payments received on the Mortgage Assets in
the related Trust Fund, one or more Classes of Certificates of any Series,
including one or more Classes of Offered Certificates of such Series, may
provide for distributions of principal thereof from (i) amounts attributable to
interest accrued but not currently distributable on one or more Classes of
Accrual Certificates, (ii) Excess Funds or (iii) any other amounts described in
the related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any Series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such Series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any Class of Certificates out of the sources
described in the preceding paragraph would shorten the weighted average life of
such Certificates and, if such Certificates were purchased at a premium, reduce
the yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any Class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on July 10,
1997 and is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Inc., a
Delaware corporation. The Depositor was organized, among other things, for the
purposes of issuing debt securities and establishing trusts, selling beneficial
interests therein and acquiring and selling mortgage assets to such trusts. The
principal executive offices of the Depositor are located at 277 Park Avenue, New
York, New York 10172. Its telephone number is (212) 892-3000. The Depositor does
not have and is not expected to have any significant assets.
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DESCRIPTION OF THE CERTIFICATES
General
Each Series will represent the entire beneficial ownership interest in
the Trust Fund created pursuant to the related Pooling Agreement. As described
in the related Prospectus Supplement, the Certificates of each Series, including
the Offered Certificates of such Series, may consist of one or more Classes of
Certificates that, among other things: (i) provide for the accrual of interest
on the aggregate Certificate Principal Balance or Certificate Notional Amount
thereof at a fixed, variable or adjustable rate; (ii) constitute Senior
Certificates or Subordinate Certificates; (iii) constitute Stripped Interest
Certificates or Stripped Principal Certificates; (iv) provide for distributions
of interest thereon or principal thereof that commence only after the occurrence
of certain events, such as the retirement of one or more other Classes of
Certificates of such Series; (v) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; (vi)
provide for distributions of principal thereof to be made, subject to available
funds, based on a specified principal payment schedule or other methodology; or
(vii) provide for distributions based on collections on the Mortgage Assets in
the related Trust Fund attributable to Prepayment Premiums and Equity
Participations.
If so specified in the related Prospectus Supplement, a Class of
Offered Certificates may have two or more component parts, each having
characteristics that are otherwise described herein as being attributable to
separate and distinct Classes. For example, a Class of Offered Certificates may
have an aggregate Certificate Principal Balance on which it accrues interest at
a fixed, variable or adjustable rate. Such Class of Offered Certificates may
also have certain characteristics attributable to Stripped Interest Certificates
insofar as it may also entitle the holders thereof to distributions of interest
accrued on an aggregate Certificate Notional Amount at a different fixed,
variable or adjustable rate. In addition, a Class of Certificates may accrue
interest on one portion of its aggregate Certificate Principal Balance or
Certificate Notional Amount at one fixed, variable or adjustable rate and on
another portion of its aggregate Certificate Principal Balance or Certificate
Notional Amount at a different fixed, variable or adjustable rate.
Each Class of Offered Certificates of a Series will be issued in
minimum denominations corresponding to the Certificate Principal Balances or, in
case of certain Classes of Stripped Interest Certificates or REMIC Residual
Certificates, Certificate Notional Amounts or percentage interests, specified in
the related Prospectus Supplement. As provided in the related Prospectus
Supplement, one or more Classes of Offered Certificates of any Series may be
issued in fully registered, definitive form (such Certificates, "Definitive
Certificates") or may be offered in book-entry format (such Certificates,
"Book-Entry Certificates") through the facilities of DTC. The Offered
Certificates of each Series (if issued as Definitive Certificates) may be
transferred or exchanged, subject to any restrictions on transfer described in
the related Prospectus Supplement, at the location specified in the related
Prospectus Supplement, without the payment of any service charges, other than
any tax or other governmental charge payable in connection therewith. Interests
in a Class of Book-Entry Certificates will be transferred on the book-entry
records of DTC and its participating organizations. If so specified in the
related Prospectus Supplement, arrangements may be made for clearance and
settlement through CEDEL, S.A. or the Euroclear System, if they are participants
in DTC.
Distributions
Distributions on the Certificates of each Series will be made on each
Distribution Date from the Available Distribution Amount for such Series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any Series and any
Distribution Date will refer to the total of all payments or other collections
(or advances in lieu thereof) on, under or in respect of
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the Mortgage Assets and any other assets included in the related Trust Fund that
are available for distribution to the holders of Certificates of such Series
("Certificateholders") on such date. The particular components of the Available
Distribution Amount for any Series and Distribution Date will be more
specifically described in the related Prospectus Supplement. In general, the
Distribution Date for a Series will be the 25th day of each month (or, if any
such 25th day is not a business day, the next succeeding business day),
commencing in the month immediately following the month in which such Series is
issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each Series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each Class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such Class
in proportion to the respective Percentage Interests evidenced thereby unless
otherwise specified in the related Prospectus Supplement. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any Class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") in any particular Class of Offered Certificates represented by any
Certificate of such Class will be equal to the percentage obtained by dividing
the initial Certificate Principal Balance or Certificate Notional Amount, as
applicable, of such Certificate by the initial aggregate Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Class.
Distributions of Interest on the Certificates
Each Class of Certificates of each Series (other than certain Classes
of Stripped Principal Certificates and certain Classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each Class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each Series will be calculated on the basis of a 360- day year consisting of
twelve 30-day months.
Distributions of interest in respect of any Class of Certificates
(other than a Class of Accrual Certificates, which will be entitled to
distributions of accrued interest commencing only on the Distribution Date, or
under the circumstances, specified in the related Prospectus Supplement, and
other than any Class of Stripped Principal Certificates or REMIC Residual
Certificates that is not entitled to any distributions of interest) will be made
on each Distribution Date based on the Accrued Certificate Interest for such
Class and such Distribution Date, subject to the sufficiency of that portion, if
any, of the Available Distribution Amount allocable to such Class on such
Distribution Date. Prior to the time interest is distributable on any Class of
Accrual Certificates, the amount of Accrued Certificate Interest otherwise
distributable on such Class will be added to the aggregate Certificate Principal
Balance thereof on each Distribution Date or otherwise deferred as described in
the related Prospectus Supplement. With respect to each Class of Certificates
(other than certain Classes of Stripped Interest Certificates and certain
Classes of REMIC Residual Certificates), the "Accrued Certificate Interest" for
each
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Distribution Date will be equal to interest at the applicable Pass-Through Rate
accrued for a specified period (generally the most recently ended calendar
month) on the aggregate Certificate Principal Balance of such Class of
Certificates outstanding immediately prior to such Distribution Date. Unless
otherwise provided in the related Prospectus Supplement, the Accrued Certificate
Interest for each Distribution Date with respect to a Class of Stripped Interest
Certificates will be similarly calculated except that it will accrue on an
aggregate Certificate Notional Amount that, in general, will either be (i) based
on the principal balances of some or all of the Mortgage Assets in the related
Trust Fund or (ii) equal to the aggregate Certificate Principal Balances of one
or more other Classes of Certificates of the same Series. Reference to a
Certificate Notional Amount with respect to a Stripped Interest Certificate is
solely for convenience in making certain calculations and does not represent the
right to receive any distributions of principal. If so specified in the related
Prospectus Supplement, the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the aggregate Certificate Principal Balance of) one or
more Classes of the Certificates of a Series may be reduced to the extent that
any Prepayment Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the Classes of Certificates of that Series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the aggregate Certificate Principal Balance of) a Class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a Class of Certificates by reason of the
allocation to such Class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the aggregate Certificate Principal Balance of such Class. See "Risk
Factors--Effect of Prepayments on Average Life of Certificates" and "--Effect of
Prepayments on Yield of Certificates" and "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest".
Distributions of Principal of the Certificates
Each Class of Certificates of each Series (other than certain Classes
of Stripped Interest Certificates and certain Classes of REMIC Residual
Certificates) will have an aggregate Certificate Principal Balance, which, at
any time, will equal the then maximum amount that the holders of Certificates of
such Class will be entitled to receive as principal out of the future cash flow
on the Mortgage Assets and other assets included in the related Trust Fund. The
aggregate outstanding Certificate Principal Balance of a Class of Certificates
will be reduced by distributions of principal made thereon from time to time
and, if and to the extent so provided in the related Prospectus Supplement,
further by any losses incurred in respect of the related Mortgage Assets
allocated thereto from time to time. In turn, the outstanding aggregate
Certificate Principal Balance of a Class of Certificates may be increased as a
result of any deferred interest on or in respect of the related Mortgage Assets
being allocated thereto from time to time, and will be increased, in the case of
a Class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
Unless otherwise specified in the related Prospectus Supplement, the initial
aggregate Certificate Principal Balance of all Classes of a Series will not be
greater than the aggregate outstanding principal balance of the related Mortgage
Assets as of the related Cut-off Date. The initial aggregate Certificate
Principal Balance of each Class of Offered Certificates will be specified in the
related Prospectus Supplement. As and to the extent described in the related
Prospectus Supplement, distributions of principal with respect to a Series will
be made on each Distribution Date to the holders of the Class or Classes of
Certificates of such Series entitled thereto until the Certificate Principal
Balances of such Certificates have been reduced to zero. Distributions of
principal with respect to one or more Classes of Certificates may be made at a
rate that is faster (and, in some cases, substantially faster) than the rate
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at which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund. Distributions of principal with respect to one
or more Classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other Classes of Certificates of
the same Series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more Classes of Certificates
(each such Class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more other Classes of Certificates (each
such Class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same Series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any Class of
Offered Certificates will be made on a pro rata basis among all of the
Certificates of such Class.
Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations.
If so provided in the related Prospectus Supplement, Prepayment
Premiums or payments in respect of Equity Participations received on or in
connection with the Mortgage Assets in any Trust Fund will be distributed on
each Distribution Date to the holders of the Class of Certificates of the
related Series entitled thereto in accordance with the provisions described in
such Prospectus Supplement. Alternatively, such items may be retained by the
Depositor or any of its affiliates or by any other specified person and/or may
be excluded as Trust Assets.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective Classes of Certificates of the related Series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates. See "Description of Credit Support".
Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement, if
a Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related Series for such Distribution Date, an amount up to the
aggregate of any payments of principal (other than the principal portion of any
balloon payments) and interest that were due on or in respect of such Mortgage
Loans during the related Due Period and were delinquent on the related
Determination Date.
Advances are intended to maintain a regular flow of scheduled interest
and principal payments to holders of the Class or Classes of Certificates
entitled thereto, rather than to guarantee or insure against losses.
Accordingly, all advances made out of a specific entity's own funds will be
reimbursable out of related recoveries on the Mortgage Loans (including amounts
drawn under any fund or instrument constituting Credit Support) with respect to
which such advances were made (as to any Mortgage Loan, "Related Proceeds") and
such other specific
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sources as may be identified in the related Prospectus Supplement, including, in
the case of a Series that includes one or more Classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more Classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
Series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer,
Trustee or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
Series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement,
any entity making advances will be entitled to receive interest on certain or
all of such advances for a specified period during which such advances are
outstanding at the rate specified in such Prospectus Supplement, and such entity
will be entitled to payment of such interest periodically from general
collections on the Mortgage Loans in the related Trust Fund prior to any payment
to the related Series of Certificateholders or as otherwise provided in the
related Pooling Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for the Offered Certificates of any Series
evidencing an interest in a Trust Fund that includes MBS will describe any
comparable advancing obligation of a party to the related Pooling Agreement or
of a party to the related MBS Agreement.
Reports to Certificateholders
On each Distribution Date, together with the distribution to the
holders of each Class of the Offered Certificates of a Series, a Master
Servicer, Manager or Trustee, as provided in the related Prospectus Supplement,
will forward to each such holder, a statement (a "Distribution Date Statement")
substantially in the form, or specifying the information, set forth in the
related Prospectus Supplement. In general, the Distribution Date Statement for
each Distribution Date will detail the distributions on the Certificates of the
related Series on such Distribution Date and the performance of the Mortgage
Assets in the related Trust Fund.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer, Manager or Trustee, as the case may be, for a Series will
be required to furnish to each person who at any time during the calendar year
was a holder of an Offered Certificate of such Series a statement containing
information regarding the principal, interest and other distributions on the
applicable Class of Offered Certificates, aggregated for such calendar year or
the applicable portion thereof during which such person was a Certificateholder.
Such obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "--Book-Entry
Registration and Definitive Certificates" below.
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If the Trust Fund for a Series includes MBS, the ability of the related
Master Servicer, Manager or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such MBS will depend on the reports received with respect to such MBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution Date Statements that will be
forwarded to the holders of the Offered Certificates of that Series in
connection with distributions made to them.
Voting Rights
The voting rights evidenced by each Series (as to such Series, the
"Voting Rights") will be allocated among the respective Classes of Certificates
of such Series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to certain amendments to the related Pooling Agreement and as otherwise
specified in the related Prospectus Supplement. See "Description of the Pooling
Agreements--Amendment". The holders of specified amounts of Certificates of a
particular Series will have the right to act as a group to remove the related
Trustee and also upon the occurrence of certain events which if continuing would
constitute an Event of Default on the part of the related Master Servicer,
Special Servicer or REMIC Administrator. See "Description of the Pooling
Agreements--Events of Default", "--Rights Upon Event of Default" and
"--Resignation and Removal of the Trustee".
Termination
The obligations created by the Pooling Agreement for each Series will
terminate following (i) the final payment or other liquidation of the last
Mortgage Asset subject thereto or the disposition of all property acquired upon
foreclosure of any Mortgage Loan subject thereto and (ii) the payment (or
provision for payment) to the Certificateholders of that Series of all amounts
required to be paid to them pursuant to such Pooling Agreement. Written notice
of termination of a Pooling Agreement will be given to each Certificateholder of
the related Series, and the final distribution will be made only upon
presentation and surrender of the Certificates of such Series at the location to
be specified in the notice of termination.
If so specified in the related Prospectus Supplement, the Certificates
of any Series may be subject to optional early retirement through the repurchase
of the Mortgage Assets in the related Trust Fund by the party or parties
specified therein, under the circumstances and in the manner set forth therein.
In addition, if so provided in the related Prospectus Supplement, upon
the reduction of the aggregate Certificate Principal Balance of a specified
Class or Classes of Certificates by a specified percentage or amount or upon a
specified date, a party designated therein may be authorized or required to
solicit bids for the purchase of all the Mortgage Assets of the related Trust
Fund, or of a sufficient portion of such Mortgage Assets to retire such Class or
Classes of Certificates, under the circumstances and in the manner set forth
therein. The solicitation of bids will be conducted in a commercially reasonable
manner and, generally, assets will be sold at their fair market value.
Circumstances may arise in which such fair market value may be less than the
unpaid balance of the Mortgage Loans sold and therefore, as a result of such a
sale, the Certificateholders of one or more Classes of Certificates may receive
an amount less than the aggregate Certificate Principal Balance of, and accrued
unpaid interest on, their Certificates.
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Book-Entry Registration and Definitive Certificates
If so provided in the Prospectus Supplement for the Offered
Certificates of any Series, one or more Classes of such Offered Certificates
will be offered in book-entry format through the facilities of DTC, and each
such Class will be represented by one or more global Certificates registered in
the name of DTC or its nominee. If so provided in the Prospectus Supplement,
arrangements may be made for clearance and settlement through the Euroclear
System or CEDEL, S.A., if they are participants in DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for DTC Participants and facilitate the clearance
and settlement of securities transactions between DTC Participants through
electronic computerized book-entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. DTC
Participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include other
organizations. DTC is owned by a number of DTC Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
directly or indirectly clear through or maintain a custodial relationship with a
DTC Participant that maintains as account with DTC. The rules applicable to DTC
and DTC Participants are on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made
by or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such purpose.
In turn, the Financial Intermediary's ownership of such Certificates will be
recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the beneficial owner's Financial Intermediary is not a DTC
Participant). Therefore, the beneficial owner must rely on the foregoing
procedures to evidence its beneficial ownership of such Certificates. The
beneficial ownership interest of the owner of a Book-Entry Certificate (a
"Certificate Owner") may only be transferred by compliance with the rules,
regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
DTC Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
Participants and by DTC Participants to Financial Intermediaries and Certificate
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of each such DTC Participant (and not of DTC, the Depositor or
any Trustee, Master Servicer, Special Servicer or Manager), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Accordingly, under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
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Unless otherwise provided in the related Prospectus Supplement, the
only "Certificateholder" (as such term is used in the related Pooling Agreement)
of Book-Entry Certificates will be the nominee of DTC, and the Certificate
Owners will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the DTC Participants who in turn will exercise their rights through DTC. The
Depositor has been informed that DTC will take action permitted to be taken by a
Certificateholder under a Pooling Agreement only at the direction of one or more
DTC Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. DTC may take conflicting actions with respect to the
Book-Entry Certificates to the extent that such actions are taken on behalf of
Financial Intermediaries whose holdings include such Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act
on behalf of Financial Intermediaries and certain Certificate Owners, the
ability of a Certificate Owner to pledge its interest in Book-Entry Certificates
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of its interest in Book-Entry Certificates, may be
limited due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all DTC Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a Class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related Series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
"Certificateholders" under and within the meaning of the related Pooling
Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
General
The Certificates of each Series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one or
more REMIC elections have been made with respect to the Trust Fund, the REMIC
Administrator. However, a Pooling Agreement that relates to a Trust Fund that
includes MBS may include a Manager as a party, but may not include a Master
Servicer, Special Servicer or other servicer as a party. All parties to each
Pooling Agreement under which
Certificates of a Series are issued will be identified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement, the
Mortgage Asset Seller or an affiliate thereof may perform the functions of
Master Servicer, Special Servicer, Manager or REMIC Administrator. If so
specified in the related Prospectus Supplement, the Master Servicer may also
perform the duties of Special Servicer, and the Master Servicer, the Special
Servicer or the Trustee may also perform the duties of REMIC Administrator. Any
party to a Pooling Agreement or any affiliate thereof may own Certificates
issued thereunder; however, except in limited circumstances (including with
respect to required consents to certain amendments to a Pooling Agreement),
Certificates issued thereunder that are held by the Master Servicer or Special
Servicer for the related Series will not be allocated Voting Rights.
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A form of a pooling and servicing agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
However, the provisions of each Pooling Agreement will vary depending upon the
nature of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may appear
in a Pooling Agreement. The Prospectus Supplement for the Offered Certificates
of any Series will describe any provision of the related Pooling Agreement that
materially differs from the description thereof contained in this Prospectus.
The summaries herein do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Pooling Agreement for each Series and the description of such provisions in the
related Prospectus Supplement. The Depositor will provide a copy of the Pooling
Agreement (without exhibits) that relates to any Series without charge upon
written request of a holder of a Certificate of such Series addressed to it at
its principal executive offices specified herein under "The Depositor".
Assignment of Mortgage Assets
General. At the time of initial issuance of any Series, the Depositor
will assign (or cause to be assigned) to the designated Trustee the Mortgage
Assets to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to be
received on or with respect to such Mortgage Assets after the related Cut-off
Date, other than principal and interest due on or before the related Cut-off
Date. The Trustee will, concurrently with such assignment, deliver the
Certificates of such Series to or at the direction of the Depositor in exchange
for the Mortgage Assets and the other assets to be included in the related Trust
Fund. Each Mortgage Asset will be identified in a schedule appearing as an
exhibit to the related Pooling Agreement. Such schedule generally will include
detailed information that pertains to each Mortgage Asset included in the
related Trust Fund, which information will typically include: (i) in the case of
a Mortgage Loan, the address of the related Mortgaged Property and type of such
property, the Mortgage Rate (and, if applicable, the applicable index, gross
margin, adjustment date and any rate cap information), the original and
remaining term to maturity, the amortization term, and the original and
outstanding principal balance; and (ii) in the case of an MBS, the outstanding
principal balance and the pass-through rate or coupon rate.
