<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-64765
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 29, 1998)
$771,491,000
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
NATIONAL REALTY FINANCE L.C.
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
and
BRIDGER COMMERCIAL REALTY FINANCE LLC
Mortgage Loan Sellers
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C2
--------------
The Commercial Mortgage Pass-Through Certificates, Series 1999-C2 will
consist of 20 classes of certificates. Only the classes described in the
following table are offered by this prospectus supplement. An additional 13
classes of certificates are not offered by this prospectus supplement. All of
the Series 1999-C2 Certificates will represent beneficial ownership interests
in a trust fund whose principal assets consist of a pool of 234 fixed rate
mortgage loans secured by first liens on 262 commercial and multifamily
residential properties.
<TABLE>
<CAPTION>
===================================================================================================================================
CERTIFICATE
INITIAL CLASS RATING (5)
CERTIFICATE INITIAL PASS- SCHEDULED FINAL WEIGHTED AVERAGE ------------------
BALANCE (+ / -- 5%) THROUGH RATE DISTRIBUTION DATE (1) LIFE (YEARS) MOODY'S S&P
<S> <C> <C> <C> <C> <C> <C>
Class A-1 ......... $229,000,000 6.955%(2) June 15, 2008 5.70 Aaa AAA
Class A-2 ......... $396,880,000 7.193%(2) April 15, 2009 9.38 Aaa AAA
Class B ........... $ 41,293,000 7.518%(3) April 15, 2009 9.71 Aa2 AA+
Class C ........... $ 45,639,000 7.715%(3) May 15, 2009 9.78 A2 A
Class D ........... $ 13,040,000 7.741%(4) June 15, 2009 9.86 A3 A--
Class E ........... $ 30,426,000 7.741%(4) June 15, 2009 9.88 Baa2 BBB
Class F ........... $ 15,213,000 7.741%(4) June 15, 2010 10.04 Baa3 BBB--
===================================================================================================================================
</TABLE>
- ----------
(1) The "Scheduled Final Distribution Date" with respect to any class of
certificates is the Distribution Date on which the related certificate
balance or notional balance would be reduced to zero, based upon the
assumptions set forth herein.
(2) The Pass-Through Rates for the Class A-1 and Class A-2 Certificates for
each Distribution Date will be equal to the fixed rates per annum set
forth in the table; provided, in each case, that the Pass-Through Rates
will not exceed the Weighted Average Net Mortgage Rate.
(3) Initial Pass-Through Rate. The Class B and Class C Certificates accrue
interest at the Weighted Average Net Mortgage Rate, less 0.223% and
0.026%, respectively.
(4) Initial Pass-Through Rate. The Class D, E and F Certificates accrue
interest at the Weighted Average Net Mortgage Rate.
(5) The Rated Final Distribution Date is June 16, 2031.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-19 OF
THIS PROSPECTUS SUPPLEMENT AND ON PAGE 12 OF THE ACCOMPANYING PROSPECTUS PRIOR
TO INVESTING IN THE OFFERED CERTIFICATES.
The Series 1999-C2 Certificates will represent interests in the trust fund
only and will not represent an interest in or obligations of the above named
persons or in any other party. The Series 1999-C2 Certificates and the mortgage
loans are not insured or guaranteed by any governmental agency or any other
person.
--------------
PRUDENTIAL SECURITIES GREENWICH NATWEST
JULY 22, 1999
<PAGE>
Prudential Securities Secured Financing Corporation
Commercial Mortgage Pass-Through Certificates, Series 1999-C2
Geographic Overview of Mortgage Pool
Washington Virginia
7 properties 1 property
$18,598,177 $1,795,528
2.14% of total 0.21% of total
Oregon District of Columbia
2 properties 1 property
$5,071,636 $2,278,281
0.58% of total 0.26% of total
Nevada Maryland
8 properties 7 properties
$23,589,552 $35,022,379
2.71% of total 4.03% of total
California Delaware
34 properties 1 property
$175,543,355 $1,150,115
20.19% of total 0.13% of total
Utah New Jersey
2 properties 5 properties
$3,616,134 $22,804,036
0.42% of total 2.62% of total
Arizona Connecticut
12 properties 4 properties
$63,555,147 $11,648,615
7.31% of total 1.34% of total
Colorado Massachusetts
8 properties 7 properties
$15,037,019 $26,861,061
1.73% of total 3.09% of total
Kansas Maine
4 properties 3 properties
$9,643,469 $2,622,128
1.11% of toal 0.30% of total
Texas New Hampshire
12 properties 4 properties
$27,771,947 $23,654,485
3.19% of total 2.72% of total
Oklahoma New York
2 properties 19 properties
$3,706,926 $81,176,256
0.43% of total 9.34% of total
Arkansas Pennsylvania
1 property 17 properties
$6,469,716 $46,595,319
0.74% of total 5.36% of total
Louisiana Ohio
4 properties 17 properties
$13,981,438 $32,514,480
1.61% of total 3.74% of total
Alabama Indiana
4 properties 13 properties
$4,426,527 $23,135,155
0.51% of total 2.66% of total
Kentucky Michigan
1 property 6 properties
$1,496,807 $9,284,172
0.17% of total 1.07% of total
Florida Wisconsin
25 properties 2 properties
$49,151,322 $4,815,665
5.65% of total 0.55% of total
Georgia Illinois
8 properties 1 property
$29,841,213 $1,086,058
3.43% of total 0.12% of total
Tennessee Iowa
5 properties 1 property
$11,558,426 $6,367,553
1.33% 0.73% of total
South Carolina Missouri
1 property 2 properties
$1,895,613 $8,969,969
0.22% of total 1.03% of total
North Carolina Wyoming
3 properties 1 property
$17,758,904 $2,796,884
2.04% of total 0.32% of total
West Virginia Idaho
1 property 5 properties
$17,536,726 $19,258,284
2.02% of total 2.22% of total
Hawaii
1 property
$5,203,290
0.60% of total
Percent of Cut-off Date Balance by Property Type
Hotel-Limited Service 3.18%
Mixed Use 4.07%
Industrial 7.07%
Hotel-Full Service 8.27%
Office 14.19%
Housing Related 25.97%
Retail 31.49%
Other 5.76%
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS
General information about mortgage pass-through certificates we might
offer publicly is contained in the accompanying prospectus, some of which may
not apply to the Series 1999-C2 Certificates or the particular classes of
Series 1999-C2 Certificates being offered. This prospectus supplement describes
the specific terms of the series of mortgage pass-through certificates being
offered to you.
IF WE DESCRIBE TERMS OF THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES
OFFERED HEREBY DIFFERENTLY IN THIS PROSPECTUS SUPPLEMENT THAN WE DO IN THE
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
RATHER THAN ON THE MORE GENERAL INFORMATION IN THE PROSPECTUS. HOWEVER, YOU
SHOULD CAREFULLY REVIEW THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS TOGETHER, BECAUSE NEITHER ONE BY ITSELF PROVIDES COMPLETE
INFORMATION ABOUT THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES OFFERED BY
THIS PROSPECTUS SUPPLEMENT.
Sometimes the discussion of a particular topic in this prospectus
supplement or in the prospectus relates to a separate discussion in another
section of this prospectus supplement or in the prospectus. We make
cross-references to other sections of this prospectus supplement and the
prospectus whenever we believe that they will enhance your understanding of the
topic under discussion. The Table of Contents of this prospectus supplement and
the Table of Contents included in the accompanying prospectus list the pages on
which these captions are located.
Whenever we use words like "intends," "anticipates" or "expects" or
similar words in this prospectus supplement, we are making a forward-looking
statement, or a projection of what we think will happen in the future.
Forward-looking statements are inherently subject to a variety of
circumstances, many of which are beyond our control, that could cause actual
results to differ materially from what we think they will be. Any
forward-looking statements in this prospectus supplement speak only as of the
date of this prospectus supplement. We do not assume any responsibility to
update or review any forward-looking statements contained in this prospectus
supplement to reflect any change in our expectation with respect to the subject
of such forward-looking statements or to reflect any change in events,
conditions or circumstances on which any such forward-looking statements are
based.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index
of Significant Definitions" beginning on page S-105 in this prospectus
supplement and under the caption "Index of Significant Definitions" beginning
on page 87 in the accompanying prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement (including this prospectus
supplement and the prospectus) with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "1933 Act"), as amended.
This prospectus supplement and the accompanying prospectus do not contain all
of the information contained in the registration statement. For further
information regarding the documents referred to in this prospectus supplement
and the prospectus, you should refer to the registration statement and the
exhibits to the registration statement. The registration statement and such
exhibits can be inspected and copied at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and the
Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1500,
Chicago, Illinois 60661. Copies of such materials can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Electronic filings made through the Electronic
Data Gathering, Analysis and Retrieval System are publicly available through
the Commission's Web Site (http://www.sec.gov). Certain documents filed with
the Commission by or on behalf of the trust fund are incorporated by reference
herein. See "Incorporation of Certain Information by Reference" in the
prospectus.
---------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS AND SUBSCRIPTIONS.
S-3
<PAGE>
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Important Notice about Information Presented
in this Prospectus Supplement and the
Accompanying Prospectus ....................... S-3
Where You Can Find More Information .............. S-3
Summary .......................................... S-5
Risk Factors ..................................... S-19
Description of the Mortgage Pool ................. S-36
Prudential Securities Secured Financing
Corporation ................................... S-57
Prudential Securities Credit Corp. ............... S-57
Mortgage Loan Sellers ............................ S-57
Description of the Certificates .................. S-61
Yield and Maturity Considerations ................ S-73
Master Servicer and Special Servicer ............. S-79
The Pooling and Servicing Agreement .............. S-79
Material Federal Income Tax Consequences ......... S-97
ERISA Considerations ............................. S-99
Legal Investment ................................. S-102
Plan of Distribution ............................. S-102
Use of Proceeds .................................. S-103
Legal Matters .................................... S-103
Ratings .......................................... S-103
Index of Terms for Prospectus Supplement ......... S-105
Annex A--Mortgage Loan Characteristics ........... A-1
Annex B--Additional Step Loan and Interest
Only Loan Characteristics ..................... B-1
Annex C--Affiliated Borrowers .................... C-1
Annex D--Form of Statement to
Certificateholders ............................ D-1
Annex E--Exceptions to Mortgage Loan
Representations and Warranties ................ E-1
Annex F--Structural and Collateral Term Sheet
and Top Ten Loan Descriptions ................. F-1
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Prospectus Supplement ............................... 2
Additional Information .............................. 2
Incorporation of Certain Information by
Reference ........................................ 2
Reports ............................................. 3
Summary of Prospectus ............................... 7
Risk Factors ........................................ 12
The Depositor ....................................... 19
Use of Proceeds ..................................... 19
Description of the Certificates ..................... 19
The Mortgage Pools .................................. 25
Servicing of the Mortgage Loans ..................... 29
Credit Enhancement .................................. 36
Certain Legal Aspects of the Mortgage Loans ......... 39
Material Federal Income Tax Consequences ............ 55
State and Other Tax Considerations .................. 81
ERISA Considerations ................................ 81
Legal Investment .................................... 83
Plan of Distribution ................................ 85
Legal Matters ....................................... 86
Financial Information ............................... 86
Rating .............................................. 86
Index of Significant Definitions .................... 87
</TABLE>
S-4
<PAGE>
SUMMARY
This Summary includes selected information from this prospectus
supplement. It does not contain all of the information you need to consider in
deciding whether to buy any class of the Offered Certificates. TO UNDERSTAND
THE TERMS OF THE OFFERING OF THE OFFERED CERTIFICATES, YOU SHOULD READ
CAREFULLY THIS ENTIRE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
OVERVIEW OF THE CERTIFICATES
<TABLE>
<CAPTION>
APPROXIMATE
INITIAL CERTIFICATE APPROXIMATE PERCENTAGE OF
BALANCE OR NOTIONAL RATINGS (1) PERCENTAGE OF CUT-OFF SUBORDINATED
CLASS BALANCE MOODY'S/S&P DATE BALANCE SECURITIES
<S> <C> <C> <C> <C>
Offered Certificates
CLASS A-1 $229,000,000 Aaa/AAA 26.34% 28.00%
CLASS A-2 $396,880,000 Aaa/AAA 45.66% 28.00%
CLASS B $ 41,293,000 Aa2/AA+ 4.75% 23.25%
CLASS C $ 45,639,000 A2/A 5.25% 18.00%
CLASS D $ 13,040,000 A3/A-- 1.50% 16.50%
CLASS E $ 30,426,000 Baa2/BBB 3.50% 13.00%
CLASS F $ 15,213,000 Baa3/BBB-- 1.75% 11.25%
Private Certificates (not offered hereby)
CLASS A-EC1(2) $869,289,765 Aaa/AAAr N/A N/A
CLASS A-EC2(3) $ 97,798,765 Aaa/AAAr N/A N/A
CLASS G $ 15,213,000 Ba1/BB+ 1.75% 9.50%
CLASS H $ 19,559,000 NR(4)/BB+ 2.25% 7.25%
CLASS J $ 6,520,000 NR(4)/BB 0.75% 6.50%
CLASS K $ 6,520,000 NR(4)/BB-- 0.75% 5.75%
CLASS L $ 17,386,000 NR(4)/B+ 2.00% 3.75%
CLASS M $ 4,347,000 NR(4)/B 0.50% 3.25%
CLASS N $ 8,693,000 B3/NR(4) 1.00% 2.25%
CLASS O $ 19,560,765 NR(4)/NR(4) 2.25% 0.00%
</TABLE>
- --------
(1) Ratings are by Moody's Investors Service, Inc. ("Moody's") and Standard &
Poors Ratings Services ("S&P"). A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. A security
rating does not address: the likelihood or frequency of prepayments (both
voluntary and involuntary), the possibility that you might suffer a lower
than expected yield, the likelihood of receipt of Prepayment Premiums or
Yield Maintenance Charges, any allocation of Prepayment Interest
Shortfalls, or the likelihood of collection by the Master Servicer of
Default Interest.
(2) Interest only strip with a notional balance ("Notional Balance") equal to
the aggregate of the Certificate Balances for Classes A-1 through O.
(3) Interest only strip with a Notional Balance equal to the aggregate of the
Certificate Balances for Classes G through O.
(4) Rating not obtained by the Depositor from such Rating Agency.
The Class R-I, Class R-II and R-III Certificates are not represented in
this table and are not offered hereby.
S-5
<PAGE>
<TABLE>
<CAPTION>
EXPECTED
WEIGHTED AMORTIZATION PERIOD
AVERAGE LIFE (MONTH/YEAR)
CLASS PASS-THROUGH RATE (YEARS) (1) (1)
<S> <C> <C> <C>
Offered Certificates
Class A-1 6.955%(2) 5.70 8/1999 - 6/2008
Class A-2 7.193%(2) 9.38 6/2008 - 4/2009
Class B 7.518%(3) 9.71 4/2009 - 4/2009
Class C 7.715%(3) 9.78 4/2009 - 5/2009
Class D 7.741%(4) 9.86 5/2009 - 6/2009
Class E 7.741%(4) 9.88 6/2009 - 6/2009
Class F 7.741%(4) 10.04 6/2009 - 6/2010
Private Certificates (not offered hereby)
Class A-EC1 0.518%(5) 9.07 N/A
Class A-EC2 0.550%(6) 14.58 N/A
Class G 6.755%(2) 11.54 6/2010 - 5/2011
Class H 6.755%(2) 11.87 5/2011 - 8/2011
Class J 6.755%(2) 12.69 8/2011 - 11/2012
Class K 6.755%(2) 13.51 11/2012 - 6/2013
Class L 6.755%(2) 14.21 6/2013 - 4/2014
Class M 6.755%(2) 15.26 4/2014 - 5/2015
Class N 6.755%(2) 16.79 5/2015 - 5/2017
Class O 6.755%(2) 19.83 5/2017 - 9/2023
</TABLE>
- --------
(1) Assumes a prepayment scenario of 0% CPR, with each ARD Loan prepaying in
full on the related Anticipated Repayment Date, and no defaults. See
"Yield and Maturity Considerations--Weighted Average Life" herein.
(2) The Pass-Through Rates for the Class A-1, Class A-2, Class G, Class H,
Class J, Class K, Class L, Class M, Class N and Class O Certificates for
each Distribution Date will be equal to the fixed rates per annum set
forth in the table; provided, in each case, that the Pass-Through Rates
will not exceed the Weighted Average Net Mortgage Rate.
(3) Initial Pass-Through Rate. The Pass-Through Rate for the Class B and
Class C Certificates will be a per annum rate equal to the Weighted
Average Net Mortgage Rate, less 0.223% and 0.026%, respectively.
(4) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate.
(5) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the excess, if any, of (i) the Weighted Average Net Mortgage
Rate over (ii) the sum of the products obtained by multiplying, in the
case of each Class of the Principal Balance Certificates, (x) the
Pass-Through Rate for that Class of Certificates, plus, solely in the
case of the Class G, Class H, Class J, Class K, Class L, Class M, Class N
and Class O Certificates, the Class A-EC2 Pass-Through Rate, times (y) a
fraction, the numerator of which is the Certificate Principal Balance of
that Class of Principal Balance Certificates, and the denominator of
which is the sum of the Certificate Principal Balances of all Classes of
Principal Balance Certificates.
(6) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the excess, if any, of (a) the lesser of (i) the Weighted
Average Net Mortgage Rate and (ii) 7.305%, over (b) 6.755% per annum.
The Class R-I, Class R-II and R-III Certificates are not represented in
this table and are not offered hereby.
S-6
<PAGE>
GENERAL................ The Certificates will consist of 20 classes, 7 of
which will be the Offered Certificates and 13 of which
will be the Private Certificates. The Offered
Certificates are the only securities being offered by
this prospectus supplement. We do not intend to
register any of the Private Certificates under the
1933 Act, and are not offering such Private
Certificates to you pursuant to this prospectus
supplement or the prospectus. We have included
information regarding the Private Certificates in this
prospectus supplement solely because of its relevance
to your understanding of the Offered Certificates.
DENOMINATIONS.......... The Class A-1 and Class A-2 Certificates will be
offered in minimum denominations of $25,000. The Class
B Certificates will be offered in minimum
denominations of $50,000. The remaining Offered
Certificates will be offered in minimum denominations
of $100,000. Investments in excess of the minimum
denominations may be made in multiples of $1.
BOOK-ENTRY
CERTIFICATES........... Each class of Offered Certificates will be registered
in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"). Beneficial interests
in such Certificates will be held through the
book-entry facilities of DTC. You will not receive a
physical certificate representing your interest in any
Offered Certificate except in the limited
circumstances set forth herein. See "Description of
the Certificates--Delivery, Form and Denomination"
herein.
EARLY TERMINATION...... When the outstanding aggregate Scheduled Principal
Balance of the mortgage loans is reduced to 1.0% of
the Cut-off Date Balance, certain parties will have
the option to purchase the remaining mortgage loans
and thereby terminate the trust fund: (1) any holder
of the Class R-III Certificates representing more than
a 50% Percentage Interest of the Class R-III
Certificates, (2) the Master Servicer or (3) the
Depositor (in that order) will have the option to
purchase the remaining mortgage loans and thereby
terminate the trust fund. See "Description of the
Certificates--Early Termination" herein.
TRUST FUND............. Prudential Securities Secured Financing Corporation,
as Depositor, is establishing the trust fund, the
assets of which consist of a pool of fixed rate
mortgage loans described more fully herein. The
mortgage loans are secured by first liens on
commercial and multifamily residential properties.
RELEVANT PARTIES
DEPOSITOR.............. Prudential Securities Secured Financing Corporation
MASTER SERVICER........ National Realty Funding L.C.
SPECIAL SERVICER....... National Realty Funding L.C.
TRANSFEROR............. Prudential Securities Credit Corp.
TRUSTEE................ The Chase Manhattan Bank
MORTGAGE LOAN SELLERS... National Realty Finance L.C., a wholly-owned
subsidiary of National Realty Funding L.C., Greenwich
Capital Financial Products, Inc. and Bridger
Commercial Realty Finance LLC, a wholly-owned
subsidiary of Bridger Commercial Funding LLC.
S-7
<PAGE>
RELEVANT DATES AND PERIODS
CUT-OFF DATE........... July 1, 1999.
CLOSING DATE........... On or about July 28, 1999.
RATED FINAL
DISTRIBUTION DATE...... June 16, 2031.
DETERMINATION DATE..... The 11th day of any month, or if such day is not a
business day, the next succeeding business day,
commencing on August 11, 1999. As used herein, a
"business day" is any day other than a Saturday,
Sunday or a day on which banking institutions in the
States of New York, Texas or Missouri are authorized
or obligated by law, executive order or governmental
decree to close.
DISTRIBUTION DATE...... Generally, the 15th day of each month, or if that
day is not a business day, the next succeeding
business day. The Distribution Date will be no fewer
than four business days after the related
Determination Date. The first Distribution Date will
be August 17, 1999.
We expect that the Scheduled Final Distribution Dates
will be as set forth below, assuming that there are
no defaults, delinquencies or modifications of the
mortgage loans after July 1, 1999. See "Description
of the Certificates--Scheduled Final Distribution
Date" herein.
<TABLE>
<CAPTION>
SCHEDULED FINAL
CLASS DISTRIBUTION DATE
- --------------------- ------------------
<S> <C>
Class A-1 ......... June 15, 2008
Class A-2 ......... April 15, 2009
Class B ........... April 15, 2009
Class C ........... May 15, 2009
Class D ........... June 15, 2009
Class E ........... June 15, 2009
Class F ........... June 15, 2010
</TABLE>
RECORD DATE............ The Record Date is the close of business on the last
business day of each month. The Record Date always
relates to the Distribution Date for the following
calendar month.
INTEREST ACCRUAL
PERIOD................. With respect to any Distribution Date, the Interest
Accrual Period is the calendar month before the month
in which such Distribution Date occurs. Interest for
each Interest Accrual Period is calculated based on a
360-day year consisting of twelve 30-day months.
COLLECTION PERIOD...... With respect to each Distribution Date and any
mortgage loan, the Collection Period is the period
beginning on the day after the Determination Date in
the month before the month in which such Distribution
Date occurs (or, in the case of the Distribution Date
occurring in August 1999, on the day after the Cut-off
Date) and ending on the Determination Date in the
month in which such Distribution Date occurs.
DUE DATE............... With respect to any Collection Period and any
mortgage loan, the date on which mortgage loan
payments are due (disregarding any applicable grace
periods).
S-8
<PAGE>
STRUCTURAL FEATURES
DISTRIBUTIONS OF
INTEREST............... Generally, on each Distribution Date, subject to the
availability of funds to make such payment and the
payment priorities described below, each class of
Certificates (other than the Class R-I, Class R-II and
R-III Certificates) will receive distributions of
interest accrued on those Certificates during the
related Interest Accrual Period at the applicable
Pass-Through Rate, plus any interest remaining unpaid
from prior Distribution Dates. As described more fully
in this prospectus supplement under "Description of
the Certificates--Distributions," on each Distribution
Date such distributions will be made, concurrently, to
the holders of Class A-1, Class A-2, Class A-EC1 and
Class A-EC2 Certificates (collectively, the "Senior
Certificates") and then sequentially to the holders of
Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M, Class N
and Class O Certificates (collectively, the
"Subordinate Certificates") to the extent they are
outstanding on such Distribution Date.
Additional Master Servicer or Special Servicer
compensation, interest on Advances, extraordinary
expenses of the trust fund and other similar items
may create a shortfall in available funds
distributable on any Distribution Date. Resulting
shortfalls in interest will be allocated to the most
subordinate class then outstanding. See "Description
of the Certificates--Distributions" herein.
DISTRIBUTIONS OF
PRINCIPAL.............. Payments in respect of principal (including the
principal component of Balloon Payments and other
scheduled and unscheduled payments of principal on the
mortgage loans) will be paid sequentially to each
holder of a class of Certificates (other than the
Class A-EC1, Class A-EC2, Class R-I, Class R-II and
R-III Certificates) based on their alphabetical class
designations, as described herein, except that on any
Distribution Date on or after the date on which the
Certificate Balances of all classes of Subordinate
Certificates have been reduced to zero, distributions
of principal will be made to the Class A-1 and A-2
Certificates on a pro rata basis.
In each case, your distributions will be subject to
the availability of funds after all required payments
of interest and certain other distributions have been
made. See "Description of the
Certificates--Distributions" herein.
The holders of the Class O Certificates will be
entitled to all distributions of Default Interest and
Excess Interest, subject to the limitations set forth
in the Pooling and Servicing Agreement, including on
Distribution Dates on or after that on which the
class Certificate Balance thereof is reduced to zero.
Additional Master Servicer or Special Servicer
compensation, interest on Advances, extraordinary
expenses of the trust fund and other similar items
may create a shortfall in funds available for
distribution on any Distribution Date. Resulting
shortfalls in principal will be allocated to the most
subordinate class then outstanding. See "Description
of the Certificates--Distributions" herein.
DISTRIBUTIONS OF
PREPAYMENT PREMIUMS
AND YIELD
MAINTENANCE CHARGES.... Prepayment Premiums and Yield Maintenance Charges
will be distributed to the extent described under
"Description of the Certificates--Distributions--Yield
Maintenance Charges and Prepayment Premiums" and Annex
A herein.
CREDIT ENHANCEMENT..... Credit enhancement is provided by the sequential
payment and subordination mechanisms set forth in the
Pooling and Servicing Agreement and described herein
under "Description of the Certificates."
SUBORDINATION.......... As a means of providing some protection to the
holders of the Senior Certificates against losses
associated with delinquent and defaulted mortgage
loans, the rights
S-9
<PAGE>
of the holders of the Subordinate Certificates to
receive distributions of interest and principal, as
applicable, will be subordinated to the rights of the
holders of the Senior Certificates. Each class of
Subordinate Certificates (other than the Class R-I,
Class R-II and R-III Certificates) will likewise be
protected by the subordination offered by the other
classes of Subordinate Certificates that bear a later
sequential alphabetical class designation (for
example, no distribution of principal or interest
will be made on the Class C Certificates until
applicable distributions have been made on the Class
B Certificates). See "Description of the
Certificates--Priorities" herein.
The Class R-I, Class R-II and R-III Certificates are
not entitled to any regular or scheduled
distributions of interest or principal.
ADVANCES............... Subject to the limitations described in this
prospectus supplement, the Master Servicer is required
to make advances in respect of delinquent monthly
payments on mortgage loans. Advances in respect of
mortgage loans as to which there has been an Appraisal
Reduction Event will equal the amount required to be
advanced by the Master Servicer (disregarding the
related Appraisal Reduction) reduced in proportion to
the deemed reduction of the outstanding principal
balance of the related mortgage loan caused by the
Appraisal Reduction.
The Master Servicer will not be required to advance
any Balloon Payment not made by the related borrower
on its due date, but will be required to advance on
and after such due date any portion of an assumed
monthly payment, to the extent not received on the
mortgage loan after such default, calculated on the
original amortization schedule of such mortgage loan,
with interest, as described herein, unless the Master
Servicer deems advance payments unrecoverable.
In addition, the Master Servicer will also be
obligated (subject to certain limitations described
in this prospectus supplement under "The Pooling and
Servicing Agreement--Advances") to make cash advances
for certain costs and expenses relating to the
mortgage loans and REO properties.
If the Trustee becomes the successor master servicer
due to the Master Servicer's failure to make a
required Advance or for any other reason, the
Trustee, as successor master servicer and subject to
the same standard applicable to the Master Servicer,
will be required to make Advances.
The Master Servicer or the Trustee, as applicable,
will be entitled to receive interest on any advance
at a rate equal to the prime rate published in The
Wall Street Journal.
See "The Pooling and Servicing Agreement--Advances"
herein.
FEDERAL TAX STATUS..... Elections will be made to treat designated portions
of the trust fund as three separate "real estate
mortgage investment conduits" (each a "REMIC").
The Offered Certificates will constitute "regular
interests" in a REMIC.
The Offered Certificates generally will be treated as
newly originated debt instruments for federal income
tax purposes. You will be required to include in
income all interest on such Certificates in
accordance with the accrual method of accounting,
regardless of your usual method of accounting. With
the exception of the Class E and Class F
Certificates, none of the Offered Certificates is
expected to be treated for federal income tax
reporting purposes as having been issued with an
original issue discount.
Certain Classes of Offered Certificates may be
treated for federal income tax purposes as having
been issued at a premium.
S-10
<PAGE>
If you are a mutual savings bank or domestic building
and loan association, the Offered Certificates held
by you will represent interests in "qualifying real
property loans" within the meaning of Section 593(d)
of the Internal Revenue Code of 1986 (the "Code"). If
you are a real estate investment trust, the Offered
Certificates held by you will constitute "real estate
assets" within the meaning of Section 856(c)(5)(B) of
the Code, and income with respect to Offered
Certificates will be considered "interest on
obligations secured by mortgages on real property or
on interests in property" within the meaning of
Section 856(c)(3)(B) of the Code. See "Material
Federal Income Tax Consequences" herein. If you are a
domestic building and loan association, the Offered
Certificates held by you will generally constitute a
"regular or residual interest in a REMIC" within the
meaning of Section 7701(a)(19)(C)(xi) of the Code
only to the extent that the mortgage loans are
secured by multifamily apartment buildings or other
residential real property. The Class R-I, Class R-II
and R-III Certificates (collectively, the "Residual
Certificates") will each constitute a "residual
interest in a REMIC" within the meaning of Section
7701(a)(19)(C)(xi) of the Code to the same extent.
See "Material Federal Income Tax Consequences--
Taxation of the REMIC and its Holders" in the
prospectus.
ERISA.................. As described under "ERISA Considerations" herein and
in the prospectus, the Class A-1, Class A-2, Class
A-EC1 and Class A-EC2 Certificates may be purchased by
employee benefit plans that are subject to ERISA. See
"ERISA Considerations" herein and in the prospectus.
SMMEA.................. The Offered Certificates will not be mortgage
related securities pursuant to the Secondary Mortgage
Market Enhancement Act of 1984 ("SMMEA"). See "Legal
Investment" herein and in the prospectus.
THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
THE MORTGAGE POOL...... The assets of the trust fund will primarily consist
of the mortgage loans. Each mortgage loan constitutes
the obligation of one or more persons to repay a
specified sum with interest. Each mortgage loan will
be secured by a first lien on one or more commercial
or multifamily residential properties.
92 of the mortgage loans, representing approximately
31.61% of the Cut-off Date Balance, were originated
or purchased by National Realty Funding L.C. ("NRF")
or its wholly-owned subsidiary, National Realty
Finance L.C. ("NRFinance"). 40 of those mortgage
loans, representing approximately 9.84% of the
Cut-off Date Balance, were purchased by NRF from
KeyBank National Association. The mortgage loans
originated or purchased by NRF subsequently were sold
to NRFinance, and will be sold by NRFinance, together
with the mortgage loans originated by NRFinance, to
Prudential Securities Credit Corp. (the "Transferor")
on the Closing Date. 120 of the mortgage loans,
representing approximately 61.24% of the Cut-off Date
Balance, were originated or purchased by Greenwich
Capital Financial Products, Inc. ("Greenwich") and
will be sold by Greenwich to the Depositor on the
Closing Date. 22 of the mortgage loans, representing
approximately 7.14% of the Cut-off Date Balance were
originated or purchased by Bridger Commercial Funding
LLC ("Bridger Funding") or its wholly-owned
subsidiary, Bridger Commercial Realty Finance LLC
("Bridger Finance"). The mortgage loans originated or
purchased by Bridger Funding were sold to Bridger
Finance and will be sold by Bridger Finance to the
Transferor on the Closing Date. NRFinance, Greenwich
and Bridger Finance are the "Mortgage Loan Sellers,"
as such term is used herein. The Transferor will sell
to the Depositor each of the mortgage loans acquired
by it from NRFinance and Bridger Finance. Each of the
mortgage loans sold to the Depositor by the
Transferor or Greenwich will be subject to certain
S-11
<PAGE>
repurchase obligations whereby any breach of
representations and warranties is enforceable by the
Trustee directly against the Transferor or Greenwich.
Certain characteristics of the mortgage loans and the
related Mortgaged Properties are described under
"Risk Factors" and "Description of the Mortgage Pool"
herein.
The Annexes to this prospectus supplement provide
certain additional information regarding the mortgage
loans:
o Annex A (mortgage loan characteristics);
o Annex B (additional step loan and interest-only
loan characteristics);
o Annex C (affiliated borrowers);
o Annex E (exceptions to mortgage loan
representations and warranties); and
o Annex F (structural and collateral term sheet
and top ten loan descriptions).
The following tables summarize certain information
with respect to all of the mortgage loans. All
weighted average information regarding the mortgage
loans reflects weighting of the mortgage loans by
their principal balances as of the Cut-off Date,
after application of all payments of principal due on
or before such date, whether or not received.
GENERAL MORTGAGE LOAN CHARACTERISTICS
(AS OF THE CUT-OFF DATE)
<TABLE>
<S> <C>
Initial Mortgage Pool Balance ................................. $869,289,765
Number of Mortgage Loans ...................................... 234
Average Mortgage Loan Balance ................................. $ 3,714,914
Largest Mortgage Loan Balance ................................. $ 69,289,658
Smallest Mortgage Loan Balance ................................ $ 295,304
Weighted Average Mortgage Rate (Gross) ........................ 7.605%
Weighted Average Mortgage Rate (Net) .......................... 7.540%
Weighted Average Remaining Amortization Term (months) ......... 309
Range of Remaining Amortization Terms (months) ................ 139-359
Range of Original Amortization Terms (months) ................. 144-360
Weighted Average Underwritten DSCR ............................ 1.407x
Range of DSCRs ................................................ 1.01x - 3.76x
Weighted Average LTV (Current) ................................ 69.70%
Range of LTVs (Current) ....................................... 37.09-96.56%
Weighted Average Balloon/ARD LTV .............................. 54.23%
Percentage of Cut-off Date Balance made up of:
Fully Amortizing Loans ....................................... 6.96%
Balloon Loans (including ARD Loans) .......................... 93.04%
</TABLE>
S-12
<PAGE>
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES MORTGAGE LOANS BALANCE
- ------------------------------------------ ---------------- -------------
<S> <C> <C>
$295,304- $499,999................. 6 0.26%
$500,000- $999,999................. 21 1.96
$1,000,000- $1,999,999................. 70 11.91
$2,000,000- $2,999,999................. 40 11.24
$3,000,000- $3,999,999................. 32 12.77
$4,000,000- $4,999,999................. 25 12.98
$5,000,000- $5,999,999................. 15 9.60
$6,000,000- $6,999,999................. 6 4.57
$8,000,000- $8,999,999................. 4 3.89
$9,000,000- $9,999,999................. 4 4.32
$10,000,000-$11,999,999................. 6 7.49
$12,000,000-$14,999,999................. 1 1.42
$15,000,000-$19,999,999................. 1 2.02
$20,000,000-$39,999,999................. 2 7.59
$40,000,000-$69,289,658................. 1 7.97
-- ------
Total .................................. 234 100.00%
=== ======
</TABLE>
DEBT SERVICE COVERAGE RATIOS
Debt Service Coverage Ratios ("DSCRs") for each
mortgage loan are calculated based on the ratio of
the related annual Underwritten Cash Flow to the
related Annual Debt Service, as more fully described
herein under "Description of the Mortgage
Pool--Certain Characteristics of the Mortgage Pool."
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
DSCR(X) MORTGAGE LOANS BALANCE
- --------------------- ---------------- -------------
<S> <C> <C>
1.01-1.15 ......... 2 1.29%
1.16-1.20 ......... 4 1.23
1.21-1.25 ......... 25 11.92
1.26-1.30 ......... 49 24.52
1.31-1.35 ......... 43 19.12
1.36-1.40 ......... 28 8.94
1.41-1.45 ......... 21 5.08
1.46-1.50 ......... 16 5.24
1.51-1.55 ......... 11 4.84
1.56-1.60 ......... 11 2.83
1.61-1.65 ......... 7 2.49
1.66-1.70 ......... 2 8.12
1.71-1.75 ......... 3 0.77
1.76-1.80 ......... 3 1.06
1.91-1.95 ......... 2 0.32
1.96-2.00 ......... 2 0.49
2.01-2.50 ......... 4 1.29
2.51-3.76 ......... 1 0.45
-- ------
Total ............. 234 100.00%
=== ======
</TABLE>
S-13
<PAGE>
RANGE OF LOAN-TO-VALUE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
LOAN-TO-VALUE RATIO MORTGAGE LOANS BALANCE
- ------------------------- ---------------- -------------
<S> <C> <C>
35.01%-40.00% ......... 2 0.46%
40.01%-45.00% ......... 4 1.32
45.01%-50.00% ......... 4 0.79
50.01%-55.00% ......... 10 2.99
55.01%-60.00% ......... 17 12.43
60.01%-65.00% ......... 27 8.80
65.01%-70.00% ......... 49 17.17
70.01%-75.00% ......... 64 25.99
75.01%-80.00% ......... 54 28.70
80.01%-85.00% ......... 1 0.44
85.01%-95.00% ......... 1 0.16
95.01%-96.56% ......... 1 0.74
-- ------
Total ................. 234 100.00%
=== ======
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
PROPERTY TYPE MORTGAGED PROPERTIES BALANCE
- -------------------------------------- ---------------------- -------------
<S> <C> <C>
Retail--Anchored ................... 20 16.73%
Retail--Unanchored ................. 32 9.95
Retail--Single Tenant .............. 16 3.93
Retail--Shadow Anchored ............ 2 0.88
-- ------
Retail Subtotal .................. 70 31.49
Multifamily ........................ 75 22.31
Manufactured Housing ............... 16 3.67
-- ------
Housing Related Subtotal ......... 91 25.97
Office ............................. 27 14.19
Hotel--Full Service ................ 16 8.27
Industrial ......................... 17 7.07
Mixed Use .......................... 15 4.07
Hotel--Limited Service ............. 9 3.18
Nursing Home ....................... 8 3.17
Self-Storage ....................... 6 1.37
Assisted Living Facility ........... 2 0.81
Congregate Care .................... 1 0.41
-- ------
Total .............................. 262 100.00%
=== ======
</TABLE>
S-14
<PAGE>
MATURITY YEARS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
MATURITY YEAR MORTGAGE LOANS BALANCE
- ----------------- ---------------- -------------
<S> <C> <C>
2002 .......... 1 0.76%
2003 .......... 1 0.17
2005 .......... 1 0.38
2006 .......... 2 8.29
2007 .......... 3 0.63
2008 .......... 74 31.25
2009 .......... 109 42.77
2011 .......... 9 4.45
2012 .......... 1 0.17
2013 .......... 9 3.37
2014 .......... 1 0.07
2016 .......... 1 0.29
2017 .......... 1 0.50
2018 .......... 9 2.38
2019 .......... 8 1.87
2020 .......... 2 1.23
2023 .......... 2 1.41
--- ------
Total ......... 234 100.00%
=== ======
</TABLE>
50 of the mortgage loans, representing approximately
18.52% of the Cut-off Date Balance, contain
provisions that prohibit a prepayment for a certain
period of time (a "Lockout Period"), and thereafter
allow prepayment which must be accompanied by payment
of (i) an amount equal to the greater of a Prepayment
Premium or Yield Maintenance Charge, (ii) a Yield
Maintenance Charge, (iii) a Yield Maintenance Charge
for a specified period, and a Prepayment Premium for
subsequent specified period, or (iv) a Prepayment
Premium.
15 of the mortgage loans, representing approximately
2.49% of the Cut-off Date Balance, contain provisions
that allow prepayment accompanied by payment of (i)
an amount equal to the greater of a Yield Maintenance
Charge and a Prepayment Premium or (ii) a Yield
Maintenance Charge without an initial Lockout Period.
150 of the mortgage loans, representing approximately
65.56% of the Cut-off Date Balance, provide that
after a period of not less than two years after the
Closing Date (a "Defeasance Lockout Period"), a
borrower may obtain a release of the lien on the
related Mortgaged Property (a "defeasance") by
substituting for such Mortgaged Property, as
collateral for the related promissory note, U.S.
government obligations that provide for payments in
amounts equal to or greater than the amounts payable
under the related promissory note on each Due Date or
maturity date (or, in the case of the ARD Loans,
through the related Anticipated Repayment Dates,
including prepayment in full on their related
Anticipated Repayment Dates) and upon satisfaction of
certain other conditions (and in the case of certain
of such mortgage loans, such period during which a
defeasance is allowed is followed by a period during
which a prepayment must be accompanied by an amount
equal to the greater of a Yield Maintenance Charge
and a Prepayment Premium).
S-15
<PAGE>
4 of the mortgage loans, representing approximately
2.13% of the Cut-off Date Balance, permit prepayment
for a specified period accompanied by payment of a
Yield Maintenance Charge, followed by a period during
which defeasance is permitted.
13 of the mortgage loans, representing approximately
2.71% of the Cut-off Date Balance, permit prepayment
for a specified period accompanied by payment of a
Yield Maintenance Charge, followed by a period during
which prepayment is allowed accompanied by payment of
a Prepayment Premium that declines over time.
1 of the mortgage loans, representing approximately
7.97% of the Cut-off Date Balance, after a period of
two years succeeding the Closing Date, permits
defeasance. In addition, the mortgage loan permits
prepayment as follows: (i) during the five years
succeeding the date of the origination of the
mortgage loan, the mortgage loan permits prepayment
accompanied by payment of the greater of (x) one
percent of the amount of principal being prepaid or
(y) a Yield Maintenance Charge, (ii) during the
period of time after the fifth year succeeding the
date of the origination of the mortgage loan to the
sixth year succeeding the date of origination, the
mortgage loan permits prepayment accompanied by the
payment of an amount equal to one percent of the
amount of principal being prepaid, and (iii) after
the sixth year succeeding the date of the origination
of the mortgage loan, no premium or charge will be
required in connection with any prepayment of the
mortgage loan.
1 of the mortgage loans, representing approximately
0.62% of the Cut-off Date Balance, contains a Lockout
Period, and thereafter permits prepayment without any
additional premium or charge.
Generally, the mortgage loans provide that during a
specified period (generally two to 12 months) prior
to the maturity date or Anticipated Repayment Date,
as applicable, of such mortgage loans, voluntary
prepayments may be made without restriction.
S-16
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS
<TABLE>
<CAPTION>
PERCENTAGE OF CURRENT POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE
FEATURE ASSUMING 0% CPR(1)
- ------------------------------------------------------------------------------------------------------------------------------------
07/99 07/00 07/01 07/02 07/03 07/04 07/05 07/06 07/07 07/08
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) .......... 86.1% 86.1% 85.9% 82.4% 79.1% 71.2% 70.7% 76.3% 74.2% 65.7%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater .............. 1.4 1.3 1.3 1.4 1.4 1.3 1.3 1.2 1.8 1.9
4.00% to 4.99% ................ 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.7
3.00% to 3.99% ................ 0.5 0.5 0.5 0.5 1.2 1.4 1.4 0.8 0.3 0.1
2.00% to 2.99% ................ 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.0 0.0
1.00% to 1.99% ................ 10.2 10.2 10.5 13.5 16.6 15.9 16.0 18.9 20.0 13.6
0.00% to 0.99% ................ 0.8 0.8 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance ........ 13.9 13.9 14.1 16.4 20.3 19.8 19.8 22.1 22.8 16.3
Total of Yield Maintenance,
Lockout/Defeasance ............ 100.0 100.0 100.0 98.8 99.4 90.9 90.5 98.4 97.0 82.0
Percentage Premium:
5.00% or greater .............. 0.0 0.0 0.0 0.0 0.1 0.5 0.0 0.5 0.3 0.4
4.00% to 4.99% ................ 0.0 0.0 0.0 0.0 0.0 0.1 0.5 0.0 0.0 0.0
3.00% to 3.99% ................ 0.0 0.0 0.0 0.4 0.0 0.0 0.5 0.6 0.5 0.0
2.00% to 2.99% ................ 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.5 1.2 0.0
1.00% to 1.99% ................ 0.0 0.0 0.0 0.0 0.0 8.5 0.0 0.0 0.5 0.6
Total Percentage Premium ....... 0.0 0.0 0.0 0.4 0.5 9.1 1.0 1.6 2.5 1.0
Open (no Call Protection) ...... 0.0 0.0 0.0 0.8 0.2 0.0 8.5 0.0 0.4 17.0
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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) ..... 869.3 858.0 845.7 832.3 811.6 795.0 778.3 692.9 673.3 613.3
Pool Factor(3) ................. 100.0 98.7 97.3 95.7 93.4 91.5 89.5 79.7 77.5 70.6
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in July in
each of the years indicated, will be within a Lockout Period or will
require that Principal Prepayments be accompanied by the indicated
Prepayment Premium or Yield Maintenance Charge. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and "Defeasance."
(2) After the related Defeasance Lockout Period, the related borrower may
obtain the release of the lien on the related Mortgaged Property by
substituting for such Mortgaged Property, as collateral for the related
promissory note, direct, non-callable obligations of the United States
which provide for payments on or prior to each Due Date and on the
maturity date of the mortgage loan in amounts equal to or greater than
the amounts payable on the related mortgage loan on each such date (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates including prepayment in full on the related Anticipated Repayment
Dates), and upon satisfaction of certain other conditions. 4 of the
mortgage loans, representing approximately 2.13% of the Cut-off Date
Balance, contain provisions that provide for a period allowing prepayment
accompanied by payment of a Yield Maintenance Charge followed by a period
with a defeasance feature. See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions" and
Annex A herein.
(3) Represents the approximate percentage of the Cut-off Date Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Date."
S-17
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS
<TABLE>
<CAPTION>
PERCENTAGE OF CURRENT POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE
FEATURE ASSUMING 0% CPR(1)
- -------------------------------------------------------------------------------
07/09 07/10 07/11 07/12 07/13 07/14 07/15 07/16 07/17 07/18
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ......... 67.2% 67.9% 59.6% 59.5% 42.2% 52.0% 53.6% 55.8% 59.5% 64.0%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater ............. 3.2 3.0 3.0 2.8 0.0 0.0 0.0 0.0 0.0 0.0
4.00% to 4.99% ............... 4.2 4.2 4.1 4.2 4.9 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ............... 0.3 0.3 0.4 0.3 0.0 6.9 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 7.4 0.0 0.0 0.0
1.00% to 1.99% ............... 20.5 20.1 20.2 17.5 19.2 14.0 13.7 21.3 12.0 9.7
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 ....... 28.2 27.6 27.6 24.8 24.2 20.9 21.1 21.3 12.0 9.7
Total of Yield Maintenance,
Lockout/Defeasance ........... 95.4 95.5 87.2 84.4 66.4 72.9 74.7 77.0 71.5 73.7
Percentage Premium:
5.00% or greater ............. 2.5 0.0 0.0 0.0 2.7 4.0 0.0 0.0 0.0 0.0
4.00% to 4.99% ............... 2.1 2.4 0.0 0.0 0.0 3.0 4.2 0.0 0.0 0.0
3.00% to 3.99% ............... 0.0 2.1 3.4 0.0 0.0 0.0 0.0 4.4 0.0 0.0
2.00% to 2.99% ............... 0.0 0.0 3.1 3.3 0.0 0.0 0.0 0.0 4.6 0.0
1.00% to 1.99% ............... 0.0 0.0 0.0 3.2 6.2 5.2 5.5 6.0 6.5 4.9
Total Percentage Premium ...... 4.6 4.5 6.5 6.5 8.9 12.2 9.7 10.3 11.2 4.9
Open (no Call Protection) ..... 0.0 0.0 6.3 9.1 24.7 14.8 15.6 12.6 17.3 21.3
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)..... 102.2 97.0 63.1 57.8 47.0 31.5 27.4 23.0 18.7 14.3
Pool Factor(3) ................ 11.8 11.2 7.3 6.6 5.4 3.6 3.1 2.6 2.1 1.6
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in July in
each of the years indicated, will be within a Lockout Period or will
require that Principal Prepayments be accompanied by the indicated
Prepayment Premium or Yield Maintenance Charge. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions," "--Defeasance," and Annex A.
(2) After the related Defeasance Lockout Period, the related borrower may
obtain the release of the lien on the related Mortgaged Property by
substituting for such Mortgaged Property, as collateral for the related
promissory note, direct, non-callable obligations of the United States
which provide for payments on or prior to each Due Date and on the
maturity date of the mortgage loan in amounts equal to or greater than
the amounts payable on the related mortgage loan on each such date (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates including prepayment in full on the related Anticipated Repayment
Dates), and upon satisfaction of certain other conditions. 4 of the
mortgage loans, representing approximately 2.13% of the Cut-off Date
Balance, have defeasance features that provide for prepayment of the
mortgage loans (with accompanying Yield Maintenance Charges), and afford
the related borrowers the option either to prepay or to exercise the
defeasance features. See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Prepayment Provisions" and Annex A
herein.
(3) Represents the approximate percentage of the Cut-off Date Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Dates."
S-18
<PAGE>
RISK FACTORS
You should carefully consider the following risks and those in the
prospectus under "Risk Factors" before making an investment decision. Your
investment in the Offered Certificates will involve some degree of risk. If any
of the following risks are realized, your investment could be materially and
adversely affected. In addition, other risks unknown to us or which we
currently consider immaterial may also impair your investment.
COMMERCIAL AND MULTIFAMILY Your investment decision should take into account
MORTGAGE LOANS ARE that commercial and multifamily mortgage lending
SUBJECT TO SPECIAL RISKS generally involves risks that are different than
WHICH MAY ADVERSELY AFFECT those faced in connection with other types of
YOUR INVESTMENT. lending. The following factors, among others,
contribute to these risks:
(1) larger loans provide lenders with less
diversification of risk and the potential for
greater losses from the delinquency or
default of individual loans;
(2) substantially all of the mortgage loans are
non-recourse obligations, the repayment of
which is often solely dependent upon the
successful operation of the related Mortgaged
Properties;
(3) commercial and multifamily property values
and net operating income can be volatile;
(4) substantially all of the mortgage loans are
balloon loans, and so your investment may be
exposed to additional risks associated with
both the value of the related Mortgaged
Property and the borrower's ability to obtain
new financing when the balloon payment is
due;
(5) an increase in vacancy rates, a decline in
rental rates, or an increase in operating
expenses or necessary capital expenditures
may impair a borrower's ability to repay its
loan;
(6) changes in the general economic climate, an
excess of comparable space in the area, a
reduction in demand for real estate in the
area, the attractiveness of the property to
tenants and guests and perceptions of the
property's safety, convenience and services
may also affect the income from and market
value of a Mortgaged Property; and
(7) government regulations and changes in real
estate, zoning or tax laws, changes in interest
rate levels or potential liability under
environmental and other laws may affect real
estate values and income.
AGING, DETERIORATION The age, construction quality and design of a
AND POOR CONSTRUCTION particular Mortgaged Property may affect the
QUALITY MAY ADVERSELY occupancy level and the occupancy fees that may be
charged. Poorly constructed Mortgaged Properties
AFFECT THE VALUE AND are likely to require more expenditures for
CASH FLOW OF THE maintenance, repairs and improvements. Even
MORTGAGED PROPERTIES. Mortgaged Properties that were well constructed and
have been well maintained will require improvements
in order to maintain their value and retain tenants
and other occupants.
LIMITED ADAPTABILITY Some of the Mortgaged Properties would require
FOR OTHER USES substantial capital expenditures to convert to an
MAY SUBSTANTIALLY LOWER alternative use. If the operation of any such
THE LIQUIDATION VALUE OF Mortgaged Properties becomes unprofitable due to,
A MORTGAGED among other factors, (1) competition, (2) age of
PROPERTY IN CERTAIN the improvements, (3) decreased demand, and (4)
CIRCUMSTANCES. zoning restrictions, and as a result the borrower
becomes unable to meet its obligations, the
liquidation value of any such Mortgaged Property
may be substantially less than would be the case if
such property were more readily adaptable to other
uses.
S-19
<PAGE>
RENEWAL, TERMINATION, We cannot assure you that (1) leases that expire
EXPIRATION AND can be renewed, (2) the space covered by leases
RELETTING OF LEASES that expire or are terminated can be leased in a
ENTAIL RISKS WHICH timely manner at comparable rents or on comparable
MAY ADVERSELY AFFECT terms or (3) the borrower will have the cash or be
YOUR INVESTMENT. able to obtain the financing to fund any required
tenant improvements. Income from and the market
value of the Mortgaged Properties would be
adversely affected if vacant space in the Mortgaged
Properties could not be leased for a significant
period of time, if tenants were unable to meet
their lease obligations or if, for any other
reason, rental payments could not be collected.
Upon the occurrence of an event of default by a
tenant, delays and costs in enforcing the lessor's
rights could occur. In addition, certain tenants at
the Mortgaged Properties may be entitled to
terminate their leases or reduce their rents based
upon negotiated lease provisions (for example, if
an anchor tenant ceases operations at the related
Mortgaged Property). In such cases, we cannot
assure you that the operation of such provisions
will not allow such a termination or rent
reduction. A tenant's lease may also be terminated
or otherwise affected if such tenant becomes the
subject of a bankruptcy proceeding.
If a significant portion of a Mortgaged Property is
leased to a single tenant, the failure of the
borrower to relet that portion of the Mortgaged
Property in the event that such tenant vacates or
fails to perform its obligations will have a
greater adverse effect on your investment than if
such Mortgaged Property were leased to a greater
number of tenants.
FACTORS AFFECTING THE The Mortgaged Properties face competition from
COMPETITIVE POSITION OF various sources, which could adversely affect such
THE MORTGAGED PROPERTIES properties' net operating income and market values
MAY ADVERSELY AFFECT and, therefore, your investment. Factors affecting
THEIR VALUE AND the competitive position of a CASH FLOW. Mortgaged
Property include:
(1) the existence of similar properties located
in the same area, which attract similar types
of occupants on the basis of more favorable
rental rates, location, condition and
features;
(2) the existence of any oversupply of available
space in a particular market, either as a
result of new construction or a decrease in
the number of occupants, which adversely
affects the rental rates for the Mortgaged
Property; and
(3) the possibility of other properties being
converted to competitive uses as a result of
trends in the use of property by occupants
(for example, the establishment of more home
based offices and businesses or the
conversion of warehouse space for multifamily
use).
POOR QUALITY OF MANAGEMENT The successful operation of the Mortgaged
MAY ADVERSELY AFFECT THE Properties is also dependent on the performance of
OPERATION OF THE MORTGAGED the respective property managers of the Mortgaged
PROPERTIES. Properties. Property Managers may be responsible
for:
(1) responding to changes in local market factors
such as competition and patterns of demand;
(2) managing leasing activities such as planning
and implementing the rental rate structure,
including establishing levels of rent
payments; and
(3) ensuring that maintenance and capital
improvements can be carried out in a timely
fashion.
S-20
<PAGE>
HOSPITALITY PROPERTIES 25 of the mortgaged properties, which secure
ARE SUBJECT TO CERTAIN mortgage loans representing approximately 11.46% of
RISKS WHICH COULD the Cut-off Date Balance, are hotel, motel and
ADVERSELY AFFECT other similar properties. The value and cash flow
THEIR VALUE AND CASH FLOW. the Hospitality Properties will depend on some
or all of the following factors:
(1) local, regional and national economic
conditions and competition;
(2) the frequency of improvements and
renovations, including those performed to
meet the competition;
(3) changes in the public image of a hotel or
motel, to the extent a hotel or motel is
affiliated or associated with a chain;
(4) the ability of a hotel or motel to retain its
franchise rights or compete successfully
after losing its franchise rights;
(5) the seasonal fluctuations, if any, in the
income generated; and
(6) the continued existence of a liquor license.
The liquor licenses for some of the hospitality
properties may be held by the property manager
rather than by the related borrower. The laws and
regulations relating to such licenses generally
prohibit the transfer of such licenses. In the
event of a foreclosure of a hospitality property,
it is unlikely that the Master Servicer, Special
Servicer or purchaser in any such sale would be
entitled to the rights under the liquor license.
Such party would be required to apply in its own
right for such license and would be subject to the
risk of denial or delays in obtaining the license.
OFFICE PROPERTIES ARE 27 of the mortgaged properties, which secure
SUBJECT TO CERTAIN RISKS mortgage loans representing approximately 14.19% of
AFFECT WHICH COULD the Cut-off Date Balance, are office properties.
ADVERSELY THEIR VALUE Significant factors affecting the value of office
AND CASH FLOW. properties include: (1) the quality of the tenants
in the building;
(2) the physical attributes of the building in
relation to competing buildings; and
(3) the strength and stability of the market area
as a desirable business location.
Office properties may be adversely affected by an
economic decline in the business operated by the
tenants. The risk of an adverse effect is increased
if revenue is dependent on a single tenant or if
there is a significant concentration of tenants in
a particular business or industry. Approximately
2.09% of the Cut-off Date Balance is secured by
office properties that are single tenant
properties.
Office properties also are subject to competition
with other office properties in the same market.
Competition is affected by a property's age,
condition, design (for example, floor sizes and
layout), access to transportation and amenities,
including sophisticated building systems such as
fiber optic cables, satellite communications or
other base building technological features.
The successful operation of an office property also
depends on the local economy. For example, factors
such as labor cost and quality, tax environment and
quality of life, including proximity to schools and
cultural amenities, affect a company's decision to
locate office headquarters in a given area. A
central business district may have an economy that
is markedly different from that of a suburb. The
local economy and the financial condition of the
borrower will
S-21
<PAGE>
impact an office property's ability to consistently
attract stable tenants. In addition, the cost of
refitting office space for a new tenant is often
more costly than for other property types.
RETAIL PROPERTIES ARE 70 of the mortgaged properties, which secure the
SUBJECT TO CERTAIN RISKS mortgage loans representing approximately 31.49% of
WHICH COULD ADVERSELY the Cut-off Date Balance, are retail properties.
AFFECT THEIR VALUE AND The value and cash flow of retail properties will
CASH FLOW. depend on various factors including the following:
(1) the quality of the tenants;
(2) the fundamental aspects of the real estate,
such as location and market demographics;
(3) the success of retail tenant businesses; and
(4) whether a retail property is "anchored,"
"shadow anchored," "unanchored" or occupied
by a single tenant.
Retail properties that are anchored are
traditionally perceived as less risky than
unanchored properties. A retail anchor tenant is a
tenant that is proportionately large in size and is
vital in attracting customers to the property. As
used in this prospectus supplement, an "anchored
property" means a property in which a nationally or
regionally recognized tenant or a tenant of
sufficient creditworthiness occupies a significant
portion of the Mortgaged Property, or in which any
tenant occupies more than 20,000 square feet. As
used in this prospectus supplement, a "shadow
anchored" property means a retail property that is
contiguous with or near another property occupied
by a nationally recognized store, often under
circumstances in which both such properties share
parking, are subject to a reciprocal easement
agreement and are subject to common area
maintenance. The following table shows the
breakdown of mortgage loans secured by retail
property among anchored, shadow anchored, single
tenant and unanchored:
<TABLE>
<CAPTION>
RETAIL PROPERTY TYPE PERCENT OF CUT-OFF DATE BALANCE
- ----------------------------- --------------------------------
<S> <C>
Anchored (multi-tenant) 16.73%
Unanchored 9.95%
Occupied by Single Tenant 3.93%
Shadow Anchored 0.88%
</TABLE>
The loss of an anchor tenant, the assignment of an
anchor tenant's interest under any lease to a less
desirable tenant or a significant decline in the
level of an anchor tenant's business may have an
adverse effect on the overall operation of these
properties. The correlation between the success of
tenant businesses and credit quality of the
mortgage loan is increased when the property is a
single-tenant property.
Unlike office properties or hospitality properties,
traditional retail properties also face competition
from sources outside a given real estate market,
including:
(1) catalog retailers;
(2) home shopping networks;
(3) shopping through electronic media;
(4) telemarketing; and
(5) outlet centers.
Continued growth of these alternative retail
outlets could adversely affect the rents
collectible at the retail properties securing
mortgage loans in the trust fund.
S-22
<PAGE>
NURSING HOMES AND ASSISTED 11 of the mortgaged properties, which secure the
LIVING PROPERTIES ARE mortgage loans representing approximately 4.39% of
SUBJECT TO CERTAIN RISKS the Cut-off Date Balance, are residential health
WHICH COULD ADVERSELY care facilities consisting of nursing homes,
AFFECT THEIR assisted living facilities or congregate care
VALUE AND CASH FLOW. facilities. Mortgage loans secured by liens on
residential health care facilities pose some risks
that are similar to the risks set forth for other
types of mortgaged properties, but also pose risks
that are not associated with loans secured by liens
on other types of income producing real estate.
Some of these special risks are as follows:
(1) providers of long-term nursing care, assisted
living and other medical services are subject
to federal and state laws that relate to
various subjects, including (a) the adequacy
of medical care, (b) distribution of
pharmaceuticals, (c) rate setting, (d)
equipment, (e) personnel, (f) operating
policies, (g) additions to facilities and
services and (h) the reimbursement policies
of government programs and private insurers;
(2) the failure of any of the borrowers to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations, in which case no
revenues would be received from the related
Mortgaged Property or the portion thereof
requiring licensing, or, if applicable, such
borrower could be barred from participating
in certain reimbursement programs;
(3) the required licenses and certifications for
some facilities may be held by the manager of
the facility rather than by the borrower, and
the applicable laws and regulations relating
to such licenses and certifications generally
prohibit the transfer of such licenses and
certifications; in the event of foreclosure,
we cannot assure you that the Trustee or any
other purchaser at a foreclosure sale would
be entitled to any licenses used by the
borrower, and we cannot assure you that a new
license could be obtained;
(4) to the extent any nursing home receives a
significant portion of its revenues from
government reimbursement programs, primarily
Medicaid and Medicare, such revenue may be
adversely affected by (a) statutory and
regulatory changes, (b) retroactive rate
adjustments, (c) administrative rulings, (d)
policy interpretations, (e) reimbursement
delays and (f) government funding
restrictions;
(5) governmental payors limit payments to health
care providers, and are currently considering
various proposals that could materially
change or curtail those payments;
accordingly, payments under government
programs may be insufficient to fully
reimburse the cost of caring for program
beneficiaries, thereby adversely affecting
the ability of the related borrowers to meet
their mortgage loan obligations; and
(6) only the provider who actually furnished the
related medical goods and services may sue
for or enforce its rights to reimbursement;
therefore, in the event of a foreclosure,
none of the Trustee, the Master or Special
Servicer, or a subsequent lessee or operator
would generally be entitled to obtain any
outstanding reimbursement payments from
federal or state governments.
MULTIFAMILY PROPERTIES 75 of the mortgaged properties, which secure the
ARE SUBJECT TO CERTAIN mortgage loans representing approximately 22.31% of
RISKS WHICH COULD the Cut-off Date Balance, are multifamily
ADVERSELY AFFECT THEIR properties. A large number of factors may adversely
VALUE AND CASH FLOW. affect the value and successful operation of a
multifamily property, including:
S-23
<PAGE>
(1) the physical attributes of the apartment
building (e.g., its age, appearance and
construction quality);
(2) the location of the property (e.g., a change
in the neighborhood over time);
(3) the ability of management to provide adequate
maintenance and insurance;
(4) the types of services the property provides;
(5) the property's reputation;
(6) the level of mortgage interest rates (which
may encourage tenants to purchase rather than
rent housing);
(7) the presence of competing properties;
(8) adverse local or national economic
conditions;
(9) state and local regulations; and
(10) reductions in government assistance/rent
subsidy programs.
