<PAGE>
8-K
Current Report
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 11, 1999
HELLER FINANCIAL COMMERCIAL MORTGAGE ASSET CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 333-44299 36-4202202
(State or other Jurisdiction (Commission (I.R.S. Employer
Incorporation) File Number) Identification Number)
---------------------
500 West Monroe Street
Chicago, Illinois 60661
(principal executive offices)
(312) 441-7000
<PAGE>
Item 5. OTHER EVENTS
Description of the Certificates
Heller Financial Commercial Mortgage Asset Corp. (the "Depositor") will
cause to be filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Commission's Rule 424 a Prospectus Supplement and the Prospectus
filed as part of Registration Statement, File No. 333-44299, in connection with
the Depositor's issuance of a series of certificates, entitled Commercial
Mortgage Pass-Through Certificates, Series 1999 PH-1 (the "Certificates"), to be
issued pursuant to a Pooling and Servicing agreement among the Depositor, a
master servicer to be determined, Lennar Partners, Inc. as Special Servicer, and
LaSalle National Bank as Trustee.
Computational Materials
Prudential Securities Incorporated as underwriter of certain of the
Certificates (the "Underwriter") has provided certain prospective purchasers of
the Certificates with certain yield tables and other computational materials,
collateral terms sheets and structural term sheets (the "Computational
Materials") in written form, which Computational Materials are in the nature of
data tables and term sheet information relating to the assets of the trust fund
in which the Certificates represent beneficial ownership, the structure of the
Certificates and terms of certain classes of Certificates, and the hypothetical
characteristics and hypothetical performance of certain classes and Certificates
based on collateral information provided by Heller Financial Capital Funding,
Inc. and/or Prudential Mortgage Capital Funding, LLC, under certain assumptions
and scenarios.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits
EXHIBIT NO. 99 DESCRIPTION
Computational Materials (as defined in Item 5) that have been provided
by the Underwriter to certain prospective purchasers of the Offered
Certificates. Such Computational materials are not required to be filed
electronically, but have been filed manually with the Commission.
1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 14, 1999
HELLER FINANCIAL COMMERCIAL
MORTGAGE ASSET CORP.
By: /s/ Thomas J. Bax
-------------------------
Name: Thomas J. Bax
Title: Vice President
2
<PAGE>
ANNEX E
E-1
- -------------------------------------------------------------------------------
STRUCTURAL AND COLLATERAL TERM SHEET
HELLER FINANCIAL COMMERCIAL MORTGAGE ASSET CORP. (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999 PH-1
$1,023,979,711 (APPROXIMATE)
- -------------------------------------------------------------------------------
The information included herein is provided solely by Prudential
Securities Incorporated ("PSI") and Morgan Stanley & Co. Incorporated
(collectively as "Underwriters") for the Heller Financial Commercial Mortgage
Asset Corp. Series 1999 PH-1 transaction. The analysis in this report is based
on information provided by Prudential Mortgage Capital Company, LLC ("PMCC")
and Heller Financial Capital Funding, Inc. ("HFC"), (collectively known as the
"Sellers"). The Underwriters make no representations as to the accuracy of such
information. All opinions and conclusions in this report are subject to change.
All analyses are based on certain assumptions noted herein and different
assumptions could yield substantially different results. You are cautioned that
there is no universally accepted method for analyzing financial instruments or
commercial mortgage loans. You should review the assumptions; there may be
differences between these assumptions and your actual business practices.
Further, the Underwriters do not guarantee any results and there is no
guarantee as to the liquidity of the instruments involved in this analysis. The
decision to adopt any strategy remains your responsibility. The Underwriters
(or any of their affiliates) or their officers, directors, analysts or
employees may have positions in securities, or derivative instruments thereon
referred to herein, and may, as principal or agent, buy or sell such
securities, or derivative instruments. In addition, the Underwriters may make a
market in the securities referred to herein, but are not obligated to do so.
Finally, the Underwriters have not addressed the legal, accounting and tax
implications of the analysis with respect to you and the Underwriters strongly
urge you to seek advice from your counsel, accountant and tax advisor.
Neither the information nor the opinions expressed shall be construed to
be, or constitute, an offer to sell or buy or a solicitation of an offer to
sell or buy any securities, or derivative instruments mentioned herein.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
ANNEX E
E-2
STRUCTURAL AND COLLATERAL TERM SHEET
HELLER FINANCIAL COMMERCIAL MORTGAGE ASSET CORP. (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999 PH-1
$1,023,979,711 (APPROXIMATE)
- -------------------------------------------------------------------------------
APPROXIMATE SECURITIES STRUCTURE:
Approx. Expected Weighted
Expected Face/Notional Credit Average Principal
Rating Amount Support Life Payment
Class (Fitch/Moody's) ($000) (% of UPB) (years)(a) Window(a)
- ---------- ------------- ------------ ----------- --------- ------------
PUBLICLY OFFERED
A-1 AAA/Aaa $204,000 26.75% 5.502 6/99 - 2/08
A-2 AAA/Aaa 546,062 26.75 9.385 2/08 - 2-09
B AAA/Aa1 23,042 24.50 9.717 2/09 - 2/09
C AA/Aa2 20,480 22.50 9.734 2/09 - 3/09
D A/A2 53,757 17.25 9.800 3/09 - 3/09
PRIVATELY OFFERED
X (IO) AAA/Aaa 1,023,980 N/A 9.022 6/99 - 4/14
E A-/A3 12,801 16.00 9.800 3/09 - 3/09
F BBB/Baa2 38,398 12.25 9.904 3/09 - 5/09
G BBB-/Baa3 17,920 10.50 9.967 5/09 - 5/09
H BB+/NR 35,840 7.00 10.089 5/09 - 7/10
J BB/NR 20,480 5.00 12.447 7/10 - 3/13
K BB-/NR 7,680 4.25 13.902 3/13 - 8/13
L B+/NR 10,240 3.25 14.306 8/13 - 12/13
M B/NR 7,680 2.50 14.550 12/13 - 12/13
N B-/NR 10,240 1.50 14.550 12/13 - 12/13
O NR/NR 15,360 --- 14.741 12/13 - 4/14
- --------- -------------- ------------ ----------- --------- ------------
Total 1,023,980
(a) Calculated at 0% CPR and no balloon or ARD extensions.
COLLATERAL FACTS:
Cut-off Date Balance: $1,023,979,711
Number of Mortgage Loans: 193
Number of Properties: 203
Average Cut-off Date Balance: $5,305,594
Weighted Average Gross Coupon: 7.177%
Weighted Average Net Coupon: 7.109%
Weighted Average Remaining Amortization Term (months): 325.16
Weighted Average Cut-off Date DSCR: 1.39x
Weighted Average Cut-off Date LTV: 70.97%
Weighted Average Balloon/ARD LTV Ratio: 57.54%
Weighted Average Remaining Term to Balloon/Maturity (months): 119.57
SIGNIFICANT PROPERTY TYPE CONCENTRATIONS:
Cut-off Date # of % of Wtd. Avg. Wtd. Avg.
Property Type Balance Properties Pool DSCR Coupon
- -----------------------------------------------------------------------
Multifamily $258,104,728 57 25.21% 1.37x 6.85%
Manufac. Housing 39,548,458 16 3.86 1.33 7.68
Senior Housing 30,384,188 5 2.97 1.61 7.10
---------- - ---- ---- ----
Total 328,037,374 78 32.04 1.39 6.97
HousingRelated
Office 238,136,440 29 23.26 1.37 7.22
Retail-Anchored 19 17.28 1.40 7.33
176,896,422
Retail-Unanchored 25 10.39 1.37 7.16
106,366,267
Self-Storage 54,104,211 23 5.28 1.54 7.28
Industrial 30,142,216 9 2.94 1.35 7.08
Hotel 28,878,151 6 2.82 1.42 8.35
Retail-Single Ten. 5 1.30 1.29 7.21
13,273,489
Other 48,145,138 9 4.70 1.47 7.11
- -----------------------------------------------------------------------
Total $1,023,979,711 203 100.00% 1.39 7.18%
COLLATERAL CONTRIBUTORS:
Collateral Cut-off # of % of Wtd. Avg. Wtd. Avg.
Contributors Date Balance Mortgage Loans Pool DSCR. Coupon
- -----------------------------------------------------------------------
PMCF $600,064,280 86 58.60% 1.39 7.13%
HFC $423,915,430 107 41.40% 1.39 7.24%
- -----------------------------------------------------------------------
Total $1,023,979,711 193 100.00% 1.39 7.18%
<PAGE>
IMPORTANT CHARACTERISTICS:
Lead Manager & Prudential Securities Incorporated ("PSI")
Placement Agent:
Co-Manager: Morgan Stanley & Co. Incorporated ("MSDW")
Mortgage Loan Sellers: Prudential Mortgage Capital Funding, LLC("PMCF")
Heller Financial Capital Funding, Inc. ("HFC")
Master Servicer: First Union National Bank ("FUNB")
Special Servicer: Lennar Partners, Inc. ("Lennar")
Trustee: LaSalle Bank National Association ("LaSalle")
Pricing Date: On or about May 17, 1999
Settlement Date: On or about May 27, 1999
Cut-off Date: May 1, 1999
Determination Date: The 8th of each month, or if the 8th is
not a Business Day, the next Business Day.
First Determination
Date: June 8, 1999
Distribution Date: The 15th of each month, or if the 15th day
is not a Business Day, the Business Day
immediately following the 15th day.
First Distribution June 15, 1999
Date:
ERISA Eligible: A-1, A-2 & X (IO)
SMMEA: Not eligible
Structure: Sequential. See "Structural Overview"
herein for further details.
Interest Accrual Calendar month preceding distribution
Period:
Day Count: 30/360
Tax Treatment: REMIC
Rated Final May 15, 2031
Distribution Date:
Clean-up Call: 1%
Minimum The Class A-1 & Class A-2 Certificates
Denominations: will be issued in minimum denominations of
$25,000 initial Certificate Balance. The Class B
Certificates will be issued in minimum denominations of
$50,000 initial Certificate Balance. The remaining
Offered Certificates will be issued in minimum
denominations of $100,000 initial Certificate Balance or
Notional Amount.
Pricing Assumption: The loans will be assumed to pay as
scheduled to its respective maturity or
Anticipated Repayment Date.
SIGNIFICANT STATE CONCENTRATIONS:
Cut-off Date # of Wtd.
State Balance Properties % of Pool Avg. DSCR
- ---------------- --------------- ---------- ------------ ----------
Texas $125,370,229 14 12.24% 1.41x
New Jersey 106,585,389 8 10.41 1.33
California 104,824,727 24 10.24 1.42
Illinois 93,215,925 10 9.10 1.44
Florida 77,410,158 24 7.56 1.36
Ohio 46,911,330 6 4.58 1.34
South Carolina 39,750,211 1 3.88 1.47
Michigan 39,575,727 10 3.86 1.50
Virginia 38,034,153 6 3.71 1.39
Tennessee 35,014,622 7 3.42 1.31
Other 317,287,240 93 31.00 1.39
- ---------------- --------------- ---------- ------------ ----------
Total $1,023,979,711 203 100.00% 1.39x
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-3
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
<PAGE>
E-4
- --------------------------------------------------------------------------------
TRANSACTION HIGHLIGHTS
- --------------------------------------------------------------------------------
o Diversification:
- 193 loans secured by 203 properties
- Top 5 loans equal 20.3% of pool; Top 10 equal 29.0%
- 36 states in total, including Texas 12.24%, New Jersey 10.41%,
California 10.24%, Illinois 9.10%, Florida 7.56%; no other state >
5.00%
- Balloon/ARD distribution equals 55.43% in 2009, and no other year
more than 27.54%
o Underwriting:
- South Plains Mall (Control # 1), Station Plaza (Control # 4) and
Somerset Grove (Control # 2) are all shadow-rated investment grade by
Moody's and/or Fitch. These loans have an aggregate cut-off date
balance of $140,068,714 (13.68% of the total pool cut-off date
balance).
- 1.39x Weighted Average Cut-off Date DSCR
- 70.97% Weighted Average Cut-off Date LTV
- 57.54% Weighted Average Balloon/ARD LTV
- 325.16 Month Weighted Average Remaining Amortization Term
- --------------------------------------------------------------------------------
GENERAL POOL CHARACTERISTICS
- --------------------------------------------------------------------------------
Number of Loans: 193
Number of Properties: 203
Aggregate Cut-off Date Principal Balance: $1,023,979,711
Aggregate Original Principal Balance: $1,030,778,106
Weighted Average Gross Coupon: 7.177%
Gross Coupon Range: 5.980 - 9.700%
Weighted Average Net Coupon: 7.1092%
Net Coupon Range: 5.8276 -
9.6476%
Average Cut-off Date Principal Balance: $5,305,594
Average Original Principal Balance: $5,340,819
Maximum Cut-off Date Principal Balance: $64,916,634
Minimum Cut-off Date Principal Balance: $532,852
Maximum Original Principal Balance: $65,000,000
Minimum Original Principal Balance: $535,000
Weighted Average Cut-off Date DSCR: 1.39x
Cut-off Date DSCR Range: 1.13 - 4.40x
Weighted Average Cut-off Date LTV: 70.97%
Cut-off Date LTV Range: 23.3 - 91.2%
Weighted Average Original LTV: 71.44%
Original LTV Range: 23.4 - 91.6%
Weighted Average Balloon/ARD LTV: 57.54%
Balloon/ARD LTV Range: 0.0 - 82.0%
Weighted Average Age (First Pay through Last 6.72 mths
Pay):
Age Range: 0 - 29 mths
Weighted Avg. Remaining Amortization Term: 325.16 mths
Remaining Amortization Term Range: 171 - 360 mths
Weighted Average Original Amortization Term: 331.80 mths
Original Amortization Term Range: 180 - 360 mths
Weighted Avg. Rem. Term to Balloon/Maturity: 119.57 mths
Remaining Term Range: 57 - 179 mths
Weighted Average Original Term to 126.21 mths
Balloon/Maturity:
Original Term Range: 60 - 180 mths
<PAGE>
- --------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- --------------------------------------------------------------------------------
o The Mortgage Pool will be comprised of 193 mortgage loans with an
approximate Cut-off Date principal balance of $1,023,979,711.