Delivery of Mortgage Loans. In addition, unless otherwise specified in
the related Prospectus Supplement, the Depositor will, as to each Mortgage Loan
to be included in a Trust Fund, deliver, or cause to be delivered, to the
related Trustee (or to a custodian appointed by the Trustee as described below)
the Mortgage Note endorsed, without recourse, either in blank or to the order of
such Trustee (or its nominee), the Mortgage with evidence of recording indicated
thereon (except for any Mortgage not returned from the public recording office),
an assignment of the Mortgage in blank or to the Trustee (or its nominee) in
recordable form, together with any intervening assignments of the Mortgage with
evidence of recording thereon (except for any such assignment not returned from
the public recording office), and, if applicable, any riders or modifications to
such Mortgage Note and Mortgage, together with certain other documents at such
times as set forth in the related Pooling Agreement. Such assignments may be
blanket assignments covering Mortgages on Mortgaged Properties located in the
same county, if permitted by law. Notwithstanding the foregoing, a Trust Fund
may include Mortgage Loans where the original Mortgage Note is not delivered to
the Trustee if the Depositor delivers, or causes to be delivered, to the related
Trustee (or such custodian) a copy or a duplicate original of the Mortgage Note,
together with an affidavit of the Depositor or a prior holder of such Mortgage
Note certifying that the original thereof has been lost or destroyed. In
addition, if the Depositor cannot deliver, with respect to any Mortgage Loan,
the Mortgage or any intervening assignment with evidence of recording thereon
concurrently with the execution and delivery of the related Pooling Agreement
because of a delay caused by the public recording office, the Depositor will
deliver, or cause to be delivered, to the related Trustee (or such custodian) a
true and correct photocopy of such Mortgage or assignment as submitted for
recording. The Depositor will deliver, or cause to be delivered, to the related
Trustee (or such custodian) such Mortgage or assignment with evidence of
recording indicated thereon after receipt thereof from the public recording
office. If the Depositor cannot deliver, with respect to any Mortgage Loan, the
Mortgage or any intervening assignment with evidence of recording
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thereon concurrently with the execution and delivery of the related Pooling
Agreement because such Mortgage or assignment has been lost, the Depositor will
deliver, or cause to be delivered, to the related Trustee (or such custodian) a
true and correct photocopy of such Mortgage or assignment with evidence of
recording thereon. Unless otherwise specified in the related Prospectus
Supplement, assignments of Mortgage to the Trustee (or its nominee) will be
recorded in the appropriate public recording office, except in states where, in
the opinion of counsel acceptable to the Trustee, such recording is not required
to protect the Trustee's interests in the Mortgage Loan against the claim of any
subsequent transferee or any successor to or creditor of the Depositor or the
originator of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a Series will
be required to review the Mortgage Loan documents delivered to it within a
specified period of days after receipt thereof, and the Trustee (or such
custodian) will hold such documents in trust for the benefit of the
Certificateholders of such Series.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee.
Delivery of MBS. Unless otherwise specified in the related Prospectus
Supplement, the related Pooling Agreement will provide that such steps will be
taken as will be necessary to cause the Trustee to become the registered owner
of each MBS which is included in a Trust Fund and to provide for all
distributions on each such MBS to be made either directly to the Trustee or to
an MBS Administrator other than the Trustee, if any.
Representations and Warranties with respect to Mortgage Assets; Repurchases and
Other Remedies
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, the Depositor will, with respect to each Mortgage
Asset in the related Trust Fund, make or assign, or cause to be made or
assigned, certain representations and warranties (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example: (i) the accuracy of the information set forth for such Mortgage Asset
on the schedule of Mortgage Loans appearing as an exhibit to the related Pooling
Agreement; (ii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iii) in the
case of a Mortgage Loan, the enforceability of the related Mortgage Note and
Mortgage, the existence of title insurance insuring the lien priority of the
related Mortgage, the payment status of the Mortgage Loan and the delivery of
all documents required to be delivered with respect to the Mortgage Loan as
contemplated under "--Assignment of Mortgage Assets--Delivery of Mortgage Loans"
above. It is expected that in most cases the Warranting Party will be the
Mortgage Asset Seller; however, the Warranting Party may also be the Depositor,
an affiliate of the Mortgage Asset Seller or the Depositor, the Master Servicer,
the Special Servicer or another person acceptable to the Depositor. The
Warranting Party, if other than the Mortgage Asset Seller, will be identified in
the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Asset that
materially and adversely affects the interests of the Certificateholders of the
related Series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Asset from the Trustee at a price not less
than the unpaid principal balance of such Mortgage Asset as of the date of
purchase, together with interest thereon at the related Mortgage Rate (or, in
the case of an MBS, at the related pass-through rate or coupon rate) to a date
on or about the date of purchase (in any event, the "Purchase Price"). If so
provided in the Prospectus Supplement for the Offered Certificates of any
Series, in lieu of repurchasing a Mortgage Asset as to which a breach has
occurred, a Warranting Party will have the option, exercisable upon certain
conditions
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and/or within a specified period after initial issuance of such Series, to
replace such Mortgage Asset with one or more other mortgage loans or
mortgage-backed securities that conform to the description of "Mortgage Asset"
herein, in accordance with standards that will be described in the Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
this repurchase or substitution obligation will constitute the sole remedy
available to holders of the Certificates of any Series or to the related Trustee
on their behalf for a breach of representation and warranty by a Warranting
Party, and no other person or entity will be obligated to purchase or replace a
Mortgage Asset if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Asset as of a date prior to the date upon which the
related Series is initially issued, and thus may not address events that may
occur following the date as of which they were made. The date as of which the
representations and warranties regarding the Mortgage Assets in any Trust Fund
were made will be specified in the related Prospectus Supplement.
Collection and Other Servicing Procedures with respect to Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer for any Mortgage Asset Pool, directly
or through Sub-Servicers, will each be obligated under the related Pooling
Agreement to service and administer the Mortgage Loans in such Mortgage Asset
Pool for the benefit of the related Certificateholders, in accordance with
applicable law and further in accordance with the terms of such Pooling
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. Subject to the foregoing, the Master Servicer and the
Special Servicer will each have full power and authority to do any and all
things in connection with such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own account, provided (i) such procedures are consistent with
the terms of the related Pooling Agreement and (ii) do not impair recovery under
any instrument of Credit Support included in the related Trust Fund. Consistent
with the foregoing, the Master Servicer and the Special Servicer will each be
permitted, in its discretion, unless otherwise specified in the related
Prospectus Supplement, to waive any Prepayment Premium, late payment charge or
other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding which
shall have remained
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in force undischarged or unstayed for a specified number of days; and (iii) REO
Properties. If so specified in the related Prospectus Supplement, a Pooling
Agreement also may provide that if a default on a Mortgage Loan has occurred or,
in the judgment of the related Master Servicer, a payment default is reasonably
foreseeable, the related Master Servicer may elect to transfer the servicing
thereof, in whole or in part, to the related Special Servicer. Unless otherwise
provided in the related Prospectus Supplement, when the circumstances no longer
warrant a Special Servicer's continuing to service a particular Mortgage Loan
(e.g., the related borrower is paying in accordance with the forbearance
arrangement entered into between the Special Servicer and such borrower), the
Master Servicer will resume the servicing duties with respect thereto. If and to
the extent provided in the related Pooling Agreement and described in the
related Prospectus Supplement, a Special Servicer may perform certain limited
duties in respect of Mortgage Loans for which the Master Servicer is primarily
responsible (including, if so specified, performing property inspections and
evaluating financial statements); and a Master Servicer may perform certain
limited duties in respect of any Mortgage Loan for which the Special Servicer is
primarily responsible (including, if so specified, continuing to receive
payments on such Mortgage Loan (including amounts collected by the Special
Servicer), making certain calculations with respect to such Mortgage Loan and
making remittances and preparing certain reports to the Trustee and/or
Certificateholders with respect to such Mortgage Loan. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer will be
responsible for filing and settling claims in respect of particular Mortgage
Loans under any applicable instrument of Credit Support. See "Description of
Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean
that operating income is insufficient to service the mortgage debt, or may
reflect the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the Special Servicer can make
the initial determination of appropriate action, evaluate the success of
corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged Property in
lieu of foreclosure) on behalf of the Certificateholders of the related Series
may vary considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged Property
is located. If a mortgagor files a bankruptcy petition, the Special Servicer may
not be permitted to accelerate the maturity of the Mortgage Loan or to foreclose
on the related Mortgaged Property for a considerable period of time. See
"Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws". Mortgagors may, from
time to time, request partial releases of the Mortgaged Properties, easements,
consents to alteration or demolition and other similar matters. In general, the
Master Servicer may approve such a request if it has determined, exercising its
business judgment in accordance with the applicable servicing standard, that
such approval will not adversely affect the security for, or the timely and full
collectability of, the related Mortgage Loan. Any fee collected by the Master
Servicer for processing such request will be retained by the Master Servicer as
additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the
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Mortgage Loan and request notification of any action (as described below) to be
taken against the mortgagor or the Mortgaged Property by the superior
lienholder. If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the related
Senior Lien, or has declared or intends to declare a default under the mortgage
or the promissory note secured thereby, or has filed or intends to file an
election to have the related Mortgaged Property sold or foreclosed, then, unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
and the Special Servicer will each be required to take, on behalf of the related
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and/or to preserve the security of the related
Mortgage Loan, subject to the application of the REMIC Provisions (as defined
herein). Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer or Special Servicer, as applicable, will be required to advance
the necessary funds to cure the default or reinstate the Senior Lien, if such
advance is in the best interests of the related Certificateholders and the
Master Servicer or Special Servicer, as applicable, determines such advances are
recoverable out of payments on or proceeds of the related Mortgage Loan.
Sub-Servicers
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer or Special Servicer, as applicable, and a
Sub-Servicer (a "Sub-Servicing Agreement") must provide for servicing of the
applicable Mortgage Loans consistent with the related Pooling Agreement. The
Master Servicer and Special Servicer in respect of any Mortgage Asset Pool will
each be required to monitor the performance of Sub-Servicers retained by it and
will have the right to remove a Sub-Servicer retained by it at any time it
considers such removal to be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a
Master Servicer or Special Servicer will be solely liable for all fees owed by
it to any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is sufficient
to pay such fees. Each Sub-Servicer will be reimbursed by the Master Servicer or
Special Servicer, as the case may be, that retained it for certain expenditures
which it makes, generally to the same extent such Master Servicer or Special
Servicer would be reimbursed under a Pooling Agreement. See "--Certificate
Account" and "--Servicing Compensation and Payment of Expenses".
Collection of Payments on MBS
Unless otherwise specified in the related Prospectus Supplement, the
MBS, if any, included in the Trust Fund for any Series will be registered in the
name of the Trustee. All distributions thereon will be made either directly to
the Trustee or to an MBS Administrator other than the Trustee, if any. Unless
otherwise specified in the related Prospectus Supplement, the related Pooling
Agreement will provide that, if the Trustee or such other MBS Administrator, as
applicable, has not received a distribution with respect to any MBS by a
specified day after the date on which such distribution was due and payable
pursuant to the terms of such MBS, the Trustee or such other MBS Administrator,
as applicable, is to request the issuer or guarantor, if any, of such MBS to
make such payment as promptly as possible and legally permitted and is to take
such legal action against such issuer or guarantor as the Trustee or such other
MBS Administrator, as applicable, deems appropriate under the circumstances,
including the prosecution of any claims in connection therewith. The reasonable
legal fees and expenses incurred by the Trustee or such other MBS Administrator,
as applicable, in connection with the prosecution of any such legal action will
be reimbursable thereto (with interest) out of the proceeds of any such action
and will be retained by the Trustee or such other MBS Administrator, as
applicable, prior to the deposit of any remaining proceeds in the Certificate
Account pending distribution thereof to Certificateholders of the
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affected Series. In the event that the Trustee or such other MBS Administrator,
as applicable, has reason to believe that the proceeds of any such legal action
may be insufficient to reimburse it (with interest) for its projected legal fees
and expenses, the Trustee or such other MBS Administrator, as applicable, will
notify the Certificateholders of the affected Series that it is not obligated to
pursue any such available remedies unless adequate indemnity for its legal fees
and expenses is provided by such Certificateholders.
Certificate Account
General. The related Trustee and any related Master Servicer, Special
Servicer and/or Manager, as applicable, will establish and maintain, or cause to
be established and maintained, in respect of each Trust Fund, one or more
accounts (collectively, the "Certificate Account"), which will be established so
as to comply with the standards of each Rating Agency that has rated any one or
more Classes of Certificates of the related Series. A Certificate Account may be
maintained as an interest-bearing or a noninterest-bearing account and the funds
held therein may be invested pending each succeeding Distribution Date in United
States government securities and other obligations that are acceptable to each
Rating Agency that has rated any one or more Classes of Certificates of the
related Series ("Permitted Investments"). Unless otherwise provided in the
related Prospectus Supplement, any interest or other income earned on funds in a
Certificate Account will be paid to the related Trustee, Master Servicer,
Special Servicer and/or Manager, as applicable, as additional compensation. A
Certificate Account may be maintained with the related Trustee, Master Servicer,
Special Servicer, Manager or Mortgage Asset Seller or with a depository
institution that is an affiliate of any of the foregoing or of the Depositor,
provided that it complies with applicable Rating Agency standards. If permitted
by the applicable Rating Agency or Agencies, a Certificate Account may contain
funds relating to more than one series of mortgage pass-through certificates and
may contain other funds representing payments on mortgage assets owned by the
related Master Servicer or Special Servicer or serviced by either on behalf of
others.
Deposits. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, the following payments and
collections in respect of the Trust Assets included in any Trust Fund, that are
received or made by the Trustee, the Master Servicer, the Special Servicer, the
MBS Administrator or the Manager, as applicable, subsequent to the Cut-off Date
(other than payments due on or before the Cut-off Date), are to be deposited in
the Certificate Account for such Trust Fund within a certain period following
receipt (in the case of collections on or in respect of the Trust Assets) or
otherwise as provided in the related Pooling Agreement:
(i) if such Trust Fund includes Mortgage Loans, all payments
on account of principal, including principal prepayments, on such
Mortgage Loans;
(ii) if such Trust Fund includes Mortgage Loans, all payments
on account of interest on such Mortgage Loans, including any default
interest collected, in each case net of any portion thereof retained by
the Master Servicer or the Special Servicer as its servicing
compensation or as compensation to the Trustee;
(iii) if such Trust Fund includes Mortgage Loans, all proceeds
received under any hazard, title or other insurance policy that
provides coverage with respect to a Mortgaged Property or the related
Mortgage Loan or in connection with the full or partial condemnation of
a Mortgaged Property (other than proceeds applied to the restoration of
the property or released to the related borrower) ("Insurance Proceeds"
and "Condemnation Proceeds", respectively) and all other amounts
received and retained in connection with the liquidation of defaulted
Mortgage Loans or property acquired in respect thereof, by foreclosure
or otherwise (such amounts, together with those amounts listed in
clause (vii) below, "Liquidation Proceeds"), together with the net
operating income (less reasonable reserves for future
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expenses) derived from the operation of any Mortgaged Properties
acquired by the Trust Fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any
fund that constitutes Credit Support for the related Series;
(v) if such Trust Fund includes Mortgage Loans, any advances
made with respect to delinquent scheduled payments of principal and
interest on such Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement for the
related Series;
(vii) if such Trust Fund includes Mortgage Loans, all proceeds
of the purchase of any Mortgage Loan, or property acquired in respect
thereof, by the Depositor, any Mortgage Asset Seller or any other
specified person as described under "--Representations and Warranties
with respect to Mortgage Assets; Repurchases and Other Remedies", all
proceeds of the purchase of any defaulted Mortgage Loan as described
under "--Realization Upon Defaulted Mortgage Loans", and all proceeds
of any Mortgage Loan purchased as described under "Description of the
Certificates--Termination";
(viii) if such Trust Fund includes Mortgage Loans, and to the
extent that any such item does not constitute additional servicing
compensation to the Master Servicer or the Special Servicer and is not
otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to
the Mortgage Loans;
(ix) if such Trust Fund includes Mortgage Loans, all payments
required to be deposited in the Certificate Account with respect to any
deductible clause in any blanket insurance policy as described under
"--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master
Servicer, the Special Servicer, the Manager or the Trustee in
connection with losses realized on investments for the benefit of the
Master Servicer, the Special Servicer, the Manager or the Trustee, as
the case may be, of funds held in the Certificate Account;
(xi) if such Trust Fund includes MBS, all payments on such
MBS;
(xii) if such Trust Fund includes MBS, all proceeds of the
purchase of any MBS by the Depositor or any other specified person as
described under "--Representations and Warranties with respect to
Mortgage Assets; Repurchases and Other Remedies" and all proceeds of
any MBS purchased as described under "Description of the
Certificates--Termination"; and
(xiii) any other amounts received on or in respect of the
Mortgage Assets required to be deposited in the Certificate Account as
provided in the related Pooling Agreement and described in the related
Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Trustee, Master Servicer,
Special Servicer or Manager, as applicable, in respect of any Trust Fund may
make withdrawals from the Certificate Account for such Trust Fund for any of the
following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
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(ii) if such Trust Fund includes Mortgage Loans, then as and
to the extent, and from the sources, described in the related
Prospectus Supplement, to pay the related Master Servicer or Special
Servicer any servicing fees and other compensation to which it is
entitled in respect of such Mortgage Loans and that was not previously
retained thereby;
(iii) if such Trust Fund includes Mortgage Loans, to reimburse
the related Master Servicer, the related Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled
payments of principal and interest made by it, and certain unreimbursed
servicing expenses incurred by it, with respect to such Mortgage Loans
and any properties acquired in respect thereof, such reimbursement to
be made out of amounts that represent late payments collected on the
particular Mortgage Loans, Liquidation Proceeds, Insurance Proceeds and
Condemnation Proceeds collected on the particular Mortgage Loans and
properties, and net operating income collected on the particular
properties, with respect to which such advances were made or such
expenses were incurred or out of amounts drawn under any form of Credit
Support with respect to such Mortgage Loans and properties, or if in
the judgment of the Master Servicer, the Special Servicer or such other
person, as applicable, such advances and/or expenses will not be
recoverable from such amounts, such reimbursement to be made from
amounts collected on other Mortgage Assets in the same Trust Fund or,
if and to the extent so provided by the related Pooling Agreement and
described in the related Prospectus Supplement, only from that portion
of amounts collected on such other Mortgage Assets that is otherwise
distributable on one or more Classes of Subordinate Certificates of the
related Series;
(iv) if and to the extent, and from the sources, described in
the related Prospectus Supplement, to pay the related Master Servicer,
the related Special Servicer or any other specified person interest
accrued on the advances and servicing expenses, if any, described in
clause (iii) above made or incurred by it while such advances and
servicing expenses remain outstanding and unreimbursed;
(v) if such Trust Fund includes Mortgage Loans, to pay any
servicing expenses not otherwise required to be advanced by the related
Master Servicer, the related Special Servicer or any other specified
person, including, if applicable, costs and expenses incurred by the
Trust Fund for environmental site assessments performed with respect to
Mortgaged Properties that constitute security for defaulted Mortgage
Loans, and for any containment, clean-up or remediation of hazardous
wastes and materials present on such Mortgaged Properties, as described
under "--Realization Upon Defaulted Mortgage Loans";
(vi) to reimburse the Depositor, the related Trustee, any
related Master Servicer, Special Servicer, REMIC Administrator or
Manager and/or any of their respective directors, officers, employees
and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"Certain Matters Regarding the Trustee";
(vii) if and to the extent, and from the sources, described in
the related Prospectus Supplement, to pay the fees of the related
Trustee and of any related REMIC Administrator, Manager, provider of
Credit Support and obligor on a Cash Flow Agreement;
(viii) if and to the extent, and from the sources, described
in the related Prospectus Supplement, to reimburse prior draws on any
form of Credit Support in respect of the related Series;
(ix) to pay the related Master Servicer, the related Special
Servicer, the related Manager and/or the related Trustee, as
appropriate, interest and investment income earned in respect of
amounts held in the Certificate Account as additional compensation;
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(x) if one or more elections have been made to treat such
Trust Fund or designated portions thereof as a REMIC, to pay any
federal, state or local taxes imposed on the Trust Fund or its assets
or transactions, as and to the extent described under "Federal Income
Tax Consequences" and "REMICs--Prohibited Transactions Tax and Other
Taxes";
(xi) to pay for the cost of various opinions of counsel
obtained pursuant to the related Pooling Agreement for the benefit of
Certificateholders or otherwise in connection with the servicing or
administration of the related Trust Assets;
(xii) to make any other withdrawals permitted by the related
Pooling Agreement and described in the related Prospectus Supplement;
and
(xiii) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
Modifications, Waivers and Amendments of Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer may each agree to modify, waive or
amend any term of any Mortgage Loan serviced by it in a manner consistent with
the applicable servicing standard to be described in the related Prospectus
Supplement; provided that the modification, waiver or amendment (i) will not
affect the amount or timing of any scheduled payments of principal or interest
on the Mortgage Loan, and (ii) will not, in the judgment of the Master Servicer
or the Special Servicer, as the case may be, materially impair the security for
the Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon. Unless otherwise provided in the related Prospectus Supplement, the
Special Servicer also may agree to any other modification, waiver or amendment
if, in its judgment (i) a material default on the Mortgage Loan has occurred or
a payment default is reasonably foreseeable, (ii) such modification, waiver or
amendment is reasonably likely to produce a greater recovery with respect to the
Mortgage Loan, taking into account the time value of money, than would
liquidation and (iii) such modification, waiver or amendment will not adversely
affect the coverage under any applicable instrument of Credit Support.