MANUFACTURED HOUSING 16 of the mortgaged properties, which secure the
COMMUNITIES ARE SUBJECT TO mortgage loans representing approximately 3.67% of
CERTAIN RISKS WHICH COULD the Cut-off Date Balance, are manufactured housing
ADVERSELY AFFECT THEIR communities. Mortgage loans secured by liens on
VALUE AND CASH FLOW. properties of these types pose risks not associated
with loans secured by liens on other types of
income-producing real estate, including:
(1) the number of competing manufactured housing
communities and other residential
developments (such as apartment buildings and
single family-homes) in the local market;
(2) the age, appearance and reputation of the
community;
(3) the ability of management to provide adequate
maintenance and insurance; and
(4) the types of services and amenities it
provides.
The manufactured housing communities are "special
purpose" properties that could not be readily
converted to general residential, retail or office
use. Some manufactured housing communities may
lease sites to non-permanent recreational vehicles,
which occupancy is often very seasonal in nature.
SELF-STORAGE FACILITIES 6 of the mortgaged properties, which secure the
ARE SUBJECT TO RISKS WHICH mortgage loans representing approximately 1.37% of
COULD ADVERSELY AFFECT . the Cut-off Date Balance, are self-storage
THEIR VALUE AND CASH FLOW facilities. Various factors may adversely affect
the value and successful operation of a
self-storage facility:
(1) competition, because both acquisition and
development costs and break-even occupancy
are relatively low;
(2) conversion of a self-storage facility to an
alternative use generally requires
substantial capital expenditures;
(3) security concerns; and
(4) user privacy and ease of access to individual
storage space may increase environmental
risks (although lease agreements generally
prohibit users from storing hazardous
substances in the units).
S-24
<PAGE>
The environmental assessments discussed herein did
not include an inspection of the contents of the
self-storage units of the self-storage properties.
Accordingly, there is no assurance that all of the
units included in the self-storage properties are
free from hazardous substances or will remain so in
the future.
INDUSTRIAL PROPERTIES 17 of the mortgaged properties, which secure the
ARE SUBJECT TO CERTAIN mortgage loans representing approximately 7.07% of
RISKS WHICH COULD ADVERSELY the Cut-off Date Balance, are industrial
AFFECT THEIR VALUE properties. Various factors may adversely affect
AND CASH FLOW. the economic performance of an industrial property,
including:
(1) reduced demand for industrial space because
of a decline in a particular industry
segment;
(2) a property becoming functionally obsolete;
(3) the unavailability of labor sources;
(4) changes in access, energy prices, strikes,
relocation of highways, construction of
additional highways or other factors;
(5) a change in the proximity of supply sources;
and
(6) environmental hazards.
IF TENANT LEASES DO NOT Some of the tenant leases, including some of the
CONTAIN ATTORNMENT anchor tenant leases, do not contain provisions
PROVISIONS OR ARE NOT that require the tenant to attorn to, or recognize
SUBORDINATE TO MORTGAGE as landlord under the lease, a successor owner of
LIENS, THE FORECLOSURE the property following foreclosure. Some of the
VALUE OF THE MORTGAGED leases, including some of the anchor tenant leases,
PROPERTY COULD BE may be either subordinate to the liens created by
ADVERSELY AFFECTED. the mortgage loans or else contain a provision that
requires the tenant to subordinate the lease if the
mortgagee agrees to enter into a non-disturbance
agreement. In some states, if tenant leases are
subordinate to the liens created by the mortgage
loans and such leases do not contain attornment
provisions, such leases may terminate upon the
transfer of the property to a foreclosing lender or
purchaser at foreclosure. Accordingly, in the case
of the foreclosure of a Mortgaged Property located
in such a state and leased to one or more desirable
tenants under leases that do not contain attornment
provisions, such Mortgaged Property could
experience a further decline in value if such
tenants' leases were terminated (for example, if
such tenants were paying above-market rents). If a
Mortgage is subordinate to a lease, the lender will
not (unless it has otherwise agreed with the
tenant) possess the right to dispossess the tenant
upon foreclosure of the property. If such a lease
contains provisions inconsistent with the Mortgage
(for example, provisions relating to application of
insurance proceeds or condemnation awards), the
provisions of the lease will take precedence over
the provisions of the Mortgage.
MORTGAGE LOANS ARE NOT No mortgage loan is insured or guaranteed by the
GUARANTEED. United States of America, any governmental agency
or instrumentality, any private mortgage insurer or
by the Depositor, the Transferor, the Mortgage Loan
Sellers, the Master Servicer, the Special Servicer,
the Trustee or any of their respective affiliates.
NON-RECOURSE LOANS LIMIT Substantially all of the mortgage loans are
REMEDIES FOLLOWING non-recourse loans. Therefore, recourse generally
BORROWER DEFAULT. may be had only against the specific Mortgaged
Property securing the mortgage loan and such other
assets (if any) as may have been pledged to secure
the mortgage loan. Consequently, the payment of
each non-recourse mortgage loan is primarily
dependent upon the sufficiency of the net operating
income from the related Mortgaged Property and, at
maturity, upon the market value of such Mortgaged
Property.
S-25
<PAGE>
In those cases where recourse against the borrower
is permitted by the loan documents, the ability to
collect from the borrower is dependent upon the
creditworthiness, solvency and other factors
specific to the borrower and generally are not
within the control of any of the Mortgage Loan
Sellers, the Transferor, the Depositor, the Master
Servicer, the Special Servicer, the Trustee or any
of their affiliates. Even if the mortgage loan
documents provide for recourse against the borrower
or another entity, we cannot assure you that
significant amounts will be realized in respect of
such recourse in the event of a default with
respect to any mortgage loan.
CONCENTRATION OF MORTGAGE In general, a mortgage pool composed of loans
LOANS AND BORROWERS having larger average balances and a smaller number
DECREASES DIVERSIFICATION of loans may be subject to losses that are more
AND MAY INCREASE THE RISK severe than other pools having smaller average
OF YOUR INVESTMENT. balances, but with the same or a similar aggregate
principal balance. You should carefully consider
all aspects of any mortgage loan representing a
significant percentage of the Cut-off Date Balance
to ensure that no such loan is subject to risks
unacceptable to you. Additionally, a mortgage pool
with a high concentration of mortgage loans to the
same borrower or related borrowers is subject to
the potential risk that a borrower undergoing
financial difficulties might divert its resources
or undertake remedial actions (such as a
bankruptcy) in order to alleviate such
difficulties, to the detriment of the Mortgaged
Properties and therefore your investment. See
"Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Concentration
of Mortgage Loans and Borrowers" herein.
FORECLOSURE MAY SUBJECT If the trust fund acquires a Mortgaged Property
THE TRUST FUND TO CERTAIN pursuant to a foreclosure or deed-in-lieu of
TAXES. foreclosure, one of the REMICs might become subject
to federal (and possibly state or local) tax, at
the highest marginal corporate rate (currently
35%), on certain of its net income from the
operation and management of that Mortgaged
Property. As a consequence, the net proceeds
available for distribution to Certificateholders
would be reduced.
CHANGES IN THE COMPOSITION As principal payments or prepayments are made on
OF THE MORTGAGE POOL DUE various mortgage loans, you may be subject to more
TO PAYMENT PATTERNS MAY concentrated risk due to the reduction in both the
DECREASE DIVERSIFICATION diversity of types of Mortgaged Properties and the
AND INCREASE THE RISK OF number of borrowers. Because principal on the
YOUR INVESTMENT. Certificates is payable in sequential order, and no
class receives principal until the Certificate
Balance of the preceding sequential class or
classes has been reduced to zero, classes that have
a later sequential designation are more likely to
be exposed to such risk of concentration than
classes with an earlier sequential priority.
REGIONAL FACTORS MAY Repayments by borrowers and the market values of
ADVERSELY AFFECT the Mortgaged Properties could be affected by:
THE VALUE AND
CASH FLOW OF MORTGAGED (1) economic conditions generally or in the
PROPERTIES. regions where the borrowers and the Mortgaged
Properties are located;
(2) conditions in the real estate markets where
the Mortgaged Properties are located;
(3) changes in governmental rules and fiscal
policies;
(4) natural disaster; and
(5) other factors that are beyond the control of
the borrowers.
S-26
<PAGE>
The economy of any state or region in which a
Mortgaged Property is located may be adversely
affected to a greater degree than that of other
areas of the country by certain developments
affecting industries concentrated in such state or
region.
THE ENVIRONMENTAL The environmental condition of a Mortgaged Property
CONDITION OF MORTGAGED may be affected by the operations of tenants and
PROPERTIES MAY SUBJECT THE occupants. Current and future environmental laws,
TRUST FUND TO LIABILITY ordinances or regulations may impose additional
UNDER FEDERAL AND compliance obligations on business operations that
STATE LAWS. can be met only by significant capital
expenditures. Adverse environmental conditions may
subject the trust fund to certain risks, including
the following:
(1) a diminution in the value of a Mortgaged
Property or the inability to foreclose
against such Mortgaged Property;
(2) inability to lease such Mortgaged Property to
potential tenants;
(3) the potential that the related borrower may
default on a mortgage loan due to such
borrower's inability to pay high
investigation or remediation costs or
difficulty in bringing its operations into
compliance with environmental laws; and
(4) liability for clean up costs or other
remedial actions which could exceed the value
of the Mortgaged Property.
Under certain federal and state laws, a statutory
lien over the subject property may secure the
reimbursement of remedial costs incurred by
regulatory agencies to address environmental
violations. In some instances, the lien may be
prior to the lien of an existing mortgage. Any such
lien arising with respect to a Mortgaged Property
would adversely affect the value of such Mortgaged
Property and could make impracticable the
foreclosure by the Special Servicer on such
Mortgaged Property in the event of a default by the
related borrower. Under various federal, state and
local laws, ordinances and regulations, a current
or previous owner or operator of real property, as
well as certain other categories of parties, may be
liable for the costs of removal or remediation of
hazardous or toxic substances on, under, adjacent
to or in such property. The owner's liability for
the cost of any required remediation is generally
not limited under applicable laws, and could exceed
the value of the property and/or the assets of the
owner. Under some environmental laws, a secured
lender (such as the trust fund) may be deemed an
"owner" or "operator" of the related Mortgaged
Property if the lender is deemed to have
participated in the management of the borrower,
regardless of whether the borrower actually caused
the environmental damage. Therefore, the trust
fund's potential exposure to liability for cleanup
costs of any required removal or remediation of
hazardous substances will increase if the trust
fund actually takes possession of a Mortgaged
Property or control of its day to day operations.
See "Certain Legal Aspects of the Mortgage
Loans--Environmental Risks" in the prospectus, and
"Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Environmental
Risks" herein.
Under the laws of some states and under the federal
Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), it is
conceivable that a secured lender such as the trust
fund may be held liable as an "owner" or "operator"
for the costs of addressing releases or threatened
releases of hazardous substances at a Mortgaged
Property. CERCLA imposes liability on a secured
owner for such costs, even though the environmental
damage or threat was caused by a prior or current
owner or operator, if
S-27
<PAGE>
(1) agents or employees of the secured lender are
deemed to have participated in the management of
the Mortgaged Property, or (2) under certain
conditions the secured lender actually takes
possession of the Mortgaged Property or control of
its day to day operations (for example, through
foreclosure or the appointment of a receiver).
CERCLA excludes from the definition of "owner or
operator" a secured creditor who holds an
indication of ownership primarily to protect its
security interest, but does not "participate in the
management" of the Mortgaged Property (the "secured
creditor exclusion").
Amendments to CERCLA have clarified the range of
activities in which a lender may engage without
becoming subject to liability under CERCLA.
Liability for costs associated with the
investigation and cleanup of environmental
contamination may also be governed by state law,
which may not provide any specific protections to
lenders.
CERCLA does not apply to petroleum products, and
the secured creditor exclusion does not govern
liability for cleanup costs associated with
releases of petroleum contamination. Federal
regulation of underground petroleum storage tanks
(other than heating oil tanks) is governed by
Subtitle I of the Resource Conservation and
Recovery Act ("RCRA"). The United States
Environmental Protection Agency ("EPA") has
promulgated a lender liability rule for underground
storage tanks regulated by Subtitle I of RCRA.
Under the EPA rule, a holder of a security interest
in an underground storage tank or real property
containing an underground storage tank is not
considered an operator of the underground storage
tank as long as petroleum is not added to, stored
in or dispensed from the tank. Moreover, recent
amendments to RCRA, enacted concurrently with the
CERCLA amendments discussed above, extend to the
holders of security interests in petroleum
underground storage tanks the same protections
accorded to secured creditors under CERCLA. It
should be noted, however, that liability for
cleanup of petroleum contamination may be governed
by state law, which may not provide any specific
protection for lenders. See "Certain Legal Aspects
of the Mortgage Loans--Environmental Risks" in the
prospectus.
Each of the Mortgage Loan Sellers has represented
that each of the related Mortgaged Properties was
subject to a Phase I Environmental Site Assessment
("ESA"), conducted consistently with generally
recognized industry standards or a similar study or
an update of a previously conducted Phase I ESA or
an update based upon information contained in an
established database or, for loans with an original
principal balance of less than $1,000,000 (or
$1,500,000 in the case of Bridger Finance and
Greenwich), an environmental transaction screen
assessment. The Mortgage Loan Sellers have informed
the Transferor or the Depositor, as applicable,
that such assessments, studies, updates or
environmental transaction screen assessments were
conducted within 12-months prior to the origination
of the mortgage loans. Other than as described in
this prospectus supplement under "Description of
the Mortgage Pool--Certain Characteristics of the
Mortgage Pool--Environmental Risks," these
environmental assessments, transaction screen
assessments, studies or updates identified no
material adverse environmental conditions or
circumstances anticipated to require any material
expenditure with respect to any Mortgaged Property,
except for:
(1) those cases where such conditions or
circumstances were investigated further and,
based upon such additional investigation, a
qualified environmental consultant
recommended no further investigations or
remediation;
S-28
<PAGE>
(2) those cases in which an operations and
maintenance plan was recommended by the
environmental consultant and such plan was
obtained or an escrow reserve established to
cover the estimated costs of obtaining such
plan;
(3) those cases in which soil or groundwater
contamination was suspected or identified and
either (a) such condition or circumstance was
remediated or abated prior to the origination
date of the related mortgage loan, (b) a "no
further action" letter was obtained from the
applicable regulatory authority or (c) either
an environmental insurance policy was
obtained, a letter of credit was provided, an
escrow reserve account was established, or an
indemnity from the responsible party was
obtained to cover the estimated costs of any
required investigation, monitoring or
remediation; and
(4) those cases in which (a) a leaking
underground storage tank or groundwater
contamination was identified as located on or
originated from an offsite property, (b) a
responsible party has been identified under
applicable law, and (c) either such condition
is not known to have affected the Mortgaged
Property or the responsible party has either
received a "no further action" letter from
the applicable regulatory agency, established
a remediation fund, or provided an indemnity
or guaranty to the related borrower.
The above information regarding the absence of
material adverse environmental conditions is based
upon the environmental assessments, transaction
screen assessments, similar studies or updates and
has not been independently verified by the Mortgage
Loan Sellers, the Depositor, the Transferor, or any
of their respective affiliates. You should review
carefully the results of such assessments, studies,
updates or environmental screen assessments in this
prospectus supplement under "Description of the
Mortgage Pool--Certain Characteristics of the
Mortgage Pool--Environmental Risks."
The Pooling and Servicing Agreement requires that
the Special Servicer obtain an ESA of a Mortgaged
Property prior to either acquiring title on behalf
of the trust fund or assuming the property's
operations. Such requirement may delay foreclosure
until a satisfactory ESA is obtained or until any
required remedial action is thereafter taken, but
it will also decrease the likelihood that the trust
fund will become liable under any environmental
law. We cannot assure you that any ESA will reveal
the existence of conditions or circumstances that
would result in the trust fund becoming liable
under any environmental law, or that the
requirements of the Pooling and Servicing Agreement
will effectively insulate the trust fund from
potential liability under environmental laws. See
"The Pooling and Servicing Agreement--Realization
Upon Mortgaged Properties--General Standards for
Conduct in Foreclosing or Selling Defaulted Loans"
herein and "Certain Legal Aspects of the Mortgage
Loans--Environmental Risks" in the prospectus.
IF A BORROWER USES THE In general, other than as disclosed herein and in
MORTGAGED PROPERTY AS Annex A attached hereto, the borrower is prohibited
SECURITY FOR ANOTHER LOAN, from obtaining another loan secured by the
THE VALUE OF THE MORTGAGED Mortgaged Property without the mortgagee's
PROPERTY MAY BE ADVERSELY approval. See "Description of the Mortgage
AFFECTED. Pool--Certain Characteristics of the Mortgage
Pool--Other Financing" herein. The Pooling and
Servicing Agreement will permit the Master Servicer
and the Special Servicer to give such approval if
certain conditions exist, including a confirmation
from the Rating Agencies indicating that
forbearance from enforcing such provision will not
result in a downgrade, withdrawal or qualification
of the respective ratings of any outstanding
classes of Certificates. The absence of such
conditions may not become evident, however,
until the related mortgage loan
S-29
<PAGE>
otherwise defaults. If one or more subordinate
liens are imposed on a Mortgaged Property or the
borrower incurs other indebtedness, the trust fund
is subject to additional risks. Some of those risks
are:
(1) the borrower may defer necessary maintenance
of the Mortgaged Property in order to pay the
required debt service on the subordinate
financing, and the value of the Mortgaged
Property may decline as a result;
(2) the borrower may have an incentive to repay
the subordinate or unsecured indebtedness
before the mortgage loan;
(3) it may be more difficult for the borrower to
refinance the mortgage loan or to sell the
Mortgaged Property for the purpose of making
any Balloon Payment upon the maturity of the
mortgage loan or for the purpose of making a
prepayment in full on or about the
Anticipated Repayment Date in the case of any
ARD Loan; and
(4) additional debt increases the risk that the
borrower could become insolvent or subject to
bankruptcy or similar proceedings or might
complicate bankruptcy proceedings delaying
foreclosure on the Mortgaged Property. In
addition, if the holder of additional debt
becomes bankrupt or insolvent, the Trustee's
ability to foreclose on the related mortgage
loan could be delayed. See "Certain Legal
Aspects of the Mortgage Loans--Foreclosure"
in the prospectus.
In general, borrowers may incur trade payables in
the ordinary course of business. In certain
circumstances, borrowers are permitted to incur
additional unsecured indebtedness.
See "Certain Legal Aspects of the Mortgage
Loans--Secondary Financing; Due-on-Encumbrance
Provisions" in the prospectus.
EQUITY COURTS MAY REFUSE The mortgage loans generally contain "due-on-sale"
TO ENFORCE DUE-ON- and "due-on-encumbrance" DUE-ON-SALE, clauses that
ENCUMBRANCE AND DEBT- permit the mortgagee to accelerate the maturity of
ACCELERATION CLAUSES, the mortgage loan if the related borrower sells or
ADVERSELY AFFECTING otherwise transfers or encumbers the related
EXERCISE OF REMEDIES UPON Mortgaged Property or its interest in the Mortgaged
DEFAULTED MORTGAGE LOANS. Property in violation of the Mortgage. All of the
mortgage loans also include a debt-acceleration
clause. A debt-acceleration clause permits the
lender to accelerate the debt upon specified
monetary or non-monetary defaults of the borrower.
The equity courts of any state, however, may refuse
the foreclosure or other sale of a mortgaged
property or refuse to permit the acceleration of
the indebtedness if the default is immaterial, or
if enforcement of the clause would be inequitable,
unjust, or unconscionable.
BANKRUPTCY OF BORROWERS Borrowers may be either individuals or legal
MAY ADVERSELY AFFECT entities. Most of the borrowers that are legal
PAYMENT OF MORTGAGE entities are not bankruptcy remote entities.
LOANS. Borrowers that are not bankruptcy remote entities
may be more likely to become insolvent or the
subject of a voluntary or involuntary bankruptcy
proceeding because such borrowers may be (a)
operating entities with businesses distinct from
the operation of the property, with the associated
liabilities and risks of operating an ongoing
business or (b) individuals who may have personal
liabilities unrelated to the Mortgaged Property. In
addition, any borrower, as an owner of real estate,
will be subject to certain potential liabilities
and risks. We cannot assure you that a borrower
will not file for bankruptcy protection or that
creditors of a borrower, or a corporate or
individual general partner or member of a borrower,
will not
S-30
<PAGE>
initiate a bankruptcy or similar proceeding against
such borrower. See "Certain Legal Aspects of the
Mortgage Loans--Foreclosure--Bankruptcy Laws" in
the prospectus.
A HIGH RATE AND EARLY The rate and the timing of delinquencies and
OCCURRENCE OF BORROWER defaults on the mortgage loans will affect:
DELINQUENCIES AND DEFAULTS (1) the amount of distributions on your
MAY ADVERSELY AFFECT YOUR certificates;
INVESTMENT.
(2) the yield to maturity of your certificates;
(3) the rate of principal payments on your
certificates; and
(4) the weighted average lives of your
certificates.
If you calculate the anticipated yield of your
Certificates based on a rate of default or amount
of losses lower than that actually experienced by
the mortgage loans and such additional losses are
allocable to your class of Certificates or such
losses result in a reduction of the Certificate
Balance of your Certificates, your actual yield to
maturity will be lower than expected and could be
negative under certain extreme scenarios. The
timing of any loss on a liquidated mortgage loan
will also affect the actual yield to maturity of
your Certificates if a portion of the loss is
allocable to such certificates, even if the rate of
defaults and severity of losses are consistent with
your expectations. In general, the earlier a loss
borne by you occurs, the greater the effect on your
yield to maturity.
APPRAISALS AND ENGINEERING In making your investment decision, you should not
REPORTS ARE OF LIMITED rely on appraisals and engineering reports on
VALUE IN HELPING YOU MAKE Mortgaged Properties as your only indicator of the
YOUR INVESTMENT DECISION. actual value or physical characteristics of the
Mortgaged Properties. In general, appraisals
represent the analysis and opinion of qualified
experts and are not guarantees of present or future
value. Moreover, appraisals seek to establish the
amount a willing buyer would pay a willing seller.
Such amount could be significantly higher than the
amount obtained from the sale of a Mortgaged
Property under a distressed or liquidation sale.
The architectural and engineering reports represent
the analysis of the individual engineers or site
inspectors at or before the origination of the
respective mortgage loans. The reports may not have
been updated since they were originally conducted
and may not have revealed all necessary or
desirable repairs, maintenance or capital
improvement items.
CHANGES IN ZONING LAWS The Mortgaged Properties are typically subject to
MAY ADVERSELY AFFECT THE applicable building and zoning ordinances and codes
VALUE AND INCOME OF affecting the construction and use of real
MORTGAGED PROPERTY. property. Because the zoning laws applicable to a
Mortgaged Property (including density, use, parking
and set-back requirements) are generally subject to
change at any time, certain of the improvements
upon the Mortgaged Properties may not comply fully
with all applicable current and future zoning laws.
Changes in zoning laws may limit the ability of the
related borrower to renovate or operate the
premises and, in the event of a substantial
casualty loss, to rebuild or utilize the premises.
THE COSTS OF COMPLIANCE A borrower may be required to incur costs to comply
WITH APPLICABLE LAWS AND with various existing and future federal, state or
REGULATIONS MAY ADVERSELY local laws and regulations applicable to the
AFFECT A BORROWER'S related Mortgaged Property. Such costs, or the
ABILITY TO REPAY ITS imposition of injunctive relief, penalties or fines
MORTGAGE LOAN. in connection with the borrower's noncompliance,
could negatively
S-31
<PAGE>
impact the borrower's cash flow and, consequently,
its ability to pay its mortgage loan. See "Certain
Legal Aspects of the Mortgage Loans--Americans With
Disabilities Act" in the prospectus.
LIMITATIONS ON THE Arrangements whereby certain of the mortgage loans
ENFORCEABILITY OF are cross-collateralized and cross-defaulted with
CROSS-COLLATERALIZATION one or more related mortgage loans could be
ARRANGEMENTS MAY HAVE AN challenged as fraudulent conveyances by the
ADVERSE EFFECT ON creditors or the bankruptcy estate of any of the
RECOURSE IN THE EVENT OF related borrowers. Under federal and most state
A DEFAULT ON A fraudulent conveyance statutes, the incurring of an
CROSS-COLLATERALIZED obligation or the transfer of property, including
MORTGAGE LOAN. the granting of a mortgage lien, by a person may be
voided under certain circumstances if:
(1) the person did not receive fair consideration
or reasonably equivalent value in exchange
for such obligation or transfer; and
(2) the person (a) was insolvent at the time of
the incurrence of such obligation or
transfer; or (b) was engaged in a business or
a transaction or was about to engage in a
business or a transaction, for which
properties remaining with the person
constitute an unreasonably small capital; or
(c) intended to incur, or believed that it
would incur, debts that would be beyond the
person's ability to pay as such debts
matured.
Accordingly, a lien granted by any such borrower
could be avoided if a court were to determine that
(1) the borrower did not receive fair consideration
or reasonably equivalent value when pledging such
Mortgaged Property for the equal benefit of the
other related borrowers, and (2) such borrower was
insolvent at the time of granting the lien, was
rendered insolvent by the granting of the lien, was
left with inadequate capital or was not able to pay
its debts as they matured.
We cannot assure you that a lien granted by a
borrower on a Cross-Collateralized Loan to secure
the mortgage loan of an affiliated borrower, or any
payment thereon, would not be avoided as a
fraudulent conveyance. See "Description of the
Mortgage Pool--Certain Characteristics of the
Mortgage Pool" herein for more information
regarding the Cross-Collateralized Loans.
THE CASH FLOW AND VALUE OF Certain of the Mortgaged Properties are leased
A SINGLE-TENANT PROPERTY wholly or in large part to a single tenant or are
COULD BE ADVERSELY AFFECTED wholly or in large part owner-occupied. Any default
BY A TENANT'S DEFAULT ON by such a tenant could adversely affect the related
ITS LEASE. borrower's ability to make payments on the related
mortgage loan. We cannot assure you that any such
tenant will continue to perform its obligations
under its lease (or, in the case of an
owner-occupied Mortgaged Property, under the
related mortgage loan documents). See "Description
of the Mortgage Pool--Certain Characteristics of
the Mortgage Pool--Tenant Matters" and Annex A
herein.
LITIGATION AGAINST A From time to time, there may be legal proceedings
BORROWER MAY ADVERSELY pending or threatened against the borrowers and
AFFECT THE BORROWER'S their affiliates relating to their business. We
ABILITY TO MEET ITS cannot assure you that any such litigation will not
MORTGAGE LOAN OBLIGATIONS. have a material adverse effect on any borrower's
ability to meet its obligations under the related
mortgage loan and, thus, on the distributions to
Certificateholders.
THE MASTER SERVICER OR The Master Servicer and Special Servicer may
SPECIAL SERVICER MAY HAVE purchase and own Certificates, including the
INTERESTS DIFFERENT FROM Subordinate Certificates. Under such circumstances,
THOSE OF THE TRUST FUND DUE it is possible that the interests of the Master
TO THE MASTER SERVICER'S OR Servicer or Special Servicer, as a holder of the
SPECIAL SERVICER'S PURCHASE Certificates of any class, may differ from those of
OF CERTIFICATES AND the Certificateholders of any other class. The
SERVICING OFNON-TRUST Master Servicer and Special Servicer have advised
FUND LOANS. the Depositor that they intend to continue to
service existing mortgage loans and new mortgage
S-32
<PAGE>
loans for third parties, including portfolios of
mortgage loans similar to the mortgage loans
included in the trust fund. These mortgage loans
and the related mortgaged properties may be in the
same markets as, or have owners, obligors or
property managers in common with, certain of the
mortgage loans in the trust fund and the related
Mortgaged Properties. To the extent that overlap
exists, the interests of the Master Servicer, the
Special Servicer and their respective affiliates
and their other clients may differ from, and
compete with, the interests of the trust fund. The
Master Servicer and Special Servicer are required,
however, to service the mortgage loans in
accordance with the Servicing Standard contained in
the Pooling and Servicing Agreement.
INCORRECT ASSUMPTIONS In deciding whether to purchase any Offered
REGARDING PRINCIPAL Certificates, you should make an independent
PAYMENTS AND PREPAYMENTS decision as to the appropriate prepayment
MAY LEAD TO A LOWER THAN assumptions to be used. The yield on the Offered
EXPECTEDYIELD ON YOUR Certificates of any class will depend on, among
INVESTMENT. other things, the Pass-Through Rate for such
Certificates and the extent to which principal
payments are applied to reduce the related
certificate's principal balance. The yield on any
Offered Certificate that is purchased at a discount
or premium will also be affected by the rate and
timing of principal payments and principal losses
on the mortgage loans.
If you purchase an Offered Certificate at a
discount, you should consider the risk that a
slower than anticipated rate of principal payments
on the mortgage loans will result in an actual
yield that is lower than you expect. If you
purchase an Offered Certificate at a premium, you
should consider the risk that a faster than
anticipated rate of principal payments on the
mortgage loans will result in an actual yield that
is lower than you expect. Insofar as the principal
in your Offered Certificate is repaid, you may not
be able to reinvest such amounts in an alternative
investment with a yield comparable to the yield on
your Offered Certificates.
BORROWERS' FAILURE TO MAKE Substantially all of the mortgage loans are Balloon
BALLOON PAYMENTS MAY Loans. Balloon Loans involve a greater risk of
ADVERSELY AFFECT YOUR default than self-amortizing loans. The ability of
INVESTMENT. a borrower to make a Balloon Payment typically will
depend upon its ability either to refinance the
related Mortgaged Property or to sell such
Mortgaged Property at a price sufficient to permit
the borrower to make the Balloon Payment. The
ability of a borrower to accomplish either of these
goals will be affected by a number of factors at
the time of attempted sale or refinancing,
including:
(1) the level of available mortgage rates;
(2) the fair market value of the related
Mortgaged Property;
(3) the borrower's equity in the related
Mortgaged Property;
(4) the financial condition of the borrower;
(5) the operating history of the related
Mortgaged Property;
(6) tax laws;
(7) prevailing economic conditions; and
(8) the availability of credit for multifamily or
commercial properties.
See "Yield and Maturity Considerations--Yield
Considerations--Balloon Payments/ARD Loan Payments"
herein.
S-33
<PAGE>
THE INEFFECTIVENESS OF Restrictions on voluntary prepayments contained in
RESTRICTIONS ON VOLUNTARY a promissory note (for example, Lockout Periods,
PREPAYMENTS MAY ADVERSELY Yield Maintenance Charges and Prepayment Premiums)
AFFECT THE YIELD OF YOUR affect the rate and timing of principal payments
INVESTMENT. made on the related mortgage loan. Most of the
mortgage loans provide that, for a specified amount
of time during which a prepayment of such mortgage
loan is permitted, it must be accompanied by a
Yield Maintenance Charge or other Prepayment
Premium. The existence of Yield Maintenance Charges
or other Prepayment Premiums generally will result
in the mortgage loans prepaying at a lower rate.
However, the requirement that a prepayment be
accompanied by a Yield Maintenance Charge or other
Prepayment Premium may not provide a sufficient
economic disincentive to a borrower seeking to
refinance at a more favorable interest rate.
Furthermore, we cannot assure you that the
obligation to pay a Yield Maintenance Charge or
other Prepayment Premium will be enforceable under
applicable state or federal law (including federal
bankruptcy law) or, if enforceable, that the
foreclosure proceeds received with respect to a
defaulted mortgage loan will be sufficient to make
such payment. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and Annex A herein.
The yield and total return on your Offered
Certificates may differ significantly from your
expectations due to prepayments on the mortgage
loans being higher or lower than you anticipated.
Even if the actual yield is equal to your
anticipated yield, you may not realize your
expected total return on investment or the expected
weighted average life of your Certificate. For a
discussion of certain factors affecting prepayment
of the mortgage loans. See "Yield and Maturity
Considerations" herein.
The structure of the Offered Certificates causes
the yield of certain classes to be sensitive to
changes in the rates of prepayment of the mortgage
loans and other factors. If you are purchasing any
class of Offered Certificates other than the Class
A-1 or Class A-2 Certificates, you will not receive
any principal distributions until the certificate
principal balance of each class that is senior to
your class is reduced to zero.
INTEREST ON ADVANCES, The Master Servicer or the Trustee will be entitled
SPECIAL SERVICING FEES, to receive interest on unreimbursed Advances at the
OTHER SERVICING EXPENSES Advance Rate. Reimbursements will be made no later
AND ADDITIONAL TRUST FUND than the Distribution Date following the date on
EXPENSES MAY REDUCE THE which funds are available to reimburse such
AMOUNT OF DISTRIBUTIONS ON Advance. The Master Servicer's or the Trustee's
YOUR CERTIFICATES. right to receive such payments of interest precedes
your right to receive distributions on the Offered
Certificates. Consequently, this circumstance may
result in decreased distributions to you that would
not otherwise have resulted. See "The Pooling and
Servicing Agreement--Advances" herein. In addition,
certain circumstances, including late payment of
principal and interest, will result in a mortgage
loan being specially serviced. The Special Servicer
is entitled to additional compensation for special
servicing activities, including Special Servicing
Fees, Disposition Fees and Workout Fees, which may
result in decreased distributions on the Offered
Certificates that would not otherwise have
resulted. See "The Pooling and Servicing
Agreement--Special Servicing" herein. Under the
Pooling and Servicing Agreement, certain
unanticipated or extraordinary expenses are deemed
to be expenses of the trust fund, and no
reimbursement for such expenses from any other
party is provided for under the Pooling and
Servicing Agreement. Shortfalls in Available Funds
will result from such expenses of the trust fund
and other similar items, and these shortfalls will
generally be borne as described under "Description
of the Certificates."
S-34
<PAGE>
THE ABSENCE OF A SECONDARY There is currently no secondary market for the
MARKET FOR YOUR Offered Certificates. The Underwriters have told us
CERTIFICATES MAY ADVERSELY that they currently intend to buy and sell (that
AFFECT LIQUIDITY OF YOUR is, THE "make a market" in) the Offered
INVESTMENT. Certificates, but they are under no obligation to
do so. Accordingly, we cannot assure you that a
secondary market for the Offered Certificates will
develop. Moreover, if a secondary market does
develop, we cannot assure you that it will allow
you to resell your Offered Certificates or that it
will continue for the life of the Offered
Certificates. We do not intend to apply for listing
of the Offered Certificates on any securities
exchange.
RISKS ASSOCIATED WITH THE The transition from the year 1999 to the year 2000
YEAR 2000 MAY ADVERSELY may disrupt the ability of computerized systems to
AFFECT YOUR INVESTMENT. process information, the collection of payments on
the mortgage loans, and servicing of the mortgage
loans and the performance of related duties by the
Master Servicer, the Special Servicer, the Trustee,
the borrowers and other third parties. The
Depositor has been advised by the Master Servicer
and the Special Servicer that, to their best
knowledge, which may be based upon information
obtained from vendors and/or from information
obtained from sources which the Master Servicer and
Special Servicer reasonably believe are reliable,
that by August 31, 1999, any custom-made software
or hardware designed or purchased or licensed by
Master Servicer and Special Servicer, which Master
Servicer and Special Servicer has identified as
being mission-critical to its business for purposes
of its operations and for purposes of compiling,
reporting or generating data required by this
Agreement, will be Year 2000 capable. The Master
Servicer, the Special Servicer and the Trustee
consider their products and services to be "Year
2000 capable" if the product or service will be
capable of accurately performing calculations or
other processing with respect to dates after August
31, 1999 as a result of the changing of the date
from 1999 to 2000, including leap year
calculations, when used for the purpose for which
it was intended, assuming that all other products,
including other software or hardware, when used in
combination with such software or hardware designed
or purchased or licensed by the Master Servicer and
Special Servicer properly exchange date data.
However, none of the Depositor, the Transferor or
any affiliate of the Depositor or Transferor has
made any independent investigation of the computer
systems of the Master Servicer, the Special
Servicer or the Trustee. In the event that the
computer systems of the Master Servicer, the
Special Servicer or the Trustee are not fully Year
2000 capable, the resulting disruption in the
collection or distribution of receipts on the
mortgage loans could materially and adversely
affect the Certificateholders. In addition,
borrower or tenant computer failures may cause an
increase in delinquencies on the Mortgage Loans
during the first quarter of 2000. For instance,
defaults may arise from computer failures of retail
systems of major tenants in retail commercial real
estate properties, or from increased expenses or
legal claims related to failures of embedded
technology in building systems, or simply from
delays in rent payments, even from tenants that are
otherwise Year 2000 compliant.
S-35
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 234 commercial and multifamily "whole"
mortgage loans (the "Mortgage Loans"). The Mortgage Loans have an aggregate
Cut-off Date Principal Balance of approximately $869,289,765 (the "Cut-off Date
Balance"), subject to a variance of plus or minus 5%. The "Cut-off Date
Principal Balance" of each Mortgage Loan is the unpaid principal balance
thereof as of the Cut-off Date, after application of all payments of principal
due on or before such date, whether or not received. The "Pool Balance" as of
any date will be the aggregate of the outstanding principal balances of the
Mortgage Loans in the Mortgage Pool as of such date. The following description
of terms and provisions of the Mortgage Loans is a generalized description of
the terms and provisions of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have special terms and provisions that deviate from
the generalized, aggregated description.
The Annexes to this prospectus supplement provides certain additional
information regarding the mortgage loans:
o Annex A (Mortgage Loan characteristics);
o Annex B (additional step loan and interest-only loan characteristics);
o Annex C (affiliated borrowers);
o Annex E (exceptions to Mortgage Loan representations and warranties);
and
o Annex F (structural and collateral term sheet and top ten loan
descriptions).
Generally, each Mortgage Loan is evidenced by a separate promissory note.
Each Mortgage Loan is secured by one or more mortgages, deeds of trust, deeds
to secure debt or other similar security instruments (each, a "Mortgage") that
creates a first lien on one or more of a fee simple estate, an estate for years
or a leasehold estate in a real property (a related "Mortgaged Property")
improved for commercial or multifamily residential use.
The percentage of the Cut-off Date Balance represented by each type of
Mortgaged Property is as follows:
<TABLE>
<CAPTION>
PROPERTY TYPE MORTGAGED CUT-OFF DATE
- ----------------------------------- PROPERTIES BALANCE
<S> <C> <C>
Retail--Anchored .................. 20 16.73
Retail--Unanchored ................ 32 9.95
Retail--Single Tenant ............. 16 3.93
Retail--Shadow Anchored ........... 2 0.88
-- ------
Retail Subtotal .................. 70 31.49
Multifamily ....................... 75 22.31
Manufacturered Housing ............ 16 3.67
-- ------
Housing Related Subtotal ......... 91 25.97
Office ............................ 27 14.19
Hotel--Full Service ............... 16 8.27
Industrial ........................ 17 7.07
Mixed Use ......................... 15 4.07
Hotel--Limited Service ............ 9 3.18
Nursing Home ...................... 8 3.17
Self-Storage ...................... 6 1.37
Assisted Living Facility .......... 2 0.81
Congregate Care ................... 1 0.41
-- ------
Total ............................. 262 100.00%
=== ======
</TABLE>
No Mortgage Loan is insured or guaranteed by the United States of America,
any governmental agency or instrumentality, any private mortgage insurer, the
Depositor, the Transferor, the Mortgage Loan Sellers, the Master Servicer, the
Special Servicer, the Trustee or any of their respective affiliates.
S-36
<PAGE>
The Depositor will purchase the Mortgage Loans on or before the Closing
Date from the Transferor pursuant to "Mortgage Loan Purchase and Sale Agreement
I" to be dated on or about July 22, 1999. The Transferor will purchase 92 and
22 Mortgage Loans (representing approximately 31.61% and 7.14% of the Cut-off
Date Balance, respectively) from NRFinance and Bridger Finance, respectively,
on or before the Closing Date pursuant to separate agreements (together, the
"Underlying Mortgage Loan Purchase Agreements"). The Depositor will purchase
120 Mortgage Loans (representing approximately 61.24% of the Cut-off Date
Balance) from Greenwich on or before the Closing Date pursuant to "Mortgage
Loan Purchase and Sale Agreement II" to be dated on or about July 22, 1999. The
Depositor will assign the Mortgage Loans to the Trustee pursuant to the Pooling
and Servicing Agreement. The Master Servicer and the Special Servicer will each
service the Mortgage Loans pursuant to the Pooling and Servicing Agreement. See
"The Pooling and Servicing Agreement--Servicing of the Mortgage Loans;
Collection of Payments."
SECURITY FOR THE MORTGAGE LOANS
Each Mortgage Loan is secured by a Mortgage encumbering the related
Mortgaged Property. Substantially all of the Mortgage Loans are non-recourse
loans, meaning that if a borrower defaults thereunder, recourse generally may
be had only against the specific Mortgaged Property securing such Mortgage Loan
and any other assets specifically pledged by the borrower to secure such
Mortgage Loan. Each Mortgage Loan is also secured by an assignment of the
related borrower's interest in the leases, rents, issues and profits of the
related Mortgaged Property.
Each Mortgage constitutes a first lien on a Mortgaged Property. Generally
such lien is subject only to (1) liens for current real estate and other taxes
and special assessments not yet delinquent, (2) covenants, conditions,
restrictions, rights of way, easements and other matters of public record as of
the date of recording of such Mortgage that do not generally have a material
adverse effect on the Mortgaged Property, (3) certain leases and subleases, and
(4) other matters that do not, individually or in the aggregate, materially and
adversely affect the value of the Mortgaged Property or interfere with the
borrower's ability to make required principal and interest payments.
Ground Leases; Estates for Years. 8 of the Mortgaged Properties, which
secure Mortgage Loans representing approximately 5.98% of the Cut-off Date
Balance, are encumbered by a Mortgage on the related borrower's leasehold
interest in the related Mortgaged Property. 1 of the Mortgaged Properties,
which secures a Mortgage Loan representing approximately 0.59% of the Cut-off
Date Balance, is encumbered by (1) a first lien encumbering the related
borrower's fee interest in a portion of the Mortgaged Property and (2) a
leasehold interest in the remainder of the Mortgaged Property. The Mortgage
Loan Sellers have represented that each ground lease expires not less than 10
years after the maturity date of the related Mortgage Loan (including extension
options). See "Certain Legal Aspects of the Mortgage Loans--Foreclosure--
Leasehold Risks" in the prospectus.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. The Mortgage Loans provide for Monthly Payments to be due on
the first day of each month (each, a "Due Date"). All of the Mortgage Loans
provide for a grace period of ten days or less from the related Due Date before
a scheduled payment is deemed to be contractually delinquent for purposes of
imposing a late charge.
Mortgage Rates; Calculations of Interest. Each Mortgage Loan accrues
interest at an annualized rate that is fixed for the entire term of such
Mortgage Loan, and does not permit any negative amortization or the deferral of
interest except that 2 of the Mortgage Loans, representing approximately 0.61%
of the Cut-off Date Balance, provide that for a period of up to two years from
origination the borrower is obligated only to pay interest accrued each month.
Those 2 Mortgage Loans have not yet reached the end of such period.
Such Mortgage Loans are identified in Annexes A and B, and a summary of
the relevant provisions is provided therein.
ARD Loans; Excess Interest. 17 of the Mortgage Loans (the "ARD Loans"),
representing approximately 7.35% of the Cut-off Date Balance, bear interest at
their respective Mortgage Rates until an "Anticipated Repayment Date" specified
therein. Commencing on such Anticipated Repayment Date, each such Mortgage Loan
will bear interest at a fixed annual rate (the "Revised Rate") equal to the
Mortgage Rate (or in the case of certain Mortgage Loans, the applicable
Treasury Rate) plus a specified percentage (generally, no more than 5.0%, so
long as the Mortgage Loan is included in the trust fund). The Master Servicer
and Special Servicer will undertake in the Pooling and Servicing Agreement to
deem the Revised Rate to accrue at the Mortgage Rate plus 2.00% per annum, and
have agreed not to take any enforcement action with respect to the accrual or
collection of Excess Interest, including any request for payment of such
amounts, in excess of such rate, in each
S-37
<PAGE>
case unless each Rating Agency has been notified of the intention to do so and
each Rating Agency has indicated that such action will not, by itself, result
in the downgrade, qualification or withdrawal of any rating then assigned by it
to any class of Certificates. Until the principal balance of such Mortgage Loan
has been reduced to zero, such Mortgage Loan will only require the related
borrower to pay interest at the Mortgage Rate, and the Excess Interest accrued
at the related Revised Rate over the portion of the interest accrued at the
related Mortgage Rate will be deferred. Such deferred interest will not be
added to the principal balance of the related Mortgage Loan, but will itself
accrue interest at the Revised Rate to the extent such accrual is lawful. Such
accrued and deferred interest, and any interest accrued thereon is referred to
herein as "Excess Interest."
Borrowers under ARD Loans generally are required, on or prior to the
related Anticipated Repayment Date, to enter into lockbox agreements whereby
revenue from the related Mortgaged Property will be deposited into a lockbox
account controlled by the Master Servicer, if certain conditions are met,
rather then directly to the borrower. From and after the Anticipated Repayment
Date, the related borrower generally will be required to apply all monthly cash
flow from the related Mortgaged Property in a priority of payments specified in
the related Mortgage Loan Documents.
As described below, each ARD Loan generally provides that the related
borrower is prohibited from prepaying the Mortgage Loan until one to six months
prior to the Anticipated Repayment Date. However, upon the commencement of such
period, the borrower may prepay the loan, in whole or in part, without payment
of a Prepayment Premium or Yield Maintenance Charge. The Anticipated Repayment
Date for each ARD Loan is listed in Annex A.
The holders of the Class O Certificates will be entitled to all
distributions of Excess Interest, subject to the limitations set forth in the
Pooling and Servicing Agreement, including on Distribution Dates on or after
that on which the class Certificate Balance thereof is reduced to zero.
Amortization of Principal. 214 of the Mortgage Loans (the "Balloon
Loans"), representing approximately 93.04% of the Cut-off Date Balance, provide
for monthly payments of principal based on amortization schedules longer than
their remaining terms, thereby leaving substantial principal amounts due and
payable on their respective maturity dates. Such final payment, together with
interest for the one month period preceding such Balloon Loan's maturity date,
is referred to herein as a "Balloon Payment". The remaining Mortgage Loans have
amortization terms that match their respective terms to maturity. The weighted
average Balloon LTV applicable to the Mortgage Pool is approximately 54.23%.
Prepayment Provisions. Generally, the Mortgage Loans provide that during a
specified period (generally two to 12 months) prior to the maturity date or
Anticipated Repayment Date, as applicable, of such Mortgage Loans voluntary
prepayments may be made without restriction. Prior to such specified period, if
any, each Mortgage Loan restricts voluntary prepayments in one or more of the
following ways:
(1) Imposing a "Lockout Period" by prohibiting any prepayments for a
specified period of time after the date of origination of such Mortgage
Loan;
(2) Imposing a "Yield Maintenance Charge" (as described Annex A) in
connection with any principal prepayment made during a specified period
of time (a "Yield Maintenance Period") after the date of origination of
such Mortgage Loan or after a Lockout Period; or
(3) Imposing "Prepayment Premiums" (fees or premiums generally equal to a
fixed percentage of the then outstanding principal balance of such
Mortgage Loan) in connection with any principal prepayment made during a
specified period of time (a "Prepayment Premium Period") after any
Lockout Period and any Yield Maintenance Period.
50 of the Mortgage Loans, representing approximately 18.52% of the Cut-off
Date Balance, contain provisions that prohibit a prepayment for a certain
period of time (a "Lockout Period"), and thereafter allow prepayment which must
be accompanied by payment of (i) an amount equal to the greater of a Prepayment
Premium or Yield Maintenance Charge, (ii) a Yield Maintenance Charge, (iii) a
Yield Maintenance Charge for a specified period, and a Prepayment Premium for
subsequent specified period, or (iv) a Prepayment Premium.
15 of the Mortgage Loans, representing approximately 2.49% of the Cut-off
Date Balance, contain provisions that allow prepayment accompanied by payment
of (i) an amount equal to the greater of a Yield Maintenance Charge and a
Prepayment Premium or (ii) a Yield Maintenance Charge without an initial
Lockout Period.
150 of the Mortgage Loans, representing approximately 65.56% of the
Cut-off Date Balance, provide that after a period of not less than two years
after the Closing Date (a "Defeasance Lockout Period"), a borrower may obtain a
defeasance of the Mortgage Loan (and in the case of certain of such Mortgage
Loans, such period during which a defeasance is allowed is followed by a period
during which a prepayment must be accompanied by an amount equal to the greater
of a Yield Maintenance Charge and a Prepayment Premium).
S-38
<PAGE>
4 of the Mortgage Loans, representing approximately 2.13% of the Cut-off
Date Balance, permit prepayment for a specified period accompanied by payment
of a Yield Maintenance Charge, followed by a period during which defeasance is
permitted.
13 of the Mortgage Loans, representing approximately 2.71% of the Cut-off
Date Balance, permit prepayment for a specified period accompanied by payment
of a Yield Maintenance Charge, followed by a period during which prepayment is
allowed accompanied by payment of a Prepayment Premium that declines over time.
1 of the Mortgage Loans, representing approximately 7.97% of the Cut-off
Date Balance, after a period of two years succeeding the Closing Date, permits
defeasance. In addition, after a period of two years succeeding the Closing
Date, the Mortgage Loan permits prepayment as follows: (i) during the five
years succeeding the date of the origination of the Mortgage Loan, the Mortgage
Loan permits prepayment accompanied by payment of the greater of (x) one
percent of the amount of principal being prepaid or (y) a Yield Maintenance
Charge, (ii) during the period of time after the fifth year succeeding the date
of the origination of the Mortgage Loan to the sixth year succeeding the date
of origination, the Mortgage Loan permits prepayment accompanied by the payment
of an amount equal to one percent of the amount of principal being prepaid, and
(iii) after the sixth year succeeding the date of the origination of the
Mortgage Loan, no premium or charge will be required in connection with any
prepayment of the Mortgage Loan.
1 of the mortgage loans, representing approximately 0.62% of the Cut-off
Date Balance, contains a Lockout Period, and thereafter permits prepayment
without any additional premium or charge.
The table in "Summary--Overview of the Certificates--Prepayment
Lockout/Premium Analysis" sets forth for the Distribution Date in each
indicated month the percentage of the aggregate Scheduled Principal Balance of
all Mortgage Loans expected to be outstanding (after giving effect to scheduled
principal payments for the Due Date relating to such Distribution Date) with
respect to which:
(1) a Lockout Period is in effect;
(2) a prepayment must be accompanied by (a) a Yield Maintenance Charge, (b)
the greater of a Yield Maintenance Charge or a Prepayment Premium (the
percentage used in calculating such Prepayment Premium is also set
forth in such table) or (c) a Prepayment Premium (the percentage used
in calculating such Prepayment Premium is also set forth in such
table); or
(3) no Lockout Period, Yield Maintenance Period or Prepayment Premium
Period is applicable (designated "Open" on such table).
Annex A attached hereto contains information regarding the calculation of
Yield Maintenance Charges and Prepayment Premiums applicable to each of the
Mortgage Loans.
Prepayment Premiums and Yield Maintenance Charges are generally not
imposed in connection with involuntary prepayments resulting from a Casualty or
Condemnation, so long as no event of default then exists. The Prepayment
Premiums and Yield Maintenance Charges are payable in connection with
prepayments after an event of default but prior to the sale of the Mortgaged
Property. Certain Mortgage Loans permit the related borrower to transfer the
related Mortgaged Property to a third-party without prepaying the related
Mortgage Loan if certain conditions are satisfied, including an assumption by
the transferee of all of such borrower's obligations in respect of such
Mortgage Loan. See "--`Due-on-Encumbrance' and `Due-on-Sale' Provisions" below.
You should note that the enforceability of provisions requiring payment of
Prepayment Premiums and Yield Maintenance Charges has been challenged in some
states. Neither the Depositor nor any Mortgage Loan Seller can provide any
assurance as to the enforceability of any Mortgage Loan provisions barring
prepayment or requiring the payment of a Prepayment Premium or Yield
Maintenance Charge or of the collectibility of any Prepayment Provision or
Yield Maintenance Charge. See "Yield and Maturity Considerations" herein and
"Certain Legal Aspects of the Mortgage Loans--Enforceability of Certain
Provisions" in the prospectus.
Defeasance. 154 of the Mortgage Loans, representing approximately 67.69%
of the Cut-off Date Balance, grant the borrower the right, after a specified
period, to obtain the release of the lien of the Mortgage on the Mortgaged
Property by providing for the substitution for such Mortgaged Property, as
collateral for the related promissory note, direct, non-callable obligations of
the United States of America. Such securities must, in the aggregate, provide
for payments on or prior to each Due Date and on the maturity date of the
Mortgage Loan in amounts equal to or greater than the amounts payable under the
related promissory note on each such date (or, in the case of the ARD Loans,
through the related Anticipated Repayment Date, including prepayment in full on
the related Anticipated Repayment Date). Conditions to the borrower's right to
a
S-39
<PAGE>
defeasance include delivery of (1) an opinion of counsel stating that the Trust
REMICs will not fail to maintain their respective status as REMICs as a result
of such defeasance and (2) in some cases, written confirmation from the Rating
Agencies that such defeasance will not result in a downgrading, withdrawal or
qualification of the respective ratings of any outstanding classes of
Certificates.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions. Except for 3 of the
Mortgage Loans, representing approximately 0.20% of the Cut-off Date Balance,
the Mortgages contain "due-on-encumbrance" clauses that permit the holder of
the Mortgage to accelerate the maturity of the related Mortgage Loan if the
borrower encumbers the related Mortgaged Property without its consent. Certain
borrowers are allowed, under certain circumstances, to further encumber the
related Mortgaged Property with additional liens. See "Risk Factors--If a
Borrower Uses the Mortgaged Property as Security for Another Loan, the Value of
the Mortgaged Property May be Adversely Affected" herein. The Master Servicer
or the Special Servicer, as applicable, will determine, in a manner consistent
with the Servicing Standard described herein under "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments" whether to
accelerate payment of a Mortgage Loan upon, or to consent to, any additional
encumbrance of the related Mortgaged Property. In certain cases, acceleration
may not be waived except upon confirmation from each Rating Agency that such
waiver will not result in the downgrade, withdrawal or qualification of its
then current rating of any class of Certificates.
The Mortgages generally prohibit the borrower from transferring the
Mortgaged Property, or allowing a change of ownership of the borrower, without
the mortgagee's prior consent. For this purpose, a change in ownership of the
borrower is generally defined to include:
(1) over a specified percentage (generally from 10% to 49%) change in the
ownership of the borrower, a guarantor of the Mortgage Loan, or the
general partner or managing member of the borrower;
(2) the removal, resignation or change in ownership of, or the transfer or
pledge of the partnership or membership interest of, any general
partner or managing member of a borrower or a guarantor of the Mortgage
Loan;
(3) with respect to certain of such Mortgage Loans, the removal,
resignation or change in ownership of the managing agent of the related
Mortgaged Property; or
(4) the voluntary or involuntary transfer or dilution of the controlling
interest in the related borrower held by a specified person.
With respect to certain of such Mortgage Loans, the borrower may be
entitled to transfer the Mortgaged Property or allow a change in ownership if
certain conditions are satisfied, typically including one or more of the
following:
(1) no event of default has occurred;
(2) the proposed transferee meets the mortgagee's customary underwriting
criteria;
(3) the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria;
(4) an acceptable assumption agreement is executed; and
(5) a specified assumption fee (generally between 0.5% and 1.0% of the then
outstanding principal balance of the related Mortgage Loan) has been
received by the mortgagee.
Certain of the Mortgages also allow: (1) changes in ownership between
existing partners and members; (2) transfers to family members (or trusts for
the benefit of family members), affiliated companies and certain specified
individuals and entities; (3) issuance by the borrower of new partnership or
membership interests; (4) certain other changes in ownership for estate
planning purpose; or (5) certain other transfers similar in nature to the
foregoing.
Upon any transfer or change in ownership of the Mortgaged Property which
is in direct violation of provisions contained in the Mortgage Loan Documents,
such documents generally permit the holder of the Mortgage Loan to accelerate
the loan's maturity. See "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions--Due-on-Sale Provisions" in the
prospectus. You should note that the enforceability of due-on-sale and
due-on-encumbrance provisions has been challenged in several states.
Default Provisions. The related Mortgage and the other documents contained
in the Mortgage File (the "Mortgage Loan Documents") generally provide that an
event of default will exist if:
(1) the borrower fails to pay any regular installment of principal and/or
interest (a) upon the date the same is due, (b) within a specified
period (generally five days to 10 days) after the date upon which the
same was due, or (c) within a specified period (generally five days to
10 days) following written notice from the mortgagee of such failure;
S-40
<PAGE>
(2) the borrower violates prepayment, defeasance, Due-on-Encumbrance or
Due-on-Sale provisions;
(3) the borrower fails to pay taxes or other charges when due, to keep all
required insurance policies in full force and effect, to cure any
material violations of laws or ordinances affecting the Mortgaged
Property or to operate the related Mortgaged Property according to
specified standards;
(4) the imposition of a mechanic's, materialman's or other similar lien
against the Mortgaged Property; or
(5) the institution of a bankruptcy, receivership or similar action against
the borrower or the Mortgaged Property.
Additionally, the related Mortgage Loan Documents may contain other
specified events of default, including one or more of the following:
(1) the unapproved conversion of the related Mortgaged Property to a
condominium or cooperative;
(2) defaults under certain other agreements;
(3) defaults under or unapproved modifications to any related franchise
agreement;
(4) material changes to or defaults under any related management agreement;
or
(5) the failure to correct any deficiency that would justify termination of
a Medicare or Medicaid contract or a ban on new patients otherwise
qualifying for Medicaid or Medicare coverage or the assessment of
certain fines or penalties by any state or any Medicare, Medicaid,
health, reimbursement or licensing agency.
Upon an event of default, the Master Servicer or the Special Servicer may
take such action as it deems advisable to protect and enforce the rights of the
Trustee, on behalf of the Certificateholders, against the related borrower and
in and to the related Mortgaged Property, subject to the terms of the related
Mortgage Loan. Such action may include acceleration of maturity of the Mortgage
Loan or complete or partial foreclosure of the Mortgage Loan.
Default Interest. All of the Mortgage Loans provide for imposition of a
rate of interest higher than the stated interest rate upon the occurrence of an
event of default ("Default Interest"). Default Interest is generally calculated
as a specified rate above the stated interest rate of such Mortgage Loan, and
in some cases may be calculated as a specified rate above a specified base rate
(typically a prime rate reported in The Wall Street Journal or published by
major money center banks). You should note that the enforceability of Default
Interest provisions has been challenged in several states. Also, the
collectibility of any Default Interest is dependent on the creditworthiness of
the borrower. See "Certain Legal Aspects of the Mortgage Loans--Enforceability
of Certain Provisions" in the prospectus.
Hazard, Liability and other Insurance. Each Mortgage Loan requires that
the related Mortgaged Property be insured against loss or damage by fire or
other risks and hazards covered by a standard extended coverage insurance
policy. Such insurance generally includes:
(1) commercial general liability insurance for bodily injury or death and
property damage;
(2) an "All Risk of Physical Loss" policy or standard extended coverage
policy;
(3) such other coverage as the related Mortgage Loan Seller may have
required based on the specific characteristics of the Mortgaged
Property (including in each case other than where a Major Tenant is
self insured or has independently procured similar insurance, rental
loss insurance and business interruption insurance); and
(4) where appropriate, boiler and machinery coverage and flood insurance.
Generally, the insurance set forth in clause (2) above must be for an
amount equal to (1) the full replacement cost of the Mortgaged Property or (2)
the outstanding principal balance of the related Mortgage Loan, whichever is
less but in any event in an amount sufficient to ensure that the insurer would
not deem the borrower a co-insurer. With respect to some of the Mortgage Loans,
the related borrower has satisfied the applicable insurance requirements by
obtaining blanket insurance policies.
Generally, the borrower is required to maintain an insurance policy
providing business interruption or rental continuation coverage in an amount
not less than the income anticipated from 12-months of operations of the
Mortgaged Property. The Mortgage Loan Documents relating to 1 of the Mortgage
Loans, representing approximately 0.04% of the Cut-off Date Balance, however,
do not specifically require the related borrowers to maintain business
interruption or rental continuation coverage, but generally do require the
related borrowers to obtain and maintain any insurance that the mortgagee may
reasonably require.
S-41
<PAGE>
The related Mortgage Loan Documents typically provide that in the event of
damage to the related Mortgaged Property (a "Casualty"), insurance proceeds in
excess of a specified amount will be paid to the mortgagee rather than the
borrower. The mortgagee may elect to apply such proceeds to the outstanding
indebtedness rather than to restoration of the related Mortgaged Property.
However, the mortgagee may be required to apply such proceeds to restoration of
the related Mortgaged Property if certain conditions are met. These conditions
typically include one or more of the following:
(1) the insurance proceeds payable are less than a specified amount;
(2) less than a specified percentage of the related Mortgaged Property is
destroyed;
(3) the value of the related Mortgaged Property following such Casualty
remains greater than either a specified amount or a specified
percentage of the value of the related Mortgaged Property before such
Casualty;
(4) the Casualty affects less than a specified percentage of the net
rentable area of the Mortgaged Property or interrupts less than a
specified percentage of the rentals from the Mortgaged Property;
(5) such restoration will cost less than a specified amount and such
proceeds are sufficient to complete such restoration;
(6) such restoration can be accomplished within a specified time period;
(7) the restored Mortgaged Property will adequately secure the related
Mortgage Loan;
(8) income (including rents and insurance proceeds) will be adequate to
service the debt during the restoration period; and
(9) no event of default then exists.
Certain leases require the borrower or the tenant to rebuild the buildings
located upon the related Mortgaged Property in the event of a Casualty, and the
related Mortgage Loan Documents permit the application of insurance proceeds to
satisfy such requirement.
Condemnation. Generally, the Mortgage Loans provide that all awards
payable to the borrower in connection with any taking or exercise of the power
of eminent domain with respect to the related Mortgaged Property (a
"Condemnation") will be paid directly to the mortgagee. The mortgagee may elect
to apply such proceeds to the outstanding indebtedness rather than to the
restoration of the related Mortgaged Property. However, the mortgagee may be
required to apply such awards to restoration of the related Mortgaged Property
if certain conditions are met. These conditions typically include one or more
of the following:
(1) the award is less than a specified amount;
(2) the Condemnation affects less than a specified percentage of the net
rentable area of the Mortgaged Property or interrupts less than a
specified percentage of the rental revenue from the Mortgaged Property;
(3) restoration will cost less than a specified amount and sufficient funds
are available to complete such restoration;
(4) restoration can be accomplished within a specified time period;
(5) income (including the Condemnation award, rental revenue and insurance
proceeds) will be adequate to service the debt during the restoration
period;
(6) no event of default then exists; or
(7) such restoration is feasible and the Mortgaged Property will be
commercially viable after such restoration.
Certain leases require the borrower or the tenant to restore the related
Mortgaged Property in the event of a Condemnation, and the related Mortgage
Loan Documents permit the application of Condemnation Proceeds to satisfy such
requirement.
Delinquencies and Modifications. As of the Cut-off Date, no Mortgage Loan
was more than 30-days delinquent in respect of any Monthly Payment, and no
Mortgage Loan has been modified in any material manner since its origination in
connection with any default or threatened default on the part of the related
borrower.
S-42
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE POOL
Concentration of Mortgage Loans and Borrowers. Several of the Mortgage
Loans have Cut-off Date Principal Balances that are substantially higher than
the average Cut-off Date Principal Balance. The largest single Mortgage Loan
has a Cut-off Date Principal Balance of $69,289,658, which represents
approximately 7.97% of the Cut-off Date Balance. The ten largest individual
Mortgage Loans have Cut-off Date Principal Balances that represent in the
aggregate approximately 25.56% of the Cut-off Date Balance.
Descriptions of the Ten Largest Individual Mortgage Loans. See Annex F
attached to this prospectus supplement.