- The regularly scheduled monthly principal payments from the loans
will be paid on a straight sequential basis (i.e., A-1, A-2, etc.).
- All other principal collections from the loans will be distributed on
a straight sequential basis.
- If all Classes other than Classes A-1 and A-2 have been reduced to
zero, principal will be allocated to Class A-1 and A-2 on a pro-rata
basis.
o Each of the Classes (other than Classes A-1, A-2 and X) will be
subordinate to earlier alphabetically lettered classes. Realized Losses
and Appraisal Reductions will be allocated in reverse alphabetical order
to such Classes with certificate balances, and then pro-rata to Classes
A-1 and A-2.
o All Classes will pay interest on a 30/360 basis.
o Shortfalls resulting from servicer modifications or special servicer
compensation will be allocated in reverse alphabetical order to Classes
with certificate balances.
o The Master Servicer will be First Union National Bank. First Union is
rated CMS1 by Fitch IBCA.
o The Special Servicer will be Lennar Partners, Inc. Lennar is rated CSS1 by
Fitch IBCA.
o The Special Servicer will be responsible for servicing loans that, in
general, are in default or are in imminent default, and for administering
REO properties. The Special Servicer may modify such loans if, among other
things, such modifications in the sole good faith of the Special Servicer,
increase the recovery to Certificateholders on an estimated net present
value basis. The Special Servicer, as agent for the trust and all
Certificateholders is responsible for all collections, modifications and
extensions for defaulted loans or REO properties.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-5
- -------------------------------------------------------------------------------
CALL PROTECTION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
05/99 05/00 05/01 05/02 05/03 05/04 05/05 05/06 05/07 05/08
---------- ---------- --------- -------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 97.4% 95.7% 95.2% 94.3% 83.9% 82.2% 82.2% 82.6% 82.8% 81.1%
Greater of Yield Maintenance or Percentage Premium of:
1.00% to 1.99% 2.6 4.3 4.8 5.7 16.1 17.8 17.6 16.8 16.6 13.2
0.00% to 0.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance 2.6 4.3 4.8 5.7 16.1 17.8 17.6 16.8 16.6 13.2
Total of Yield Maintenance
and Lockout / Defeasance 100.0 100.0 100.0 100.0 100.0 100.0 99.8 99.4 99.4 94.4
Percentage Premium:
3.00% to 3.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0
2.00% to 2.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0
1.00% to 1.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Percentage Premium 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.6 0.0
Open (no Call Protection) 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 5.6
--- --- --- --- --- --- --- --- --- ---
Total All Categories 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($MM) 1,024.0 1,011.2 997.4 982.5 966.4 945.6 926.9 883.2 860.1 791.4
Pool Factor 100.0 98.8 97.4 95.9 94.4 92.3 90.5 86.3 84.0 77.3
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
05/09 05/10 05/11 05/12 05/13 05/14
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 84.2% 83.8% 87.9 87.7% 98.1% 0.0%
Greater of Yield Maintenance or Percentage Premium of:
1.00% to 1.99% 15.8 11.3 12.1 0.3 0.0 0.0
0.00% to 0.99% 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance 15.8 11.3 12.1 0.3 0.0 0.0
Total of Yield Maintenance
and Lockout / Defeasance 100.0 95.1 100.0 88.0 98.1 0.0
Percentage Premium:
3.00% to 3.99% 0.0 0.0 0.0 0.0 0.0 0.0
2.00% to 2.99% 0.0 0.0 0.0 0.0 0.0 0.0
1.00% to 1.99% 0.0 0.0 0.0 0.0 0.0 0.0
Total Percentage Premium 0.0 0.0 0.0 0.0 0.0 0.0
Open (no Call Protection) 0.0 4.9 0.0 12.0 1.9 0.0
--- --- --- ---- --- ---
Total All Categories 100.0 100.0 100.0 100.0 100.0 0.0
Current Pool Balance ($MM) 78.2 73.1 64.0 58.2 45.4 0.0
Pool Factor 7.6 7.1 6.3 5.7 4.4 0.0
</TABLE>
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-6
- -------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
- -------------------------------------------------------------------------------
All collected Prepayment Premiums and Yield Maintenance Charges associated with
principal prepayments will be allocated between the Offered Certificates and
the Class X Certificates as follows:
Yield Maintenance Charges:
--------------------------
o The Yield Maintenance Charges will be allocated between such
Classes of Certificates based on the product of (a) the
principal distributed to each such Class as a percentage of the
principal distributed to all Classes and (b) the Base Interest
Fraction, with the remainder being distributed to the Class X
Certificates.
Base (Pass-Through Rate - Discount Rate - Yield
Maintenance Spread)
Interest =
Fraction (Mortgage Rate - Discount Rate -
Yield Maintenance Spread)
o In general, this formula provides for an increase in the
allocation of yield maintenance charges to the Offered
Certificates then entitled to principal distribution relative to
the Class X Certificates as interest rates decrease, and a
decrease in the allocation to such Classes as interest rates
rise.
Fixed Percentage Prepayment Premiums:
-------------------------------------
o 75% of all Fixed Percentage Prepayment Premiums will be
allocated to the Class X Certificates. The remaining 25% of the
Fixed Percentage Prepayment Premiums will be allocated to the
Offered Certificates then entitled to principal distributions.
- -------------------------------------------------------------------------------
PROPERTY TYPE DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED BALANCE
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE AS OF THE
PROPERTY TYPES PROPERTIES POOL BALANCE INTEREST RATE* (MONTHS) LTV DSCR CUT-OFF DATE
- -------------- ---------- ------------ -------------- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 57 25.21 % 6.8481 % 114.01 74.35 % 1.37 x $258,104,728
MANUFACTURED HOUSING 16 3.86 7.6823 105.62 78.78 1.33 39,548,458
SENIOR HOUSING 5 2.97 7.0984 129.17 75.12 1.61 30,384,188
- ---- ------ ------ ----- ---- ----------
TOTAL HOUSING RELATED 78 32.04 6.9719 114.40 74.96 1.39 328,037,374
OFFICE 29 23.26 7.2181 121.97 71.64 1.37 238,136,440
RETAIL-ANCHORED 19 17.28 7.3275 116.73 65.24 1.40 176,896,422
RETAIL-UNANCHORED 25 10.39 7.1630 136.88 71.24 1.37 106,366,267
SELF-STORAGE 23 5.28 7.2803 113.66 66.07 1.54 54,104,211
INDUSTRIAL 9 2.94 7.0779 114.29 72.94 1.35 30,142,216
HOTEL 6 2.82 8.3474 121.81 62.53 1.42 28,878,151
RETAIL-SINGLE TENANT 5 1.30 7.2093 112.74 76.10 1.29 13,273,489
GOLF COURSE 1 1.01 7.7100 166.00 54.38 1.58 10,332,008
RETAIL-POWER CENTER 1 0.96 6.8800 111.00 72.86 1.39 9,836,065
CONGREGATE CARE 1 0.90 6.9000 107.00 73.97 1.69 9,246,047
RETAIL/OFFICE 1 0.65 6.3700 116.00 74.59 1.39 6,683,076
INDUSTRIAL/OFFICE 3 0.43 6.4749 115.00 62.25 1.41 4,380,076
OFFICE/MULTIFAMILY 1 0.41 7.3400 134.00 74.04 1.29 4,220,130
RETAIL-SHADOW ANCHORED 1 0.34 8.1100 119.00 77.48 1.25 3,447,736
- ---- ------ ------ ----- ---- ---------
TOTAL 203 100.00 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
==================================================================================================================================
</TABLE>
* The Weighted Average Interest Rate on each stratification table listed herein
indicates the Gross Mortgage Rate.
<PAGE>
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-7
- -------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED BALANCE
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE AS OF THE
STATES PROPERTIES POOL BALANCE INTEREST RATE (MONTHS) LTV DSCR CUT-OFF DATE
- ------ ---------- ------------ ------------- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
TEXAS 14 12.24 % 7.3928 % 119.48 61.71 % 1.41 x $125,370,229
NEW JERSEY 8 10.41 6.8665 137.92 71.85 1.33 106,585,389
CALIFORNIA 24 10.24 7.2430 112.71 70.84 1.42 104,824,727
ILLINOIS 10 9.10 7.2106 115.09 72.41 1.44 93,215,925
FLORIDA 24 7.56 6.9476 109.01 74.55 1.36 77,410,158
OHIO 6 4.58 7.5644 119.30 74.54 1.34 46,911,330
SOUTH CAROLINA 1 3.88 7.0000 175.00 66.25 1.47 39,750,211
MICHIGAN 10 3.86 7.1507 123.02 71.29 1.50 39,575,727
VIRGINIA 6 3.71 7.7608 117.74 67.23 1.39 38,034,153
TENNESSEE 7 3.42 6.6810 114.60 76.12 1.31 35,014,622
PENNSYLVANIA 8 3.26 7.2594 110.07 71.31 1.40 33,399,798
NEW YORK 10 3.03 7.6146 106.76 73.29 1.40 31,060,973
NEVADA 4 2.98 7.1120 119.45 78.36 1.31 30,526,095
MASSACHUSETTS 7 2.46 7.1680 115.02 69.47 1.45 25,219,580
COLORADO 9 2.11 7.1214 111.18 72.30 1.46 21,626,838
NEW MEXICO 2 1.97 7.4480 115.58 72.62 1.47 20,183,678
WASHINGTON 7 1.80 6.8324 112.35 72.41 1.35 18,478,682
NORTH CAROLINA 4 1.54 7.5166 116.62 63.26 1.38 15,790,145
GEORGIA 3 1.47 6.8510 112.21 77.80 1.27 15,004,604
HAWAII 1 1.40 6.9000 112.00 79.49 1.47 14,307,402
OKLAHOMA 2 1.10 6.9188 111.00 72.55 1.38 11,243,195
ARIZONA 3 1.09 7.1128 110.77 77.43 1.37 11,164,064
OREGON 4 1.06 6.9555 114.63 65.28 1.40 10,804,373
WISCONSIN 7 0.99 7.3651 113.11 81.70 1.27 10,140,964
MISSOURI 4 0.90 7.0097 121.83 66.24 1.41 9,185,853
KANSAS 3 0.87 6.3972 116.00 75.86 1.42 8,898,737
IDAHO 2 0.56 6.8623 112.81 63.52 1.49 5,764,325
INDIANA 1 0.52 8.1200 99.00 79.10 1.22 5,300,000
DELAWARE 1 0.34 7.1700 118.00 72.74 1.29 3,491,564
ALABAMA 2 0.27 7.1500 111.00 73.22 1.36 2,738,327
KENTUCKY 2 0.27 7.0565 113.95 58.33 1.45 2,727,371
MAINE 1 0.24 7.2500 111.00 79.17 1.13 2,494,008
MARYLAND 1 0.21 7.7000 118.00 73.23 1.26 2,196,853
RHODE ISLAND 3 0.20 6.5400 115.00 79.46 1.36 2,034,262
NEW HAMPSHIRE 1 0.19 6.8800 109.00 76.40 1.35 1,909,947
NEBRASKA 1 0.16 7.5400 117.00 73.87 1.30 1,595,602
- ---- ------ ------ ----- ---- ---------
TOTAL 203 100.00 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
==============================================================================================================================
</TABLE>
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-8
- -------------------------------------------------------------------------------
LTV RANGE BY CUT-OFF DATE PRINCIPAL BALANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
PERCENT OF WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF CUT-OFF DATE AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
RANGE OF CUT-OFF MORTGAGE POOL INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
DATE LTV RATIOS LOANS BALANCE RATE (MONTHS) LTV DSCR DATE
- --------------- ----- ------- ---- -------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
15.01 - 35.00 1 0.05 % 8.3500 % 116.00 23.27 % 4.40 x $532,852
35.01 - 40.00 3 0.36 8.0961 115.65 37.74 2.01 3,711,287
40.01 - 45.00 4 0.55 7.1501 128.63 43.47 1.75 5,662,423
45.01 - 50.00 2 0.44 6.7721 114.76 46.74 1.90 4,455,535
50.01 - 55.00 4 7.75 7.5836 124.65 52.35 1.50 79,377,426
55.01 - 60.00 6 1.39 7.2930 116.40 57.59 1.45 14,275,313
60.01 - 65.00 15 6.19 7.2451 115.26 62.23 1.49 63,410,606
65.01 - 70.00 20 11.78 7.1741 135.20 67.47 1.42 120,592,097
70.01 - 75.00 64 39.65 7.1367 119.55 72.56 1.37 406,036,852
75.01 - 80.00 71 31.47 7.0941 113.51 78.26 1.34 322,236,844
80.01 - 85.00 1 0.16 8.0000 114.00 83.99 1.38 1,679,712
85.01 - 95.00 2 0.20 8.0000 114.00 89.72 1.17 2,008,765
- ---- ------ ------ ----- ---- ---------
TOTAL 193 100 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
===============================================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
LTV RANGE AT MATURITY DATE OR BALLOON DATE / ARD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
PERCENT OF WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF CUT-OFF DATE AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
RANGE OF MATURITY/ MORTGAGE POOL INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
BALLOON LTV RATIOS LOANS BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------------ ----- ------- ---- -------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ZERO 2 3.17 % 6.5974 % 171.00 71.25 % 1.20 x $32,493,071
15.01 - 35.00% 5 0.58 7.9066 132.85 40.71 2.06 5,931,432
35.01 - 40.00 6 1.89 7.3739 142.27 51.32 1.67 19,336,638
40.01 - 45.00 5 4.64 7.0089 170.15 65.34 1.49 47,500,490
45.01 - 50.00 12 10.05 7.4933 122.41 56.42 1.51 102,866,624
50.01 - 55.00 18 7.06 7.2341 116.91 64.55 1.43 72,248,355
55.01 - 60.00 32 18.99 7.2498 118.44 70.91 1.39 194,408,236
60.01 - 65.00 48 25.29 7.0994 114.22 73.66 1.37 258,971,969
65.01 - 70.00 45 22.64 7.0608 112.52 77.79 1.34 231,812,779
70.01 - 75.00 15 5.18 7.3736 94.62 79.20 1.33 53,045,424
75.01 - 80.00 4 0.40 8.0000 90.63 82.83 1.27 4,087,457
80.01 - 85.00 1 0.12 8.0000 114.00 91.23 1.18 1,277,233
- ---- ------ ------ ----- ---- ---------
TOTAL 193 100.00 % 7.1769 % 119.57 70.97 % 1.39 x