Realization Upon Defaulted Mortgage Loans
If a default on a Mortgage Loan has occurred or, in the Special
Servicer's judgment, a payment default is imminent, the Special Servicer, on
behalf of the Trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related Mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related Mortgaged
Property, by operation of law or otherwise. Unless otherwise specified in the
related Prospectus Supplement, the Special Servicer may not, however, acquire
title to any Mortgaged Property, have a receiver of rents appointed with respect
to any Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related Series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is
in compliance with applicable environmental laws and regulations and
(b) there are no circumstances or conditions present at the Mortgaged
Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental laws
and regulations; or
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(ii) the Special Servicer, based solely (as to environmental
matters and related costs) on the information set forth in such report,
determines that taking such actions as are necessary to bring the
Mortgaged Property into compliance with applicable environmental laws
and regulations and/or taking the actions contemplated by clause (i)(b)
above, is reasonably likely to produce a greater recovery, taking into
account the time value of money, than not taking such actions. See
"Certain Legal Aspects of Mortgage Loans--Environmental
Considerations".
A Pooling Agreement may grant to the Master Servicer, the Special
Servicer, a provider of Credit Support and/or the holder or holders of certain
Classes of Certificates of the related Series a right of first refusal to
purchase from the Trust Fund, at a predetermined price (which, if less than the
Purchase Price specified herein, will be specified in the related Prospectus
Supplement), any Mortgage Loan as to which a specified number of scheduled
payments are delinquent. In addition, unless otherwise specified in the related
Prospectus Supplement, the Special Servicer may offer to sell any defaulted
Mortgage Loan if and when the Special Servicer determines, consistent with its
normal servicing procedures, that such a sale would produce a greater recovery,
taking into account the time value of money, than would liquidation of the
related Mortgaged Property. In the absence of any such sale, the Special
Servicer will generally be required to proceed against the related Mortgaged
Property, subject to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if
title to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer, on behalf of the Trust Fund, will
be required to sell the Mortgaged Property prior to the close of the third
taxable year following the taxable year in which the Trust Fund acquires such
Mortgaged Property, unless (i) the IRS grants an extension of time to sell such
property or (ii) the Trustee receives an opinion of independent counsel to the
effect that the holding of the property by the Trust Fund thereafter will not
result in the imposition of a tax on the Trust Fund or cause the Trust Fund (or
any designated portion thereof) to fail to qualify as a REMIC under the Code at
any time that any Certificate is outstanding. Subject to the foregoing and any
other tax-related limitations, the Special Servicer will generally be required
to attempt to sell any Mortgaged Property so acquired on the same terms and
conditions it would if it were the owner. Unless otherwise provided in the
related Prospectus Supplement, if title to any Mortgaged Property is acquired by
a Trust Fund as to which a REMIC election has been made, the Special Servicer
will also be required to ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times. If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of an
independent contractor, however, will not relieve the Special Servicer of its
obligation to manage such Mortgaged Property as required under the related
Pooling Agreement. The Special Servicer may be authorized to allow the Trust
Fund to incur a federal income or other tax if doing so would, in the reasonable
discretion of the Special Servicer, maximize the net after-tax proceeds to
Certificateholders.
If Liquidation Proceeds collected with respect to a defaulted Mortgage
Loan are less than the outstanding principal balance of the defaulted Mortgage
Loan plus interest accrued thereon plus the aggregate amount of reimbursable
expenses incurred by the Special Servicer and/or the Master Servicer in
connection with such Mortgage Loan, then, to the extent that such shortfall is
not covered by any instrument or fund constituting Credit Support, the Trust
Fund will realize a loss in the amount of such shortfall. The Special Servicer
and/or the Master Servicer will be entitled to reimbursement out of the
Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the
distribution of such Liquidation Proceeds to Certificateholders, any and all
amounts that represent unpaid servicing compensation in respect of the Mortgage
Loan, unreimbursed servicing expenses incurred with respect to the Mortgage Loan
and any unreimbursed advances of delinquent payments made with respect to the
Mortgage Loan. In addition, if and to the extent set forth in the related
Prospectus Supplement, amounts otherwise distributable on the Certificates may
be further reduced by interest payable to the Master Servicer and/or Special
Servicer on such servicing expenses and advances.
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If any Mortgaged Property suffers damage such that the proceeds, if
any, of the related hazard insurance policy are insufficient to restore fully
the damaged property, neither the Special Servicer nor the Master Servicer will
be required to expend its own funds to effect such restoration unless (and to
the extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master Servicer, as the case may be, for its
expenses and (ii) that such expenses will be recoverable by it from related
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and/or amounts
drawn on any instrument or fund constituting Credit Support.
Hazard Insurance Policies
Unless otherwise specified in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the related Pooling Agreement will require
the Master Servicer (or the Special Servicer with respect to Mortgage Loans
serviced thereby) to use reasonable efforts to cause each Mortgage Loan borrower
to maintain a hazard insurance policy that provides for such coverage as is
required under the related Mortgage or, if the Mortgage permits the holder
thereof to dictate to the borrower the insurance coverage to be maintained on
the related Mortgaged Property, such coverage as is consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, such coverage generally will be
in an amount equal to the lesser of the principal balance owing on such Mortgage
Loan and the replacement cost of the related Mortgaged Property. The ability of
a Master Servicer (or Special Servicer) to assure that hazard insurance proceeds
are appropriately applied may be dependent upon its being named as an additional
insured under any hazard insurance policy and under any other insurance policy
referred to below, or upon the extent to which information concerning covered
losses is furnished by borrowers. All amounts collected by a Master Servicer (or
Special Servicer) under any such policy (except for amounts to be applied to the
restoration or repair of the Mortgaged Property or released to the borrower in
accordance with the Master Servicer's (or Special Servicer's) normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related Certificate Account. The Master
Servicer (or Special Servicer) may satisfy its obligation to cause each borrower
to maintain such a hazard insurance policy by maintaining a blanket policy
insuring against hazard losses on the Mortgage Loans in a Trust Fund. If such
blanket policy contains a deductible clause, the Master Servicer (or Special
Servicer) will be required, in the event of a casualty covered by such blanket
policy, to deposit in the related Certificate Account all additional sums that
would have been deposited therein under an individual policy but were not
because of such deductible clause.
In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies covering the Mortgaged Properties will be
underwritten by different insurers under different state laws in accordance with
different applicable state forms, and therefore will not contain identical terms
and conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide
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that the insurer's liability in the event of partial loss does not exceed the
lesser of (i) the replacement cost of the improvements less physical
depreciation and (ii) such proportion of the loss as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
improvements.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected in connection with the permitted transfer of a
Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans-Due-on-Sale and
Due-on-Encumbrance Provisions".
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, a
Master Servicer's primary servicing compensation with respect to a Series will
come from the periodic payment to it of a specified portion of the interest
payments on each Mortgage Loan in the related Trust Fund, including Mortgage
Loans serviced by the related Special Servicer. If and to the extent described
in the related Prospectus Supplement, a Special Servicer's primary compensation
with respect to a Series may consist of any or all of the following components:
(i) a specified portion of the interest payments on each Mortgage Loan in the
related Trust Fund, whether or not serviced by it; (ii) an additional specified
portion of the interest payments on each Mortgage Loan then currently serviced
by it; and (iii) subject to any specified limitations, a fixed percentage of
some or all of the collections and proceeds received with respect to each
Mortgage Loan which was at any time serviced by it, including Mortgage Loans for
which servicing was returned to the Master Servicer. Insofar as any portion of
the Master Servicer's or Special Servicer's compensation consists of a specified
portion of the interest payments on a Mortgage Loan, such compensation will
generally be based on a percentage of the principal balance of such Mortgage
Loan outstanding from time to time and, accordingly, will decrease with the
amortization of the Mortgage Loan. As additional compensation, a Master Servicer
or Special Servicer may be entitled to retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the related Certificate Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer
or Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
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Evidence as to Compliance
Unless otherwise specified in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the related Master Servicer and Special
Servicer will each be required, at its expense, to cause a firm of independent
public accountants to furnish to the Trustee, on or before a specified date in
each year, beginning the first such date that is at least a specified number of
months after the Cut-off Date, a statement generally to the effect that such
firm has examined such documents and records as it has deemed necessary and
appropriate relating to the Master Servicer's or Special Servicer's as the case
may be, servicing of the Mortgage Loans under the Pooling Agreement or servicing
of mortgage loans similar to the Mortgage Loans under substantially similar
agreements for the preceding calendar year (or during the period from the date
of commencement of the Master Servicer's or Special Servicer's, as the case may
be, duties under the Pooling Agreement until the end of such preceding calendar
year in the case of the first such statement) and that the assertion of the
management of the Master Servicer or Special Servicer, as the case may be, that
it maintained an effective internal control system over servicing of the
Mortgage Loans or similar mortgage loans is fairly stated in all material
respects, based upon established criteria, which statement meets the standards
applicable to accountants' reports intended for general distribution. In
rendering its report such firm may rely, as to the matters relating to the
direct servicing of commercial and multifamily mortgage loans by sub-servicers,
upon comparable reports of firms of independent public accountants rendered on
the basis of examinations conducted in accordance the same standards (rendered
within one year of such report) with respect to those sub-servicers. The
Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Trustee.
If a Trust Fund includes Mortgage Loans, the related Pooling Agreement
will also provide that, on or before a specified date in each year, beginning
the first such date that is at least a specified number of months after the
Cut-off Date, the Master Servicer and Special Servicer shall each deliver to the
related Trustee an annual statement signed by one or more officers of the Master
Servicer or the Special Servicer, as the case may be, to the effect that, to the
best knowledge of each such officer, the Master Servicer or the Special
Servicer, as the case may be, has fulfilled in all material respects its
obligations under the Pooling Agreement throughout the preceding year or, if
there has been a material default in the fulfillment of any such obligation,
such statement shall specify each such known default and the nature and status
thereof. Such statement may be provided as a single form making the required
statements as to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies
of the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator, the Manager and the Depositor
Unless otherwise specified in the Prospectus Supplement for a Series,
the related Pooling Agreement will permit any related Master Servicer, Special
Servicer, REMIC Administrator or Manager to resign from its obligations in such
capacity thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any Class of Certificates of such Series or (b) a determination
that such obligations are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it. No such resignation will become effective until the Trustee or other
successor has assumed the obligations and duties of the resigning Master
Servicer, Special Servicer, REMIC Administrator or Manager, as the case may be,
under the related Pooling Agreement. Each Master Servicer, Special Servicer and,
if it receives distributions on MBS, Manager for a Trust Fund will be required
to maintain a fidelity bond and errors and
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omissions policy or their equivalent that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions permitted by
the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Depositor, any related
Master Servicer, Special Servicer, REMIC Administrator or Manager, or any
director, officer, employee or agent of any of them will be under any liability
to the related Trust Fund or Certificateholders for any action taken, or not
taken, in good faith pursuant to such Pooling Agreement or for errors in
judgment; provided, however, that no such person or entity will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of obligations or
duties thereunder or by reason of reckless disregard of such obligations and
duties. Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that the Depositor, any related Master
Servicer, Special Servicer, REMIC Administrator and Manager, and any director,
officer, employee or agent of any of them will be entitled to indemnification by
the related Trust Fund against any loss, liability or expense incurred in
connection with any legal action that relates to such Pooling Agreement or the
related Series; provided, however, that such indemnification will not extend to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties under such
Pooling Agreement, or by reason of reckless disregard of such obligations or
duties. In addition, each Pooling Agreement will provide that neither the
Depositor nor any related Master Servicer, Special Servicer, REMIC Administrator
or Manager will be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective responsibilities under the
Pooling Agreement and that in its opinion may involve it in any expense or
liability. However, any such party may be permitted, in the exercise of its
discretion, to undertake any such action that it may deem necessary or desirable
with respect to the enforcement and/or protection of the rights and duties of
the parties to the Pooling Agreement and the interests of the related Series of
Certificateholders thereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the related Series of Certificateholders, and the Depositor, the
Master Servicer, the Special Servicer, the REMIC Administrator or the Manager,
as the case may be, will be entitled to charge the related Certificate Account
therefor.
Any person into which a Master Servicer, a Special Servicer, a REMIC
Administrator, a Manager or the Depositor may be merged or consolidated, or any
person resulting from any merger or consolidation to which a Master Servicer, a
Special Servicer, a REMIC Administrator, a Manager or the Depositor is a party,
or any person succeeding to the business of a Master Servicer, a Special
Servicer, a REMIC Administrator, a Manager or the Depositor, will be the
successor of the Master Servicer, the Special Servicer, the REMIC Administrator,
the Manager or the Depositor, as the case may be, under the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, a
REMIC Administrator will be entitled to perform any of its duties under the
related Pooling Agreement either directly or by or through agents or attorneys,
and the REMIC Administrator will not be responsible for any willful misconduct
or gross negligence on the part of any such agent or attorney appointed by it
with due care.
Events of Default
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, "Events of Default" under the related Pooling
Agreement will include, without limitation, (i) any failure by a Master Servicer
or a Manager to distribute or cause to be distributed to the Certificateholders
of such Series, or to remit to the related Trustee for distribution to such
Certificateholders, any amount required to be so distributed or remitted, which
failure continues unremedied for five days after written notice thereof has been
given to the Master Servicer or the Manager, as the case may be, by any other
party to the related Pooling Agreement, or to
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the Master Servicer or the Manager, as the case may be, with a copy to each
other party to the related Pooling Agreement, by Certificateholders entitled to
not less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series; (ii) any failure by a Special
Servicer to remit to the related Master Servicer or Trustee, as applicable, any
amount required to be so remitted, which failure continues unremedied for five
days after written notice thereof has been given to the Special Servicer by any
other party to the related Pooling Agreement, or to the Special Servicer, with a
copy to each other party to the related Pooling Agreement, by the
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights of such
Series; (iii) any failure by a Master Servicer, a Special Servicer or a Manager
duly to observe or perform in any material respect any of its other covenants or
obligations under the related Pooling Agreement, which failure continues
unremedied for sixty days after written notice thereof has been given to the
Master Servicer, the Special Servicer or the Manager, as the case may be, by any
other party to the related Pooling Agreement, or to the Master Servicer, the
Special Servicer or the Manager, as the case may be, with copy to each other
party to the related Pooling Agreement, by Certificateholders entitled to not
less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series; (iv) any failure by a REMIC
Administrator duly to observe or perform in any material respect any of its
covenants or obligations under the related Pooling Agreement, which failure
continues unremedied for sixty days after written notice thereof has been given
to the REMIC Administrator by any other party to the related Pooling Agreement,
or to the REMIC Administrator, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series; and (v) certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings in respect
of or relating to a Master Servicer, a Special Servicer, a Manager or a REMIC
Administrator, and certain actions by or on behalf of any such party indicating
its insolvency or inability to pay its obligations. Material variations to the
foregoing Events of Default (other than to add thereto or shorten cure periods
or eliminate notice requirements) will be specified in the related Prospectus
Supplement.
Rights Upon Event of Default
If an Event of Default occurs with respect to a Master Servicer, a
Special Servicer, a Manager or a REMIC Administrator (other than the Trustee)
under a Pooling Agreement, then, in each and every such case, so long as the
Event of Default remains unremedied, and unless otherwise specified in the
related Prospectus Supplement, the Depositor or the Trustee will be authorized,
and at the direction of Certificateholders of the related Series entitled to not
less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series, the Trustee will be required,
to terminate all of the rights and obligations of the defaulting party as Master
Servicer, Special Servicer, MBS Administrator or REMIC Administrator, as
applicable, under the Pooling Agreement, whereupon the Trustee (except under the
circumstances contemplated in the next paragraph) will succeed to all of the
responsibilities, duties and liabilities of the defaulting party as Master
Servicer, Special Servicer, Manager or REMIC Administrator, as applicable, under
the Pooling Agreement (except that if the defaulting party is required to make
advances thereunder regarding delinquent Mortgage Loans, but the Trustee is
prohibited by law from obligating itself to make such advances, or if the
related Prospectus Supplement so specifies, the Trustee will not be obligated to
make such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified in the related Prospectus Supplement, if the Trustee
is unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related Series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution or other
appropriate entity that (unless otherwise provided in the related Prospectus
Supplement) is acceptable to each applicable Rating Agency to act as successor
to the Master Servicer, Special Servicer, Manager or REMIC Administrator, as the
case may be, under the Pooling Agreement. Pending such appointment, the Trustee
will be obligated to act in such capacity.