Affiliated Borrowers. 67 Mortgage Loans, representing approximately 21.78%
of the Cut-off Date Balance, were made to affiliated entities. The two largest
groups consist of 20 and 2 Mortgage Loans, collectively representing
approximately 3.46% and 1.53% of the Cut-off Date Balance, respectively. No set
of Mortgage Loans made to a single borrower or to a single group of affiliated
borrowers constitutes more than approximately 7.97% of the Cut-off Date
Balance.
20 Mortgage Loans, representing approximately 5.55% of the Cut-off Date
Balance, are cross-collateralized and cross-defaulted with one or more other
Mortgage Loans made to the same borrower or to an affiliate thereof. 44
Mortgage Loans, representing approximately 15.81% of the Cut-off Date Balance,
are made to the same borrower or to an affiliate thereof but are not
cross-collateralized or cross-defaulted. "Cross-Collateralized Loans" and
"Cross-Defaulted Loans" reduce the risk that the inability of an individual
Mortgaged Property to generate net operating income sufficient to pay debt
service thereon will result in defaults (and ultimately losses) by making the
pool of collateral available to support debt service on, and principal
repayment of, the aggregate indebtedness evidenced by the related
Cross-Collateralized Loans and by making it easier for a lender to foreclose on
performing collateral should the need arise. Annex C contains the Affiliated
Borrower Loan Table, which sets forth more detailed information regarding
Mortgage Loans made to a single borrower or to a single group of affiliated
borrowers.
Geographic Concentration. The Mortgaged Properties are located in 40
states and the District of Colombia. The states with the greatest concentration
of Mortgage Loans are indicated in the table below. No more than 4% of the
Mortgage Loans by Cut-off Date Balance are secured by Mortgaged Properties
located in any state not indicated below or the District of Colombia.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF CUT-OFF DATE
STATE MORTGAGE LOANS BALANCE
- ---------------------- ---------------- --------------
<S> <C> <C>
California ........... 34 20.19%
New York ............. 19 9.34%
Arizona .............. 12 7.31%
Florida .............. 25 5.65%
Pennsylvania ......... 17 5.36%
Maryland ............. 7 4.03%
</TABLE>
Environmental Risks. An ESA, a similar study, an update of a previously
conducted Phase I ESA, an update based on information contained in an
established database, or in the case of certain Mortgage Loans with an original
principal balance of less than $1,000,000 (or $1,500,000 in the case of Bridger
Finance and Greenwich), an environmental transaction screen assessment, was
obtained by the related Mortgage Loan Seller with respect to each of the
Mortgaged Properties within 12-months of the respective dates as of which the
Mortgage Loans were originated.
Other than as described below, the Mortgage Loan Sellers have informed the
Depositor that such ESAs, transaction screen assessments, studies or updates
did not identify any material adverse environmental conditions or
circumstances, except for:
(1) cases where such conditions or circumstances were investigated further
and, based upon such additional investigation, a qualified
environmental consultant recommended no further investigation or
remediation;
(2) cases where a qualified environmental consultant recommended an
operations and maintenance plan and such plan was obtained or an escrow
reserve was established to cover the estimated costs of obtaining such
plan;
S-43
<PAGE>
(3) cases where soil or groundwater contamination was suspected or
identified and either (a) such condition was remediated or abated prior
to the origination date of the Mortgage Loan; (b) a "no further action"
letter was obtained from the applicable regulatory authority, or (c)
either an environmental insurance policy was obtained, a letter of
credit provided, an escrow reserve account established, or an indemnity
from the responsible party was obtained to cover the estimated costs of
any further required investigation, testing, monitoring or remediation;
and
(4) those cases in which a leaking underground storage tank or groundwater
contamination was identified to be located on or to have originated
from an offsite property, a responsible party has been identified under
applicable law, and either (a) such condition is not known to have
affected the Mortgaged Property or (b) the responsible party has either
received a "no further action" letter from the applicable regulatory
agency, established a remediation fund, or provided an indemnity or
guaranty to the borrower.
The foregoing information is based upon ESAs, transaction screen
assessments, similar studies or updates and has not been independently verified
by the Mortgage Loan Sellers, the Depositor, the Transferor, or any of their
respective affiliates.
The ESAs, studies, transaction screen assessments, or updates with respect
to certain Mortgaged Properties identified potentially adverse environmental
conditions which, if confirmed through further investigation or research, could
be important and require material expenditure.
You should understand that none of the Depositor, the Mortgage Loan
Sellers, the Master Servicer, the Special Servicer, the Trustee, any affiliate
of any of the foregoing, any environmental consultants or any other person
guarantees the absence of or extent of any environmental condition on the
Mortgaged Properties that could result in environmental liability. The ESAs,
transaction screen assessments, similar studies and updates are limited in
scope, and may not uncover every environmental condition or fully reveal the
severity of any environmental conditions observed. Further, none of the
aforementioned persons or entities can give any assurance that future changes
in applicable environmental laws, the development or discovery of presently
unknown environmental conditions at the Mortgaged Properties or the
deterioration of existing conditions will not require material additional study
costs or material remediation expenses, or generate material liabilities, or
otherwise put stress on the borrower's cash flow.
Other Financing. 7 of the Mortgage Loans, representing approximately 9.86%
of the Cut-off Date Balance, allow the borrower, under circumstances specified
in the Mortgage Loan Documents, either to maintain an existing subordinate
mortgage encumbering the Mortgaged Property or to grant such a subordinate
mortgage in the future. 3 of the Mortgage Loans, representing approximately
0.20% of the Cut-off Date Balance, do not prohibit the borrower from incurring
additional debt that is secured by a mortgage encumbering the Mortgaged
Property. Such Mortgage Loans are identified in Annex A. The circumstances
specified in the Mortgage Loan Documents typically include one or more of the
following:
(1) The senior mortgagee must approve one or more of the purpose, amount,
term and amortization period of the proposed subordinate debt, together
with the identity of the subordinate lender and the terms of the
subordinate loan document.
(2) The subordinate mortgage is unconditionally subordinated to the related
Mortgage Loan Documents, and/or the subordinate lender is prohibited
from exercising any remedies against the borrower without the senior
mortgagee's consent and/or from receiving any payments on such
subordinate debt if, for the preceding 12-months, either (a) the
aggregate debt service coverage ratio for such Mortgage Loan and such
subordinate debt is less than a specified ratio (generally ranging from
1.20 to 1.30), or (b) the aggregate loan-to-value ratio for such
Mortgage Loan and such subordinate debt is greater than a specified
ratio (generally ranging from 70% to 80%).
(3) The subordinate debt is non-recourse.
(4) The Mortgaged Property is in acceptable economic condition as of the
effective date of the subordinate financing, such condition being
typically indicated by the following: (a) the aggregate debt service
coverage ratio for such Mortgage Loan and such subordinate debt is
equal to or greater than a specified ratio (generally 1.20), and/or (b)
the aggregate loan-to-value ratio for such Mortgage Loan and such
subordinate debt is less than a specified ratio (generally ranging from
70% to 80%).
(5) The conditions set forth in the Pooling and Servicing Agreement for
waiver of Due-on-Encumbrance provisions are met.
With respect to the Mortgage Loans sold by Bridger Finance to the
Transferor, if the related borrowers are "special purpose entities," the
related Mortgage Loan Documents prohibit the borrowers from incurring unsecured
subordinated debt. If, however, the related borrowers are not "special purpose
entities," the related Mortgage Loan Documents do not contain provisions that
prohibit the borrowers from incurring unsecured subordinated debt.
S-44
<PAGE>
Zoning Compliance. The related Mortgage Loan Seller received assurances
that all of the improvements located upon each respective Mortgaged Property
complied in all material respects with applicable zoning laws, or that such
improvements qualified as permitted nonconforming uses. In some cases, the
assurances were limited to a representation or warranty from the related
borrower, for breach of which recourse may be had to such borrower.
Tenant Matters. With respect to 91 of the Mortgage Loans, representing
approximately 39.29% of the Cut-off Date Balance, a major tenant occupies more
than 20% of the net leasable area of the related Mortgaged Property. Many of
such major tenants occupy their respective leased premises pursuant to leases
that require them to pay all applicable real property taxes, maintain insurance
over the improvements thereon and maintain the physical condition of such
improvements. With respect to Mortgage Loans secured by a retail, office or
industrial property, the related Mortgage Loan Seller or originator generally
obtained an estoppel certificate from each major tenant in which such tenant
indicated its intention to continue in the relevant lease and that such tenant
was not presently aware of any condition or event that would allow it to
terminate such lease prior to the end of the lease term. Generally, major
tenants do not have investment grade credit ratings. Additional information
regarding major tenants is set forth in Annex A herein.
Other Information. Annex A sets forth certain information with respect to
the Mortgage Loans and the Mortgaged Properties. Such information was primarily
derived from financial statements supplied by the borrowers which, in most
cases, are unaudited and were not prepared in accordance with generally
accepted accounting principles. "Net Operating Income" and "Cash Flow" do not
represent the net operating income and cash flow reflected on the borrowers'
financial statements. The differences between "Net Operating Income" and "Cash
Flow" determined by the Mortgage Loan Sellers and net operating income and cash
flow reflected on the borrowers' financial statements represent the adjustments
made by the related Mortgage Loan Seller, as described below, to increase the
level of consistency between the financial statements provided by the
borrowers. However, such adjustments were subjective in nature and were not
made in a uniform manner nor in accordance with generally accepted accounting
principles. "Underwritten NOI" and "Underwritten Cash Flow" are pro forma
numbers prepared by the related Mortgage Loan Seller to reflect their
assessment of the market based performance of the related Mortgaged Property.
None of the Depositor, the Transferor or either of the Underwriters has
verified the accuracy of the financial statements supplied by the borrowers or
the accuracy or appropriateness of the adjustments discussed below to determine
"Net Operating Income," "Cash Flow," "Underwritten NOI," and "Underwritten Cash
Flow."
"Net Operating Income," "Cash Flow," "Underwritten NOI" and "Underwritten
Net Cash Flow" are not substitutes for, or improvements upon, net income as
determined in accordance with generally accepted accounting principles as a
measure of the results of a Mortgaged Property's operations or for cash flows
from operating activities determined in accordance with generally accepted
accounting principles as a measure of liquidity. No representation is made as
to the future net income or net cash flow of the Mortgaged Properties, and "Net
Operating Income," "Cash Flow," "Underwritten NOI" and "Underwritten Cash Flow"
as set forth herein are not intended to represent such future net income or net
cash flow.
Appraisals of the Mortgaged Properties, conducted in compliance with the
Code of Professional Ethics and Standards of Professional Conduct of the
Appraisal Institute and the Uniform Standards of Professional Appraisal
Practice as adopted by the Appraisal Standards Board of the Appraisal
Foundation and accepted and incorporated into FIRREA, were obtained in
connection with the origination of the Mortgage Loans. No other person has
prepared or obtained a separate appraisal or reappraisal. Another appraiser
might arrive at a different opinion of value. Any Appraised Value might differ
from the value that would be determined in a current appraisal or the amount
that would be realized upon a sale or liquidation of the Mortgaged Property.
Accordingly, you should not rely on the Loan-to-Value Ratios set forth herein
as necessarily indicative of the true Loan-to-Value Ratios.
Debt service coverage ratios are used by lenders of loans secured by
income producing property to measure the ratio of (1) cash currently generated
by a property annually that is available for debt service (that is, cash that
remains after payment of operating expenses) to (2) required annual debt
service payments. Debt service coverage ratios, however, only measure the
current, or recent, ability of a property to service mortgage debt. If a
property is not expected to have a stable operating cash flow (because, for
instance, it is subject to leases that expire during the loan term and provide
for above-market rents, or that are difficult to replace), a debt service
coverage ratio may not be a reliable indicator of a property's ability to
service the mortgage debt over the entire remaining loan term. In addition, a
debt service coverage ratio may not adequately reflect the significant amounts
of cash that a property owner may be required to expend to pay for capital
improvements, tenant improvements and leasing commissions when expiring leases
are replaced. Accordingly, we can give no assurance and make no representation
that the Debt Service Coverage Ratios accurately reflect the future ability of
a Mortgaged Property to generate sufficient cash flow to repay the related
Mortgage Loan.
S-45
<PAGE>
For purposes of Annex A:
(1) "Net Operating Income" or "NOI" means revenue derived from the use
and operation of the Mortgaged Property (primarily rental income) less
operating expenses (such as utilities, general administrative expenses,
management fees, advertising, repairs and maintenance) and less fixed
expenses (such as insurance and real estate taxes). NOI generally does not
reflect capital expenditures, interest expense, income taxes and non-cash
items such as depreciation or amortization. The Mortgage Loan Sellers have
informed the Depositor that they have adjusted items of revenue and expense
shown on the borrowers' financial statements in order to reflect the
historical operating results for the Mortgaged Properties on a normalized
basis (for example, adjusting for the payment of two years of real estate
taxes in a single year). In addition, the Mortgage Loan Sellers have
informed the Depositor that replacement reserves have been reflected in the
calculation of NOI with respect to all of the Mortgaged Properties (other
than Mortgaged Properties securing certain of the Key Bank Mortgage Loans).
Revenue was generally adjusted to eliminate security deposits and to
eliminate non-recurring items and items not related to the operation of the
Mortgaged Property. Expense was generally adjusted to eliminate
distributions to owners, items of expense not related to the operation of
the Mortgaged Property, non-recurring items, such as capital expenditures,
and refunds of security deposits. The Mortgage Loan Sellers have informed
the Depositor that they have made the adjustments based upon their review of
borrower financial statements, their own experience in originating loans
and, in some cases, conversations with borrowers. The adjustments were
subjective in nature and were not uniform for each Mortgaged Property. "1997
NOI" and "1998 NOI" reflect calendar or fiscal year operations for 1997 and
1998, respectively.
(2) "Cash Flow" means the NOI for the related Mortgaged Property
decreased by tenant improvement costs, leasing commissions, capital
expenditures and other non-recurring expenditures, as appropriate.
(3) "Underwritten NOI DSCR" means the NOI for the related Mortgaged
Property on an annual basis as determined by the related Mortgage Loan
Seller in accordance with its underwriting guidelines for similar
properties. Although there are differences in the underwriting guidelines of
the Mortgage Loan Sellers, the nature and types of adjustments made by each
of them were generally the same. Revenue generally is calculated as follows.
Rental revenue is calculated using the lower of actual or market rental
rates, with a vacancy rate equal to the higher of the Mortgaged Property's
historical rate, the market rate or an assumed vacancy rate. Other revenues,
such as parking fees, percentage rents and vending income are included only
if sustainable. Revenues, such as application fees and lease termination
fees, are not included. Operating and fixed expenses generally are adjusted
to reflect the higher of the Mortgaged Property's average expenses or a
mid-range industry norm for expenses on similar properties in similar
locations plus the greater of actual management fees or an assumed market
rate management fee and a reserve for replacement of capital items.
(4) "Underwritten Net Cash Flow" for the related Mortgage Loan Seller
means the Underwritten NOI for such Mortgage Loan decreased by an amount
that the related Mortgage Loan Seller has determined to be an appropriate
allowance, based upon its underwriting guidelines, for average annual tenant
improvements and leasing commissions.
(5) "Appraisal Value" means the appraised value of such property as
determined by an appraisal made not more than nine months prior to the
origination date of the related Mortgage Loan and reviewed by the related
Mortgage Loan Seller.
(6) "Monthly Debt Service" means, for any Mortgage Loan, the current
monthly debt service (that is, interest at the related Mortgage Rate and
principal) payable with respect to such Mortgage Loan commencing on the
Cut-off Date (assuming no prepayments occur).
(7) "Debt Service Coverage Ratio," "Underwritten NOI DSCR" or "DSCR"
means, (a) the Underwritten Net Cash Flow for the related Mortgaged Property
divided by (b) the Annual Debt Service for such Mortgage Loan.
(8) "Loan-to-Value Ratio," "Appraised LTV" or "LTV" means the Cut-off
Date, Principal Balance of such Mortgage Loan divided by the Appraised Value
of the related Mortgaged Property.
(9) "Balloon/ARD LTV Ratio" means the Balloon Amount or ARD Amount for
such Mortgage Loan as of the Cut-off Date divided by the Appraised Value of
the related Mortgaged Property.
(10) "ARD Amount" or "ARD Balance" for any ARD Loan is equal to the
Scheduled Principal Balance as of the related Anticipated Repayment Date.
(11) "Balloon Amount" or "Balloon Balance" means the principal amount, if
any, due at maturity, taking into account scheduled amortization and
assuming no prepayments or defaults.
S-46
<PAGE>
(12) "Physical Occupancy %" means the percentage of net rentable area,
rooms, units, beds, pads or sites of a Mortgaged Property that are leased or
occupied. Occupancy rates are calculated based upon the most recent rent
information received by the related Mortgage Loan Seller. The "Occupancy As
of Date" for each Mortgage Loan are based upon rent rolls received by the
related Mortgage Loan Seller from the related borrower or mortgage loan
originator (if other than the related Mortgage Loan Seller).
(13) "Remaining Term to Maturity" means the number of Due Dates remaining
from the Cut-off Date through the maturity of a mortgage loan (or, for an
ARD Loan, through its related Anticipated Repayment Date).
(14) "Remaining Amortization Term" for any Mortgage Loan is calculated at
its original amortization term (based upon such Mortgage Loan's original
balance, interest rate and monthly payment, in the case of an ARD Loan,
assuming prepayment in full on its related Anticipated Repayment Date) less
the number of Due Dates through and including the Cut-off Date.
(15) The "Year Built" is based on information contained in deed records,
appraisals, engineering surveys, architectural papers, title insurance
and/or other insurance policies.
(16) The "Year Renovated" is based upon information contained in the
appraisal of the related Mortgaged Property.
(17) All calculations of any applicable Lockout Period, Defeasance
Lockout Period, Yield Maintenance Period, Prepayment Premium or Yield
Maintenance Charge for a Mortgage Loan are based upon such Mortgage Loan's
first scheduled payment date.
(18) For each Mortgage Loan secured by more than one Mortgaged Property,
the "Number of Units," "Units/SF," "Appraised Value," "Current Occupancy,"
"Underwritten NOI" and "Underwritten Cash Flow" is the sum of the respective
values for each Mortgaged Property securing such Mortgage Loan.
(19) "Weighted Average Remaining Term" means the weighted average of the
Remaining Terms to Maturity of the Mortgage Loans.
(20) Due to rounding, percentages may not add to 100% and amounts may not
add to the indicated total.
S-47
<PAGE>
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The foregoing description of the Mortgage Pool and the Mortgaged
Properties is based upon the Scheduled Principal Balances of the Mortgage Loans
as of the Cut-off Date. Before we issue the Certificates, one or more Mortgage
Loans may be removed from the Mortgage Pool if the Depositor deems such removal
necessary or appropriate or if such Mortgage Loans are prepaid. A limited
number of other mortgage loans may be included in the Mortgage Pool before we
issue the Certificates, unless including such mortgage loans would materially
alter the characteristics of the Mortgage Pool, as described in this prospectus
supplement. Accordingly, the characteristics of the Mortgage Loans constituting
the Mortgage Pool at the time we issue the Certificates may vary from those
described herein.
A Current Report on Form 8-K (the "Form 8-K") will be filed, together with
the Pooling and Servicing Agreement, with the Securities and Exchange
Commission within 15 days after the initial issuance of the Certificates. The
Form 8-K will be available to the Certificateholders promptly after its filing.
In the event that Mortgage Loans are removed from or added to the Mortgage Pool
as described in the preceding paragraph, such removal or addition will be noted
in the Form 8-K.
REPRESENTATIONS AND WARRANTIES; REPURCHASE
Each of NRFinance and Bridger Finance will make certain representations
and warranties to the Transferor in the related Underlying Mortgage Loan
Purchase Agreements. The Transferor will make substantially similar
representations and warranties to the Depositor in Mortgage Loan Purchase and
Sale Agreement I. Greenwich will make representations and warranties to the
Depositor in Mortgage Loan Purchase and Sale Agreement II that are
substantially similar to the representations and warranties of NRFinance and
Bridger Finance in the Underlying Mortgage Loan Purchase Agreements. The sole
remedy available to the Trustee or Certificateholders for a Mortgage Loan
Seller's failure to cure any breach of such representations and warranties that
materially and adversely affect the interest of the Certificateholders in the
affected Mortgage Loan is for the Trustee to enforce its rights against the
Transferor or Greenwich, as applicable, to require it to cure the breach or
repurchase the affected Mortgage Loan within 85 days of receiving notice of
such breach or as otherwise provided in the Pooling and Servicing Agreement.
The Depositor will assign its rights under Mortgage Loan Purchase and Sale
Agreement I and Mortgage Loan Purchase and Sale Agreement II (and therewith the
rights of the Transferor under the Underlying Mortgage Loan Purchase
Agreements) to the Trustee for the benefit of the Certificateholders.
All references in these representations and warranties are to related
documents, Mortgaged Properties and entities unless otherwise indicated. The
representations and warranties are made for each Mortgage Loan as of the date
specified in the related Underlying Mortgage Loan Purchase Agreement, and
include the following (subject to certain exceptions set forth in such
Underlying Mortgage Loan Purchase Agreement and attached hereto as Annex E):
(1) Mortgage Loan Characteristics. The information set forth in the
mortgage loan schedule is true, correct and complete in all material respects;
provided, however, that with respect to the information set forth with respect
to each Mortgage Loan under the captions "Physical Occupancy %," "Occupancy As
of Date," "1997 NOI," "1998 NOI," "Underwritten NOI," "Underwritten Net Cash
Flow" and "Underwritten NOI DSCR," the Mortgage Loan Seller represents only
that the information is a correct and accurate reproduction or derivation, as
adjusted by the Mortgage Loan Seller in accordance with its customary
underwriting practices and procedures, of the information provided to it by the
borrower (or an affiliate or principal thereof) and takes no responsibility for
the accuracy or completeness of the information provided by the borrower (or
such affiliate or principal); provided, further, however, that the Mortgage
Loan Seller has no actual knowledge that the information is incorrect,
inaccurate or incomplete following the reasonable and customary due diligence
performed by the Mortgage Loan Seller in connection with its origination or
purchase of the Mortgage Loans.
(2) Domestic Borrower. The borrower is an individual who is a citizen of,
or an entity organized under the laws of, a state of the United States of
America.
(3) Single-Purpose Bankruptcy Remote Entity. Each borrower of a Mortgage
Loan in excess of $25,000,000 is an entity which has represented in connection
with the origination of the Mortgage Loan, or whose organizational documents as
of the date of origination of the Mortgage Loan provide that so long as the
Mortgage Loan is outstanding, it will be a single-purpose entity whose
activities and ability to incur debt are restricted by the applicable Mortgage
or the organizational documents in a manner intended to make the likelihood of
bankruptcy proceedings being commenced by or against such borrower remote, and
as to which the borrower has delivered an opinion of counsel concerning
substantive non-consolidation and as to which the borrower has at least one
independent director. For this purpose, "single-purpose entity" shall mean a
person, other than an individual, which does not engage in any business
unrelated to the Mortgaged Property and its financing, does not have any assets
other than those related to its interest in such Mortgaged Property or its
financing, or any indebtedness other than
S-48
<PAGE>
as permitted by the Mortgage or the other Mortgage Loan Documents, has its own
books and records separate and apart from any other person and holds itself out
as being a legal entity, separate and apart from any other person.
(4) Delivery of Mortgage Loan Documents. The Mortgage Loan Seller has
caused or will cause to be delivered to the Transferor (or its designee) or the
Depositor or its designee, within the time period prescribed by the Underlying
Mortgage Loan Purchase Agreement or Mortgage Loan Purchase and Sale Agreement
II, each of the documents comprising the Mortgage File for each Mortgage Loan.
(5) Payment Current. All payments required to be made with respect to the
Mortgage Loan under the terms of the promissory note or the Mortgage (inclusive
of any applicable grace or cure period) up to the Closing Date have been made.
Within the twelve months preceding the Closing Date, there has not been any
delinquency in excess of 30 days with respect to the Mortgage Loan.
(6) Equity Participation or Participation Interest. The Mortgage Loan
contains no equity participation by the Mortgage Loan Seller and is a whole
loan and not a participation interest. Neither the promissory note nor the
Mortgage provides for negative amortization or any contingent or additional
interest in the form of participation in the cash flow of the Mortgaged
Property. The Mortgage Loan Seller has no ownership interest in that Mortgaged
Property or in the borrower other than in the Mortgage Loan being assigned and
sold. Neither the Mortgage Loan Seller nor any affiliate of the Mortgage Loan
Seller has any obligation to make any capital contributions to the borrower
under the Mortgage or any other Mortgage Loan Document.
(7) Compliance with Applicable Laws. As of the date of its origination,
the Mortgage Loan either complied with, or was exempt from, applicable federal
or state laws, regulations and other requirements pertaining to usury. To the
best of the Mortgage Loan Seller's knowledge, as of the date of origination of
the Mortgage Loan, the originator complied in all material respects with the
requirements of any and all other federal, state or local laws applicable to
the origination, servicing and collection of the Mortgage Loan. No governmental
or regulatory approval or consent is required for the sale of the Mortgage Loan
by the Mortgage Loan Seller, and the Mortgage Loan Seller has full right, power
and authority to sell that Mortgage Loan. To the extent necessary to ensure the
enforceability of the Mortgage Loan and the effective sale, transfer and
assignment thereof and of the promissory note, the originator and/or the
Mortgage Loan Seller each was qualified and appropriately licensed to transact
business in the jurisdiction in which the Mortgaged Property is located at the
time such entity had possession of the promissory note.
(8) Proceeds Fully Disbursed. The proceeds of the Mortgage Loan have been
fully disbursed (although certain reserve accounts controlled by the Mortgage
Loan Seller may have been established as described in Annex A), and there is no
requirement for future advances thereunder.
(9) Origination Expenses Paid. All costs, fees and expenses incurred in
connection with the origination and closing of the Mortgage Loan, including,
without limitation, recording costs and fees, have been paid to the appropriate
person or arrangements have been made for their payment to the appropriate
person on a timely basis by the borrower.
(10) Documents Valid. Each of the promissory note, the Mortgage and any
other Mortgage Loan Document is the legal, valid and binding obligation of the
borrower, the guarantor or other party executing that document (subject to any
non-recourse or partial recourse provisions contained therein) and is
enforceable in accordance with its terms subject to customary exceptions. There
is no valid offset, defense, counterclaim or right of rescission with respect
to the promissory note, Mortgage or any other Mortgage Loan Document, nor will
the operation of any of the terms of the promissory note or the Mortgage, or
the exercise of any right thereunder, render either the promissory note or the
Mortgage, unenforceable or subject to any valid offset, defense, counterclaim
or right of rescission, including, without limitation, the defense of usury,
and the Mortgage Loan Seller has no knowledge that any such offset, defense,
counterclaim or right of rescission has been asserted or is available with
respect thereto. Except as described in the immediately following sentence, the
promissory note and the Mortgage do not require the mortgagee to release any
portion of the Mortgaged Property except upon payment in full of the mortgage
loan or the exercise of a defeasance feature. In the case of certain Mortgaged
Properties securing cross-collateralized Mortgage Loans, certain Mortgage Loans
secured by multiple Mortgaged Properties, and certain Mortgage Loans secured by
one or more parcels constituting a single Mortgaged Property, the mortgagee may
be required to release a Mortgaged Property or a portion thereof upon payment
of a portion of the Mortgage Loan, as specified in the Mortgage Loan Documents.
(11) Assignment of Mortgage; Note Endorsement. The assignment of mortgage
(but for the insertion of the name of the assignee and any related recording
information which is not yet available to the Mortgage Loan Seller) is or will
be in
S-49
<PAGE>
recordable form and constitutes or will constitute the Mortgage Loan Seller's
legal, valid and binding assignment to the Transferor or the Depositor of the
Mortgage and any assignment of leases, rents and profits or assignment of
assignment of leases, rents and profits. The Mortgage Loan Seller's endorsement
and delivery of the promissory note to the Transferor or the Depositor in
accordance with the terms of the Underlying Mortgage Loan Purchase Agreement or
Mortgage Loan Purchase and Sale Agreement II constitutes or will constitute the
Mortgage Loan Seller's legal, valid and binding assignment to the Transferor or
the Depositor of that promissory note, and together with the Mortgage Loan
Seller's execution and delivery of the assignment of mortgage to the Transferor
or the Depositor, legally and validly conveys or will convey all right, title
and interest of the Mortgage Loan Seller in that Mortgage Loan to the
Transferor or the Depositor.
(12) First Lien. Based on the related policy of title insurance (or pro
forma or specimen policy or "marked-up" commitment for title insurance), the
Mortgage is a legal, valid and enforceable first lien on the Mortgaged Property
(including all buildings and improvements on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to those buildings, and all
additions, alterations and replacements made at any time prior to the closing
date of the Mortgage Loan with respect to the foregoing, but excluding any
related personal property) which Mortgaged Property is free and clear of all
liens and encumbrances having priority over or equal to the first lien of the
Mortgage, except for:
(a) the lien of current real estate taxes and special assessments not yet
delinquent or accruing interest or penalties;
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of the Mortgage
which do not materially and adversely (A) affect the value of the Mortgaged
Property as security for the Mortgage Loan or (B) interfere with the
borrower's ability to make required interest and principal payments or to make
use of that Mortgaged Property for the intended purposes therefor;
(c) leases and subleases pertaining to the Mortgaged Property which the
Mortgage Loan Seller did not require to be subordinated to the lien of the
Mortgage; provided that those leases and subleases, if any, are with entities
which are not affiliated with the Mortgage Loan Seller; and
(d) other matters which do not, individually or in the aggregate,
materially and adversely (A) affect the value of the Mortgaged Property as
security for the Mortgage Loan, or (B) interfere with the borrower's ability
to make required principal and interest payments or to make use of the
Mortgaged Property for the intended purposes therefor.
(13) No Modification, Release or Satisfaction. Except by a written
instrument which has been delivered to the Transferor or its designee or the
Depositor or its designee as part of the Mortgage File:
(a) neither the promissory note nor the Mortgage (including any
amendments or supplements thereto) included in the Mortgage File) has been
impaired, waived, modified, altered, satisfied, canceled or subordinated or
rescinded;
(b) the Mortgaged Property has not been released from the lien of the
Mortgage; and
(c) the borrower has not been released from its obligations under the
Mortgage, in whole or in any part, in each such event in a manner which would
materially interfere with the benefits of the security intended to be provided
by the Mortgage.
(14) Defeasance. A Mortgage Loan that permits defeasance provides that,
after the applicable Defeasance Lockout Period, the borrower may obtain the
release of all or a portion of the Mortgaged Property from the lien of the
Mortgage upon the pledge to the Trustee of non-callable U.S. Treasury or other
non-callable U.S. government obligations that provide for payments on or prior
to all successive payment dates to maturity (or, in the case of an ARD Loan,
through the Anticipated Repayment Date) in the amounts due on those dates and
upon the satisfaction of certain other conditions. A Mortgage Loan containing a
defeasance provision has a Defeasance Lockout Period of not less than two years
after the Closing Date or includes other conditions precedent the satisfaction
of which will ensure that the exercise of such a feature will not cause any
REMIC to fail to be a REMIC. Certain Mortgage Loans also require that a REMIC
opinion be provided as a condition to exercise of any defeasance option, and
the Mortgage or the other Mortgage Loan Documents generally require the
satisfaction of one or more of the following conditions prior to the defeasance
of the Mortgaged Property:
(a) the borrower must provide the mortgagee with a prior written notice
of not less than 30 days;
(b) the borrower must either (i) deliver to the mortgagee or the servicer
of the Mortgage Loan, as the case may be, the government obligations described
above in this clause (14) or (ii) pay to the mortgagee or the servicer of the
Mortgage Loan, as the case may be, an amount sufficient to purchase the
government obligations described above in this clause (14);
S-50
<PAGE>
(c) the borrower must provide a written confirmation from the Rating
Agencies indicating that the defeasance will not result in a reduction,
withdrawal or qualification of the respective ratings of any outstanding
classes of Certificates;
(d) the borrower must deliver an officer's certificate to the effect that
all of its obligations with respect to the Mortgage Loan have been satisfied
and that the Mortgage Loan is not in default; and
(e) the borrower must undertake to provide such other documents or
information as the mortgagee may reasonably request in connection with the
defeasance.
(15) No Delinquent Taxes or Assessments. All tax or governmental
assessments, or installments thereof, which were due on or prior to the date of
origination had been paid as of such date and the Mortgage Loan Seller knows of
no tax or governmental assessment, or if payable in installments, any
installment thereof, which became due and owing thereafter and prior to the
Closing Date in respect of the Mortgaged Property, which, if left unpaid, would
be, or might become, a lien on the Mortgaged Property having priority over the
Mortgage which has become delinquent such that (A) such tax, assessment or
installment has commenced to accrue interest or penalties, or (B) the
applicable taxing authority may commence proceedings to collect such tax,
assessment or installment, as applicable.
(16) Escrow or Reserve Deposits. As of the Closing Date: (a) the reserve
accounts, if any, contain all escrow deposits and other payments required by
the terms of the Mortgage Loan Documents (inclusive of any applicable grace or
cure period) to be held by the Mortgage Loan Seller as of the Closing Date; and
(b) the Mortgage Loan Seller is transferring all amounts on deposit in the
reserve account(s) on the Closing Date to the Transferor or the Depositor or to
the extent not being transferred to the Transferor or the Depositor, all escrow
deposits and other payments required under the promissory note, the Mortgage
and any other Mortgage Loan Documents have been applied in accordance with
their intended purposes by the mortgage loan originator, the Mortgage Loan
Seller or its agent.
(17) No Third Party Advances. The Mortgage Loan Seller has not, directly
or indirectly, (a) advanced funds; (b) induced or solicited any payment from a
person other than the borrower; or (c) to the Mortgage Loan Seller's knowledge,
received any payment other than from the borrower, for the payment of any
amount required under the promissory note or the Mortgage, except for interest
accruing from the date of the promissory note or the date of disbursement of
the proceeds of the Mortgage Loan, whichever is later, to the date which
precedes by 30 days the first Due Date under the promissory note.
(18) No Condemnation or Damages. To the best of the Mortgage Loan Seller's
knowledge, no proceedings for the total or partial condemnation of the
Mortgaged Property (a) have occurred since the date as of which the appraisal
relied upon in the origination of the Mortgage Loan was prepared or (b) are
pending or threatened other than, in each case, proceedings as to partial
condemnation which do not materially and adversely affect the value of the
Mortgaged Property as security for the Mortgage Loan. To the best of the
Mortgage Loan Seller's knowledge, the Mortgaged Property is free of material
damage. The Mortgage requires that any related condemnation award be applied
either to the restoration of the Mortgaged Property or to the payment of the
outstanding principal balance of or accrued interest on the Mortgage Loan.
(19) No Mechanics' Liens. To the Mortgage Loan Seller's knowledge, the
Mortgaged Property (excluding any related personal property) (i) is free and
clear of any mechanics' and materialmen's liens or liens in the nature thereof
and (ii) no rights are outstanding that, under applicable law, could give rise
to any such liens any of which liens are or may be prior to, or equal with, the
lien of the Mortgage, except, with respect to (i) and (ii) above, those which
are insured against by the lender's title insurance policy referred to in (23)
below.
(20) Title Survey: Improvements; Separate Tax Parcels. The Mortgage Loan
Seller has delivered an as-built survey, a survey recertification, a site plan,
a recorded plat or the like with respect to the Mortgaged Property which
satisfied, or the Mortgage Loan Seller otherwise satisfied, the requirements of
the related title insurance company for deletion of the standard general
exceptions for encroachments, boundary and other survey matters and for
easements not shown by the public records from the related title insurance
policy, except with respect to any Mortgaged Property located in a jurisdiction
(such as the State of Texas where survey title insurance coverage is prohibited
by law) in which the exception for easements not shown by the public records
could not be deleted and such standard general exception is customarily
accepted by prudent commercial mortgage lenders in such jurisdiction. Except
for encroachments and similar matters which are inconsequential, do not
materially and adversely affect the value of the Mortgaged Property as security
for the Mortgage Loan, or are insured against by the related lender's title
insurance policy described in (23) below, surveys and/or title insurance
obtained at the time of the origination of the Mortgage Loan indicated or
insured that (A) none of the improvements which were included for the purpose
of determining the appraised value of the Mortgaged Property in the related
appraisal at the time of the
S-51
<PAGE>
origination of the Mortgage Loan lie outside the boundaries and building
restriction lines of the Mortgaged Property, and (B) no improvements on
adjoining properties encroach upon the Mortgaged Property. The Mortgaged
Property constitutes one or more complete separate tax lots or is subject to an
endorsement under the related lender's title insurance policy.
(21) Title. The Mortgage Loan Seller has good title to and is the sole
owner and beneficial holder of the Mortgage Loan. The Mortgage Loan Seller has
full power, authority and legal right to sell and assign the Mortgage Loan, is
the sole mortgagee or beneficiary of record under the Mortgage and is
transferring the Mortgage Loan to the Transferor or the Depositor free and
clear of any and all liens, encumbrances, participation interests, pledges,
charges or security interests of any nature encumbering the Mortgage Loan.
(22) Compliance with Laws. To the best of the Mortgage Loan Seller's
knowledge, based upon a letter or letters from governmental authorities, a
legal opinion, an endorsement or endorsements to the related title insurance
policy, a representation of the borrower at the time of origination of the
Mortgage Loan or other information reasonably acceptable to the Mortgage Loan
Seller at the time of origination of that Mortgage Loan:
(a) no improvements located on or forming a part of the Mortgaged
Property are in violation of any applicable zoning and building laws or
ordinances;
(b) the Mortgaged Property complies with all other laws and regulations
pertaining to the use and occupancy thereof (excluding environmental laws (see
(34) and (35) below) and all applicable insurance requirements;
(c) the borrower has obtained all inspections, licenses, permits,
authorizations, and certificates necessary for compliance, including, but not
limited to, certificates of occupancy (if available); and
(d) the Mortgage Loan Seller has not received notification from any
governmental authority that the Mortgaged Property violates or does not comply
with laws or regulations or is being used, operated or occupied unlawfully or
that the borrower has failed to obtain such inspections, licenses, permits,
authorizations or certificates, except for such violation or non-compliance
(A) which does not materially and adversely affect the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the Mortgaged
Property was intended at the time of origination of the Mortgage Loan, (B)
which is specifically addressed by the appraiser in the determination of the
related appraised value, or (C) for which a reserve account held for the
related Mortgage Loan Seller has been established in an amount sufficient to
pay for the estimated costs to correct the violations or non-compliance.
(23) Title Insurance. The lien of the Mortgage is insured by an ALTA
lender's title insurance policy or, if an ALTA lender's title insurance policy
is unavailable, another state-approved form of lender's title insurance policy
issued in an amount not less than the stated principal amount of the Mortgage
Loan (after all advances of principal) insuring the Mortgage Loan Seller and
its successors and assigns that the Mortgage is a valid first lien on the
Mortgaged Property, subject only to exceptions described in (12) above (or, if
a title insurance policy has not yet been issued in respect of the Mortgage
Loan, the policy will be issued and is currently evidenced by a pro forma or
specimen policy or by a "marked-up" commitment for title insurance which was
furnished by the related title insurance company for purposes of closing the
Mortgage Loan). The premium for the title insurance policy has been paid in
full and the title insurance policy is (or, when issued, will be) in full force
and effect, and upon endorsement and delivery of the related promissory note to
the Transferor or the Depositor and recording of the related assignment of
mortgage in favor of the Transferor or the Depositor in the applicable real
estate records, the title insurance policy will inure to the benefit of the
Transferor or the Depositor. The title insurance policy (a) does not contain
the standard general exceptions for encroachments, boundary or other survey
matters and for easements not shown by the public records, other than matters
which do not materially and adversely (1) affect the value of the Mortgaged
Property as security for the Mortgage Loan, or (2) interfere with the
borrower's ability to make required principal and interest payments or to make
use of such Mortgaged Property for the intended purposes, and (b) only contains
such exceptions for encroachments, boundary and other survey matters as are
customarily accepted by prudent commercial mortgage lenders. The Mortgage Loan
Seller and its agents have not taken, or failed to take, any action that would
materially impair the coverage benefits of any such title insurance policy. The
Mortgage Loan Seller has not made any claim under any title insurance policy.
(24) Insurance Related to Mortgaged Property. All improvements on the
Mortgaged Property are insured by (A) a fire and extended perils insurance
policy providing coverage on a full replacement cost basis in an amount not
less than the lesser of (1) the full replacement cost of all improvements to
the Mortgaged Property, and (2) the outstanding principal balance of the
Mortgage Loan, but in any event in an amount sufficient to avoid the operation
of any co-insurance provisions contained in the insurance policy, which policy
contains a standard mortgagee clause naming the originator or the Mortgage Loan
Seller
S-52
<PAGE>
and its successors as additional insureds; (B) an insurance policy providing
business interruption or rental continuation coverage in an amount not less
than the income anticipated from 12 months of operations of the Mortgaged
Property; (C) a comprehensive general liability insurance policy in an amount
not less than $1,000,000 per occurrence; and (D) if any material improvement on
the Mortgaged Property is located in an area identified by the Federal
Emergency Management Agency as having special flood hazards under the National
Flood Insurance Act of 1968, as amended, a flood insurance policy providing
coverage in an amount not less than the lesser of (1) the stated principal
amount of the related promissory note, and (2) the maximum amount of insurance
available under the Flood Disaster Protection Act of 1973, as amended. As of
the Closing Date, the insurance premium for each insurance policy shall have
been paid or escrowed. Each insurance policy contains a clause providing that
it is not terminable and may not be reduced without 30 days prior written
notice to the mortgagee (except that, in the event of nonpayment of insurance
premiums, each insurance policy provides for termination upon not less than 10
days' prior written notice), and no notice has been received by the Mortgage
Loan Seller. With respect to each insurance policy, the Mortgage Loan Seller
has received a certificate of insurance or similar document dated within the
last 12 months to the effect that the insurance policy is in full force and
effect. The Mortgage Loan Seller has no knowledge of any action, omission,
misrepresentation, negligence or fraud which would result in the failure of any
such insurance policy. The Mortgage Loan Documents require the borrower or a
tenant of the borrower to maintain each insurance policy at its expense, but
authorizes the mortgagee to maintain any insurance policy at the borrower's
expense upon the borrower's or tenant's failure to do so (subject to any
applicable notice or cure periods). The Mortgage and insurance policy require
that any related insurance proceeds, in excess of a specified amount, will be
applied either to the repair or restoration of all or part of the Mortgaged
Property or to the payment of the outstanding principal balance of or accrued
interest on the Mortgage Loan.
(25) UCC Financing Statements. One or more Uniform Commercial Code
financing statements covering all furniture, fixtures, equipment and other
personal property (A) which are collateral under the Mortgage or under a
security or similar agreement executed and delivered in connection with the
Mortgage Loan, and (B) in which a security interest can be perfected by the
filing of Uniform Commercial Code financing statement(s) under applicable law
have been filed or recorded (or have been sent for filing or recording)
wherever necessary to perfect under applicable law a security interest in such
furniture, fixtures, equipment and other personal property (including rights
under leases and all agreements affecting the use, enjoyment or occupancy of
all or any part of the Mortgaged Property and hotel room revenues).
(26) Default, Breach and Acceleration. There is no material default,
breach, violation or event of acceleration existing under the related loan
agreement, promissory note or Mortgage. The Mortgage Loan Seller has no
knowledge of any event (other than failure to make payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration thereunder. The Mortgage Loan Seller has no knowledge
that the borrower is a debtor in any state or federal bankruptcy or insolvency
proceeding.
(27) Customary Provisions. The promissory note and the Mortgage, together
with applicable state law, contain customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
practical realization against the Mortgaged Property of the benefits of the
security, including, but not limited to, judicial or, if applicable,
non-judicial foreclosure.
(28) Access Routes. (A) Surveys, title insurance reports, the title
insurance policy or other relevant documents contained in the Mortgage File
indicate that at the time of origination of the Mortgage Loan, the borrower had
sufficient rights with respect to amenities, ingress and egress and similar
matters identified in the appraisal of the Mortgaged Property as being critical
to the appraised value thereof, and (B) the Mortgaged Property was receiving
services from public or private water, sewer and other utilities that were
adequate as of the date that the Mortgage Loan was originated, and none of such
services is subject to revocation as a result of a foreclosure or change in
ownership of an adjacent property.
(29) Mortgage Loans Secured by Ground Lease but Not Fee Interest. With
respect to each Mortgage Loan that is secured in whole or in part by the
interest of the borrower as lessee under a ground lease of all or a portion of
the Mortgaged Property, but the related fee interest in the portion of the
Mortgaged Property covered by such ground lease is not subject or subordinate
to the lien of the Mortgage, the Mortgage Loan Seller hereby represents and
warrants that:
(a) as of the date of the closing of the Mortgage Loan, the ground lease
is in full force and effect, and the ground lease or a memorandum of the
ground lease has been duly recorded in the applicable real estate records and
(1) the ground lease (or the related estoppel letter or lender protection
agreement between the Mortgage Loan Seller and the lessor) does not prohibit
the interest of the lessee from being encumbered by the Mortgage and does not
restrict the use of the Mortgaged Property of the lessee in a manner that
would interfere with the borrower's ability to make required
S-53
<PAGE>
principal and interest payments or to make use of the Mortgaged Property for
the intended purposes, or a separate written agreement permitting the
encumbrance has been obtained, and (2) there have been no material changes in
the terms of the ground lease that would be binding on the mortgagee as
successor to the lessee except as set forth in written instruments which are
part of the Mortgage File;
(b) based on the related policy of title insurance, the lessee's
leasehold interest in the portion of the Mortgaged Property covered by the
ground lease is not subject to any liens or encumbrances securing indebtedness
which are superior to, or of equal priority with, the Mortgage, except for
liens of current real estate taxes and special assessments not yet delinquent
or accruing interest or penalties;
(c) the lessee's interest in the ground lease may be transferred to the
Transferor and its successors and assigns or the Depositor and its successors
and assigns through a foreclosure of the Mortgage or conveyance in lieu of
foreclosure and, thereafter, may be transferred to another person by the
related mortgagee and its successors and assigns, upon notice to, but without
the consent of, the lessor (or, if any such consent is required, either (1) it
has been obtained prior to the Closing Date, or (2) it may not be unreasonably
withheld) provided that the ground lease has not been terminated and all
amounts owed thereunder have been paid;
(d) the lessor is required to give notice of any default under the ground
lease by the lessee to the mortgagee either under the terms of the ground
lease or under the terms of a separate estoppel letter or written agreement;
(e) the related mortgagee is entitled, under the terms of the ground
lease or a separate estoppel letter or written agreement, to receive notice of
any default by the lessee under the ground lease, and after any such notice,
is entitled to not less than the time provided to the lessee under the ground
lease to cure such default, which is curable during such period before the
lessor may terminate the ground lease; all rights of the lessee under the
ground lease may be exercised by or on behalf of the mortgagee;
(f) the currently effective term of the ground lease (excluding any
extension or renewal which is not binding on the lessor thereunder) extends
not less than 10 years beyond the maturity date of the Mortgage Loan;
(g) the ground lease does not impose any restrictions on subletting which
the Mortgage Loan Seller considered to be commercially unreasonable at the
time of its origination or purchase of the Mortgage Loan or that a prudent
commercial mortgage lender would have considered unreasonable at such date;
(h) to the Mortgage Loan Seller's knowledge as of the Closing Date, (1)
no event of default has occurred under the ground lease and (2) no event has
occurred which, with the passage of time, the giving of notice or both (other
than rental or other payments being due, but not yet delinquent), would result
in a default or an event of default under the terms of the ground lease;
(i) the lessor has agreed in a writing included in the Mortgage File that
the ground lease may not be amended, modified, canceled or terminated without
the prior written consent of the Mortgage Loan Seller or the mortgagee and
that any such action without such consent is not binding upon the mortgagee,
its successors and assigns. Unless the mortgagee fails to cure a default of
the lessee under the ground lease following notice thereof from the lessor as
set forth in (e) above, the lessor is required to enter into a new ground
lease upon termination of the ground lease for any reason (including, without
limitation, rejection of the ground lease in a bankruptcy proceeding);
(j) under the terms of the ground lease and the Mortgage, taken together,
any related insurance proceeds or condemnation award (other than in respect of
a total or substantially total loss or taking) will be applied either to (1)
the repair or restoration of all or part of the Mortgaged Property covered by
the ground lease, with the mortgagee or a trustee appointed by it having the
right to hold and disburse such proceeds as such repair or restoration
progresses (except where the Mortgage Loan provides that the related borrower
or its agent may hold and disburse such proceeds with respect to any loss or
taking less than a stipulated amount not greater than $50,000), or (2) the
payment of the outstanding principal balance of and accrued interest on the
Mortgage Loan; and
(k) there are no existing mortgages on the fee interest which can be
foreclosed upon that are not subject to the ground lease, and the provisions
of the ground lease and/or other documents related thereto and included as
part of the Mortgage File preclude the creation of any future mortgage on the
fee interest that can be foreclosed upon not subject to the ground lease.
(30) Deed of Trust. With respect to any Mortgage that is a deed of trust
or trust deed, a trustee, duly qualified under applicable law to serve as such,
has either been properly designated and currently so serves or may be
substituted in
S-54
<PAGE>
accordance with applicable law. Except in connection with (A) a trustee's sale
after default by the borrower or (B) the release of the Mortgaged Property
following the payment of the Mortgage Loan in full, no fees or expenses are
payable by the Mortgage Loan Seller, the Transferor or the Depositor to the
trustee.
(31) Cross-Security. The Mortgaged Property is not collateral or security
for the payment or performance of (A) any other obligations owed to the
originator of the Mortgage Loan or the Mortgage Loan Seller other than another
Mortgage Loan being sold, transferred and assigned by the Mortgage Loan Seller
under the Underlying Mortgage Loan Purchase Agreement or the Mortgage Loan
Purchase and Sale Agreement II, or (B) to the Mortgage Loan Seller's knowledge,
any other obligations owed to any person other than the Mortgage Loan Seller.
The related promissory note is not secured by any property other than a
Mortgaged Property.
(32) Assignment of Leases, Rents and Profits. Unless the Mortgaged
Property is occupied by the borrower, the Mortgage Loan Documents contain the
provisions of an assignment of leases, rents and profits or include a separate
assignment of leases, rents and profits or assignment of assignment of leases,
rents and profits. Any assignment of leases, rents and profits incorporated
within the Mortgage or set forth in a separate Mortgage Loan Document creates
on recordation (with the same priority as the related Mortgage) a valid
assignment of, or security interest in, the right to receive all payments due
under the related leases, if any.
(33) REMIC. (A) The Mortgage Loan is principally secured by an interest in
real property and either (1) the fair market value of that real property was at
least equal to 80% of the adjusted issue price of the Mortgage Loan on the date
of origination of the Mortgage Loan or, if that Mortgage Loan has been
"significantly modified" within the meaning of Section 1001 of the Code, on the
date of such modification (unless the modification may be disregarded under
Treas. Reg. Sec. 1.860G-2(b)(3)), or (2) substantially all of the proceeds of
the Mortgage Loan were used to acquire or improve or protect an interest in
real property that, at the origination of the Mortgage Loan, was the only
security for the Mortgage Loan; (B) the Mortgage Loan contains no equity
participation by the Mortgage Loan Seller, and neither the promissory note nor
the Mortgage provides for any contingent or additional interest in the form of
participation in the cash flow or proceeds realized on disposition of the
Mortgaged Property; and (C) the Mortgage Loan is a "qualified mortgage" as
defined in, and for purposes of, Section 860G(3)(A) of the Code and provides
for the payments of interest at a fixed rate or at a rate described in Treas.
Reg. Sec. 1.860G-1(a)(3).
(34) Environmental Site Assessments. Environmental Site Assessments,
transaction screen assessments, studies or updates prepared or obtained in
connection with the origination of the Mortgage Loan identified no material
adverse environmental conditions or circumstances anticipated to require any
material expenditure with respect to any Mortgaged Property, except for: (A)
those cases where the conditions or circumstances were investigated further and
based upon such additional investigation, a qualified environmental consultant
recommended no further investigation or remediation; (B) those cases in which
an operations and maintenance plan was recommended by the environmental
consultant and the plan was obtained or an escrow reserve established to cover
the estimated costs of obtaining the plan; (C) those cases in which soil or
groundwater contamination was suspected or identified and either (1) that
condition or circumstance was remediated or abated prior to the origination
date of the Mortgage Loan, (2) a "no further action" letter was obtained from
the applicable regulatory authority, or (3) either an environmental insurance
policy was obtained, a letter of credit provided, an escrow reserve account
established, or an indemnity from the responsible party was obtained, to cover
the estimated costs of any required investigation, testing, monitoring or
remediation; or (D) those cases in which (1) a leaking underground storage tank
or groundwater contamination was identified to be located on or to have
originated from an offsite property, (2) a responsible party has been
identified under applicable law, and (3) either that condition is not known to
have affected the Mortgaged Property or the responsible party has either
received a "no further action" letter from the applicable regulatory agency,
established a remediation fund, or provided a guaranty or indemnity to the
borrower.
(35) Notice of Environmental Problem. Other than with respect to any
conditions identified in the ESAs, transaction screen assessments, studies or
updates referred to in clause (34) above, the Mortgage Loan Seller: (A) has not
received actual notice from any federal, state or other governmental authority
of (1) any failure of the Mortgaged Property to comply with any applicable
environmental laws, or (2) any known or threatened release of hazardous
materials on or from the Mortgaged Property in violation of any applicable
environmental laws; (B) has not received actual notice from the borrower that
(1) the borrower has received any such notice from any relevant governmental
authority, (2) the Mortgaged Property fails to comply with any applicable
environmental laws, or (3) the borrower has received actual notice that there
is any known or threatened release of hazardous materials on or from the
Mortgaged Property in violation of any applicable environmental laws; or (C)
S-55
<PAGE>
has no actual knowledge that (1) the Mortgaged Property fails to materially
comply with any applicable environmental laws or (2) there has been any known
or threatened release of hazardous materials on or from the Mortgaged Property
where the release falls outside the exceptions stated in clause (34) above.
(36) Recourse. The Mortgage Loan Documents contain standard provisions
providing for recourse against the borrower or a principal of the borrower for
damages sustained in connection with the borrower's fraud, material
misrepresentation or misappropriation of any tenant security deposits, rent,
insurance proceeds or condemnation proceeds. The Mortgage Loan Documents
contain provisions in which the borrower or a principal of the borrower has
agreed to indemnify the mortgagee for damages resulting from violations of any
applicable environmental laws.
(37) Environmental Compliance. Each Mortgage Loan contains either a
representation, warranty or covenant that the borrower will not use, cause or
permit to exist on the Mortgaged Property any hazardous materials in violation
of any applicable environmental laws or an indemnity with respect to any
violation in favor of the Mortgage Loan Seller.
(38) Inspection. The Mortgage Loan Seller or originator has inspected the
Mortgaged Property or caused the Mortgaged Property to be inspected within the
12 months preceding the Closing Date.
(39) Subordinate Debt. Except as has been disclosed in the exceptions
hereto, the Mortgage contains a provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
borrower encumbers the Mortgaged Property without the prior written consent of
the mortgagee thereunder.
(40) Common Ownership. To the Mortgage Loan Seller's knowledge, no two
properties securing Mortgage Loans are directly or indirectly under common
ownership except to the extent that such common ownership and the ownership
structure have been specifically disclosed in Annex A and Annex C to this
prospectus supplement.
(41) Operating or Financial Statement. The Mortgage Loan Documents require
the borrower to furnish to the mortgagee at least annually an operating
statement with respect to the Mortgaged Property or, in the case of a
borrower-occupied Mortgaged Property, a financial statement with respect to the
borrower.
(42) Litigation. To the best of the Mortgage Loan Seller's knowledge as of
the date of origination or purchase of the Mortgage Loan, and to the Mortgage
Loan Seller's knowledge thereafter, there is no pending action, suit,
proceeding, arbitration or governmental investigation with respect to the
borrower or Mortgaged Property which if determined adversely to the borrower
would have a material adverse effect on the value of the Mortgaged Property or
the borrower's ability to continue to perform its obligations under the
Mortgage Loan.
(43) Assisted Living Loans and Nursing Home Loans. If the Mortgage Loan is
secured in whole or in part by a Mortgage on a Mortgaged Property operated as a
facility, based upon due diligence performed in the origination of the Mortgage
Loan, and to its knowledge as of the date of the related Underlying Mortgage
Loan Purchase Agreement and Mortgage Loan Purchase and Sale Agreement II:
1. All governmental licenses, permits, regulatory agreements or other
approvals or agreements necessary or desirable for the use and operation of
the facility as intended, including, without limitation, a valid certificate
of need or similar certificate, license, or approval issued by the
applicable department of health for the requisite number of beds, and
approved provider status in any approved provider payment program, were, as
of the related date of origination, held by the borrower or the operator of
the facility and were in full force and effect; and
2. In connection with the most recent governmental inspection of the
facility (a) the facility had not received a "Level A" (or equivalent)
violation that has not been cured to the satisfaction of the applicable
governmental agency, (b) no statement of charges or deficiencies had been
made or penalty enforcement action has been undertaken against the facility,
its operator or the borrower or against any officer, director or stockholder
of the operator or the borrower by the governmental agency, (c) there were
no violations that threatened the facility's, the operator's or the
borrower's certification for participation in Medicare or Medicaid or any
other third-party payor program, (d) to the Mortgage Loan Seller's
knowledge, the borrower and facility comply with all federal, state and
local laws, regulations, quality and safety standards, accreditation
standards and requirements of the applicable state department of health and
(e) there was no threatened or pending revocation, suspension, termination,
probation, restriction, limitation, or nonrenewal affecting the borrower,
the operator or the facility or any participation or provider agreement with
any third-party payor to which the borrower or the operator is subject.
(44) ARD Loans. With respect to each Mortgage Loan that is an ARD Loan, it
commenced amortizing on its initial scheduled Due Date (or, in the case of
certain interest-only Mortgage Loans, as otherwise set forth in the related
promissory
S-56
<PAGE>
notes) and provides that: (A) the margin used in calculating its Mortgage Rate
is no more than five percent (5%) in connection with the passage of its
Anticipated Repayment Date; (B) its Anticipated Repayment Date is of the term
specified in Annex A following the origination of the Mortgage Loan; (C) no
later than the related Anticipated Repayment Date, if it has not previously
done so, the borrower is required to enter into a "lockbox agreement" whereby
all revenue from the Mortgaged Property shall be deposited directly into a
designated account controlled by the Master Servicer; and (D) any cash flow
from the Mortgaged Property that is applied to amortize the Mortgage Loan
following its Anticipated Repayment Date shall, to the extent the net cash flow
is in excess of the Monthly Payment payable therefrom, be net of budgeted and
discretionary (Master Servicer approved) capital expenditures.
(45) Due-on-Sale. The Mortgage contains a "due-on-sale" clause that
provides for the acceleration of the payment of the unpaid principal balance of
such Mortgage Loan if, without the prior written consent of the mortgagee, the
Mortgaged Property subject to the Mortgage is directly or indirectly
transferred or sold; provided that certain of the Mortgages permit (A) changes
in ownership between existing partners and members, (B) transfers to family
members (or trusts for the benefit of family members), affiliated companies and
certain specified individuals and entities, (C) issuance by the borrower of new
partnership or membership interests, (D) certain other changes in ownership for
estate planning purposes, or (E) certain other transfers similar in nature to
the foregoing.
(46) Loan Origination; Loan Underwriting. Each Mortgage Loan was
originated by the Mortgage Loan Seller, an affiliate of the Mortgage Loan
Seller or an originator approved by the Mortgage Loan Seller, or was purchased
by the Mortgage Loan Seller, and each Mortgage Loan substantially complied with
all of the terms, conditions and requirements of the Mortgage Loan Seller's
underwriting standards in effect at the time of its origination or purchase of
such Mortgage Loan, subject to such exceptions as the Mortgage Loan Seller
approved.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Prudential Securities Secured Financing Corporation, formerly known as P-B
Secured Financing Corporation (the "Depositor"), was incorporated in the State
of Delaware on August 26, 1988, as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Depositor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10292. Its telephone number is (212) 778-1818, Attention: Peter
Riemenschneider. The Depositor does not have, nor is it expected in the future
to have, any significant assets.
PRUDENTIAL SECURITIES CREDIT CORP.
Prudential Securities Credit Corp. (the "Transferor"), was incorporated in
the State of Delaware on May 13, 1988, as a wholly-owned, limited purpose
finance subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Transferor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10292, Attention: Clay Lebhar. Its telephone number is (212)
778-1818.
MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans on or before the Closing
Date from the Transferor and Greenwich pursuant to Mortgage Loan Purchase and
Sale Agreement I and Mortgage Loan Purchase and Sale Agreement II,
respectively. The Transferor will have purchased Mortgage Loans from National
Realty Finance L.C. ("NRFinance") and Bridger Commercial Realty Funding LLC
("Bridger Finance"), as Mortgage Loan Sellers pursuant the Underlying Mortgage
Loan Purchase Agreements.
NRFinance is a limited liability company organized under the laws of the
State of Missouri in 1997. It is a wholly-owned, limited purpose finance
subsidiary of National Realty Funding L.C. ("NRF"), which also is a Missouri
limited liability company organized in 1997. NRF is a real estate financial
services company which originates commercial and multifamily real estate loans,
provides loan servicing for large pools of commercial and multifamily real
estate loans, and offers asset management for other commercial and multifamily
real estate assets. NRF has offices in Chicago, Illinois, Jersey City, New
Jersey, Kansas City, Missouri and Burlingame, California. NRFinance was
organized for the purpose of acquiring loans originated by NRF and holding them
pending securitization or other disposition. The principal offices of both NRF
and NRFinance are located at 911 Main Street, Suite 1400, Kansas City, Missouri
64105.
40 of the Mortgage Loans, representing approximately 9.84% of the Cut-off
Date Balance, sold by NRFinance to the Transferor were originated by KeyBank
National Association. In the related Underlying Mortgage Loan Purchase
S-57
<PAGE>
Agreement, NRFinance has represented and warranted that such Mortgage Loans
were originated pursuant to underwriting guidelines and procedures
substantially similar to those utilized by NRF and NRFinance in their
origination of mortgage loans.
Greenwich Capital Financial Products, Inc. ("Greenwich"), a Delaware
corporation and an indirect wholly-owned subsidiary of National Westminister
Bank Plc., is engaged principally in the origination, purchase, sale and
financing of residential and commercial mortgage loans, consumer receivables
and other financial assets. Greenwich also provides advisory services to
originators and servicers of such assets. The majority of the assets originated
or purchased by Greenwich are securitized and sold as mortgage-backed or
asset-backed securities through its affiliates. Greenwich's principal office is
located at 600 Steamboat Road, Greenwich, Connecticut 06830.
40 of the Mortgage Loans, representing approximately 17.17% of the Cut-off
Date Balance, sold by Greenwich to the Depositor were purchased in December
1998 and January 1999 from ContiSecurities Asset Funding Corp. III by
Greenwich, and were fully re-underwritten substantially in accordance with the
underwriting guidelines and process set forth below.
Bridger Finance is a limited liability company organized under the laws of
the State of Missouri in 1998. It is a wholly-owned, limited purpose finance
subsidiary of Bridger Commercial Funding LLC ("Bridger Funding") which is also
a limited liability company organized under the laws of the State of Missouri
in 1998. Bridger Funding is a real estate financial services company which
originates and acquires commercial and multifamily real estate loans and
provides loan servicing. Bridger Funding has offices in Mill Valley, California
(near San Francisco), Chicago, Illinois, Bozeman, Montana and Augusta, Georgia.