$1,023,979,711
===============================================================================================================================
</TABLE>
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-9
- -------------------------------------------------------------------------------
PAYMENT TYPES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
PAYMENT TYPES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------- ----- ------------ ---- -------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
AMORT. BALLOON/ARD 188 91.50 % 7.2176 % 117.91 70.88 % 1.40 x $936,971,193
GRADUATED P&I BALLOON 1 4.31 6.6900 120.00 70.81 1.43 44,115,446
FULLY AMORTIZING 2 3.17 6.5974 171.00 71.25 1.20 32,493,071
INT. ONLY, THEN AMORT BALLOON 2 1.02 7.3942 107.34 78.20 1.25 10,400,000
- ---- ------ ------ ----- ---- ----------
TOTAL 193 100.00 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
=================================================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
DEBT SERVICE COVERAGE RATIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE AS OF THE
DSCR(X) LOANS POOL BALANCE RATE (MONTHS) LTV DSCR CUT-OFF DATE
- ------- ----- ------------ ---- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.01 - 1.15 4 0.48 % 7.4633 % 96.06 78.95 % 1.14 x $4,947,408
1.16 - 1.20 6 3.97 6.7373 157.38 73.94 1.18 40,617,283
1.21 - 1.25 20 7.73 7.5023 112.32 76.33 1.24 79,158,978
1.26 - 1.30 39 16.61 7.4198 117.19 74.54 1.28 170,080,103
1.31 - 1.35 26 12.65 7.0121 112.64 74.53 1.33 129,512,794
1.36 - 1.40 29 17.48 7.2793 115.05 71.67 1.38 178,960,454
1.41 - 1.45 26 15.28 6.8866 113.83 71.66 1.43 156,452,610
1.46 - 1.50 11 14.07 7.2098 132.37 62.41 1.48 144,119,786
1.51 - 1.55 10 3.95 7.0950 113.78 69.08 1.53 40,465,833
1.56 - 1.60 5 3.12 7.2597 130.55 66.43 1.57 31,979,628
1.61 - 1.65 3 0.51 6.8628 120.05 58.88 1.63 5,232,141
1.66 - 1.70 3 1.44 6.9000 110.28 67.04 1.69 14,764,832
1.71 - 1.75 2 0.61 6.7693 112.48 61.59 1.71 6,218,051
1.81 - 1.85 2 1.09 7.2782 158.71 72.22 1.81 11,187,663
1.86 - 1.90 2 0.40 6.6835 114.91 50.31 1.86 4,102,573
1.96 - 2.00 1 0.18 6.9600 113.00 49.06 1.96 1,839,849
2.00 - 2.15 1 0.12 8.3500 116.00 35.51 2.15 1,225,063
2.16 - 2.50 2 0.25 7.6679 113.31 41.87 2.34 2,581,812
2.51 - 4.40 1 0.05 8.3500 116.00 23.27 4.40 532,852
- ---- ------ ------ ----- ---- -------
TOTAL 193 100.00 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
===============================================================================================================================
</TABLE>
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-10
- -------------------------------------------------------------------------------
MORTGAGE INTEREST RATES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE
RANGE OF MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE AS OF THE
MORTGAGE RATES (%) * LOANS POOL BALANCE RATE (MONTHS) LTV DSCR CUT-OFF DATE
- -------------------- ----- ------------ ---- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
5.9800 - 6.0000 1 0.11 % 5.9800 % 115.00 75.49 % 1.27 x $1,094,635
6.0001 - 6.2500 2 2.21 6.0895 114.76 76.92 1.34 22,630,542
6.2501 - 6.5000 16 9.11 6.4090 110.99 73.75 1.43 93,282,637
6.5001 - 6.7500 23 15.42 6.6529 126.38 71.32 1.39 157,848,567
6.7501 - 7.0000 29 15.12 6.9325 127.74 71.39 1.43 154,775,643
7.0001 - 7.2500 39 16.78 7.1158 114.67 74.15 1.40 171,862,017
7.2501 - 7.5000 22 15.91 7.4202 119.54 64.84 1.37 162,903,621
7.5001 - 7.7500 21 8.12 7.6634 119.13 69.46 1.40 83,167,944
7.7501 - 8.0000 24 10.64 7.8510 116.55 73.60 1.34 108,978,444
8.0001 - 8.2500 8 3.85 8.0510 116.23 73.96 1.28 39,428,829
8.2501 - 8.5000 5 1.99 8.4617 119.19 56.58 1.58 20,418,341
8.5001 - 8.7500 1 0.27 8.6400 120.00 66.27 1.45 2,717,000
8.7501 - 9.0000 1 0.24 8.9300 120.00 69.43 1.46 2,430,000
9.5001 - 9.7000 1 0.24 9.7000 91.00 54.62 1.42 2,441,491
- ---- ------ ----- ----- ---- ---------
TOTAL 193 100.00 % 7.1769 % 119.57 70.97 % 1.39 x $1,023,979,711
===============================================================================================================================
</TABLE>
* Indicates Gross Coupon
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-11
- -------------------------------------------------------------------------------
SUMMARIES OF THE TEN LARGEST MORTGAGE LOANS
- -------------------------------------------------------------------------------
CONTROL #1: SOUTH PLAINS MALL LOAN #: 6103423
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $64,916,634 Property Type: Anchored Retail
- ----------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Lubbock, TX
- ----------------------------------------------------------------------------------------------------------
Origination Date: 02/17/1999 Year Built/Renovated: 1972, 76, 85, 86/1998
- ----------------------------------------------------------------------------------------------------------
Maturity Date: 03/01/2029 Net Rentable Square Feet: 1,001,082
- ----------------------------------------------------------------------------------------------------------
Anticipated Repay Date: 03/01/2009 Cut-off Date Balance/sf: $64.85
- ----------------------------------------------------------------------------------------------------------
Mortgage Rate: 7.49000% Appraised Value: $125,000,000
- ----------------------------------------------------------------------------------------------------------
Annual Debt Service: $5,448,533 Current LTV: 51.93%
- ----------------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.49x Balance at ARD LTV: 45.95%
- ----------------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $8,109,326 Percent Leased: 98.00%
- ----------------------------------------------------------------------------------------------------------
Balance at ARD: $57,556,900 Leasing Status Date: 01/31/1999
- ----------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The South Plains Mall Loan (the "South Plains Mall Loan") is secured by a first
mortgage on a 1,001,082 square foot regional mall located in Lubbock, Texas
(the "South Plains Mall Property"). The South Plains Mall Loan was originated
by Prudential Mortgage Capital Company, LLC on February 17, 1999 to refinance a
loan from The Prudential Insurance Company of America.
BORROWER:
The Borrower is Macerich Lubbock Limited Partnership, a single
purpose, bankruptcy remote California limited partnership (the "South
Plains Mall Borrower"). The South Plains Mall Borrower is sponsored by
The Macerich Partnership, L.P. (the" "Sponsor"), the operating entity
of The Macerich Company, a public REIT ("Macerich").
SECURITY:
The South Plains Mall Loan is evidenced by a promissory note (the
"Note") secured by a Mortgage and Security Agreement (the "Mortgage"),
an Assignment of Leases and Rents, UCC Financing Statements, and
certain additional security documents. The Mortgage is a first lien on
a fee interest in the South Plains Mall Property.
RECOURSE:
The South Plains Mall Loan is non-recourse, subject to certain
exceptions set forth in the Note which generally include, among other
things, liabilities relating to fraud, material misrepresentation,
misapplication of rents, and unauthorized transfers or encumbrances of
the South Plains Mall Property (the "Recourse Carveouts"). The
obligations of the South Plains Mall Borrower under the Recourse
Carveouts are guaranteed by the Sponsor, pursuant to the terms of an
Indemnity and Guaranty Agreement. In addition, under the terms of a
Hazardous Substances Indemnity Agreement, the South Plains Mall
Borrower and the Sponsor assume liability for, guarantee payment to
Lender of, and indemnify Lender from specified costs and liabilities
arising out of the environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 7.490% per annum until the anticipated
repayment date of March 1, 2009 (the "ARD"). The South Plains Mall
Loan requires monthly payments of principal and interest of
$454,044.42 through the ARD. From and after the ARD, if the South
Plains Mall Loan is not paid in full, the interest rate shall increase
as set forth in the Note and the Pooling and Servicing Agreement and
excess cash flow from the South Plains Mall Property, after funding of
specified reserves, and payment of debt service and certain operating
expenses and capital expenditures, will be applied to the outstanding
principal balance of the Note. The South Plains Mall Loan accrues
interest computed based on the actual number of days elapsed each
month in a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The South Plains Mall Borrower has agreed that all Rents and Profits
(as such term is defined in the Mortgage) will be deposited into an
account (the "Clearing Account") with a bank approved by Lender (the
"Clearing Bank") in which the Lender has been granted a first
priority security interest, and has informed all tenants of the
Property that upon notice, all Rents and Profits should be paid
directly to the Clearing Bank. The South Plains Mall Borrower has
agreed to cause all Rents and Profits to be deposited into the
Clearing Account, and then forwarded to an account controlled by
Lender with LaSalle National Bank (the "Deposit Account") commencing
on the occurrence of any of the following events: (i) an Event of
Default (as such term is defined in the Mortgage), (ii) the failure
of the South Plains Mall Borrower to repay the South Plains Mall Loan
on or before the date three months prior to the ARD, (iii) the Debt
Service Coverage Ratio for the immediately prior twelve-month period
(the "Trailing DSCR") is less than 1.35x, or (iv) if, prior to
December 25, 2005 any two of the following tenants (J.C. Penney,
Dillard's Home, Dillard's, Beall's) (each, a "Rolling Anchor") fail
to deliver to South Plains Mall Borrower written notice of their
exercise of the extension options included in their leases (each of
(i) through (iv) above, a "Sweep Event"). Funds in the Deposit
Account shall be applied in accordance with the terms of the Note.
Such cash management shall generally continue until the South Plains
Mall Loan is paid in full, provided that for the Sweep Event
specified in paragraph (iii) above, cash management shall continue
only until such time as Trailing DSCR has exceeded 1.35x for at least
24 consecutive months, and for the Sweep Event specified in paragraph
(iv) above, until such time as acceptable replacement tenants have
executed acceptable leases, taken possession of the leased premises
and delivered acceptable estoppel certificates to Lender.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
South Plains Mall Borrower is prohibited from prepaying the South
Plains Mall Loan at any time before the date three (3) months prior to
the ARD. The Loan may be prepaid at par at any time thereafter. The
South Plains Mall Borrower may defease the South Plains Mall Loan, in
whole but not in part, at any time after the later to occur of two
years after the REMIC "start-up date" or February 17, 2002, by
providing the Lender with non-callable U.S. Treasury obligations
sufficient to pay its remaining obligations, provided that, the South
Plains Mall Borrower may, upon satisfaction of certain conditions,
including the Lender's receipt of confirmation in writing from the
specified rating agencies that such transfer will not result in a
qualification, downgrade or withdrawal of any rating then in effect
for any related securities ("Rating Agency Confirmation"), partially
defease the South Plains Mall Loan in connection with a future
transfer of a portion of the South Plains Mall Property to an anchor
tenant.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-12
TRANSFER OF SOUTH PLAINS MALL PROPERTY OR INTEREST IN SOUTH PLAINS
MALL BORROWER:
The Lender shall have the option to declare the South Plains Mall Loan
immediately due and payable upon the transfer of the South Plains Mall
Property or any ownership interest in the South Plains Mall Borrower,
except in connection with the rights of transfer described below. The
South Plains Mall Borrower has the right, once during the term of the
Loan, to transfer the South Plains Mall Property upon the satisfaction
of certain conditions, including Rating Agency Confirmation.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
There is a tax escrow which requires monthly deposits in an amount
estimated to be sufficient to pay real estate taxes when due. From and
after an Event of Default, the South Plains Mall Borrower must make
monthly deposits in an amount estimated to be sufficient to pay
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $21,306.00.