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Notwithstanding the foregoing, if the same entity is acting as both
Trustee and REMIC Administrator, it may be removed in both such capacities as
described under "--Resignation and Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to the Trustee written notice of default and the
continuance thereof and unless the holders of Certificates of the related Series
entitled to not less than 25% of the Voting Rights for such Series have made
written request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity and the
Trustee for sixty days after receipt of such request and indemnity has neglected
or refused to institute any such proceeding. However, the Trustee will be under
no obligation to exercise any of the trusts or powers vested in it by the
Pooling Agreement or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the holders
of Certificates covered by such Pooling Agreement, unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
Amendment
Except as otherwise specified in the related Prospectus Supplement,
each Pooling Agreement may be amended by the parties thereto, without the
consent of any of the holders of Certificates covered by such Pooling Agreement:
(i) to cure any ambiguity; (ii) to correct, modify or supplement any provision
therein which may be inconsistent with any other provision therein or to correct
any error; (iii) to add any other provisions with respect to matters or
questions arising thereunder which shall not be inconsistent with the provisions
thereof; (iv) if a REMIC election has been made with respect to any portion of
the related Trust Fund, to relax or eliminate any requirement thereunder imposed
by the provisions of the Code relating to REMICs if such provisions are amended
or clarified such that any such requirement may be relaxed or eliminated; (v) to
relax or eliminate any requirement thereunder imposed by the Securities Act or
the rules thereunder if the Securities Act or such rules are amended or
clarified such that any requirement may be relaxed or eliminated; (vi) if a
REMIC election has been made with respect to any portion of the related Trust
Fund, and if such amendment, as evidenced by an opinion of counsel delivered to
the related Trustee and REMIC Administrator, is reasonably necessary to comply
with any requirements imposed by the Code or any successor or amendatory statute
or any temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any such proposed action which, if made effective, would apply
retroactively to any REMIC created under such Pooling Agreement at least from
the effective date of such amendment, or would be necessary to avoid the
occurrence of a prohibited transaction or to reduce the incidence of any tax
that would arise from any actions taken with respect to the operation of any
REMIC created under such Pooling Agreement; (vii) if a REMIC election has been
made with respect to any portion of the related Trust Fund, to modify, add to or
eliminate certain transfer restrictions relating to REMIC Residual Certificates;
or (viii) for any other purpose; provided that such amendment of a Pooling
Agreement (other than any amendment for any of the specific purposes described
in clauses (vi) and (vii) above) may not, as evidenced by an opinion of counsel
obtained by or delivered to the Trustee, adversely affect in any material
respect the interests of any holder of Certificates of the related Series; and
provided further that any amendment covered solely by clause (viii) above may
not adversely affect the then current rating assigned to any Class of
Certificates of the related Series by any Rating Agency, as evidenced by written
confirmation to such effect from each applicable Rating Agency obtained by or
delivered to the Trustee.
Except as otherwise specified in the related Prospectus Supplement,
each Pooling Agreement may also be amended by the parties thereto, with the
consent of the holders of Certificates of the respective Classes affected
thereby evidencing, in the aggregate, not less than 66-2/3% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
allocated to such Classes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Pooling
Agreement or of
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modifying in any manner the rights of the holders of Certificates covered by
such Pooling Agreement, except that no such amendment of a Pooling Agreement may
(i) reduce in any manner the amount of, or delay the timing of, payments
received on the related Mortgage Assets which are required to be distributed on
a Certificate of the related Series without the consent of the holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
holders of any Class of Certificates of the related Series in a manner other
than as described in the immediately preceding clause (i) without the consent of
the holders of all Certificates of such Class or (iii) modify the provisions of
such Pooling Agreement relating to amendments thereof without the consent of the
holders of all Certificates of the related Series then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling Agreement without having first received an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to any party to such Pooling Agreement or any other specified person in
accordance with such amendment will not result in the imposition of a tax on the
related Trust Fund or cause such Trust Fund (or any designated portion thereof)
to fail to qualify as a REMIC.
List of Certificateholders
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same Series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that Series held
by such person. If such list is as of a date more than 90 days prior to the date
of receipt of such Certificateholders' request, then such person, if not the
registrar for the Certificates of such Series, will be required to request from
such registrar a current list and to afford such requesting Certificateholders
access thereto promptly upon receipt.
The Trustee
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
Duties of the Trustee
The Trustee for each Series will make no representation as to the
validity or sufficiency of the related Pooling Agreement, the Certificates of
such Series or any underlying Mortgage Asset or related document and will not be
accountable for the use or application by or on behalf of any other party to the
related Pooling Agreement of any funds paid to such party in respect of the
Certificates or the Mortgage Assets. If no Event of Default has occurred and is
continuing, the Trustee for each Series will be required to perform only those
duties specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
Trustee will be required to examine such documents and to determine whether they
conform to the requirements of such agreement.
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Certain Matters Regarding the Trustee
As and to the extent described in the related Prospectus Supplement,
the fees and normal disbursements of any Trustee may be the expense of the
related Master Servicer or other specified person or may be required to be borne
by the related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to indemnification, from amounts held
in the Certificate Account for such Series, for any loss, liability or expense
incurred by the Trustee in connection with the Trustee's acceptance or
administration of its trusts under the related Pooling Agreement; provided,
however, that such indemnification will not extend to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
on the part of the Trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of such obligations or
duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to execute any of its trusts or powers
under the related Pooling Agreement or perform any of this duties thereunder
either directly or by or through agents or attorneys, and the Trustee will not
be responsible for any willful misconduct or gross negligence on the part of any
such agent or attorney appointed by it with due care.
Resignation and Removal of the Trustee
The Trustee for any Series may resign at any time, in which event the
Depositor will be obligated to appoint a successor Trustee. The Depositor may
also remove the Trustee for any Series if such Trustee ceases to be eligible to
continue as such under the related Pooling Agreement or if such Trustee becomes
insolvent. Upon becoming aware of such circumstances, the Depositor will be
obligated to appoint a successor Trustee. Unless otherwise specified in the
related Prospectus Supplement, a Trustee may also be removed at any time by the
holders of Certificates of the applicable Series evidencing not less than 51%
(or such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such Series; provided that if such removal was without cause,
the Certificateholders effecting such removal may be responsible for any costs
and expenses incurred by the terminated Trustee in connection with its removal.
Any resignation or removal of a Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the successor
Trustee. Notwithstanding anything herein to the contrary, if any entity is
acting as both Trustee and REMIC Administrator for any Series, then any
resignation or removal of such entity as Trustee will also constitute the
resignation or removal of such entity as REMIC Administrator, and the successor
Trustee will also serve as the successor REMIC Administrator as well.
DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more Classes of
the Certificates of any Series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more other Classes of Certificates, the use of a surety bond, an
insurance policy or a guarantee, the establishment of one or more reserve funds,
or any combination of the foregoing. If and to the extent so provided in the
related Prospectus Supplement, any of the foregoing forms of Credit Support may
provide credit enhancement for more than one Series.
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The Credit Support may not provide protection against all risks of loss
and will not guarantee payment to Certificateholders of all amounts to which
they are entitled under the related Pooling Agreement. If losses or shortfalls
occur that exceed the amount covered by the related Credit Support or that are
of a type not covered by such Credit Support, Certificateholders will bear their
allocable share of deficiencies. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one Series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such Series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such Series.
If Credit Support is provided with respect to one or more Classes of
Certificates of a Series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors--Credit Support
Limitations".
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more
Classes of Certificates of a Series may be Subordinate Certificates. To the
extent specified in the related Prospectus Supplement, the rights of the holders
of Subordinate Certificates to receive distributions from the Certificate
Account on any Distribution Date will be subordinated to the corresponding
rights of the holders of Senior Certificates. If so provided in the related
Prospectus Supplement, the subordination of a Class of Certificates may apply
only in the event of certain types of losses or shortfalls. The related
Prospectus Supplement will set forth information concerning the method and
amount of subordination provided by a Class or Classes of Subordinate
Certificates in a Series and the circumstances under which such subordination
will be available.
If the Mortgage Assets in any Trust Fund are divided into separate
groups, each supporting a separate Class or Classes of Certificates of the
related Series, Credit Support may be provided by cross-support provisions
requiring that distributions be made on Senior Certificates evidencing interests
in one group of Mortgage Assets prior to distributions on Subordinate
Certificates evidencing interests in a different group of Mortgage Assets within
the Trust Fund. The Prospectus Supplement for a Series that includes a
cross-support provision will describe the manner and conditions for applying
such provisions.
Insurance or Guarantees with Respect to Mortgage Loans
If so provided in the related Prospectus Supplement, Mortgage Loans
included in any Trust Fund will be covered for certain default risks by
insurance policies or guarantees. The related Prospectus Supplement will
describe the nature of such default risks and the extent of such coverage.
Letter of Credit
If so provided in the Prospectus Supplement for a Series, deficiencies
in amounts otherwise payable on such Certificates or certain Classes thereof
will be covered by one or more letters of credit, issued by a bank or other
financial institution specified in such Prospectus Supplement (the "Letter of
Credit Bank"). Under a letter of credit, the Letter of Credit Bank will be
obligated to honor draws thereunder in an aggregate fixed dollar amount, net of
unreimbursed payments thereunder, generally equal to a percentage specified in
the related Prospectus Supplement of the aggregate principal balance of some or
all of the related Mortgage Assets on the
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related Cut-off Date or of the initial aggregate Certificate Principal Balance
of one or more Classes of Certificates. If so specified in the related
Prospectus Supplement, the letter of credit may permit draws only in the event
of certain types of losses and shortfalls. The amount available under the letter
of credit will, in all cases, be reduced to the extent of the unreimbursed
payments thereunder and may otherwise be reduced as described in the related
Prospectus Supplement. The obligations of the Letter of Credit Bank under the
letter of credit for any Series will expire at the earlier of the date specified
in the related Prospectus Supplement or the termination of the related Trust
Fund.
Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a Series, deficiencies
in amounts otherwise payable on such Certificates or certain Classes thereof
will be covered by insurance policies or surety bonds provided by one or more
insurance companies or sureties. Such instruments may cover, with respect to one
or more Classes of Certificates of the related Series, timely distributions of
interest or distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
Prospectus Supplement. The related Prospectus Supplement will describe any
limitations on the draws that may be made under any such instrument.
Reserve Funds
If so provided in the Prospectus Supplement for a Series, deficiencies
in amounts otherwise payable on such Certificates or certain Classes thereof
will be covered (to the extent of available funds) by one or more reserve funds
in which cash, a letter of credit, Permitted Investments, a demand note or a
combination thereof will be deposited, in the amounts specified in such
Prospectus Supplement. If so specified in the related Prospectus Supplement, the
reserve fund for a Series may also be funded over time by a specified amount of
certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a Series will be applied for
the purposes, in the manner, and to the extent specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
reserve funds may be established to provide protection only against certain
types of losses and shortfalls. Following each Distribution Date, amounts in a
reserve fund in excess of any amount required to be maintained therein may be
released from the reserve fund under the conditions and to the extent specified
in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited
in any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
Series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a Series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
Credit Support with Respect to MBS
If so provided in the Prospectus Supplement for a Series, any MBS
included in the related Trust Fund and/or the related underlying mortgage loans
may be covered by one or more of the types of Credit Support described herein.
The related Prospectus Supplement will specify, as to each such form of Credit
Support, the information indicated above with respect thereto, to the extent
such information is material and available.
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CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties in the United States. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries do not
purport to be complete, to reflect the laws of any particular state, or to
encompass the laws of all jurisdictions in which the security for the Mortgage
Loans (or mortgage loans underlying any MBS) is situated. Accordingly, the
summaries are qualified in their entirety by reference to the applicable laws of
those states. See "Description of the Trust Funds--Mortgage Loans". If a
significant percentage of Mortgage Loans (or mortgage loans underlying MBS), by
balance, are secured by properties in a particular state, relevant state laws,
to the extent they vary materially from this discussion, will be discussed in
the Prospectus Supplement. For purposes of the following discussion, "Mortgage
Loan" includes a mortgage loan underlying an MBS.
General
Each Mortgage Loan will be evidenced by a note or bond and secured by
an instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage: a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). In
contrast, a deed of trust is a three-party instrument, among a trustor (the
equivalent of a borrower), a trustee to whom the real property is conveyed, and
a beneficiary (the lender) for whose benefit the conveyance is made. Under a
deed of trust, the trustor grants the property, irrevocably until the debt is
paid, in trust and generally with a power of sale, to the trustee to secure
repayment of the indebtedness evidenced by the related note. A deed to secure
debt typically has two parties, pursuant to which the borrower, or grantor,
conveys title to the real property to the grantee, or lender, generally with a
power of sale, until such time as the debt is repaid. In a case where the
borrower is a land trust, there would be an additional party because legal title
to the property is held by a land trustee under a land trust agreement for the
benefit of the borrower. At origination of a mortgage loan involving a land
trust, the borrower may execute a separate undertaking to make payments on the
mortgage note. In no event is the land trustee personally liable for the
mortgage note obligation. The mortgagee's authority under a mortgage, the
trustee's authority under a deed of trust and the grantee's authority under a
deed to secure debt are governed by the express provisions of the related
instrument, the law of the state in which the real property is located, certain
federal laws and, in some deed of trust transactions, the directions of the
beneficiary.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom,
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while (unless rents are to be paid directly to the lender) retaining a revocable
license to collect the rents for so long as there is no default. If the borrower
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and therefore cannot be used by the
bankruptcy debtor without a hearing or lender's consent and unless the lender's
interest in the room rates is given adequate protection (e.g., cash payment for
otherwise encumbered funds or a replacement lien on unencumbered property, in
either case equal in value to the amount of room rates that the debtor proposes
to use, or other similar relief). See "--Bankruptcy Laws".
Personalty
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
Foreclosure
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete.
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Judicial Foreclosure. A judicial foreclosure proceeding is conducted in
a court having jurisdiction over the mortgaged property. Generally, the action
is initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects of
mortgage defaults perceived as harsh or unfair. Relying on such principles, a
court may alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or overreaching,
or may require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have substituted their
judgment for the lender's and have required that lenders reinstate loans or
recast payment schedules in order to accommodate borrowers who are suffering
from a temporary financial disability. In other cases, courts have limited the
right of the lender to foreclose in the case of a nonmonetary default, such as a
failure to adequately maintain the mortgaged property or an impermissible
further encumbrance of the mortgaged property. Finally, some courts have
addressed the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that a borrower
receive notice in addition to statutorily-prescribed minimum notice. For the
most part, these cases have upheld the reasonableness of the notice provisions
or have found that a public sale under a mortgage providing for a power of sale
does not involve sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the
right of the borrower to reinstate mortgage loans after commencement of
foreclosure proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
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Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limited Recourse Nature of the Mortgage Loans".) Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make such repairs as are necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The lender also will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale or lease of
the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, because of the expenses associated with acquiring, owning and selling
a mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged property is sold at foreclosure, or resold after it is
acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest. The holder of a junior
mortgage that forecloses on a mortgaged property does so subject to senior
mortgages and any other prior liens, and may be obliged to keep senior mortgage
loans current in order to avoid foreclosure of its interest in the property. In
addition, if the foreclosure of a junior mortgage triggers the enforcement of a
"due-on-sale" clause contained in a senior mortgage, the junior mortgagee could
be required to pay the full amount of the senior mortgage indebtedness or face
foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to
enable the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For
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example, in some states a lender cannot obtain a deficiency judgment against the
borrower following foreclosure or sale under a deed of trust. A deficiency
judgment is a personal judgment against the former borrower equal to the
difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Other statutes may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting such security; however, in some of those states, the lender,
following judgment on such personal action, may be deemed to have elected a
remedy and thus may be precluded from foreclosing upon the security.
Consequently, lenders in those states where such an election of remedy provision
exists will usually proceed first against the security. Finally, other statutory
provisions, designed to protect borrowers from exposure to large deficiency
judgments that might result from bidding at below-market values at the
foreclosure sale, limit any deficiency judgment to the excess of the outstanding
debt over the fair market value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage
on the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate to
be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure
sale, and contains certain other protective provisions typically included in a
"mortgageable" ground lease. Certain Mortgage Loans, however, may be secured by
ground leases which do not contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security
interest on the borrower's ownership interest in shares, and the proprietary
leases appurtenant thereto, allocable to cooperative dwelling units that may be
vacant or occupied by nonowner tenants. Such loans are subject to certain risks
not associated with mortgage loans secured by a lien on the fee estate of a
borrower in real property. Such a loan typically is subordinate to the mortgage,
if any, on the Cooperative's building which, if foreclosed, could extinguish the
equity in the building and the proprietary leases of the dwelling units derived
from ownership of the shares of the Cooperative. Further, transfer of shares in
a Cooperative are subject to various regulations as well as to restrictions
under the governing documents of the Cooperative, and the shares may be canceled
in the event that associated maintenance charges due under the related
proprietary leases are not paid. Typically, a recognition agreement between the
lender and the Cooperative provides, among other things, the lender with an
opportunity to cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
Bankruptcy Laws
Operation of the Bankruptcy Code and related state laws may interfere
with or affect the ability of a lender to realize upon collateral and/or to
enforce a deficiency judgment. For example, under the Bankruptcy Code, virtually
all actions (including foreclosure actions and deficiency judgment proceedings)
to collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments
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are made during the course of the bankruptcy case. The delay and the
consequences thereof caused by such automatic stay can be significant. Also,
under the Bankruptcy Code, the filing of a petition in bankruptcy by or on
behalf of a junior lienor may stay the senior lender from taking action to
foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, by means of a reduction in the rate of interest and/or an alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a debtor,
through its rehabilitative plan, to reinstate a mortgage loan payment schedule
even if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of certain states until the lender has taken some further action,
such as commencing foreclosure or obtaining a receiver prior to activation of
the assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent
on its receipt of rent payments under a lease of the related property, that
ability may be impaired by the commencement of a bankruptcy case relating to a
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor (except potentially to the extent of
any security deposit) with respect to its claim for damages for termination of
the lease. The Bankruptcy Code also limits a lessor's damages for lease
rejection to (a) the rent reserved by the lease (without regard to acceleration)
for the greater of one year, or 15%, not to exceed three years, of the remaining
term of the lease plus (b) unpaid rent to the earlier of the surrender of the
property or the lessee's bankruptcy filing.
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Environmental Considerations
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a
property may give rise to a lien on the property for clean-up costs. In several
states, such a lien has priority over all existing liens, including those of
existing mortgages. In these states, the lien of a mortgage may lose its
priority to such a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator", however, is a person who without participating in the management of
the facility, holds indicia of ownership primarily to protect his security
interest. This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of
1996 (the "Lender Liability Act") amended, among other things, the provisions of
CERCLA with respect to lender liability and the secured creditor exemption. The
Lender Liability Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. In order for a lender to be deemed to have
participated in the management of a mortgaged property, the lender must actually
participate in the operational affairs of the property of the borrower. The
Lender Liability Act provides that "merely having the capacity to influence, or
unexercised right to control" operations does not constitute participation in
management. A lender will lose the protection of the secured creditor exemption
only if it exercises decision-making control over the borrower's environmental
compliance and hazardous substance handling and disposal practices, or assumes
day-to-day management of operational functions of the mortgaged property. The
Lender Liability Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed-in-lieu of
foreclosure provided that the lender seeks to sell the mortgaged property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
Certain Other Federal and State Laws. Many states have statutes similar
to CERCLA, and not all those statutes provide for a secured creditor exemption.
In addition, under federal law, there is potential liability relating to
hazardous wastes and underground storage tanks under the federal Resource
Conservation and Recovery Act.
Certain federal, state and local laws, regulations and ordinances
govern the management, removal, encapsulation or disturbance of
asbestos-containing materials ("ACMs"). Such laws, as well as common law
standards, may impose liability for releases of or exposure to ACMs and may
provide for third parties to seek recovery from owners or operators of real
properties for personal injuries associated with such releases.
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Recent federal legislation will in the future require owners of
residential housing constructed prior to 1978 to disclose to potential residents
or purchasers any known lead-based paint hazards and will impose treble damages
for any failure to so notify. In addition, the ingestion of lead-based paint
chips or dust particles by children can result in lead poisoning, and the owner
of a property where such circumstances exist may be held liable for such
injuries and for the costs of removal or encapsulation of the lead-based paint.
Testing for lead-based paint or lead in the water was conducted with respect to
certain of the Mortgaged Properties, generally based on the age and/or condition
thereof.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action (for example, actions based on nuisance or on toxic tort
resulting in death, personal injury or damage to property) related to hazardous
environmental conditions on a property. While it may be more difficult to hold a
lender liable in such cases, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. Such costs may jeopardize the
borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in
the related Prospectus Supplement, the Pooling Agreement will provide that
neither the Master Servicer nor the Special Servicer, acting on behalf of the
Trustee, may acquire title to a Mortgaged Property or take over its operation
unless the Special Servicer, based solely (as to environmental matters) on a
report prepared by a person who regularly conducts environmental audits, has
made the determination that certain conditions relating to environmental
matters, as described under "Description of the Pooling Agreements-Realization
Upon Defaulted Mortgage Loans", have been satisfied.