Bridger Finance was organized for the purpose of acquiring loans originated or
purchased by Bridger Funding and holding them pending securitization or other
disposition. The principal offices of both Bridger Funding and Bridger Finance
are located at 100 Shoreline Highway, Suite 295, Mill Valley, California 94941.
UNDERWRITING GUIDELINES AND PROCESS FOR MORTGAGE LOAN SELLERS
Overview. The Mortgage Loan Sellers generally underwrite commercial real
estate loans with principal amounts that range from $250,000 to $50.0 million.
Loans underwritten by the Mortgage Loan Sellers are secured by mortgages on
commercial and multifamily real estate assets located throughout the United
States.
Mortgage Loan Underwriting Guide. Each Mortgage Loan Seller maintains a
Mortgage Loan Underwriting Guide (the "Guide") which sets forth its policies
and procedures for originating commercial real estate loans. While many aspects
of commercial real estate lending are subjective, and the Guide expressly
provides for many exceptions, the Guide establishes baseline standards and a
generally uniform approach to originating commercial real estate loans.
Initial Steps for Loan Origination. Each Mortgage Loan Seller's first step
in evaluating a prospective mortgage loan involves reviewing the property's
operating statements, rent roll (which indicates current lease terms), copies
of all leases, copies of actual real estate tax bills as well as property and
casualty bills, financial statements of such prospective borrower and/or its
principals and copies of utility bills. Each Mortgage Loan Seller reviews and
evaluates information provided by the borrower, certified by the borrower as
correct, regarding any current or past loan defaults, bankruptcies or lawsuits,
and obtains applicable credit reports.
Market Analysis. Prior to property inspection, lease and sale comparables
are usually gathered from reliable sources such as appraisers, leasing agents
and real estate brokers that are active in the marketplace. Each Mortgage Loan
Seller collects and evaluates data regarding the local market economics
including overall market occupancy, rental rates and prices for similar
properties, submarket and neighborhood specific data.
Financial Analysis. Each Mortgage Loan Seller analyzes the financial
condition of a prospective borrower and its principals and conducts credit and
background inquiries to determine their credit history and uncover any
potential legal or ethical issues affecting or otherwise involving the
prospective borrower or its principals. Each Mortgage Loan Seller also contacts
the respective credit references provided by the borrower.
Property Analysis. Each Mortgage Loan Seller conducts an analysis of the
real estate collateral for each originated or purchased loan to try to
reasonably determine the property's stabilized cash flows and thereby calculate
the mortgage loan's debt service coverage ratio ("DSCR"). Each Mortgage Loan
Seller determines the loan-to-value ratio ("LTV") of the mortgage loan as of
the date of origination based on the value set forth in the related appraisal
conducted as described below under "--Appraisals."
S-58
<PAGE>
Each Mortgage Loan Seller's mortgage officers analyze property data
including, in most instances, building size, age, land area, number of units,
amenities, tenants, lease expiration, rental rates, creditworthiness of major
tenants, rollover exposure and expense reimbursements. Several years of
historical financial performance of the property are evaluated if such
information is available. Mortgage officers also evaluate any reasonably
identifiable irregular or non-recurring costs such as tenant improvements and
leasing commissions to measure the potential impact of such expenses on a
borrower's ability to service its debt.
The following table highlights the Mortgage Loan Sellers' underwriting
guidelines, subject to certain exceptions, for minimum DSCR and maximum LTV
ratios for various property types. These guidelines are as follows:
<TABLE>
<CAPTION>
PROPERTY TYPE MINIMUM DSCR(X) MAXIMUM LTV
- ----------------------------------- ----------------- ------------
<S> <C> <C>
Multifamily ....................... 1.20 80%
Mobile Home Park .................. 1.20 80%
Assisted Living Facility .......... 1.30 75%
Retail--Anchored .................. 1.25 80%
Retail--Unanchored ................ 1.25 75%
Industrial ........................ 1.25 75%
Office ............................ 1.25 75%
Congregate Care ................... 1.35 75%
Nursing Homes ..................... 1.40 75%
Self Storage ...................... 1.30 75%
Hospitality ....................... 1.40 75%
</TABLE>
In addition to guidelines for DSCR and LTV, there are guidelines relating
to the amortization of the loan with specific requirements based on property
type and property age.
Site Inspection. A mortgage officer or a representative of a Mortgage Loan
Seller inspects the property securing a loan and often meets with the
prospective borrower and its principals. The mortgage officer or a
representative of a Mortgage Loan Seller tours the subject property, inspects
tenant spaces, evaluates the property's condition, and observes the surrounding
area and marketplace. By conducting an inspection of the competing properties
and confirming the accuracy of the property related data, the Mortgage Loan
Seller intends to evaluate the property relative to competing properties. This
comparison analysis is an integral component in projecting the ongoing physical
and financial viability of the property.
Loan Summary. The mortgage officer develops a presentation concerning the
merits and the weaknesses of the loan, including a consideration of any
corresponding mitigating factors. This loan presentation generally involves the
following:
(1) overview of the loan request with requirements and exceptions;
(2) strengths, risks and mitigating factors relating to the collateral;
(3) description of the market and neighborhood;
(4) photographs, description and comparative analysis of for lease and for
sale comparables;
(5) description of any major tenants in the property with pertinent
financial data;
(6) description of the borrowing entity, the principals and their
financial condition;
(7) photographs of the property which often includes an aerial photograph;
(8) comparison of stabilized economics with historicals and an explanation
of the stabilized numbers; and
(9) summaries of the third-party reports described below, if they are
available.
The mortgage officer distributes the mortgage loan presentation to the
Mortgage Loan Seller's credit officer or committee. Prior to the issuance of
any binding commitment, the Mortgage Loan Seller's credit officer or committee
must approve and agree upon all substantive terms of the proposed loan.
Generally, each Mortgage Loan Seller approves and issues loan commitments
after receipt and review of third-party reports or, if such reports are not
available at such time, subject to receipt and review. These reports consist of
an appraisal, a property condition report (and a seismic study where
appropriate) and a Phase I environmental report.
S-59
<PAGE>
Appraisals. Appraisers must be state certified and each Mortgage Loan
Seller's appraisals are generally prepared by Members of the Appraisal
Institute. Appraisals must be prepared in conformity with the requirements of
the Code of Professional Ethics, the Standards of Professional Appraisal
Practice as adopted by the Appraisal Standards Board of the Appraisal
Foundation and accepted and incorporated into FIRREA. A mortgage officer
reviews the final loan appraisal.
Property Condition Reports. Each Mortgage Loan Seller orders property
condition reports from third-party agents. The engineer examines the entire
property and provides a report of property characteristics. The report outlines
immediate repairs necessary to remedy any deferred maintenance as well as a
schedule of anticipated capital repair expenditures over the life of the loan.
If any required repairs are not completed prior to loan closing, the Mortgage
Loan Seller establishes an escrow account and generally requires a deposit of
125% of the estimated cost to be held until the repairs are completed.
Environmental Reports. A qualified and licensed environmental engineer
prepares all Phase I environmental site assessments on behalf of each Mortgage
Loan Seller. All firms that prepare site assessments must meet requirements as
to experience, knowledge of local or regional issues and insurance policy
issues. For Mortgage Loans with an original principal balance of less than
$1,000,000 (or $1,500,000 in the case of Bridger Finance and Greenwich) an
environmental transaction screen assessment may be performed in lieu of a Phase
I environmental assessment.
Should the Phase I report conclude that additional investigation ("Phase
II") is necessary, a review of the test results is conducted in consultation
with the Mortgage Loan Seller's chief underwriter to determine the extent of
any environmental risk. No mortgage loan is approved if the Mortgage Loan
Seller believes that a substantial unmitigated environmental hazard exists.
S-60
<PAGE>
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 20 classes, to be designated as the Class A-1,
Class A-2, Class A-EC1, Class A-EC2, Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class O,
Class R-I, Class R-II and Class R-III Certificates. Only the Class A-1, Class
A-2, Class B, Class C, Class D, Class E and Class F Certificates are offered
hereby. The initial Certificate Balance of each class of Offered Certificates
is expected to be the balance set forth on the cover of this prospectus
supplement, subject to a permitted variance of plus or minus 5%, depending on
the aggregate principal balance of the Mortgage Loans actually transferred to
the trust fund.
The Pooling and Servicing Agreement will be included as part of the Form
8-K to be filed with the Commission within 15 days after the Closing Date. See
"The Pooling and Servicing Agreement" herein and "Description of the
Certificates" and "Servicing of the Mortgage Loans" in the prospectus for
important additional information regarding the terms of the Pooling and
Servicing Agreement and the Certificates.
The Certificates represent in the aggregate the entire beneficial
ownership interest in a trust fund consisting primarily of:
(1) the Mortgage Loans, all scheduled payments of interest and principal due
after the Cut-off Date and all payments under and proceeds of the Mortgage
Loans received after the Cut-off Date (exclusive of payments of principal and
interest due on or before the Cut-off Date);
(2) any REO Property;
(3) such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Account, the Interest Reserve Account and
any account established in connection with REO Properties (an "REO Account");
(4) the rights of the mortgagee under all insurance policies with respect to
the Mortgage Loans;
(5) the Depositor's rights and remedies under the Mortgage Loan Purchase
Agreements, including rights with respect to enforcement of repurchase
obligations of the Mortgage Loan Sellers in connection with any breaches of
representations and warranties concerning the Mortgage Loans; and
(6) all of the mortgagee's right, title and interest in the Reserve
Accounts.
The Certificate Balance ("Certificate Balance") of any class of
Certificates outstanding at any time represents the maximum amount that the
holders thereof are entitled to receive as distributions allocable to principal
from the cash flow on the Mortgage Loans and the other assets in the trust
fund. The respective Certificate Balance of each class of Certificates will in
each case be reduced by amounts actually distributed on such class that are
allocable to principal and by any Realized Losses allocated to such class. The
Class A-EC1 and Class A-EC2 Certificates are interest only Certificates, have
no Certificate Balances and are not entitled to distributions in respect of
principal.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Regular Certificates will
be made on the 15th day of each month or, if such day is not a Business Day,
then on the next succeeding Business Day, commencing on August 17, 1999,
provided that no distribution date shall be fewer than four Business Days after
the related Determination Date (each, a "Distribution Date"). All distributions
(other than the final distribution on any Certificate) will be made by the
Trustee to the persons in whose names the Certificates are registered at the
close of business on the last Business Day of the month preceding the month in
which such Distribution Date occurs (the "Record Date"). Such distributions
will be made (1) by wire transfer of immediately available funds to the account
specified by the related Certificateholder at a bank or other entity having
appropriate facilities for such transfer, if such Certificateholder (a) is DTC
or its nominee or (b) provides the Trustee with wiring instructions no less
than five Business Days prior to the related Record Date and is the registered
owner of Certificates with an aggregate Certificate Balance or Notional Balance
of at least $50,000, or otherwise (2) by check mailed to such
Certificateholder. The final distribution on any Certificate will be made in
like manner, but only upon presentation or surrender of such Certificate at the
location specified in the notice to the holder thereof of such final
distribution. The "Class A-EC1 Notional Balance" as of any date is equal to the
sum of the Certificate Balances of the Class A-1, Class A-2, Class
S-61
<PAGE>
B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N and Class O Certificates. The "Class A-EC2 Notional
Balance" as of any date is equal to the sum of the Certificate Balances of the
Class G, Class H, Class J, Class K, Class L, Class M, Class N and Class O
Certificates.
The aggregate distribution to be made in respect of the Regular
Certificates on any Distribution Date will be made from the Available Funds.
The "Available Funds" for a Distribution Date will be the sum of all previously
undistributed Monthly Payments or other receipts on account of principal of and
interest on or in respect of the Mortgage Loans (including Unscheduled Payments
and Net REO Proceeds, if any) received by the Master Servicer during the
related Collection Period, all P&I Advances made in respect of such
Distribution Date, and all other amounts required to be placed in the
Collection Account by the Master Servicer. "Available Funds" distributable to
Certificateholders does not include the following:
(1) the Trustee Fee payable for the related Collection Period (which amount
will be paid to the Trustee prior to any other allocations or distributions on
each Distribution Date);
(2) amounts used to reimburse the Master Servicer or the Trustee, as
applicable, for previously unreimbursed Advances and interest thereon;
(3) the Servicing Fee, Special Servicing Fee, Disposition Fee, Workout Fee
and other compensation due to the Master Servicer and/or Special Servicer with
respect to each Mortgage Loan;
(4) all amounts representing late fees, late payment charges and similar
fees, "insufficient funds" check charges, loan modification fees, extension
fees, loan service transaction fees, demand fees, beneficiary statement
charges, assumption fees and similar fees, which the Master Servicer or the
Special Servicer, as applicable, is entitled to retain as additional servicing
compensation;
(5) all amounts representing scheduled Monthly Payments due after the Due
Date in the related Collection Period (such amounts to be treated as received
on the Due Date when due);
(6) other amounts payable to the Master Servicer or the Special Servicer in
respect of unpaid servicing compensation from:
(a) amounts received in connection with the sale or liquidation of
Specially Serviced Mortgage Loans, by foreclosure, trustee's sale or
otherwise from the proceeds thereof;
(b) amounts (other than Insurance Proceeds) received in connection with
the taking of a Mortgaged Property by exercise of the power of eminent
domain or condemnation ("Condemnation Proceeds," and together with amounts
referred to in clause (a), "Liquidation Proceeds"); or
(c) proceeds of insurance policies to the extent not applied to the
restoration of the Mortgaged Property or released to the borrower in
accordance with the normal servicing procedures of the Master Servicer or
the related sub-servicer and the terms and conditions of the related
Mortgage and promissory note ("Insurance Proceeds");
(7) all amounts representing reimbursable expenses of the Master Servicer,
the Special Servicer or the Trustee and amounts permitted to be retained by
the Master Servicer or the Special Servicer or withdrawn by the Master
Servicer from the Collection Account to cover such expenses;
(8) Prepayment Premiums, Yield Maintenance Charges and Excess Interest
received in the related Collection Period, which are to be distributed
separately as described herein;
(9) interest or investment income with respect to funds on deposit in the
Collection Account or Reserve Accounts; and
(10) Default Interest received in the related Collection Period, which is to
be distributed separately as described herein.
The "Class Interest Distribution Amount" with respect to any Distribution
Date and each class of Certificates is the amount of interest accrued on the
Certificate Balance or Notional Balance of such class during the related
Interest Accrual Period at the applicable Pass-Through Rate.
Allocations of Realized Losses on the Distribution Date occurring during
any Interest Accrual Period will be deemed to have been made as of the first
day of such Interest Accrual Period for purposes of determining any Class
Interest
S-62
<PAGE>
Distribution Amount. Notwithstanding the foregoing, the Class Interest
Distribution Amount for each class of Certificates otherwise calculated as
described above will be reduced by such class' pro rata share of any Prepayment
Interest Shortfall not offset by any Prepayment Interest Surplus or the
servicing fees (determined pro rata according to each Class Interest
Distribution Amount without regard to this sentence).
Priorities. As used below in describing the priorities of distribution of
Available Funds for each Distribution Date, the terms set forth below will have
the following meanings.
The "Class Interest Shortfall" for any class of Certificates on any
Distribution Date means the excess, if any, of the amount of interest required
to be distributed to the holders of such class of Certificates on such
Distribution Date over the amount of interest actually distributed to such
holders. No interest will accrue on unpaid Class Interest Shortfalls.
The "Collection Period," with respect to a Distribution Date, is the
period beginning on the day following the Determination Date in the month
preceding the month in which such Distribution Date occurs (or, in the case of
the Distribution Date occurring in August 1999, on the day after the Cut-off
Date) and ending on the Determination Date in the month in which such
Distribution Date occurs.
The "Default Rate," with respect to any Mortgage Loan, is the annual rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month preceding the month in which such Distribution Date occurs.
Interest for each Interest Accrual Period is calculated based on a 360-day year
consisting of twelve 30-day months.
The "Monthly Payment" with respect to any Mortgage Loan for any
Distribution Date (other than any REO Mortgage Loan) is the scheduled monthly
payment of principal and interest, excluding any Balloon Payment, that is
payable by the related borrower on the related Due Date. The Monthly Payment
with respect to an REO Mortgage Loan for any Distribution Date is the monthly
payment that would otherwise have been payable on the related Due Date had the
related Mortgage Loan not been discharged (after giving effect to any extension
or other modification), determined as set forth in the Pooling and Servicing
Agreement.
The "Net Mortgage Rate" for each Mortgage Loan is the Mortgage Rate for
such Mortgage Loan in the absence of a default and exclusive of Excess
Interest, minus the related Servicing Fee Rate and the Trustee Fee Rate.
The "Mortgage Rate" for each Mortgage Loan is the annual rate at which
interest accrues on such Mortgage Loan (in the absence of a default or, with
respect to any ARD Loan, in the absence of a failure to prepay such ARD Loan on
or before its Anticipated Repayment Date), provided, however, that if any
Mortgage Loan does not accrue interest on the basis of a 360-day year
consisting of twelve 30-day months, then the Mortgage Rate of such Mortgage
Loan for any one-month period preceding a related Due Date will be the
annualized rate at which interest would have to accrue in respect of such
Mortgage Loan on the basis of a 360-day year consisting of twelve 30-day months
in order to produce the aggregate amount of interest actually accrued
(exclusive of Default Interest or Excess Interest) in respect of such Mortgage
Loan during such one-month period at the related Mortgage Rate; and provided
further that with respect to each Interest Reserve Loan, (i) the Mortgage Rate
for the one month period preceding the Due Dates in both January and February
in any year that is not a leap year and in February in any year that is a leap
year, shall be determined net of any Withheld Amounts and (ii) the Mortgage
Rate for the one month period preceding the Due Date in March of each year
shall be determined taking into account the addition of the Withheld Amounts.
The "Mortgage Rate" for purposes of calculating the Weighted Average Net
Mortgage Rate shall be the Mortgage Rate of such Mortgage Loan without taking
into account any reduction in the interest rate by a bankruptcy court pursuant
to a plan of reorganization or pursuant to any of its equitable powers or a
reduction in interest or principal due to a modification of such Mortgage Loan.
"Net REO Proceeds," with respect to any REO Property and any related
Mortgage Loan, are all revenues received by the Special Servicer with respect
to such REO Property or REO Mortgage Loan that are not Liquidation Proceeds,
net of any insurance premiums, taxes, assessments and other costs and expenses
permitted to be paid from the related REO Account pursuant to the Pooling and
Servicing Agreement.
The "Pass-Through Rate" for any class of Regular Certificates is the per
annum rate at which interest accrues on the Certificates of such class during
any Interest Accrual Period, and is set forth under "Summary" herein. The
Pass-Through Rates for the Class A-1 and Class A-2 Certificates for each
Distribution Date will be equal to the fixed rates per annum set forth under
"Summary" herein; provided, in each case, that the Pass-Through Rates will not
exceed the Weighted Average Net Mortgage Rate.
S-63
<PAGE>
The "Pooled Principal Distribution Amount" for any Distribution Date will
be equal to the sum (without duplication) of:
(1) the principal component of all scheduled Monthly Payments that become
due on the Mortgage Loans during the related Collection Period regardless of
whether received;
(2) the principal component of all Assumed Scheduled Payments, as
applicable, deemed to become due during the related Collection Period with
respect to any Balloon Loan that is delinquent in respect of its Balloon
Payment regardless of whether received;
(3) the Scheduled Principal Balance of each Mortgage Loan that was, during
the related Collection Period, repurchased from the trust fund in connection
with the breach of a representation or warranty or an early termination of the
trust fund as described under "Early Termination";
(4) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan that was liquidated during the related Collection Period;
(5) the principal component of any Balloon Payment received during the
related Collection Period;
(6) all Principal Prepayments received in the related Collection Period; and
(7) all full or partial recoveries in respect of principal, including
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds and Net REO
Proceeds.
"Prepayment Interest Shortfall" means the amount of interest a borrower is
not required to pay or does not pay because of a Principal Prepayment made
during any Collection Period relative to the amount of interest that would have
accrued on the Mortgage Loan during such Collection Period in the absence of
such Principal Prepayment. Any Prepayment Interest Shortfall with respect to a
Distribution Date will be offset first by the amount of any Prepayment Interest
Surplus and then up to an amount equal to the aggregate Servicing Fees to which
the Master Servicer would otherwise be entitled on such Distribution Date. If
the Master Servicer and the Special Servicer are the same person, any remaining
Prepayment Interest Shortfall after the application of the prior sentence will
be offset by the aggregate Special Servicing Fees, Workout Fees and Disposition
Fees to which the Special Servicer would otherwise be entitled on such
Distribution Date.
A "Prepayment Interest Surplus" with respect to any Principal Prepayment
means the amount by which (a) interest received from the related borrower in
respect of the related Mortgage Loan during such Collection Period exceeds
interest at the related Net Mortgage Rate on the Scheduled Principal Balance of
such Mortgage Loan accrued during the related Interest Accrual Period. The
Master Servicer will be entitled to retain any Prepayment Interest Surplus as
additional servicing compensation to the extent not required to offset
Prepayment Interest Shortfalls as described in the preceding paragraph.
"Prepayment Premiums" are payments received on a Mortgage Loan in
connection with a Principal Prepayment thereon, calculated as a fixed
percentage of the amount of principal to be prepaid.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan that are received in advance of the scheduled Due Date for such
payments and that are not accompanied by an amount of interest representing the
full amount of scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
"Unscheduled Payments" are all Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds payable under the Mortgage Loans, the repurchase prices
of any Mortgage Loans that are repurchased or purchased pursuant to the Pooling
and Servicing Agreement and any other payments under or with respect to the
Mortgage Loans not scheduled to be made, including Principal Prepayments, but
excluding Prepayment Premiums, Yield Maintenance Charges and Excess Interest.
The "Weighted Average Net Mortgage Rate" for any Interest Accrual Period
is a per annum rate equal to the weighted average of the Net Mortgage Rates,
weighted on the basis of the Scheduled Principal Balances thereof as of the
first day of such Interest Accrual Period.
On each Distribution Date, holders of each class of Certificates will
receive distributions, up to the amount of Available Funds available for
distribution, in the amounts and in the order of priority (the "Available Funds
Allocation") set forth below:
S-64
<PAGE>
(1) concurrently to the Class A-1, Class A-2, Class A-EC1 and Class A-EC2
Certificates, pro rata based on their Class Interest Distribution Amounts, up
to their Class Interest Distribution Amounts plus any unpaid Class Interest
Shortfalls previously allocated to such class,
(2) to the Class A-1 Certificates, in reduction of the Certificate Balance
thereof until reduced to zero, the Pooled Principal Distribution Amount for
such Distribution Date;
(3) to the Class A-1 Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(4) after the Certificate Balance of the Class A-1 Certificates has been
reduced to zero, to the Class A-2 Certificates, in reduction of the
Certificate Balance thereof until reduced to zero, the remaining Pooled
Principal Distribution Amount;
(5) to the Class A-2 Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(6) to the Class B Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(7) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class B Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(8) to the Class B Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(9) to the Class C Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(10) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class C Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(11) to the Class C Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(12) to the Class D Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(13) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class D Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(14) to the Class D Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(15) to the Class E Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(16) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class E Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(17) to the Class E Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(18) to the Class F Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(19) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class F Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
S-65
<PAGE>
(20) to the Class F Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(21) to the Class G Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(22) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class G Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(23) to the Class G Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(24) to the Class H Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(25) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class H Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(26) to the Class H Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(27) to the Class J Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(28) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class J Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(29) to the Class J Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(30) to the Class K Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(31) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class K Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(32) to the Class K Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(33) to the Class L Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(34) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class L Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(35) to the Class L Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(36) to the Class M Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(37) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class M Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(38) to the Class M Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
S-66
<PAGE>
(39) to the Class N Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(40) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class N Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(41) to the Class N Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
(42) to the Class O Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
class;
(43) after the Certificate Balances of the classes with earlier alphabetical
class designations have been reduced to zero, to the Class O Certificates, in
reduction of the Certificate Balance thereof until reduced to zero, the
remaining Pooled Principal Distribution Amount;
(44) to the Class O Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such class;
and
(45) any remaining Available Funds shall be distributed to the Class R-I
Certificates.
Additional Master Servicer or Special Servicer compensation, interest on
Advances, extraordinary expenses of the trust fund and other similar items will
create a shortfall in Available Funds, which generally will result in a Class
Interest Shortfall for the class then outstanding with the latest alphabetical
class designation.
Distributions of Principal After Senior Principal Distribution
Cross-Over-Date. Notwithstanding the foregoing, on each Distribution Date on
and after the Senior Principal Distribution Cross Over Date, and on the final
Distribution Date in connection with the termination of the trust fund, all
distributions of principal to the Class A-1 and A-2 Certificates (including for
any unreimbursed Realized Losses) will be paid to holders of such classes of
Certificates, pro rata based on their outstanding Certificate Balances
immediately prior to such Distribution Date, until the Certificate Balance of
each such class is reduced to zero.
The "Senior Principal Distribution Cross-Over-Date" will be the first
Distribution Date on which the aggregate Certificate Balance of the Class A-1
and A-2 Certificates (before any distributions are made) exceeds the sum of (a)
the aggregate Scheduled Principal Balance of all Mortgage Loans on such
Distribution Date and (b) the portion of the Available Funds that will remain
after the required distributions of interest to be made to such classes on such
Distribution Date.
Yield Maintenance Charges and Prepayment Premiums. Yield Maintenance
Charges collected during any Collection Period will be allocated as between the
Class A-EC1 and Class A-EC2 Certificates and all other eligible classes based
on the Base Interest Fraction. The product of the Base Interest Fraction and
Yield Maintenance Charges will be allocated for distribution to each class
entitled to receive principal distributions on the related Distribution Date.
The product of (a) the amount of principal distributed to each such class
(other than the Class A-EC1 and Class A-EC2 Certificates) as a percentage of
the principal distributed to all classes multiplied by (b) the Base Interest
Fraction for such class and multiplied by (c) the amount of Yield Maintenance
Charges will be distributed to such class. The remainder of such Yield
Maintenance Charges will be distributed 85% and 15% to the Class A-EC1 and
Class A-EC2 Certificates, respectively.
Twenty-five percent of the Prepayment Premiums collected during any
Collection Period will be allocated for distribution to classes entitled to
receive principal distributions on the related Distribution Date on a pro rata
basis, based on the amount of principal distributed to each such class as a
percentage of the amount of principal distributed to all classes. The remainder
of such Prepayment Premiums will be allocated 85% and 15% to the Class A-EC1
and Class A-EC2 Certificates, respectively.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan and with respect to any class of Certificates is a fraction
(a) whose numerator is the amount, if any, by which (1) the Pass-Through Rate
on such class of Certificates exceeds (2) the Yield Rate used in calculating
the Yield Maintenance Charge with respect to such principal prepayment and (b)
whose denominator is the amount, if any, by which the (1) Mortgage Rate on such
Mortgage Loan exceeds (2) the Yield Rate used in calculating the Yield
Maintenance Charge with respect to such principal prepayment; provided,
however, that under no circumstances shall the Base Interest Fraction be
greater than one. If such Yield Rate is greater than or equal to the lesser of
(a) the Mortgage Rate on such Mortgage Loan and (b) the related Pass-Through
Rate, then the Base Interest Fraction shall equal zero.
S-67
<PAGE>
Notwithstanding the foregoing, no Prepayment Premiums or Yield Maintenance
Charges will be distributed to holders of the Class G, Class H, Class J, Class
K, Class L, Class M, Class N, Class O or Residual Certificates. Instead, after
the Certificate Balances of the Class A-1, Class A-2, Class B, Class C, Class
D, Class E and Class F Certificates have been reduced to zero, 85% and 15% all
Prepayment Premiums and Yield Maintenance Charges will be distributed to
holders of the Class A-EC1 and Class A-EC2 Certificates, respectively. For a
description of Prepayment Premiums and Yield Maintenance Charges, See
"Description of the Mortgage Pool--Certain Terms and Provisions of the Mortgage
Loans--Prepayment Provisions" and Annex A herein. See also "Certain Legal
Aspects of the Mortgage Loans--Enforceability of Certain Provisions--Prepayment
Provisions" in the prospectus.
Prepayment Premiums and Yield Maintenance Charges will be distributed on
any Distribution Date only to the extent they are received in respect of the
Mortgage Loans in the related Collection Period.
Default Interest. Default Interest received with respect to a Mortgage
Loan will be distributed on such Distribution Date to the holders of the Class
O Certificates.
Realized Losses. Realized Losses on Mortgage Loans will be allocated to
the outstanding class of Certificates with the latest alphabetical class
designation (other than the Residual Certificates, Class A-EC1 and Class A-EC2
Certificates) in reverse sequential order, until the Certificate Balance
thereof is reduced to zero. However, on and after the Senior Principal
Distribution Cross-Over Date, Realized Losses will be allocated between the
Class A-1 and Class A-2 Certificates on a pro rata basis. Realized Losses
allocated to any class of Certificates other than the Residual Certificates
will reduce the Class A-EC1 Notional Balance. Realized Losses allocated to the
Class G, Class H, Class J, Class K, Class L, Class M, Class N or Class O
Certificates will reduce the Class A-EC2 Notional Balance.
As referred to herein, the "Realized Loss" with respect to any
Distribution Date will mean the amount, if any, by which (1) the aggregate
Certificate Balance after giving effect to distributions made on such
Distribution Date, exceeds (2) the aggregate Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the month in which such Distribution Date
occurs. Any amounts recovered in respect of any amounts previously written off
as Realized Losses will be distributed to the classes of Certificates in
reverse order of allocation of Realized Losses thereto.
Available Funds will be reduced by the aggregate amount of any
indemnification payments made from amounts constituting assets of the trust
fund to any person under the Pooling and Servicing Agreement. Such reduction of
amounts otherwise distributable to a class will be allocated first in respect
of interest and second in respect of principal but will not be reimbursable and
so shall not create Class Interest Shortfalls and shall not constitute Realized
Losses. See "Servicing of the Mortgage Loans--Certain Matters With Respect to
the Master Servicer, the Special Servicer, the Trustee and the Depositor" in
the prospectus.
The "Scheduled Principal Balance" of any Mortgage Loan as of any Due Date
will be the principal balance of such Mortgage Loan as of such Due Date, after
giving effect to (1) any Principal Prepayments, prepayments that do not include
prepayment premiums or other unscheduled recoveries of principal and any
Balloon Payments received during the related Collection Period and (2) any
payment in respect of principal due on or before such Due Date (excluding
Balloon Payments, but including the principal portion of any Assumed Scheduled
Payment), irrespective of any delinquency in payment by the borrower. The
Scheduled Principal Balance of any REO Mortgage Loan as of any Due Date is
equal to the principal balance thereof outstanding on the date that the related
Mortgaged Property became an REO Property minus any Net REO Proceeds allocated
to principal and minus the principal component of Monthly Payments due thereon
on or before such Due Date. With respect to any Mortgage Loan, from and after
the date on which the Master Servicer makes a determination that it has
recovered all amounts that it reasonably expects to be finally recoverable (a
"Final Recovery Determination"), the Scheduled Principal Balance thereof will
be zero.
The aggregate Appraisal Reduction will be allocated by the Trustee on each
Distribution Date for purposes of determining the Voting Rights and the amount
of P&I Advances with respect to the related Mortgage Loan to the Certificate
Balance of the Class O, Class N, Class M, Class L, Class K, Class J, Class H,
Class G, Class F, Class E, Class D, Class C and Class B Certificates, in that
order, up to the amount of their respective Certificate Balances.
SCHEDULED FINAL DISTRIBUTION DATE
The "Scheduled Final Distribution Date" with respect to any class of
Certificates is the Distribution Date on which the aggregate Certificate
Balance or aggregate Notional Balance, as the case may be, of such class of
Certificates would be reduced to zero based on the assumptions set forth below.
Such Distribution Date shall in each case be as follows:
S-68
<PAGE>
<TABLE>
<CAPTION>
SCHEDULED FINAL
CLASS DISTRIBUTION DATE
- --------------------- ------------------
<S> <C>
Class A-1 ......... June 15, 2008
Class A-2 ......... April 15, 2009
Class B ........... April 15, 2009
Class C ........... May 15, 2009
Class D ........... June 15, 2009
Class E ........... June 15, 2009
Class F ........... June 15, 2010
</TABLE>
The Scheduled Final Distribution Dates set forth above were calculated
without regard to any delays in the collection of Balloon Payments and without
regard to a reasonable liquidation time with respect to any Mortgage Loans that
may become delinquent. Accordingly, in the event of defaults on the Mortgage
Loans, the actual final Distribution Date for any class of Certificates may be
later, and could be substantially later, than the related Scheduled Final
Distribution Date.
In addition, the Scheduled Final Distribution Dates set forth above were
calculated assuming no prepayments (involuntary or voluntary), no exercise of
defeasance options, no early termination of the trust fund, no defaults, no
condemnations, no modifications, no extensions and payment in full of ARD Loans
on the related Anticipated Repayment Dates. Since the rate of payment
(including prepayments) of the Mortgage Loans can be expected to exceed the
scheduled rate of payments, and could exceed such scheduled rate by a
substantial amount, the actual final Distribution Date for any class of
Certificates may be earlier, and could be substantially earlier, than the
related Scheduled Final Distribution Date.
ADDITIONAL RIGHTS OF THE RESIDUAL CERTIFICATES
The Residual Certificates will remain outstanding for as long as the trust
fund exists. Holders of the Residual Certificates are not entitled to regular
or scheduled distributions in respect of principal, interest, Prepayment
Premiums, Yield Maintenance Charges or Excess Interest. Holders of the Residual
Certificates are not expected to receive any distributions until after the
Certificate Balances of all other classes of Certificates have been reduced to
zero, and then will receive distributions only to the extent of any Available
Funds remaining on any Distribution Date and any remaining assets of the
REMICs.
EARLY TERMINATION
The holder of the Class R-III Certificates representing greater than a 50%
Percentage Interest of the Class R-III Certificates, and, if such holder does
not exercise this option, the Master Servicer and, if the Master Servicer does
not exercise this option, the Depositor, will have the option to purchase all
of the Mortgage Loans and all property remaining in the trust fund on any
Distribution Date on which the aggregate Scheduled Principal Balance of the
Mortgage Loans remaining in the trust fund is less than 1% of the Cut-off Date
Balance. Any such purchase would effect an early termination of the trust fund
and early retirement of the then-outstanding Certificates. The purchase price
payable upon the exercise of such option on such a Distribution Date will be an
amount equal to the greater of:
(1) the sum of (a) 100% of the outstanding principal balance of each
Mortgage Loan included in the trust fund as of the last day of the month
preceding such Distribution Date (less any Advances previously made on
account of principal); (b) the fair market value of all other property
included in the trust fund as of the last day of such preceding month, as
determined by an independent appraiser no more than 30 days prior to the
last day of such month; (c) all unpaid interest accrued on such principal
balance of each such Mortgage Loan (including any REO Mortgage Loan) at the
Mortgage Rate to the last day of such month (less any Advances previously
made on account of interest); and (d) unreimbursed Advances with interest
thereon at the Advance Rate, unpaid servicing compensation and unpaid trust
fund expenses; or
(2) the aggregate fair market value of the Mortgage Loans and all other
property acquired in respect of any Mortgage Loan in the trust fund, on the
last day of the month preceding such Distribution Date, as determined by an
independent appraiser no more than 30 days prior to the last day of such
month together with one month's interest thereon at the related Mortgage
Rate, plus disposition expenses.
Additionally, the holders of 100% of the Class O Certificates or the
Special Servicer will have the option to purchase any ARD Loan that is also in
default on or after its Anticipated Repayment Date at a price equal to the
greater of (a) its
S-69
<PAGE>
outstanding Scheduled Principal Balance plus accrued and unpaid interest or (b)
its fair market value, plus in each case any unreimbursed Advances made with
respect thereto (with interest thereon). As a condition to such purchase, the
holder wishing to make such purchase will be required to deliver an opinion of
counsel to the effect that such purchase would not cause any REMIC to fail to
qualify as a REMIC under the Code and either (1) an opinion of counsel to the
effect that such purchase would not result in a gain taxable as net income from
prohibited transactions (imposed by Code Section 860F(a)(1)) or result in the
imposition of any other tax on any REMIC or (2) an accountant's certification
to the effect that such purchase would not result in the realization of any net
income to any REMIC.
DELIVERY, FORM AND DENOMINATION
Book-Entry Certificates. No Person acquiring a Certificate (a "Book-Entry
Certificate") will be entitled to receive a physical certificate, except under
the limited circumstances described below. Absent such circumstances, the
Book-Entry Certificates will be registered in the name of a nominee of DTC and
beneficial interests therein will be held by investors ("Beneficial Owners")
through the book-entry facilities of DTC, as described herein, in denominations
of $25,000 initial Certificate Balance for the Class A-1 and Class A-2
Certificates, $50,000 initial Certificate Balance for the Class B Certificates,
and $100,000 initial Certificate Balance for the remaining Offered Certificates
and, in each case, integral multiples of $1.00 in excess thereof. One
certificate of each such class may be issued that represents a different
initial Certificate Balance or Notional Balance to accommodate the remainder of
the initial Certificate Balance or Notional Balance of such class. The
Depositor has been informed by DTC that its nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of the
Book-Entry Certificates.
No Beneficial Owner of a Book-Entry Certificate will be entitled to
receive a definitive Certificate (a "Definitive Certificate") representing such
person's interest in the Book-Entry Certificates except as set forth below.
Unless and until Definitive Certificates are issued to Beneficial Owners in
respect of the Book-Entry Certificates under the limited circumstances
described herein, all references to actions taken by Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to actions
taken by DTC upon instructions from its participants, and all references herein
to distributions, notices, reports and statements to Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to
distributions, notices, reports and statements to DTC or Cede & Co., as the
case may be, for distribution to Beneficial Owners in accordance with DTC
procedures. DTC may discontinue providing its services as securities depository
with respect to the Book-Entry Certificates at any time by giving reasonable
notice to the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, certificates are required to be printed
and delivered. The Trustee, the Master Servicer, the Special Servicer and the
Certificate Registrar may for all purposes, including the making of payments
due on the Book-Entry Certificates, deal with DTC as the authorized
representative of the Beneficial Owners with respect to such Certificates.
The Depository Trust Company ("DTC") is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations ("Participants") and to
facilitate the clearance and settlement of securities transactions among
Participants through electronic computerized book-entry charges in
Participants' accounts, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies and clearing corporations and certain
other organizations. The Rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission. Indirect access to the DTC
system also is available to banks, brokers, dealers, trust companies and other
institutions that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each Beneficial Owner
is in turn to be recorded on the Direct Participants' and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Book-Entry Certificates are to be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in
the Certificates except in the event that use of the
S-70
<PAGE>
book-entry system for the Book-Entry Certificates is discontinued. Neither the
Certificate Registrar nor the Trustee will have any responsibility to monitor
or restrict the transfer of ownership interests in Book-Entry Certificates
through the book-entry facilities of DTC.
To facilitate subsequent transfers, all Book-Entry Certificates deposited
by Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Book-Entry Certificates with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Certificates are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Beneficial Owners will not be recognized as Certificateholders, as such term is
used in the Pooling and Servicing Agreement, by the Trustee or any paying agent
(each, a "Paying Agent") appointed by the Trustee. Beneficial Owners will be
permitted to exercise the rights of Certificateholders only indirectly through
DTC and its Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, will be governed
by arrangements between them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Beneficial
Owner to pledge Book-Entry Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Book-Entry Certificates, may be limited due to lack of a definitive Certificate
for such Book-Entry Certificates. In addition, under a book-entry format,
Beneficial Owners may experience delays in their receipt of payments, since
distributions will be made by the Trustee or a Paying Agent on behalf of the
Trustee to Cede & Co., as nominee for DTC.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Book-Entry Certificates. Under its usual procedures, DTC mails an Omnibus Proxy
to the Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Certificates are credited on that record date (identified
in a listing attached to the Omnibus Proxy). DTC may take conflicting actions
with respect to Percentage Interests or Voting Rights to the extent that
Participants whose holdings of Book-Entry Certificates evidence such Percentage
Interests or Voting Rights authorize divergent action.
Neither the Depositor, the Trustee, the Master Servicer, the Special
Servicer nor any Paying Agent will have any responsibility for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests of the Book-Entry Certificates registered in the name of Cede & Co.,
as nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. In the event of the insolvency
of DTC, a Participant or an Indirect Participant in whose name Book-Entry
Certificates are registered, the ability of the Beneficial Owners of such
Book-Entry Certificates to obtain timely payment may be impaired. In addition,
in such event, if the limits of applicable insurance coverage by the Securities
Investor Protection Corporation are exceeded or if such coverage is otherwise
unavailable, ultimate payment of amounts distributable with respect to such
Book-Entry Certificates may be impaired.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Depositor believes to be reliable, but
the Depositor takes no responsibility for the accuracy thereof.
Physical Certificates. Book-Entry Certificates will be converted to
Definitive Certificates and reissued to Beneficial Owners or their nominees,
rather than to DTC or its nominee, only if (1) (a) the Depositor advises the
Certificate Registrar in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to any class
of the Book-Entry Certificates and (b) the Depositor is unable to locate a
qualified successor or (2) the Depositor, at its option, advises the Trustee
and Certificate Registrar that it elects to terminate the book-entry system
through DTC with respect to any class of the Book-Entry Certificates.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Certificate Registrar will be required to notify all affected
Beneficial Owners through DTC of the availability of Definitive Certificates.
Upon surrender by DTC of the physical certificates representing the affected
Book-Entry Certificates and receipt of instructions for re-registration, the
Certificate Registrar will reissue the Book-Entry Certificates as Definitive
Certificates to the Beneficial Owners. Upon the issuance of Definitive
Certificates for purposes of representing ownership of the Certificates
originally issued as Book-Entry Certificates, the registered holders of such
Definitive Certificates will be recognized as Certificateholders under the
Pooling and Servicing Agreement and, accordingly, will be entitled directly to
receive payments on, and exercise Voting Rights with respect to, and to
transfer and exchange such Definitive Certificates.
S-71
<PAGE>
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar in accordance with the
terms of the Pooling and Servicing Agreement.
REGISTRATION AND TRANSFER
The holder of any Definitive Certificate may transfer or exchange the same
in whole or part (subject to the minimum authorized denomination) at the
corporate trust office of the certificate registrar appointed pursuant to the
Pooling and Servicing Agreement (the "Certificate Registrar") or at the office
of any transfer agent. In exchange for any Definitive Certificate properly
presented for transfer or exchange with all necessary accompanying
documentation, the Certificate Registrar will, within five Business Days of
such request if made at the corporate trust office of the Certificate
Registrar, or within ten Business Days if made at the office of another
transfer agent, execute and deliver to the transferee or holder the transferred
or exchanged Definitive Certificate or Definitive Certificates.
No fee or service charge will be imposed by the Certificate Registrar for
any registration of transfer or exchange referred to above. The Certificate
Registrar may require payment by each transferor of a sum sufficient to pay any
tax, expense or other governmental charge payable in connection with any such
transfer.
S-72
<PAGE>
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General.
The yield on any Offered Certificate will depend on (1) the price at which
such Certificate is purchased by an investor and (2) the rate, timing and
amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things:
(1) the rate and timing of principal payments (including voluntary and
involuntary prepayments) and the extent to which such amounts are to be
applied in reduction of the Certificate Balance (or Notional Balance) of the
class of Certificates to which such Certificate belongs;
(2) the rate, timing and severity of Realized Losses on the Mortgage Loans
and the extent to which such losses are allocable in reduction of the
Certificate Balance (or Notional Balance) of any class of Certificates;
(3) with respect to the Class B, Class C, Class D, Class E, Class F and
Class A-EC1 Certificates, the Weighted Average Net Mortgage Rate as in
effect from time to time; and
(4) disproportionate principal payments (whether resulting from
differences in amortization schedules, prepayments or otherwise) on Mortgage
Loans having Net Mortgage Rates that are higher or lower than the current
Weighted Average Net Mortgage Rate will affect the yield on the Class B,
Class C, Class D, Class E, Class F and Class A-EC1 Certificates.
Rate and Timing of Principal Payments. The yield to Certificateholders
purchased at a discount or premium will be affected by the rate and timing of
principal payments made in reduction of the Certificate Balance of such
Certificates. The Pooled Principal Distribution Amount for each Distribution
Date generally will be distributable in its entirety to each class of Offered
Certificates, sequentially in order of class designation, in each case until
the Certificate Balance of each such class of Certificates is reduced to zero.
Consequently, the rate and timing of principal payments made in reduction of
the Certificate Balance of the Offered Certificates will be directly related to
the rate and timing of principal payments on or in respect of the Mortgage
Loans.
Defaults on the Mortgage Loans, particularly at or near their stated
maturity dates, may result in significant delays in payments of principal on
the Mortgage Loans and, accordingly, on the Certificates, while work-outs are
negotiated, foreclosures are completed or bankruptcy proceedings are resolved.
The yield to investors in the Subordinate Certificates will be very sensitive
to the timing and magnitude of losses on the Mortgage Loans due to liquidations
following a default, and will also be very sensitive to delinquencies in
payment. In addition, the Special Servicer has the option, subject to certain
limitations, to extend the maturity of Mortgage Loans following a default in
the payment of a Balloon Payment. See "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments" and
"--Realization Upon Mortgaged Properties" herein and "Certain Legal Aspects of
the Mortgage Loans--Foreclosure" in the prospectus.
The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation, the terms of the Mortgage Loans (for example, the
provisions requiring the payment of Prepayment Premiums or Yield Maintenance
Charges, and amortization terms that require Balloon Payments or include an
Anticipated Repayment Date), prevailing interest rates, the market value of the
Mortgaged Properties, the demographics and relative economic vitality of the
areas in which the Mortgaged Properties are located, the general supply and
demand for such facilities (and their uses) in such areas, the quality of
management of Mortgaged Properties, the servicing of the Mortgage Loans,
federal and state tax laws (which are subject to change) and other
opportunities for investment.
The rate of prepayment on the Mortgage Pool is likely to be affected by
the amount of any required Yield Maintenance Charges and Prepayment Premiums
and the borrowers' ability to refinance their related Mortgage Loans. If
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level have decreased enough to offset any required Yield Maintenance
Charges and Prepayment Premium, a borrower may have an increased incentive to
refinance its Mortgage Loan. Under such circumstances a borrower may refinance
to "lock in" a fixed rate or a lower rate or to take advantage of an initial
"teaser rate" on an adjustable rate mortgage loan (that is, a mortgage interest
rate below that which would otherwise apply if the applicable index and gross
margin were applied). Also, a borrower may refinance its Mortgage Loan to "cash
out" (that is, to take advantage of an increase in the market value of the
Mortgaged Property).
S-73
<PAGE>
In addition, some borrowers may sell Mortgaged Properties in order to
realize their equity therein, to meet cash flow needs or to make other
investments. Changes in federal, state and local tax laws or deferral programs
may also impact the refinance opportunities. Also, although excess cash flow is
applied to reduce the principal of the ARD Loans after their respective
Anticipated Repayment Dates and the Mortgage Rates are reset at the Revised
Rates, there can be no assurance that any of such Mortgage Loans will be
prepaid on that date or any date prior to maturity. Under the circumstances
described under "Description of the Mortgage Pool--Certain Terms and Conditions
of the Mortgage Loans--ARD Loans; Excess Interest," the holders of 100% of the
Class O Certificates or the Special Servicer will have the option to purchase
any ARD Loan that is also in default on or after its Anticipated Repayment Date
at a price equal to the greater of (a) its outstanding Scheduled Principal
Balance, plus accrued and unpaid interest or (b) its fair market value, plus in
each case any unreimbursed Advances made with respect thereto, plus accrued and
unpaid interest on such advances. The exercise of this option may accelerate
repayment of certain Certificates, but is not expected to result in repayment
of all classes on the same Distribution Date.
If the markets for commercial and multifamily real estate should
experience an overall decline in property values such that the outstanding
balances of the Mortgage Loans exceed the value of the respective Mortgaged
Properties, a borrower under a non-recourse loan may have a decreased incentive
to fund operating cash flow deficits. As a result, actual losses may be higher
than those originally anticipated by investors.
Neither the Depositor, the Transferor, the Mortgage Loan Sellers nor the
Trustee, or any affiliate of any of them, makes any representation as to the
particular factors that will affect the rate and timing of prepayments and
defaults on particular Mortgage Loans or as to the relative importance of such
factors. None of them makes any representation as to the percentage of the
principal balance of the Mortgage Loans that will be prepaid at all or at any
time or as to whether a default will occur as of any date.
The extent to which the yield to maturity of any class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed in
reduction of the Certificate Balance of such Certificates. An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield. An investor should consider, in the case of any Certificate
purchased at a premium (or the Class A-EC1 and Class A-EC2 Certificates, which
have no Certificate Balances), the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of
principal on the Mortgage Loans is distributed in reduction of the Certificate
Balance or Notional Balance of any Offered Certificate purchased at a discount
or premium the greater will be the effect on an investor's yield to maturity.
As a result, the effect on an investor's yield of principal payments on the
Mortgage Loans occurring at a rate higher (or lower) than the rate anticipated
by the investor during any particular period would not be fully offset by a
subsequent like reduction (or increase) in the rate of such principal payments.
Balloon Payments/ARD Loan Payments. 214 of the Mortgage Loans,
representing 93.04% of the Cut-off Date Balance are Balloon Loans which will
have substantial payments (that is, Balloon Payments) due at their stated
maturities, unless previously prepaid. 17 of such Mortgage Loans are ARD Loans.
The ability of the borrowers to pay the Balloon Payments at the maturity of the
Balloon Loans or to prepay an ARD Loan in full on the related Anticipated
Repayment Dates may depend on their ability to sell or refinance the Mortgaged
Properties, which, in turn, will depend on a number of factors described above
many of which are beyond the control of such borrowers. The Certificates are
subject to the risk of failure by the borrowers to make the required Balloon
Payments or prepayments of ARD Loans on their Anticipated Repayment Dates. If
any borrower is unable to make the applicable Balloon Payment when due or to
prepay an ARD Loan on the Anticipated Repayment Date, the weighted average
lives of the Certificates are likely to be longer than expected.
Losses and Shortfalls. The yield to holders of the Regular Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Shortfalls in
Available Funds resulting from shortfalls in collections of amounts payable on
the Mortgage Loans (to the extent not advanced) or additional Master Servicer
or Special Servicer compensation, interest on Advances, extraordinary trust
fund expenses or other similar items will generally be borne as described above
under "Description of the Certificates."
Pass-Through Rate. The Pass-Through Rates on the Class B, Class C, Class
D, Class E, Class F and Class A-EC1 Certificates are related to the Weighted
Average Net Mortgage Rate. Therefore, a decrease in the Net Mortgage Rate for
any Mortgage Loan (for example, as a result of a modification) may result in
insufficient cash flow to make all interest payments due on each of such
classes. Any such interest shortfall would affect such Certificates in reverse
sequential order, commencing with the Class O Certificates.
S-74
<PAGE>
The Weighted Average Net Mortgage Rate will fluctuate over the lives of
the Certificates as a result of scheduled amortization, voluntary prepayments,
Appraisal Reductions and liquidations of Mortgage Loans. If principal payments,
including voluntary and involuntary Principal Prepayments, are made on a
Mortgage Loan with a relatively high Net Mortgage Rate at a rate faster than
the rate of principal payments on the Mortgage Pool as a whole, the
Pass-Through Rates applicable to the Class B, Class C, Class D, Class E, Class
F and Class A-EC1 Certificates will be adversely affected. Accordingly, the
yield on each such class of Certificates will be sensitive to changes in the
outstanding principal balances of the Mortgage Loans as a result of scheduled
amortization, voluntary prepayments and liquidations of Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until, at the earliest, the 15th day of the month
following the month in which interest accrued on the Certificates, the
effective yield to the holders of the Regular Certificates will be lower than
the yield that would otherwise be produced by the applicable Pass-Through Rate
and purchase prices (assuming such prices did not account for such delay).
WEIGHTED AVERAGE LIFE
The weighted average life of a Certificate refers to the average amount of
time that will elapse from the Closing Date to the date of distribution to the
investor of each dollar distributed in reduction of Principal Balance or
Notional Balance of such Certificate. The weighted average life of each class
of Certificates will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant rate of
prepayment each month, expressed as an annual rate, relative to the
then-outstanding principal balance of a pool of mortgage loans for the life of
such mortgage loans. As used in each of the following tables, the column headed
"0.00%" assumes that none of the Mortgage Loans is prepaid before maturity. The
columns headed "10.00%," "15.00%" and "25.00%" assume that no prepayments are
made on any Mortgage Loan during such Mortgage Loan's Lockout Period, if any,
or during such Mortgage Loan's Yield Maintenance Period, if any, or during such
Mortgage Loan's Defeasance Lockout Period, if any, and are otherwise made on
each of the Mortgage Loans at the indicated CPRs. CPR does not purport to be
either an historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any
mortgage loans, including the Mortgage Loans to be included in the trust fund.
The tables set forth below have been prepared on the basis of certain
assumptions as described below regarding the characteristics of the Mortgage
Loans that are expected to be included in the Mortgage Pool as described under
"Description of the Mortgage Pool" herein and the performance thereof. The
tables assume, among other things, that:
(1) as of the Closing Date the Mortgage Loans (except as set forth herein)
provide for a Monthly Payment of principal and interest that would fully
amortize the remaining principal balance of such Mortgage Loan using the
Monthly Payments set forth in Annex A hereto, commencing on August 1, 1999
(including Balloon Payments on the maturity dates set forth in Annex A);
(2) neither the Depositor, the Transferor nor the related Mortgage Loan
Sellers will repurchase any Mortgage Loan, and none of the Master Servicer,
the Special Servicer, the Depositor or the holders of the Class R-III
Certificates will exercise its option to purchase Mortgage Loans and thereby
cause a termination of the trust fund;
(3) there are no delinquencies or Realized Losses;
(4) no Prepayment Premiums are paid;
(5) there are no Appraisal Reductions;
(6) payments on the Certificates will be made on the 15th day of each month,
commencing in August 1999 (notwithstanding that any such day is not a business
day or is fewer than four business days after the related Determination Date);
(7) there are no ongoing trust fund expenses payable out of the trust fund
other than Servicing Fees;
(8) the Regular Certificates will be purchased on the Closing Date;
(9) no defaults occur with respect to any of the Mortgage Loans;
(10) all Mortgage Loans have a maturity date on the first day of a month;
S-75
<PAGE>
(11) each ARD Loan is paid in full on its Anticipated Repayment Date
notwithstanding the fact that prepayments could occur under such ARD Loans
prior to such Anticipated Repayment Date and that, in either case, such
prepayments would not be accompanied by payment of a Yield Maintenance Charge
or Prepayment Premium;
(12) as of May 1, 2003, the principal and interest due on Mortgage Loan
control number 123 will be decreased by $10,600.00 per month to $20,923.92 per
month; however, in preparing the tables set forth below it has been assumed
that there will be no such decrease in the payment of principal and interest
on the Mortgage Loan; and
(13) the Closing Date will occur on July 28, 1999.
The actual performance of the Mortgage Loans will differ from the
assumptions used in calculating the tables set forth below, which are
hypothetical in nature and are provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. Any
difference between such assumptions and the actual performance of the Mortgage
Loans, or actual prepayment or loss experience, will affect the percentages of
initial Certificate Balance outstanding over time and the weighted average
lives of the classes of Certificates.
Subject to the foregoing discussion and assumptions, the following tables
indicate the weighted average life of each class of Certificates, and set forth
the percentages of the initial Certificate Balance of each class of
Certificates that would be outstanding after each of the Distribution Dates
shown based on the different prepayment speed assumptions reflected in the
tables. Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The "Constant Prepayment Rate" or "CPR" model
represents an assumed constant rate of prepayment relative to the
then-outstanding principal balance of a pool of new mortgage loans for the life
of such mortgage loans.
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2
PREPAYMENT SPEED (1) PREPAYMENT SPEED (1)
---------------------------------------- ---------------------------------------
DISTRIBUTION DATE 0.00% 10.00% 15.00% 25.00% 0.00% 10.00% 15.00% 25.00%
- ------------------------- ------- -------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Balance ......... 100 100 100 100 100 100 100 100
July 15, 2000 ........... 95 95 95 95 100 100 100 100
July 15, 2001 ........... 90 90 90 90 100 100 100 100
July 15, 2002 ........... 84 84 84 83 100 100 100 100
July 15, 2003 ........... 75 75 74 74 100 100 100 100
July 15, 2004 ........... 68 67 66 65 100 100 100 100
July 15, 2005 ........... 60 56 54 51 100 100 100 100
July 15, 2006 ........... 23 22 22 21 100 100 100 100
July 15, 2007 ........... 14 13 12 11 100 100 100 100
July 15, 2008 ........... 0 0 0 0 93 92 91 90
July 15, 2009 ........... 0 0 0 0 0 0 0 0
Weighted Avg.
Life (2) ............... 5.7 5.6 5.6 5.5 9.4 9.4 9.4 9.4
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-76
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS B CLASS C
PREPAYMENT SPEED (1) PREPAYMENT SPEED (1)
---------------------------------------- ---------------------------------------
DISTRIBUTION DATE 0.00% 10.00% 15.00% 25.00% 0.00% 10.00% 15.00% 25.00%
- ------------------------- ------- -------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Balance ......... 100 100 100 100 100 100 100 100
July 15, 2000 ........... 100 100 100 100 100 100 100 100
July 15, 2001 ........... 100 100 100 100 100 100 100 100
July 15, 2002 ........... 100 100 100 100 100 100 100 100
July 15, 2003 ........... 100 100 100 100 100 100 100 100
July 15, 2004 ........... 100 100 100 100 100 100 100 100
July 15, 2005 ........... 100 100 100 100 100 100 100 100
July 15, 2006 ........... 100 100 100 100 100 100 100 100
July 15, 2007 ........... 100 100 100 100 100 100 100 100
July 15, 2008 ........... 100 100 100 100 100 100 100 100
July 15, 2009 ........... 0 0 0 0 0 0 0 0
Weighted Avg.
Life (2) ............... 9.7 9.7 9.7 9.7 9.8 9.8 9.8 9.8
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS D CLASS E
PREPAYMENT SPEED (1) PREPAYMENT SPEED (1)
---------------------------------------- ---------------------------------------
DISTRIBUTION DATE 0.00% 10.00% 15.00% 25.00% 0.00% 10.00% 15.00% 25.00%
- ------------------------- ------- -------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Balance ......... 100 100 100 100 100 100 100 100
July 15, 2000 ........... 100 100 100 100 100 100 100 100
July 15, 2001 ........... 100 100 100 100 100 100 100 100
July 15, 2002 ........... 100 100 100 100 100 100 100 100
July 15, 2003 ........... 100 100 100 100 100 100 100 100
July 15, 2004 ........... 100 100 100 100 100 100 100 100
July 15, 2005 ........... 100 100 100 100 100 100 100 100
July 15, 2006 ........... 100 100 100 100 100 100 100 100
July 15, 2007 ........... 100 100 100 100 100 100 100 100
July 15, 2008 ........... 100 100 100 100 100 100 100 100
July 15, 2009 ........... 0 0 0 0 0 0 0 0
Weighted Avg.
Life (2) ............... 9.9 9.8 9.8 9.8 9.9 9.9 9.9 9.9
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-77
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS F
PREPAYMENT SPEED (1)
-----------------------------------------
DISTRIBUTION DATE 0.00% 10.00% 15.00% 25.00%
- --------------------------- --------- -------- -------- -------
<S> <C> <C> <C> <C>
Initial Balance ......... 100 100 100 100
July 15, 2000 ........... 100 100 100 100
July 15, 2001 ........... 100 100 100 100
July 15, 2002 ........... 100 100 100 100
July 15, 2003 ........... 100 100 100 100
July 15, 2004 ........... 100 100 100 100
July 15, 2005 ........... 100 100 100 100
July 15, 2006 ........... 100 100 100 100
July 15, 2007 ........... 100 100 100 100
July 15, 2008 ........... 100 100 100 100
July 15, 2009 ........... 29 23 21 17
July 15, 2010 ........... 0 0 0 0
Weighted Avg.
Life (2) ................ 10.0 10.0 10.0 9.9
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-78
<PAGE>
MASTER SERVICER AND SPECIAL SERVICER
National Realty Funding L.C. is the Master Servicer and the Special
Servicer. Certain information regarding National Realty Funding L.C. is set
forth herein under "Mortgage Loan Sellers" in this prospectus supplement.
As of March 31, 1999, National Realty Funding L.C. was responsible for the
servicing of approximately 625 commercial and multifamily loans with an
aggregate principal balance of approximately $2.4 billion, the collateral for
which is located throughout the United States.
The foregoing information concerning National Realty Funding, L.C. has
been provided by it. Accordingly, neither the Depositor nor the Underwriters
make any representation or warranty as to the accuracy or completeness of such
information.
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, dated as of July 1, 1999 (the "Pooling and Servicing Agreement"), by
and among the Depositor, the Master Servicer, the Special Servicer and the
Trustee.
Upon written request, the Depositor will provide to a prospective or
actual holder of a Certificate a copy (without exhibits) of the Pooling and
Servicing Agreement without charge. Requests should be addressed to Prudential
Securities Secured Financing Corporation, One New York Plaza, 18th Floor, New
York, New York 10292, attention: Peter Riemenschneider, at telephone number
(212) 778-1818.