Tenant Improvements and Leasing Commissions
The South Plains Mall Borrower has agreed to establish a reserve for
tenant improvements and leasing commissions which requires the
following deposits:
(a) If any Rolling Anchor fails to exercise the lease extension
option contained in its lease prior to December 25, 2005,
then during calendar year 2006 the South Plains Mall
Borrower shall make monthly deposits equal to 1/12 of the
amount specified below for such Rolling Anchor:
J.C. Penney - $895,000
Dillard's Home - $594,631
Dillard's - $1,078,361
Beall's - $87,500
(b) In addition to (a), commencing on January 1, 2005 and
continuing through December 1, 2005, monthly payments of
$127,712.52, provided, however, that if Macerich or
entities controlled by Macerich, control the South Plains
Mall Borrower at that time and own or manage more than
15,000,000 square feet of space (the "Minimum Ownership
Condition"), then no such payments are required unless and
until at any time during calendar year 2005, Macerich fails
to satisfy the Minimum Ownership Condition, after which
Macerich is required to make such deposits as are necessary
to accumulate in such reserve the sum of $1,532,550.00
prior to the end of calendar year 2005.
J.C. Penney Reserve
The South Plains Mall Borrower has deposited with Lender the amount of
$809,891 (the "J.C. Penney Reserve") intended to address a claim made
by J.C. Penney in its tenant estoppel certificate for reimbursement of
such amount as a result of certain construction work performed by it
prior to the South Plains Mall Borrower's acquisition of the Property.
The J.C. Penney Reserve will be retained until such time that J.C.
Penney delivers an estoppel indicating that it does not have any claim
against the South Plains Mall Borrower.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
consent of Lender.
THE PROPERTY
The South Plains Mall Property is a regional mall located in Lubbock, Texas
containing 1,144,782 square feet of gross leasable area, of which 1,001,082
square feet represents the South Plains Mall Property. According to a rent roll
provided by the South Plains Mall Borrower (the "Rent Roll"), the South Plains
Mall Property is 98.00% leased, as of January 31, 1999, and is anchored by six
department stores, including J.C. Penney (A3 Moody's/ A S&P/ A- Fitch),
Dillard's and Dillard's Home (Baa1 Moody's/ BBB S&P/ NR Fitch), Mervyn's,
Beall's, and Sears (A2 Moody's/ A- S&P/ A Fitch). Sears owns its store and the
underlying land, and such property is not part of the collateral securing the
Loan.
The South Plains Mall Property is a two-story, two-building complex that was
constructed in three stages, from 1972 through 1986. The J.C. Penney store was
remodeled in 1998.
According to the Rent Roll, J.C. Penney occupies 218,518 square feet through
July 2007, with four five-year renewal options. Dillard's (Main) occupies
162,755 square feet through January 2007, with five five-year renewal options.
Dillard's Home occupies 94,814 square feet through January 2007, with five
five-year renewal options. Mervyn's, which operates under a ground lease which
commenced in 1985 and expires in July 2011, occupies 82,000 square feet through
July 2011, with three ten-year renewal options. Beall's occupies 40,000 square
feet through January 2007, with three ten-year renewal options. The Rent Roll
indicates that the South Plains Mall Property contains over 350,000 square feet
of mall shop space, including a number of national and regional chains, such as
Comp USA, Old Navy, Olive Garden (occupying the one outparcel), and The Gap.
THE MANAGEMENT
The South Plains Mall Property is managed by Macerich Property Management
Company, a wholly owned subsidiary of Macerich. Macerich and its affiliates own
and manage 48 regional shopping centers and five community centers totaling
approximately 40.5 million square feet. They also provide third-party
management services, managing four regional shopping centers containing
approximately 3.6 million square feet. Macerich has been in the business of
owning and operating retail real estate for 27 years.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-13
CONTROL #2: SOMERSET GROVE II LOAN #: 6103070
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $44,115,446 Property Type: Office
- -------------------------------------------------------------------------------------------------
Loan Type: Graduated P&I; Hyperam Location: Franklin Township, NJ
- -------------------------------------------------------------------------------------------------
Origination Date: 08/07/1998 Year Built/Renovated: 1988
- -------------------------------------------------------------------------------------------------
Maturity Date: 09/01/2024 Net Rentable Square Feet: 444,760
- -------------------------------------------------------------------------------------------------
Anticipated Repay Date: 05/01/2009 Cut-off Date Balance/sf: $99.19
- -------------------------------------------------------------------------------------------------
Mortgage Rate: 6.69000% Appraised Value: $62,300,000
- -------------------------------------------------------------------------------------------------
Annual Debt Service: $3,542,719 Current LTV: 70.81%
- -------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.43x Balance at ARD LTV: 55.36%
- -------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $5,059,754 Percent Leased: 100.00%
- -------------------------------------------------------------------------------------------------
Balance at ARD: $34,489,034 Leasing Status Date: 01/01/1999
- -------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Somerset Grove II Loan (the "Somerset Grove II Loan") is secured by a first
mortgage on a 444,760 square foot office building located in Franklin Township,
New Jersey (the "Somerset Grove II Property"). The Somerset Grove II Property
is 100% leased to AT&T Corp. (A1 Moody's/ AA- S&P/ AA- Fitch) ("AT&T"). The
Somerset Grove II Loan was originated by Prudential Mortgage Capital Company,
LLC on August 7, 1998 to refinance a loan from The Prudential Insurance Company
of America.
BORROWER:
The Borrower is 290 Davidson Avenue, LLC, a single purpose, bankruptcy
remote New Jersey limited liability company (the "Somerset Grove II
Borrower").
SECURITY:
The Somerset Grove II Loan is evidenced by a promissory note (the
"Note") secured by a Mortgage and Security Agreement (the "Mortgage"),
an Assignment of Leases and Rents, UCC Financing Statements, and
certain additional security documents. The Mortgage is a first lien on
a fee interest in the Somerset Grove II Property.
RECOURSE:
The Somerset Grove II Loan is non-recourse, subject to certain
exceptions set forth in the Note which generally include, among other
things, liabilities relating to fraud, material misrepresentation,
misapplication of rents, and unauthorized transfers or encumbrances of
the Somerset Grove II Property (the "Recourse Carveouts"). The
obligations of the Somerset Grove II Borrower under the Recourse
Carveouts are guaranteed by Bennett Rechler (the "Sponsor") pursuant
to the terms of an Indemnity and Guaranty Agreement. In addition,
under the terms of a Hazardous Substances Indemnity Agreement, the
Somerset Grove II Borrower and the Sponsor assume liability for,
guarantee payment to Lender of, and indemnify Lender from specified
costs and liabilities arising out of the environmental condition of
the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 6.690% per annum until the anticipated
repayment date of May 1, 2009 (the "ARD"). The Somerset Grove II Loan
requires monthly payments of principal and interest of $295,226.58
through April 1, 2003 and $309,039.76 from May 1, 2003 through the
ARD. From and after the ARD, if the Somerset Grove II Loan is not paid
in full, the interest rate shall increase as set forth in the Note and
the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement and excess cash flow from the Somerset Grove II Property,
after funding of specified reserves and payment of debt service and
certain operating expenses and capital expenditures, will be applied
to the outstanding principal balance of the Loan. The Somerset Grove
II Loan accrues interest computed on the basis of twelve 30-day months
in a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The Somerset Grove II Borrower has agreed that all Rents and Profits
(as such term is defined in the Mortgage) will be deposited into an
account (the "Deposit Account") controlled by Lender established with
the Chase Manhattan Bank (the "Deposit Bank"). AT&T pays all rent due
under its lease directly to the Deposit Bank. Funds in the Deposit
Account are disbursed in accordance with the terms of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
Somerset Grove II Borrower is prohibited from prepaying the Loan at
any time before the date three (3) months prior to the ARD. The Loan
may be prepaid at par at any time thereafter. The Somerset Grove II
Borrower may defease the Loan, in whole but not in part, at any time
during the period commencing on the later to occur of two (2) years
after the REMIC "start-up" date or August 7, 2001 and ending on the
date three (3) months prior to the ARD, by providing Lender with
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations.
TRANSFER OF SOMERSET GROVE II PROPERTY OR INTEREST IN SOMERSET GROVE
II BORROWER:
The Lender shall have the option to declare the Somerset Grove II Loan
immediately due and payable upon the transfer of the Somerset Grove II
Property or any ownership interest in the Somerset Grove II Borrower,
except in connection with the rights of transfer described below. The
Somerset Grove II Borrower has the right, once during the term of the
Loan, to transfer the entire Somerset Grove II Property upon the
satisfaction of certain conditions, including Lender's receipt of
Rating Agency Confirmation and the specified assumption fee.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
By the terms of its lease, AT&T is required to pay all real estate
taxes assessed against the Somerset Grove II Property directly to the
tax authority. There is an insurance escrow which requires monthly
deposits in an amount estimated to be sufficient to pay insurance
premiums when due. There is also an escrow required for future capital
expenditures which is required to be funded monthly in the amount of
$3,834.67.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-14
Tenant Improvements and Leasing Commissions
The Somerset Grove II Borrower was required to establish and maintain
a reserve for the payment of future leasing commissions and tenant
improvements in connection with the renewal of the AT&T lease
("Renewal Reserve"). Commencing on May 1, 2004 and monthly thereafter
through and including November 1, 2007, Borrower has agreed to deposit
an amount equal to $33,500 in the Renewal Reserve. On or before
December 1, 2007, Borrower is also to provide Lender with an
irrevocable letter of credit in the amount of $2,660,000 (the "Leasing
Letter of Credit"). If Borrower does not timely provide the Leasing
Letter of Credit, Borrower must deposit monthly with Lender all cash
flow generated by the Somerset Grove II Property remaining after
payment of debt service, required reserves, and operating expenses
approved by Lender until the Reserve Termination (as defined below).
Such payments into the Renewal Reserve shall continue until the
earliest to occur of (a) AT&T's irrevocable exercise of its ten-year
lease renewal option, (b) repayment in full of the Somerset Grove II
Loan, (c) the ARD, or (d) such earlier date as agreed to by Lender in
its sole discretion (the "Reserve Termination"). In the event AT&T
does not exercise its renewal option by May 1, 2008, then on the ARD,
Lender may draw down and apply the funds in the Renewal Reserve and
the Leasing Letter of Credit to the repayment of the Somerset Grove II
Loan.
AT&T Completion Reserve
The Somerset Grove II Borrower was required to establish a completion
reserve (the "Completion Reserve") at closing in the amount of
$1,600,000, to fund completion of certain improvements as required by
the AT&T lease and certain repairs suggested in EMG's Property
Condition Report dated July 8, 1998. The repairs and certain of the
improvements have been completed, and the current balance remaining in
the Completion Reserve, as of May 10, 1999, is $252,530.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without the
prior written consent of Lender.
PURCHASE OPTION:
AT&T has an option to purchase the Somerset Grove II Property for $63
million on or about April 30, 2009. AT&T's lease contains an option to
renew for a ten year period (the "Renewal Option"). If AT&T exercises
its Renewal Option, it shall have a second option to purchase the
Somerset Grove II Property for $58 million in the 20th year of AT&T's
lease term.
THE PROPERTY
The Somerset Grove II Property is a 444,760 square foot office building located
in Franklin Township, New Jersey. The Somerset Grove II Property was completed
in 1988 and includes a five-story office building plus an additional one-story
office building/fitness center.
THE MANAGEMENT
The Somerset Grove II Property is managed by the Sponsor.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-15
CONTROL #3: BAREFOOT LANDING LOAN #: 6103230
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $39,750,211 Property Type: Retail
- ------------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: N. Myrtle Beach, SC
- ------------------------------------------------------------------------------------------------------------
Origination Date: 11/02/1998 Year Built/Renovated: 1988 and 1991
- ------------------------------------------------------------------------------------------------------------
Maturity Date: 12/01/2023 Net Rentable Square Feet: 244,244
- ------------------------------------------------------------------------------------------------------------
Anticipated Repay Date: 12/1/2013 Cut-off Date Balance/sf: $162.75
- ------------------------------------------------------------------------------------------------------------
Mortgage Rate: 7.00000% Appraised Value: $60,000,000
- ------------------------------------------------------------------------------------------------------------
Annual Debt Service: $3,392,540 Current LTV: 66.25%
- ------------------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.47x Balance at ARD LTV: 40.58%
- ------------------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $4,986,096 Percent Leased: 97.16%
- ------------------------------------------------------------------------------------------------------------
Balance at ARD: $24,488,786 Leasing Status Date: 12/31/1998
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Barefoot Landing Loan (the "Barefoot Landing Loan") is secured by a first
mortgage on a 244,244 square foot retail center located in North Myrtle Beach,
South Carolina (the "Barefoot Landing Property"). The Barefoot Landing Loan was
originated by Prudential Mortgage Capital Company, LLC on November 2, 1998.
BORROWER:
The Borrower is Barefoot Properties Limited Partnership, a single
purpose, bankruptcy remote South Carolina limited partnership (the
"Barefoot Landing Borrower").
SECURITY:
The Barefoot Landing Loan is evidenced by a promissory note (the
"Note") secured by a Mortgage and Security Agreement (the "Mortgage"),
an Assignment of Leases and Rents, UCC Financing Statements, and
certain additional security documents. The Mortgage is a first lien on
a fee interest in the Barefoot Landing Property.