If a lender forecloses on a mortgage secured by a property, the
operations on which are subject to environmental laws and regulations, the
lender will be required to operate the property in accordance with those laws
and regulations. Such compliance may entail substantial expense, especially in
the case of industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
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Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") generally preempts state laws that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limitations as set forth in the Garn Act
and the regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
Junior Liens; Rights of Holders of Senior Liens
If so provided in the related Prospectus Supplement, the Mortgage
Assets for a Series may include Mortgage Loans secured by junior liens, and the
loans secured by the related Senior Liens may not be included in the Mortgage
Asset Pool. The primary risk to holders of Mortgage Loans secured by junior
liens is the possibility that adequate funds will not be received in connection
with a foreclosure of the related Senior Liens to satisfy fully both the Senior
Liens and the Mortgage Loan. In the event that a holder of a Senior Lien
forecloses on a Mortgaged Property, the proceeds of the foreclosure or similar
sale will be applied first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more Classes of the
Certificates of the related Series bear (i) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (ii) the risk
of loss if the deficiency judgment is not realized upon. Moreover, deficiency
judgments may not be available in certain jurisdictions or the Mortgage Loan may
be nonrecourse.
Subordinate Financing
The terms of certain of the Mortgage Loans may not restrict the ability
of the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal
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amount of or the interest rate payable on the senior loan, the senior lender may
lose its priority to the extent any existing junior lender is harmed or the
borrower is additionally burdened. Third, if the borrower defaults on the senior
loan and/or any junior loan or loans, the existence of junior loans and actions
taken by junior lenders can impair the security available to the senior lender
and can interfere with or delay the taking of action by the senior lender.
Moreover, the bankruptcy of a junior lender may operate to stay foreclosure or
similar proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower
to pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980 ("Title V") provides that state usury limitations shall not
apply to certain types of residential (including multifamily) first mortgage
loans originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is authorized
by the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title
V has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
Certain Laws and Regulations
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and
rules promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public
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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 borrower in its capacity
as owner or landlord, the ADA may also impose such requirements on a foreclosing
lender who succeeds to the interest of the borrower as owner or landlord.
Furthermore, since the "readily achievable" standard may vary depending on the
financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the borrower of complying with the requirements of
the ADA may be subject to more stringent requirements than those to which the
borrower is subject.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related Series, and would not be covered by advances or, unless
otherwise specified in the related Prospectus Supplement, any form of Credit
Support provided in connection with such Certificates. In addition, the Relief
Act imposes limitations that would impair the ability of the Master Servicer or
Special Servicer to foreclose on an affected Mortgage Loan during the borrower's
period of active duty status, and, under certain circumstances, during an
additional three month period thereafter.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
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FEDERAL INCOME TAX CONSEQUENCES
General
The following general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Certificates of any Series, to the extent it relates to matters of law or legal
conclusions with respect thereto, represents the opinion of counsel to the
Depositor with respect to that Series on the material matters associated with
such consequences, subject to any qualifications set forth herein. Unless
otherwise specified in the related Prospectus Supplement, counsel to the
Depositor for each Series will be Sidley & Austin. This discussion is directed
to Certificateholders that hold the Certificates as "capital assets" within the
meaning of Section 1221 of the Code and does not purport to discuss all federal
income tax consequences that may be applicable to the individual circumstances
of particular investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special treatment under the Code. Further,
the authorities on which this discussion, and the opinion referred to below, are
based are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the IRS with respect to any of the federal income tax
consequences discussed below, and no assurance can be given the IRS will not
take contrary positions. Taxpayers and preparers of tax returns (including those
filed by any REMIC or other issuer) should be aware that under applicable
Treasury regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (i) is given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions, and (ii) is
directly relevant to the determination of an entry on a tax return. Accordingly,
it is recommended that taxpayers consult their tax advisors and tax return
preparers regarding the treatment of any item on their tax returns, even where
the anticipated tax consequences have been discussed herein. In addition to the
federal income tax consequences described herein, it is recommended that
potential investors consult their tax advisors concerning the state, local or
other tax consequences to them of the purchase, ownership and disposition of
Offered Certificates. See "State and Other Tax Consequences".
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (ii) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which no
such election will be made. The Prospectus Supplement for each Series will
indicate whether a REMIC election (or elections) will be made for the related
Trust Fund and, if such an election is to be made, will identify all "regular
interests" and "residual interests" in the REMIC. For purposes of this tax
discussion, references to a "Certificateholder" or a "holder" are to the
beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements other than guaranteed
investment contracts are included in a Trust Fund, the anticipated material tax
consequences associated with such Cash Flow Agreements also will be discussed in
the related Prospectus Supplement. See "Description of the Trust Funds--Cash
Flow Agreements".
The following discussion is based in part upon the rules governing
original issue discount that are set forth in Sections 1271-1273 and 1275 of the
Code and in the Treasury regulations issued thereunder (the "OID Regulations"),
and in part upon the REMIC Provisions and the Treasury regulations issued
thereunder (the
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"REMIC Regulations"). The OID Regulations do not adequately address certain
issues relevant to, and in some instances provide that they are not applicable
to, securities such as the Certificates.
REMICs
Classification of REMICs. With respect to each Series of REMIC
Certificates, counsel to the Depositor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling
Agreement and certain other documents (and subject to certain assumptions set
forth therein), the related Trust Fund (or each applicable portion thereof) will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of REMIC Certificates,
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of counsel to the Depositor for the applicable
Series as specified in the related Prospectus Supplement, subject to any
qualifications set forth herein. In addition, counsel to the Depositor have
prepared or reviewed the statements in this Prospectus under the heading
"Federal Income Tax Consequences--REMICs", and are of the opinion that such
statements are correct in all material respects. Such statements are intended as
an explanatory discussion of the possible effects of the classification of any
Trust Fund (or applicable portion thereof) as a REMIC for federal income tax
purposes on investors generally and of related tax matters affecting investors
generally, but do not purport to furnish information in the level of detail or
with the attention to an investor's specific tax circumstances that would be
provided by an investor's own tax advisor. Accordingly, it is recommended that
each investor consult its own tax advisors with regard to the tax consequences
to it of investing in REMIC Certificates.
If an entity electing to be treated as a REMIC fails to comply with one
or more of the ongoing requirements of the Code for such status during any
taxable year, the Code provides that the entity may lose its status as a REMIC
for such year and thereafter. In that event, such entity may be taxable as a
corporation, and the related REMIC Certificates may not be accorded the status
or given the tax treatment described below. Although the Code authorizes the
Treasury Department to issue regulations providing relief in the event of an
inadvertent termination of REMIC status, no such regulations have been issued.
Any such relief, moreover, may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the Trust Fund's income for
the period in which the requirements for such status are not satisfied. The
Pooling Agreement with respect to each REMIC will include provisions designed to
maintain the Trust Fund's status as a REMIC under the REMIC Provisions. It is
not anticipated that the status of any Trust Fund as a REMIC will be
inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general,
unless otherwise provided in the related Prospectus Supplement, the REMIC
Certificates will be "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code and assets described in Section 7701(a)(19)(C) of the
Code in the same proportion that the assets of the REMIC underlying such
Certificates would be so treated. However, to the extent that the REMIC assets
constitute mortgages on property not used for residential or certain other
prescribed purposes, the REMIC Certificates will not be treated as assets
qualifying under Section 7701(a)(19)(C). Moreover, if 95% or more of the assets
of the REMIC qualify for any of the foregoing characterizations at all times
during a calendar year, the REMIC Certificates will qualify for the
corresponding status in their entirety for that calendar year. Interest
(including original issue discount) on the REMIC Regular Certificates and income
allocated to the REMIC Residual Certificates will be interest described in
Section 856(c)(3)(B) of the Code to the extent that such Certificates are
treated as "real estate assets" within the meaning of Section 856(c)(5)(B) of
the Code. In addition, the REMIC Regular Certificates will be "qualified
mortgages" within the meaning of Section 860G(a)(3) of the Code in the hands of
another REMIC, and will be "permitted assets" under Section 860L(c)(1)(G) for a
"financial asset securitization investment trust" or FASIT. The determination as
to the
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percentage of the REMIC's assets that constitute assets described in the
foregoing sections of the Code will be made with respect to each calendar
quarter based on the average adjusted basis of each category of the assets held
by the REMIC during such calendar quarter. The REMIC Administrator will report
those determinations to Certificateholders in the manner and at the times
required by applicable Treasury regulations.
The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and any property acquired by foreclosure held pending sale, and may include
amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts would be
considered to be part of the Mortgage Loans, or whether such assets (to the
extent not invested in assets described in the foregoing sections of the Code)
otherwise would receive the same treatment as the Mortgage Loans for purposes of
all of the foregoing sections of the Code. In addition, in some instances
Mortgage Loans may not be treated entirely as assets described in the foregoing
sections of the Code. If so, the related Prospectus Supplement will describe the
Mortgage Loans that may not be so treated. Treasury regulations do provide,
however, that cash received from payments on Mortgage Loans held pending
distribution is considered part of the Mortgage Loans for purposes of Section
856(c)(4)(A) of the Code.
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)(4)(A)
of the Code and the interest thereon may not constitute "interest on obligations
secured by mortgages on real property" within the meaning of Section
856(c)(3)(B) of the Code.
Tiered REMIC Structures. For certain Series of REMIC Certificates, two
or more separate elections may be made to treat designated portions of the
related Trust Fund as separate REMICs ("Tiered REMICs") for federal income tax
purposes. As to each such Series of REMIC Certificates, in the opinion of
counsel to the Depositor, assuming compliance with all provisions of the related
Pooling Agreement, the Tiered REMICs will each qualify as a REMIC and the REMIC
Certificates issued by the Tiered REMICs, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will
be "real estate assets" within the meaning of Section 856(c)(5)(B) of the Code,
and "loans secured by an interest in real property" under Section 7701(a)(19)(C)
of the Code, and whether the income on such Certificates is interest described
in Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under the cash method of accounting will be required to report income with
respect to REMIC Regular Certificates under the accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the "constant yield" method described below,
in advance of the receipt of the cash attributable to such income. In addition,
Section 1272(a)(6) of the Code provides special rules applicable to REMIC
Regular
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Certificates and certain other debt instruments issued with original issue
discount. Regulations have not been issued under that section.
The Code requires that a reasonable prepayment assumption be used with
respect to Mortgage Loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations that have not yet been issued. The Conference Committee
Report accompanying the Tax Reform Act of 1986 (the "Committee Report")
indicates that the regulations will provide that the prepayment assumption used
with respect to a REMIC Regular Certificate must be the same as that used in
pricing the initial offering of such REMIC Regular Certificate. The prepayment
assumption (the "Prepayment Assumption") used in reporting original issue
discount for each Series of REMIC Regular Certificates will be consistent with
this standard and will be disclosed in the related Prospectus Supplement.
However, neither the Depositor nor any other person will make any representation
that the Mortgage Loans will in fact prepay at a rate conforming to the
Prepayment Assumption or at any other rate or that such Prepayment Assumption
will not be challenged by the Internal Revenue Service (the "IRS") on audit.
The original issue discount, if any, on a REMIC Regular Certificate
will be the excess of its stated redemption price at maturity over its issue
price. The issue price of a particular Class of REMIC Regular Certificates will
be the first cash price at which a substantial amount of REMIC Regular
Certificates of that Class is sold (excluding sales to bond houses, brokers and
underwriters). If less than a substantial amount of a particular Class of REMIC
Regular Certificates is sold for cash on or prior to the related Closing Date,
the issue price for such Class will be the fair market value of such Class on
such Closing Date. Under the OID Regulations, the stated redemption price of a
REMIC Regular Certificate is equal to the total of all payments to be made on
such Certificate other than "qualified stated interest". "Qualified stated
interest" is interest that is unconditionally payable at least annually (during
the entire term of the instrument) at a single fixed rate, or at a "qualified
floating rate", an "objective rate", a combination of a single fixed rate and
one or more "qualified floating rates" or one "qualified inverse floating rate",
or at a combination of "qualified floating rates" that does not operate in a
manner that accelerates or defers interest payments on such REMIC Regular
Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the IRS.
Certain Classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to such Certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a Distribution Date, in some cases, as a consequence of this "long
first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing of
the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first
Distribution Date is computed with respect to a period that begins prior to the
Closing Date, a portion of the purchase price paid for a REMIC Regular
Certificate will reflect such accrued interest. In such cases, information
returns provided to the Certificateholders and the IRS will be based on the
position that the portion of the purchase price paid for the interest accrued
with
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respect to periods prior to the Closing Date is treated as part of the overall
cost of such REMIC Regular Certificate (and not as a separate asset the cost of
which is recovered entirely out of interest received on the next Distribution
Date) and that portion of the interest paid on the first Distribution Date in
excess of interest accrued for a number of days corresponding to the number of
days from the Closing Date to the first Distribution Date should be included in
the stated redemption price of such REMIC Regular Certificate. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first Distribution Date. It is unclear how an election to
do so would be made under the OID Regulations and whether such an election could
be made unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average maturity. For this
purpose, the weighted average maturity of the REMIC Regular Certificate is
computed as the sum of the amounts determined, as to each payment included in
the stated redemption price of such REMIC Regular Certificate, by multiplying
(i) the number of complete years (rounding down for partial years) from the
issue date until such payment is expected to be made (presumably taking into
account the Prepayment Assumption) by (ii) a fraction, the numerator of which is
the amount of the payment, and the denominator of which is the stated redemption
price at maturity of such REMIC Regular Certificate. Under the OID Regulations,
original issue discount of only a de minimis amount (other than de minimis
original issue discount attributable to a so-called "teaser" interest rate or an
initial interest holiday) will be included in income as each payment of stated
principal is made, based on the product of the total amount of such de minimis
original issue discount and a fraction, the numerator of which is the amount of
such principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See "--Taxation
of Owners of REMIC Regular Certificates--Market Discount" below for a
description of such election under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess
of a de minimis amount, the holder of such Certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that begins on a date that
corresponds to a Distribution Date (or in the case of the first such period,
begins on the Closing Date) and ends on the day preceding the immediately
following Distribution Date, a calculation will be made of the portion of the
original issue discount that accrued during such accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of (i) the sum of (a) the present value, as of the end of the
accrual period, of all of the distributions remaining to be made on the REMIC
Regular Certificate, if any, in future periods and (b) the distributions made on
such REMIC Regular Certificate during the accrual period of amounts included in
the stated redemption price, over (ii) the adjusted issue price of such REMIC
Regular Certificate at the beginning of the accrual period. The present value of
the remaining distributions referred to in the preceding sentence will be
calculated (i) assuming that distributions on the REMIC Regular Certificate will
be received in future periods based on the Mortgage Loans being prepaid at a
rate equal to the Prepayment Assumption, (ii) using a discount rate equal to the
original yield to maturity of the Certificate and (iii) taking into account
events (including actual prepayments) that have occurred before the close of the
accrual period. For these purposes, the original yield to maturity of the
Certificate will be calculated based on its issue price and assuming that
distributions on the Certificate will be made in all accrual periods based on
the Mortgage Loans being prepaid at a rate equal to the Prepayment Assumption.
The adjusted issue price of a
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REMIC Regular Certificate at the beginning of any accrual period will equal the
issue price of such Certificate, increased by the aggregate amount of original
issue discount that accrued with respect to such Certificate in prior accrual
periods, and reduced by the amount of any distributions made on such REMIC
Regular Certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases
such Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
If the foregoing method for computing original issue discount results
in a negative amount of original issue discount as to any accrual period with
respect to a REMIC Regular Certificate, the amount of original issue discount
allocable to such accrual period will be zero. That is, no current deduction of
such negative amount will be allowed to the holder of such Certificate. The
holder will instead only be permitted to offset such negative amount against
future positive original issue discount (if any) attributable to such a
Certificate. Although not free from doubt, it is possible that a
Certificateholder may be permitted to deduct a loss to the extent his or her
basis in the Certificate exceeds the maximum amount of payments such
Certificateholder could ever receive with respect to such Certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to Stripped Interest
Certificates which can have negative yields under certain circumstances that are
not default related. See "Risk Factors--Effect of Prepayments on Yield of
Certificates" herein.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount (other than a de minimis amount), that is, in
the case of a REMIC Regular Certificate issued without original issue discount,
at a purchase price less than its remaining stated principal amount, or in the
case of a REMIC Regular Certificate issued with original issue discount, at a
purchase price less than its adjusted issue price will recognize gain upon
receipt of each distribution representing stated redemption price. In
particular, under Section 1276 of the Code such a Certificateholder generally
will be required to allocate the portion of each such distribution representing
some of all of the stated redemption price first to accrued market discount not
previously included in income, and to recognize ordinary income to that extent.
A Certificateholder may elect to include market discount in income currently as
it accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, such election will apply to all market discount bonds
acquired by such Certificateholder on or after the first day of the first
taxable year to which such election applies.
The OID Regulations also permit a Certificateholder to elect to accrue
all interest and discount (including de minimis market or original issue
discount) in income as interest, and to amortize premium, based on a constant
yield method. If such an election were made with respect to a REMIC Regular
Certificate with market discount, the Certificateholder would be deemed to have
made an election to include currently market discount in income with respect to
all other debt instruments having market discount that such Certificateholder
acquires during the taxable year of the election or thereafter, and possibly
previously acquired instruments. Similarly, a Certificateholder that made this
election for a Certificate that is acquired at a premium would be deemed to have
made an election to amortize bond premium with respect to all debt instruments
having amortizable bond premium that such Certificateholder owns or acquires.
See "--Taxation of Owners of REMIC Regular
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Certificates--Premium" below. Each of the elections in this and the preceding
paragraph to accrue interest, discount and premium with respect to a Certificate
on a constant yield method or as interest would be irrevocable except with the
approval of the IRS.
However, market discount with respect to a REMIC Regular Certificate
will be considered to be de minimis for purposes of Section 1276 of the Code if
such market discount is less than 0.25% of the remaining stated redemption price
of such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. Such treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (i) on the basis of a constant yield
method, (ii) in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to the
total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period, or (iii) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the REMIC Regular Certificate at the beginning of the
accrual period. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or
other periodic distributions throughout their term, the effect of these rules
may be to require market discount to be includible in income at a rate that is
not significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder, however, has elected to include market discount in income currently as
it accrues, the interest deferral rule described above would not apply.