ASSIGNMENT OF THE MORTGAGE LOANS
On or before the Closing Date, the Depositor will assign or cause the
assignment of the Mortgage Loans, without recourse, to the Trustee for the
benefit of the Certificateholders. On or before the Closing Date, the Depositor
will deliver to the Trustee the following set of documents for each Mortgage
Loan (the "Trustee Mortgage File") (with a copy to the Master Servicer):
(1) the original promissory note for such Mortgage Loan, endorsed by the
applicable Mortgage Loan Seller in blank or in the following form: "Pay to
the order of The Chase Manhattan Bank, as Trustee, for the registered
holders of Prudential Securities Secured Financing Corporation Commercial
Mortgage Pass-Through Certificates, Series 1999-C2, without recourse," which
the Master Servicer or its designee is authorized to complete, and which
promissory note and all endorsements thereof shall show a complete chain of
endorsement from the originator of such Mortgage Loan to the applicable
Mortgage Loan Seller;
(2)(a) the related original recorded Mortgage for such Mortgage Loan or a
copy thereof certified by the related title insurance company, public
recording office or closing agent to be in the form in which it was executed
and submitted for recording, (b) the related original recorded assignment of
mortgage from the originator to the applicable Mortgage Loan Seller, or a
copy thereof certified by the related title insurance company, public
recording office or closing agent to be in the form in which it was executed
and submitted for recording, and (c) the related original assignment of
mortgage executed by the applicable Mortgage Loan Seller in blank, which the
Master Servicer or its designee is authorized to complete and which, except
for the .ion of the name of the assignee and any related recording
information which is not yet available to the applicable Mortgage Loan
Seller, is in suitable form for recordation in the jurisdiction in which the
related Mortgaged Property is located;
(3) (a) if the related security agreement for such Mortgage Loan is
separate from the related Mortgage, the original security agreement or a
counterpart thereof, and (b) if the security agreement is not assigned under
the assignments of mortgage described in clause (2) above, the related
original assignment of such security agreement from the originator to the
applicable Mortgage Loan Seller or a counterpart thereof and (c) the
original assignment of such security agreement executed by the applicable
Mortgage Loan Seller in blank which the Master Servicer or its designee is
authorized to complete;
(4) a copy of each Form UCC-1 financing statement, if any, filed with
respect to personal property constituting a part of the Mortgaged Property
for such Mortgage Loan, together with a copy of each Form UCC-2 or UCC-3
assignment, if any, of such financing statement to the applicable Mortgage
Loan Seller from the originator and a copy of each Form UCC-2 or UCC-3
assignment, if any, of such financing statement executed by the applicable
Mortgage
S-79
<PAGE>
Loan Seller in blank, which the Master Servicer or its designee is
authorized to complete and which, except for the insertion of the name of
the assignee and any related filing information which is not yet available
to the applicable Mortgage Loan Seller, is in suitable form for filing in
the filing office in which such financing statement was filed;
(5) the related original loan agreement for such Mortgage Loan, if any,
or a counterpart thereof;
(6) the related original lender's title insurance policy (or the original
pro forma title insurance policy) for such Mortgage Loan, together with any
endorsements thereto;
(7) if any related assignment of leases, rents and profits for such
Mortgage Loan is separate from the related Mortgage, (a) the original
recorded assignment of leases, rents and profits or a copy thereof certified
by the related title insurance company, public recording office or closing
agent in the form in which it was executed and submitted for recording, (b)
the related original recorded reassignment of such instrument, if any, from
the originator to the applicable Mortgage Loan Seller or a copy thereof
certified by the related title insurance company, public recording office or
closing agent in the form in which it was executed submitted for recording,
and (c) the related original reassignment of such instrument, if any,
executed by the applicable Mortgage Loan Seller in blank, which the Master
Servicer or its designee is authorized to complete and which, except for the
insertion of the name of the assignee and any related recording information
which is not yet available to the applicable Mortgage Loan Seller, is in
suitable form for recordation in the jurisdiction in which the related
Mortgaged Property is located. Any such reassignments may also be included
in a related assignment of mortgage and need not be a separate instrument;
(8) if any related assignment of contracts is separate from the related
Mortgage, the original assignment of contracts or a counterpart thereof, and
if the assignment of contracts is not assigned under the assignments of
mortgage described in clause (2) above, the related original assignment of
such instrument from the originator to the applicable Mortgage Loan Seller
or a counterpart thereof and the related original reassignment of such
instrument executed by the applicable Mortgage Loan Seller in blank, which
the Master Servicer or its designee is authorized to complete;
(9) with respect to any related Reserve Accounts for such Mortgage Loan, a
copy of the original of any separate agreement relating thereto between the
related borrower and the originator;
(10) the original of any other written agreement, instrument or document
securing such Mortgage Loan, including, without limitation, original
guarantees for such Mortgage Loan or the original letter of credit, if any,
for such Mortgage Loan, together with any and all amendments thereto,
including, without limitation, any amendment which entitles the Master
Servicer to draw upon such letter of credit on behalf of the Trustee for the
benefit of the Certificateholders, and the original of each instrument or
other item of personal property given as security for such Mortgage Loan the
possession of which by a secured party is necessary to the secured party's
valid, perfected, first priority security interest therein, together with
all assignments or endorsements thereof necessary to entitle the Master
Servicer to enforce a valid, perfected, first priority security interest
therein on behalf of the Trustee for the benefit of the Certificateholders;
(11) with respect to any related Reserve Accounts for such Mortgage Loan,
a copy of the UCC-1 financing statements, if any, submitted for filing with
respect to the applicable Mortgage Loan Seller's security interest in such
Reserve Accounts and all funds contained therein, together with a copy of
each Form UCC-2 or UCC-3 assignment, if any, of such financing statement
from the originator to the applicable Mortgage Loan Seller and a copy of
each Form UCC-2 or UCC-3 assignment, if any, of such financing statement
executed by the applicable Mortgage Loan Seller in blank, which the Master
Servicer or its designee is authorized to complete and which, except for the
insertion of the name of the assignee and any related filing information
which is not yet available to the applicable Mortgage Loan Seller, is in
suitable form for filing in the filing office in which such financing
statement was filed; and
(12) copies of any and all amendments, modifications, supplements and
waivers related to any of the foregoing.
If the Depositor cannot deliver any original or certified recorded
document described above on the Closing Date, the Depositor will use its
reasonable best efforts to deliver (or cause to be delivered) such original or
certified recorded documents promptly upon receipt and in any case not later
than 120 days from the Closing Date (subject to delays attributable to the
failure of the appropriate recording office to return such documents, in which
case the Depositor will deliver (or cause to be delivered) such documents
promptly upon receipt thereof). The Trustee is obligated to review the Trustee
Mortgage File for each Mortgage Loan within 90 days after the later of delivery
or the Closing Date and report any missing documents or certain types of
defects therein to the Depositor.
S-80
<PAGE>
The Master Servicer will hold all remaining Mortgage Loan Documents and
all other documents related to each Mortgage Loan, including copies of any
management agreements, ground leases, appraisals, surveys, environmental
reports and similar documents and any other written agreements relating to each
Mortgage Loan (collectively, the "Master Servicer Mortgage File" and together
with the Trustee Mortgage File, the "Mortgage File") in trust for the benefit
of the Trustee on behalf of Certificateholders. The legal ownership of all
records and documents with respect to each Mortgage Loan prepared by or that
come into the possession of the Master Servicer will immediately vest in the
Trustee, in trust for the benefit of Certificateholders.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer (directly or through a sub-servicer) to service and administer
the Mortgage Loans (or in the case of the Special Servicer, the Specially
Serviced Mortgage Loans and REO Mortgage Loans) on behalf of the trust fund
solely in the best interests of and for the benefit of all of the
Certificateholders and the trust fund, in accordance with the terms of the
Pooling and Servicing Agreement and the Mortgage Loans. To the extent
consistent with the foregoing and except to the extent that the Pooling and
Servicing Agreement provides for a contrary specific course of action, each of
the Master Servicer and the Special Servicer is required to service and
administer the Mortgage Loans (1) in the same manner in which, and with the
same care, skill, prudence and diligence with which it services and administers
similar mortgage loans for itself and other third-party portfolios, giving due
consideration to customary and usual standards of practice used by prudent
institutional commercial mortgage loan servicers of loans comparable to the
Mortgage Loans, or (2) in the same manner in which, and with the same care,
skill, prudence and diligence with which it services and administers similar
mortgage loans that it owns, whichever standard of care is higher, and taking
into account its other obligations under the Pooling and Servicing Agreement
and with the purpose of maximizing the estimated net present value of each
Mortgage Loan, but without regard to:
(1) any other relationship that the Master Servicer, the Special Servicer,
any sub-servicer, the Depositor, the Trustee, or any affiliate of any of them
may have with the borrowers or any affiliate of such borrowers;
(2) the ownership of any Certificate by the Master Servicer, the Special
Servicer or any affiliate of either;
(3) the Master Servicer's or the Trustee's obligations, as applicable, to
make Advances or to incur servicing expenses with respect to the Mortgage
Loans;
(4) the Master Servicer's, the Special Servicer's or any sub-servicer's
right to receive compensation for its services under the Pooling and Servicing
Agreement or with respect to any particular transaction;
(5) the ownership, servicing or management for others by the Master
Servicer, the Special Servicer or any sub-servicer of any other mortgage loans
or property; or
(6) any obligation of the Master Servicer to pay any indemnity with respect
to any repurchase obligation.
Each of the Master Servicer and the Special Servicer is permitted, at its
own expense, to employ sub-servicers, agents or attorneys in performing any of
its obligations under the Pooling and Servicing Agreement. In any such
instance, the Master Servicer or the Special Servicer will not be relieved of
any of its obligations under the Pooling and Servicing Agreement and each will
be responsible for the acts and omissions of any such sub-servicers, agents or
attorneys. The Pooling and Servicing Agreement provides, however, that neither
the Master Servicer nor the Special Servicer, nor any of their directors,
officers, employees or agents, will have any liability to the trust fund or the
Certificateholders for taking any action or refraining from taking any action
in good faith or for errors in judgment. The foregoing provision will not
protect the Master Servicer, the Special Servicer or such other person from:
(1) any liability resulting from a breach of any of the Master Servicer's or
the Special Servicer's or such other person's respective representations or
warranties in the Pooling and Servicing Agreement;
(2) any specific liability imposed on the Master Servicer or the Special
Servicer or such other person for a breach of the servicing standards set
forth in the Pooling and Servicing Agreement; or
(3) any liability by reason of the Master Servicer's or the Special
Servicer's or such other person's willful misfeasance, bad faith, fraud or
negligence in the performance of its duties under the Pooling and Servicing
Agreement or its reckless disregard of its obligations and duties under the
Pooling and Servicing Agreement.
S-81
<PAGE>
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer to make reasonable efforts to collect all payments called for
under the terms of the Mortgage Loans and to follow collection procedures as
are consistent with the servicing standards under the Pooling and Servicing
Agreement. Consistent with the above, the Master Servicer or the Special
Servicer, as applicable, may, in its discretion, waive any late payment charge
or penalty fee in connection with any delinquent Monthly Payment or Balloon
Payment with respect to any Mortgage Loan. With respect to any ARD Loan, the
Pooling and Servicing Agreement prohibits the Master Servicer and the Special
Servicer from taking any enforcement action (other than requests for
collections) for payment of Excess Interest or principal in excess of the
principal component of the constant Monthly Payment for such ARD Loan before
(1) any acceleration of the maturity of such ARD Loan based on a default other
than the non-payment of Excess Interest or principal in excess of the principal
component of the related Scheduled Monthly Payment for such ARD Loan or (2) the
final maturity date of such ARD Loan.
ADVANCES
Subject to the limitations described below, the Master Servicer will be
obligated to advance (each such amount, a "P&I Advance"), on the business day
preceding each Distribution Date (the "Remittance Date"), an amount equal to
the total or any portion of the Monthly Payment on any Mortgage Loan that was
delinquent as of the close of business on the Business Day preceding such
Remittance Date or, in the event of a default in the payment of a Balloon
Payment, the Assumed Scheduled Payment for the related Balloon Loan, unless the
Master Servicer determines that any such advance would be a Nonrecoverable
Advance and delivers to the Trustee an officer's certificate and accompanying
documentation related to a determination of nonrecoverability.
For any Distribution Date, the amount required to be advanced for a
Mortgage Loan that has been subject to an Appraisal Reduction Event will equal
the amount that would be required to be advanced by the Master Servicer without
giving effect to the Appraisal Reduction reduced in proportion to the deemed
reduction of the outstanding principal balance of the Mortgage Loan caused by
such Appraisal Reduction.
In addition to P&I Advances, the Master Servicer will also be obligated
(subject to the limitations described herein) to make cash advances ("Property
Advances," and together with P&I Advances, "Advances") (a) to pay certain costs
and expenses incurred in connection with defaulted Mortgage Loans, acquisition
of title to, or management of, REO Properties, or the sale of defaulted
Mortgage Loans or REO Properties, (b) to pay delinquent real estate taxes,
assessments and hazard insurance premiums and (c) to cover other similar costs
and expenses necessary to protect and preserve the security of the related
Mortgage. None of the Master Servicer, the Special Servicer or the Trustee, as
applicable, will be obligated to advance from its own funds any amounts
required to cure any failure of any Mortgaged Property to comply with any
applicable environmental law or to contain, clean up or remedy any
environmental condition present at any Mortgaged Property, and such expense
shall be an expense of the trust fund.
If the Trustee becomes the successor Master Servicer, the Trustee, as
successor master servicer acting in accordance with the servicing standards set
forth in the Pooling and Servicing Agreement, will be required to make the
Advances subject to its determination of recoverability. The Trustee will be
entitled to rely conclusively on any non-recoverability determination of the
Master Servicer. See "--The Trustee" below.
The obligation of the Master Servicer or the Trustee, as applicable, to
make Advances with respect to any Mortgage Loan will continue through the
foreclosure of such Mortgage Loan and until the liquidation of the Mortgage
Loan or related Mortgaged Properties. Advances are intended to provide a
limited amount of liquidity and not to guarantee or insure against losses.
Neither the Master Servicer nor the Trustee will be required to make any
Advance that it determines (possibly based on, among other things, an updated
appraisal), in its good faith business judgment, will not be recoverable out of
related late payments, Insurance Proceeds, Liquidation Proceeds and certain
other collections with respect to the Mortgage Loan as to which such Advance
was made. To the extent that any borrower is not obligated under its Mortgage
Loan Documents to pay or reimburse any portion of any related outstanding
Advances as a result of a modification of such Mortgage Loan by the Special
Servicer that forgives loan payments or other amounts that the Master Servicer
or the Trustee previously advanced, and the Master Servicer or the Trustee
determines that no other source of payment or reimbursement for such Advances
is available to it, such Advances will be deemed to be nonrecoverable. In
addition, if the Master Servicer or the Trustee, as applicable, determines that
any Advance previously made will not be recoverable from the foregoing sources,
then the Master Servicer or the Trustee, as applicable, will be reimbursed for
such Advance, plus interest thereon, out of amounts on deposit in the
Collection Account before any distributions are made on the Certificates. Any
such determination must be evidenced by an officer's certificate delivered to
the Trustee (or, in the case of the Trustee, to the Depositor) setting forth
such determination of nonrecoverability and the procedure and considerations of
the Master Servicer or the Trustee, as applicable,
S-82
<PAGE>
forming the basis of such determination. Such officer's certificate must
include a copy of the updated appraisal or any other information or reports
obtained by the Master Servicer or the Trustee, as applicable, such as property
operating statements, rent rolls, property inspection reports, engineering
reports and other documentation which may support the determination as set
forth in such certificate.
The Master Servicer or the Trustee, as applicable, will be reimbursed for
any Advance it has made from (1) any collections on or in respect of the
particular Mortgage Loan or REO Property with respect to which such Advance was
made or (2) upon determining that such Advance is not recoverable in the manner
described in the preceding paragraph, from any other amounts from time to time
on deposit in the Collection Account.
The Master Servicer or the Trustee, as applicable, will be entitled to
receive interest at a rate equal to the prime rate published in The Wall Street
Journal, or if The Wall Street Journal is no longer published, The New York
Times (the "Advance Rate"), on its outstanding Advances. The Master Servicer or
the Trustee, as applicable, will be authorized to pay itself such interest from
general collections on all of the Mortgage Loans before any payments are made
to Certificateholders. The interest on such Advance will generally result in a
Class Interest Shortfall for the most Subordinate Class then outstanding.
APPRAISAL REDUCTIONS
After an Appraisal Reduction Event has occurred for a Mortgage Loan, an
Appraisal Reduction will be calculated for such Mortgage Loan. An "Appraisal
Reduction Event" for a Mortgage Loan will occur at the earliest of:
(1) the third anniversary of the date on which the first extension of the
maturity date of such Mortgage Loan became effective as a result of a
modification of such Mortgage Loan by the Special Servicer, which extension
did not decrease the aggregate amount of Monthly Payments on the Mortgage
Loan;
(2) 120 days after an uncured delinquency occurs for such Mortgage Loan;
(3) the date on which a reduction in the amount of Monthly Payments on such
Mortgage Loan, or a change in any other material economic term of such
Mortgage Loan (other than an extension of its maturity) becomes effective as a
result of a modification of such Mortgage Loan by the Special Servicer;
(4) 60 days after a receiver has been appointed;
(5) 60 days after the related borrower of such Mortgage Loan declares
bankruptcy or is the subject of an involuntary bankruptcy proceeding; or
(6) immediately after such Mortgage Loan becomes an REO Mortgage Loan;
provided, however, that an Appraisal Reduction Event will not occur at any
time when the aggregate Certificate Balances of all classes of Certificates
other than the Senior Certificates have been reduced to zero.
The "Appraisal Reduction" for any Distribution Date and for any Mortgage
Loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess, if any, of (1) the outstanding Scheduled Principal Balance
of such Mortgage Loan over (2) the excess of (a) 90% of the Appraised Value of
the related Mortgaged Property as determined (A) by one or more appraisals, if
such Mortgage Loan has an outstanding Scheduled Principal Balance equal to or
in excess of $2,000,000, conducted in compliance with the Code of Professional
Ethics and Standards of Professional Conduct of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice as adopted by the
Appraisal Standards Board of the Appraisal Foundation and accepted and
incorporated into FIRREA (the costs of which will be paid by the Master
Servicer as a Property Advance) or (B) by either an appraisal conducted as
described in the preceding clause (A) or an internal valuation performed by the
Special Servicer, if such Mortgage Loan has an outstanding Scheduled Principal
Balance less than $2,000,000 over (b) the sum of (A) to the extent not
previously advanced by the Master Servicer or the Trustee, all unpaid interest
on such Mortgage Loan at a per annum rate equal to its Mortgage Rate, (B) all
unreimbursed Advances (and interest thereon) in respect of such Mortgage Loan
and (C) all currently due and unpaid real estate taxes and assessments,
insurance premiums, ground rents and all other amounts due and unpaid with
respect to such Mortgage Loan (which taxes, assessments, premiums, ground rents
and other amounts have not been subject to an Advance by the Master Servicer or
the Trustee. If an appraisal is to be obtained as described above, the Special
Servicer must obtain such appraisal by the date of the related Appraisal
Reduction Event. If such appraisal is not obtained by such date, the Appraisal
Reduction for the related Mortgage Loan will be 35% of the outstanding
Scheduled Principal Balance of such Mortgage Loan as of the date of the related
Appraisal Reduction Event. On the first Determination Date occurring on or
after the delivery of such
S-83
<PAGE>
appraisal, the Special Servicer will be required to calculate and report to the
Master Servicer, and the Master Servicer will report to the Trustee and the
Directing Certificateholder, the Appraisal Reduction to take into account such
appraisal. The Directing Certificateholder shall have the right, at any time
within six months of the date of its receipt of any appraisal of any Mortgaged
Property required to be obtained as set forth above, to require that the
Special Servicer obtain a new appraisal of such Mortgaged Property meeting the
criteria specified above. The cost of any such appraisal shall be paid by the
Controlling Class Certificateholders without right of reimbursement. However,
the Special Servicer shall not be required to obtain any such appraisal unless
the Special Servicer shall have received reasonable assurance of payment of the
costs of such appraisal and of any expenses related thereto. Upon receipt of
the appraisal obtained pursuant to the immediately preceding sentence, the
Special Servicer shall redetermine and report to the Servicer, the Trustee and
the Directing Certificateholder the amount of the Appraisal Reduction on the
basis of both appraisals with respect to such Mortgage Loan, and such
redetermined Appraisal Reduction shall replace the prior Appraisal Reduction
with respect to such Mortgage Loan.
As a result of calculating an Appraisal Reduction for a Mortgage Loan, the
P&I Advance for such Mortgage Loan for the related Remittance Date will be
reduced, which will have the effect of reducing the amount of interest and
principal available for distribution to the Certificateholders. The maximum
amount of the P&I Advance for any Distribution Date and any Mortgage Loan for
which an Appraisal Reduction has been calculated will equal the amount that
would be required to be advanced without giving effect to the Appraisal
Reduction multiplied by a fraction, the numerator of which is the outstanding
principal balance of such mortgage loan less the amount of such Appraisal
Reduction and the denomination of which is the outstanding principal balance of
such Mortgage Loan. Appraisal Reductions will be allocated to the Subordinate
Certificates in reverse sequential order of the classes for purposes of
determining Voting Rights. See "--Realization Upon Mortgage Loans" and
"--Voting Rights" herein.
With respect to each Mortgage Loan as to which an Appraisal Reduction has
occurred and which has remained current for twelve consecutive Monthly Payments
and no other Appraisal Reduction Event has occurred and is continuing), the
Special Servicer may, within 30-days before each anniversary of such Appraisal
Reduction Event, order an appraisal (which may be an update of a prior
appraisal) or, with respect to any Mortgage Loan with an outstanding principal
balance less than $2,000,000, perform an internal valuation or obtain an
appraisal (which may be an update of a prior appraisal), the cost of which will
be paid by the Master Servicer as a Property Advance recoverable from the trust
fund. Based upon such appraisal or internal valuation, the Special Servicer
will redetermine and report to the Master Servicer and the Trustee the amount
of the Appraisal Reduction for such Mortgage Loan, and such redetermined
Appraisal Reduction will replace the prior Appraisal Reduction for such
Mortgage Loan. Notwithstanding the foregoing, the Special Servicer will not be
required to obtain an appraisal or perform an internal valuation for a Mortgage
Loan which is the subject of an Appraisal Reduction Event if the Special
Servicer has obtained an appraisal for the related Mortgaged Property during
the 12-month period before the occurrence of such Appraisal Reduction Event.
Instead, the Special Servicer may use such prior appraisal in calculating any
Appraisal Reduction for such Mortgage Loan.
ACCOUNTS
Collection Account. The Master Servicer will establish and maintain a
segregated account or accounts (the "Collection Account") into which it will be
required to deposit, within two Business Days of receipt, the following
payments and collections received or made by it on or with respect to the
Mortgage Loans:
(1) all payments on account of principal on the Mortgage Loans, including
the principal component of Unscheduled Payments on the Mortgage Loans;
(2) all payments on account of interest on the Mortgage Loans and the
interest portion of all Unscheduled Payments and all Prepayment Premiums and
Yield Maintenance Charges;
(3) any amounts required to be deposited by the Master Servicer in
connection with losses realized on Permitted Investments with respect to funds
held in the Collection Account and in connection with Prepayment Interest
Shortfalls;
(4) (a) all Net REO Proceeds transferred from an REO Account, (b) all
amounts transferred from lockbox accounts in respect of ARD Loans and payable
to the Certificateholders and (c) all Condemnation Proceeds, Insurance
Proceeds and Liquidation Proceeds (net of related expenses) not required to be
applied to the restoration or repair of the related Mortgaged Property;
(5) any amounts received from borrowers that represent recoveries of
Property Advances;
S-84
<PAGE>
(6) with respect to any Distribution Date occurring in each February, and
in any January occurring in a year that is not a leap year, the Withheld
Amounts to be deposited in the Interest Reserve Account and held for future
distribution; and
(7) any other amounts required by the provisions of the Pooling and
Servicing Agreement to be deposited into the Collection Account by the
Master Servicer or the Special Servicer.
The foregoing requirements for deposits in the Collection Account will be
exclusive, and any payments in the nature of late payment charges, late fees,
"insufficient funds" check charges, assumption fees, loan modification fees,
loan service transaction fees, extension fees, demand fees, beneficiary
statement charges and similar fees need not be deposited in the Collection
Account by the Master Servicer. To the extent permitted by applicable law, the
Master Servicer or the Special Servicer, as applicable, will be entitled to
retain any such charges and fees received with respect to the Mortgage Loans.
In the event that the Master Servicer deposits into the Collection Account any
amount not required to be deposited therein, the Master Servicer may at any
time withdraw such amount from the Collection Account.
Distribution Account. The Trustee will establish and maintain a segregated
account or accounts (the "Distribution Account") in its name in trust for the
benefit of the Certificateholders. For each Distribution Date, the Master
Servicer will deposit in the Distribution Account, to the extent of funds on
deposit in the Collection Account on or before the Remittance Date, the
aggregate amount of Available Funds as required by the Pooling and Servicing
Agreement, plus certain other amounts specified in the Pooling and Servicing
Agreement. To the extent not otherwise included in Available Funds, the Master
Servicer will remit to the Trustee all P&I Advances for deposit into the
Distribution Account on the related Remittance Date. See "Description of the
Certificates--Distributions" herein.
The Collection Account and the Distribution Account will be held in the
name of the Trustee (or, in the case of the Collection Account, the Master
Servicer on behalf of the Trustee) on behalf of the Certificateholders, and the
Trustee (and, in the case of the Collection Account, the Master Servicer) will
be authorized to make withdrawals therefrom. Each of the Collection Account and
the Distribution Account will be either (1) a segregated account or accounts
maintained with either a federally or state-chartered depository institution or
trust company, the short term unsecured debt obligations of which are rated at
least P-1 by Moody's and at least A-1+ by S&P or, if deposits are to be held
therein for 30 or more days, the long term unsecured debt obligations of which
(or of such institution's parent holding company) are rated at least Aa2 by
Moody's and at least AA- by S&P or (2) a segregated trust account or accounts
maintained with a federally or state-chartered depository institution or trust
company acting in its fiduciary capacity, having, in either case, a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority and subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 CFR 9.10(b), or as to
which the Trustee has been informed in writing by each Rating Agency that the
maintenance of such account will not, in and of itself, result in a
downgrading, withdrawal or qualification of the rating then assigned by such
Rating Agency to any class of Certificates (an "Eligible Bank"). Amounts on
deposit in the Collection Account and certain other accounts may be invested in
certain investments specified in the Pooling and Servicing Agreement
("Permitted Investments").
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Master Servicer may make withdrawals from the Collection Account for
the following purposes:
(1) to remit on or before each Remittance Date to the Distribution Account
an amount equal to Available Funds and certain other amounts for the related
Distribution Date;
(2) to pay or reimburse the Master Servicer or the Trustee, as applicable,
for Advances made by it and interest on such Advances, but the Master
Servicer's right to reimburse itself will be limited as described herein under
"--Advances";
(3) (a) to pay on or before each Remittance Date to the Master Servicer or
the Special Servicer, as applicable, the fee portion of the servicing
compensation for the related Distribution Date (provided that the Servicing
Fees must be paid from interest received on the related Mortgage Loan), (b) to
pay from time to time to the Master Servicer any interest or investment income
earned on funds deposited in the Collection Account, (c) to pay to the Master
Servicer as additional servicing compensation any Prepayment Interest Surplus
received in the preceding Collection Period, and (d) to pay to the Master
Servicer or the Special Servicer, as applicable, any other amounts
constituting additional servicing compensation;
S-85
<PAGE>
(4) to pay on or before each Distribution Date to the Depositor, the
Transferor, the related Mortgage Loan Seller or other purchaser of each
Mortgage Loan or REO Property that has previously been purchased or
repurchased by such person pursuant to the Pooling and Servicing Agreement,
all amounts received thereon during the related Collection Period and after
the date as of which the price of such purchase or repurchase was determined;
(5) to the extent not reimbursed or paid pursuant to any of the above
clauses, to reimburse or pay to the Master Servicer, the Special Servicer, the
Trustee or the Depositor, as applicable, for certain other unreimbursed
expenses incurred by or on behalf of such person pursuant to and to the extent
reimbursable under the Pooling and Servicing Agreement and to satisfy any
other payment or reimbursement obligations of the trust fund under the Pooling
and Servicing Agreement;
(6) to pay to the Trustee amounts payable as compensation, including, but
not limited to, the Trustee Fee, and amounts requested by the Trustee to pay
taxes on certain net income with respect to REO Properties (provided that the
Trustee will also have the right to withdraw such amounts for such
applications);
(7) to withdraw any amount deposited into the Collection Account that was
not required to be deposited therein; and
(8) to clear and terminate the Collection Account pursuant to a plan for
termination and liquidation of the trust fund.
INTEREST RESERVE ACCOUNT.
The Master Servicer will establish and maintain a segregated account or
accounts (the "Interest Reserve Account)" in the name of the Master Servicer
for the benefit of the Certificateholders. With respect to each Distribution
Date occurring in February and each Distribution Date occurring in any January
which occurs in a year that is not a leap year, there will be deposited, in
respect of each Mortgage Loan that accrues interest on the basis of a 360-day
year and the actual number of days (an "Interest Reserve Loan"), an amount
equal to one day's interest at the related Mortgage Rate (net of any servicing
fee payable therefrom) on the respective Scheduled Principal Balance as of the
immediately preceding Due Date, from the Monthly Payment or P&I Advance is made
in respect thereof (all amounts so deposited in any consecutive January (if
applicable) and February, "Withheld Amounts"). With respect to each
Distribution Date occurring in March, an amount is required to be withdrawn
from the Interest Reserve Account in respect of each Interest Reserve Loan
equal to the related Withheld Amounts from the preceding January (if
applicable) and February, if any, and deposited into the Collection Account.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
The Master Servicer or the Special Servicer, as applicable, will be
obligated to enforce the Trustee's rights under the "due-on-sale" clause in the
related Mortgage Loan Documents to accelerate the maturity of the related
Mortgage Loan, unless (1) such provision is not enforceable under applicable
law, (2) enforcement would result in a loss of insurance coverage under any
related insurance policy, (3) enforcement is reasonably likely to result in
meritorious legal action by the related borrower, or (4) the Master Servicer or
the Special Servicer, as applicable, acting in accordance with the servicing
standards described herein, determines that such enforcement is not in the best
interests of the trust fund. However, if the Scheduled Principal Balance of any
Mortgage Loan or a group of Mortgage Loans (1) made to a single borrower or
affiliated borrowers or (2) that is secured by any group of
cross-collateralized Mortgaged Properties equals or exceeds the greater of (a)
$20,000,000 or (b) 5% of the Pool Balance, and if the related Mortgage Loan
Documents permit the Master Servicer to require such confirmation, the Master
Servicer or the Special Servicer, as applicable, will not be permitted to
refrain from enforcing the Trustee's rights under the "due-on-sale" clause in
such Mortgage Loan or a group of Mortgage Loans without obtaining a
confirmation from each Rating Agency that such forbearance will not result, in
and of itself, in a downgrading, withdrawal or qualification of its then
current rating of any class of Certificates.
If (1) applicable law prohibits the enforcement of a "due-on-sale" clause,
(2) the Master Servicer or the Special Servicer is otherwise prohibited from
taking such action, or (3) the Master Servicer or the Special Servicer has
determined that such enforcement is not in the best interests of the trust fund
as described in the preceding paragraph (and the confirmation from each Rating
Agency described therein has been obtained), then the Mortgage Loan in question
may be assumed by a third person. As a result, (1) the original borrower may be
released from liability for the unpaid principal balance of such Mortgage Loan
and interest thereon at the applicable Mortgage Rate during the remaining term
of such Mortgage Loan, (2) the Master
S-86
<PAGE>
Servicer may accept payments in respect of such Mortgage Loan from the new
owner of the related Mortgaged Property, and (3) the Master Servicer or the
Special Servicer, as applicable, may enter into an assumption agreement with a
new purchaser whereby the new owner of the related Mortgaged Property will be
substituted as the borrower and the original borrower will be released, so long
as (to the extent permitted by law) the new owner satisfies the underwriting
requirements customarily imposed by the Master Servicer or the Special
Servicer, as applicable, as a condition to its approval of a borrower on a new
mortgage loan substantially similar to such Mortgage Loan. In the event a
Mortgage Loan is assumed as described in the preceding sentence, the Trustee,
the Master Servicer and the Special Servicer will not permit any modification
of such Mortgage Loan other than as described below under "--Amendments,
Modifications and Waivers." The Master Servicer or the Special Servicer, as
applicable, will be entitled to retain as additional servicing compensation any
assumption fees paid by the original borrower or the new owner in connection
with such assumption. See "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions--Due-on-Sale Provisions" in the
prospectus. A new owner of the related Mortgaged Property may be substituted,
or a junior or senior lien may be allowed on the related Mortgaged Property,
without the consent of the Master Servicer, the Special Servicer or the Trustee
in a bankruptcy proceeding involving the Mortgaged Property.
If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which by its terms (1) provides that such Mortgage
Loan will (or may at the related mortgagee's option) become due and payable
upon the creation of any lien or other encumbrance on such Mortgaged Property
or (2) requires the consent of the related mortgagee to the creation of any
such lien or other encumbrance on such Mortgaged Property, then, for so long as
the related Mortgage Loan is included in the trust fund, and such borrower
creates any such lien or other encumbrance, the Master Servicer or the Special
Servicer, as applicable, on behalf of the trust fund, will enforce such
provision. As a result, the Master Servicer or the Special Servicer, as
applicable, will (1) accelerate the payments due on such Mortgage Loan or (2)
withhold its consent to the creation of any such lien or other encumbrance, as
applicable. However, the Master Servicer or the Special Servicer, as
applicable, will not enforce such provision if, acting in accordance with the
applicable servicing standards, it determines that such enforcement would not
be in the best interests of the trust fund and it is able to obtain the
confirmation of each Rating Agency that such Rating Agency will not downgrade,
withdraw or qualify its then current rating of any class of Certificates as a
result of such forbearance from enforcement.
A "due-on-sale" or "due-on-encumbrance" clause may, under certain
circumstances, be unenforceable against a borrower that is a debtor in a case
under the Bankruptcy Code. In addition, notwithstanding the foregoing, the
Master Servicer or the Special Servicer, as applicable, may elect to consent to
the assumption of a Mortgage Loan by a prospective new borrower, or to refrain
from enforcing any "due-on-encumbrance" provision relating to any junior or
senior lien on a Mortgaged Property imposed in any bankruptcy proceeding
involving such Mortgaged Property.
INSPECTIONS; APPRAISALS
The Master Servicer (or the Special Servicer with respect to Specially
Serviced Mortgage Loans or REO Properties) is required, at its own expense, to
inspect each Mortgaged Property at such times and in such manner as are
consistent with the servicing standards described herein, but will in any event
be required to (1) inspect each Mortgaged Property at least once every 12
months (or 24 months for any Mortgage Loan with a principal balance of less
then $2,000,000), with the first such inspection to be completed on or before
August 31, 2000, unless each of the Rating Agencies has confirmed in writing
that a longer period between inspections (which may not exceed 24 months) will
not result, in and of itself, in a downgrading, withdrawal or qualification of
the rating then assigned by such Rating Agency to any class of Certificates;
and (2) inspect the related Mortgaged Property as soon as practicable after the
Master Servicer or the Special Servicer, as applicable, has received any
financial and lease reporting fees for any Mortgage Loan (unless such property
has been inspected by the Master Servicer or the Special Servicer during the
preceding 120-day period). In addition, if any Monthly Payment on any Mortgage
Loan becomes more than 60 days delinquent (without giving effect to any grace
period permitted under the related promissory note or Mortgage), the Special
Servicer will inspect each related Mortgaged Property at its own expense as
soon as practicable thereafter.
REALIZATION UPON MORTGAGED PROPERTIES
If a Mortgage Loan has defaulted, the Special Servicer may at any time
institute foreclosure proceedings, exercise any power of sale contained in the
related Mortgage or otherwise acquire title to the related Mortgaged Property.
S-87
<PAGE>
General Standards for Conduct in Foreclosing or Selling Defaulted Loans.
Any costs and expenses incurred in any foreclosure or similar proceedings will
be advanced by the Master Servicer as a Property Advance, unless the Master
Servicer determines that such Advance would constitute a Nonrecoverable
Advance.
If the Special Servicer elects to proceed with a non-judicial foreclosure
in accordance with the laws of the jurisdiction in which the subject Mortgaged
Property is located, the Special Servicer will not be required to pursue a
deficiency judgment against the related borrower or any other liable party if
(1) the laws of the jurisdiction do not permit such a deficiency judgment after
a non-judicial foreclosure or (2) the Special Servicer determines, in its best
judgment, that the likely recovery resulting from a deficiency judgment will
not be sufficient to warrant the cost, time, expense or exposure of pursuing
the deficiency judgment and such determination is evidenced by an officer's
certificate delivered to the Trustee.
The Special Servicer, on behalf of the trust fund, is prohibited from
obtaining title to a Mortgaged Property as a result of or in lieu of
foreclosure or otherwise obtaining title to any direct or indirect partnership
interest or other equity interest in any borrower pledged pursuant to a pledge
agreement and thereby become the beneficial owner of a Mortgaged Property, and
otherwise acquiring possession of, or taking any other action with respect to,
any Mortgaged Property if, as a result of any such action, the Trustee, for the
trust fund or the Certificateholders, would be considered to hold title to, to
be a "mortgagee in possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of CERCLA or any comparable law, unless
the Special Servicer has previously determined, in accordance with the
servicing standards set forth in the Pooling and Servicing Agreement and based
on an updated ESA prepared within the past twelve months by a person
independent of the Special Servicer who regularly conducts environmental
assessments, that:
(1) such Mortgaged Property is in compliance with applicable environmental
laws in all material respects or, if such Mortgaged Property is found not to
be in compliance, the Special Servicer, after consultation with an
environmental consultant, has determined that it would be in the best
economic interest of the trust fund to take such actions as are necessary to
bring such Mortgaged Property in compliance with such laws, and
(2) there are no circumstances present at such Mortgaged Property relating
to the use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean up or remediation
could reasonably be required under any currently effective federal, state or
local law or regulation, or that, if any such hazardous materials are
present for which such action could reasonably be required, the Master
Servicer, after consultation with an environmental consultant, has
determined that it would be in the best economic interest of the trust fund
to take such actions with respect to such Mortgaged Property.
In the event that the environmental assessment last obtained by the
Special Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance with applicable environmental laws
in all material respects or that hazardous materials may be present but does
not definitively establish such fact, the Special Servicer will cause such
further environmental tests as the Special Servicer deems prudent to protect
the interests of Certificateholders to be conducted by a person independent of
the Special Servicer who regularly conducts such tests. Any such tests will be
deemed part of the ESA obtained by the Special Servicer for these purposes. In
the event that title to any Mortgaged Property is acquired in foreclosure or by
deed-in-lieu of foreclosure, the deed or certificate of sale will be issued to
the Trustee or to its nominee (which may not be the Master Servicer or the
Special Servicer) or a separate trustee or co-trustee on behalf of the trust
fund. Notwithstanding any such acquisition of title and cancellation of the
related Mortgage Loan, such Mortgage Loan will be considered to be a Mortgage
Loan held in the trust fund until such time as the related REO Property is sold
by the trust fund. Net REO Proceeds with respect to such REO Property will be
allocated in reduction of the principal balance of such Mortgage Loan and
treated as Available Funds.
If the trust fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the Pooling and
Servicing Agreement provides that the Special Servicer must administer such
Mortgaged Property in such manner so that it qualifies at all times as
"foreclosure property" within the meaning of Code Section 860G(a)(8). The
Pooling and Servicing Agreement also requires that, within 90 days of the trust
fund's acquisition of such Mortgaged Property, the Special Servicer contract
with an independent contractor (as defined in the Pooling and Servicing
Agreement) for the management and operation of such Mortgaged Property, unless
the Special Servicer provides the Trustee with an opinion of counsel that the
operation and management of the Mortgaged Property other than through an
independent contractor will not cause such Mortgaged Property to fail to
qualify as "foreclosure property." Such opinion will be obtained at an expense
of the trust fund.
The Special Servicer may offer to sell to any person any Specially
Serviced Mortgage Loan or any REO Property, if and when the Special Servicer
determines, consistent with the servicing standards set forth in the Pooling
and Servicing
S-88
<PAGE>
Agreement, that such a sale would be in the best economic interests of the
trust fund. In any event, the Special Servicer will offer to sell each REO
Property so that the sale of such REO Property will occur within the period
specified in the Pooling and Servicing Agreement. For any such sale of a
Specially Serviced Mortgage Loan or an REO Property, the Special Servicer will
give the Trustee at least 10 Business Days prior written notice of its
intention to sell. The Special Servicer will accept an offer from any person
that is determined by the Special Servicer to be a fair price for such
Specially Serviced Mortgage Loan or REO Property, if the highest offeror is not
an Interested Person, or is determined to be such a price by the Trustee (which
may be based upon updated independent appraisals received by the Trustee or the
Special Servicer, as applicable), if the highest offeror is an Interested
Person; provided, however, that any offer by an Interested Person in the amount
of the repurchase price determined in accordance with the Pooling and Servicing
Agreement shall be deemed to be a fair price. "Interested Person" means the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any borrower
or property manager of a Mortgaged Property, an independent contractor engaged
by the Special Servicer to manage or operate an REO Property or any known
affiliate of any of the foregoing. Notwithstanding anything to the contrary
herein, neither the Trustee, in its individual capacity, nor any of its
affiliates may offer to purchase any Specially Serviced Mortgage Loan or any
REO Property. In addition, the Special Servicer may accept an offer that is not
the highest offer if it determines, in accordance with the servicing standards
set forth in the Pooling and Servicing Agreement, that acceptance of such offer
would be in the best interests of the Certificateholders (for example, if the
prospective buyer making the lower offer is more likely to perform its
obligations, or other terms offered by the prospective buyer making the lower
offer are more favorable).
The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan within 30
days after the servicing of such Mortgage Loan is transferred to the Special
Servicer. The Special Servicer will deliver each Asset Status Report to the
Master Servicer, the Directing Certificateholder and the Rating Agencies. The
Directing Certificateholder may object to any Asset Status Report within 10
business days of receipt; provided, however, that the Special Servicer shall
implement the recommended action as outlined in such Asset Status Report if it
makes an affirmative determination that such objection is not in the best
interest of all the Certificateholders. In connection with making such
affirmative determination, the Special Servicer will request a vote by all the
Certificateholders. If the majority of Certificateholders fail within five days
after the notice of such vote is sent to them to reject such Asset Status
Report, the Special Servicer shall implement the same. If the majority of
Certificateholders reject the Asset Status Report, the Special Servicer shall
revise such Asset Status Report as set forth below. If the Directing
Certificateholder does not disapprove an Asset Status Report within 10 business
days, the Special Servicer shall implement the recommended action as outlined
in such Asset Status Report.
If the Directing Certificateholder disapproves such Asset Status Report
and the Special Servicer has not made the affirmative determination described
above, the Special Servicer will revise such Asset Status Report as soon as
practicable thereafter, but in no event later than 30 days after such
disapproval. The Special Servicer will revise such Asset Status Report until
the earlier of (1) the Directing Certificateholder's failure to disapprove such
revised Asset Status Report as described above; or (2) the Special Servicer
makes a determination that such objection is not in the best interests of the
Certificateholders, or (3) the passage of ninety (90) days from the date of
preparation of the first Asset Status Report. The Special Servicer shall
implement the recommended action as outlined in such Asset Status Report in a
commercially reasonable manner.
The Special Servicer will not be required to take or refrain from taking
any action in connection with any Asset Status Report that would cause it to
violate applicable law, this Agreement, including the Servicing Standard, or
the REMIC Provisions. No direction of the Directing Certificateholder shall (1)
require or cause the Special Servicer to violate the terms of a Specially
Serviced Mortgage Loan, applicable law or any provision of this Agreement,
including the Servicing Standard and to maintain the REMIC status of each Trust
REMIC, (2) result in the imposition of a "prohibited transaction" or
"prohibited contribution" tax under the REMIC Provisions, (3) expose the Master
Servicer, the Special Servicer, the Depositor, a Mortgage Loan Seller, the
trust fund, the Trustee or their officers, directors, employees or agents to
any claim, suit or liability, or (4) materially expand the scope of the Special
Servicer's or the Master Servicer's responsibilities under this Agreement.
"Directing Certificateholder" means the Controlling Class
Certificateholder selected by the Holders of more than 50% of the Percentage
Interests in the Controlling Class, by Certificate Balance; provided, however,
that (1) absent such selection, (2) until a Directing Certificateholder is so
selected or (3) upon receipt by the Trustee of a notice from the Holders of
more than 50% of the Percentage Interests in the Controlling Class, by
Certificate Balance, that a Directing Certificateholder is no longer
designated, the Controlling Class Certificateholder that owns the largest
aggregate Certificate Balance of the Controlling Class will be the Directing
Certificateholder.
S-89
<PAGE>
"Controlling Class" means, as of any date of determination, the most
subordinate class of Regular Certificates then outstanding that then has an
aggregate Certificate Balance at least equal to (a) 25% of the initial
Certificate Balance of such class, in the case of the Class O Certificates, or
(b) 50% of the initial Certificate Balance of such class, in the case of any
class of Certificates other than the Class O Certificates (or if no such class
exists, the most subordinate class then outstanding). As of the Closing Date,
the Controlling Class will be the Class O Certificates.
"Controlling Class Certificateholders" means each Holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified by
the Certificate Registrar to the Trustee from time to time by such Holder (or
Certificate Owner).
AMENDMENTS, MODIFICATIONS, EXTENSIONS AND WAIVERS
The Master Servicer and the Special Servicer have, subject to the
restrictions noted in the Pooling and Servicing Agreement, the authority to
prepare and execute any modifications, waivers, consents or amendments with
respect to any Mortgage Loan, including modification of the Mortgage Rate,
forgiveness of principal and interest payments, and extension of the maturity
date. Neither the Master Servicer nor the Special Servicer may amend, modify,
waive or otherwise consent to the change of the stated maturity date of any
Mortgage Loan, the payment of principal of or interest (including Default
Interest) on any Mortgage Loan, or any other term of any Mortgage Loan, unless
(1) such amendment, modification, waiver or consent is not a "significant
modification" under Section 1001 of the Code, (2) if such amendment,
modification, waiver or consent would constitute a "significant modification"
under Section 1001 of the Code, such modification is occasioned by a default or
a reasonably foreseeable default on such Mortgage Loan, or (3) the Master
Servicer or the Special Servicer shall have received an Opinion of Counsel (at
the trust fund's expense) that such amendment, modification or waiver would not
cause an imposition of a tax under the REMIC Provisions or cause a loss of the
REMIC status of any REMIC.
After a default in the payment of a Balloon Payment, the Special Servicer
acting in accordance with the servicing standards set forth in the Pooling and
Servicing Agreement, may grant any number of successive extensions of up to 12
months (or the period from the beginning of the first of such extension, if
shorter) on the defaulted Mortgage Loan. The Special Servicer may not grant any
extension (whether relating to a default in the payment of a Balloon Payment or
otherwise) that (1) permits the related borrower to make payments of only
interest for a period of longer than 12 months in the aggregate, (2) extends
the maturity date of the related Mortgage Loan beyond the date that is 10 years
before the expiration of any related ground lease with respect to the Mortgaged
Property securing such Mortgage Loan without the written consent of each Rating
Agency, (3) extends the maturity date of the related mortgage loan beyond the
date that is 5 years from the original maturity date of such Mortgage Loan
based on its original amortization schedule or (4) extends the maturity date of
the related mortgage loan to a date later than two years prior to the Rated
Final Distribution Date.
The trust fund will indemnify the Depositor, the Master Servicer, the
Special Servicer and the Directing Certificateholder, and any of the directors,
officers, employees or agents of the Depositor, the Master Servicer, the
Special Servicer, or the Directing Certificateholder (or of any general partner
of any of them) against any loss, liability or expense incurred in connection
with any legal action relating to the Pooling and Servicing Agreement or the
Certificates not (i) incurred by reason of its respective willful misfeasance,
bad faith, fraud or negligence or (in the case of the Master Servicer, Special
Servicer, or Directing Certificateholder) a breach of the Servicing Standard in
the performance of its respective duties or by reason of reckless disregard of
its respective obligations or duties hereunder of (ii) imposed by any taxing
authority.
THE TRUSTEE
The Chase Manhattan Bank, a New York banking corporation with its
principal offices in New York, New York, will act as the Trustee pursuant to
the Pooling and Servicing Agreement. The Trustee's corporate trust office is
located at 450 West 33rd Street, 14th Floor, New York, New York 10001,
Attention: Capital Markets Fiduciary Services (CMBS).
The Trustee may resign at any time by giving written notice to the
Depositor, the Master Servicer, the Special Servicer and the Rating Agencies.
Upon such notice of the Trustee's resignation, the Master Servicer will appoint
a successor trustee. If no successor trustee is appointed within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for appointment of a successor trustee.
The Depositor or the Master Servicer may remove the Trustee if, among
other things, (1) the Trustee ceases to be eligible to continue as such under
the Pooling and Servicing Agreement, (2) the Trustee at any time becomes
incapable of acting, (3) the Trustee is adjudged bankrupt or insolvent, (4) a
receiver of the Trustee or its property is appointed, or (5) any public
S-90
<PAGE>
officer takes charge or control of the Trustee or its property. The
Certificateholders representing a majority of the aggregate Voting Rights may
remove the Trustee upon written notice to the Master Servicer, the Special
Servicer, the Depositor and the Trustee. No resignation or removal of the
Trustee or appointment of a successor trustee will become effective until the
acceptance of the appointment by the successor trustee.
The trust fund will indemnify the Trustee and its directors, officers,
employees, agents and affiliates against any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees) arising in
respect of the Pooling and Servicing Agreement or the Certificates (but only to
the extent that they are expressly reimbursable under the Pooling and Servicing
Agreement or are "unanticipated expenses incurred by the REMIC" under Treasury
Regulations Section 1.860G-1(b)(3)(ii)) other than those resulting from the
negligence, fraud, bad faith or willful misconduct of the Trustee and those for
which such indemnified persons are indemnified by the Master Servicer or the
Special Servicer as described in the last sentence of this paragraph. The
Trustee will not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties under the Pooling
and Servicing Agreement or in the exercise of any of its rights or powers if,
in the Trustee's opinion, the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Each of the
Master Servicer and the Special Servicer will indemnify the Trustee and its
directors, officers, employees, agents and affiliates against any losses,
liabilities, damages, claims and expenses resulting from the willful
misconduct, fraud, bad faith or negligence in the performance of the Master
Servicer's or the Special Servicer's respective duties under the Pooling and
Servicing Agreement or by reason of reckless disregard of the Master Servicer's
or the Special Servicer's respective obligations and duties under the Pooling
and Servicing Agreement.
If no event of default has occurred of which the Trustee has actual
knowledge or, after the curing of all events of default which may have
occurred, the Trustee is required to perform only those duties specifically
required under the Pooling and Servicing Agreement. Upon receipt of the various
certificates, reports and other instruments required to be furnished to it, the
Trustee is required to examine such documents and to determine only whether
they conform on their face to the requirements of the Pooling and Servicing
Agreement.
During the continuance of an event of default of which it has actual
knowledge, the Trustee shall exercise such of the rights and powers vested in
it by the Pooling and Servicing Agreement, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affair.
If the Master Servicer fails to make any required Advance, the Trustee, as
successor master servicer, will be required to make such Advance to the extent
that such Advance is not deemed to be nonrecoverable. The Trustee will be
entitled to rely conclusively on any determination by the Master Servicer that
an Advance, if made, would be nonrecoverable (any such Advance, a
"Nonrecoverable Advance"). The Trustee will be entitled to reimbursement for
each Advance made by it in the same manner and to the same extent as the Master
Servicer. See "--Advances" herein.
DUTIES OF THE TRUSTEE
The Trustee, the Master Servicer and the Special Servicer will make no
representation as to the validity or sufficiency of the Pooling and Servicing
Agreement, the Certificates or this prospectus supplement or the validity,
enforceability or sufficiency of the Mortgage Loans or related documents. The
Trustee will not be accountable for the use or application by the Depositor of
any Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Master Servicer or the
Special Servicer, in respect of the Mortgage Loans, or any funds deposited in
or withdrawn from the Collection Account or the Distribution Account by the
Depositor, the Master Servicer or the Special Servicer, other than with respect
to any funds held by the Trustee.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer will be entitled to receive a monthly servicing fee
(the "Servicing Fee") with respect to each Mortgage Loan and for each
Distribution Date equal to one-twelfth (1/12) of a per annum rate (the related
"Servicing Fee Rate") ranging from 0.0003% to 0.001% (as set forth in Annex A)
multiplied by the Scheduled Principal Balance of such Mortgage Loan as of the
Due Date in the month preceding the month in which such Distribution Date
occurs. The Servicing Fee relating to each Mortgage Loan will be retained by
the Master Servicer from payments and collections (including Insurance Proceeds
and Liquidation Proceeds) on such Mortgage Loan. The Master Servicer will also
be entitled to retain as additional servicing compensation:
(1) investment income earned on amounts on deposit in the Collection
Account, the Reserve Accounts (to the extent consistent with applicable law
and the related Mortgage Loan Documents) and the Interest Reserve Account;
S-91
<PAGE>
(2) amounts collected on the Mortgage Loans that are not Specially Serviced
Mortgage Loans in the nature of late payment charges, late fees, "insufficient
funds" check charges (including with respect to Specially Serviced Mortgage
Loans), loan service transaction fees, extension fees, demand fees, loan
modification fees, assumption fees, beneficiary statement charges and similar
fees and charges (but excluding any Prepayment Premiums, Yield Maintenance
Charges, Excess Interest, Default Interest or other amounts required to be
deposited or retained in the Collection Account);
(3) financial and lease reporting fees relating to any Mortgage Loan that is
not a Specially Serviced Mortgage Loan and to the extent permitted under the
related Mortgage Loan; and
(4) Prepayment Interest Surplus (to the extent not offset against any
Prepayment Interest Shortfall in accordance with the Pooling and Servicing
Agreement).
The Master Servicer will reimburse the Trustee for certain out-of-pocket
expenses incurred by the Trustee in the performance of its duties in accordance
with the Pooling and Servicing Agreement.
The Master Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described herein).
SPECIAL SERVICING
With respect to any Mortgage Loan that is designated a Specially Serviced
Mortgage Loan, the Master Servicer will transfer its servicing responsibilities
to the Special Servicer, but will continue to (1) receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer), (2) make
certain calculations relating to such Mortgage Loan, and (3) make remittances
and prepare certain reports to the Trustee relating to such Mortgage Loan. If
the related Mortgaged Property is acquired in respect of any such Mortgage Loan
whether through foreclosure, deed-in-lieu of foreclosure or otherwise (upon
acquisition, an "REO Property"), the Special Servicer will continue to be
responsible for the operation and management thereof. The Master Servicer will
have no responsibility for the performance by the Special Servicer of its
duties under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will define a "Specially Serviced
Mortgage Loan" to include any Mortgage Loan with respect to which:
(1) the related borrower is 60 or more days delinquent (without giving
effect to any grace period) in the payment of principal and interest
(regardless of whether P&I Advances have been reimbursed in respect thereof);
(2) the related borrower has expressed to the Master Servicer its inability
to pay the Mortgage Loan or a hardship in paying the Mortgage Loan in
accordance with its terms;
(3) the Master Servicer has received notice that the related borrower has
(a) become the subject of any bankruptcy, insolvency or similar proceeding,
(b) admitted in writing its inability to pay its debts as they come due, or
(c) made an assignment for the benefit of creditors;
(4) the Master Servicer has received notice of a foreclosure or threatened
foreclosure of any lien on the Mortgaged Property securing such Mortgage Loan;
(5) a default of which the Master Servicer has notice (other than a failure
by the related borrower to pay principal or interest) and which materially and
adversely affects the interests of the Certificateholders has occurred and
remains unremedied for the applicable grace period specified in the Mortgage
Loan (or, if no grace period is specified, 60 days); provided, that in any
case a default requiring a Property Advance will be deemed to materially and
adversely affect the interests of the Certificateholders;
(6) the related borrower has failed to make a Balloon Payment when due
(unless the Master Servicer and the Special Servicer agree in writing that
such Mortgage Loan is likely to be paid in full within 30 days after such
default);
(7) the Master Servicer proposes to commence foreclosure or other workout
arrangements; or
(8) the Master Servicer otherwise determines that there is a material risk
of default by the related borrower.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan:
(1) with respect to the circumstances described in clauses (1) and (6)
above, when the related borrower has brought the Mortgage Loan current and
thereafter has made three consecutive full and timely Monthly Payments
thereon;
S-92
<PAGE>
provided that with respect to the circumstances described in clause (6), the
related borrower may satisfy the requirements above pursuant to any workout
implemented by the Special Servicer;
(2) with respect to the circumstances described in clauses (2) and (4)
above, when such circumstances cease to exist in the good faith judgment of
the Special Servicer and with respect to the circumstances described in
clauses (3) and (7), when such circumstances cease to exist;
(3) with respect to the circumstances described in clause (5) above, when
such default is cured; or
(4) with respect to the circumstances described in clause (8) above, when
the Master Servicer determines that there is no longer a material risk of
default by the related borrower,
provided that, in any such case, no circumstance exists (as described above) at
such time that would cause such Mortgage Loan to be otherwise characterized as
a Specially Serviced Mortgage Loan.
If any Specially Serviced Mortgage Loan, in accordance with its original
terms or as modified in accordance with the Pooling and Servicing Agreement,
becomes a performing Mortgage Loan (through workout by the Special Servicer or
otherwise) for three consecutive Monthly Payments (provided no additional event
of default is foreseeable in the reasonable judgment of the Special Servicer),
the Special Servicer will return the full servicing responsibilities of such
Mortgage Loan (a "Corrected Mortgage Loan") to the Master Servicer.
The Special Servicer may be removed and a successor special servicer may
be appointed by the Directing Certificateholder at will. If any such removal is
made without cause, then the costs of transferring the servicing
responsibilities to a successor Special Servicer will be paid by the removing
Certificateholders as described in the Pooling and Servicing Agreement.
Notwithstanding the foregoing, the removal of the Special Servicer and the
appointment of a successor special servicer will not be effective until (1) the
successor special servicer has assumed in writing all of the responsibilities,
duties and liabilities of the Special Servicer under the Pooling and Servicing
Agreement pursuant to an agreement satisfactory to the Trustee, and (2) each of
the Rating Agencies confirms to the Trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading, withdrawal
or qualification of the rating then assigned by such Rating Agency to any class
of Certificates.
The Special Servicer will be entitled to certain fees, including a special
servicing fee (the "Special Servicing Fee") equal to one-twelfth (1/12) of
0.25% of the outstanding Scheduled Principal Balance of each Specially Serviced
Mortgage Loan on a monthly basis. In addition to the Special Servicing Fee, the
Special Servicer will also receive, with respect to any Specially Serviced
Mortgage Loan or REO Property that is sold or transferred or otherwise
liquidated (except in connection with the repurchase of a Mortgage Loan as
described under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase"), a disposition fee (the "Disposition Fee") equal to
the product of (1) the excess, if any, of (a) the proceeds of the sale or
liquidation of such Specially Serviced Mortgage Loan or REO Property over (b)
any broker's commission and related brokerage referral fees and (2) 1%.
Furthermore, the Special Servicer will receive, as additional servicing
compensation, a workout fee (the "Workout Fee") equal to the product of 1.0%
and the amount of Net Collections received by the Master Servicer or the
Special Servicer with respect to each Corrected Mortgage Loan. If any Corrected
Mortgage Loan again becomes a Specially Serviced Mortgage Loan, any right to
the Workout Fee relating to such Mortgage Loan earned from the initial
modification, restructuring or workout thereof will terminate, and the Special
Servicer will be entitled to a new Workout Fee for such Specially Serviced
Mortgage Loan upon resolution or workout of the subsequent event of default
under such Specially Serviced Mortgage Loan. Each of the foregoing fees, along
with certain expenses related to special servicing of a Mortgage Loan, will be
payable out of funds otherwise available to pay principal and interest on the
Certificates. The Special Servicer will also be entitled to retain as
additional servicing compensation (1) all investment income earned on amounts
on deposit in any REO Account and (2) to the extent permitted under the related
Mortgage Loan, all amounts collected with respect to the Specially Serviced
Mortgage Loans in the nature of late payment charges, late fees, assumption
fees, loan modification fees, extension fees, financial and lease reporting
fees (to the extent such fees are not required to be remitted to the related
borrower pursuant to the related promissory note), loan service transaction
fees, demand fees, beneficiary statement charges or similar items (but
excluding any Default Interest, Yield Maintenance Charges or other Prepayment
Premiums or Excess Interest), in each case to the extent received with respect
to any Specially Serviced Mortgage Loan and not required to be deposited or
retained in the Collection Account pursuant to the Pooling and Servicing
Agreement.
S-93
<PAGE>
"Net Collections" means, with respect to any Corrected Mortgage Loan, an
amount equal to all payments on account of principal and interest on such
Mortgage Loan and all Prepayment Premiums, Yield Maintenance Charges and Excess
Interest.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Monthly Reports. On each Distribution Date, the Trustee will mail to each
Certificateholder, with copies to the Depositor, the Paying Agent, the
Underwriters, the Master Servicer and each Rating Agency, a statement in CSSA
format on the distribution to be made on such date, setting forth for each
class:
(1) The Pooled Principal Distribution Amount and the amount allocable to
principal included in Available Funds;
(2) The Class Interest Distribution Amount distributable to such class and
the amount of Available Funds allocable thereto, together with any Class
Interest Shortfall allocable to such class;
(3) The amount of any P&I Advances by the Master Servicer or the Trustee
included in the amounts distributed to the Certificateholders;
(4) The Certificate Balance of each class of Certificates after giving
effect to the distribution of amounts in respect of the Pooled Principal
Distribution Amount on such Distribution Date;
(5) Realized Losses and their allocation to the Certificate Balance of any
class of Certificates;
(6) The Scheduled Principal Balance of the Mortgage Loans as of the Due Date
preceding such Distribution Date;
(7) The number and aggregate principal balance of the Mortgage Loans (a)
delinquent one month, (b) delinquent two months, (c) delinquent three or more
months, (d) as to which foreclosure proceedings have been commenced, and (e)
that otherwise constitute Specially Serviced Mortgage Loans, and, with respect
to each Specially Serviced Mortgage Loan, the amount of Property Advances made
during the related Collection Period, the amount of P&I Advances made on such
Distribution Date, the aggregate amount of Property Advances made that remain
unreimbursed and the aggregate amount of P&I Advances made that remain
unreimbursed;
(8) With respect to any Mortgage Loan that became an REO Mortgage Loan
during the preceding calendar month, the principal balance of such Mortgage
Loan as of the date it became an REO Mortgage Loan;
(9) As of the Due Date preceding such Distribution Date, as to any REO
Property sold during the related Collection Period, the date on which the
Special Servicer made a Final Recovery Determination and the amount of the
proceeds of such sale deposited into the Collection Account, and the aggregate
amount of REO Proceeds and Net REO Proceeds (in each case other than
Liquidation Proceeds) and other revenues collected by the Special Servicer
with respect to each REO Property during the related Collection Period and
credited to the Collection Account, in each case identifying such REO Property
by name;
(10) The outstanding principal balance of each REO Mortgage Loan as of the
close of business on the immediately preceding Due Date and the appraised
value of the related REO Property in the most recent appraisal obtained;
(11) The amount of the servicing fee and special servicing fee paid to the
Master Servicer and Special Servicer with respect to such Distribution Date,
and the amount of the additional servicing compensation or additional special
servicing fee that was paid to the Master Servicer and Special Servicer with
respect to such Distribution Date;
(12) The amount of any Special Servicing Fee, Disposition Fee or Workout Fee
paid to the Special Servicer with respect to such Distribution Date;
(13) The amount of any Appraisal Reduction allocated during the related
Collection Period on a loan-by-loan basis and the total amount of Appraisal
Reductions made through such Distribution Date; and
(14) (a) The amount of Yield Maintenance Charges or Prepayment Premiums
collected and any Excess Interest received during the related Collection
Period, and (b) the amount of Default Interest received during the related
Collection Period.
In the case of information furnished pursuant to clauses (1), (2), (3) and
(14)(a) above, the amounts will be expressed as a dollar amount in the
aggregate for all Certificates of each applicable class, and will be expressed
as a dollar amount for each class of Certificates for a Certificate having a
denomination of $1,000 initial Certificate Balance or Notional Balance.
S-94
<PAGE>
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during such calendar
year was a holder of a Certificate (except for a Residual Certificate) a
statement containing the information set forth in clauses (1) and (2) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trustee will be
deemed to have been satisfied to the extent that it provided substantially
comparable information pursuant to any requirements of the Code as from time to
time in effect.
On each Distribution Date, the Trustee will mail to each holder of a
Residual Certificate a copy of the reports mailed to the other
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed on the Residual Certificates on such
Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during such calendar
year was a holder of a Residual Certificate a statement setting forth the
amounts actually distributed on such Certificate aggregated for such calendar
year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee will be deemed to have been
satisfied to the extent that it provided substantially comparable information
pursuant to any requirements of the Code as from time to time in effect.
In addition, the Trustee will provide each Certificateholder with any
additional information regarding the Mortgage Loans that the Master Servicer or
the Special Servicer, in its sole discretion, delivers to the Trustee for
distribution to the Certificateholders. Also, certain information made
available in the Distribution Date statements may be obtained by accessing a
World Wide Website maintained by the Trustee at http://www.chase.com/sfa.