RECOURSE:
The Barefoot Landing Loan is non-recourse, subject to certain
exceptions set forth in the Note which generally include, among other
things, liabilities relating to fraud, material misrepresentation,
misapplication of rents, and unauthorized transfers or encumbrances of
the Barefoot Landing Property (the "Recourse Carveouts"). The
obligations of the Barefoot Landing Borrower under the Recourse
Carveouts are guaranteed by Samuel W. Puglia (the "Sponsor") pursuant
to the terms of an Indemnity and Guaranty Agreement. In addition,
under the terms of a Hazardous Substances Indemnity Agreement, the
Barefoot Landing Borrower and the Sponsor assume liability for,
guarantee payment to Lender of, and indemnify Lender from specified
costs and liabilities arising out of the environmental condition of
the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 7.000% per annum until the anticipated
repayment date of December 1, 2013 (the "ARD"). The Barefoot Landing
Loan requires monthly payments of principal and interest of
$282,711.68 through the ARD. From and after the ARD, if the Barefoot
Landing Loan is not paid in full, the interest rate shall increase as
set forth in the Note and the Pooling and Servicing Agreement and
excess cash flow from the Property, after funding of specified
reserves, and payment of debt service and certain operating expenses
and capital expenditures, will be applied to the outstanding principal
balance of the Note. The Barefoot Landing Loan accrues interest
computed on the basis of twelve 30-day months in a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The Barefoot Landing Borrower has agreed that from and after the
earlier to occur of (i) the date six months prior to the ARD, or (ii)
an Event of Default (as such term is defined in the Mortgage) until
repayment of the Barefoot Landing Loan, and during any period in which
the Debt Service Coverage Ratio for the immediately prior twelve-month
period (the "Trailing DSCR") is less than 1.20x, all Rents and Profits
(as such term is defined in the Mortgage) will be deposited into an
account (the "Clearing Account") controlled by Lender with a bank
approved by Lender (the "Clearing Bank"). In such event, the Barefoot
Landing Borrower has agreed to deposit all Rents and Profits with the
Clearing Bank. At Lender's request, all such funds shall be
transferred by the Clearing Bank to an account (the "Deposit Account")
under the sole dominion and control of Lender established with a bank
determined by Lender, to be applied in accordance with the terms of
the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
Barefoot Landing Borrower is prohibited from prepaying the Barefoot
Landing Loan at any time before the date six (6) months prior to the
ARD. The Loan may be prepaid at par at any time thereafter. The
Barefoot Landing Borrower may defease the Loan, in whole but not in
part, at any time during the period commencing on the later to occur
of the date two years after the REMIC "start-up" date or November 2,
2002 and ending on the date six (6) months prior to the ARD, by
providing Lender with non-callable U.S. Treasury obligations
sufficient to pay its remaining obligations under the Loan.
TRANSFER OF BAREFOOT LANDING PROPERTY OR INTEREST IN BAREFOOT
LANDING BORROWER:
The Lender shall have the option to declare the Barefoot Landing Loan
immediately due and payable upon the transfer of the Barefoot Landing
Property or any ownership interest in the Barefoot Landing Borrower,
except in connection with the rights of transfer described below. The
Barefoot Landing Borrower has the right, once during the term of the
Loan, to transfer the entire Barefoot Landing Property upon the
satisfaction of certain conditions, including Lender's receipt of
Rating Agency Confirmation and the specified assumption fee.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-16
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $4,036.00.
Business Tax Escrow
The Barefoot Landing Borrower was required to deposit upon the
Barefoot Landing Loan closing $2,672.01, with subsequent monthly
payments of $890.67 required thereafter, for the payment of an annual
Business Tax.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without the
prior written consent of Lender.
THE PROPERTY
The Barefoot Landing Property is a 244,244 square foot retail center located in
North Myrtle Beach, South Carolina. According to a rent roll provided by the
Barefoot Landing Borrower, the Barefoot Landing Property is 97.16% leased, as
of December 31, 1998, to approximately 103 tenants. The Barefoot Landing Phase
I was completed in 1988 and Barefoot Landing Phase II was completed in 1991.
The Barefoot Landing Property has been voted the "Most Popular Tourist
Attraction in South Carolina" by the South Carolina Department of Parks,
Recreations, and Tourism in 1995, 1996, and 1997. The property is currently
occupied by a variety of retail and restaurant tenants. Major tenants include
Greg Norman's Restaurant, Dick's Last Resort, Fuddrucker's, London Fog, and
Bass Shoes.
THE MANAGEMENT
The Barefoot Landing Property is managed by Barefoot Property Management
L.L.C., an entity affiliated with the Sponsor. The Sponsor has been involved in
the management of the subject property since its construction in 1988.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-17
CONTROL #4: STATION PLAZA OFFICE COMPLEX LOAN #: 6103062
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $31,036,634 Property Type: Office
- ----------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Fully Amortizing Location: Trenton, NJ
- ----------------------------------------------------------------------------------------------------------
Origination Date: 07/10/1998 Year Built/Renovated: 1986 and 1989
- ----------------------------------------------------------------------------------------------------------
Maturity Date: 08/01/2013 Net Rentable Square Feet: 320,477
- ----------------------------------------------------------------------------------------------------------
Anticipated Repay Date: N/A Cut-off Date Balance/sf: $96.85
- ----------------------------------------------------------------------------------------------------------
Mortgage Rate: 6.57800% Appraised Value: $42,700,000
- ----------------------------------------------------------------------------------------------------------
Annual Debt Service: $3,361,540 Current LTV: 72.69%
- ----------------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.18x Balance at Maturity LTV: 0.00%
- ----------------------------------------------------------------------------------------------------------
UnderwrittenCash Flow: $3,959,880 Percent Leased: 99.70%
- ----------------------------------------------------------------------------------------------------------
Balance at Maturity: $0.00 Leasing Status Date: 05/03/1999
- ----------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Station Plaza Office Complex Loan (the "Station Plaza Office Complex Loan")
is secured by a first mortgage on a 320,477 square foot office building complex
located in Trenton, New Jersey (the "Station Plaza Office Complex Property").
The Station Plaza Office Complex Loan was originated by Prudential Mortgage
Capital Company, LLC on July 10, 1998.
BORROWER:
The Borrower is comprised of Drei Holdings, LLC and Trois Holdings,
LLC, both single purpose, bankruptcy remote New Jersey limited
liability companies (the "Station Plaza Office Complex Borrower").
SECURITY:
The Station Plaza Office Complex Loan is evidenced by a promissory
note (the "Note") secured by a Mortgage and Security Agreement (the
"Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee interest in the Station Plaza Office Complex
Property.
RECOURSE:
The Station Plaza Office Complex Loan is non-recourse, subject to
certain exceptions set forth in the Note which generally include,
among other things, liabilities relating to fraud, material
misrepresentation, misapplication of rents, and unauthorized transfers
or encumbrances of the Station Plaza Office Complex Property (the
"Recourse Carveouts"). The obligations of the Station Plaza Office
Complex Borrower under the Recourse Carveouts are guaranteed by Sydney
Sussman (the "Sponsor") pursuant to the terms of an Indemnity and
Guaranty Agreement. In addition, under the terms of a Hazardous
Substances Indemnity Agreement, the Station Plaza Office Complex
Borrower and the Sponsor assume liability for, guarantee payment to
Lender of, and indemnify Lender from specified costs and liabilities
arising out of the environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 6.578% per annum until the maturity date
of August 13, 2013 (the "Maturity Date"). The Station Plaza Office
Complex Loan requires monthly payments of principal and interest of
$280,128.33 which are expected to fully amortize the Loan as of the
Maturity Date. The Station Plaza Office Complex Loan accrues interest
computed on the basis of twelve 30-day months in a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The Station Plaza Office Complex Borrower has agreed that all Rents
and Profits (as such term is defined in the Mortgage) will be
deposited into an account controlled by Lender (the "Deposit Account")
with a bank approved by Lender (the "Deposit Bank"). All tenants of
the Station Plaza Office Complex Property pay all rents due under
their leases directly to the Deposit Bank.
Funds in the Deposit Account are applied in accordance with the terms
of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
Station Plaza Office Complex Borrower is prohibited from prepaying the
Station Plaza Office Complex Loan at any time before the date six (6)
months prior to the Maturity Date. The Loan may be prepaid at par at
any time thereafter. The Station Plaza Office Complex Borrower may
defease the Station Plaza Office Complex Loan, in whole but not in
part, at any time after the earlier to occur of two years after the
REMIC "start-up date" or July 10, 2001, by providing the Lender with
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations.
TRANSFER OF PROPERTY OR INTEREST IN STATION PLAZA OFFICE COMPLEX
BORROWER:
Lender shall have the option to declare the Station Plaza Office
Complex Loan immediately due and payable upon the transfer of the
Station Plaza Office Complex Property or any ownership interest in the
Station Plaza Office Complex Borrower, except in connection with the
rights of transfer described below. The Station Plaza Office Complex
Borrower has the right, once during the term of the Loan, to transfer
the entire Station Plaza Office Complex Property upon the satisfaction
of certain conditions, including Lender's receipt of Rating Agency
Confirmation and the specified assumption fee. Non-managing member
and/or limited partnership interests in the Station Plaza Office
Complex Borrower or in any general partner or managing member of the
Station Plaza Office Complex Borrower are freely transferable without
the Lender's consent, provided that management control of each entity
comprising the Station Plaza Office Complex Borrower remains with the
Sponsor and ownership is controlled by the Sponsor and/or his
immediate family members. Involuntary transfers caused by the death of
any individual, and gifts of an individual's ownership interests for
estate planning purposes to the spouse or lineal descendants of such
individual (or a trust for the benefit of such individual, spouse or
lineal descendants) shall be permitted so long as the Station Plaza
Office Complex Borrower is reconstituted, if required, following such
death or gift and so long as management of the Station Plaza Office
Complex Property remains unchanged or is otherwise acceptable to
Lender.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-18
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $6,209.75.
Tenant Improvements and Leasing Commissions
The Station Plaza Office Complex Borrower was required to escrow
$1,000,000 into a Tenant Improvement/Leasing Reserve. This reserve is
in place to satisfy obligations of the Station Plaza Office Complex
Borrower as landlord under its lease with the State of New Jersey (the
"Tenant") to fund additional tenant improvements to be drawn
periodically during the lease term at the Tenant's option.
SUBORDINATE/OTHER DEBT:
Subordinated indebtedness or other encumbrances are prohibited.
THE PROPERTY
The Station Plaza Office Complex Property is a 320,477 square foot office
complex located in Trenton, New Jersey. According to a rent roll provided by
the Station Plaza Office Complex Borrower, the Station Plaza Office Complex
Property is 99.7% leased, as of May 3, 1999, to nine tenants which are
primarily various state and federal government agencies. The Station Plaza
Office Complex Property consists of three buildings. Station Plaza III is a
148,540 square foot ten-story building completed in 1989. Station Plaza IV and
V are two four-story buildings that were completed in 1986 consisting of
171,937 square feet. The Station Plaza Office Complex Property is 87% leased to
the State of New Jersey (Aa1 Moody's/ AA+ S&P/ AA+ Fitch) through October 31,
2017.
Parking for the Station Plaza Office Complex Property is provided through
easement rights to 1,280 parking spaces located in an adjacent 1,576-car,
seven-level parking facility which is owned and managed by an entity controlled
by the Sponsor but is not part of the collateral for the loan.
THE MANAGEMENT
The Station Plaza Office Complex Property is managed by Nexus Properties, Inc.,
an entity affiliated with the Sponsor.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-19
CONTROL #5: REMINGTON PLACE APARTMENTS LOAN #: 6103250
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Cut-off Date Balance: $27,670,755 Property Type: Multifamily
- ------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Schaumburg, IL
- ------------------------------------------------------------------------------------------------------
Origination Date: 11/30/1998 Year Built/Renovated: 1986/1997
- ------------------------------------------------------------------------------------------------------
Maturity Date: 12/01/2028 Number of Units: 528
- ------------------------------------------------------------------------------------------------------
Anticipated Repay Date: 12/01/2008 Cut-off Date Balance/Unit: $52,407
- ------------------------------------------------------------------------------------------------------
Mortgage Rate: 6.41000% Appraised Value: $37,900,000
- ------------------------------------------------------------------------------------------------------
Annual Debt Service: $2,088,873 Current LTV: 73.01%
- ------------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.45x Balance at ARD LTV: 62.04%
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Underwritten Cash Flow: $3,031,466 Percent Leased: 96.59%
- ------------------------------------------------------------------------------------------------------
Balance at ARD: $23,562,522 Leasing Status Date: 02/01/1999
- ------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Remington Place Apartments Loan (the "Remington Place Apartments Loan") is
secured by a first mortgage on a 528 unit garden style apartment complex
located in Schaumburg, Illinois (the "Remington Place Apartments Property").
The Remington Place Apartments Loan was originated by Prudential Mortgage
Capital Company, LLC on November 30, 1998.
BORROWER:
The Remington Place Apartments Borrower is Remington Place, L.P., a
single asset, bankruptcy remote New Jersey limited partnership (the
"Remington Place Apartments Borrower").
SECURITY:
The Remington Place Apartments Loan is evidenced by a promissory note
(the "Note") secured by a Mortgage and Security Agreement (the
"Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee interest in the Remington Place Apartments
Property.
RECOURSE:
The Remington Place Apartments Loan is non-recourse, subject to
certain exceptions set forth in the Note which generally include,
among other things, liabilities relating to fraud, material
misrepresentation, misapplication of rents, and unauthorized transfers
or encumbrances of Remington Place Apartments Property (the "Recourse
Carveouts"). The obligations of the Remington Place Apartments
Borrower under the Recourse Carveouts are guaranteed by David M. Brown
(the "Sponsor") pursuant to the terms of an Indemnity and Guaranty
Agreement. The Sponsor is the sole owner of the Penobscot Corporation.