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Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If a holder elects to amortize bond premium,
bond premium would be amortized on a constant yield method and would be applied
as an offset against qualified stated interest. If made, such an election will
apply to all debt instruments having amortizable bond premium that the holder
owns or subsequently acquires. The IRS recently finalized new regulations on the
amortization of bond premium. However, the regulations do not specifically apply
to holders of REMIC Regular Certificates. The OID Regulations also permit
Certificateholders to elect to include all interest, discount and premium in
income based on a constant yield method, further treating the Certificateholder
as having made the election to amortize premium generally. See "--Taxation of
Owners of REMIC Regular Certificates--Market Discount" above. The Committee
report states that the same rules that apply to accrual of market discount
(which rules will require use of a Prepayment Assumption in accruing market
discount with respect to REMIC Regular Certificates without regard to whether
such Certificates have original issue discount) will also apply in amortizing
bond premium under Section 171 of the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders
of the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Mortgage Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its Certificate Principal Balance has been
reduced to zero) and that the loss will be characterized as a short-term capital
loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates until it can
be established that any such reduction ultimately will not be recoverable. As a
result, the amount of taxable income reported in any period by the holder of a
REMIC Regular Certificate could exceed the amount of economic income actually
realized by the holder in such period. Although the holder of a REMIC Regular
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that, as the result of a realized
loss, ultimately will not be realized, the law is unclear with respect to the
timing and character of such loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC generally is not subject to entity-level taxation, except with
regard to prohibited transactions and certain other transactions. See
"--Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable
income or net loss of a REMIC is generally taken into account by the holder of
the REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates
will be subject to tax rules that differ significantly from those that would
apply if the REMIC Residual Certificates were treated for federal income tax
purposes as direct ownership interests in the Mortgage Loans or as debt
instruments issued by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus
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Supplement. The daily amounts so allocated will then be allocated among the
REMIC Residual Certificateholders in proportion to their respective ownership
interests on such day. Any amount included in the gross income or allowed as a
loss of any REMIC Residual Certificateholder by virtue of this paragraph will be
treated as ordinary income or loss. The taxable income of the REMIC will be
determined under the rules described below in "--Taxable Income of the REMIC"
and will be taxable to the REMIC Residual Certificateholders without regard to
the timing or amount of cash distributions by the REMIC until the REMIC's
termination. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under Section 469 of the Code on the deductibility of "passive
losses".
A holder of a REMIC Residual Certificate that purchased such
Certificate from a prior holder of such Certificate also will be required to
report on its federal income tax return amounts representing its daily share of
the taxable income (or net loss) of the REMIC for each day that it holds such
REMIC Residual Certificate. Those daily amounts generally will equal the amounts
of taxable income or net loss determined as described above. The Committee
Report indicates that certain modifications of the general rules may be made, by
regulations, legislation or otherwise to reduce (or increase) the income of a
REMIC Residual Certificateholder that purchased such REMIC Residual Certificate
from a prior holder of such Certificate at a price greater than (or less than)
the adjusted basis (as defined below) such REMIC Residual Certificate would have
had in the hands of an original holder of such Certificate. The REMIC
Regulations, however, do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from
the seller of such Certificate in connection with the acquisition of such REMIC
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that such payment should be included in income over time according
to an amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of such payments, it is recommended that
holders of REMIC Residual Certificates consult their tax advisors concerning the
treatment of such payments for income tax purposes.
The amount of income REMIC Residual Certificateholders will be required
to report (or the tax liability associated with such income) may exceed the
amount of cash distributions received from the REMIC for the corresponding
period. Consequently, REMIC Residual Certificateholders should have other
sources of funds sufficient to pay any federal income taxes due as a result of
their ownership of REMIC Residual Certificates or unrelated deductions against
which income may be offset, subject to the rules relating to "excess
inclusions", residual interests without "significant value" and "noneconomic"
residual interests discussed below. The fact that the tax liability associated
with the income allocated to REMIC Residual Certificateholders may exceed the
cash distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return. Such disparity between income and
distributions may not be offset by corresponding losses or reductions of income
attributable to the REMIC Residual Certificateholder until subsequent tax years
and, then, may not be completely offset due to changes in the Code, tax rates or
character of the income or loss. REMIC Residual Certificates may in some
instances have negative "value". See "Risk Factors--Federal Tax Considerations
Regarding REMIC Residual Certificates".
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other Class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
for amortization of any premium on the Mortgage Loans, for bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
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For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a Class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount".
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
Classes of REMIC Certificates are retained initially rather than sold, the REMIC
Administrator may be required to estimate the fair market value of such
interests in order to determine the basis of the REMIC in the Mortgage Loans and
other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant yield basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption.
A REMIC will be allowed deductions for interest (including original
issue discount) on the REMIC Regular Certificates (including any other Class of
REMIC Certificates constituting "regular interests" in the REMIC not offered
hereby) equal to the deductions that would be allowed if the REMIC Regular
Certificates (including any other Class of REMIC Certificates constituting
"regular interests" in the REMIC not offered hereby) were indebtedness of the
REMIC. Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other Class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a Class of REMIC Regular Certificates is issued at a price in excess
of the stated redemption price of such Class (such excess "Issue Premium"), the
net amount of interest deductions that are allowed the REMIC in each taxable
year with respect to the REMIC Regular Certificates of such Class will be
reduced by an amount equal to the portion of the Issue Premium that is
considered to be amortized or repaid in that year. Although the matter is not
entirely certain, it is likely that Issue Premium would be amortized under a
constant yield method in a manner analogous to the method of accruing original
issue discount described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount".
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As a general rule, the taxable income of a REMIC will be determined in
the same manner as if the REMIC were an individual having the calendar year as
its taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other noninterest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a
REMIC Residual Certificate will be equal to the amount paid for such REMIC
Residual Certificate, increased by amounts included in the income of the REMIC
Residual Certificateholder and decreased (but not below zero) by distributions
made, and by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account
any net loss for any calendar quarter to the extent such net loss exceeds such
REMIC Residual Certificateholder's adjusted basis in its REMIC Residual
Certificate as of the close of such calendar quarter (determined without regard
to such net loss). Any loss that is not currently deductible by reason of this
limitation may be carried forward indefinitely to future calendar quarters and,
subject to the same limitation, may be used only to offset income from the REMIC
Residual Certificate. The ability of REMIC Residual Certificateholders to deduct
net losses may be subject to additional limitations under the Code, as to which
it is recommended that REMIC Residual Certificateholders consult their tax
advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder
may not amortize its basis in a REMIC Residual Certificate, but may only recover
its basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted
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basis such REMIC Residual Certificate would have in the hands of an original
holder see "--Taxation of Owners of REMIC Residual Certificates--General" above.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the
daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at the beginning of the calendar quarter and 120% of
the "long-term Federal rate" in effect on the Closing Date. For this purpose,
the adjusted issue price of a REMIC Residual Certificate as of the beginning of
any calendar quarter will be equal to the issue price of the REMIC Residual
Certificate, increased by the sum of the daily accruals for all prior quarters
and decreased (but not below zero) by any distributions made with respect to
such REMIC Residual Certificate before the beginning of such quarter. The issue
price of a REMIC Residual Certificate is the initial offering price to the
public (excluding bond houses and brokers) at which a substantial amount of the
REMIC Residual Certificates were sold. The "long-term Federal rate" is an
average of current yields on Treasury securities with a remaining term of
greater than nine years, computed and published monthly by the IRS.
Although it has not done so, the Treasury also has authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered not to have "significant value". The REMIC Regulations provide
that in order to be treated as having significant value, the REMIC Residual
Certificates must have an aggregate issue price at least equal to two percent of
the aggregate issue prices of all of the related REMIC's regular and residual
interests. In addition, based on the Prepayment Assumption, the anticipated
weighted average life of the REMIC Residual Certificates must equal or exceed 20
percent of the anticipated weighted average life of the REMIC, based on the
Prepayment Assumption and on any required or permitted clean up calls or
required liquidation provided for in the REMIC's organizational documents. The
related Prospectus Supplement will disclose whether offered REMIC Residual
Certificates may be considered to have "significant value" under the REMIC
Regulations; provided, however, that any disclosure that a REMIC Residual
Certificate will have "significant value" will be based upon certain
assumptions, and the Depositor will make no representation that a REMIC Residual
Certificate will have "significant value" for purposes of the above-described
rules.
For REMIC Residual Certificateholders, an excess inclusion (i) will not
be permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however "--Foreign Investors
in REMIC Certificates" below. Furthermore, for purposes of the alternative
minimum tax, (i) excess inclusions will not be permitted to be offset by the
alternative tax net operating loss deduction and (ii) alternative minimum
taxable income may not be less than the taxpayer's excess inclusions. This last
rule has the effect of preventing non-refundable tax credits from reducing the
taxpayer's income tax to an amount lower than the alternative minimum tax on
excess inclusions.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by
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such shareholders from such trust, and any amount so allocated will be treated
as an excess inclusion with respect to a REMIC Residual Certificate as if held
directly by such shareholder. Treasury regulations yet to be issued could apply
a similar rule to regulated investment companies, common trust funds and certain
cooperatives; the REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in
the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects
that the transferee will receive distributions with respect to the REMIC
Residual Certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling Agreement that are intended to reduce the
possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such transferee's historic payment of its debts and ability to
continue to pay its debts as they come due in the future. Prior to purchasing a
REMIC Residual Certificate, prospective purchasers should consider the
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "--Foreign Investors in REMIC Certificates" below for
additional restrictions applicable to transfers of certain REMIC Residual
Certificates to foreign persons.
Mark-to-Market Rules. The IRS recently released regulations under
Section 475 of the Code (the "Mark-to-Market Regulations") relating to the
requirement that a securities dealer mark to market securities held for sale to
customers. This mark-to-market requirement applies to all securities owned by a
dealer, except to the extent that the dealer has specifically identified a
security as held for investment. The Mark-to-Market Regulations provide that for
purposes of this mark-to-market requirement, a REMIC Residual Certificate is not
treated as a security for purposes of Section 475 of the Code, and thus is not
subject to the mark-to-market rules. It is recommended that prospective
purchasers of a REMIC Residual Certificate consult their tax advisors regarding
the Mark-to-Market Regulations.
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Unless otherwise stated in the related Prospectus Supplement, transfers
of REMIC Residual Certificates to investors that are not United States Persons
(as defined below in "--Foreign Investors in REMIC Certificates") will be
prohibited under the related Pooling Agreement. If transfers of REMIC Residual
Certificates to investors that are not United States Persons are permitted
pursuant to the related Pooling Agreement, the related Prospectus Supplement
will describe additional restrictions applicable to transfers of certain REMIC
Residual Certificates to such persons.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related Prospectus Supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular
Certificates the holders of which receive an allocation of fees and expenses in
accordance with the preceding discussion, if any holder thereof is an
individual, estate or trust, or a "pass-through entity" beneficially owned by
one or more individuals, estates or trusts, (i) an amount equal to such
individual's, estate's or trust's share of such fees and expenses will be added
to the gross income of such holder and (ii) such individual's, estate's or
trust's share of such fees and expenses will be treated as a miscellaneous
itemized deduction allowable subject to the limitation of Section 67 of the
Code, which permits such deductions only to the extent they exceed in the
aggregate 2% of a taxpayer's adjusted gross income. In addition, Section 68 of
the Code provides that the amount of itemized deductions otherwise allowable for
an individual whose adjusted gross income exceeds a specified amount will be
reduced by the lesser of (i) 3% of the excess of the individual's adjusted gross
income over such amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for the taxable year. The amount of additional taxable
income reportable by REMIC Certificateholders that are subject to the
limitations of either Section 67 or Section 68 of the Code may be substantial.
Furthermore, in determining the alternative minimum taxable income of such a
holder of a REMIC Certificate that is an individual, estate or trust, or a
"pass-through entity" beneficially owned by one or more individuals, estates or
trusts, no deduction will be allowed for such holder's allocable portion of
servicing fees and other miscellaneous itemized deductions of the REMIC, even
though an amount equal to the amount of such fees and other deductions will be
included in such holder's gross income. Accordingly, REMIC Residual Certificates
will generally not be appropriate investments for individuals, estates, or
trusts, or pass-through entities beneficially owned by one or more individuals,
estates or trusts. It is recommended that such prospective investors consult
with their tax advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the
selling Certificateholder will recognize gain or loss equal to the difference
between the amount realized on the sale and its adjusted basis in the REMIC
Certificate. The adjusted basis of a REMIC Regular Certificate generally will
equal the cost of such REMIC Regular Certificate to such Certificateholder,
increased by income reported by such Certificateholder with respect to such
REMIC Regular Certificate (including original issue discount and market discount
income) and reduced (but not below zero) by distributions on such REMIC Regular
Certificate received by such Certificateholder and by any amortized premium. The
adjusted basis of a REMIC Residual Certificate will be determined as described
above under "--Taxation of Owners of REMIC Residual Certificates--Basis Rules,
Net Losses and Distributions". Except as described below, any such gain or loss
will be capital gain or loss, provided such REMIC Certificate is held as a
capital asset (generally, property held for investment) within the meaning of
Section 1221 of the Code. The Code as of the date of this Prospectus provides
for lower rates as to mid-term capital gains, and still lower rates as to
long-term capital gains, than those applicable to the short-term capital
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gains and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise
be a capital gain will be treated as ordinary income to the extent such gain
does not exceed the excess, if any, of (i) the amount that would have been
includible in the seller's income with respect to such REMIC Regular Certificate
assuming that income had accrued thereon at a rate equal to 110% of the
"applicable Federal rate" (generally, a rate based on an average of current
yields on Treasury securities having a maturity comparable to that of the
Certificate based on the application of the Prepayment Assumption to such
Certificate), determined as of the date of purchase of such REMIC Regular
Certificate, over (ii) the amount of ordinary income actually includible in the
seller's income prior to such sale. In addition, gain recognized on the sale of
a REMIC Regular Certificate by a seller who purchased such REMIC Regular
Certificate at a market discount will be taxable as ordinary income in an amount
not exceeding the portion of such discount that accrued during the period such
REMIC Certificate was held by such holder, reduced by any market discount
included in income under the rules described above under "--Taxation of Owners
of REMIC Regular Certificates--Market Discount" and "--Premium".
REMIC Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1) of the Code, so that gain or loss recognized from
the sale of a REMIC Certificate by a bank or thrift institution to which such
Section applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include such
net capital gain in total net investment income for the taxable year, for
purposes of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.
Except as may be provided in Treasury regulations yet to be issued, if
the seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC
Residual Certificateholder on the sale will not be deductible, but instead will
be added to such REMIC Residual Certificateholder's adjusted basis in the
newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"Prohibited Transactions Tax"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage
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Loans for temporary investment pending distribution on the REMIC Certificates.
It is not anticipated that any REMIC will engage in any prohibited transactions
as to which it would be subject to a material Prohibited Transaction Tax.
In addition, certain contributions to a REMIC made after the day on
which the REMIC issues all of its interests could result in the imposition of a
tax on the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling Agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property", determined by reference to the
rules applicable to real estate investment trusts. "Net income from foreclosure
property" generally means income from foreclosure property other than qualifying
rents and other qualifying income for a real estate investment trust. Under
certain circumstances, the Special Servicer may be authorized to conduct
activities with respect to a Mortgaged Property acquired by a Trust Fund that
causes the Trust Fund to incur this tax if doing so would, in the reasonable
discretion of the Special Servicer, maximize the net after-tax proceeds to
Certificateholders. However, under no circumstance will the Special Servicer
cause the acquired Mortgage Property to cease to be a "permitted investment"
under Section 860G(a)(5) of the Code.
Unless otherwise disclosed in the related Prospectus Supplement, it is
not anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to
the extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related REMIC Administrator, Master Servicer, Special Servicer, Manager or
Trustee, in any case out of its own funds, provided that such person has
sufficient assets to do so, and provided further that such tax arises out of a
breach of such person's obligations under the related Pooling Agreement. Any
such tax not borne by a REMIC Administrator, Master Servicer, Special Servicer,
Manager or Trustee would be charged against the related Trust Fund resulting in
a reduction in amounts payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate) of the total
anticipated excess inclusions with respect to such REMIC Residual Certificate
for periods after the transfer and (ii) the highest marginal federal income tax
rate applicable to corporations. The anticipated excess inclusions must be
determined as of the date that the REMIC Residual Certificate is transferred and
must be based on events that have occurred up to the time of such transfer, the
Prepayment Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents. Such a tax
generally would be imposed on the transferor of the REMIC Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a REMIC Residual Certificate would in no event be liable for such
tax with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that (i) residual interests in
such entity are not held by disqualified organizations and (ii) information
necessary for the application of the tax described herein will be made
available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in each Pooling
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Agreement, and will be discussed in any Prospectus Supplement relating to the
offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (i) such holder's social security number and a statement
under penalties of perjury that such social security number is that of the
record holder or (ii) a statement under penalties of perjury that such record
holder is not a disqualified organization.
For taxable years beginning on or after January 1, 1998, if an
"electing large partnership" holds a Residual Certificate, all interests in the
electing large partnership are treated as held by disqualified organizations for
purposes of the tax imposed upon a pass-through entity by Section 860E(c) of the
Code. An exception to this tax, otherwise available to a pass-through entity
that is furnished certain affidavits by record holders of interests in the
entity and that does not know such affidavits are false, is not available to an
electing large partnership.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code. For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. An "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code. In
addition, a person holding an interest in a pass-through entity as a nominee for
another person will, with respect to such interest, be treated as a pass-through
entity.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a capital loss
equal to the amount of such difference.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the REMIC
Administrator, which generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
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As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the REMIC Residual
Certificateholders in connection with the administrative and judicial review of
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. REMIC Residual Certificateholders generally will be required to
report such REMIC items consistently with their treatment on the related REMIC's
tax return and may in some circumstances be bound by a settlement agreement
between the REMIC Administrator, as tax matters person, and the IRS concerning
any such REMIC item. Adjustments made to the REMIC's tax return may require a
REMIC Residual Certificateholder to make corresponding adjustments on its
return, and an audit of the REMIC's tax return, or the adjustments resulting
from such an audit, could result in an audit of a REMIC Residual
Certificateholder's return. No REMIC will be registered as a tax shelter
pursuant to Section 6111 of the Code because it is not anticipated that any
REMIC will have a net loss for any of the first five taxable years of its
existence. Any person that holds a REMIC Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Reporting of interest income, including any original issue discount,
with respect to REMIC Regular Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of REMIC Regular
Interests and the IRS; holders of REMIC Regular Certificates that are
corporations, trusts, securities dealers and certain other non-individuals will
be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring a REMIC Regular Certificate issued with
original issue discount to disclose on its face the amount of original issue
discount and the issue date, and requiring such information to be reported to
the IRS. Reporting with respect to REMIC Residual Certificates, including
income, excess inclusions, investment expenses and relevant information
regarding qualification of the REMIC's assets will be made as required under the
Treasury regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the REMIC Administrator.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
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Foreign Investors in REMIC Certificates. A REMIC Regular
Certificateholder that is not a "United States Person" (as defined below) and is
not subject to federal income tax as a result of any direct or indirect
connection to the United States in addition to its ownership of a REMIC Regular
Certificate will, in general, not, unless otherwise disclosed in the related
Prospectus Supplement, be subject to United States federal income or withholding
tax in respect of a distribution on a REMIC Regular Certificate, provided that
the holder complies to the extent necessary with certain identification
requirements (including delivery of a statement, signed by the Certificateholder
under penalties of perjury, certifying that such Certificateholder is not a
United States Person and providing the name and address of such
Certificateholder). For these purposes, "United States Person" means a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in, or under the laws of, the United States or any
political subdivision thereof, an estate whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or a trust as to which (i) a court in the United States
is able to exercise primary supervision over the administration of the trust and
(ii) one or more United States fiduciaries have the right to control all
substantial decisions of the trust. It is possible that the IRS may assert that
the foregoing tax exemption should not apply with respect to a REMIC Regular
Certificate held by a REMIC Residual Certificateholder that owns directly or
indirectly a 10% or greater interest in the REMIC Residual Certificates. If the
holder does not qualify for exemption, distributions of interest, including
distributions in respect of accrued original issue discount, to such holder may
be subject to a tax rate of 30%, subject to reduction under any applicable tax
treaty.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder who is not a
United States person and owns 10% or more of one or more underlying Mortgagors
or, if the holder is a controlled foreign corporation, is related to one or more
Mortgagors.