Other Available Information. The Master Servicer or the Special Servicer,
if applicable, will promptly give notice to the Trustee, who will provide a
copy to each Certificateholder, each Rating Agency, the Depositor, the
Underwriters, the related Mortgage Loan Seller and the Master Servicer or the
Special Servicer (if affecting a Special Serviced Mortgage Loan), of (1) any
notice from a borrower or insurance company regarding an upcoming voluntary or
involuntary prepayment (including that resulting from a Casualty or
Condemnation) of all or part of the related Mortgage Loan (provided that a
request by a borrower or other party for a quotation of the amount necessary to
satisfy all obligations with respect to a Mortgage Loan will not, in and of
itself, be deemed to be such notice); and (2) any other occurrence known to it
with respect to a Mortgage Loan or REO Property that the Master Servicer or the
Special Servicer determines in accordance with the servicing standards set
forth in the Pooling and Servicing Agreement would have a material effect on
such Mortgage Loan or REO Property. The notice referred to in (2) will include
an explanation as to the reason for such material effect (provided that any
extension of the term of any Mortgage Loan will in any event be deemed to have
a material effect).
In addition to the other reports and information made available and
distributed to the Depositor, the Underwriters, the Trustee or the
Certificateholders pursuant to the provisions of the Pooling and Servicing
Agreement, the Master Servicer and the Special Servicer will, in accordance
with such reasonable rules and procedures as they may adopt, also make
available any information relating to the Mortgage Loans, the Mortgaged
Properties or the borrowers for review by the Depositor, the Underwriters, the
Trustee, the Certificateholders and any other persons to whom the Master
Servicer or the Special Servicer, as the case may be, believes such disclosure
is appropriate, unless prohibited by applicable law or by any documents related
to a Mortgage Loan. In providing such additional information, the Master
Servicer or the Special Servicer may, to the extent it deems such action to be
necessary or appropriate, require the recipient of such information to execute
an agreement governing the availability, use and disclosure of such
information. Such agreement may also contain indemnification provisions for the
Master Servicer or the Special Servicer, as applicable, against any liability
or damage that may arise from disclosing such information.
Upon reasonable prior written request, the Trustee will also make
available during normal business hours, for review by the Depositor, the Rating
Agencies, any Certificateholder, the Underwriters, any person identified to the
Trustee by a Certificateholder as a prospective transferee of a Certificate and
any other persons to whom the Trustee believes such disclosure is appropriate,
the following items:
(1) the Pooling and Servicing Agreement;
(2) all monthly statements to Certificateholders delivered since the Closing
Date;
(3) all annual statements as to compliance delivered to the Trustee and the
Depositor; and
(4) all annual independent accountants' reports delivered to the Trustee and
the Depositor.
S-95
<PAGE>
The Master Servicer or the Special Servicer, as appropriate, will make
available at its offices during normal business hours, for review by the
Depositor, the Underwriters, the Trustee, the Rating Agencies, any
Certificateholder, any person identified to the Master Servicer or the Special
Servicer, as applicable, by a Certificateholder as a prospective transferee of
a Certificate, and any other persons to whom the Master Servicer or the Special
Servicer, as applicable, believes such disclosure is appropriate, the following
items:
(1) the inspection reports prepared by or on behalf of the Master Servicer
or the Special Servicer, as applicable, in connection with the property
inspections conducted by the Master Servicer or the Special Servicer, as
applicable;
(2) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Master Servicer or the Special Servicer; and
(3) any and all officer's certificates and other evidence delivered to the
Trustee and the Depositor to support the Master Servicer's determination that
any Advance was, or if made, would be, a Nonrecoverable Advance, in each case
except to the extent doing so is prohibited by applicable law or by any
document relating to a Mortgage Loan.
Each of the Master Servicer, the Special Servicer and the Trustee will be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses incurred by it in providing copies of or access to any of the
above information. However, any such costs and expenses arising from any such
request by a Rating Agency will be paid by the Master Servicer.
The Master Servicer will, on behalf of the trust fund, prepare, sign and
file with the Commission any and all reports, statements and information
relating to the trust fund that the Master Servicer or the Trustee determines
are required to be filed with the Commission pursuant to Sections 13(a) or
15(d) of the 1934 Act. Each such report, statement and information must be
filed on or before the required filing date for such report, statement or
information. Notwithstanding the foregoing, the Depositor will file with the
Commission, within 15 days of the Closing Date, a Form 8-K together with the
Pooling and Servicing Agreement.
None of the Trustee, the Master Servicer and the Special Servicer will be
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third-party for inclusion in any notice or in any other
report or information furnished or provided by the Trustee, the Master Servicer
or the Special Servicer under the Pooling and Servicing Agreement. The Trustee,
the Master Servicer and the Special Servicer will be indemnified and held
harmless by the trust fund against any loss, liability or expense incurred in
connection with any legal action relating to any statement or omission or
alleged statement or omission in or from such notice, report or information,
including any report filed with the Commission.
VOTING RIGHTS
The "Voting Rights" assigned to each class will be:
(1) 0% in the case of the Residual Certificates;
(2) in the case of any other class of Certificates, other than the Class
A-EC1 and Class A-EC2 Certificates, a percentage equal to the product of (a)
99% and (b) a fraction, the numerator of which is equal to the aggregate
outstanding Certificate Balance of such class and the denominator of which
is equal to the aggregate outstanding Certificate Balances of all classes of
Certificates; and
(3) in the case of the Class A-EC1 and Class A-EC2 Certificates, 0.50%
and 0.50%, respectively.
The Voting Rights of any class of Certificates will be allocated among
Certificateholders of such class in proportion to their respective percentage
interests; provided, however, that any Certificate held or beneficially owned
by the Depositor, the Master Servicer, the Special Servicer, the Trustee, a
property manager or a borrower or any affiliate thereof will be deemed not to
be outstanding and the Voting Rights to which it is entitled will not be taken
into account in determining whether the requisite percentage of Voting Rights
necessary to effect any consent, approval or waiver that specifically relates
to any such person has been obtained (unless such consent, approval or waiver
is with respect to an action that would materially and adversely affect the
interests of the holders of any class of Certificates while any such person is
the holder of Certificates aggregating not less than 66-2/3% of the Percentage
Interest of any such class). For purposes of determining Voting Rights, the
Certificate Balance of any class will be deemed to be reduced by the amount
allocated to such class of any Appraisal Reductions related to Mortgage Loans
as to which Liquidation Proceeds or other final payment has not yet been
received. The Voting Rights of any class of Certificates will be allocated
among Certificateholders of such class in proportion to their respective
Percentage Interests, except that any Certificate registered in the name of the
Depositor, the Master Servicer, the Special Servicer, any borrower, the
Trustee, a property manager relating to any Mortgaged Property or any of their
respective
S-96
<PAGE>
affiliates shall be deemed not to be outstanding and the Voting Rights to which
it is entitled shall not be taken into account in determining whether the
requisite percentage of Voting Rights necessary to effect any consent, approval
or waiver that specifically relates to any such person has been obtained
(unless such consent, approval or waiver is to an action that would materially
adversely affect in any material respect the interests of the
Certificateholders of any class, while any of the foregoing persons is the
holder of Certificates aggregating not less than 66 2/3% of the Percentage
Interest of any such class).
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to the trust
fund, creating three REMICs. Upon the issuance of the Offered Certificates,
O'Melveny & Myers LLP will deliver its opinion, generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
(1) each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code of 1986 (the "Code"), and
(2) (a) each of the Class A-1, Class A-2, Class B, Class C, Class D, Class E
and Class F Certificates and each Class of the Private Certificates will be a
class of REMIC "regular interests" and (b) the Class R-I Certificates, the
Class R-II Certificates and the Class R-III Certificates each will be the sole
class of "residual interests" in a related REMIC referred to respectively as
REMIC I or the "Upper-Tier REMIC," REMIC II or the "Middle-Tier REMIC," and
REMIC III or the "Lower-Tier REMIC."
Because they represent REMIC regular interests, the Regular Certificates
generally will be treated as newly originated debt instruments for federal
income tax purposes. Holders of such classes of Certificates will be required
to include in income all interest on such Certificates in accordance with the
accrual method of accounting, regardless of a Certificateholder's usual method
of accounting. With the exception of the Class E and Class F Certificates, none
of the Offered Certificates is expected to be treated for Federal income tax
reporting purposes as having been issued with original issue discount. For
purposes of determining the rate of accrual of market discount, original issue
discount and premium for federal income tax purposes, it has been assumed that
the Mortgage Loans will prepay at the rate of 0% CPR, and all ARD Loans will
prepay on their related Anticipated Repayment Dates. No representation is made
as to whether the Mortgage Loans will prepay at that rate or any other rate.
Certain classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a class of Certificates will be treated as holding a Certificate with bond
premium will depend on such Certificateholder's purchase price. Holders of such
classes of Certificates should consult their own tax advisors regarding the
possibility of making an election to amortize any such premium. See "Material
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Premium" in the prospectus.
Offered Certificates held by a mutual savings bank or domestic building
and loan association will represent interests in "qualifying real property
loans" within the meaning of Section 593(d) of the Code. Offered Certificates
held by a real estate investment trust will constitute "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code, and income with respect
to Offered Certificates will be considered "interest on obligations secured by
mortgages on real property or on interests in real property" within the meaning
of Section 856(c)(3)(B) of the Code. Offered Certificates held by a domestic
building and loan association will generally constitute a "regular or residual
interest in a REMIC" with the meaning of Section 7701(a)(19)(C)(xi) of the Code
only in the proportion that the Mortgage Loans are secured by multifamily
apartment buildings and other residential real property (approximately 25.97%).
See "Material Federal Income Tax Consequence--Federal Income Tax Consequences
for REMIC Certificates" in the prospectus.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, See "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates" in the
prospectus.
Potential investors also should take note of the following recent changes
and proposed changes in federal income tax law. The summary of these changes is
intended to modify the prospectus' tax consequences summary of federal income
tax law as it relates to these points.
The administration's budget proposal for the fiscal year 2000, released
February 1, 1999, proposes legislation that would amend the market discount
provisions of the Code to require holders of debt instruments, such as REMIC
Regular Certificates, that use an accrual method of accounting to include
market discount in income as it accrues. For purposes of determining and
accruing market discount, the proposed legislation would provide that a
Certificateholder's yield can not exceed 5 percentage points over the greater
of (1) the original yield-to-maturity of the Certificate, or (2) the applicable
Federal rate in effect at the time the Certificateholder acquired the
Certificate. It is unclear how this proposal would apply
S-97
<PAGE>
to instruments, such as the REMIC Regular Certificates, which have uncertain
yields to maturity attributable to possible prepayments on an underlying pool
of prepayable securities. This proposal was not included in the Financial
Freedom Act of 1999, introduced in the House of Representatives July 15, 1999,
or the Taxpayer Refund Act of 1999, introduced in the Senate July 19, 1999. See
generally "Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates--Market Discount" in the prospectus. This proposal is
intended to be effective for debt instruments acquired on or after the date the
proposed legislation is enacted.
In connection with a sale, exchange or redemption of an Offered
Certificate held as a capital asset of an initial holder, to the extent any
gain is treated as capital, non-corporate taxpayers will be subject to a lower
maximum tax rate (20%) than the maximum rate applicable to ordinary income of
such taxpayers (39.6%) for Offered Certificates held for more than one year.
The maximum tax rate for corporations is the same with respect to ordinary
income and capital gains. Capital gains will be treated as long term capital
gains if an Offered Certificate is held for more than one year. See generally
"Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Sale or Exchange of Regular Certificates" in the prospectus.
Foreclosure property is real property acquired by the REMIC Pool in
connection with the default or imminent default of a qualified mortgage, and
may not be held beyond the close of the third taxable year following the year
it was acquired by the REMIC Pool, unless the Internal Revenue Service grants
an extension of up to an additional three years for such property to be held
pending disposition, in which case such property must be disposed of before the
expiration of the extension period. See generally "Federal Income Tax
Consequences--Taxes that May Be Imposed on the REMIC Pool--Net Income From
Foreclosure Property" and "Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Qualification as a REMIC" in the
prospectus.
Potential investors in Offered Certificates who are Non-U.S. Persons (as
defined in the prospectus) should be aware that the Internal Revenue Service
has recently amended the certification rules to be followed by Non-U.S. Persons
and payors of interest on, or proceeds from the sale or exchange of, an Offered
Certificate to obtain an exemption from or reduction in the rate of United
States federal income tax collected by withholding. These new certification
rules are not yet effective, but will generally be effective for payments made
after December 31, 2000, subject to certain transition rules for calendar years
1999 and 2000. Certifications that comply with either the current certification
rules or the new certification rules will be required at the time Offered
Certificates are acquired by a Non-U.S. Person. Certifications that comply with
current rules, however, will cease to be valid on the earlier of December 31,
2000 or their expiration date unless they are in compliance with the revised
rules. Non-U.S. Persons providing certifications that comply with the current
certification rules but not the new certification rules will therefore be
required to provide replacement certifications that comply with the modified
certification rules when those rules become effective, regardless of whether a
prior certification has expired by its terms, and in any case such a Non-U.S.
Person may be required to provide a replacement certification that complies
with the new certification rules prior to the effective date of the new rules,
at the discretion of the withholding agent. Non-U.S. Holders claiming benefit
under an income tax treaty (and not relying on the portfolio interest exemption
with respect to interest payments on Offered Certificates) may be required to
obtain a United States federal taxpayer identification number and to certify
their eligibility under the applicable treaty's limitation on benefits article
in order to comply with the new certification rules. Also, on January 13, 1999,
the Internal Revenue Service issued Notice 99-8 under which it proposed certain
changes to these new withholding certification rules for nonresident alien
individuals and foreign corporations and provided a model "qualified
intermediary" withholding agreement to be entered into between the Internal
Revenue Service and certain institutions to allow them to certify on behalf of
their non-U.S. customers or account holders who invest in securities of U.S.
issuers, such as the Offered Certificates. THE NEW WITHHOLDING TAX
CERTIFICATION RULES ARE COMPLEX AND THIS SUMMARY DOES NOT COMPLETELY DESCRIBE
THEM OR DESCRIBE ALL RULES THAT MAY BE RELEVANT TO ALL HOLDERS. EACH POTENTIAL
INVESTOR WHO IS A NON-U.S. PERSON IS STRONGLY ENCOURAGED TO CONSULT ITS OWN TAX
ADVISOR TO DETERMINE THE EFFECT THESE RULES AND PROPOSED RULES MAY HAVE ON THE
PURCHASE, OWNERSHIP AND DISPOSITION OF AN INVESTMENT IN OFFERED CERTIFICATES IN
ITS PARTICULAR CIRCUMSTANCES.
DUE TO THE COMPLEXITY OF THESE RULES AND THE CURRENT UNCERTAINTY AS TO THE
MANNER OF THEIR APPLICATION TO THE TRUST FUND AND CERTIFICATEHOLDERS, IT IS
PARTICULARLY IMPORTANT THAT POTENTIAL INVESTORS CONSULT THEIR OWN TAX ADVISORS
REGARDING THE TAX TREATMENT OF THEIR ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE CERTIFICATES.
S-98
<PAGE>
ERISA CONSIDERATIONS
SUMMARY
The Subordinate Certificates may not be purchased by or transferred to:
(1) an employee benefit plan or other retirement arrangement, including an
individual retirement account or a Keogh plan, which is subject to the
fiduciary responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or a
governmental plan subject to any federal, state or local law ("Similar Law")
that is, to a material extent, similar to the foregoing provisions of ERISA or
the Code ("Plans");
(2) a collective investment fund in which any such Plans are invested;
(3) other persons acting on behalf of any such Plan or using the assets of
any such Plan or any entity whose underlying assets include "plan assets" by
reason of a Plan's investment in the entity (within the meaning of Department
of Labor Regulations Section 2510.3 101); or
(4) an insurance company that is using assets of any insurance company
separate account or general account in which the assets of any such Plans are
invested (or which are deemed pursuant to ERISA or any Similar Law to include
assets of such Plans) other than an insurance company using the assets of its
general account under circumstances whereby the assets of the trust fund will
not be treated as "plan assets" for purposes of applying the fiduciary
responsibility and the prohibited transactions provisions of ERISA, the Code
or any Similar Law.
Each prospective transferee of a Subordinate Certificate will be required
to deliver to the Depositor, the Certificate Registrar and the Trustee either:
(a) a transferee representation letter, substantially in the form of Exhibit D
to the Pooling and Servicing Agreement, stating that such prospective
transferee is not a person referred to in clause (1), (2), (3) or (4) above, or
(b) an opinion of counsel which establishes to the satisfaction of the
Depositor, the Trustee and the Certificate Registrar that the purchase and
holding of such Certificate will not result in the assets of the trust fund
being deemed to be "plan assets" and subject to the fiduciary responsibility or
prohibited transaction provision or ERISA, the Code or any Similar Law, and
will not constitute or result in a non-exempt prohibited transaction within the
meaning of Section 406 or 407 of ERISA, Section 4975 of the Code or any Similar
Law, and will not subject the Master Servicer, the Special Servicer, the
Depositor, the Trustee or the Certificate Registrar to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code). If a prospective transferee elects to deliver the opinion of counsel
referred to in clause (b), then such opinion of counsel will be at the expense
of such prospective transferee and not the expense of the Trustee, the trust
fund, the Master Servicer, the Special Servicer, the Certificate Registrar or
the Depositor.
TO THE EXTENT ANY OFFERED CERTIFICATE IS IN BOOK-ENTRY FORM, THE HOLDER OF
THE BENEFICIAL INTEREST IN SUCH CERTIFICATE AND ANY TRANSFEREE THEREOF WILL BE
DEEMED TO HAVE REPRESENTED THAT IT IS NOT A PERSON REFERRED TO IN CLAUSES (1),
(2), (3) OR (4) ABOVE.
None of the Residual Certificates may be purchased by or transferred to a
Plan. Accordingly, the following discussion does not purport to discuss the
considerations under ERISA or Code Section 4975 with respect to the purchase,
holding or disposition of the Residual Certificates.
CERTAIN REQUIREMENTS UNDER ERISA
General. ERISA and the Code impose certain duties and restrictions on
Plans and certain persons who perform services for Plans. In accordance with
ERISA's general fiduciary standards, before investing in a Certificate a Plan
fiduciary should determine whether to do so is permitted under the governing
Plan instruments and is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of its portfolio. A
Plan fiduciary should especially consider the ERISA requirement of investment
prudence and the sensitivity of the return on the Certificates to the rate of
principal prepayments (including voluntary prepayments by the borrowers and
involuntary liquidations) on the Mortgage Loans, as discussed in "Yield and
Maturity Considerations" herein.
Parties in Interest/Disqualified Persons. Other provisions of ERISA (and
corresponding provisions of the Code) prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to
such Plan (so called "parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code). The Depositor, the
Underwriters, the Master Servicer, the Special Servicer or the Trustee or
certain affiliates thereof might be
S-99
<PAGE>
considered or might become "parties in interest" or "disqualified persons" with
respect to a Plan. If so, the acquisition or holding of Certificates by or on
behalf of such Plan could be considered to give rise to a "prohibited
transaction" within the meaning of ERISA and the Code unless an administrative
exemption described below or some other exemption is available. Special caution
should be exercised before the assets of a Plan are used to purchase a
Certificate if, with respect to such assets, the Depositor, the Underwriters,
the Master Servicer, the Special Servicer or the Trustee or an affiliate
thereof either: (1) has discretionary authority or control with respect to the
investment or management of such assets of such Plan, or (2) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such assets pursuant to an agreement or understanding that such advice will
serve as a primary basis for investment decisions with respect to such assets
and that such advice will be based on the particular needs of such Plan.
Delegation of Fiduciary Duty. Further, if the assets included in the trust
fund were deemed to constitute Plan assets, it is possible that a Plan's
investment in the Certificates might be deemed to constitute a delegation under
ERISA of the duty to manage Plan assets by the fiduciary deciding to invest in
the Certificates, and certain transactions involved in the operation of the
trust fund might be deemed to constitute prohibited transactions under ERISA
and the Code. Neither ERISA nor the Code define the term "plan assets."
The United States Department of Labor has issued regulations (the "Plan
Asset Regulations") concerning whether a Plan's assets will be considered to
include an interest in the underlying assets of an entity (such as the trust
fund) for purposes of the general fiduciary responsibility provisions of ERISA,
as well as for the prohibited transaction provisions of ERISA and the Code, if
the Plan acquires an "equity interest" (such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an interest in the
underlying assets of a trust fund. However, the Depositor cannot predict, nor
can there be any continuing assurance whether such exceptions may be
applicable, because of the factual nature of certain of the rules set forth in
the Plan Asset Regulations. For example, one of the exceptions in the Plan
Asset Regulations states that the underlying assets of an entity will not be
considered "plan assets" if less than 25% of the value of each class of equity
interests is held by "benefit plan investors," which are defined as Plans,
individual retirement accounts and employee benefit plans not subject to ERISA
(for example, governmental plans), but this exception is tested immediately
after each acquisition of an equity interest in the entity whether upon initial
issuance or in the secondary market.
ADMINISTRATIVE EXEMPTIONS
Individual Administrative Exemptions. The Department has granted to
Prudential Securities Incorporated an individual administrative exemption
(Prohibited Transaction Exemption 90-32, 55 Fed. Reg. 23147 (June 6, 1990, as
amended by Prohibited Transaction Exemption 97-34, 62 Fed. Reg. 39021 (July 21,
1997)) (the "Exemption") for certain mortgage-backed and asset-backed
certificates underwritten in whole or in part by Prudential Securities
Incorporated. The Exemption may be applicable to the initial purchase, the
holding and the subsequent resale by a Plan of certain certificates, such as
the Senior Certificates, underwritten by the Underwriters, representing
interests in pass-through trusts that consist of certain receivables, loans and
other obligations, provided that the conditions and requirements of the
Exemption are satisfied. The loans described in the Exemption include mortgage
loans such as the Mortgage Loans.
Among the conditions that must be satisfied for the Exemption to apply are
the following:
(1) The acquisition of Certificates by a Plan is on terms (including the
price for the Certificates) that are at least as favorable to the Plan as they
would be in an arm's length transaction with an unrelated party;
(2) The rights and interests evidenced by Certificates acquired by the Plan
are not subordinated to the rights and interests evidenced by other
certificates of the trust fund;
(3) The Certificates acquired by the Plan have received a rating at the time
of such acquisition that is one of the three highest generic rating categories
from either Duff & Phelps Credit Rating Co. ("Duff & Phelps"), Fitch IBCA,
Inc., Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Services, a division of the McGraw Hill Companies ("S&P");
(4) The Trustee must not be an affiliate of any of the Depositor, the
Underwriters, the Master Servicer, the Special Servicer, any obligor with
respect to the Mortgage Loans included in the trust fund constituting more
than 5% of the aggregate unamortized balance of the assets in the trust fund,
or any affiliate of such parties (the "Restricted Group");
S-100
<PAGE>
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of certificates represents not more than
reasonable compensation for underwriting the certificates; the sum of all
payments made to and retained by the Depositor pursuant to the assignment of
the mortgage loans to the trust fund represents not more than the fair market
value of such mortgage loans; the sum of all payments made to and retained by
the Master Servicer and any other Servicer represents not more than reasonable
compensation for such person's services under the pooling and servicing
agreement and reimbursement of such person's reasonable expenses in connection
therewith; and
(6) The Plan investing in the Certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Commission under the 1933
Act.
In addition, the trust fund must also meet the following requirements:
(1) The corpus of the trust fund must consist solely of assets of the type
that have been included in other investment pools;
(2) Certificates in such other investment pools must have been rated in one
of the three highest rating categories by Duff & Phelps, Fitch IBCA, Inc.,
Moody's or S&P for at least one year before the Plan's acquisition of the
Certificates pursuant to the Exemption; and
(3) Certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year before
any Plan's acquisition of the Certificates pursuant to the Exemption.
If the conditions of the Exemption are met, the acquisition, holding and
resale of Certificates by Plans would be exempt from the prohibited transaction
provisions of ERISA and the Code (regardless of whether a Plan's assets would
be considered to include an ownership interest in the Mortgage Loans in the
Mortgage Pool as the underlying assets of a trust fund).
Moreover, the Exemption provides relief from certain
self-dealing/conflict-of-interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations held in the trust provided that, among other requirements:
(1) in the case of an acquisition in connection with the initial issuance of
certificates, at least 50% of each class of certificates in which Plans have
invested is acquired by persons independent of the Restricted Group; and at
least 50% of the aggregate interest in the trust is acquired by persons
independent of the Restricted Group;
(2) such fiduciary (or its affiliate) is an obligor with respect to 5% or
less of the fair market value of the obligations contained in the trust;
(3) the Plan's investment in certificates of each class does not exceed 25%
of all of the certificates of that class outstanding at the time of the
acquisition; and
(4) immediately after the acquisition no more than 25% of the assets of the
Plan with respect to which such person is a fiduciary are invested in
certificates representing an interest in one or more trusts containing assets
sold or served by the same entity.
The Exemption does not apply to the purchasing or holding of Certificates
by Plans sponsored by the Depositor, the Underwriters, the Trustee, the Master
Servicer, the Special Servicer, any obligor with respect to Mortgage Loans
included in the trust fund constituting more than 5% of the aggregate
unamortized principal balance of the assets in the trust fund or any affiliate
of such parties.
THE CHARACTERISTICS OF THE SUBORDINATE CERTIFICATES AND THE RESIDUAL
CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTION. ACCORDINGLY, THE
SUBORDINATE CERTIFICATES AND RESIDUAL CERTIFICATES MAY NOT BE PURCHASED BY OR
TRANSFERRED TO A PLAN OR PERSON ACTING ON BEHALF OF ANY PLAN OR USING THE
ASSETS OF ANY SUCH PLAN, OTHER THAN AN INSURANCE COMPANY USING ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES IN WHICH SUCH PURCHASE OR TRANSFER WOULD
NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION.
Before purchasing a Senior Certificate, a fiduciary of a Plan should make
its own determination as to the availability of the exemptive relief provided
by the Exemption or the availability of any other prohibited transaction
exemptions, and whether the conditions of any such exemption will be applicable
to the Senior Certificates. Any fiduciary of a Plan (including an entity that
is deemed to hold Plan assets for purposes of ERISA and the Code) considering
whether to purchase a Senior Certificate should also carefully review with its
own legal advisors the applicability of the fiduciary duty and prohibited
transaction provisions of ERISA and the Code to such investment and the
availability of the Exemption.
S-101
<PAGE>
THE SALE OF SENIOR CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION BY THE DEPOSITOR, EITHER UNDERWRITER OR ANY OTHER MEMBER OF THE
RESTRICTED GROUP THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS
WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN OR THAT
THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.
EXEMPT PLAN
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, such a governmental plan may be subject to
a Similar Law. A fiduciary of a governmental plan should make its own
determination as to the need for and the availability of any exemptive relief
under any Similar Law.
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA Plans, may give rise to "unrelated
business taxable income" as described in Code Sections 511-515 and 860E.
Further, before the purchase of Residual Certificates, a prospective transferee
may be required to provide an affidavit to a transferor that it is not, nor is
it purchasing a Residual Certificate on behalf of, a "Disqualified
Organization," which term is defined under the caption "Material Federal Income
Tax Consequences" in the prospectus and includes certain tax exempt entities
not subject to Code Section 511, including certain governmental plans, as
discussed under the caption "Material Federal Income Tax Consequences" in the
prospectus. Accordingly, Plans may not purchase Residual Certificates.
LEGAL INVESTMENT
The Offered Certificates will not be mortgage related securities for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
The appropriate characterization of the Certificates under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase the Certificates, may be subject to significant
interpretive uncertainties.
The Depositor makes no representations as to the proper characterization
of the Certificates for legal investment purposes, financial institution
regulatory purposes or other purposes or as to the ability of particular
investors to purchase the Certificates under applicable legal investment
restrictions. These uncertainties may adversely affect the liquidity of the
Certificates. Accordingly, all institutions whose investment activities are
subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Certificates
constitute a legal investment or are subject to investment, capital or other
restrictions.
PLAN OF DISTRIBUTION
Prudential Securities Incorporated and Greenwich NatWest Limited, as agent
for National Westminister Bank, Plc. (together referred to herein as the
"Underwriters") have agreed, severally and not jointly, pursuant to an
Underwriting Agreement dated July 22, 1999 (the "Underwriting Agreement"), to
purchase from the Depositor the principal balances of Certificates set forth
under their names below.
<TABLE>
<CAPTION>
GREENWICH NATWEST
LIMITED, AS AGENT FOR
PRUDENTIAL SECURITIES NATIONAL WESTMINSTER
CLASS INCORPORATED BANK PLC.
- --------------------- ----------------------- ----------------------
<S> <C> <C>
Class A-1 ......... $ 88,760,400 $140,239,600
Class A-2 ......... $153,830,688 $243,049,312
Class B ........... $ 16,005,167 $ 25,287,833
Class C ........... $ 17,689,676 $ 27,949,324
Class D ........... $ 5,054,304 $ 7,985,696
Class E ........... $ 11,793,118 $ 18,632,882
Class F ........... $ 5,896,559 $ 9,316,441
</TABLE>
The Underwriters have informed the Depositor that they propose to offer
the Offered Certificates for sale from time to time in one or more negotiated
transactions, or otherwise, at varying prices to be determined, in each case,
at the time of the related sale. The Underwriters may effect such transactions
by selling such Certificates to or through dealers, and such dealers
S-102
<PAGE>
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriters or purchasers of the Certificates for whom
they may act as agent. The Underwriters and any dealers that participate with
the Underwriters in the distribution of the Certificates purchased by the
Underwriters may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of Certificates by them or the
Underwriters may be deemed to be underwriting discounts or commissions under
the 1933 Act.
The Offered Certificates are offered by the Underwriters when, as and if
issued by the Depositor, delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Offered Certificates will be made in book-entry form
through the facilities of DTC against payment therefor on or about July 28,
1999, which is the fourth business day following the date of pricing of the
Certificates. Under Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended, trades in the secondary market generally are required to settle in
three business days, unless the parties to any trade expressly agree otherwise.
Accordingly, purchasers who wish to trade Offered Certificates in the secondary
market prior to such delivery should specify a longer settlement cycle, or
should refrain from specifying a shorter settlement cycle, to the extent that
failing to do so would result in a settlement date that is earlier than the
date of delivery of such Offered Certificates.
The Depositor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the 1933 Act, or contribute to
payments that the Underwriters may be required to make in respect thereof.
Greenwich NatWest Limited, a United Kingdom broker-dealer and a member of
the Securities and Futures Authority Limited, has agreed that, as part of the
distribution of the Certificates offered hereby and subject to certain
exceptions, it will not offer or sell any Certificates within the United
States, its territories or possessions or to persons who are citizens thereof
or residents therein. The Underwriting Agreement does not limit sales of
Certificates offered hereby outside of the United States.
The Underwriters have advised the Depositor that they currently expect to
make a market in the Certificates; however, they have no obligation to do so.
Any market making may be discontinued at any time, and there can be no
assurance that an active public market for the Certificates will develop. For
further information regarding any offer or sale of the Certificates pursuant to
this prospectus supplement and the prospectus, see "Plan of Distribution" in
the prospectus.
USE OF PROCEEDS
The Depositor will apply the net proceeds from the sale of Certificates to
pay the purchase price of the Mortgage Loans, to repay indebtedness that has
been incurred to obtain funds to acquire the Mortgage Loans and to pay costs of
structuring, issuing and underwriting the Certificates.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor by O'Melveny & Myers LLP, for Prudential Securities Incorporated,
as an Underwriter, by Latham & Watkins and for Greenwich Natwest Limited, as
agent for National Westminister Bank, Plc., as Underwriter, by Sidley & Austin.
RATINGS
It is a condition to the issuance of the Offered Certificates that each
such class of Certificates be assigned the ratings indicated on the cover
hereof by Moody's and S&P, respectively.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the receipt by holders of payments of interest and principal
to which they are entitled by the Rated Final Distribution Date. The Rating
Agencies' ratings take into consideration the credit quality of the mortgage
pool, structural and legal aspects associated with the Certificates, and the
extent to which the payment stream in the mortgage pool is adequate to make
payments required under the Certificates. Ratings on mortgage pass-through
certificates do not, however, represent an assessment of the likelihood, timing
or frequency of principal prepayments by borrowers or the degree to which such
prepayments (both voluntary and involuntary) might differ from those originally
anticipated. The security ratings do not address the possibility that
Certificateholders might suffer a lower than anticipated yield. In addition,
ratings on mortgage pass-through certificates do not address the likelihood of
receipt of Prepayment Premiums or the timing of the receipt thereof or the
likelihood of collection by the Master Servicer of Default Interest. In
general, the ratings thus address credit risk and not prepayment risk.
S-103
<PAGE>
There can be no assurance as to whether any rating agency not requested to
rate the Certificates will nonetheless issue a rating and, if so, what such
rating would be. A rating assigned to the Certificates by a rating agency that
has not been requested by the Depositor to do so may be lower than the rating
assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the Certificates should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
S-104
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
DEFINITIONS PAGE
- ----------- ----
1933 Act................................................................. S-3
1997 NOI................................................................ S-46
1998 NOI................................................................ S-46
Advance Rate............................................................ S-83
Advances................................................................ S-82
anchored property....................................................... S-22
Anticipated Repayment Date.............................................. S-37
Appraisal Reduction..................................................... S-83
Appraisal Reduction Event............................................... S-83
Appraisal Value......................................................... S-46
Appraised LTV........................................................... S-46
ARD Amount.............................................................. S-46
ARD Balance............................................................. S-46
ARD Loans............................................................... S-37
Asset Status Report..................................................... S-89
Available Funds......................................................... S-62
Available Funds Allocation.............................................. S-64
Balloon Amount.......................................................... S-46
Balloon Balance......................................................... S-46
Balloon Loans........................................................... S-38
Balloon Payment......................................................... S-38
Balloon/ARD LTV Ratio................................................... S-46
Base Interest Fraction.................................................. S-67
Beneficial Owners....................................................... S-70
Book-Entry Certificate.................................................. S-70
Bridger Finance......................................................... S-11
Bridger Funding......................................................... S-11
business day............................................................. S-8
Cash Flow............................................................... S-46
Casualty................................................................ S-42
CERCLA.................................................................. S-27
Certificate Balance..................................................... S-61
Certificate Registrar................................................... S-72
Class A-EC1 Notional Balance............................................ S-61
Class A-EC2 Notional Balance............................................ S-62
Class Interest Distribution Amount...................................... S-62
Class Interest Shortfall................................................ S-63
Code.............................................................. S-11, S-97
Collection Account...................................................... S-84
Collection Period....................................................... S-63
Commission............................................................... S-3
Condemnation............................................................ S-42
Condemnation Proceeds................................................... S-62
Constant Prepayment Rate.................................... S-76, S-77, S-78
Controlling Class....................................................... S-90
Controlling Class Certificateholders.................................... S-90
Corrected Mortgage Loan................................................. S-93
CPR......................................................... S-76, S-77, S-78
Cross-Collateralized Loans.............................................. S-43
Cross-Defaulted Loans................................................... S-43
Current Occupancy....................................................... S-47
Cut-off Date Balance.................................................... S-36
S-105
<PAGE>
Cut-off Date Principal Balance.......................................... S-36
Debt Service Coverage Ratio............................................. S-46
Default Interest........................................................ S-41
Default Rate............................................................ S-63
Defeasance Lockout Period............................................... S-15
Definitive Certificate.................................................. S-70
Depositor............................................................... S-57
Directing Certificateholder............................................. S-89
Disposition Fee......................................................... S-93
Disqualified Organization.............................................. S-102
Distribution Account.................................................... S-85
Distribution Date....................................................... S-61
DSCR.............................................................. S-46, S-58
DSCRs................................................................... S-13
DTC................................................................ S-7, S-70
Due Date................................................................ S-37
Duff & Phelps.......................................................... S-100
Eligible Bank........................................................... S-85
EPA..................................................................... S-28
ERISA................................................................... S-99
ESA..................................................................... S-28
Excess Interest......................................................... S-38
Exemption.............................................................. S-100
Final Recovery Determination............................................ S-68
Form 8-K................................................................ S-48
Greenwich............................................................... S-11
Guide................................................................... S-58
Indirect Participants................................................... S-70
Insurance Proceeds...................................................... S-62
Interest Accrual Period................................................. S-63
Interest Reserve Account................................................ S-86
Interest Reserve Loan................................................... S-86
Interested Person....................................................... S-89
Liquidation Proceeds.................................................... S-62
Loan-to-Value Ratio..................................................... S-46
Lockout Period.......................................................... S-15
LTV............................................................... S-46, S-58
Master Servicer Mortgage File........................................... S-81
Monthly Debt Service.................................................... S-46
Monthly Payment......................................................... S-63
Moody's.................................................................. S-5
Mortgage................................................................ S-36
Mortgage File........................................................... S-81
Mortgage Loan Documents................................................. S-40
Mortgage Loan Purchase and Sale Agreement I............................. S-37
Mortgage Loan Purchase and Sale Agreement II............................ S-37
Mortgage Loan Sellers................................................... S-11
Mortgage Loans.......................................................... S-36
Mortgage Rate........................................................... S-63
Mortgaged Property...................................................... S-36
Net Collections......................................................... S-94
Net Mortgage Rate....................................................... S-63
Net Operating Income.................................................... S-46
Net REO Proceeds........................................................ S-63
NOI..................................................................... S-46
S-106
<PAGE>
Nonrecoverable Advance.................................................. S-91
Notional Balance......................................................... S-5
NRF..................................................................... S-11
NRFinance............................................................... S-11
Number of Units......................................................... S-47
Open.................................................................... S-39
Participants............................................................ S-70
Pass-Through Rate....................................................... S-63
Paying Agent............................................................ S-71
Permitted Investments................................................... S-85
Phase II................................................................ S-60
Physical Occupancy %.................................................... S-47
P&I Advance............................................................. S-82
Plan Asset Regulations................................................. S-100
Plans................................................................... S-99
Pool Balance............................................................ S-36
Pooled Principal Distribution Amount.................................... S-64
Pooling and Servicing Agreement......................................... S-79
Prepayment Interest Shortfall........................................... S-64
Prepayment Interest Surplus............................................. S-64
Prepayment Premium Period............................................... S-38
Prepayment Premiums............................................... S-38, S-64
Principal Prepayments................................................... S-64
Property Advances....................................................... S-82
RCRA.................................................................... S-28
Realized Loss........................................................... S-68
Record Date............................................................. S-61
Remaining Amortization Term............................................. S-47
Remaining Term to Maturity.............................................. S-47
REMIC............................................................. S-10, S-97
Remittance Date......................................................... S-82
REO Account............................................................. S-61
REO Mortgage Loan....................................................... S-64
REO Property............................................................ S-92
Residual Certificates................................................... S-11
Restricted Group....................................................... S-100
Revised Rate............................................................ S-37
Scheduled Final Distribution Date.................................... 1, S-68
Scheduled Principal Balance............................................. S-68
Senior Certificates...................................................... S-9
Senior Principal Distribution Cross-Over-Date........................... S-67
Servicing Fee........................................................... S-91
Servicing Fee Rate...................................................... S-91
shadow anchored......................................................... S-22
Similar Law............................................................. S-99
SMMEA............................................................ S-11, S-102
S&P............................................................... S-5, S-100
special purpose......................................................... S-24
Special Servicing Fee................................................... S-93
Specially Serviced Mortgage Loan........................................ S-92
Subordinate Certificates................................................. S-9
Transferor........................................................ S-11, S-57
Trustee Mortgage File................................................... S-79
Underlying Mortgage Loan Purchase Agreements............................ S-37
Underwriters........................................................... S-102
S-107
<PAGE>
Underwriting Agreement................................................. S-102
Underwritten Cash Flow.................................................. S-47
Underwritten Net Cash Flow.............................................. S-46
Underwritten NOI........................................................ S-45
Underwritten NOI DSCR................................................... S-46
Units/SF................................................................ S-47
Unscheduled Payments.................................................... S-64
Voting Rights........................................................... S-96
Weighted Average Net Mortgage Rate...................................... S-64
Weighted Average Remaining Term......................................... S-47
Withheld Amounts........................................................ S-86
Workout Fee............................................................. S-93
Year Built.............................................................. S-47
Year Renovated.......................................................... S-47
Yield Maintenance Charge................................................ S-38
Yield Maintenance Period................................................ S-38
S-108
<PAGE>
ANNEX A
EXPLANATORY NOTES
Shaded Mortgage Loans signify either single notes secured by multiple
Mortgages, or cross-collateralized/cross-defaulted notes and Mortgages.
Crossed loans (i.e., cross-collateralized or cross-defaulted Mortgage Loans)
include a summation of certain loan parameters (for example, Cut-off Date
Balance) on the top line of the loan group as designated in bold type and,
therefore, some loan totals are duplicated and must be adjusted to attain
portfolio totals.
"NRF," "Greenwich," "Bridger" and "KeyBank" denote National Realty Funding L.C.
or National Realty Finance L.C., as applicable, Greenwich Capital Financial
Products, Inc., Bridger Commercial Realty Finance LLC or Bridger Commercial
Funding LLC, as applicable and KeyBank National Association, respectively, as
originators of the Mortgage Loans.
Certain ratios including Cut-off Date Balance/Unit or SF, DSCR, LTV and Balloon
LTV are calculated on a combined basis for Mortgage Loans that are secured by
multiple Mortgaged Properties or are cross-collateralized and cross-defaulted.
"ARD" indicates the Anticipated Repayment Date.
The Amortization Term shown is the basis for determining the fixed monthly
principal and interest payment as set forth in the related Note. For those
Mortgage Loans utilizing an actual/360 interest calculation methodology, the
actual amortization to a zero balance may require more monthly payments than
indicated.
"Largest Tenant Name" refers to the tenant that represents the greatest
percentage of the total square footage at the related Mortgaged Property.
YM represents yield maintenance. "YM1," "YM2," "YM3," "YM4" and "YM5" represent
the greater of yield maintenance or one percent, two percent, three percent,
four percent and five percent of the outstanding principal balance at such
time, respectively. The "1%," "2%," "3%," "4%" and "5%" represent specified
Prepayment Premiums. "Open" represents a period during which principal
prepayments are permitted without payment of a Prepayment Premium. For each
Mortgage Loan, the sum of the numbers set forth under the Prepayment
Description category represents the number of months in the original term to
maturity.
"LO" denotes that a Mortgage Loan is locked out for a period during which
prepayment is not permitted.
"DEF" denotes defeasance and indicates that a loan may be defeased only during
the indicated period.
"Yield Maintenance Description" indicates whether the Yield Maintenance Charge
is calculated using a flat Treasury Rate or a specified spread in basis points.
"Yield Maintenance Calculation Method" indicates the various mathematical
formulas used to calculate the applicable Yield Maintenance Charges.
"Seasoning" represents the approximate number of months elapsed from the date
of the first regularly scheduled payment to the Cut-off Date.
Missing NOI data points occur because the data was not available or because
they apply to a time period that is not comparable to other Mortgage Loans in
the Mortgage Loan Pool.
"Due-on-Sale" provides a confirmation that exercise is at the related lender's
option with a fee payable for such option.
"Fixed" Loan Type identifies that interest will accrue on the balance of the
related Mortgage Loan at the indicated fixed coupon during the term of the
loan.
"NAP" denotes data is not applicable.
"Current LTV Ratio" is calculated using the original appraised value and the
Cut-off Date Balance.
All current reserve escrow balances, monthly reserves and monthly escrows were
obtained from the related Mortgage Loan Seller.
Generally, 1997 NOI and 1998 NOI indicates a January through December calendar
or fiscal year.
"Current or Future Subordinate Financing" indicates whether the related
borrower may enter into further financing secured by the Mortgaged Property,
without the lender's consent.
A-1
<PAGE>
Generally, any "Yield Maintenance Charge" will be calculated in accordance
with one of the following formulae:
TYPE 1:
The Yield Maintenance Charge will be an amount equal to the greater of (i)
a specified prepayment premium or (ii) the present value, as of the date of
such prepayment, of the remaining scheduled payments of principal and interest
on the portion of the Mortgage Loan being prepaid (including any Balloon
Payment or principal balance due on the Anticipated Repayment Date for an ARD
Loan) determined by discounting such payments at the Discount Rate, less the
amount being prepaid. The term "Discount Rate" shall mean the rate that, when
compounded monthly, is equivalent to the Treasury Rate (hereinafter defined)
when compounded semi-annually. The term "Treasury Rate" shall mean the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the prepayment date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the maturity date. In
the event that Release H.15 is no longer published, the lender shall select a
comparable publication to determine the Treasury Rate.
TYPE 2:
The Yield Maintenance Charge will be an amount equal to the greater of:
(i) a specified prepayment premium which is a percentage of the principal
balance of the Mortgage Loan being prepaid; or (ii) the product of (A) the
ratio of the amount of the principal balance of the Mortgage Loan being prepaid
over the outstanding principal balance of the Mortgage Loan on the date of such
prepayment (after subtracting the scheduled principal payment on such
prepayment date), multiplied by (B) the present value as of the prepayment date
of the remaining scheduled payments of principal and interest from the
prepayment date through the maturity date (including any balloon payment)
determined by discounting such payments at the Discount Rate less the amount of
the outstanding principal balance of the Mortgage Loan on the prepayment date
(after subtracting the scheduled principal payment on such prepayment date).
The term "Treasury Rate" shall mean the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury Constant Maturities for the week ending prior to the
prepayment date, of U.S. Treasury constant maturities with maturity dates (one
longer and one shorter) most nearly approximating the maturity date. In the
event that Release H.15 is no longer published, the lender shall select a
comparable publication to determine the Treasury Rate.
TYPE 3:
The Yield Maintenance Charge will be an amount equal to the greater of (i)
1% of the outstanding principal balance of the Mortgage Loan as of the date of
prepayment, or (ii) an amount equal to (x) the sum of the present values as of
the date of prepayment of all unpaid principal and interest payments required
under the Mortgage Loan, calculated by discounting such payments from their
respective scheduled payment dates back to the date of prepayment at a discount
rate equal to the Periodic Treasury Yield (as hereinafter defined), minus (y)
the outstanding balance of the Mortgage Loan as of the date of prepayment. The
"Periodic Treasury Yield" means (i) the annual yield to maturity of an actively
traded non-callable U.S. Treasury fixed interest rate security (other than any
such security which can be surrendered at the option of the holder at face
value in payment of federal estate tax or which was issued at a substantial
discount) that has a maturity closest to (whether before, on or after) the
maturity date of the Mortgage Loan (or if two or more such securities have
maturity dates equally close to the maturity date of the Mortgage Loan, the
average annual yield to maturity of all such securities), as reported in The
Wall Street Journal or other authoritative publication or news retrieval
service on the fifth business day preceding the date of prepayment, divided by
(ii) twelve, if scheduled payments are monthly, or four, if scheduled payment
dates are quarterly.
TYPE 4:
The Yield Maintenance Charge will be an amount equal to the greater of (i)
a specified prepayment premium, or (ii) the positive difference, if any,
between (x) the present value on the date of such prepayment of all future
installments which the borrower would otherwise be required to pay under the
Mortgage Loan during the original term of the Mortgage Loan absent such
prepayment, including the unpaid principal amount which would otherwise be due
upon the scheduled maturity date of such Mortgage Loan, with such present value
being discounted back on a monthly basis and determined by the use of a monthly
discount rate equal to one-twelfth of the Treasury Rate (as hereinafter
defined), and (y) the principal amount
A-2
<PAGE>
of the Mortgage Loan on the date of such prepayment. The term "Treasury Rate"
means the yield per annum as based on a determination by the lender in its sole
discretion to be the yield in the secondary market on U.S. Government Treasury
obligations having a maturity date which is the same as, or is the nearest date
subsequent to, the maturity date of the Mortgage Loan.
TYPE 5:
The Yield Maintenance Charge will be calculated during the Yield
Maintenance Period as an amount equal to the greater of (i) a specified
prepayment premium, or (ii) the present value of the excess of (x) the monthly
interest which would otherwise be payable on the portion of the principal
balance being prepaid from the first day of the calendar month immediately
following the date of prepayment (unless the prepayment occurs on the first day
of a calendar month during the term of the Mortgage Loan, in which case from
the date of prepayment) to and including the maturity date of the Mortgage Loan
over (y) the monthly interest the lender would earn if the principal balance
being prepaid were reinvested for the period from the first day of the calendar
month immediately following the date of prepayment (unless the prepayment is
tendered on the first day of a calendar month during the term of the Mortgage
Loan, in which case from the date of prepayment) to and including the maturity
date of the Mortgage Loan at the Treasury Rate. The "Treasury Rate" shall mean
the yield per annum determined by the Master Servicer to be the yield in the
secondary market of U.S. Treasury obligations having a maturity date which is
the same as, or is the nearest date subsequent to, the maturity date of the
Mortgage Loan.
Mortgage Loan control number 25 has a Type 3 Yield Maintenance Charge,
except that the phrase "the greater of (i) 1% of the outstanding principal
balance of the Mortgage Loan as of the date of prepayment, or (ii)" in the
first and second lines in Type 3 are not applicable to this Mortgage Loan.
Mortgage Loans control numbers 105 and 204 have a Type 3 Yield Maintenance
Charge, except that during the five years preceding the maturity dates of the
Mortgage Loans, the Mortgage Loans may be prepaid accompanied by an amount
equal to the product of (x) 5%, 4%, 3%, 2% or 1%, respectively, and (y) the
outstanding principal of the Mortgage Loans at the beginning of the fifth year,
fourth year, third year, second year or year preceding the maturity dates of
the Mortgage Loans.
A-3
<PAGE>
COLLATERAL CONTRIBUTORS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF WEIGHTED
MORTGAGE DATE AVERAGE
COLLATERAL CONTRIBUTORS LOANS BALANCE INTEREST RATE
- -------------------------------------- ----------- ------------ ---------------
<S> <C> <C> <C>
Greenwich ....................... 120 61.24% 7.5335%
National Realty Funding ......... 52 21.77 7.7066
KeyBank(1) ...................... 40 9.84 7.6285
Bridger ......................... 22 7.14 7.8782
--- ----- ------
Total .......................... 234 100.00% 7.6051%
=== ====== =======
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE WEIGHTED
TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
COLLATERAL CONTRIBUTORS (MONTHS) LTV DSCR BALANCE
- -------------------------------------- ----------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
Greenwich ....................... 122.58 69.61% 1.44x $532,378,772
National Realty Funding ......... 129.62 68.73 1.35 189,228,790
KeyBank(1) ...................... 119.03 70.69 1.39 85,576,459
Bridger ......................... 122.28 72.16 1.32 62,105,743
------ ----- ---- ------------
Total .......................... 123.74 69.70% 1.41x $869,289,765
====== ===== ==== ============
</TABLE>
--------
(1) 40 of the Mortgage Loans, representing approximately 9.84% of the
Cut-off Date Balance, sold by NRFinance to the Transferor were
acquired from KeyBank in connection with issuance of the
Certificates.
PAYMENT TYPES
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE WEIGHTED AVERAGE WEIGHTED
NUMBER OF OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
PAYMENT TYPES LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ----------------------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing Balloon ........... 212 92.44% 7.6165% 115.43 70.03% 1.41x $803,552,565
Fully Amortizing ............. 20 6.96 7.3756 234.74 67.03 1.40 60,467,200
Interest Only, Then Amortizing
Balloon ..................... 2 0.61 8.5000 117.00 51.47 1.61 5,270,000
--- ---- ------ ------ ----- ---- ------------
Total ....................... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ======= ====== ====== ===== ==== ============
</TABLE>
RANGE OF CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
RANGE OF CUT-OFF DATE BALANCES LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- -------------------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
295,304 - 499,999 ... 6 0.26% 8.0491% 168.82 54.89% 1.66x $ 2,237,583
500,000 - 999,999 ... 21 1.96 7.9699 136.54 67.80 1.43 17,079,950
1,000,000 - 1,999,999 ... 70 11.91 7.6309 122.60 69.00 1.39 103,541,078
2,000,000 - 2,999,999 ... 40 11.24 7.7394 126.86 67.53 1.40 97,698,765
3,000,000 - 3,999,999 ... 32 12.77 7.6114 129.29 66.92 1.56 111,014,595
4,000,000 - 4,999,999 ... 25 12.98 7.2728 140.24 70.05 1.40 112,800,162
5,000,000 - 5,999,999 ... 15 9.60 7.5417 113.02 70.74 1.37 83,467,000
6,000,000 - 6,999,999 ... 6 4.57 7.8662 142.98 77.27 1.23 39,740,936
8,000,000 - 8,999,999 ... 4 3.89 7.4929 159.97 75.14 1.33 33,842,460
9,000,000 - 9,999,999 ... 4 4.32 7.2254 110.90 74.99 1.40 37,579,798
10,000,000 - 11,999,999 ... 6 7.49 7.3134 114.39 69.73 1.31 65,099,837
12,000,000 - 14,999,999 ... 1 1.42 7.9700 119.00 78.11 1.31 12,341,663
15,000,000 - 19,999,999 ... 1 2.02 8.0000 143.00 76.25 1.26 17,536,726
20,000,000 - 39,999,999 ... 2 7.59 7.6267 117.00 75.63 1.27 66,019,555
40,000,000 - 69,289,658 ... 1 7.97 8.0800 83.00 58.74 1.66 69,289,658
-- ----- ------ ------ ----- ---- ------------
Total .................... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
A-4
<PAGE>
RANGE OF GROSS MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
RANGE OF GROSS MORTGAGE RATES LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ---------------------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.2501 - 6.5000% ............ 3 2.78% 6.3963% 111.44 74.17% 1.43x $ 24,168,433
6.5001 - 6.7500 ............. 2 0.98 6.6387 191.24 51.40 1.37 8,506,154
6.7501 - 7.0000 ............. 18 7.91 6.9343 158.72 71.98 1.41 68,778,088
7.0001 - 7.2500 ............. 34 13.93 7.1730 113.19 70.84 1.36 121,107,623
7.2501 - 7.5000 ............. 49 16.26 7.4148 119.10 72.03 1.44 141,388,986
7.5001 - 7.7500 ............. 46 18.72 7.6169 138.26 72.88 1.31 162,708,031
7.7501 - 8.0000 ............. 30 17.11 7.8698 123.44 72.17 1.33 148,703,383
8.0001 - 8.2500 ............. 26 16.15 8.1055 105.44 62.25 1.52 140,349,728
8.2501 - 8.5000 ............. 15 3.63 8.3927 106.58 62.32 1.49 31,539,259
8.5001 - 8.7500 ............. 4 0.99 8.7188 133.84 57.73 2.50 8,587,261
8.7501 - 9.0000 ............. 5 1.38 8.8115 112.80 63.13 1.41 11,956,624
9.0001 - 9.2500 ............. 1 0.10 9.2000 234.00 64.25 1.55 867,412
9.2501 - 9.5000 ............. 1 0.07 9.3750 107.00 79.09 1.35 628,783
-- ----- ------ ------ ----- ---- ------------
Total ...................... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
MATURITY YEARS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
MATURITY YEARS LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ----------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
2002 .......... 1 0.76% 8.3770 % 40.00 75.24% 1.23x $ 6,605,927
2003 .......... 1 0.17 7.5000 50.00 55.55 1.92 1,472,071
2005 .......... 1 0.38 7.7300 73.00 77.35 1.46 3,326,017
2006 .......... 2 8.29 8.0633 83.00 59.24 1.64 72,086,542
2007 .......... 3 0.63 8.2262 99.03 72.60 1.31 5,461,813
2008 .......... 74 31.25 7.3006 110.32 70.79 1.45 271,695,697
2009 .......... 109 42.77 7.7398 116.85 71.17 1.35 371,785,266
2011 .......... 9 4.45 7.9539 141.66 67.43 1.32 38,687,030
2012 .......... 1 0.17 7.2500 155.00 69.19 1.20 1,480,704
2013 .......... 9 3.37 7.1547 169.36 67.73 1.34 29,302,240
2014 .......... 1 0.07 8.3100 185.00 69.86 1.33 621,602
2016 .......... 1 0.29 7.6250 206.00 52.95 1.30 2,541,864
2017 .......... 1 0.50 6.5300 211.00 51.86 1.25 4,304,366
2018 .......... 9 2.38 7.4662 229.50 72.03 1.31 20,730,970
2019 .......... 8 1.87 7.9581 236.65 68.56 1.34 16,268,319
2020 .......... 2 1.23 7.7005 249.77 85.38 1.21 10,704,406
2023 .......... 2 1.41 6.9000 290.00 63.51 1.71 12,214,930
--- ----- ------ ------ ----- ---- ------------
Total ......... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
A-5
<PAGE>
PROPERTY TYPES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGED DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
PROPERTY TYPES PROPERTIES BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ------------------------------------ ------------ ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail--Anchored .............. 20 16.73% 7.4939% 124.85 74.30% 1.31x $145,393,293
Retail--Unanchored ............ 32 9.95 7.5237 125.05 68.92 1.39 86,492,118
Retail--Single Tenant ......... 16 3.93 7.8390 169.51 73.20 1.32 34,190,747
Retail--Shadow Anchored ....... 2 0.88 6.9263 142.52 56.92 1.55 7,667,288
-- ----- ------ ------ ----- ---- ------------
Retail Subtotal .............. 70 31.49 7.5305 130.99 71.98 1.34 273,743,445
Multifamily ................... 75 22.31 7.2946 133.62 71.57 1.38 193,898,605
Manufactured Housing .......... 16 3.67 7.9558 96.91 72.03 1.34 31,864,914
-- ----- ------ ------ ----- ---- ------------
Housing Related Subtotal ..... 91 25.97 7.3880 128.43 71.63 1.38 225,763,519
Office ........................ 27 14.19 7.8111 117.73 69.00 1.32 123,360,302
Hotel--Full Service ........... 16 8.27 8.0870 84.14 59.06 1.68 71,923,991
Industrial .................... 17 7.07 7.6358 124.39 70.18 1.31 61,459,499
Mixed Use ..................... 15 4.07 7.3633 120.73 70.56 1.34 35,340,917
Hotel--Limited Service ........ 9 3.18 7.9840 139.50 66.80 1.56 27,657,348
Nursing Home .................. 8 3.17 7.7897 111.14 60.89 2.08 27,590,154
Self-Storage .................. 6 1.37 7.4916 152.84 73.09 1.39 11,881,746
Assisted Living Facility ...... 2 0.81 7.7667 92.42 76.13 1.40 7,001,874
Congregate Care ............... 1 0.41 7.8000 235.00 62.58 1.51 3,566,971
-- ----- ------ ------ ----- ---- ------------
Total ........................ 262 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
RANGE OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
RANGE OF LOAN-TO-VALUE RATIOS LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ---------------------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
35.01 - 40.00% .............. 2 0.46% 7.0938% 275.55 37.17% 2.41x $ 3,969,496
40.01 - 45.00 ............... 4 1.32 8.0578 127.44 42.41 1.66 11,485,194
45.01 - 50.00 ............... 4 0.79 7.5220 117.03 46.84 1.36 6,876,945
50.01 - 55.00 ............... 10 2.99 7.6614 149.40 52.26 1.49 26,022,148
55.01 - 60.00 ............... 17 12.43 8.0349 97.36 58.32 1.68 108,064,692
60.01 - 65.00 ............... 27 8.80 7.6523 126.92 63.35 1.43 76,522,003
65.01 - 70.00 ............... 49 17.17 7.5997 123.10 68.08 1.41 149,224,175
70.01 - 75.00 ............... 64 25.99 7.5538 130.47 73.07 1.35 225,955,464
75.01 - 80.00 ............... 54 28.70 7.4329 120.54 77.76 1.31 249,519,121
80.01 - 85.00 ............... 1 0.44 7.4700 110.00 81.87 1.34 3,807,107
85.01 - 95.00 ............... 1 0.16 8.2300 101.00 85.86 1.36 1,373,704
95.01 - 96.56 ............... 1(1) 0.74 7.7500 247.00 96.56 1.01 6,469,716
---- ----- ------ ------ ----- ---- ------------
Total ...................... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
===== ====== ====== ====== ===== ==== ============
</TABLE>
--------
(1) Mortgage Loan Control #26, which has a 96.56% loan-to-value ratio,
is a credit tenant loan that is secured by net lease obligations of
a rated tenant or guarantor.
A-6
<PAGE>
LOAN ORIGINATION YEARS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
RANGE OF ORIGINATION YEARS LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ---------------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 .................. 108 53.60% 7.8256% 119.32 69.77% 1.38x $465,980,976
1998 .................. 120 44.37 7.3154 130.28 69.44 1.44 385,688,741
1997 .................. 5 1.27 7.9618 132.07 72.89 1.29 11,014,121
1995 .................. 1 0.76 8.3770 40.00 75.24 1.23 6,605,927
--- ----- ------ ------ ----- ---- ------------
Total ................ 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
RANGE OF DSCRS LOANS BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ----------------------- ----------- ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.01 - 1.15 ......... 2(1) 1.29% 7.3547% 214.70 88.30% 1.07x $ 11,251,884
1.16 - 1.20 ......... 4 1.23 7.3634 142.72 73.45 1.17 10,649,622
1.21 - 1.25 ......... 25 11.92 7.5781 124.90 73.16 1.24 103,659,607
1.26 - 1.30 ......... 49 24.52 7.6656 126.59 72.85 1.28 213,136,778
1.31 - 1.35 ......... 43 19.12 7.4991 121.19 71.83 1.33 166,165,846
1.36 - 1.40 ......... 28 8.94 7.6161 121.28 68.35 1.38 77,741,731
1.41 - 1.45 ......... 21 5.08 7.3338 153.05 70.81 1.42 44,118,662
1.46 - 1.50 ......... 16 5.24 7.4635 115.67 66.44 1.48 45,538,532
1.51 - 1.55 ......... 11 4.84 7.2673 143.25 69.20 1.52 42,106,779
1.56 - 1.60 ......... 11 2.83 7.7670 113.83 64.75 1.59 24,587,532
1.61 - 1.65 ......... 7 2.49 7.7090 111.53 63.39 1.62 21,679,577
1.66 - 1.70 ......... 2 8.12 8.0689 83.49 58.59 1.66 70,574,233
1.71 - 1.75 ......... 3 0.77 7.8734 123.22 67.09 1.74 6,656,531
1.76 - 1.80 ......... 3 1.06 7.6073 113.40 69.88 1.77 9,181,202
1.91 - 1.95 ......... 2 0.32 7.9781 82.99 54.28 1.92 2,820,763
1.96 - 2.00 ......... 2 0.49 7.5014 117.27 41.66 2.00 4,244,348
2.01 - 2.50 ......... 4 1.29 7.5002 172.82 57.83 2.37 11,224,891
2.51 - 3.76 ......... 1 0.45 8.7500 112.00 57.26 3.76 3,951,249
---- ----- ------ ------ ----- ---- ------------
Total ............... 234 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
===== ====== ====== ====== ===== ==== ============
</TABLE>
--------
(1) Mortgage Loan Control #26, which has a 1.01x DSCR, is a credit
tenant loan that is secured by net lease obligations of a rated
tenant or guarantor.