In addition, under the terms of a Hazardous Substances Indemnity
Agreement, the Remington Place Apartments Borrower and the Sponsor
assume liability for, guarantee payment to Lender of, and indemnify
Lender from specified costs and liabilities arising out of the
environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 6.410% per annum until the anticipated
repayment date of December 1, 2008 (the "ARD"). The Remington Place
Apartments Loan requires monthly payments of principal and interest of
$174,072.71 through the ARD. From and after the ARD, if the Remington
Place Apartments Loan is not paid in full, the interest rate shall
increase as set forth in the Note and the Pooling and Servicing
Agreement and excess cash flow from the Property, after funding of
specified reserves, and payment of debt service and certain operating
expenses and capital expenditures, will be applied to the outstanding
principal balance of the Note. The Remington Place Apartments Loan
accrues interest computed on the basis of twelve 30-day months in a
360-day year.
CASH MANAGEMENT/LOCKBOX:
The Remington Place Apartments Borrower has agreed that from and after
the earlier to occur of (i) an Event of Default (as such term is
defined in the Mortgage), or (ii) the date that is two (2) months
prior to the ARD, and continuing until the Note is repaid in full, all
Rents and Profits (as such term is defined in the Mortgage) will be
deposited into an account (the "Clearing Account") controlled by
Lender with a bank approved by Lender (the "Clearing Bank"). At
Lender's request, all such funds shall be transferred by the Clearing
Bank to an account (the "Deposit Account") under the sole dominion and
control of Lender established with a bank determined by Lender, to be
applied by Lender in accordance with the terms of the Note.
PREPAYMENT:
Except in connection with certain casualty or condemnation events, the
Remington Place Apartments Borrower is prohibited from prepaying the
Remington Place Apartments Loan at any time before the date six (6)
months prior to the ARD. The Loan may be prepaid at par at any time
thereafter. The Remington Place Apartments Borrower may defease the
Loan, in whole but not in part, at any time after the earlier to occur
of four years from the first payment date or 25 months after the REMIC
"start-up" date, and ending on the ARD, by providing Lender with
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations under the Loan.
TRANSFER OF REMINGTON PLACE APARTMENTS PROPERTY OR INTEREST IN
REMINGTON PLACE APARTMENTS BORROWER:
The Lender shall have the option to declare the Remington Place
Apartments Loan immediately due and payable upon the transfer of the
Remington Place Apartments Property or any ownership interest in the
Remington Place Apartments Borrower, except in connection with the
rights of transfer described below. The Remington Place Apartments
Borrower has the right, one or more times during the term of the Loan,
to transfer the entire Remington Place Apartments Property upon the
satisfaction of certain conditions, including Lender's receipt of
Rating Agency Confirmation and the specified assumption fee. In
addition, certain transfers of interests in Borrower and its
constituent entities, including certain transfers by devise or descent
or for estate planning purposes are permitted without Lender's consent
upon the satisfaction of certain conditions set forth in the Mortgage.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-20
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $11,000.00.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
written consent of Lender.
THE PROPERTY
The Remington Place Apartments Property is a 528 unit garden style apartment
complex located in Schaumburg, Illinois, approximately 30 miles northwest of
Chicago. The complex consists of 20 three-story and three two-story apartment
buildings and two office/clubhouse buildings. The apartment buildings were
constructed in 1986, with an additional $2.6 million invested in completed
renovations during the five year period ending in 1997. The complex has a gross
rentable area of 468,712 square feet and is comprised of 288
one-bedroom/one-bathroom units and 240 two-bedroom/two-bathroom units. The
amenities on the premises include an outdoor pool, two tennis courts, a
playground, a volleyball court, and a basketball court. Each individual unit is
equipped with full size washers and dryers, and approximately 75% of the units
have fireplaces. According to a rent roll provided by the Remington Place
Apartments Borrower, the Remington Place Apartments Property is 96.59% leased,
as of February 1, 1999.
THE MANAGEMENT
The Remington Place Apartments Property is managed by Remington Real Estate
Corporation, an entity affiliated with the Sponsor.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-21
CONTROL #6: SPRINGFIELD-PRESCOTT & IDOT LOAN #: 6103381
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Cut-off Date Balance: $23,098,052 Property Type: Office
- ----------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Springfield, IL
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Origination Date: 12/30/98 Year Built/Renovated: 1988, 1991
- ----------------------------------------------------------------------------------------------------
Maturity Date: 01/01/2024 Net Rentable Square Feet: 248,470
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Anticipated Repay Date: 01/01/2009 Cut-off Date Balance/sf: $92.96
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Mortgage Rate: 7.79000% Appraised Value: $32,300,000
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Annual Debt Service: $2,110,152 Current LTV: 71.51%
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Underwritten DSCR: 1.37x Balance at Maturity LTV: 58.84%
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Underwritten Cash Flow: $2,883,888 Percent Leased: 100.00%
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Balance at ARD: $19,052,952 Leasing Status Date: 12/30/1998
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</TABLE>
THE PROPERTY
PROPERTY 1: THE PRESCOTT E. BLOOM BUILDING LOAN #: 6103381A
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Location: Springfield, IL Net Rentable Square Feet: 180,300
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Construction: Steel Percent Leased: 100.00%
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Year Built/Renovated: 1988 Appraised Value: $24,100,000
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PROPERTY 2: ILLINOIS DEPARTMENT OF TRANSPORTATION ANNEX (IDOT) LOAN #: 6103381B
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Location: Springfield, IL Net Rentable Square Feet: 68,170
- -----------------------------------------------------------------------------
Construction: Steel Percent Leased: 100.00%
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Year Built/Renovated: 1991 Appraised Value: $8,200,000
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THE LOAN
The Springfield-Prescott & IDOT Loan (the "Springfield-Prescott & IDOT Loan")
is secured by a first mortgage on two office properties located in Springfield,
Illinois (the "Springfield-Prescott & IDOT Property"). The Springfield-Prescott
& IDOT Loan was originated by Prudential Mortgage Capital Company, LLC on
December 30, 1998.
BORROWER:
The Springfield-Prescott & IDOT Borrower is Government Property Fund,
LLC, a single purpose, bankruptcy remote California limited liability
company (the "Springfield-Prescott & IDOT Borrower").
SECURITY:
The Springfield-Prescott & IDOT Loan is evidenced by a promissory note
(the "Note") secured by a Mortgage and Security Agreement (the
"Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee interest in the Springfield-Prescott & IDOT
Property.
RECOURSE:
The Springfield-Prescott & IDOT Loan is non-recourse, subject to
certain exceptions set forth in the Note which generally include,
among other things, liabilities relating to fraud, material
misrepresentation, misapplication of rents, and unauthorized transfers
or encumbrances of the Springfield-Prescott & IDOT Property (the
"Recourse Carveouts"). The obligations of the Springfield-Prescott &
IDOT Borrower under the Recourse Carveouts are guaranteed by Mark L.
Friedman (the "Sponsor") pursuant to the terms of an Indemnity and
Guaranty Agreement. In addition, under the terms of a Hazardous
Substances Indemnity Agreement, the Springfield-Prescott & IDOT
Borrower and the Sponsor assume liability for, guarantee payment to
Lender of, and indemnify Lender from specified costs and liabilities
arising out of the environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 7.790% per annum until the anticipated
repayment date of January 1, 2009 (the "ARD"). The
Springfield-Prescott & IDOT Loan requires monthly payments of
principal and interest of $175,845.97 through the ARD. From and after
the ARD, if the Springfield-Prescott & IDOT Loan is not paid in full,
the interest rate shall increase as set forth in the Note and the
Pooling and Servicing Agreement and excess cash flow from the
Property, after funding of specified reserves, and payment of debt
service and certain operating expenses and capital expenditures, will
be applied to the outstanding principal balance of the Note. The
Springfield-Prescott & IDOT Loan accrues interest computed based on
the actual number of days elapsed each month in a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The Springfield-Prescott & IDOT Borrower has agreed that all Rents and
Profits (as such term is defined in the Mortgage) will be deposited
into an account with LaSalle National Bank (the "Deposit Bank") under
the sole dominion and control of Lender (the "Deposit Account"). All
tenants of the Springfield-Prescott & IDOT Property have been notified
to make payments of Rent and Profits directly to the Deposit Bank.
Funds in the Deposit Account shall be applied in accordance with the
terms of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
Springfield-Prescott & IDOT Borrower is prohibited from prepaying the
Springfield-Prescott & IDOT Loan at any time before the date three (3)
months prior to the ARD. The Loan may be prepaid at par at any time
thereafter. The Springfield-Prescott & IDOT Borrower may defease the
Loan, in whole but not in part, at any time during the period
commencing on
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-22
December 30, 2001 and ending on the date three (3) months prior to
the ARD, by providing Lender with non-callable U.S. Treasury
obligations sufficient to pay its remaining obligations.
TRANSFER OF SPRINGFIELD-PRESCOTT & IDOT PROPERTY OR INTEREST IN
SPRINGFIELD-PRESCOTT & IDOT BORROWER:
The Lender shall have the option to declare the Springfield-Prescott &
IDOT Loan immediately due and payable upon the transfer of the
Springfield-Prescott & IDOT Property or any ownership interest in the
Springfield-Prescott & IDOT Borrower, except in connection with the
rights of transfer described below. The Springfield-Prescott & IDOT
Borrower has the right, once during the term of the Loan, to transfer
the entire Springfield-Prescott & IDOT Property upon the satisfaction
of certain conditions, including Lender's receipt of Rating Agency
Confirmation and the specified assumption fee. Transfers of certain
ownership interests in the Springfield-Prescott & IDOT Borrower and
entities holding an interest therein are permitted upon the
satisfaction of certain conditions, including minimum levels of
beneficial ownership, and continued management control, upon Lender's
approval, which may include the requirement for Rating Agency
Confirmation.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $3,987.50.
Tenant Improvements and Leasing Commissions
The Springfield-Prescott & IDOT Borrower was required to escrow
$1,000,000 into a Tenant Improvement/Leasing Reserve for the payment
of future leasing commissions and tenant improvements, which is
replenished at the monthly rate of $18,497 when the balance falls
below $1,000,000. In lieu of the Tenant Improvement/Leasing Reserve,
the Springfield-Prescott & IDOT Borrower has the option to post an
irrevocable "evergreen" letter of credit from the Bank of America NT &
SA or other financial institution acceptable to Lender in the amount
of $1,000,000.
Management Termination Fee
If the existing management agreement(s) for the Springfield-Prescott &
IDOT Property are terminated, the Manager is entitled to receive a
termination fee(s). Upon the occurrence of certain events which Lender
has determined might lead to the replacement of the Manager, the
Springfield-Prescott & IDOT Borrower has agreed to establish a reserve
in anticipation of the need to pay such termination fee(s).
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
consent of Lender.
THE PROPERTY
The Springfield-Prescott & IDOT Property consists of two office buildings
located in Springfield, Illinois, approximately 190 miles southwest of Chicago
and 100 miles northeast of St. Louis. According to a rent roll provided by the
Springfield-Prescott & IDOT Borrower (the "Rent Roll"), the
Springfield-Prescott & IDOT Property is 100% leased, as of December 30, 1998,
to the State of Illinois (Aa2 Moody's/ AA S&P/ AA Fitch), and are occupied by
Illinois' Department of Public Aid, Department of Transportation and the
Department of Natural Resources. The two buildings include the Prescott E.
Bloom Building (the "Prescott Building") and the Illinois Department of
Transportation Annex (the "IDOT Annex"). The Prescott Building contains 180,300
square feet of net rentable space leased through June 30, 2002, and is
currently occupied by the Department of Public Aid. The IDOT Annex contains
68,170 square feet of net rentable space leased through December 31, 2000, and
is occupied by two tenants. The Department of Natural Resources occupies 20,451
square feet and the Illinois Department of Transportation occupies 47,719
square feet.
THE MANAGEMENT
The Springfield-Prescott & IDOT Properties are managed by Pacific Management,
Inc. (the "Manager"), pursuant to two (2) separate unsubordinated management
agreements. The Manager is an affiliate of NFM, Inc., which is the largest
manager of government-leased properties in Springfield, with over 1.7 million
square feet under management. NFM, Inc. has developed or redeveloped a
significant amount of Springfield office property, including the
Springfield-Prescott & IDOT Property.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-23
CONTROL #7: THE RESERVE AT WESTLAND APARTMENTS LOAN #: 6103198
<TABLE>
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<S> <C> <C> <C>
Cut-off Date Balance: $17,277,028 Property Type: Multifamily
- --------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Knoxville, TN
- --------------------------------------------------------------------------------------------------
Origination Date: 11/10/1998 Year Built/Renovated: 1997
- --------------------------------------------------------------------------------------------------
Maturity Date: 12/01/2028 Number of Units: 308
- --------------------------------------------------------------------------------------------------
Anticipated Repay Date: 12/01/2008 Cut-off Date Balance/Unit: $56,094
- --------------------------------------------------------------------------------------------------
Mortgage Rate: 6.08000% Appraised Value: $21,700,000
- --------------------------------------------------------------------------------------------------
Annual Debt Service: $1,259,718 Current LTV: 79.62%
- --------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.32x Balance at ARD LTV: 68.01%
- --------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $1,661,514 Percent Leased: 87.66%
- --------------------------------------------------------------------------------------------------
Balance at ARD: $14,788,568 Leasing Status Date: 03/04/1999
- --------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Reserve at Westland Apartments Loan (the "The Reserve at Westland
Apartments Loan") is secured by a first mortgage on a 342,120 square foot
garden style apartment complex located in Knoxville, Tennessee (the "The
Reserve at Westland Apartments Property"). The Reserve at Westland Apartments
Loan was originated by Prudential Mortgage Capital Company, LLC on November 10,
1998.