Further, it appears that a REMIC Regular Certificate would not be
included in the estate of a nonresident alien individual and would not be
subject to United States estate taxes. However, it is recommended that
Certificateholders who are nonresident alien individuals consult their tax
advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers
of REMIC Residual Certificates to investors that are not United States Persons
will be prohibited under the related Pooling Agreement.
Grantor Trust Funds
Classification of Grantor Trust Funds. With respect to each Series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
Agreement, the related Grantor Trust Fund will be classified as a grantor trust
under subpart E, part I of subchapter J of the Code and not as a partnership or
an association taxable as a corporation. The following general discussion of the
anticipated federal income tax consequences of the purchase, ownership and
disposition of Grantor Trust Certificates, to the extent it relates to matters
of law or legal conclusions with respect thereto, represents the opinion of
counsel to the Depositor for the applicable Series as specified in the related
Prospectus Supplement, subject to any qualifications set forth herein. In
addition, counsel to the Depositor have prepared or reviewed the statements in
this Prospectus under the heading "Federal Income Tax Consequences--Grantor
Trust Funds", and are of the opinion that such statements are correct in all
material respects. Such statements are intended as an explanatory discussion of
the possible effects of the classification of any Grantor Trust Fund as a
grantor trust for federal income tax purposes on investors generally and of
related tax matters affecting investors generally, but do not purport to furnish
information in the level of detail or with the attention to an investor's
specific tax circumstances that would be provided by an investor's own tax
advisor. Accordingly, it is recommended that each investor consult its own tax
advisors with regard to the tax consequences to it of investing in Grantor Trust
Certificates.
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For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees) and interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust Fund
will be referred to as a "Grantor Trust Strip Certificate". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code (but generally only to the
extent that the underlying Mortgage Loans have been made with respect to
property that is used for residential or certain other prescribed purposes);
(ii) "obligation[s] (including any participation or Certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3) of the Code; (iii) "permitted
assets" within the meaning of Section 860L(a)(1)(C) of the Code; and (iv) "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code. In
addition, counsel to the Depositor will deliver an opinion that interest on
Grantor Trust Fractional Interest Certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip
Certificates evidence an interest in a Grantor Trust Fund consisting of Mortgage
Loans that are "loans . . . secured by an interest in real property" within the
meaning of Section 7701(a)(19)(C)(v) of the Code and "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code, and the interest on which is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(A) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
Counsel to the Depositor will not deliver any opinion on these questions. It is
recommended that prospective purchasers to which such characterization of an
investment in Grantor Trust Strip Certificates is material consult their tax
advisors regarding whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including
any participation or Certificate of beneficial ownership therein) which . . .
[are] principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code and, in general, "permitted assets" within the
meaning of Section 860L(a)(1)(C) of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates
General. Holders of a particular Series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans.
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Under Section 67 of the Code, an individual, estate or trust holding a
Grantor Trust Fractional Interest Certificate directly or through certain
pass-through entities will be allowed a deduction for such reasonable servicing
fees and expenses only to the extent that the aggregate of such holder's
miscellaneous itemized deductions exceeds two percent of such holder's adjusted
gross income. In addition, Section 68 of the Code provides that the amount of
itemized deductions otherwise allowable for an individual whose adjusted gross
income exceeds a specified amount will be reduced by the lesser of (i) 3% of the
excess of the individual's adjusted gross income over such amount or (ii) 80% of
the amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple Classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the Classes of Grantor Trust Certificates
using a method that recognizes that each such Class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among Classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such Class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any Series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a Class of Grantor
Trust Strip Certificates is issued as part of the same Series or (ii) the
Depositor or any of its affiliates retains (for its own account or for purposes
of resale) a right to receive a specified portion of the interest payable on a
Mortgage Asset. Further, the IRS has ruled that an unreasonably high servicing
fee retained by a seller or servicer will be treated as a retained ownership
interest in mortgages that constitutes a stripped coupon. The related Prospectus
Supplement will include information regarding servicing fees paid to a Master
Servicer, a Special Servicer, any Sub-Servicer or their respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below. Under the stripped bond rules,
the holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
Grantor Trust Fractional Interest Certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates" below) and the yield of such
Grantor Trust Fractional Interest Certificate to such holder. Such yield would
be computed as the rate (compounded based on the regular interval between
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payment dates) that, if used to discount the holder's share of future payments
on the Mortgage Loans, would cause the present value of those future payments to
equal the price at which the holder purchased such Certificate. In computing
yield under the stripped bond rules, a Certificateholder's share of future
payments on the Mortgage Loans will not include any payments made in respect of
any ownership interest in the Mortgage Loans retained by the Depositor, the
Master Servicer, the Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments.
Recent legislation extends the scope of that section to any pool of debt
instruments the yield on which may be affected by reason of prepayments,
effective for taxable years beginning after enactment. The precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain whether a prepayment assumption will be applied collectively to all a
taxpayer's investments in pools of debt instruments or will be applied on an
investment-by-investment basis. Similarly, as to investments in Grantor Trust
Fractional Interest Certificates, it is not clear whether the assumed prepayment
rate is to be determined based on conditions at the time of the first sale of
the Grantor Trust Fractional Interest Certificate or, with respect to any
holder, at the time of purchase of the Grantor Trust Fractional Interest
Certificate by that holder. It is recommended that Certificateholders consult
their tax advisors concerning reporting original issue discount with respect to
Grantor Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired
at a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
In the absence of statutory or administrative clarification, it is
currently intended that information reports or returns to the IRS and
Certificateholders will be based on a prepayment assumption (the "Prepayment
Assumption") determined when Certificates are offered and sold hereunder and
disclosed in the related Prospectus Supplement, and on a constant yield computed
using a representative initial offering price for each Class of Certificates.
However, neither the Depositor nor any other person will make any representation
that the Mortgage Loans will in fact prepay at a rate conforming to such
Prepayment Assumption or any other rate or that the Prepayment Assumption will
not be challenged by the IRS on audit. Certificateholders also should bear in
mind that the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each Series who bought at that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are
to be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price
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multiplied by the weighted average maturity of the Mortgage Loans, then such
original issue discount or market discount will be considered to be de minimis.
Original issue discount or market discount of only a de minimis amount will be
included in income in the same manner as de minimis original issue discount and
market discount described in "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" and "--Market
Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. In that case, the original
issue discount rules will apply, even if the stripped bond rules do not apply,
to a Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in Mortgage Loans issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal
the difference between the stated redemption price of such Mortgage Loans and
their issue price. For a definition of "stated redemption price," see
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount"
above. In general, the issue price of a Mortgage Loan will be the amount
received by the borrower from the lender under the terms of the Mortgage Loan,
less any "points" paid by the borrower, and the stated redemption price of a
Mortgage Loan will equal its principal amount, unless the Mortgage Loan provides
for an initial "teaser," or below-market interest rate. The determination as to
whether original issue discount will be considered to be de minimis will be
calculated using the same test as in the REMIC discussion. See "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. Under
recent legislation, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing yield with respect to any pool of debt
instruments, the yield on which may be affected by prepayments. The precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain whether a prepayment assumption will be applied collectively to
all a taxpayer's investments in pools of debt instruments or will be applied on
an investment-by-investment basis. Similarly, as to investments in Grantor Trust
Fractional Interest Certificates, it is not clear whether the assumed prepayment
rate is to be determined at the time of the first sale of the Grantor Trust
Fractional Interest Certificate or, with respect to any holder, at the time of
that holder's purchase of the Grantor Trust Fractional Interest Certificate. It
is recommended that Certificateholders consult their own tax advisors concerning
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates and refer to the related Prospectus Supplement with
respect to each Series to determine whether and in what manner the original
issue discount rules will apply to Mortgage Loans in such Series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such
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Mortgage Loans. The adjusted issue price of a Mortgage Loan on any given day
equals the sum of (i) the adjusted issue price (or, in the case of the first
accrual period, the issue price) of such Mortgage Loan at the beginning of the
accrual period that includes such day and (ii) the daily portions of original
issue discount for all days during such accrual period prior to such day. The
adjusted issue price of a Mortgage Loan at the beginning of any accrual period
will equal the issue price of such Mortgage Loan, increased by the aggregate
amount of original issue discount with respect to such Mortgage Loan that
accrued in prior accrual periods, and reduced by the amount of any payments made
on such Mortgage Loan in prior accrual periods of amounts included in its stated
redemption price.
In the absence of statutory or administrative clarification, it is
currently intended that information reports or returns to the IRS and
Certificateholders will be based on a prepayment assumption (the "Prepayment
Assumption") determined when Certificates are offered and sold hereunder and
disclosed in the related Prospectus Supplement, and on a constant yield computed
using a representative initial offering price for each Class of Certificates.
However, neither the Depositor nor any other person will make any representation
that the Mortgage Loans will in fact prepay at a rate conforming to such
Prepayment Assumption or any other rate or that the Prepayment Assumption will
not be challenged by the IRS on audit. Certificateholders also should bear in
mind that the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each Series who bought at that price.
Market Discount. If the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "--Taxation of Owners of REMIC Regular
Interests--Market Discount" above.
Section 1276(b)(3) of the Code authorizes the Treasury Department to
issue regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
holder's option: (i) on the basis of a constant yield method, (ii) in the case
of a Mortgage Loan issued without original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period.
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Under recent legislation, Section 1272(a)(6) of the Code requires that
a prepayment assumption be used in computing the accrual of original issue
discount with respect to any pool of debt instruments, the yield on which may be
affected by prepayments. Because the Mortgage Loans will be such a pool, it
appears that the prepayment assumption used (or that would be used) in
calculating the accrual of original issue discount, if any, is also to be used
in calculating the accrual of market discount. However, the precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain whether a prepayment assumption will be applied collectively to all of
a taxpayer's investments in pools of debt instruments or will be applied on an
investment-by-investment basis. Similarly, it is not clear whether the assumed
prepayment rate is to be determined at the time of the first sale of the Grantor
Trust Fractional Interest Certificate or, with respect to any holder, at the
time of that holder's purchase of the Grantor Trust Fractional Interest
Certificate. Moreover, because the regulations under 1276(b)(3) referred to in
the preceding paragraph have not been issued, it is not possible to predict what
effect such regulations might have on the tax treatment of a Mortgage Loan
purchased at a discount in the secondary market. It is recommended that
Certificateholders consult their own tax advisors concerning accrual of market
discount with respect to Grantor Trust Fractional Interest Certificates and
should refer to the related Prospectus Supplement with respect to each Series to
determine whether and in what manner the market discount will apply to Mortgage
Loans purchased at a market discount in such Series.
To the extent that the Mortgage Loans provide for periodic payments of
stated redemption price, market discount may be required to be included in
income at a rate that is not significantly slower than the rate at which such
discount would be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans may be considered to be
de minimis and, if so, will be includible in income under de minimis rules
similar to those described above in "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount" above.
Further, under the rules described above in "--REMICs--Taxation of
Owners of REMIC Regular Certificates--Market Discount", any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It appears that a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code similar to that
described for calculating the accrual of market discount of Grantor Trust
Fractional Interest Certificates. See "--Taxation of Owners of Grantor Trust
Fractional Interest Certificates -- Market Discount", above.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates--If Stripped Bond Rules Apply", no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will
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be applied to securities such as the Grantor Trust Strip Certificates.
Accordingly, it is recommended that holders of Grantor Trust Strip Certificates
consult their tax advisors concerning the method to be used in reporting income
or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied.
Under the stripped coupon rules, it appears that original issue
discount will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a
prepayment assumption be used in computing the accrual of original issue
discount with respect to certain categories of debt instruments, and that
adjustments be made in the amount and rate of accrual of such discount when
prepayments do not conform to such prepayment assumption. It appears that those
provisions would apply to Grantor Trust Strip Certificates. It is uncertain
whether the assumed prepayment rate would be determined based on conditions at
the time of the first sale of the Grantor Trust Strip Certificate or, with
respect to any subsequent holder, at the time of purchase of the Grantor Trust
Strip Certificate by that holder.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a REMIC Regular Certificate, the amount of
original issue discount allocable to such accrual period will be zero. That is,
no current deduction of such negative amount will be allowed to the holder of
such Certificate. The holder will instead only be permitted to offset such
negative amount against future positive original issue discount (if any)
attributable to such a Certificate. Although not free from doubt, it is possible
that a Certificateholder may be permitted to deduct a loss to the extent his or
her basis in the Certificate exceeds the maximum amount of payments such
Certificateholder could ever receive with respect to such Certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to Stripped Interest
Certificates, which can have negative yields under circumstances that are not
default related. See "Risk Factors--Effect of Prepayments on Yield of
Certificates" herein.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, it currently is intended to base information returns or reports
to the IRS and Certificateholders on the Prepayment Assumption disclosed in the
related Prospectus Supplement and on a constant yield computed using a
representative initial offering price for each Class of Certificates. However,
neither the Depositor nor any other person will make any representation that the
Mortgage Loans will in fact prepay at a rate conforming to the Prepayment
Assumption or at any other rate or that the Prepayment Assumption will not be
challenged by the IRS on audit. Certificateholders also should bear in mind that
the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each Series who bought at that price. It is recommended that prospective
purchasers of the Grantor Trust Strip Certificates consult their tax advisors
regarding the use of the Prepayment Assumption.
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Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides for lower rates
as to long-term capital gains, than those applicable to the short-term capital
gains and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be
partially or wholly ordinary and not capital in certain circumstances. Gain
attributable to accrued and unrecognized market discount will be treated as
ordinary income, as will gain or loss recognized by banks and other financial
institutions subject to Section 582(c) of the Code. Furthermore, a portion of
any gain that might otherwise be capital gain may be treated as ordinary income
to the extent that the Grantor Trust Certificate is held as part of a
"conversion transaction" within the meaning of Section 1258 of the Code. A
conversion transaction generally is one in which the taxpayer has taken two or
more positions in the same or similar property that reduce or eliminate market
risk, if substantially all of the taxpayer's return is attributable to the time
value of the taxpayer's net investment in such transaction. The amount of gain
realized in a conversion transaction that is recharacterized as ordinary income
generally will not exceed the amount of interest that would have accrued on the
taxpayer's net investment at 120% of the appropriate "applicable Federal rate"
(which rate is computed and published monthly by the IRS) at the time the
taxpayer enters into the conversion transaction, subject to appropriate
reduction for prior inclusion of interest and other ordinary income items from
the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include such
net capital gain in total net investment income for that taxable year, for
purposes of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master Servicer, as applicable,
will furnish, within a reasonable time after the end of each calendar year, to
each holder of a Grantor Trust Certificate who was such a holder at any time
during such year, information regarding the amount of servicing compensation
received by the Master Servicer, the Special Servicer or any Sub-Servicer, and
such other customary factual information as the Depositor or the reporting party
deems necessary or desirable to enable holders of Grantor Trust Certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the Grantor Trust Certificates are uncertain
in various respects, there is no assurance the IRS will agree with the Trustee's
or Master Servicer's, as the case may be, information reports of such items of
income and expense. Moreover, such information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial Certificateholders that bought their Certificates at the representative
initial offering price used in preparing such reports.
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On August 13, 1998, the Service published proposed regulations, which
will, when effective, establish a reporting framework for interests in "widely
held fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity classified as a
"trust" under Treasury Regulation Section 301.7701-4(c) in which any interest is
held by a middleman (which includes, but is not limited to, a custodian of a
person's account, a nominee, and a broker holding an interest for a customer in
street name). These regulations are proposed to be effective for calendar years
beginning on or after the date that the final regulations are published in the
Federal Register.
Backup Withholding. In general, the rules described above in
"--REMICs--Backup Withholding with Respect to REMIC Certificates" will also
apply to Grantor Trust Certificates.
Foreign Investors. In general, the discussion with respect to REMIC
Regular Certificates in "--REMICs--Foreign Investors in REMIC Certificates"
above applies to Grantor Trust Certificates except that Grantor Trust
Certificates will, unless otherwise disclosed in the related Prospectus
Supplement, be eligible for exemption from U.S. withholding tax, subject to the
conditions described in such discussion, only to the extent the related Mortgage
Loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be
exempt under Sections 871(h)(1) and 881(c) of the Code from United States
withholding tax, and the Grantor Trust Certificate is not held in connection
with a Certificateholder's trade or business in the United States, such Grantor
Trust Certificate will not be subject to United States estate taxes in the
estate of a nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in
"Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore, it is
recommended that prospective investors consult their tax advisors with respect
to the various tax consequences of investments in the Offered Certificates.
ERISA CONSIDERATIONS
General
ERISA and the Code impose certain requirements on employee benefit
plans, and on certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts (and as applicable, insurance company
general accounts) in which such plans, accounts or arrangements are invested
that are subject to the fiduciary responsibility provisions of ERISA and Section
4975 of the Code ("Plans"), and on persons who are fiduciaries with respect to
such Plans, in connection with the investment of Plan assets. Certain employee
benefit plans, such as governmental plans (as defined in ERISA Section 3(32)),
and, if no election has been made under Section 410(d) of the Code, church plans
(as defined in Section 3(33) of ERISA) are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. Any such plan which is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code,
however, is subject to the prohibited transaction rules set forth in Section 503
of the Code.
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ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. The types of transactions between Plans
and Parties in Interest that are prohibited include: (a) sales, exchanges or
leases of property, (b) loans or other extensions of credit and (c) the
furnishing of goods and services. Certain Parties in Interest that participate
in a prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Code or a penalty imposed pursuant to Section 502(i) of
ERISA, unless a statutory or administrative exemption is available. In addition,
the persons involved in the prohibited transaction may have to rescind the
transaction and pay an amount to the Plan for any losses realized by the Plan or
profits realized by such persons, individual retirement accounts involved in the
transaction may be disqualified resulting in adverse tax consequences to the
owner of such account and certain other liabilities could result that would have
a significant adverse effect on such person.
Plan Asset Regulations
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Assets and other assets included in a related Trust Fund to be deemed
assets of such Plan. Section 2510.3-101 of the regulations (the "Plan Asset
Regulations") of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions apply, including that the equity
participation in the entity by "benefit plan investors" (i.e., Plans and certain
employee benefit plans not subject to ERISA) is not "significant", both as
defined therein. For this purpose, in general, equity participation by benefit
plan investors will be "significant" on any date if 25% or more of the value of
any class of equity interests in the entity is held by benefit plan investors
(determined by not including the investments of persons with discretionary
authority or control over the assets of such entity, of any person who provides
investment advice for a fee (direct or indirect) with respect to such assets,
and "affiliates" (as defined in the DOL regulations relating to Plan assets) of
such persons). Equity participation in a Trust Fund will be significant on any
date if immediately after the most recent acquisition of any Certificate, 25% or
more of any Class of Certificates is held by benefit plan investors (determined
by not including the investments of the Depositor, the Trustee, the Master
Servicer, the Special Servicer, any other parties with discretionary authority
over the assets of a Trust Fund and their respective affiliates).
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as a Master Servicer, a Special Servicer,
any Sub-Servicer, a Trustee, the obligor under any related credit enhancement
mechanism, or certain affiliates thereof may be deemed to be a Plan "fiduciary"
with respect to the investing Plan and thus subject to the fiduciary
responsibility provisions of ERISA. In addition, if the underlying assets of a
Trust Fund constitute Plan assets, the Depositor, any related REMIC
Administrator, any related Manager, any mortgagor with respect to a related
Mortgage Loan or a mortgage loan underlying a related MBS, as well as each of
the parties described in the preceding sentence, may become Parties in Interest
with respect to an investing Plan (or of a Plan holding an interest in an
investing entity). Thus, if the Mortgage Assets and other assets included in a
Trust Fund constitute Plan assets, the operation of the Trust Fund, may involve
a prohibited transaction under ERISA or the Code. For example, if a person who
is a Party in Interest with respect to an investing Plan is a mortgagor with
respect to a Mortgage Loan included in a Trust Fund, the purchase of
Certificates by the Plan could constitute a prohibited loan between a Plan and a
Party in Interest.