A-7
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT OF WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGED DATE INTEREST TERM CUT-OFF AVERAGE CUT-OFF DATE
STATES PROPERTIES BALANCE RATE (MONTHS) DATE LTV DSCR BALANCE
- ---------------------------- ------------ ------------ ------------ ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
California ............ 34 20.19% 7.4916% 123.81 70.46% 1.38x $175,543,355
New York .............. 19 9.34 7.6626 117.55 70.52 1.32 81,176,256
Arizona ............... 12 7.31 7.1652 156.33 73.59 1.42 63,555,147
Florida ............... 25 5.65 7.7276 130.67 70.61 1.46 49,151,322
Pennsylvania .......... 17 5.36 7.9371 101.28 61.41 1.53 46,595,319
Maryland .............. 7 4.03 7.7918 104.19 70.52 1.48 35,022,379
Ohio .................. 17 3.74 7.4669 123.89 72.27 1.44 32,514,480
Georgia ............... 8 3.43 7.5447 102.27 69.37 1.46 29,841,213
Texas ................. 12 3.19 7.8038 117.63 64.27 1.45 27,771,947
Massachusetts ......... 7 3.09 7.6861 114.41 71.95 1.31 26,861,061
New Hampshire ......... 4 2.72 7.9861 121.15 70.88 1.35 23,654,485
Nevada ................ 8 2.71 7.5932 129.55 64.04 1.42 23,589,552
Indiana ............... 13 2.66 7.6094 136.47 66.70 1.40 23,135,155
New Jersey ............ 5 2.62 7.3291 125.78 70.49 1.39 22,804,036
Idaho ................. 5 2.22 7.6824 118.70 67.44 1.34 19,258,284
Washington ............ 7 2.14 8.0414 121.70 62.12 1.45 18,598,177
North Carolina ........ 3 2.04 8.0800 83.00 58.74 1.66 17,758,904
West Virginia ......... 1 2.02 8.0000 143.00 76.25 1.26 17,536,726
Colorado .............. 8 1.73 7.4306 112.27 69.13 1.44 15,037,019
Louisiana ............. 4 1.61 7.6542 115.00 71.08 1.29 13,981,438
Connecticut ........... 4 1.34 6.8959 116.67 72.76 1.39 11,648,615
Tennessee ............. 5 1.33 7.5312 116.37 67.23 1.44 11,558,426
Kansas ................ 4 1.11 7.7616 155.13 67.85 1.38 9,643,469
Michigan .............. 6 1.07 7.5959 123.94 66.18 1.44 9,284,172
Missouri .............. 2 1.03 7.3613 116.45 77.41 1.31 8,969,969
Arkansas .............. 1 0.74 7.7500 247.00 96.56 1.01 6,469,716
Iowa .................. 1 0.73 7.5500 229.00 72.36 1.34 6,367,553
Hawaii ................ 1 0.60 7.2100 109.00 76.52 1.25 5,203,290
Oregon ................ 2 0.58 7.4246 112.37 69.40 2.21 5,071,636
Wisconsin ............. 2 0.55 7.1033 110.44 66.96 1.41 4,815,665
Alabama ............... 4 0.51 7.3603 115.66 71.69 1.39 4,426,527
Oklahoma .............. 2 0.43 7.8070 118.65 74.89 1.32 3,706,926
Utah .................. 2 0.42 7.3336 168.14 68.28 1.42 3,616,134
Wyoming ............... 1 0.32 7.6500 83.00 71.71 1.27 2,796,884
Maine ................. 3 0.30 9.0960 153.74 70.44 1.37 2,622,128
District of Columbia .. 1 0.26 7.1500 112.00 77.07 1.32 2,278,281
South Carolina ........ 1 0.22 8.0800 83.00 58.74 1.66 1,895,613
Virginia .............. 1 0.21 7.6400 116.00 79.80 1.30 1,795,528
Kentucky .............. 1 0.17 7.3700 118.00 74.84 1.44 1,496,807
Delaware .............. 1 0.13 7.7500 112.00 74.20 1.58 1,150,115
Illinois .............. 1 0.12 8.0400 117.00 72.40 1.28 1,086,058
-- ---- ------ ------ ----- ---- ------------
Total ................ 262 100.00% 7.6051% 123.74 69.70% 1.41x $869,289,765
=== ====== ====== ====== ===== ==== ============
</TABLE>
A-8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
CONTROL LOAN LOAN
NUMBER NUMBER CONTRIBUTOR PROPERTY NAME PROPERTY ADDRESS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 03-0810828 Greenwich Crown Hotels Various
1.10 03-0810828A Greenwich Atlanta Holiday Inn- Downtown 101 International Drive
1.20 03-0810828B Greenwich Holiday Inn 100 South George Street
1.30 03-0810828C Greenwich Holiday Inn Holidome 5400 Holiday Drive
1.40 03-0810828D Greenwich Asheville Comfort Suites 890 Brevard Road
1.50 03-0810828E Greenwich Holiday Inn Executive Park 8520 University Executive Park Drive
1.60 03-0810828F Greenwich Wyndham Garden 4620 South Miami Boulevard
1.70 03-0810828G Greenwich Beaver Falls Holiday Inn 7195 Eastwood Drive
1.80 03-0810828H Greenwich Courtyard by Marriott 3327 Street Road
1.90 03-0810828I Greenwich East Comfort Inn 4021 Union Deposit Road
1.91 03-0810828J Greenwich Wyndham Garden 765 Eisenhower Boulevard
1.92 03-0810828K Greenwich Johnstown Holiday Inn 250 Market Street
1.93 03-0810828L Greenwich Holiday Inn Express 1440 Scalp Avenue
1.94 03-0810828M Greenwich Pottstown Comfort Inn 99 Robinson Street
1.95 03-0810828N Greenwich Holiday Inn Holidome 2000 Loucks Road
1.96 03-0810828O Greenwich Rock Hill Holiday Inn 2640 North Cherry Hill
2 03-0810141 Greenwich Bridgepointe Shopping Center 2200 - 3020 Bridgepointe Parkway
3 03-0810618 Greenwich 122 Fifth Avenue 122 Fifth Avenue
4 6519 NRF Dudley Farms Plaza 100-228 RHL Boulevard
5 GL981131 KeyBank Emery/Busch Industrial Building 12 Celina Avenue
6 BRIDGER VARIOUS VARIOUS
6.10 215990028 Bridger 1376 Bordeaux 1376 Bordeaux
6.20 215990053 Bridger 1380 Bordeaux 1380 Bordeaux
7 NRF VARIOUS 8135 RITCHIE HIGHWAY
7.10 5201 NRF Festival at Pasadena 8135 Ritchie Highway
7.20 6098 NRF Festival at Pasadena Pad Building 8135 Ritchie Highway
8 6423 NRF Palouse Empire Mall 1850 W. Pullman Road (Highway #8)
9 03-0810140 Greenwich Ventana Vista Apartments 5051 North Sabino Canyon Road
10 03-0810054 Greenwich Park Plaza Shopping Center 26705, 26741, 26841, 26851, 26611 and
26601 Aliso Creek Road
11 4088 NRF Shadowridge Heights Apartments 1510 South Melrose Drive
12 5410 NRF Bayside Office Center 150 Mount Vernon Street
13 03-0810102 Greenwich Boulder Run Shopping Center 325-327 Franklin Avenue
14 03-0221360 Greenwich West 49th Street 308, 310, 318 - 332, 340 West 49th Street
15 03-0810072 Greenwich Brenden Theatres Davis Street at I-80
16 03-0810052 Greenwich The Pavillions at Mesa 1837 - 1955 West Guadalupe Road
17 03-0221361 Greenwich Desert Star Apartments 1106 West Bell Road
18 KEYBANK VARIOUS VARIOUS
18.10 4164695 KeyBank Pine Lake Apartments 1924 Pine Loch Terrace
18.20 4164709 KeyBank Terrace Trace Apartments 9135 Talina Lane
18.30 4164733 KeyBank Jupiter Cove Apartments I 17873-A Thelma Avenue
18.40 4164814 KeyBank Rivers End I Apartments 5520 Collins Road
18.50 4164831 KeyBank Cypress Apartments 6200 Cypress Point Drive
18.60 GL991009 KeyBank Jupiter Cove III 17937 Thelma Avenue
19 9811010012 Greenwich North Valley Medical Plaza 3811 East Bell Road
20 5554 NRF 4250 Veterans Highway 4250 Veterans Memorial Highway
21 03-0221428 Greenwich Boardwalk @ Anderson Springs SEC Dobson and Ray Roads
22 KEYBANK VARIOUS VARIOUS
22.10 6218 KeyBank Princeton Court Apartments 103 Princeton Court
22.20 6219 KeyBank Elmtree Park Apartments 11023 Elmtree Park Drive
22.30 6220 KeyBank Meadowood Apartments 8611 Meadowood Drive
22.40 6221 KeyBank Rosewood Commons Apartments 5586 Rosewood Commons Drive
22.50 6223 KeyBank Acadia Court Apartments 3008 Acadia Court
23 03-0810596 Greenwich Pembrooke Square Medical Center 11355 Pembrooke Square
24 GL981134 KeyBank Laguna Properties Building 5005 East Philadelphia Street
25 300980020 Bridger Southwind Mobile Home Estates 7300 Luther Drive
26 610980009 Bridger K-Mart Rogers 2115 West Walnut Avenue
27 03-0810056 Greenwich Park Fair Mall 100 Euclid Avenue
28 KEYBANK VARIOUS VARIOUS
28.10 6029 KeyBank Pine Terrace I & II Apartments 322 South Burkett Avenue
28.20 6033 KeyBank Sanford Court Apartments 3291 South Sanford Avenue
28.30 6034 KeyBank Applewood I & II Apartments 101 East New Hampshire Avenue
29 03-0810110 Greenwich Buckhead Exchange 3167 Peachtree Road NE
30 03-0810122 Greenwich Pascack Plaza 1-23 Perlman Drive
31 03-0810037 Greenwich Days Inn Hotel 8350 Edes Avenue
32 5468 NRF BeautiControl Office 2121 Midway Road
33 6761 NRF REXBURG STUDENT HOUSING VARIOUS
33.10 6761A NRF Autumn Winds Apartments 160 West 5th South
33.20 6761B NRF Somerset Apartments 480 South 100 West
33.30 6761C NRF Brookside Village Apartments 487 South 3rd West
34 03081090008 Greenwich Hampton Inn - Sea Tac 19445 Pacific Highway South
35 03-0221351 Greenwich Devir Street Apartments 66, 92 and 108 Devir Street
36 415990042 Bridger Alameda Technology Center 1255 - 1275 Harbor Bay Parkway
37 9811010011 Greenwich Clocktower Apartments Phase I Two Clocktower Place
38 03-0221371 Greenwich Best Western Cascadia Inn 2800 Pacific Avenue
39 03-0810108 Greenwich Global Plaza West 3645 - 3675 South Durango Drive
40 03-0810597 Greenwich Ponce de Leon Care Center 1999 Old Moultrie Road
41 03-0221420 Greenwich 1000 Henry Street 1000 Henry Street
42 03-0810082 Greenwich 55 Post Road West 55 Post Road West
43 03-0221331 Greenwich Greenway Terrace 15400 - 15472 North 99th Avenue
44 4794 KeyBank Rolla Center 901 & 1003 South Bishop Avenue
45 03-0221336 Greenwich Bayside Willows Apartments 530 Sunnyview Drive
46 03-0221448 Greenwich Westgate Plaza North side of Route 30
47 1109 NRF Riverfront Apartments 726 First Avenue North
48 4163141 KeyBank Cheyenne Mountain Shopping Center 1670 E. Cheyenne Mountain Boulevard
49 03-0810061 GREENWICH APPLE CREEK MHP / SELF STORAGE VARIOUS
AND ORCHARD LAKE MHP (ROLL-UP
49.10 03-0810061A Greenwich Apple Creek Mobile Home Park / Self Storage 2189 East Ohio Pike
49.20 03-0810061B Greenwich First Security Self Storage 2189 East Ohio Pike
49.30 03-0810061C Greenwich Orchard Lake Mobile Home Park 969 State Route 28
50 5397 NRF Kennedy Square 4950 West Kennedy Boulevard
51 03-0221365 Greenwich Westpointe II Apartments 6465 West Lane
52 03-0810086 Greenwich CB/Buckhead - Roswell 5395 Roswell Road
53 03-0810078 Greenwich Park Green Apartments 8100 Bellaire
54 03-0221366 Greenwich Bridle Path Apartments 1619 Bridle Path Drive
55 3770 NRF Heritage Court Apartments 335 & 336 Center Road
56 03-0221357 Greenwich Hawaii Market Shopping Center 120 East Valley Boulevard
57 5462 NRF Santa Fe Place Apartments 350 North Festival Drive
58 2261 NRF Iron Mountain Building 6935 Flanders Drive
59 1853 NRF Shore Center Shopping Center 22304-22400 Lake Shore Blvd.
60 03-0221330 Greenwich La Fuente Inn 1513 East 16th Street
61 03-0221356 Greenwich Pueblo Hills Shopping Center 2221, 2233 and 2269 Rampart Boulevard
62 03-0810112 Greenwich The Park Belvedere 101 - 115 West 79th Street
63 4058 NRF The Hesser Center 1,25, & 77 Sundial Avenue
64 03-0810584 Greenwich Lee Park Plaza 520-540 Bergen Boulevard
65 03-0810565 Greenwich Hood River Care Center 729 Henderson Road
66 03-0810566 Greenwich 221 Route 4 East 211 Route 4 East
67 6571 NRF Lochwood III Apartments 1437 Slate Run Road
68 03-0810139 Greenwich Essex Warehouse 5702 Corporate Drive
69 03-0810610 Greenwich Freeman Decorating Company 1000 Elmwood Park Boulevard
70 03-0810608 Greenwich Doctors Hospital of West Covina 725 South Orange Avenue
71 9902010038 Greenwich Beven Street Warehouse 6040 Beven Street
72 03-0810093 Greenwich Crescenta Valley Mini Storage 4441 Cloud Avenue
73 03-0221367 Greenwich Stonebridge Health Center 11125 Circle Drive
74 03-0221338 Greenwich Wagner Heights Nursing and Rehabilitation Center 9289 Branstetter Place
75 03-0221340 Greenwich 22 East 67th Street 22 East 67th Street
76 03-0810611 Greenwich Flemington Arms Apartments 81-95 North Main Street
77 NRF VARIOUS VARIOUS
77.10 5623 NRF Colonial Park Apartments 4600 Sprague Avenue
77.20 5625 NRF Jackson Trace Apartments 500 Whites Gap Road
77.30 5624 NRF Fox Valley Apartments 5112 McClellan Boulevard
78 03-0221349 Greenwich Shrewsbury Crossing Assisted Living Facility 311 West Main Street
79 4163231 KeyBank Clearwater Commons 4519 East 82nd Street
80 03-0221355 Greenwich Gillette Nursing Home 3310 Elm Road NE
81 03-0221427 Greenwich Sierra Apartments 150 - 220 Trantor Place
82 03-0221432 Greenwich 6845 Deerpath Building 6845 Deerpath Road
83 03-0810113 Greenwich Palace Plaza Shopping Center 2350 and 2450 Montebello Sq. Dr.
84 03-0221362 Greenwich Sunplace Apartments 1950 North 43rd Avenue
85 03-0810071 Greenwich Meadow Wood Crown Plaza 1575 Delucci Lane
86 03-0221358 Greenwich Oakbridge Retail Center 7944 Tree Lane
87 03-0221353 Greenwich Gateway Plaza Shopping Center 24933 Santa Clara Street
88 NRF VARIOUS VARIOUS
88.10 5435 NRF Eagle Trace Apartments 925 West 29th Street South
88.20 5434 NRF Ashbury Court Apartments 1940 South Woodlawn
89 6415 NRF Office Depot Tallahassee 3151 Capital Circle N. E.
90 4161904 KeyBank Westbay Assisted Living Residence 4920 Viceroy Court
100 5900 NRF Yerington Plaza 176 West Goldfield Avenue
101 6348 NRF CAPTEC FRANCHISE CAPITAL PARTNERS, L.P. IV VARIOUS
101.10 6348A NRF Arby's Restaurant 4740 Cemetery Road
101.20 6348B NRF Taco Bell Restaurant 32270 Van Dyke Avenue
101.30 6348C NRF Taco Bell Restaurant 67556 Main Street
101.40 6348D NRF Tony Roma's Restaurant 775 Vista Ridge Mall Drive
101.50 6348E NRF Del Taco Restaurant 3624 California Avenue
101.60 6348F NRF Winger's Restaurant 2336 East Baseline Road
102 03-0810014 Greenwich English Gardens Apartments 15031 West 138th
103 03-0810030 Greenwich Pembroke Place North Shopping Center 8913-9091 Taft Street
104 03-0221434 Greenwich The Northgate Office Building 950 Northgate Drive
105 400980013 Bridger Heritage Estates / Flamingo Shores 3275 U.S. Highway 92
106 3604 NRF HIGHLAND HALL/GOLFVIEW MANOR VARIOUS
106.10 3604A NRF Highland Hall 239 West Pittsburgh Road
106.20 3604B NRF Golfview Manor 616 Golf Course Road
107 6588 NRF Walgreens Drug Store 32732 Michigan Avenue
108 9811010009 Greenwich Napoleon Medical Office Building 2633 Napoleon Avenue
109 6071 NRF Teakwood Village Apartments 515 Gardere Lane
110 03-0221332 Greenwich Rancho San Diego Self Storage 10499 Austin Drive
111 6091 NRF Eden Roc Apartments & Americana Apartments A & B 1128 Victor St. / 233 & 252 River Street
112 5603 NRF Olathe Duplexes 913 Jan Mar
113 03-0221423 Greenwich Jamaica Avenue Building 163-05 and 163-17 Jamaica Avenue
114 5551 NRF Queen Anne's Gate V Apartments 88 & 102 Queen Anne's Court
115 6416 NRF Office Depot Ormond Beach 405 West Granada Boulevard
116 RM991008 KeyBank Westwinds Mobile Home Park 505 Williams Street
117 5267 NRF South Arcade Retail Building 1401-1419 First Avenue & 92-96Union Street
118 202980008 Bridger 2801 Red Dog Drive 2801 Red Dog Drive
119 03-0221363 Greenwich Forest Brooke Apartments 107 Forest Brooke Way
120 9811010015 Greenwich Pleasant Village Shopping Center 6700 Santa Rita Road
121 400980010 Bridger Royal View Gardens 1351 East Pepper Drive
122 9811010010 Greenwich Raymour & Flanigan Center 110 - 120 South West End Boulevard
123 03-0221424 Greenwich Capital City Plaza 3401 Hartzdale Drive
124 9812010027 Greenwich Quality Inn and Suites - Aberdeen 793 West Bel Air Avenue
125 410990037 Bridger Hen-Ridge Apartments 205-15 Rock Street
126 03-0221426 Greenwich Graham Center 771-785 Anderson Drive, 815-825 Franciscan
Drive
127 5369 NRF Branford Industrial Complex 12109-12115 Branford Street
128 400980015 BRIDGER COMFORT INN/KNIGHTS INN ROLL-UP VARIOUS
128.10 400980015A Bridger Comfort Inn 333 S.E. First Avenue
128.20 400980015B Bridger Knights Inn 1223 N.E. First Avenue
129 4163257 KEYBANK KEYSTONE WAY SHOPPES / CVS PHARMACY / TACO BELL VARIOUS
129.10 4163257A KeyBank Sears Hardware / Keystone Way Shoppes 1122-1168 Keystone Way
129.20 4163257B KeyBank CVS Pharmacy / Taco Bell 1391 & 1421 South Rangeline Road
130 03-0221350 Greenwich Village Shops at Chandler 820 West Warner Road
131 4164873 KeyBank Meldon Place Apartments 1736 C Brownstone Blvd.
132 6884 NRF Monticello Village Apartments 606 East Redbud Drive
133 03-0810590 Greenwich 12th and Monroe Shops and 1204 Newton St. NE 3500 - 3520 12th Street NE and 1204 Newton
Street NE
134 03-0810073 Greenwich Sierra Apartments 7475 Stockton Boulevard
135 4740 NRF Stassney Square Shopping Center 512 W. Stassney Lane
136 4163583 KeyBank Cambridge Plaza 51 South Champion Street
137 03-0810571 Greenwich Colonial Square Apartments 1440-91 West Rich Street
138 03-0221421 Greenwich Elks Plaza Shopping Center 169 - 187 West Merrick Road
139 9903020001 Greenwich Days Inn - Arlington 1195 North Watson Road
140 03-0810080 Greenwich Seth I Apartments 417 Margaret
141 3222 NRF Post Polaris Business Center 6330 Polaris Avenue
142 60598007 Bridger 1682 Novato Blvd. 1682 Novato Blvd.
143 03-0810602 Greenwich Lindenwald Plaza Shopping Center 4025 Pleasant Avenue (US 127)
144 03-0221435 Greenwich T.I.G. Industrial Building 8491 Rhonda Drive
145 6243 NRF Holly Shopping Center 104 - 224 Holly Street
146 400990040 Bridger Bonneville Gardens 705 South Redwood Rd.
147 6347 NRF CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III VARIOUS
147.10 6347A NRF Jack-in-the-Box 3750 Meridian Street South
147.20 6347B NRF Taco Bell Restaurant 45590 Gratiot Avenue
147.30 6347C NRF Tony Roma's Restaurant 4521 Southside Boulevard
148 03-0810106 Greenwich Cypress Gardens Mobile Home Park 4650 East Lake Mead Boulevard
149 4161548 KeyBank Jamestown Apartments 1347-1394 Bluff Avenue
150 6834 NRF Sorrento Mesa Office Plaza 5230 Carroll Canyon Road
151 940906389 Greenwich Park Meadows Apartments 851-976 Mount Werner Circle
152 4165039 KeyBank Carmel Self Storage 3750 Bauer Drive West
153 600980001 Bridger 901 E Street 901 E. Street
154 9811010014 Greenwich Princeton Woods Shopping Center 17064 Jefferson Davis Highway
155 03-0810606 Greenwich 1212 Hancock Street 1212 Hancock Street
156 6914 NRF Winans Home Center 1770 Hwy 395
157 5090 NRF Pacific Breeze Apartments 2850 Adrian Street
158 03-0221425 Greenwich Hilltop Willow Branch Apartments 2200 Rivers Street
159 03-0810090 Greenwich D'Agostino Supermarket 257 West 17th Street
160 4810 NRF Southbridge Crossing Indiana Street & Highway 67
161 6222 KeyBank Heathmore II Apartments 5984 Heathmore Drive
162 03-0221352 Greenwich Tooele Main Street Shops 752-788 Main Street
163 03-0810083 Greenwich CB/Buckhead - Alpharetta 3800 Mansell Road
164 410990035 Bridger Sandra Court Apartments 7014-24 Ridge Ave.
165 5655 NRF 450 & 440 Waverly Avenue 450 & 440 Waverly Avenue
166 03-0810605 Greenwich Westheimer Center 5661 Westheimer
167 4164954 KeyBank Winthrop Court Apartments 720 Ridgeview Drive
168 03-0810111 Greenwich 3900 Richmond Avenue 3900 Richmond Avenue
169 4162366 KeyBank Middlefield Mobile Home Park 15871 Swine Creek Road
170 03-0810587 Greenwich Raintree Office Building 25 North Spruce Street
171 03-0810576 Greenwich 1770 Post Road Associates 1770 - 1776 Boston Post Road
172 03-0810081 Greenwich CVS Store 4345 South Cobb Drive
173 03-0810130 Greenwich Allentown Self Storage 1700 South 4th Street
174 400980016 Bridger Twin Valley Estates 241 Lovers Lane
175 03-0221359 Greenwich 636 Eighth Avenue 636 Eighth Avenue
176 5942 NRF Land O' Lakes Village Apartments 21101 Voyager Boulevard
177 201980005 Bridger 131 So. Maple Ave. 131 S. Maple Ave.
178 100980011 Bridger 4140 Lockbourne 4140 Lockbourne Road
179 4591 NRF The Colton Block 558-596 Main Street, 2-4 Austin Street &
8-10 Austin Street
180 03-0810614 Greenwich Magnolia Center Office Building 3214 West McGraw Street
181 03-0810089 Greenwich CB/Buckhead - Duluth 3850 Pleasant Hill Road
182 03-0810612 Greenwich Willows Apartments 1661 Fifth Street
183 202980006 Bridger Southern Station 306 W. Depot Ave.
184 940907032 Greenwich 3951 Vestal Parkway East 3951 Vestal Parkway East
185 202990026 Bridger West Haven 3661 West Haven Center
186 03-0221369 Greenwich Milton Square Shopping Center 701-727 South Janesville Street
187 6096 NRF Kristie Manor Apartments 4814 Kristie Drive
188 210990027 Bridger Valley View 700 North Reed St.
189 03-0221327 Greenwich 282-299 Grand Street 282, 284, 286, 290 and 299 Grand Street
190 4161327 KeyBank Issaquah Building 6010 - 221st Place Southeast
191 4163281 KeyBank Quail Street Commons 938 Quail Street
192 03-0810084 Greenwich CB/Buckhead - Fulton 3650 Habersham Road
193 5780 NRF Paradise Pointe 118 Colony Drive
194 4410 NRF Boardwalk Boutiques 938-982 Maple Road
195 6032 KeyBank Palm Side Apartments 210 Interchange Drive
196 03-0810593 Greenwich 2600-2602 Jefferson Street 2600 - 2602 Jefferson Street
197 5965 NRF CE-FAIR Apartments 14140-14168 Cedar Road
198 03-0221333 Greenwich Alamo Self Storage 5666 Carpinteria Avenue
199 5992 NRF 39 Forest Avenue 39 Forest Avenue
200 03-0810087 Greenwich CB/Buckhead - Marietta 37 Johnson Ferry Road
201 03-0810064 Greenwich Diamond Plaza 2000 W. 79th St.
203 410990036 Bridger Leverington Court Apartments 631 Leverington Ave.
204 400980014 Bridger Oak Bend MHP 14818 Shark St.
205 03-0810560 Greenwich L'Abri Apartments 703 and 707 South West 16th Street
206 6217 KeyBank Willowood East Apartments 3787 Willowood Drive
207 5729 NRF 200-231 Harrison Avenue 200-231 Harrison Avenue
209 03-0810557 Greenwich Rambler Mobile Home Park 9225 East Main Street
210 03-0810555 Greenwich Howard Johnson 5171 Brecksville Road
211 4163176 KeyBank Big 5 Sporting Goods - KlamathFalls 3500 Washburn Way
212 4161262 KeyBank Big 5 Sporting Goods - Bullhead City 1835 Highway 95
213 03-0810613 Greenwich Best Western Jed Prouty Motor Inn 52-54 Main Street
214 6031 KeyBank Winter Woods II Apartments 15300 West Colonial Drive
215 03-0810619 Greenwich Trade Fair Supermarket 30-08 30th Avenue
216 4162480 KeyBank Fulton East Shopping Center 2039 - 2109 Locust Street, S.E.
218 4163214 KeyBank Park Plaza Shopping Center 2807-2829 Lower Wetumpka Road
221 4162471 KeyBank Jason Commercial Building 601 South Jason St.
222 03-0221328 Greenwich Sternberg Apartments 65 Sherman Street
223 940907356 Greenwich Hillcrest Apartments 1105 Ronstan Drive
224 03-0810575 Greenwich 235 Glenville Road 235 Glenville Road
226 03-0810594 Greenwich Commerce Park Office / Warehouse 7102-7176 Oaklawn Drive
227 03-0810615 Greenwich Bel-Air Mobile Home Park 2201 Leonard Road
228 03-0810533 Greenwich Parkchester Apartments 430 West 7th Street
229 03-0810588 Greenwich Bandera Landing 8015 Bandera Landing
231 SM991004 KeyBank Mt. Orange Mobile Home Park Mt. Orange Rd.
232 03-0810578 Greenwich 1215 NE 23rd Street 1215 NE 23rd Street
233 03-0810572 Greenwich Cypress Villas Apartments 220 SW 8th Street
234 03-0810579 Greenwich Neico Investments, LLC 3095 Sterling Circle
<PAGE>
<CAPTION>
CONTROL PROPERTY PROPERTY PROPERTY
NUMBER CITY STATE ZIP CODE PROPERTY TYPE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Various Various Various Hotel - Full Service
1.10 Atlanta Georgia 30303 Hotel - Full Service
1.20 Cumberland Maryland 21502 Hotel - Full Service
1.30 Frederick Maryland 21703 Hotel - Full Service
1.40 Asheville North Carolina 28806 Hotel - Full Service
1.50 Charlotte North Carolina 28262 Hotel - Full Service
1.60 Durham North Carolina 27703 Hotel - Full Service
1.70 Beaver Falls Pennsylvania 15010 Hotel - Full Service
1.80 Bensalem Pennsylvania 19020 Hotel - Full Service
1.90 Harrisburg Pennsylvania 17109 Hotel - Full Service
1.91 Harrisburg Pennsylvania 17111 Hotel - Full Service
1.92 Johnstown Pennsylvania 15901 Hotel - Full Service
1.93 Johnstown Pennsylvania 15904 Hotel - Full Service
1.94 Pottstown Pennsylvania 19464 Hotel - Full Service
1.95 York Pennsylvania 17404 Hotel - Full Service
1.96 Rock Hill South Carolina 29730 Hotel - Full Service
2 San Mateo California 94404 Retail-Anchored
3 New York New York 10011 Office
4 South Charleston West Virginia 25309 Retail-Anchored
5 Nashua New Hampshire 03063 Industrial
6 SUNNYVALE CALIFORNIA 94089 INDUSTRIAL
6.10 Sunnyvale California 94089 Industrial
6.20 Sunnyvale California 94089 Industrial
7 PASADENA MARYLAND 21122 VARIOUS
7.10 Pasadena Maryland 21122 Retail-Anchored
7.20 Pasadena Maryland 21122 Office
8 Moscow Idaho 83843 Retail-Anchored
9 Tucson Arizona 85750 Multifamily
10 Aliso Viejo California 92656 Retail-Unanchored
11 Vista California 92083 Multifamily
12 Boston Massachusetts 02125 Office
13 Wyckoff New Jersey 07481 Retail-Anchored
14 New York New York 10020 Multifamily
15 Vacaville California 95688 Retail-Single Tenant
16 Mesa Arizona 85202 Retail-Unanchored
17 Phoenix Arizona 85023 Multifamily
18 VARIOUS FLORIDA VARIOUS MULTIFAMILY
18.10 Tampa Florida 33613 Multifamily
18.20 Tampa Florida 33637 Multifamily
18.30 Jupiter Florida 33458 Multifamily
18.40 Jacksonville Florida 32244 Multifamily
18.50 Panama City Beach Florida 32408 Multifamily
18.60 Jupiter Florida 33458 Multifamily
19 Phoenix Arizona 85032 Office
20 Holbrook New York 11741 Office
21 Chandler Arizona 85224 Retail-Anchored
22 VARIOUS INDIANA VARIOUS MULTIFAMILY
22.10 Evansville Indiana 47715 Multifamily
22.20 Indianapolis Indiana 46229 Multifamily
22.30 Newburgh Indiana 47630 Multifamily
22.40 Indianapolis Indiana 46254 Multifamily
22.50 Bloomington Indiana 47401 Multifamily
23 Waldorf Maryland 20603 Office
24 Ontario California 91761 Industrial
25 Sacramento California 95823 Manufactured Housing
26 Rogers Arkansas 72756 Retail-Single Tenant
27 Des Moines Iowa 50309 Retail-Anchored
28 VARIOUS FLORIDA VARIOUS MULTIFAMILY
28.10 Callaway Florida 32404 Multifamily
28.20 Sanford Florida 32773 Multifamily
28.30 DeLand Florida 32724 Multifamily
29 Atlanta Georgia 30305 Retail-Unanchored
30 Spring Valley New York 10977 Mixed Use
31 Oakland California 94621 Hotel - Limited Service
32 Carrollton Texas 75006 Office
33 VARIOUS VARIOUS VARIOUS MULTIFAMILY
33.10 Rexburg Idaho 83440 Multifamily
33.20 Rexburg Idaho 83440 Multifamily
33.30 Rexburg Idaho 83440 Multifamily
34 SeaTac Washington 98188 Hotel - Limited Service
35 Malden Massachusetts 02148 Multifamily
36 Alameda California 94502 Office
37 Nashua New Hampshire 03060 Multifamily
38 Everett Washington 98201 Hotel - Limited Service
39 Las Vegas Nevada 89117 Retail-Unanchored
40 St. Augustine Florida 32086 Nursing Home, Skilled
41 Kailua-Kona Hawaii 96740 Mixed Use
42 Westport Connecticut 06880 Office
43 Sun City Arizona 85351 Retail-Anchored
44 Rolla Missouri 65401 Retail-Anchored
45 Pinole California 94564 Multifamily
46 East Whiteland Twp. Pennsylvania 19355 Retail-Anchored
47 Nashville Tennessee 37201 Multifamily
48 Colorado Springs Colorado 80906 Retail-Anchored
49 VARIOUS VARIOUS VARIOUS MANUFACTURED HOUSING
49.10 Amelia Ohio 45102 Manufactured Housing
49.20 Amelia Ohio 45102 Self-Storage
49.30 Milford Ohio 45150 Manufactured Housing
50 Tampa Florida 33609 Office
51 Stockton California 95210 Multifamily
52 Atlanta Georgia 30342 Mixed Use
53 Houston Texas 77036 Multifamily
54 Stockton California 95207 Multifamily
55 Vernon Connecticut 06066 Multifamily
56 San Gabriel California 91776 Retail-Unanchored
57 El Paso Texas 79912 Multifamily
58 San Diego California 92121 Industrial
59 Euclid Ohio 44123 Retail-Anchored
60 Yuma Arizona 85365 Hotel - Limited Service
61 Las Vegas Nevada 89128 Retail-Shadow Anchored
62 New York New York 10024 Retail-Unanchored
63 Manchester New Hampshire 03103 Office
64 Palisades Park New Jersey 07650 Mixed Use
65 Hood River Oregon 97031 Nursing Home, Skilled
66 Paramus New Jersey 07652 Retail-Anchored
67 New Albany Indiana 47150 Multifamily
68 St. Joseph Missouri 64507 Industrial
69 Harahan Louisiana 70123 Industrial
70 West Covina California 91790 Nursing Home, Skilled
71 Jefferson Parish Louisiana 70123 Industrial
72 La Crescenta California 91214 Self-Storage
73 Austin Texas 78736 Nursing Home
74 Stockton California 95209 Nursing Home
75 New York New York 10021 Office
76 Flemington New Jersey 08822 Multifamily
77 VARIOUS ALABAMA VARIOUS MULTIFAMILY
77.10 Anniston Alabama 36206 Multifamily
77.20 Jacksonville Alabama 36265 Multifamily
77.30 Anniston Alabama 36206 Multifamily
78 Shrewsbury Massachusetts 01545 Assisted Living Facility
79 Indianapolis Indiana 46250 Congregate Care
80 Warren Ohio 44483 Nursing Home, Skilled
81 Staten Island New York 10302 Multifamily
82 Elkridge Maryland 21227 Office
83 Colorado Springs Colorado 80909 Retail-Unanchored
84 Phoenix Arizona 85035 Multifamily
85 Reno Nevada 89502 Office
86 Madison Wisconsin 53717 Retail-Unanchored
87 Hayward California 94544 Retail-Shadow Anchored
88 WICHITA KANSAS VARIOUS MULTIFAMILY
88.10 Wichita Kansas 67217 Multifamily
88.20 Wichita Kansas 67218 Multifamily
89 Tallahassee Florida 32303 Retail-Single Tenant
90 Cape Coral Florida 33904 Assisted Living Facility
100 Yerington Nevada 89447 Retail-Anchored
101 VARIOUS VARIOUS VARIOUS RETAIL-SINGLE TENANT
101.10 Hilliard Ohio 43026 Retail-Single Tenant
101.20 Warren Michigan 48093 Retail-Single Tenant
101.30 Richmond Michigan 48062 Retail-Single Tenant
101.40 Lewisville Texas 75067 Retail-Single Tenant
101.50 Bakersfield California 93309 Retail-Single Tenant
101.60 Mesa Arizona 85204 Retail-Single Tenant
102 Olathe Kansas 66061 Multifamily
103 Pembroke Pines Florida 33024 Retail-Unanchored
104 San Rafael California 94903 Office
105 Winter Haven Florida 33881 Manufactured Housing
106 VARIOUS VARIOUS VARIOUS NURSING HOME
106.10 New Castle Pennsylvania 16101 Nursing Home
106.20 Aliquippa Pennsylvania 15001 Nursing Home
107 Wayne Michigan 48184 Retail-Single Tenant
108 New Orleans Louisiana 70115 Office
109 Baton Rouge Louisiana 70820 Multifamily
110 Spring Valley California 91978 Self-Storage
111 East Lansing Michigan 48823 Multifamily
112 Olathe Kansas 66062 Multifamily
113 Queens New York 11432 Retail-Unanchored
114 Weymouth Massachusetts 02189 Multifamily
115 Ormand Beach Florida 32174 Retail-Single Tenant
116 Cheyenne Wyoming 82007 Manufactured Housing
117 Seattle Washington 98101 Retail-Unanchored
118 Knoxville Tennessee 37914 Industrial
119 Delaware Ohio 43015 Multifamily
120 Pleasanton California 94588 Retail-Unanchored
121 El Cajon California 92021 Manufactured Housing
122 Quakertown Pennsylvania 18951 Retail-Unanchored
123 Camp Hill Pennsylvania 17011 Retail-Anchored
124 Aberdeen Maryland 21001 Hotel - Full Service
125 Philadelphia Pennsylvania 19128 Multifamily
126 San Rafael California 94901 Retail-Unanchored
127 Sun Valley California 91352 Industrial
128 VARIOUS VARIOUS VARIOUS HOTEL - LIMITED SERVICE
128.10 Florida City Florida 33034 Hotel - Limited Service
128.20 Florida City Florida 33034 Hotel - Limited Service
129 VARIOUS VARIOUS VARIOUS RETAIL-ANCHORED
129.10 Carmel Indiana 46032 Retail-Anchored
129.20 Carmel Indiana 46032 Retail-Unanchored
130 Chandler Arizona 85224 Mixed Use
131 Toledo Ohio 43614 Multifamily
132 Stillwater Oklahoma 74075 Multifamily
133 Washington District of Columbia 20017 Retail-Anchored
134 Sacramento California 95823 Multifamily
135 Austin Texas 78745 Retail-Unanchored
136 Youngstown Ohio 44503 Office
137 Columbus Ohio 43223 Multifamily
138 Freeport New York 11520 Retail-Unanchored
139 Arlington Texas 76011 Hotel - Limited Service
140 Plattsburgh New York 12901 Multifamily
141 Las Vegas Nevada 89118 Industrial
142 Novato California 94947 Office
143 Hamilton Ohio 45015 Retail-Anchored
144 Canton Township Michigan 48188 Industrial
145 Nampa Idaho 83651 Retail-Anchored
146 Salt Lake City Utah 84104 Manufactured Housing
147 VARIOUS VARIOUS VARIOUS RETAIL-UNANCHORED
147.10 Puyallup Washington 98373 Retail-Unanchored
147.20 Macomb Michigan 48042 Retail-Unanchored
147.30 Jacksonville Florida 32216 Retail-Unanchored
148 Las Vegas Nevada 89115 Manufactured Housing
149 Grandview Heights Ohio 43212 Multifamily
150 San Diego California 92121 Office
151 Colorado Springs Colorado 80903 Multifamily
152 Carmel Indiana 46032 Self-Storage
153 San Rafael California 94901 Office
154 Dumfries Virginia 22026 Retail-Unanchored
155 Quincy Massachusetts 02109 Office
156 Minden Nevada 89423 Retail-Unanchored
157 San Diego California 92110 Multifamily
158 San Pablo California 94806 Multifamily
159 New York New York 10011 Retail-Single Tenant
160 Mooresville Indiana 46158 Retail-Unanchored
161 Indianapolis Indiana 46227 Multifamily
162 Tooele Utah 84074 Retail-Unanchored
163 Alpharetta Georgia 30022 Mixed Use
164 Philadelphia Pennsylvania 19128 Multifamily
165 Patchogue New York 11772 Office
166 Houston Texas 77056 Retail-Unanchored
167 Frankfort Kentucky 40601 Multifamily
168 Staten Island New York 10312 Mixed Use
169 Middlefield Township Ohio 44062 Manufactured Housing
170 Colorado Springs Colorado 80905 Office
171 Milford Connecticut 06460 Mixed Use
172 Smyrna Georgia 30080 Retail-Single Tenant
173 Allentown Pennsylvania 18103 Self-Storage
174 Charlestown New Hampshire 03603 Manufactured Housing
175 New York New York 10018 Mixed Use
176 Land O' Lakes Florida 34639 Multifamily
177 S. San Francisco California 94080 Industrial
178 Columbus Ohio 43207 Industrial
179 Worcester Massachusetts 01608 Multifamily
180 Seattle Washington 98199 Mixed Use
181 Duluth Georgia 30136 Mixed Use
182 Elko Nevada 89801 Multifamily
183 Knoxville Tennessee 37917 Office
184 Vestal New York 13850 Retail-Unanchored
185 Knoxville Tennessee 37921 Retail-Unanchored
186 Milton Wisconsin 53563 Retail-Anchored
187 Del City Oklahoma 73115 Multifamily
188 Sedro Woolley Washington 98284 Manufactured Housing
189 New York New York 10002 Mixed Use
190 Issaquah Washington 98027 Industrial
191 Lakewood Colorado 80215 Office
192 Atlanta Georgia 30305 Mixed Use
193 Jefferson City Tennessee 37760 Manufactured Housing
194 Amherst New York 14221 Retail-Unanchored
195 Palm Bay Florida 32907 Multifamily
196 Wilmington Delaware 19802 Multifamily
197 University Heights Ohio 44121 Multifamily
198 Carpinteria California 93013 Self-Storage
199 Portland Maine 04104 Office
200 Marietta Georgia 30067 Mixed Use
201 Chicago Illinois 60620 Retail-Unanchored
203 Philadelphia Pennsylvania 19128 Multifamily
204 Hudson Florida 34667 Manufactured Housing
205 Loveland Colorado 80537 Multifamily
206 Indianapolis Indiana 46236 Multifamily
207 Boston Massachusetts 02111 Multifamily
209 Mesa Arizona 85207 Manufactured Housing
210 Richfield Ohio 44286 Hotel - Limited Service
211 Klamath Falls Oregon 97603 Retail-Single Tenant
212 Bullhead City Arizona 86442 Retail-Single Tenant
213 Bucksport Maine 04416 Hotel - Limited Service
214 Winter Garden Florida 34787 Multifamily
215 Astoria New York 11102 Retail-Single Tenant
216 Canal Fulton Ohio 44614 Retail-Unanchored
218 Montgomery Alabama 36110 Retail-Unanchored
221 Denver Colorado 80223 Industrial
222 Portland Maine 04101 Multifamily
223 Killeen Texas 76542 Multifamily
224 Greenwich Connecticut 06831 Office
226 San Antonio Texas 78229 Mixed Use
227 Bryan Texas 77801 Manufactured Housing
228 Plainfield New Jersey 07060 Multifamily
229 San Antonio Texas 28250 Retail-Unanchored
231 Slate Hill New York 10973 Manufactured Housing
232 Pompano Beach Florida 33064 Multifamily
233 Pompano Beach Florida 33060 Multifamily
234 Boulder Colorado 80301 Industrial
<PAGE>
<CAPTION>
ORIGINAL GROSS
CONTROL PRINCIPAL CUT-OFF LOAN MORTGAGE
NUMBER BORROWER NAME BALANCE DATE BALANCE TYPE RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Crown American Associates and Maryland Motel Management, Inc $69,450,000 $69,289,658 Fixed 8.0800%
1.10 Crown American Associates and Maryland Motel Management, Inc 12,500,000 12,471,141 Fixed 8.0800%
1.20 Crown American Associates and Maryland Motel Management, Inc 3,400,000 3,392,150 Fixed 8.0800%
1.30 Crown American Associates and Maryland Motel Management, Inc 7,200,000 7,183,377 Fixed 8.0800%
1.40 Crown American Associates and Maryland Motel Management, Inc 2,700,000 2,693,766 Fixed 8.0800%
1.50 Crown American Associates and Maryland Motel Management, Inc 7,600,000 7,582,454 Fixed 8.0800%
1.60 Crown American Associates and Maryland Motel Management, Inc 7,500,000 7,482,684 Fixed 8.0800%
1.70 Crown American Associates and Maryland Motel Management, Inc 3,900,000 3,890,996 Fixed 8.0800%
1.80 Crown American Associates and Maryland Motel Management, Inc 6,500,000 6,484,993 Fixed 8.0800%
1.90 Crown American Associates and Maryland Motel Management, Inc 3,250,000 3,242,497 Fixed 8.0800%
1.91 Crown American Associates and Maryland Motel Management, Inc 975,000 972,749 Fixed 8.0800%
1.92 Crown American Associates and Maryland Motel Management, Inc 1,200,000 1,197,230 Fixed 8.0800%
1.93 Crown American Associates and Maryland Motel Management, Inc 750,000 748,268 Fixed 8.0800%
1.94 Crown American Associates and Maryland Motel Management, Inc 5,100,000 5,088,225 Fixed 8.0800%
1.95 Crown American Associates and Maryland Motel Management, Inc 4,975,000 4,963,514 Fixed 8.0800%
1.96 Crown American Associates and Maryland Motel Management, Inc 1,900,000 1,895,613 Fixed 8.0800%
2 Bridgepointe LLC 39,000,000 38,921,165 Fixed 7.5200%
3 122 Fifth Associates 27,150,000 27,098,390 Fixed 7.7800%
4 THF-D Charleston Development Limited Liability Company 17,550,000 17,536,726 Fixed 8.0000%
5 Berkshire-Nashua, L.L.C. 12,350,000 12,341,663 Fixed 7.9700%
6 BORDEAUX PARTNERS LLC 11,700,000 11,676,920 FIXED 7.7700%
6.10 Bordeaux Partners LLC 4,748,000 4,738,634 Fixed 7.7700%
6.20 Bordeaux Partners, LLC 6,952,000 6,938,286 Fixed 7.7700%
7 FESTIVAL PASADENA ASSOCIATES, L.P., ET AL. 11,680,000 11,635,676 FIXED 7.4500%
7.10 Festival Pasadena Associates, L.P., et al. 9,280,000 9,244,784 Fixed 7.4500%
7.20 Festival Pasadena Associates, L.P., et al. 2,400,000 2,390,892 Fixed 7.4500%
8 Palouse Empire Mall Associates 11,500,000 11,479,097 Fixed 7.7500%
9 Ventana Vista Investors Limited Partnership 11,377,000 11,353,185 Fixed 7.3700%
10 Leaseback of California II, LLC 11,000,000 10,899,246 Fixed 7.0700%
11 HCA Shadowridge Heights LLC 10,700,000 10,620,679 Fixed 6.4700%
12 Bayside Merchandise Mart Limited Partnership 10,425,000 10,391,638 Fixed 7.9500%
13 Munico Associates 10,440,000 10,355,992 Fixed 7.2500%
14 310 W 49 St. Assoc. LP and Haga Realty 10,000,000 9,875,416 Fixed 7.0900%
15 Vintage Ranch Properties, L.P. 9,400,000 9,334,620 Fixed 8.0800%
16 Mesa Pavilion Associates, LLC 9,200,000 9,124,979 Fixed 6.2700%
17 Bigelow Arizona Limited Liability Company 8,850,000 8,735,526 Fixed 6.9000%
18 VARIOUS 8,546,250 8,528,055 FIXED 7.3700%
18.10 Pine Lake Apartments, Ltd. 660,000 658,595 Fixed 7.3700%
18.20 Terrace Trace Apartments, Ltd. 1,650,000 1,646,487 Fixed 7.3700%
18.30 Lexford FLKB, L.L.C. 1,650,000 1,646,487 Fixed 7.3700%
18.40 Rivers End Apartments, Ltd. 1,417,500 1,414,482 Fixed 7.3700%
18.50 Cypress Apartments, Ltd. 1,432,500 1,429,450 Fixed 7.3700%
18.60 Lexford FLKB II L.L.C. 1,736,250 1,732,554 Fixed 7.3700%
19 Phoenix North Star, Ltd. 8,500,000 8,483,996 Fixed 7.8200%
20 4250 Vets Highway, LLC 8,462,000 8,456,391 Fixed 8.0600%
21 Raydob, L.L.C. 8,240,000 8,166,546 Fixed 7.2000%
22 VARIOUS 6,862,000 6,816,528 FIXED 7.6000%
22.10 Princeton Court Apartments of Evansville, Ltd. 917,000 910,923 Fixed 7.6000%
22.20 Elmtree Park Apartments of Indianapolis, II, LP 947,000 940,725 Fixed 7.6000%
22.30 Meadowood Apartments of Warrick County, Ltd. 993,000 986,420 Fixed 7.6000%
22.40 Rosewood Commons Apartments ofIndianapolis, Ltd. 1,887,000 1,874,496 Fixed 7.6000%
22.50 Acadia Court Apartments of Bloomington, Ltd. 2,118,000 2,103,965 Fixed 7.6000%
23 Charles County Resources Investors 6,750,000 6,695,418 Fixed 8.0500%
24 Laguna Properties Limited Partnership 6,675,000 6,664,037 Fixed 7.6900%
25 Carol E. Williams, Kimberly Layne Williams and Dale A. Will 6,850,000 6,605,927 Fixed 8.3770%
26 K-GO, LLC 6,500,000 6,469,716 Fixed 7.7500%
27 HPM Investments, Inc. 6,500,000 6,367,553 Fixed 7.5500%
28 VARIOUS 6,195,000 6,153,948 FIXED 7.6000%
28.10 Pine Terrace Apartments, Ltd. 2,193,000 2,178,468 Fixed 7.6000%
28.20 Sanford Court Investors, Ltd. 1,782,000 1,770,191 Fixed 7.6000%
28.30 Applewood Apartments, LTD. 2,220,000 2,205,289 Fixed 7.6000%
29 Krinsky-Finkel, LLC 5,925,000 5,890,277 Fixed 7.4100%
30 Pascack Industries, Inc. 5,850,000 5,810,908 Fixed 7.5500%
31 Brilliance Investment, LLC 5,865,000 5,796,232 Fixed 7.5000%
32 JLH Properties, Inc. 5,800,000 5,792,273 Fixed 8.3300%
33 CORPORATE PLAZA LIMITED 5,765,000 5,756,330 FIXED 7.4500%
33.10 Corporate Plaza Limited 1,123,052 1,121,363 Fixed 7.4500%
33.20 Corporate Plaza Limited 2,770,195 2,766,029 Fixed 7.4500%
33.30 Corporate Plaza Limited 1,871,753 1,868,938 Fixed 7.4500%
34 Airport Investment Company, Inc. 5,800,000 5,754,326 Fixed 8.2000%
35 Malden Park Place Company, LLC 5,780,000 5,733,819 Fixed 6.9000%
36 Gloria S. Y. Gee, as Successor Trustee 5,700,000 5,693,384 Fixed 7.8750%
37 Nashua Plaza Housing Associates Limited Partnership 5,680,000 5,654,423 Fixed 7.8400%
38 AMA Holdings, LLC, SEA Holdings, LLC, DGH Holdings, LLC and 5,500,000 5,391,074 Fixed 7.7500%
39 Durango-Twain L.L.C. 5,400,000 5,369,824 Fixed 7.7100%
40 Healthcare Properties of St. Augustine, Inc. 5,400,000 5,350,286 Fixed 7.3000%
41 A.R.B.P., LLC 5,250,000 5,203,290 Fixed 7.2100%
42 Westmark Industries, LLC 5,200,000 5,137,311 Fixed 7.0100%
43 Greenway Terrace LLC 5,200,000 5,133,243 Fixed 6.9500%
44 Phybell Development Corporation 5,000,000 4,978,092 Fixed 7.2500%
45 Bayside Willows, Inc. 5,030,000 4,976,186 Fixed 7.1250%
46 Westgate Plaza LP 5,000,000 4,930,706 Fixed 7.6250%
47 Riverfront Partnership 4,875,000 4,863,747 Fixed 7.3500%
48 Dial Realty-Cheyenne Mountain,L.L.C. 4,890,000 4,853,905 Fixed 6.9500%
49 A/C, INC. 4,885,000 4,846,563 FIXED 6.9700%
49.10 A/C, Inc. 2,442,500 2,423,281 Fixed 6.9700%
49.20 A/C, Inc. 557,736 553,348 Fixed 6.9700%
49.30 A/C, Inc. 1,884,764 1,869,934 Fixed 6.9700%
50 Kennedy Square Investors, L.C. 4,825,000 4,804,993 Fixed 8.1500%
51 Westpointe Limited Partnership 4,820,000 4,782,167 Fixed 6.8200%
52 Realmark VII, L.P. 4,800,000 4,748,282 Fixed 7.0000%
53 8100 Bellaire Corporation 4,700,000 4,654,483 Fixed 7.0000%
54 Bridle Path Place Limited Partnership 4,590,000 4,553,973 Fixed 6.8200%
55 JCM Associates, L.L.C. 4,460,000 4,422,775 Fixed 6.4800%
56 Hawaii Property, Inc. 4,500,000 4,417,440 Fixed 7.6250%
57 Merit El Paso Apartments Limited Partnership 4,400,000 4,390,221 Fixed 7.5400%
58 KCSD Limited Partnership 4,369,000 4,304,366 Fixed 6.5300%
59 Miles G. Carter, an Individual 4,300,000 4,240,889 Fixed 7.1100%
60 PLJV, LLC 4,300,000 4,234,690 Fixed 7.6250%
61 Patton Rampart, LLC 4,330,000 4,201,787 Fixed 6.7500%
62 Park Belvedere LLC 4,200,000 4,192,016 Fixed 7.7800%
63 Haverford-Hathaway, LLC 4,200,000 4,182,641 Fixed 8.1700%
64 Boulevard East Associates, Ltd. 4,200,000 4,162,310 Fixed 7.4500%
65 Hood River Care Associates 4,150,000 4,125,787 Fixed 7.3500%
66 221 Route 4 East Corp. 4,150,000 4,103,282 Fixed 7.4100%
67 The Sprigler Family Limited Partnership 4,100,000 4,090,227 Fixed 7.2400%
68 Migo Limited Liability Company 4,000,000 3,991,876 Fixed 7.5000%
69 3501 North Causeway Associates 4,000,000 3,968,418 Fixed 7.3600%
70 Doctor's Hospital of West Covina, Inc. 4,000,000 3,951,249 Fixed 8.7500%
71 Beven Street Properties, LLC 3,970,000 3,949,489 Fixed 7.6100%
72 Mini Storage, Ltd. 3,850,000 3,807,107 Fixed 7.4700%
73 SB Realty Corporation 3,850,000 3,804,527 Fixed 7.5000%
74 Wagner Hts, LLC 3,800,000 3,754,256 Fixed 7.3750%
75 FREP, LLC 3,780,000 3,725,063 Fixed 7.2500%
76 Flemington Fidelco, LLC 3,720,000 3,690,066 Fixed 7.2500%
77 VARIOUS 3,699,000 3,681,373 FIXED 7.2814%
77.10 Colonial Park Apartments, LLC. 1,475,000 1,467,914 Fixed 7.2300%
77.20 Jackson Trace Apartments, LLC 1,224,000 1,218,120 Fixed 7.2300%
77.30 Fox Valley Apartments, LLC 1,000,000 995,339 Fixed 7.4200%
78 Highland Holdings, LLC 3,700,000 3,675,856 Fixed 7.8000%
79 Residential Care I, L.L.C. 3,600,000 3,566,971 Fixed 7.8000%
80 Gillette Associates, Limited Partnership 3,600,000 3,548,140 Fixed 7.8750%
81 Trantor Realty Associates 3,585,000 3,530,827 Fixed 7.0000%
82 Peregrine Properties LLC 3,525,000 3,481,424 Fixed 7.2000%
83 Ridgeview Plaza 3,500,000 3,481,297 Fixed 7.9900%
84 Sunplace Investment Associates, LP 3,525,000 3,479,404 Fixed 6.9000%
85 Meadow Wood Crown Plaza, Inc. 3,500,000 3,475,917 Fixed 7.3750%
86 ORC LLC, GMAIN LLC, RMAIN LLC 3,500,000 3,473,194 Fixed 6.9500%
87 Atalaya Properties, Inc. 3,500,000 3,465,500 Fixed 7.1400%
88 THE MARTYNES FAMILY TRUST 3,415,000 3,411,553 FIXED 8.2500%
88.10 The Martynes Family Trust 2,015,000 2,012,966 Fixed 8.2500%
88.20 The Martynes Family Trust 1,400,000 1,398,587 Fixed 8.2500%
89 The Richard C. Dunsay Real Property Trust 3,360,000 3,352,502 Fixed 7.5200%
90 Juniper Eventide, L.P. 3,350,000 3,326,017 Fixed 7.7300%
100 Yerington Shopping Center, LLC 3,316,200 3,309,161 Fixed 7.7700%
101 CAPTEC FRANCHISE CAPITAL PARNERS L.P. IV 3,276,000 3,276,000 FIXED 8.5000%
101.10 Captec Franchise Capital Parners L.P. IV 465,047 465,047 Fixed 8.5000%
101.20 Captec Franchise Capital Parners L.P. IV 377,205 377,205 Fixed 8.5000%
101.30 Captec Franchise Capital Parners L.P. IV 382,372 382,372 Fixed 8.5000%
101.40 Captec Franchise Capital Parners L.P. IV 981,767 981,767 Fixed 8.5000%
101.50 Captec Franchise Capital Parners L.P. IV 601,978 601,978 Fixed 8.5000%
101.60 Captec Franchise Capital Parners L.P. IV 467,631 467,631 Fixed 8.5000%
102 Holiday Properties Partnership 3,300,000 3,252,671 Fixed 7.0950%
103 ADI Properties and Pembroke Biscayne, LLC 3,200,000 3,173,843 Fixed 7.1500%
104 Northgate Group, LLC 3,200,000 3,173,072 Fixed 7.5000%
105 Corrigan Group Two, L.C. 3,150,000 3,145,355 Fixed 8.8000%
106 TRADE AROUND THE WORLD OF PENNSYLVANIA, INC. 3,080,000 3,055,911 FIXED 8.7700%