RESERVE AT WESTLAND APARTMENTS BORROWER:
The Reserve at Westland Apartments Borrower is The Reserve at
Westland, LLC, a single purpose, bankruptcy remote Tennessee limited
liability company (the "The Reserve at Westland Apartments Borrower").
SECURITY:
The Reserve at Westland Apartments Loan is evidenced by a promissory
note (the "Note") secured by a Deed of Trust and Security Agreement
(the "Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee interest in The Reserve at Westland Apartments
Property.
RECOURSE:
The Reserve at Westland Apartments Loan is non-recourse, subject to
certain exceptions set forth in the Note which generally include,
among other things, liabilities relating to fraud, material
misrepresentation, misapplication of rents, and unauthorized transfers
or encumbrances of The Reserve at Westland Property (the "Recourse
Carveouts"). The obligations of The Reserve at Westland Apartments
Borrower under the Recourse Carveouts are guaranteed by Robert L.
Foote (the "Sponsor") pursuant to the terms of an Indemnity and
Guaranty Agreement. In addition, under the terms of a Hazardous
Substances Indemnity Agreement, The Reserve at Westland Apartments
Borrower and the Sponsor assume liability for, guarantee payment to
Lender of, and indemnify Lender from specified costs and liabilities
arising out of the environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 6.080% per annum until the anticipated
repayment date of December 1, 2008 (the "ARD"). The Reserve at
Westland Apartments Loan requires monthly payments of principal and
interest of $104,976.53 through the ARD. From and after the ARD, if
The Reserve at Westland Apartments Loan is not paid in full, the
interest rate shall increase as set forth in the Note and the Pooling
and Servicing Agreement and excess cash flow from the Property, after
funding of specified reserves, and payment of debt service and certain
operating expenses and capital expenditures, will be applied to the
outstanding principal balance of the Note. The Reserve at Westland
Apartments Loan accrues interest computed based on the actual number
of days elapsed over a 360-day year.
CASH MANAGEMENT/LOCKBOX:
The Reserve at Westland Apartments Borrower has agreed that from and
after the earlier to occur of (i) an Event of Default (as such term is
defined in the Mortgage), or (ii) the date that is six (6) months
prior to the ARD, and continuing until the Note is repaid in full, all
Rents and Profits (as such term is defined in the Mortgage) will be
deposited into an account (the "Clearing Account") controlled by
Lender with a bank approved by Lender (the "Clearing Bank"). At
Lender's request, all such funds shall be transferred by the Clearing
Bank to an account (the "Deposit Account") under the sole dominion and
control of Lender established with a bank determined by Lender, to be
applied in accordance with the terms of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, The
Reserve at Westland Apartments Borrower is prohibited from prepaying
The Reserve at Westland Apartments Loan at any time before the date
three (3) months prior to the ARD. The Loan may be prepaid at par at
any time thereafter. The Reserve at Westland Apartments Borrower may
defease the Loan, in whole but not in part, at any time during the
period commencing on the later to occur of the date 25 months after
REMIC "start up date" or June 1, 2001 and ending on the date three (3)
months prior to the ARD, by providing Lender with non-callable U.S.
Treasury obligations sufficient to pay its remaining obligations.
TRANSFER OF RESERVE AT WESTLAND APARTMENTS PROPERTY OR INTEREST IN
RESERVE AT WESTLAND APARTMENTS BORROWER:
The Lender shall have the option to declare the Reserve at Westland
Apartments Loan immediately due and payable upon the transfer of The
Reserve at Westland Apartments Property or any ownership interest in
The Reserve at Westland Apartments Borrower, except in connection with
the rights of transfer described below. The Reserve at Westland
Apartments Borrower has the right, once during the term of the Loan,
to transfer the entire The Reserve at Westland Apartments Property
upon the satisfaction of certain conditions, including Lender's
receipt of Rating Agency Confirmation and the specified assumption
fee. The assumption fee will not be required so long as Robert L.
Foote as an individual or as a majority shareholder in Concorde Group,
Inc. and/or Alliance Development Group has a controlling interest in
the proposed buyer. In addition, certain transfers of interests in
Borrower and its constituent entities, including certain transfers by
devise or descent or for estate planning purposes are permitted
without Lender's consent upon the satisfaction of certain conditions
set forth in the Mortgage.
ESCROWS/RESERVES:
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-24
Taxes, Insurance and Capital Expenditures
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $3,670.00.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
written consent of Lender.
THE PROPERTY
The Reserve at Westland Apartments Property is a 308 unit garden style
apartment complex located in Knoxville, Tennessee. The property is improved
with 15 two and three-story buildings containing a net rentable area of 342,188
square. The unit mix includes 60 one-bedroom/one-bathroom units, 94
two-bedroom/two-bathroom units, 138 two-bedroom/two-bathroom units, and 16
three-bedroom/two-bathroom units. In addition to the apartment buildings, the
complex includes an office/clubhouse with a fitness center, swimming pool, and
putting green. Construction of The Reserve at Westland Apartments Property was
completed in November 1997. According to a rent roll provided by The Reserve at
Westland Apartments Borrower, The Reserve at Westland Apartments Property is
87.66% occupied, as of March 4, 1999.
THE MANAGEMENT
The Reserve at Westland Apartments Property is managed by RCA Realty Services,
Ltd., doing business as LEDIC Management Group, Inc. ("LEDIC"). LEDIC was
listed among the top 20 largest managers of apartments in the United States by
the National Multi Housing Council in 1998, with over 30 million square feet of
apartment and condominium property under management.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-25
CONTROL #8: THE PAVILION LOAN #: 7608321
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $16,680,926 Property Type: Office
- ---------------------------------------------------------------------------------------
Loan Type: Principal and Interest Location: Jenkintown, PA
- ---------------------------------------------------------------------------------------
Origination Date: 01/15/1998 Year Built/Renovated: 1966/1996, 1997
- ---------------------------------------------------------------------------------------
Maturity Date: 02/01/2008 Net Rentable Square Feet:336,176
- ---------------------------------------------------------------------------------------
Anticipated Repay Date: N/A Cut-off Date Balance/sf: $49.62
- ---------------------------------------------------------------------------------------
Mortgage Rate: 7.18000% Appraised Value: $24,100,000
- ---------------------------------------------------------------------------------------
Annual Debt Service: $1,465,338 Current LTV: 69.22%
- ---------------------------------------------------------------------------------------
Underwritten DSCR: 1.40x Balance at Maturity LTV: 55.92%
- ---------------------------------------------------------------------------------------
Underwritten Cash Flow: $2,053,994 Percent Leased: 87.70%
- ---------------------------------------------------------------------------------------
Balance at Maturity: $13,476,251 Leasing Status Date: 01/31/1999
- ---------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Pavilion Loan (the "Pavilion Loan") is secured by a first mortgage on a
336,176 square foot office/retail building and attached multi-level parking
structure located in Jenkintown, Pennsylvania (the "Pavilion Property"). The
Pavilion Loan was originated by Prudential Mortgage Capital Company, LLC on
January 15, 1998.
BORROWER:
The Pavilion Borrower is 1996 Pavilion Assoc., L.P., a single purpose,
bankruptcy remote Pennsylvania limited partnership (the "Pavilion
Borrower").
SECURITY:
The Pavilion Loan is evidenced by a promissory note (the "Note")
secured by a Leasehold Mortgage and Security Agreement (the
"Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a leasehold interest in The Pavilion Property.
RECOURSE:
The Pavilion Loan is non-recourse, subject to certain exceptions set
forth in the Note which generally include, among other things,
liabilities relating to fraud, material misrepresentation,
misapplication of rents, and unauthorized transfers or encumbrances of
the Pavilion Property (the "Recourse Carveouts"). The obligations of
the Pavilion Borrower under the Recourse Carveouts are guaranteed by
Arnold Galman (the "Sponsor") pursuant to the terms of an Indemnity
and Guaranty Agreement. In addition, under the terms of a Hazardous
Substances Indemnity Agreement, the Pavilion Borrower and the Sponsor
assume liability for, guarantee payment to Lender of, and indemnify
Lender from specified costs and liabilities arising out of the
environmental condition of the Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 7.180% per annum. The Pavilion Loan
requires monthly payments of principal and interest of $122,111.54
until the Maturity Date on February 1, 2008, at which time all unpaid
principal and accrued but unpaid interest is due. The Pavilion Loan
accrues interest computed on the basis of twelve 30-day months in a
360-day year.
PREPAYMENT:
Except in connection with certain casualty or condemnation events, the
Pavilion Borrower is prohibited from prepaying the Loan, until March
1, 2000, after which prepayment is permitted in whole, but not in
part, provided that said prepayment is accompanied by a payment to
Lender of a prepayment premium equal to the greater of one percent
(1%) of the then outstanding principal balance or a yield maintenance
premium calculated by reference to U.S. Treasury obligations. The
Pavilion Loan may be prepaid at par on or after the date that is six
(6) months prior to the maturity date.
TRANSFER OF PAVILION PROPERTY OR INTEREST IN PAVILION BORROWER:
The Lender has the option to declare the Pavilion Loan immediately due
and payable upon the transfer of The Pavilion Property or any
ownership interest in The Pavilion Borrower, except in connection with
the rights of transfer described below. The Pavilion Borrower has the
right, once during the term of the Loan, to transfer the entire
Pavilion Property upon the satisfaction of certain conditions,
including Lender's receipt of Rating Agency Confirmation and the
specified assumption fee. In addition, certain transfers of interests
in Borrower and its constituent entities, including certain transfers
by devise or descent or for estate planning purposes are permitted
without Lender's consent upon the satisfaction of certain conditions
set forth in the Mortgage.
ESCROWS/RESERVES:
Taxes, Insurance and Capital Expenditures
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $1,393.00.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
consent of Lender.
GROUND LEASE:
The Pavilion Borrower's interest in the Pavilion Property is a
leasehold. The Pavilion Borrower leases the land from John Barnes
Trustees, Inc. under a ground lease which expires on July 20, 2033,
subject to one ten-year extension option. The current annual ground
rent is $41,720 for the five year period ending June 30, 2003. The
annual ground rent shall be increased every five years to reflect
inflation, but in no case shall any such increase exceed $6,720.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
- -------------------------------------------------------------------------------
<PAGE>
E-26
THE PROPERTY
The Pavilion Property consists of a 336,176 square foot office/retail building
and one multi-level parking structure located in Jenkintown, Pennsylvania,
approximately ten miles north of Philadelphia. The building is situated on an
unsubordinated ground lease with approximately 34 years remaining to maturity.
The building consists of 230,848 square feet of office space on floors two
through nine and 89,121 square feet of retail space on the ground floor and one
below ground level. The property also contains storage space consisting of 45
units totaling 16,207 square feet.
The Pavilion Property's office space is currently occupied by 157 tenants, with
the largest tenant accounting for approximately 3.9% of the overall space. The
retail space is currently occupied by 31 tenants, with four tenants occupying
between 2% and 3% of the overall space. The storage space is currently occupied
by 35 of the Pavilion Property's current tenants. According to a rent roll
provided by the Pavilion Borrower, the Pavilion Property is 87.7% occupied, as
of January 31, 1999.
THE MANAGEMENT
The Pavilion Property is managed by The Galman Group, an entity affiliated with
the Sponsor. The Galman Group has owned and operated retail, office, and/or
multifamily properties since 1982.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-27
CONTROL #9: DAYS INN HOTEL-CRYSTAL CITY LOAN #: 6103362
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $16,285,000 Property Type: Hotel
- --------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Arlington, VA
- --------------------------------------------------------------------------------------------------
Origination Date: 04/05/1999 Year Built/Renovated: 1964/1994
- --------------------------------------------------------------------------------------------------
Maturity Date: 05/01/2024 Number of Rooms: 247
- --------------------------------------------------------------------------------------------------
Anticipated Repay Date: 05/01/2009 Cut-off Date Balance/Room: $65,931
- --------------------------------------------------------------------------------------------------
Mortgage Rate: 8.49000% Appraised Value: $26,500,000
- --------------------------------------------------------------------------------------------------
Annual Debt Service: $1,572,258 Current LTV: 61.45%
- --------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.40x Balance at Maturity LTV: 50.24%
- --------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $2,201,211 Annual Percent Occupancy: 71.63%
- --------------------------------------------------------------------------------------------------
Balance at Maturity: $13,349,689 Occupancy Year End: 12/31/1998
- --------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Days Inn-Crystal City Loan (the "Days Inn-Crystal City Loan") is secured by
a first mortgage on a full service Days Inn hotel located in Arlington,
Virginia. (the "Days Inn-Crystal City Property"). The Days Inn-Crystal City
Loan was originated by Prudential Mortgage Capital Company, LLC on April 5,
1999.
BORROWER:
The Days Inn-Crystal City Borrower is Crystal Inn Company, a single
purpose, bankruptcy remote Florida corporation (the "Days Inn-Crystal
City Borrower"). The Days Inn-Crystal City Borrower is sponsored by
American Hotel Holdings Company (the "Sponsor"), the parent company of
InterAmerican Hotels Corporation, the sole shareholder of the Days
Inn-Crystal City Borrower.
SECURITY:
The Days Inn-Crystal City Loan is evidenced by a promissory note (the
"Note") secured by a Deed of Trust and Security Agreement (the
"Mortgage"), an Assignment of Leases and Rents, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee interest in the Days Inn-Crystal City Property.