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The Plan Asset Regulations provide that where a Plan acquires a
"guaranteed governmental mortgage pool certificate", the Plan's assets include
such certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" certain FHLMC Certificates, GNMA Certificates and
FNMA Certificates, but do not include FAMC Certificates. Accordingly, even if
such types of MBS (other than FAMC Certificates) included in a Trust Fund were
deemed to be assets of Plan investors, the mortgages underlying such MBS (other
than FAMC Certificates) would not be treated as assets of such Plans. Thus, the
prohibited transaction described in the preceding paragraph (regarding a
prohibited loan) would not occur with respect to such types of MBS (other than
FAMC Certificates) held in a Trust Fund, even if such MBS were treated as assets
of Plans. Private label mortgage participations, mortgage pass-through
certificates, FAMC Certificates or other mortgage-backed securities are not
"guaranteed governmental mortgage pool certificates" within the meaning of the
Plan Asset Regulations.
In addition, and without regard to whether the Mortgage Assets and
other assets included in a Trust Fund constitute Plan assets, the acquisition or
holding of Offered Certificates by or on behalf of a Plan could give rise to a
prohibited transaction if the Depositor, the related Trustee or any related
Underwriter, Master Servicer, Special Servicer, Sub-Servicer, REMIC
Administrator, Manager, mortgagor or obligor under any credit enhancement
mechanism, or any of certain affiliates thereof, is or becomes a Party in
Interest with respect to an investing Plan. Accordingly, potential Plan
investors should consult their counsel and review the ERISA discussion in the
related Prospectus Supplement before purchasing any such Certificates.
Prohibited Transaction Exemptions
In considering an investment in the Offered Certificates, a Plan
fiduciary should consider the availability of prohibited transaction exemptions
promulgated by the DOL including, among others, Prohibited Transaction Class
Exemption ("PTCE") 75-1, which exempts certain transactions involving Plans and
certain broker-dealers, reporting dealers and banks; PTCE 90-1, which exempts
certain transactions between insurance company separate accounts and Parties in
Interest; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest; PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest; and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager". There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in the Certificates or,
even if it were deemed to apply, that any exemption would apply to all
transactions that may occur in connection with such investment. The Prospectus
Supplement with respect to the Offered Certificates of any Series may contain
additional information regarding the availability of other exemptions with
respect to such Offered Certificates.
Insurance Company General Accounts
In addition to any exemption that may be available under PTCE 95-60 for
the purchase and holding of Offered Certificates by an insurance company general
account, the Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides certain exemptive relief from the provisions of
Part 4 of Title I of ERISA and Section 4975 of the Code, including the
prohibited transaction restrictions imposed by ERISA and the related excise
taxes imposed by the Code, for transactions involving an insurance company
general account. Pursuant to Section 401(c) of ERISA, the DOL is required to
issue final regulations ("401(c) Regulations") no later than December 31, 1997,
which are to provide guidance for the purpose of determining, in cases where
insurance policies supported by an insurer's general account are issued to or
for the benefit of a Plan on or before December 31, 1998, which general account
assets constitute Plan assets. Section 401(c) of ERISA generally provides that,
until the date which is 18 months after the 401(c) Regulations become final, no
person shall be subject to liability under Part 4 of Title I of ERISA and
Section 4975 of the Code on the basis
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<PAGE>
of a claim that the assets of an insurance company general account constitute
Plan assets, unless (i) as otherwise provided by the Secretary of Labor in the
401(c) Regulations to prevent avoidance of the regulations or (ii) an action is
brought by the Secretary of Labor for certain breaches of fiduciary duty which
would also constitute a violation of federal or state criminal law. Any assets
of an insurance company general account which support insurance policies issued
to a Plan after December 31, 1998 or issued to Plans on or before December 31,
1998 for which the insurance company does not comply with the 401(c) Regulations
may be treated as Plan assets. In addition, because Section 401(c) does not
relate to insurance company separate accounts, separate account assets are still
treated as Plan assets of any Plan invested in such separate account. Insurance
companies contemplating the investment of general account assets in Offered
Certificates should consult with their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold such Certificates after the date which is 18 months
after the date the 401(c) Regulations become final.
Consultation With Counsel
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consider its general fiduciary
obligations under ERISA and should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of any prohibited transaction exemption in connection therewith.
Tax Exempt Investors
A Plan that is exempt from federal income taxation pursuant to Section
501 of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates-Excess Inclusions".
LEGAL INVESTMENT
If and to the extent so specified in the related Prospectus Supplement,
the Offered Certificates of any Series will constitute "mortgage related
securities" for purposes of SMMEA. "Mortgage related securities" are legal
investments to the same extent that, under applicable law, obligations issued by
or guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, insurance companies and pension funds
created pursuant to or existing under the laws of the United States or of any
state), the authorized investments of which are subject to state regulation.
Prior to December 31, 1996, only Classes of Offered Certificates that
(i) were rated in one of the two highest rating categories by one or more Rating
Agencies and (ii) were part of a Series evidencing interests in a Trust Fund
consisting of loans directly secured by a first lien on a single parcel of real
estate upon which is located a dwelling or mixed residential and commercial
structure, and originated by the types of originators specified in SMMEA, would
be "mortgage related securities" for purposes of SMMEA. Furthermore, under SMMEA
as originally enacted, if a state enacted legislation prior to October 3, 1991
that specifically limited the legal investment authority of any the entities
referred to in the preceding paragraph with respect to "mortgage related
securities" under such definition, Offered Certificates would constitute legal
investments for entities subject to such legislation only to the extent provided
in such legislation.
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<PAGE>
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which such
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures". In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state may enact legislation
limiting the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
SMMEA also amended the legal investment authority of federally
chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise deal
with "mortgage related securities" without limitation as to the percentage of
their assets represented thereby, federal credit unions may invest in such
securities, and national banks may purchase such securities for their own
account without regard to the limitations generally applicable to investment
securities set forth in 12 U.S.C. 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, effective December 31, 1996, the Office of the Comptroller of
the Currency (the "OCC") amended 12 C.F.R. Part 1 to authorize national banks to
purchase and sell for their own account, without limitation as to a percentage
of the bank's capital and surplus (but subject to compliance with certain
general standards concerning "safety and soundness" and retention of credit
information in 12 C.F.R. Section 1.5), certain "Type IV securities", defined in
12 C.F.R. Section 1.2(1) to include certain "commercial mortgage-related
securities" and "residential mortgage-related securities". As so defined,
"commercial mortgage-related security" and "residential mortgage-related
security" mean, in relevant part, "mortgage related security" within the meaning
of SMMEA, provided that, in the case of a "commercial mortgage-related
security," it "represents ownership of a promissory note or certificate of
interest or participation that is directly secured by a first lien on one or
more parcels of real estate upon which one or more commercial structures are
located and that is fully secured by interests in a pool of loans to numerous
obligors." In the absence of any rule or administrative interpretation by the
OCC defining the term "numerous obligors," no representation is made as to
whether any Class of Offered Certificates will qualify as "commercial
mortgage-related securities", and thus as "Type IV securities", for investment
by national banks. Federal credit unions should review NCUA Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities. The NCUA has adopted rules, codified as 12 C.F.R.
Section 703.5(f)- (k), which prohibit federal credit unions from investing in
certain mortgage related securities (including securities such as certain
Classes of Offered Certificates), except under limited circumstances.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "Policy Statement") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities". The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS (as defined herein). The
Policy Statement generally indicates that a mortgage derivative product will be
deemed to be high risk if it exhibits greater price volatility than a standard
fixed rate thirty-year mortgage security. According to the Policy Statement,
prior to purchase, a depository institution will be required to determine
whether a mortgage derivative product that it is considering acquiring is
high-risk, and if so that the proposed acquisition would reduce the
institution's overall interest rate risk. Reliance on analysis and documentation
obtained from a securities dealer or other outside party without internal
analysis by the institution would be unacceptable. There can be no assurance as
to which Classes of Certificates, including Offered Certificates, will be
treated as high-risk under the Policy Statement.
-120-
<PAGE>
The predecessor to the Office of Thrift Supervision (the "OTS") issued
a bulletin, entitled "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin established
guidelines for the investment by savings institutions in certain "high-risk"
mortgage derivative securities and limitations on the use of such securities by
insolvent, undercapitalized or otherwise "troubled" institutions. According to
the bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain Classes of
Offered Certificates. In addition, the National Credit Union Administration has
issued regulations governing federal credit union investments which prohibit
investment in certain specified types of securities, which may include certain
Classes of Offered Certificates. Similar policy statements have been issued by
regulators having jurisdiction over other types of depository institutions.
There may be other restrictions on the ability of certain investors
either to purchase certain Classes of Offered Certificates or to purchase any
Class of Offered Certificates representing more than a specified percentage of
the investor's assets. The Depositor makes no representations as to the proper
characterization of any Class of Offered Certificates for legal investment or
other purposes, or as to the ability of particular investors to purchase any
Class of Offered Certificates under applicable legal investment restrictions.
These uncertainties may adversely affect the liquidity of any Class of Offered
Certificates. Accordingly, all investors whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors in
determining whether and to what extent the Offered Certificates of any Class and
Series constitute legal investments or are subject to investment, capital or
other restrictions.
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the
net proceeds to be received from the sale of the Certificates of any Series will
be applied by the Depositor to the purchase of Trust Assets or will be used by
the Depositor to cover expenses related thereto. The Depositor expects to sell
the Certificates from time to time, but the timing and amount of offerings of
Certificates will depend on a number of factors, including the volume of
Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus
Supplements will be offered in Series through one or more of the methods
described below. The Prospectus Supplement prepared for the Offered Certificates
of each Series will describe the method of offering being utilized for such
Offered Certificates and will state the net proceeds to the Depositor from the
sale of such Offered Certificates.
The Depositor intends that Offered Certificates will be offered through
the following methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of the
Offered Certificates of a particular Series may be made through a combination of
two or more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public offering by one or more underwriters specified in the related Prospectus
Supplement;
2. By placements by the Depositor with institutional investors through
dealers; and
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<PAGE>
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a Series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates. Furthermore, the Trust Fund for one Series of Offered Certificates
may include Offered Certificates from other Series.
If underwriters are used in a sale of any Offered Certificates (other
than in connection with an underwriting on a best efforts basis), such
Certificates will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. The
managing underwriter or underwriters with respect to the offer and sale of
Offered Certificates of a particular Series will be set forth on the cover of
the Prospectus Supplement relating to such Series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from the Depositor and any profit on
the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
It is anticipated that the underwriting agreement pertaining to the
sale of the Offered Certificates of any Series will provide that the obligations
of the underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act, or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any Series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Depositor and
purchasers of Offered Certificates of such Series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act in connection with reoffers and sales by them of Offered Certificates.
Holders of Offered Certificates should consult with their legal advisors in this
regard prior to any such reoffer or sale.
As to any Series, only those Classes rated in an investment grade
rating category by any Rating Agency will be offered hereby. Any unrated Class
may be initially retained by the Depositor, and may be sold by the Depositor at
any time to one or more institutional investors.
-122-
<PAGE>
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement,
certain legal matters in connection with the Certificates of each Series,
including certain federal income tax consequences, will be passed upon for the
Depositor by Sidley & Austin.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series, and no
Trust Fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related Series. Accordingly, no
financial statements with respect to any Trust Fund will be included in this
Prospectus or in the related Prospectus Supplement. The Depositor has determined
that its financial statements will not be material to the offering of any
Offered Certificates.
RATING
It is a condition to the issuance of any Class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in one
of the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in certain
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating.
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<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Page
----
401(c) Regulations..........................................................118
ACMs.........................................................................84
ADA..........................................................................87
Call Risk....................................................................19
Cash Flow Agreement..........................................................14
CERCLA.......................................................................84
Certificate Account..........................................................63
Certificate Notional Amount..................................................12
Certificate Owner............................................................56
Certificate Principal Balance................................................12
Certificateholders...........................................................51
Certificates..................................................................1
Class.........................................................................1
Closing Date.................................................................10
Commercial Properties........................................................30
Commission....................................................................3
Committee Report.............................................................92
Companion Class..............................................................53
Contributions Tax...........................................................104
Controlled Amortization Class................................................53
Controlled Amortization Classes..............................................11
Cooperatives.................................................................31
CPR..........................................................................47
Credit Support...............................................................14
Crime Control Act............................................................88
Cut-off Date.................................................................10
Definitive Certificates......................................................50
Depositor.....................................................................1
Determination Date...........................................................51
Disqualified Organization...................................................105
Distribution Date............................................................13
Distribution Date Statement..................................................54
DOL.........................................................................117
DTC...........................................................................3
DTC Participants.............................................................29
Due Dates....................................................................40
Due Period...................................................................44
Equity Participation.........................................................41
ERISA........................................................................16
Exchange Act..................................................................3
Extension Risk...............................................................19
FAMC.........................................................................42
FAMC Certificates............................................................42
FHLMC........................................................................42
FHLMC Certificates...........................................................42
Financial Intermediary.......................................................56
FN\MA........................................................................42
FNMA Certificates............................................................42
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Page
----
Garn Act.....................................................................86
GNMA.........................................................................42
GNMA Certificates............................................................42
Grantor Trust Certificates...................................................15
Grantor Trust Fractional Interest Certificate...............................108
Grantor Trust Fund...........................................................89
Grantor Trust Strip Certificate.............................................108
IRS..........................................................................92
Issue Premium................................................................98
Lender Liability Act.........................................................84
Letter of Credit Bank........................................................76
Liquidation Proceeds.........................................................63
Lock-out Date................................................................40
Lock-out Period..............................................................40
Mark-to-Market Regulations..................................................101
Master Servicer...............................................................8
MBS...................................................................1, 10, 30
MBS Administrator.............................................................8
MBS Agreement................................................................42
MBS Issuer...................................................................42
MBS Servicer.................................................................42
MBS Trustee..................................................................42
Mortgage Asset Pool...........................................................1
Mortgage Asset Seller........................................................30
Mortgage Assets...........................................................1, 30
Mortgage Loans.........................................................1, 8, 30
Mortgage Notes...............................................................30
Mortgage Rate.................................................................9
Mortgaged Properties.........................................................30
Mortgages....................................................................30
Multifamily Properties.......................................................30
Net Leases...................................................................39
Net Operating Income.........................................................39
Nonrecoverable Advance.......................................................54
OCC.........................................................................120
Offered Certificates..........................................................1
OID Regulations..............................................................89
Originator...................................................................31
OTS.........................................................................121
Parties in Interest.........................................................117
Pass-Through Rate............................................................12
Percentage Interest..........................................................51
Permitted Investments........................................................63
Plan Asset Regulations......................................................117
Plans.......................................................................116
Policy Statement............................................................120
Pooling Agreement............................................................11
Prepayment Assumption..............................................92, 110, 112
Prepayment Interest Shortfall................................................45
Prepayment Premium...........................................................40
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Page
----
Prohibited Transactions Tax.................................................103
Prospectus Supplement.........................................................1
PTCE........................................................................118
Purchase Price...............................................................59
Qualified Stated Interest....................................................92
Rating Agency................................................................16
Record Date..................................................................51
Related Proceeds.............................................................53
Relief Act...................................................................88
Religious Facilities.........................................................38
REMIC.....................................................................2, 89
REMIC Administrator...........................................................8
REMIC Certificates...........................................................89
REMIC Provisions.............................................................89
REMIC Regular Certificates...................................................15
REMIC Regulations............................................................90
REMIC Residual Certificates..................................................15
REO Property.................................................................60
Restaurants..................................................................37
Retail Sales and Service Properties..........................................34
RICO.........................................................................88
Securities Act................................................................3
Senior Certificates..........................................................11
Senior Liens.................................................................31
Series........................................................................1
SMMEA........................................................................16
SPA..........................................................................47
Special Servicer..............................................................8
Storage Properties...........................................................37
Stripped Interest Certificates...............................................11
Stripped Principal Certificates..............................................11
Sub-Servicer.................................................................62
Sub-Servicing Agreement......................................................62
Subordinate Certificates.....................................................11
Tax Exempt Investor.........................................................119
Tiered REMICs................................................................91
Title V......................................................................87
Trust Fund....................................................................1
Trustee.......................................................................8
UBTI........................................................................119
UCC..........................................................................79
Undelivered Mortgage Assets..................................................10
United States Person........................................................107
Voting Rights................................................................55
Warranting Party.............................................................59
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<PAGE>
The attached diskette contains one spreadsheet file (the "Spreadsheet File")
that can be put on a user-specified hard drive or network drive. This file is
"DLJ98CF2.XLS". The file "DLJ98CF2.XLS" is a Microsoft Excel(1), Version 5.0
spreadsheet. The file provides, in electronic format, certain statistical
information that appears under the caption "Description of the Mortgage Pool" in
and on Exhibits A-1 and A-2 to the Prospectus Supplement. Defined terms used in
the Spreadsheet File but not otherwise defined therein shall have the respective
meanings assigned to them in the Prospectus Supplement. All the information
contained in the Spreadsheet File is subject to the same limitations and
qualifications contained in the Prospectus Supplement. Prospective Investors are
strongly urged to read the Prospectus Supplement and accompanying Prospectus in
its entirety prior to accessing the Spreadsheet File.
- --------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
================================================================================
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-33
Description of the Mortgage Pool...........................................S-51
Servicing of the Mortgage Loans............................................S-85
Description of the Offered Certificates....................................S-99
Yield and Maturity Considerations.........................................S-121
Use of Proceeds...........................................................S-127
Federal Income Tax Consequences...........................................S-127
Certain ERISA Considerations..............................................S-131
Legal Investment..........................................................S-134
Method of Distribution....................................................S-135
Legal Matters.............................................................S-136
Ratings...................................................................S-136
Index of Principal Definitions............................................S-138
Exhibit A-1 -- Certain Characteristics of
Mortgage Loans and Mortgaged Properties..............................A-1-1
Exhibit A-2 -- Mortgage Pool Information.................................A-2-1
Exhibit B -- Form of Trustee Report.........................................B-1
Exhibit C -- Decrement Tables for Certain Classes
of Offered Certificates ...............................................C-1
Exhibit D -- Price/Yield Tables for the Class S Certificates ..............D-1
Prospectus
Available Information.........................................................3
Incorporation of Certain Information by Reference.............................4
Summary of Prospectus.........................................................8
Risk Factors.................................................................17
Description of the Trust Funds...............................................30
Yield and Maturity Considerations............................................44
The Depositor................................................................49
Description of the Certificates..............................................50
Description of the Pooling Agreements........................................57
Description of Credit Support................................................75
Certain Legal Aspects of Mortgage Loans......................................78
Federal Income Tax Consequences..............................................89
State and Other Tax Consequences...........................................116
ERISA Considerations........................................................116
Legal Investment............................................................119
Use of Proceeds.............................................................121
Method of Distribution......................................................121
Legal Matters...............................................................123
Financial Information.......................................................123
Rating......................................................................123
Index of Principal Definitions..............................................124
Until February 28, 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 Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
================================================================================
================================================================================
$985,835,000
(Approximate)
DLJ Commercial Mortgage Corp.
(Depositor)
Column Financial, Inc.
(Mortgage Loan Seller)
Class S, Class A-1A, Class A-1B,
Class A-2, Class A-3, Class A-4,
Class B-1 and Class B-2
DLJ Commercial Mortgage Trust 1998-CF2
Commercial Mortgage
Pass-Through Certificates
Series 1998-CF2
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
November 20, 1998
================================================================================