RECOURSE:
The Days Inn-Crystal City Loan is non-recourse, subject to certain
exceptions set forth in the Note which generally include, among other
things, liabilities relating to fraud, material misrepresentation,
misapplication of rents, and unauthorized transfers or encumbrances of
the Days Inn-Crystal City Property (the "Recourse Carveouts"). The
obligations of the Days Inn-Crystal City Borrower under the Recourse
Carveouts are guaranteed by the Sponsor pursuant to the terms of an
Indemnity and Guaranty Agreement. The Sponsor is required to maintain
a minimum net worth of $5,000,000 determined in accordance with
generally accepted accounting principles. In addition, under the terms
of a Hazardous Substances Indemnity Agreement, the Days Inn-Crystal
City Borrower and the Sponsor assume liability for, guarantee payment
to Lender of, and indemnify Lender from specified costs and
liabilities arising out of the environmental condition of the
Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 8.490% per annum until the anticipated
repayment date of May 1, 2009 (the "ARD"). The Days Inn-Crystal City
Loan requires monthly payments of principal and interest of
$131,021.51 through the ARD. From and after the ARD, if the Days
Inn-Crystal City Loan is not paid in full, the interest rate shall
increase as set forth in the Note and the Pooling and Servicing
Agreement and excess cash flow from the Property, after funding of
specified reserves, and payment of debt service and certain operating
expenses and capital expenditures, will be applied to the outstanding
principal balance of the Note. The Days Inn-Crystal City Loan accrues
interest computed on the basis of twelve 30-day months in a 360-day
year.
CASH MANAGEMENT/LOCKBOX:
The Days Inn-Crystal City Borrower has agreed that from and after the
earlier to occur of (i) the ARD, or (ii) an Event of Default (as such
term is defined in the Mortgage) until repayment of the Days
Inn-Crystal City Loan, all Rents and Profits (as such term is defined
in the Mortgage) will be deposited into an account (the "Clearing
Account") controlled by Lender with a bank approved by Lender (the
"Clearing Bank"). In such event, the Days Inn-Crystal City Borrower
has agreed to deposit all Rents and Profits with the Clearing Bank. At
Lender's request, all such funds shall be transferred with the
Clearing Bank to an account (the "Deposit Account") under the sole
dominion and control of Lender established with a bank determined by
Lender, to be applied in accordance with the terms of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
Days Inn-Crystal City Borrower is prohibited from prepaying the Days
Inn-Crystal City Loan at any time before the date three (3) months
prior to the ARD. The Loan may be prepaid at par at any time
thereafter. The Days Inn-Crystal City Borrower may defease the Loan,
in whole but not in part, at any time during the period commencing on
the later to occur of date 25 months after REMIC "start up date" or
June 1, 2003 and ending on the ARD, by providing Lender with
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations under the Loan.
TRANSFER OF DAYS INN-CRYSTAL CITY PROPERTY OR INTEREST IN DAYS
INN-CRYSTAL CITY BORROWER:
The Lender shall have the option to declare the Days Inn-Crystal City
Loan immediately due and payable upon the transfer of the Days
Inn-Crystal City Property or any ownership interest in the Days
Inn-Crystal City Borrower, except in connection with the rights of
transfer described below. The Days Inn-Crystal City Borrower has the
right, one or more times during the term of the Loan, to transfer the
entire Days Inn-Crystal City Property upon the satisfaction of certain
conditions, including Lender's receipt of Rating Agency Confirmation
and the specified assumption fee. In addition, certain transfers of
interests in Borrower and its constituent entities, including certain
transfers by devise or descent or for estate planning purposes are
permitted without Lender's consent upon the satisfaction of certain
conditions set forth in the Mortgage.
ESCROWS/RESERVES:
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-28
Taxes, Insurance and Capital Expenditures
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $22,934.00 during the first 12 months of the Loan term
and monthly payments of four percent (4%) of Effective Gross Income
thereafter.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without the
prior written consent of Lender.
THE PROPERTY
The Days Inn-Crystal City Property is a full service Days Inn hotel located in
Arlington, Virginia. The Days Inn-Crystal City Property consists of one,
eight-story building with interior corridors containing 247 guest rooms, seven
meeting rooms containing 5,790 square feet, and a full service restaurant and
lounge. The improvements were constructed in 1964 and renovated in 1993 and
1994. Guest rooms are configured into 202 double rooms, 25 queen rooms, 17 king
rooms, and three executive king rooms. In addition to the restaurant and
banquet space, other amenities include a fitness room, a gift shop, an outdoor
swimming pool, and complimentary airport shuttle service. According to the Days
Inn-Crystal City Borrower the occupancy at the Days Inn-Crystal City Property
was 70.36%, for the year ending December 31, 1998.
THE MANAGEMENT
The Days Inn-Crystal City Property is managed by Sound Hospitality Management
Company, an entity affiliated with the Sponsor. Sound Hospitality manages and
operates the subject hotel, plus three other hotels owned by American Hotel
Holdings Company, for a total of 666 rooms under management.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-29
CONTROL #10: LEVEQUE TOWER OFFICE BUILDING LOAN #: 6103429
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $16,160,000 Property Type: Office
- -------------------------------------------------------------------------------------------------------
Loan Type: Principal and Interest; Hyperam Location: Columbus, OH
- -------------------------------------------------------------------------------------------------------
Origination Date: 04/06/1999 Year Built/Renovated: 1924-1927/1986-1990
- -------------------------------------------------------------------------------------------------------
Maturity Date: 05/01/2029 Net Rentable Square Feet: 347,867
- -------------------------------------------------------------------------------------------------------
Anticipated Repay Date: 05/01/2009 Cut-off Date Balance/sf: $46.45
- -------------------------------------------------------------------------------------------------------
Mortgage Rate: 8.02000% Appraised Value: $22,500,000
- -------------------------------------------------------------------------------------------------------
Annual Debt Service: $1,425,621 Current LTV: 71.82%
- -------------------------------------------------------------------------------------------------------
Underwritten DSCR: 1.30x Balance at ARD LTV: 64.30%
- -------------------------------------------------------------------------------------------------------
Underwritten Cash Flow: $1,853,306 Percent Leased: 88.60%
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Balance at ARD: $14,488,818 Leasing Status Date: 03/01/1999
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</TABLE>
THE LOAN
The LeVeque Tower Office Building Loan (the "LeVeque Tower Office Building
Loan") is secured by a first mortgage on a 347,867 square foot office building
located in Columbus, Ohio (the "LeVeque Tower Office Building Property"). The
LeVeque Tower Office Building Loan was originated by Prudential Mortgage
Capital Company, LLC on April 6, 1999.
BORROWER:
The LeVeque Tower Office Building Borrower is LeVeque Tower LLC, a
single purpose, bankruptcy remote Ohio limited liability company (the
"LeVeque Tower Office Building Borrower").
SECURITY:
The LeVeque Tower Office Building Loan is evidenced by a promissory
note (the "Note") secured by an open-end Mortgage and Security
Agreement (the "Mortgage"), an Assignment of Leases and Rents, UCC
Financing Statements, and certain additional security documents. The
Mortgage is a first lien on a fee interest in the LeVeque Tower Office
Building Property.
RECOURSE:
The LeVeque Tower Office Building Loan is non-recourse, subject to
certain exceptions set forth in the Note which generally include,
among other things, liabilities relating to fraud, material
misrepresentation, misapplication of rents, and unauthorized transfers
or encumbrances of the LeVeque Tower Office Building Property (the
"Recourse Carveouts"). The obligations of the LeVeque Tower Office
Building Borrower under the Recourse Carveouts are guaranteed by
Katherine S. LeVeque (the "Sponsor") pursuant to the terms of an
Indemnity and Guaranty Agreement. In addition, under the terms of a
Hazardous Substances Indemnity Agreement, the LeVeque Tower Office
Building Borrower and the Sponsor assume liability for, guarantee
payment to Lender of, and indemnify Lender from specified costs and
liabilities arising out of the environmental condition of the
Property.
PAYMENT TERMS:
The Mortgage Rate is fixed at 8.020% per annum until the anticipated
repayment date of May 1, 2009 (the "ARD"). The LeVeque Tower Office
Building Loan requires monthly payments of principal and interest of
$118,801.74 through the ARD. From and after the ARD, if the LeVeque
Tower Office Building Loan is not paid in full, the interest rate
shall increase as set forth in the Note and the Pooling and Servicing
Agreement and excess cash flow from the Property, after funding of
specified reserves, and payment of debt service and certain operating
expenses and capital expenditures, will be applied to the outstanding
principal balance of the Note. The LeVeque Tower Office Building Loan
accrues interest computed on the basis of the actual days elapsed in a
360-day year.
CASH MANAGEMENT/LOCKBOX:
The LeVeque Tower Office Building Borrower has agreed that from and
after the earlier to occur of (i) an Event of Default (as such term is
defined in the Mortgage), or (ii) the date that is six (6) months
prior to the ARD, and continuing until the Note is repaid in full, the
LeVeque Tower Office Building Borrower has agreed that all Rents and
Profits (as such term is defined in the Mortgage) will be deposited
into an account (the "Clearing Account") controlled by Lender with a
bank approved by Lender (the "Clearing Bank"). At Lender's request,
all such funds shall be transferred by the Clearing Bank to an account
(the "Deposit Account") under the sole dominion and control of Lender
established with a bank determined by Lender, to be applied in
accordance with the terms of the Note.
PREPAYMENT/DEFEASANCE:
Except in connection with certain casualty or condemnation events, the
LeVeque Tower Office Building Borrower is prohibited from prepaying
the Loan, in whole or in part, at any time before the date six (6)
months prior to the ARD. The Loan may be prepaid at par at any time
thereafter. The LeVeque Tower Office Building Borrower may defease the
Loan, in whole but not in part, at any time during the period
commencing June 1, 2003, but in no event earlier than 25 months after
the REMIC "start-up" date, and ending on the ARD, by providing Lender
with non-callable U.S. Treasury obligations sufficient to pay its
remaining obligations under the Loan.
TRANSFER OF LEVEQUE TOWER OFFICE BUILDING PROPERTY OR INTEREST IN
LEVEQUE TOWER OFFICE BUILDING BORROWER:
The Lender shall have the option to declare the LeVeque Tower Office
Building Loan immediately due and payable upon the transfer of the
LeVeque Tower Office Building Property or any ownership interest in
the LeVeque Tower Office Building Borrower, except in connection with
the rights of transfer described below. The LeVeque Tower Office
Building Borrower has the right, one or more times during the term of
the Loan, to transfer the entire LeVeque Tower Office Building
Property upon the satisfaction of certain conditions, including
Lender's receipt of Rating Agency Confirmation and the specified
assumption fee. In addition, certain transfers of interests in
Borrower and its constituent entities, including certain transfers by
devise or descent or for estate planning purposes are permitted
without Lender's consent upon the satisfaction of certain conditions
set forth in the Mortgage.
ESCROWS/RESERVES:
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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<PAGE>
E-30
Taxes, Insurance and Capital Expenditures
There is a tax and insurance escrow which requires monthly deposits in
an amount estimated to be sufficient to pay real estate taxes and
insurance premiums when due. There is also an escrow required for
future capital expenditures which is required to be funded monthly in
the amount of $7,305.00.
Tenant Improvements and Leasing Commissions
LeVeque Tower Office Building Borrower was required to deposit
$500,000 at closing into a tenant improvement and leasing commission
reserve and provide an additional $500,000 in the form of a letter of
credit (the "Letter of Credit"). Beginning January 1, 2001, LeVeque
Tower Office Building Borrower has the right to draw from the reserve,
or if insufficient, draw upon the Letter of Credit by amounts equal to
$6.00/SF for tenant improvements and leasing commissions relating to
the leasing of any space occupied by a current tenant whose lease
expires in 2001 or for any space which was vacant at closing and
remained vacant until 2001. All leases must be at arm's length with
third-party tenants for a minimum term of three (3) years (with the
exception of leases to state agencies) and with minimum rent of
$14.50/SF. In the event that the net operating income from the subject
property becomes insufficient to pay debt service, PMCC has the right
to draw from the escrow account for payment of any shortfall.
SUBORDINATE/OTHER DEBT:
Subordinate indebtedness or encumbrances are prohibited without prior
written consent of Lender.
THE PROPERTY
The LeVeque Tower Office Building Property is a forty-four story, 347,867 net
rentable square foot office building located in Columbus, Ohio. The building
was constructed between 1924 and 1927 and underwent an extensive $18 million
renovation from 1986 to 1990. In addition, over $1 million was spent on capital
improvements and tenant improvements from 1996 to 1998.
Major tenants include two State of Ohio agencies (Aa1 Moody's/ AA+ S&P/ AA+
Fitch). The Ohio Department of Human Resources occupies 69,816 square feet
through June 1999 with two two-year renewal options. The Ohio Department of
Aging, which has been a tenant for 19 years, occupies 34,674 square feet
through June 2001 with three two-year renewal options. According to a rent roll
provided by the LeVeque Tower Office Building Borrower, the LeVeque Tower
Office Building Property is 88.6% leased, as of March 1, 1999, to 90 tenants.
THE MANAGEMENT
The LeVeque Tower Office Building Property is managed by CB Richard Ellis, a
third-party manager.
THIS STRUCTURAL TERM SHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERM SHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERM SHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE
ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE
CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED OR MORGAN STANLEY & CO.
INCOPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES DESCRIBED HEREIN ARE
OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS SUPPLEMENT AND
PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES SHOULD MAKE
THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED THEREIN,
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH
TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES MORGAN STANLEY DEAN WITTER
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