106.10 Trade Around the World of Pennsylvania, Inc. 1,464,262 1,452,810 Fixed 8.7700%
106.20 Trade Around the World of Pennsylvania, Inc. 1,615,738 1,603,101 Fixed 8.7700%
107 Chicago Salvage Stock Stores, Inc. 3,050,000 3,047,856 Fixed 7.7700%
108 2633 Napoleon 3,060,000 3,038,678 Fixed 8.0700%
109 Teakwood Village, L.L.C. 3,035,000 3,024,853 Fixed 7.6800%
110 First European Ventures, LLC 3,100,000 3,018,094 Fixed 7.3750%
111 Vaer Associates, L.L.C. 3,000,000 2,995,501 Fixed 7.2500%
112 Olathe Duplexes, LLC 3,000,000 2,979,245 Fixed 7.9300%
113 Jamaica Avenue Realty LLC 3,000,000 2,963,194 Fixed 7.2500%
114 Q.A. V Limited Partnership, a Mass. Limited Partnership 2,851,000 2,845,397 Fixed 7.6400%
115 The Richard C. Dunsay Real Property Trust 2,825,000 2,818,696 Fixed 7.5200%
116 Cheyenne MHP, Limited 2,800,000 2,796,884 Fixed 7.6500%
117 Harbor Properties, Inc. 2,800,000 2,791,627 Fixed 8.3700%
118 Red Dog Drive LLC 2,800,000 2,780,734 Fixed 7.3750%
119 Forest Brooke Apartments LTD 2,800,000 2,771,406 Fixed 7.0000%
120 Pleasant Village Associates 2,700,000 2,695,013 Fixed 7.9000%
121 Royal View Gardens, Inc. 2,685,000 2,682,184 Fixed 8.2500%
122 Furniture Executives No. 7, L.P. 2,700,000 2,681,388 Fixed 8.1300%
123 Capital Plaza Associates, LP 2,900,000 2,679,783 Fixed 7.1250%
124 Megha, Inc 2,650,000 2,634,333 Fixed 8.2700%
125 Henridge Properties, L.P. 2,575,000 2,569,770 Fixed 7.5000%
126 The Graham Center LLC 2,600,000 2,541,864 Fixed 7.6250%
127 Branford Investments, LLC 2,500,000 2,486,914 Fixed 8.1100%
128 PARLON CORPORATION 2,485,000 2,474,078 FIXED 8.8000%
128.10 Parlon Corporation 1,883,000 1,874,724 Fixed 8.8000%
128.20 Parlon Corporation 602,000 599,354 Fixed 8.8000%
129 BARNES INVESTMENT II COMPANY 2,500,000 2,445,523 FIXED 7.5000%
129.10 Barnes Investment II Company 1,395,349 1,364,943 Fixed 7.5000%
129.20 Barnes Investment II Company 1,104,651 1,080,580 Fixed 7.5000%
130 820 West Warner, LLC 2,475,000 2,444,311 Fixed 7.3500%
131 Meldon Place Apartments of Toledo, Ltd. 2,418,750 2,413,601 Fixed 7.3700%
132 Linden Investments, L.L.C. 2,414,000 2,409,871 Fixed 7.9400%
133 12th and Monroe LP 2,300,000 2,278,281 Fixed 7.1500%
134 Packard Properties, LLC 2,250,000 2,230,487 Fixed 6.9000%
135 Cedar Contracting, Inc. d/b/a Cedar Corporation 2,239,000 2,229,761 Fixed 8.1800%
136 Tri-State Plaza Place Limited Partnership 2,200,000 2,194,346 Fixed 8.7400%
137 Colonial Square Investor, Ltd. 2,200,000 2,160,339 Fixed 7.4600%
138 Elks Plaza LLC 1,900,000 2,155,348 Fixed 8.8750%
139 Kunal Hospitality, L.L.C. 2,160,000 2,154,168 Fixed 8.4800%
140 JDD, LLC 2,160,000 2,150,183 Fixed 7.8000%
141 The Louis Somers and Debra Somers 1993 Living Trust 2,100,000 2,089,180 Fixed 7.9600%
142 Asia Fountain Group, Inc. 2,200,000 2,084,890 Fixed 7.2500%
143 Moskowitz Family II Ltd. 2,100,000 2,083,818 Fixed 7.5000%
144 Two Irish Guys II, LLC 2,100,000 2,072,212 Fixed 7.3300%
145 Bonanza Investments, LLC 2,025,000 2,022,857 Fixed 7.9600%
146 The Vanderhout Family Limited Partnership 2,000,000 1,997,309 Fixed 7.3000%
147 CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III 1,994,000 1,994,000 FIXED 8.5000%
147.10 Captec Franchise Capital Partners L.P. III 690,231 690,231 Fixed 8.5000%
147.20 Captec Franchise Capital Partners L.P. III 409,026 409,026 Fixed 8.5000%
147.30 Captec Franchise Capital Partners L.P. III 894,744 894,744 Fixed 8.5000%
148 Vegas Mobile Park One, L.P. 2,000,000 1,992,133 Fixed 7.8200%
149 Jamestown Apartments Corp. 2,000,000 1,982,125 Fixed 7.1000%
150 Downtown Properties Development Corporation 1,975,000 1,973,715 Fixed 8.1500%
151 Park Meadows Apartments 1,975,000 1,932,762 Fixed 7.5000%
152 Carmel Self Storage, LLC 1,900,000 1,894,604 Fixed 8.2100%
153 Arthur Franklin Bridge Testamentary Trust 1,900,000 1,878,013 Fixed 7.2500%
154 VF-Princeton Woods 3, LLC 1,800,000 1,795,528 Fixed 7.6400%
155 United Real Estate Investors, Inc. 1,800,000 1,790,242 Fixed 7.9000%
156 James W. Winans and Ruth C. Winans 1,763,000 1,761,217 Fixed 8.2400%
157 Edwina N. Decker Trust 1,700,000 1,696,569 Fixed 8.0200%
158 Willow Branch Apartments, Inc. 1,700,000 1,681,899 Fixed 7.1500%
159 257 Associates, LLC 1,675,000 1,665,010 Fixed 7.2500%
160 TKC Properties, LLC 1,668,000 1,659,061 Fixed 7.6400%
161 Heathmoore Apartments of Indianapolis, II, Inc. 1,649,000 1,638,073 Fixed 7.6000%
162 Tooele Centers, LLC 1,650,000 1,618,825 Fixed 7.3750%
163 Realmark X, L.L.C. 1,600,000 1,582,761 Fixed 7.0000%
164 Sandra Court Properties, L.P. 1,560,000 1,556,832 Fixed 7.5000%
165 Waverly Plaza LLC 1,550,000 1,546,649 Fixed 7.8500%
166 CP Westheimer LLC 1,550,000 1,535,609 Fixed 7.2500%
167 Winthrop Court Apartments of Frankfort, Ltd. 1,500,000 1,496,807 Fixed 7.3700%
168 Richmond Avenue Associates 1,500,000 1,494,291 Fixed 7.9900%
169 Middlefield Properties, LLC 1,500,000 1,491,671 Fixed 7.7500%
170 Raintree Office Building LLC 1,500,000 1,484,789 Fixed 7.3500%
171 1770 Post Road Associates 1,500,000 1,482,493 Fixed 7.2000%
172 Robert S. and Mary Jane Hakemian 1,500,000 1,480,704 Fixed 7.2500%
173 National Self-Storage Associates, L.L.C. 1,485,000 1,478,602 Fixed 7.3400%
174 Narje, LLC 1,480,000 1,475,758 Fixed 8.1600%
175 Eighth Avenue Associates 1,500,000 1,472,071 Fixed 7.5000%
176 LOL Village Limited Partnership 1,460,000 1,455,660 Fixed 7.5400%
177 W. Roberts Pedrick and Melanie M. Pedrick 1,450,000 1,444,219 Fixed 7.7500%
178 4140 Lockbourne Limited 1,450,000 1,437,802 Fixed 7.2500%
179 Pacific Land LLC 1,433,000 1,426,052 Fixed 8.4500%
180 Arthur Van der Wel 1,400,000 1,393,265 Fixed 8.6300%
181 Realmark IX, L.L.C. 1,408,000 1,392,830 Fixed 7.0000%
182 Ernest and Betty Vandegrift 1,400,000 1,390,332 Fixed 8.1200%
183 Southern Station Partnership, Ltd. 1,400,000 1,386,798 Fixed 7.2500%
184 Colonial Properties, LLC 1,400,000 1,373,704 Fixed 8.2300%
185 West Haven Acquisition, LLC 1,350,000 1,348,692 Fixed 8.5000%
186 Milton Development, LTD 1,360,000 1,342,471 Fixed 7.5000%
187 Coolidge-Kristie Equities, L.L.C. 1,300,000 1,297,055 Fixed 7.5600%
188 Valley View III 1,300,000 1,295,108 Fixed 7.5000%
189 Roman Realty Co., LLC and Dora Straus Family LP Association 1,300,000 1,284,575 Fixed 7.4700%
190 KALE, LLC 1,290,000 1,282,547 Fixed 7.5000%
191 Quail Street Company LLC 1,275,000 1,267,409 Fixed 7.3100%
192 Realmark Habersham, L.L.C. 1,200,000 1,187,071 Fixed 7.0000%
193 Paradise Pointe, L.L.C. 1,181,000 1,178,455 Fixed 7.8700%
194 Boardwalk Boutiques Partnership 1,185,000 1,174,680 Fixed 7.9000%
195 Palm Side Apartments, Ltd. 1,162,000 1,154,300 Fixed 7.6000%
196 Sudler Partnership 1,160,000 1,150,115 Fixed 7.7500%
197 Erez Ltd. 1,148,000 1,144,761 Fixed 7.5700%
198 Carpinteria Self Storage LLC 1,150,000 1,129,992 Fixed 7.1250%
199 39 Forest Avenue LLC 1,128,000 1,125,933 Fixed 8.8600%
200 Realmark I, Ltd. 1,100,000 1,088,148 Fixed 7.0000%
201 Parkway Bank & Trust Company Trust #11604 1,088,000 1,086,058 Fixed 8.0400%
203 Leverington Properties, L.P. 1,056,000 1,053,855 Fixed 7.5000%
204 Corrigan Group, L.C. 1,050,000 1,048,401 Fixed 8.6750%
205 Blutegel 3, LLP 1,060,000 1,047,734 Fixed 7.2500%
206 Willowood East Apartments of Indianapolis, Ltd. 1,031,000 1,024,168 Fixed 7.6000%
207 231 Harrison Avenue Limited Partnership 1,000,000 998,058 Fixed 7.6900%
209 AGA Property Management LLC 1,000,000 989,760 Fixed 7.9500%
210 BCAM Corp. 1,000,000 985,367 Fixed 8.1900%
211 No Apples I - Klamath Falls, L.L.C. 952,000 945,849 Fixed 7.7500%
212 No Apples I - Bullhead City, L.L.C. 948,000 941,875 Fixed 7.7500%
213 Bucksport Motel Properties, Inc. 875,000 867,412 Fixed 9.2000%
214 Winter Woods Apartments II, Ltd. 866,000 860,261 Fixed 7.6000%
215 30-08 Realty Corp. 862,000 857,919 Fixed 8.2600%
216 Galen M. Oakes and Beulah Oakes 750,000 748,607 Fixed 8.0800%
218 Park Plaza Associates, Ltd. 750,000 745,154 Fixed 7.7500%
221 The Jason Company L.L.C. 675,000 673,819 Fixed 8.3800%
222 HCR Properties Limited Liability Company 636,000 628,783 Fixed 9.3750%
223 Killeen Hillcrest, LTD 650,000 621,602 Fixed 8.3100%
224 Joan S. Orlovitz 615,000 606,036 Fixed 8.2200%
226 Commerce Oaklawn, LTD 600,000 594,311 Fixed 7.7300%
227 Eight Star Corporation 525,000 523,136 Fixed 8.3400%
228 Parkchester, Inc. 500,000 492,386 Fixed 7.8900%
229 South Bend Development Inc. 500,000 490,092 Fixed 8.4700%
231 Geoffrey Boynton and Nancy Boynton 350,000 349,619 Fixed 8.5000%
232 Luis and Neyda Jimenez 312,000 309,238 Fixed 8.1100%
233 Aurelain and Maria Victoria Gava 304,000 300,944 Fixed 7.4000%
234 Neico Investments, LLC 300,000 295,304 Fixed 7.6800%
<PAGE>
<CAPTION>
NET GRACE
CONTROL MORTGAGE NOTE 1ST INT. & PRIN. INTEREST DUE PERIOD PAYMENT
NUMBER RATE DATE PAYMENT DATE ACCRUAL METHOD DATE (DAYS) FREQUENCY MONTHLY DEBT SERVICE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 $539,712.13
1.10 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 107,530.61
1.20 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 27,912.20
1.30 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 55,366.82
1.40 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 18,531.87
1.50 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 56,281.98
1.60 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 59,485.02
1.70 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 27,454.62
1.80 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 50,562.26
1.90 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 22,878.85
1.91 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 8,693.96
1.92 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 11,439.43
1.93 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 6,177.29
1.94 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 37,063.74
1.95 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 34,775.86
1.96 8.0270% 05/03/99 06/01/99 Actual / 360 1 5 12 15,557.62
2 7.4670% 03/26/99 05/01/99 Actual / 360 1 5 12 273,227.96
3 7.7270% 03/04/99 05/01/99 Actual / 360 1 10 12 195,069.07
4 7.9170% 05/19/99 07/01/99 Actual / 360 1 5 12 130,274.13
5 7.9170% 05/13/99 07/01/99 Actual / 360 1 10 12 90,361.75
6 7.6770% 04/08/99 06/01/99 ACTUAL / 360 1 5 12 88,527.15
6.10 7.6770% 04/08/99 06/01/99 Actual / 360 1 5 12 35,925.38
6.20 7.6770% 04/08/99 06/01/99 Actual / 360 1 5 12 52,601.77
7 7.3470% 02/01/99 03/01/99 30 / 360 1 5 12 81,268.73
7.10 7.3470% 02/01/99 03/01/99 30 / 360 1 5 12 64,569.68
7.20 7.3470% 02/01/99 03/01/99 30 / 360 1 5 12 16,699.05
8 7.6970% 05/18/99 07/01/99 Actual / 360 1 5 12 95,174.22
9 7.3170% 03/29/99 05/01/99 Actual / 360 1 10 12 78,539.35
10 7.0170% 06/30/98 09/01/98 30 / 360 1 10 12 73,701.13
11 6.3670% 10/02/98 12/01/98 30 / 360 1 5 12 67,420.31
12 7.8970% 03/02/99 05/01/99 Actual / 360 1 5 12 80,879.53
13 7.1970% 11/11/98 01/01/99 Actual / 360 1 5 12 75,461.04
14 7.0370% 03/04/98 05/01/98 Actual / 360 1 10 12 67,840.25
15 8.0270% 11/02/98 01/01/99 Actual / 360 1 5 12 73,049.59
16 6.2170% 09/11/98 11/01/98 Actual / 360 1 5 12 56,765.71
17 6.8470% 08/28/98 10/01/98 Actual / 360 1 10 12 62,549.46
18 7.3016% 04/28/99 06/01/99 ACTUAL / 360 1 5 12 62,435.13
18.10 7.1170% 04/28/99 06/01/99 Actual / 360 1 5 12 4,821.67
18.20 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 12,054.17
18.30 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 12,054.17
18.40 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 10,355.63
18.50 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 10,465.21
18.60 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 12,684.28
19 7.7170% 03/16/99 05/01/99 Actual / 360 1 5 12 61,306.72
20 8.0070% 05/13/99 07/01/99 30 / 360 1 5 12 62,445.46
21 7.1470% 07/30/98 09/01/98 Actual / 360 1 10 12 56,521.60
22 7.5470% 12/31/98 02/01/99 ACTUAL / 360 1 5 12 51,156.76
22.10 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 6,836.31
22.20 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 7,059.96
22.30 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 7,402.89
22.40 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 14,067.74
22.50 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 15,789.86
23 7.9970% 10/29/98 12/01/98 Actual / 360 1 10 12 52,321.37
24 7.6370% 04/22/99 06/01/99 Actual / 360 1 5 12 48,955.06
25 8.2240% 10/02/95 12/01/95 Actual / 360 1 10 12 52,638.28
26 7.6570% 03/30/99 05/01/99 Actual / 360 1 5 12 52,474.56
27 7.4970% 07/28/98 09/01/98 30 / 360 1 10 12 52,562.46
28 7.5470% 12/31/98 02/01/99 ACTUAL / 360 1 5 12 46,184.22
28.10 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 16,348.99
28.20 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 13,284.95
28.30 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 16,550.28
29 7.3570% 01/15/99 03/01/99 Actual / 360 1 5 12 43,439.00
30 7.4970% 12/30/98 02/01/99 Actual / 360 1 5 12 43,421.42
31 7.4470% 08/17/98 10/01/98 30 / 360 1 10 12 43,341.83
32 8.2770% 05/24/99 07/01/99 30 / 360 1 5 12 47,988.44
33 7.3470% 04/02/99 06/01/99 30 / 360 1 5 12 40,112.52
33.10 7.3470% 04/02/99 06/01/99 30 / 360 1 5 12 7,814.13
33.20 7.3470% 04/02/99 06/01/99 30 / 360 1 5 12 19,274.85
33.30 7.3470% 04/02/99 06/01/99 30 / 360 1 5 12 13,023.55
34 8.0970% 10/30/98 12/01/98 Actual / 360 1 5 12 45,536.48
35 6.8470% 08/27/98 10/01/98 Actual / 360 1 10 12 38,067.09
36 7.7820% 04/21/99 06/01/99 Actual / 360 1 5 12 41,328.96
37 7.7370% 11/30/98 01/01/99 Actual / 360 1 5 12 41,046.04
38 7.6970% 07/13/98 09/01/98 Actual / 360 1 10 12 45,538.69
39 7.6570% 01/20/99 03/01/99 Actual / 360 1 5 12 40,646.05
40 7.2470% 10/13/98 12/01/98 Actual / 360 1 10 12 39,205.69
41 7.1570% 07/31/98 09/01/98 Actual / 360 1 10 12 36,048.16
42 6.9570% 08/28/98 10/01/98 Actual / 360 1 10 12 36,785.70
43 6.8970% 08/22/98 10/01/98 Actual / 360 1 10 12 36,920.65
44 7.1970% 02/01/99 04/01/99 Actual / 360 1 5 12 36,140.34
45 7.0720% 05/12/98 07/01/98 Actual / 360 1 10 12 34,243.86
46 7.5720% 12/31/97 02/01/98 Actual / 360 1 10 12 35,766.51
47 7.2470% 03/25/99 05/01/99 30 / 360 1 10 12 33,587.39
48 6.8970% 12/07/98 02/01/99 Actual / 360 1 10 12 34,405.67
49 6.9170% 08/20/98 10/01/98 ACTUAL / 360 1 10 12 32,401.66
49.10 6.9170% 08/20/98 10/01/98 Actual / 360 1 10 12 16,200.83
49.20 6.9170% 08/20/98 10/01/98 Actual / 360 1 10 12 3,699.40
49.30 6.9170% 08/20/98 10/01/98 Actual / 360 1 10 12 12,501.43
50 8.0970% 02/26/99 04/01/99 30 / 360 1 5 12 37,720.85
51 6.7670% 09/21/98 11/01/98 Actual / 360 1 10 12 31,807.98
52 6.9470% 09/19/98 11/01/98 Actual / 360 1 10 12 33,925.40
53 6.9470% 10/08/98 12/01/98 Actual / 360 1 10 12 33,218.62
54 6.7670% 09/21/98 11/01/98 Actual / 360 1 10 12 30,290.09
55 6.4270% 09/09/98 11/01/98 30 / 360 1 10 12 28,131.60
56 7.5720% 08/18/98 10/01/98 Actual / 360 1 10 12 36,901.78
57 7.4870% 03/04/99 05/01/99 30 / 360 1 5 12 30,886.04
58 6.4770% 05/29/98 02/01/99 30 / 360 1 5 12 34,438.02
59 7.0570% 07/23/98 09/01/98 30 / 360 1 10 12 30,693.91
60 7.5720% 08/27/98 10/01/98 Actual / 360 1 10 12 33,941.73
61 6.6970% 09/15/98 11/01/98 Actual / 360 1 10 12 38,554.06
62 7.7270% 03/23/99 05/01/99 Actual / 360 1 5 12 30,176.43
63 8.0670% 02/24/99 04/01/99 30 / 360 1 5 12 32,890.69
64 7.3970% 10/15/98 12/01/98 Actual / 360 1 10 12 30,901.16
65 7.2970% 10/05/98 12/01/98 Actual / 360 1 10 12 28,592.34
66 7.3570% 08/28/98 10/01/98 Actual / 360 1 10 12 30,425.60
67 7.1870% 04/27/99 06/01/99 30 / 360 1 5 12 29,608.67
68 7.4470% 03/05/99 05/01/99 Actual / 360 1 5 12 27,968.58
69 7.3070% 11/04/98 01/01/99 Actual / 360 1 10 12 29,196.35
70 8.6970% 10/15/98 12/01/98 Actual / 360 1 10 12 35,348.43
71 7.5070% 03/23/99 05/01/99 Actual / 360 1 5 12 32,249.61
72 7.4170% 08/27/98 10/01/98 Actual / 360 1 10 12 28,376.07
73 7.4470% 08/17/98 10/01/98 Actual / 360 1 10 12 28,723.62
74 7.3220% 08/21/98 10/01/98 Actual / 360 1 10 12 28,036.62
75 7.1970% 06/19/98 08/01/98 Actual / 360 1 10 12 27,584.46
76 7.1970% 11/02/98 01/01/99 Actual / 360 1 10 12 26,888.42
77 7.2284% VARIOUS 04/01/99 30 / 360 1 5 12 26,811.74
77.10 7.1770% 02/01/99 04/01/99 30 / 360 1 5 12 10,642.40
77.20 7.1770% 02/01/99 04/01/99 30 / 360 1 5 12 8,831.39
77.30 7.3670% 02/03/99 04/01/99 30 / 360 1 5 12 7,337.95
78 7.7470% 08/07/98 10/01/98 Actual / 360 1 10 12 26,635.21
79 7.7470% 01/15/99 03/01/99 Actual / 360 1 5 12 29,915.09
80 7.8220% 05/26/98 07/01/98 Actual / 360 1 10 12 27,763.25
81 6.9470% 06/06/98 08/01/98 Actual / 360 1 10 12 25,575.87
82 7.1470% 08/13/98 10/01/98 Actual / 360 1 10 12 25,602.26
83 7.9370% 01/13/99 03/01/99 Actual / 360 1 5 12 26,990.39
84 6.8470% 08/28/98 10/01/98 Actual / 360 1 10 12 24,913.77
85 7.3220% 12/07/98 02/01/99 Actual / 360 1 10 12 25,580.79
86 6.8970% 09/30/98 11/01/98 Actual / 360 1 5 12 23,406.88
87 7.0870% 06/10/98 08/01/98 Actual / 360 1 10 12 23,865.93
88 8.1970% VARIOUS 07/01/99 30 / 360 1 5 12 26,925.57
88.10 8.1970% 05/17/99 07/01/99 30 / 360 1 5 12 15,887.27
88.20 8.1970% 05/17/99 07/01/99 30 / 360 1 5 12 11,038.30
89 7.4170% 03/22/99 05/01/99 30 / 360 1 5 12 23,539.64
90 7.6770% 07/15/98 09/01/98 Actual / 360 1 10 12 23,953.53
100 7.6670% 03/02/99 05/01/99 30 / 360 1 5 12 23,803.51
101 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 28,429.89
101.10 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 4,035.79
101.20 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 3,273.47
101.30 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 3,318.32
101.40 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 8,520.00
101.50 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 5,224.10
101.60 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 4,058.21
102 7.0420% 01/26/98 03/01/98 30 / 360 1 10 12 22,165.93
103 7.0970% 08/13/98 10/01/98 30 / 360 1 10 12 21,613.02
104 7.4470% 07/08/98 09/01/98 Actual / 360 1 10 12 22,616.08
105 8.6870% 03/10/99 05/01/99 Actual / 360 1 5 12 24,893.64
106 8.7170% 01/28/99 03/01/99 30 / 360 1 5 12 27,257.61
106.10 8.7170% 01/28/99 03/01/99 30 / 360 1 5 12 12,958.54
106.20 8.7170% 01/28/99 03/01/99 30 / 360 1 5 12 14,299.07
107 7.7170% 05/19/99 07/01/99 30 / 360 1 5 12 21,892.74
108 7.9670% 11/16/98 01/01/99 Actual / 360 1 5 12 23,759.65
109 7.6270% 03/19/99 05/01/99 30 / 360 1 5 12 22,784.93
110 7.3220% 04/06/98 06/01/98 Actual / 360 1 10 12 24,944.95
111 7.1970% 04/26/99 06/01/99 Actual / 360 1 5 12 20,670.58
112 7.8770% 02/11/99 04/01/99 30 / 360 1 5 12 24,962.67
113 7.1970% 08/24/98 10/01/98 Actual / 360 1 10 12 21,887.50
114 7.5870% 03/02/99 05/01/99 Actual / 360 1 5 12 20,208.63
115 7.4170% 03/22/99 05/01/99 30 / 360 1 5 12 19,791.51
116 7.5970% 05/21/99 07/01/99 Actual / 360 1 10 12 20,965.75
117 8.3170% 03/18/99 05/01/99 30 / 360 1 5 12 22,301.59
118 7.2720% 12/16/98 02/01/99 Actual / 360 1 5 12 20,464.63
119 6.9470% 10/23/98 12/01/98 Actual / 360 1 10 12 19,970.73
120 7.7970% 03/09/99 05/01/99 Actual / 360 1 5 12 19,623.75
121 8.1170% 04/16/99 06/01/99 Actual / 360 1 5 12 20,171.51
122 8.0270% 11/25/98 01/01/99 Actual / 360 1 0 12 21,072.09
123 7.0720% 03/31/98 05/01/98 Actual / 360 1 10 12 31,523.92
124 8.1670% 12/30/98 02/01/99 Actual / 360 1 5 12 20,929.36
125 7.4070% 03/24/99 05/01/99 Actual / 360 1 5 12 18,044.77
126 7.5720% 08/17/98 10/01/98 Actual / 360 1 10 12 22,334.39
127 7.9570% 01/27/99 03/01/99 30 / 360 1 5 12 19,477.93
128 8.6670% 03/03/99 05/01/99 ACTUAL / 360 1 5 12 22,039.56
128.10 8.6670% 03/03/99 05/01/99 Actual / 360 1 5 12 16,700.40
128.20 8.6670% 03/03/99 05/01/99 Actual / 360 1 5 12 5,339.16
129 7.4470% 01/26/99 03/01/99 ACTUAL / 360 1 5 12 26,380.67
129.10 7.4470% 01/26/99 03/01/99 Actual / 360 1 5 12 14,724.09
129.20 7.4470% 01/26/99 03/01/99 Actual / 360 1 5 12 11,656.58
130 7.2970% 07/17/98 09/01/98 Actual / 360 1 10 12 18,049.24
131 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 17,670.32
132 7.8870% 05/20/99 07/01/99 30 / 360 1 5 12 20,101.61
133 7.0970% 09/29/98 12/01/98 Actual / 360 1 10 12 16,476.67
134 6.8470% 07/21/98 09/01/98 Actual / 360 1 10 12 14,818.50
135 8.0770% 02/09/99 04/01/99 30 / 360 1 5 12 17,548.79
136 8.6870% 03/31/99 05/01/99 Actual / 360 1 5 12 18,072.22
137 7.4070% 08/07/98 10/01/98 Actual / 360 1 10 12 17,669.28
138 8.8220% 06/24/97 08/01/97 30 / 360 1 10 12 18,349.55
139 8.4270% 03/23/99 05/01/99 Actual / 360 1 5 12 17,363.80
140 7.7470% 10/30/98 01/01/99 Actual / 360 1 10 12 15,549.20
141 7.8570% 03/30/99 05/01/99 30 / 360 1 5 12 17,513.00
142 7.1570% 11/25/98 01/01/99 Actual / 360 1 5 12 15,176.34
143 7.4470% 11/03/98 01/01/99 Actual / 360 1 10 12 15,518.81
144 7.2770% 07/02/98 09/01/98 Actual / 360 1 10 12 15,433.43
145 7.9070% 05/05/99 07/01/99 30 / 360 1 5 12 15,575.66
146 7.1670% 04/19/99 06/01/99 Actual / 360 1 5 12 13,711.42
147 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 17,304.40
147.10 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 5,989.98
147.20 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 3,549.62
147.30 8.4470% 03/26/99 05/01/01 30 / 360 1 5 12 7,764.79
148 7.7670% 02/09/99 04/01/99 Actual / 360 1 5 12 15,198.61
149 7.0470% 06/26/98 08/01/98 Actual / 360 1 5 12 13,440.64
150 8.0970% 05/05/99 07/01/99 30 / 360 1 5 12 14,698.90
151 7.2670% 11/12/97 01/01/98 Actual / 360 1 10 12 14,595.08
152 8.1570% 03/26/99 05/01/99 Actual / 360 1 5 12 14,929.80
153 7.1570% 08/14/98 10/01/98 Actual / 360 1 5 12 13,733.33
154 7.5370% 02/24/99 04/01/99 Actual / 360 1 5 12 12,758.87
155 7.8470% 01/26/99 03/01/99 Actual / 360 1 10 12 13,773.66
156 8.1870% 05/06/99 07/01/99 30 / 360 1 5 12 13,888.60
157 7.8670% 03/30/99 05/01/99 30 / 360 1 5 12 12,497.71
158 7.0970% 05/12/98 07/01/98 Actual / 360 1 10 12 11,602.71
159 7.1970% 10/23/98 12/01/98 Actual / 360 1 5 12 11,426.45
160 7.5870% 03/08/99 05/01/99 30 / 360 1 5 12 13,580.44
161 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 12,293.43
162 7.3220% 08/28/98 10/01/98 Actual / 360 1 10 12 13,273.79
163 6.9470% 09/19/98 11/01/98 Actual / 360 1 10 12 11,308.47
164 7.4070% 03/24/99 05/01/99 Actual / 360 1 5 12 10,907.75
165 7.7970% 04/29/99 06/01/99 30 / 360 1 5 12 11,809.54
166 7.1970% 10/29/98 12/01/98 Actual / 360 1 10 12 11,203.51
167 7.3170% 04/28/99 06/01/99 Actual / 360 1 5 12 10,958.34
168 7.9370% 02/24/99 04/01/99 Actual / 360 1 5 12 11,567.31
169 7.6970% 01/21/99 03/01/99 Actual / 360 1 5 12 11,329.93
170 7.2970% 09/24/98 11/01/98 Actual / 360 1 10 12 10,938.93
171 7.1470% 08/14/98 10/01/98 Actual / 360 1 10 12 10,793.83
172 7.1970% 11/11/98 01/01/99 Actual / 360 1 5 12 11,855.64
173 7.2870% 02/24/99 04/01/99 Actual / 360 1 5 12 10,819.94
174 8.0270% 03/19/99 05/01/99 Actual / 360 1 10 12 11,580.19
175 7.4470% 08/27/98 10/01/98 Actual / 360 1 10 12 12,183.57
176 7.4870% 02/17/99 04/01/99 30 / 360 1 10 12 10,248.55
177 7.6570% 03/03/99 04/01/99 Actual / 360 1 5 12 10,952.27
178 7.1570% 12/29/98 02/01/99 Actual / 360 1 5 12 10,810.89
179 8.3970% 03/19/99 05/01/99 30 / 360 1 5 12 12,390.60
180 8.5770% 12/31/98 03/01/99 30 / 360 1 10 12 11,396.09
181 6.9470% 09/19/98 11/01/98 Actual / 360 1 10 12 9,951.45
182 8.0670% 11/10/98 01/01/99 Actual / 360 1 10 12 10,916.95
183 7.0970% 01/26/99 03/01/99 Actual / 360 1 5 12 11,065.26
184 7.9970% 11/04/97 01/01/98 Actual / 360 1 10 12 11,019.60
185 8.3970% 05/04/99 07/01/99 Actual / 360 1 5 12 10,870.57
186 7.4470% 07/10/98 09/01/98 Actual / 360 1 10 12 10,147.71
187 7.5070% 04/19/99 06/01/99 30 / 360 1 5 12 9,657.68
188 7.4070% 01/05/99 03/01/99 Actual / 360 1 5 12 9,089.79
189 7.4170% 08/27/98 10/01/98 Actual / 360 1 10 12 9,673.06
190 7.4470% 01/21/99 03/01/99 Actual / 360 1 5 12 9,532.99
191 7.2570% 02/02/99 03/01/99 Actual / 360 1 5 12 9,265.13
192 6.9470% 09/19/98 11/01/98 Actual / 360 1 10 12 8,481.35
193 7.8170% 04/21/99 06/01/99 30 / 360 1 5 12 9,013.68
194 7.8470% 01/26/99 03/01/99 30 / 360 1 5 12 9,838.19
195 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 8,662.80
196 7.6970% 10/30/98 12/01/98 Actual / 360 1 10 12 8,761.81
197 7.5170% 02/24/99 04/01/99 Actual / 360 1 5 12 8,165.10
198 7.0720% 09/23/98 11/01/98 Actual / 360 1 10 12 9,074.82
199 8.8070% 04/01/99 06/01/99 30 / 360 1 5 12 9,358.23
200 6.9470% 09/19/98 11/01/98 Actual / 360 1 10 12 7,774.57
201 7.9870% 03/11/99 05/01/99 Actual / 360 1 5 12 8,013.72
203 7.4070% 03/24/99 05/01/99 Actual / 360 1 5 12 7,383.71
204 8.5420% 03/02/99 05/01/99 Actual / 360 1 5 12 8,204.17
205 7.1970% 08/05/98 10/01/98 Actual / 360 1 10 12 7,661.75
206 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 7,686.19
207 7.6370% 03/16/99 05/01/99 Actual / 360 1 5 12 7,122.71
209 7.8970% 08/17/98 10/01/98 Actual / 360 1 10 12 7,685.07
210 8.1370% 09/15/98 11/01/98 Actual / 360 1 10 12 8,483.03
211 7.4970% 12/11/98 02/01/99 Actual / 360 1 5 12 7,190.73
212 7.4970% 12/04/98 02/01/99 Actual / 360 1 5 12 7,160.52
213 9.1470% 12/08/98 02/01/99 Actual / 360 1 10 12 7,985.50
214 7.5470% 12/31/98 02/01/99 Actual / 360 1 5 12 6,456.10
215 8.2070% 03/26/99 05/01/99 Actual / 360 1 10 12 7,350.22
216 7.8270% 04/22/99 06/01/99 Actual / 360 1 10 12 5,828.43
218 7.4970% 12/31/98 02/01/99 Actual / 360 1 5 12 5,664.97
221 8.1270% 04/12/99 06/01/99 Actual / 360 1 10 12 5,380.81
222 9.3220% 05/18/98 07/01/98 Actual / 360 1 10 12 5,562.39
223 8.0770% 11/04/97 01/01/98 Actual / 360 1 10 12 5,959.34
224 8.1670% 09/08/98 11/01/98 Actual / 360 1 10 12 5,228.63
226 7.6770% 09/23/98 11/01/98 Actual / 360 1 10 12 4,524.10
227 8.2870% 02/05/99 04/01/99 Actual / 360 1 10 12 4,170.99
228 7.8370% 09/11/98 11/01/98 Actual / 360 1 10 12 4,148.04
229 8.4170% 11/04/98 01/01/99 30 / 360 1 10 12 4,914.91
231 8.2470% 05/14/99 07/01/99 Actual / 360 1 10 12 2,859.87
232 8.0570% 09/23/98 11/01/98 Actual / 360 1 10 12 2,430.85
233 7.3470% 09/16/98 11/01/98 Actual / 360 1 10 12 2,226.80
234 7.6270% 09/10/98 11/01/98 Actual / 360 1 10 12 2,449.91
<PAGE>
<CAPTION>
Yield
Yield Maintenance
Control Maintenance Calculation Original
Number YM1 YM 5% 4% 3% 2% 1% Open Description Method Amortization Term
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 60 0 0 0 0 0 12 13 Treasury Flat 5 300
1.10 60 0 0 0 0 0 12 13 Treasury Flat 300
1.20 60 0 0 0 0 0 12 13 Treasury Flat 300
1.30 60 0 0 0 0 0 12 13 Treasury Flat 300
1.40 60 0 0 0 0 0 12 13 Treasury Flat 300
1.50 60 0 0 0 0 0 12 13 Treasury Flat 300
1.60 60 0 0 0 0 0 12 13 Treasury Flat 300
1.70 60 0 0 0 0 0 12 13 Treasury Flat 300
1.80 60 0 0 0 0 0 12 13 Treasury Flat 300
1.90 60 0 0 0 0 0 12 13 Treasury Flat 300
1.91 60 0 0 0 0 0 12 13 Treasury Flat 300
1.92 60 0 0 0 0 0 12 13 Treasury Flat 300
1.93 60 0 0 0 0 0 12 13 Treasury Flat 300
1.94 60 0 0 0 0 0 12 13 Treasury Flat 300
1.95 60 0 0 0 0 0 12 13 Treasury Flat 300
1.96 60 0 0 0 0 0 12 13 Treasury Flat 300
2 0 0 0 0 0 0 0 3 360
3 0 0 0 0 0 0 0 6 360
4 0 0 0 0 0 0 0 3 344
5 57 0 0 0 0 0 0 3 Treasury Flat 1 360
6 82 0 0 0 0 0 0 3 3 300
6.10 82 0 0 0 0 0 0 3 300
6.20 82 0 0 0 0 0 0 3 300
7 0 0 0 0 0 0 0 3 360
7.10 0 0 0 0 0 0 0 3 360
7.20 0 0 0 0 0 0 0 3 360
8 0 0 0 0 0 0 0 3 235
9 0 0 0 0 0 0 0 3 360
10 54 0 0 0 0 0 0 6 Treasury Flat 5 360
11 0 0 0 0 0 0 0 3 360
12 27 0 0 0 0 0 0 3 Treasury Flat 1 291
13 0 0 0 0 0 0 0 3 300
14 54 0 0 0 0 0 0 6 Treasury Flat 4 360
15 0 0 0 0 0 0 0 3 300
16 0 0 0 0 0 0 0 3 360
17 0 0 0 0 0 0 0 3 300
18 0 0 0 0 0 0 0 3 300
18.10 0 0 0 0 0 0 0 3 300
18.20 0 0 0 0 0 0 0 3 300
18.30 0 0 0 0 0 0 0 3 300
18.40 0 0 0 0 0 0 0 3 300
18.50 0 0 0 0 0 0 0 3 300
18.60 0 0 0 0 0 0 0 3 300
19 0 0 0 0 0 0 0 3 360
20 0 0 0 0 0 0 0 3 360
21 0 0 0 0 0 0 0 6 360
22 0 0 0 0 0 0 0 3 300
22.10 0 0 0 0 0 0 0 3 300
22.20 0 0 0 0 0 0 0 3 300
22.30 0 0 0 0 0 0 0 3 300
22.40 0 0 0 0 0 0 0 3 300
22.50 0 0 0 0 0 0 0 3 300
23 0 0 0 0 0 0 0 6 300
24 0 0 0 0 0 0 0 3 324
25 0 54 0 0 0 0 0 6 3 344
26 127 0 0 0 0 0 0 3 3 250
27 120 0 0 0 0 0 0 60 Treasury Flat 5 240
28 0 0 0 0 0 0 0 3 300
28.10 0 0 0 0 0 0 0 3 300
28.20 0 0 0 0 0 0 0 3 300
28.30 0 0 0 0 0 0 0 3 300
29 0 0 0 0 0 0 0 3 300
30 0 0 0 0 0 0 0 3 300
31 78 0 0 0 0 0 0 6 Treasury Flat 5 300
32 0 0 0 0 0 0 0 3 264
33 33 0 0 0 0 0 0 3 Treasury Flat 1 360
33.10 33 0 0 0 0 0 0 3 Treasury Flat 360
33.20 33 0 0 0 0 0 0 3 Treasury Flat 360
33.30 33 0 0 0 0 0 0 3 Treasury Flat 360
34 0 0 0 0 0 0 0 3 300
35 0 0 0 0 0 0 0 6 360
36 0 0 0 0 0 0 0 3 360
37 0 0 0 0 0 0 0 0 360
38 0 0 0 0 0 0 0 6 240
39 0 0 0 0 0 0 0 3 300
40 0 0 0 0 0 0 0 3 300
41 0 0 0 0 0 0 0 6 360
42 0 0 0 0 0 0 0 3 300
43 0 0 0 0 0 0 0 6 300
44 0 0 0 0 0 0 0 3 300
45 54 0 0 0 0 0 0 6 Treasury Flat 4 360
46 60 0 0 0 0 0 0 24 Treasury Flat 5 360
47 0 0 0 0 0 0 0 3 360
48 0 0 0 0 0 0 0 3 300
49 56 0 0 0 0 0 0 4 Treasury Flat 5 360
49.10 56 0 0 0 0 0 0 4 Treasury Flat 360
49.20 56 0 0 0 0 0 0 4 Treasury Flat 360
49.30 56 0 0 0 0 0 0 4 Treasury Flat 360
50 0 0 0 0 0 0 0 3 300
51 0 0 0 0 0 0 0 6 360
52 0 0 0 0 0 0 0 3 300
53 0 0 0 0 0 0 0 0 300
54 0 0 0 0 0 0 0 6 360
55 0 0 0 0 0 12 0 12 Treasury Flat 1 360
56 0 0 0 0 0 0 0 3 240
57 0 0 0 0 0 0 0 3 360
58 0 0 12 12 0 0 0 20 Treasury Flat 1 217
59 0 0 0 0 12 0 0 12 Treasury Flat 1 300
60 0 0 0 0 0 0 0 5 264
61 0 0 0 0 0 0 0 3 180
62 0 0 0 0 0 0 0 3 360
63 0 0 0 0 0 0 0 3 300
64 0 0 0 0 0 0 0 6 300
65 0 0 0 0 0 0 0 6 360
66 0 0 0 0 0 0 0 6 300
67 0 0 0 0 0 0 0 3 300
68 0 0 0 0 0 0 0 3 360
69 0 0 0 0 0 0 0 3 300
70 0 0 0 0 0 0 0 3 240
71 0 0 0 0 0 0 0 3 240
72 0 0 0 0 0 0 0 3 300
73 0 0 0 0 0 0 0 3 300
74 0 0 0 0 0 0 0 6 300
75 0 0 0 0 0 0 0 6 300
76 0 0 0 0 0 0 0 3 300
77 0 0 0 0 0 0 0 3 300
77.10 0 0 0 0 0 0 0 3 300
77.20 0 0 0 0 0 0 0 3 300
77.30 0 0 0 0 0 0 0 3 300
78 0 0 0 0 0 0 0 6 360
79 177 0 0 0 0 0 0 3 Treasury Flat 1 240
80 0 0 0 0 0 0 0 6 300
81 0 0 0 0 0 0 0 6 300
82 0 0 0 0 0 0 0 6 300
83 0 0 0 0 0 0 0 3 300
84 0 0 0 0 0 0 0 3 300
85 0 0 0 0 0 0 0 3 300
86 0 0 0 0 0 0 0 6 360
87 0 0 0 0 0 0 0 6 360
88 12 0 0 0 0 0 0 24 Treasury Flat 1 300
88.10 12 0 0 0 0 0 0 24 Treasury Flat 300
88.20 12 0 0 0 0 0 0 24 Treasury Flat 300
89 0 0 0 0 0 0 0 3 360
90 0 0 0 0 12 12 21 3 360
100 0 0 0 0 0 0 0 3 360
101 0 0 0 0 0 0 0 3 Treasury Flat 1 240
101.10 0 0 0 0 0 0 0 3 Treasury Flat 240
101.20 0 0 0 0 0 0 0 3 Treasury Flat 240
101.30 0 0 0 0 0 0 0 3 Treasury Flat 240
101.40 0 0 0 0 0 0 0 3 Treasury Flat 240
101.50 0 0 0 0 0 0 0 3 Treasury Flat 240
101.60 0 0 0 0 0 0 0 3 Treasury Flat 240
102 84 0 0 0 12 12 6 6 Treasury Flat 5 360
103 54 0 0 0 0 0 0 6 Treasury Flat 5 360
104 0 0 0 0 0 0 0 6 360
105 24 0 12 12 12 12 9 3 3 300
106 117 0 0 0 0 0 0 3 Treasury Flat 1 240
106.10 117 0 0 0 0 0 0 3 Treasury Flat 240
106.20 117 0 0 0 0 0 0 3 Treasury Flat 240
107 0 0 0 0 0 0 0 3 360
108 0 0 0 0 0 0 0 3 300
109 0 0 0 0 0 0 0 3 300
110 108 0 0 0 0 0 0 72 Treasury Flat 4 240
111 0 0 0 0 0 0 0 3 360
112 0 0 0 0 0 0 0 3 240
113 78 0 0 0 0 0 0 6 Treasury Flat 4 300
114 27 0 0 0 0 0 0 3 Treasury Flat 1 360
115 0 0 0 0 0 0 0 3 360
116 0 0 0 0 0 0 0 3 300
117 0 0 0 0 0 0 0 3 300
118 45 0 0 0 0 0 0 3 3 300
119 0 0 36 12 12 12 78 6 300
120 0 0 0 0 0 0 0 3 360
121 69 0 0 0 0 0 0 3 3 360
122 0 0 0 0 0 0 0 3 300
123 54 0 0 0 0 0 0 6 Treasury Flat 4 300
124 0 0 0 0 0 0 0 3 300
125 0 0 0 0 0 0 0 3 360
126 0 0 0 0 0 0 0 6 216
127 0 0 0 0 0 0 0 3 Treasury Flat 1 300
128 57 0 0 0 0 0 0 3 3 240
128.10 57 0 0 0 0 0 0 3 240
128.20 57 0 0 0 0 0 0 3 240
129 69 0 0 0 0 0 0 3 Treasury Flat 1 144
129.10 69 0 0 0 0 0 0 3 Treasury Flat 144
129.20 69 0 0 0 0 0 0 3 Treasury Flat 144
130 0 0 0 0 0 0 0 3 300
131 0 0 0 0 0 0 0 3 300
132 0 0 0 0 0 0 0 3 Treasury Flat 1 240
133 0 0 0 0 0 0 0 6 300
134 54 0 0 0 0 0 0 6 Treasury Flat 5 360
135 0 0 0 0 0 0 0 3 300
136 0 0 0 0 0 0 0 3 300
137 0 0 0 0 0 0 0 6 240
138 114 0 0 0 0 0 0 6 Treasury Flat 5 300
139 0 0 0 0 0 0 0 0 300
140 0 0 0 0 0 0 0 3 360
141 33 0 0 0 0 0 0 3 Treasury Flat 1 240
142 57 0 0 0 0 0 0 3 3 300
143 0 0 0 0 0 0 0 3 300
144 0 0 0 0 0 0 0 6 300
145 0 0 0 0 0 0 0 3 300
146 69 0 0 0 0 0 0 3 3 360
147 0 0 0 0 0 0 0 3 Treasury Flat 1 240
147.10 0 0 0 0 0 0 0 3 Treasury Flat 240
147.20 0 0 0 0 0 0 0 3 Treasury Flat 240
147.30 0 0 0 0 0 0 0 3 Treasury Flat 240
148 58 0 0 0 0 0 0 3 Treasury Flat 5 300
149 57 0 0 0 0 0 0 3 Treasury Flat 1 360
150 0 0 0 0 0 0 0 3 360
151 78 0 0 0 0 0 0 6 Treasury Flat 4 300
152 57 0 0 0 0 0 0 3 Treasury Flat 1 300
153 57 0 0 0 0 0 0 3 3 300
154 0 0 0 0 0 0 0 3 360
155 0 0 0 0 0 0 0 6 300
156 0 0 0 0 0 0 0 3 300
157 0 0 0 0 0 0 0 3 Treasury Flat 1 360
158 54 0 0 0 0 0 0 6 Treasury Flat 4 360
159 0 0 0 0 0 0 0 3 360
160 0 0 0 0 0 0 0 3 240
161 0 0 0 0 0 0 0 3 300
162 0 0 0 0 0 0 0 6 240
163 0 0 0 0 0 0 0 3 300
164 0 0 0 0 0 0 0 3 360
165 0 0 0 0 0 0 0 3 300
166 0 0 0 0 0 0 0 3 300
167 0 0 0 0 0 0 0 3 300
168 0 0 0 0 0 0 0 3 300
169 0 0 0 0 0 0 0 3 300
170 0 0 0 0 0 0 0 6 300
171 0 0 0 0 0 0 0 6 300
172 0 0 0 0 0 0 0 3 240
173 0 0 0 0 0 0 0 3 300
174 81 0 0 0 0 0 0 3 3 300
175 0 0 0 0 0 0 0 6 240
176 0 0 0 0 0 0 0 3 360
177 57 0 0 0 0 0 0 3 3 300
178 57 0 0 0 0 0 0 3 3 276
179 0 0 0 0 0 0 0 3 240
180 180 0 12 12 12 12 9 3 Treasury Flat 5 300
181 0 0 0 0 0 0 0 3 300
182 114 0 0 0 0 0 0 6 Treasury Flat 5 300
183 57 0 0 0 0 0 0 3 3 240
184 0 0 12 0 0 0 0 12 Treasury Flat 4 300
185 57 0 0 0 0 0 0 3 3 300
186 0 0 0 0 0 0 0 6 300
187 0 0 0 0 0 0 0 3 300
188 57 0 0 0 0 0 0 3 3 360
189 54 0 0 0 0 0 0 6 Treasury Flat 4 300
190 0 0 0 0 0 0 0 3 300
191 0 0 0 0 0 0 0 3 300
192 0 0 0 0 0 0 0 3 300
193 0 0 0 0 0 0 0 3 300
194 0 0 0 0 0 0 0 3 Treasury Flat 1 240
195 0 0 0 0 0 0 0 3 300
196 114 0 0 0 0 0 0 6 Treasury Flat 5 300
197 0 0 0 0 0 0 0 3 360
198 0 0 0 0 0 0 0 60 240
199 0 0 0 0 0 0 0 3 300
200 0 0 0 0 0 0 0 3 300
201 0 0 0 0 0 0 0 0 360
203 0 0 0 0 0 0 0 3 360
204 24 0 12 12 12 12 9 3 3 360
205 0 0 0 0 0 0 0 6 300
206 0 0 0 0 0 0 0 3 300
207 0 0 0 0 0 0 0 3 360
209 114 0 0 0 0 0 0 6 Treasury Flat 5 300
210 120 0 12 12 12 12 6 6 Treasury Flat 5 240
211 57 0 0 0 0 0 0 3 Treasury Flat 1 300
212 57 0 0 0 0 0 0 3 Treasury Flat 1 300
213 120 0 12 12 12 12 12 60 Treasury Flat 5 240
214 0 0 0 0 0 0 0 3 300
215 180 0 12 12 12 12 6 6 Treasury Flat 5 240
216 57 0 0 0 0 0 0 3 Treasury Flat 2 300
218 0 0 0 0 0 0 0 3 300
221 57 0 0 0 0 0 0 3 Treasury Flat 2 300
222 0 0 13 12 12 12 6 6 300
223 0 0 0 0 0 0 0 24 Treasury Flat 4 204
224 120 0 12 12 12 12 12 60 Treasury Flat 5 240
226 114 0 0 0 0 0 0 6 Treasury Flat 5 300
227 114 0 0 0 0 0 0 6 Treasury Flat 5 300
228 120 0 12 12 12 12 12 60 Treasury Flat 5 240
229 120 0 12 12 12 12 6 6 Treasury Flat 5 180
231 57 0 0 0 0 0 0 3 Treasury Flat 2 286
232 120 0 12 12 12 12 12 60 Treasury Flat 5 300
233 114 0 0 0 0 0 0 6 Treasury Flat 5 300
234 114 0 0 0 0 0 0 6 Treasury Flat 5 240
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------
CROSS COLLATERALIZED / CROSS DEFAULTED SEASONING LO DEF YM5 YM4 YM3 YM2
- -----------------------------------------------------------------------------------------------------------------------------
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
2 0 0 0 0 0 0
3 27 90 0 0 0 0
3 48 66 0 0 0 0
1 25 116 0 0 0 0
1 60 0 0 0 0 0
215990053, 215990028 2 36 0 0 0 0 0
215990053 2 36 0 0 0 0 0
215990028 2 36 0 0 0 0 0
6098, 5201 5 29 88 0 0 0 0
6098 5 29 88 0 0 0 0
5201 5 29 88 0 0 0 0
1 25 92 0 0 0 0
3 27 90 0 0 0 0
11 59 0 0 0 0 0
8 32 85 0 0 0 0
3 0 90 0 0 0 0
7 31 86 0 0 0 0
15 60 0 0 0 0 0
7 31 86 0 0 0 0
9 48 69 0 0 0 0
10 156 141 0 0 0 0
4164695, 4164709, 4164733, 4164814, 4164831, GL991009 2 26 91 0 0 0 0
4164709, 4164733, 4164814, 4164831, GL991009 2 26 91 0 0 0 0
4164695, 4164733, 4164814, 4164831, GL991009 2 26 91 0 0 0 0
4164695, 4164709, 4164814, 4164831, GL991009 2 26 91 0 0 0 0
4164695, 4164709, 4164733, 4164831, GL991009 2 26 91 0 0 0 0
4164695, 4164709, 4164733, 4164814, GL991009 2 26 91 0 0 0 0
4164695, 4164709, 4164733, 4164814, 4164831 2 26 91 0 0 0 0
3 27 89 0 0 0 0
1 25 92 0 0 0 0
11 60 54 0 0 0 0
6218, 6219, 6220, 6221, 6223 6 30 87 0 0 0 0
6219, 6220, 6221, 6223 6 30 87 0 0 0 0
6218, 6220, 6221, 6223 6 30 87 0 0 0 0
6218, 6219, 6221, 6223 6 30 87 0 0 0 0
6218, 6219, 6220, 6223 6 30 87 0 0 0 0
6218, 6219, 6220, 6221 6 30 87 0 0 0 0
8 60 54 0 0 0 0
2 26 91 0 0 0 0
44 24 0 0 0 0 0
3 120 0 0 0 0 0
11 60 0 0 0 0 0
6029, 6033, 6034 6 30 87 0 0 0 0
6033, 6034 6 30 87 0 0 0 0
6029, 6034 6 30 87 0 0 0 0
6029, 6033 6 30 87 0 0 0 0
5 29 88 0 0 0 0
6 30 87 0 0 0 0
10 36 0 0 0 0 0
1 25 92 0 0 0 0
2 48 0 0 0 36 0
2 48 0 0 0 36 0
2 48 0 0 0 36 0
2 48 0 0 0 36 0
8 48 69 0 0 0 0
10 36 78 0 0 0 0
2 36 81 0 0 0 0
7 31 89 0 0 0 0
11 114 0 0 0 0 0
5 29 88 0 0 0 0
8 36 81 0 0 0 0
11 60 54 0 0 0 0
10 34 83 0 0 0 0
10 36 78 0 0 0 0
4 28 89 0 0 0 0
13 60 0 0 0 0 0
18 96 0 0 0 0 0
3 27 90 0 0 0 0
6 30 87 0 0 0 0
10 60 0 0 0 0 0
10 60 0 0 0 0 0
10 60 0 0 0 0 0
10 60 0 0 0 0 0
4 28 113 0 0 0 0
9 60 114 0 0 0 0
9 33 84 0 0 0 0
8 32 88 0 0 0 0
9 60 114 0 0 0 0
9 0 0 0 0 0 96
10 34 203 0 0 0 0
3 27 90 0 0 0 0
13 0 0 180 0 0 0
11 0 0 0 0 96 0
10 36 223 0 0 0 0
9 96 81 0 0 0 0
3 27 90 0 0 0 0
4 28 113 0 0 0 0
8 90 84 0 0 0 0
8 60 54 0 0 0 0
10 60 54 0 0 0 0
2 26 91 0 0 0 0
3 27 90 0 0 0 0
7 48 69 0 0 0 0
8 60 57 0 0 0 0
3 27 90 0 0 0 0
10 34 83 0 0 0 0
10 60 57 0 0 0 0
10 60 54 0 0 0 0
12 36 78 0 0 0 0
7 48 69 0 0 0 0
5623, 5624,5625, (CROSS DEFAULTED ONLY) 4 28 89 0 0 0 0
5624,5625 (Cross-Defaulted Only) 4 28 89 0 0 0 0
5623,5624 (Cross-Defaulted Only) 4 28 89 0 0 0 0
5623,5625 (Cross-Defaulted Only) 4 28 89 0 0 0 0
10 36 78 0 0 0 0
5 60 0 0 0 0 0
13 60 54 0 0 0 0
12 36 138 0 0 0 0
10 34 80 0 0 0 0
5 29 88 0 0 0 0
10 156 141 0 0 0 0
6 30 87 0 0 0 0
9 36 78 0 0 0 0
12 60 54 0 0 0 0
5434, 5435 1 0 0 0 180 12 12
5434 1 0 0 0 180 12 12
5435 1 0 0 0 180 12 12
3 27 210 0 0 0 0
11 36 0 0 0 0 0
3 27 90 0 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
17 0 0 0 0 0 0
10 60 0 0 0 0 0
11 60 54 0 0 0 0
3 36 0 0 0 0 0
5 0 0 0 0 0 0
5 0 0 0 0 0 0
5 0 0 0 0 0 0
1 25 92 0 0 0 0
7 48 69 0 0 0 0
3 27 90 0 0 0 0
14 60 0 0 0 0 0
2 26 115 0 0 0 0
4 28 89 0 0 0 0
10 36 0 0 0 0 0
3 0 90 0 0 0 0
3 27 210 0 0 0 0
1 25 56 0 0 0 0
3 27 90 0 0 0 0
6 72 0 0 0 0 0
8 84 0 0 0 0 0
3 27 90 0 0 0 0
2 48 0 0 0 0 0
7 48 69 0 0 0 0
15 60 0 0 0 0 0
6 48 69 0 0 0 0
3 36 81 0 0 0 0
10 120 90 0 0 0 0
5 0 0 117 0 0 0
3 60 0 0 0 0 0
3 60 0 0 0 0 0
3 60 0 0 0 0 0
5 72 0 0 0 0 0
5 72 0 0 0 0 0
5 72 0 0 0 0 0
11 36 81 0 0 0 0
2 26 91 0 0 0 0
1 0 0 117 0 0 0
8 60 54 0 0 0 0
11 60 0 0 0 0 0
4 28 89 0 0 0 0
3 27 90 0 0 0 0
10 34 81 0 0 0 0
24 0 0 0 0 0 0
3 27 93 0 0 0 0
7 31 86 0 0 0 0
3 60 0 0 0 48 0
7 60 0 0 0 0 0
7 31 86 0 0 0 0
11 60 54 0 0 0 0
1 25 92 0 0 0 0
2 48 0 0 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
3 0 90 27 0 0 0
4 60 0 0 0 0 0
12 60 0 0 0 0 0
1 25 92 0 0 0 0
19 36 0 0 0 0 0
3 60 0 0 0 0 0
10 60 0 0 0 0 0
4 28 89 0 0 0 0
5 48 66 0 0 0 0
1 25 116 0 0 0 0
3 0 0 0 141 0 0
13 60 0 0 0 0 0
8 32 145 0 0 0 0
3 27 90 0 0 0 0
6 30 87 0 0 0 0
10 120 114 0 0 0 0
9 33 84 0 0 0 0
3 36 81 0 0 0 0
2 26 91 0 0 0 0
8 48 69 0 0 0 0
2 26 91 0 0 0 0
4 28 89 0 0 0 0
5 29 88 0 0 0 0
9 60 54 0 0 0 0
10 60 54 0 0 0 0
7 31 128 0 0 0 0
4 28 89 0 0 0 0
3 36 0 0 0 0 0
10 36 18 0 0 0 0
4 28 89 0 0 0 0
4 60 0 0 0 0 0
6 60 0 0 0 0 0
3 27 90 0 0 0 0
5 0 0 0 0 0 0
9 33 84 0 0 0 0
7 0 0 0 0 0 0
5 60 0 0 0 0 0
19 0 0 96 0 0 0
1 60 0 0 0 0 0
11 35 79 0 0 0 0
2 26 91 0 0 0 0
5 60 0 0 0 0 0
10 60 0 0 0 0 0
5 29 88 0 0 0 0
5 29 89 0 0 0 0
9 33 84 0 0 0 0
2 26 91 0 0 0 0
5 0 0 141 0 0 0
6 30 87 0 0 0 0
8 0 0 0 0 0 0
4 28 89 0 0 0 0
9 60 120 0 0 0 0
2 26 91 0 0 0 0
9 33 84 0 0 0 0
3 27 93 0 0 0 0
3 36 81 0 0 0 0
3 36 0 0 0 0 0
10 60 54 0 0 0 0
6 30 87 0 0 0 0
3 27 90 0 0 0 0
10 0 0 0 0 0 0
9 0 0 0 0 0 0
6 60 0 0 0 0 0
6 60 0 0 0 0 0
6 0 0 0 0 0 0
6 30 87 0 0 0 0
3 0 0 0 0 0 0
2 60 0 0 0 0 0
6 30 87 0 0 0 0
2 60 0 0 0 0 0
13 59 0 0 0 0 0
19 48 0 60 0 72 0
9 0 0 0 0 0 0
9 0 0 0 0 0 0
4 0 0 0 0 0 0
9 0 0 0 0 0 0
7 0 0 0 0 0 0
1 60 0 0 0 0 0
9 0 0 0 0 0 0
9 0 0 0 0 0 0
9 0 0 0 0 0 0
<PAGE>
<CAPTION>
REMAINING
CONTROL ORIGINAL TERM MATURITY AMORTIZATION REMAINING TERM BALLOON, FULLY BALLOON/ARD
NUMBER TO MATURITY OR ARD DATE OR ARD TERM TO MATURITY OR ARD AMORTIZING OR ARD BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 85 05/31/06 298 83 Balloon $ 62,043,338
1.10 85 05/31/06 298 83 Balloon 12,361,326
1.20 85 05/31/06 298 83 Balloon 3,208,685
1.30 85 05/31/06 298 83 Balloon 6,364,768
1.40 85 05/31/06 298 83 Balloon 2,130,356
1.50 85 05/31/06 298 83 Balloon 6,469,971
1.60 85 05/31/06 298 83 Balloon 6,838,181
1.70 85 05/31/06 298 83 Balloon 3,156,083
1.80 85 05/31/06 298 83 Balloon 5,812,453
1.90 85 05/31/06 298 83 Balloon 2,630,069
1.91 85 05/31/06 298 83 Balloon 999,426
1.92 85 05/31/06 298 83 Balloon 1,315,035
1.93 85 05/31/06 298 83 Balloon 710,119
1.94 85 05/31/06 298 83 Balloon 4,260,712
1.95 85 05/31/06 298 83 Balloon 3,997,706
1.96 85 05/31/06 298 83 Balloon 1,788,447
2 120 04/01/09 357 117 Balloon 34,532,966
3 120 04/01/09 357 117 Balloon 24,194,111
4 144 06/01/11 343 143 Balloon 14,391,789
5 120 06/01/09 359 119 Balloon 11,055,257
6 121 06/01/09 298 119 BALLOON 9,584,889
6.10 121 06/01/09 298 119 Balloon 3,889,662
6.20 121 06/01/09 298 119 Balloon 5,695,227
7 120 02/01/09 355 115 BALLOON 10,144,745
7.10 120 02/01/09 355 115 Balloon 8,060,207
7.20 120 02/01/09 355 115 Balloon 2,084,537
8 120 06/01/09 234 119 Balloon 7,946,828
9 120 04/01/09 357 117 Balloon 10,036,071
10 119 07/01/08 349 108 Balloon 9,490,525
11 120 11/01/08 352 112 Balloon 9,082,659
12 120 04/01/09 288 117 Balloon 8,466,889
13 120 12/01/08 293 113 Balloon 8,441,262
14 120 04/01/08 345 105 HyperAm 8,635,778
15 120 12/01/08 293 113 Balloon 7,787,417
16 120 10/01/08 351 111 Balloon 7,880,237
17 300 09/01/23 290 290 Fully Amortizing -
18 120 05/01/09 298 118 BALLOON 6,937,816
18.10 120 05/01/09 298 118 Balloon 535,785
18.20 120 05/01/09 298 118 Balloon 1,339,465
18.30 120 05/01/09 298 118 Balloon 1,339,465
18.40 120 05/01/09 298 118 Balloon 1,150,721
18.50 120 05/01/09 298 118 Balloon 1,162,899
18.60 120 05/01/09 298 118 Balloon 1,409,481
19 119 03/01/09 357 116 Balloon 7,597,004
20 120 06/01/09 359 119 Balloon 7,444,850
21 120 08/01/08 349 109 HyperAm 7,133,818
22 120 01/01/09 294 114 BALLOON 5,604,287
22.10 120 01/01/09 294 114 Balloon 748,926
22.20 120 01/01/09 294 114 Balloon 773,428
22.30 120 01/01/09 294 114 Balloon 810,997
22.40 120 01/01/09 294 114 Balloon 1,541,137
22.50 120 01/01/09 294 114 Balloon 1,729,799
23 120 11/01/08 292 112 Balloon 5,585,092
24 120 05/01/09 322 118 Balloon 5,685,101
25 84 10/02/02 300 40 Balloon 6,354,434
26 250 02/01/20 247 247 Fully Amortizing 344,013
27 240 08/01/18 229 229 Fully Amortizing -
28 120 01/01/09 294 114 BALLOON 5,059,539
28.10 120 01/01/09 294 114 Balloon 1,791,053
28.20 120 01/01/09 294 114 Balloon 1,455,384
28.30 120 01/01/09 294 114 Balloon 1,813,103
29 120 02/01/09 295 115 Balloon 4,811,000
30 120 01/01/09 294 114 Balloon 4,770,750
31 120 09/01/08 290 110 Balloon 4,689,465
32 120 06/01/09 263 119 Balloon 4,377,694
33 120 05/01/09 358 118 BALLOON 5,007,231
33.10 120 05/01/09 358 118 Balloon 975,435
33.20 120 05/01/09 358 118 Balloon 2,406,072
33.30 120 05/01/09 358 118 Balloon 1,625,724
34 120 11/01/08 292 112 Balloon 4,819,362
35 120 09/01/08 350 110 HyperAm 5,035,687
36 120 05/01/09 358 118 Balloon 5,092,896
37 120 12/01/08 353 113 Balloon 5,068,804
38 120 08/01/08 229 109 HyperAm 3,796,242
39 120 02/01/09 295 115 Balloon 4,423,574
40 120 11/01/08 292 112 Balloon 4,371,277
41 120 08/01/08 349 109 Balloon 4,546,243
42 120 09/01/08 290 110 Balloon 4,172,533
43 120 09/01/08 290 110 Balloon 4,107,534
44 120 03/01/09 296 116 Balloon 4,046,044
45 120 06/01/08 347 107 Balloon 4,347,295
46 180 01/01/13 342 162 Balloon 3,814,583
47 120 04/01/09 357 117 Balloon 4,224,868
48 120 01/01/09 294 114 Balloon 3,916,248
49 120 09/01/08 350 110 BALLOON 4,263,809
49.10 120 09/01/08 350 110 Balloon 2,131,905
49.20 120 09/01/08 350 110 Balloon 486,813
49.30 120 09/01/08 350 110 Balloon 1,645,092
50 144 03/01/11 296 140 Balloon 3,634,940
51 180 10/01/13 351 171 Balloon 3,568,216
52 120 10/01/08 291 111 Balloon 3,851,628
53 120 11/01/08 292 112 Balloon 3,770,032
54 180 10/01/13 351 171 Balloon 3,397,974
55 120 10/01/08 351 111 Balloon 3,786,799
56 240 09/01/18 230 230 Fully Amortizing -
57 120 04/01/09 357 117 Balloon 3,829,164
58 224 02/01/17 211 211 Fully Amortizing -
59 120 08/01/08 289 109 Balloon 3,402,168
60 264 09/01/20 254 254 Fully Amortizing -
61 180 10/01/13 171 171 Fully Amortizing -
62 120 04/01/09 357 117 Balloon 3,742,736
63 144 03/01/11 296 140 Balloon 3,166,059
64 180 11/01/13 292 172 Balloon 2,732,841
65 120 11/01/08 352 112 Balloon 3,657,785
66 120 09/01/08 290 110 Balloon 3,370,630
67 120 05/01/09 298 118 Balloon 3,255,467
68 120 03/31/09 357 117 Balloon 3,540,079
69 120 12/01/08 293 113 Balloon 3,244,941
70 120 11/01/08 232 112 Balloon 2,906,747
71 120 04/01/09 237 117 Balloon 2,777,303
72 120 09/01/08 290 110 Balloon 3,132,560
73 120 09/01/08 290 110 Balloon 3,087,149
74 120 09/01/08 290 110 Balloon 3,036,898
75 120 07/01/08 288 108 Balloon 3,011,319
76 120 12/01/08 293 113 Balloon 3,007,805
77 120 03/01/09 296 116 BALLOON 2,940,340
77.10 120 03/01/09 296 116 Balloon 1,170,857
77.20 120 03/01/09 296 116 Balloon 971,612
77.30 120 03/01/09 296 116 Balloon 797,871
78 120 09/01/08 350 110 HyperAm 3,297,645
79 240 02/01/19 235 235 Fully Amortizing -
80 120 06/01/08 287 107 HyperAm 2,915,016
81 180 07/01/13 288 168 HyperAm 2,205,292
82 120 09/01/08 290 110 HyperAm 2,803,784
83 120 02/01/09 295 115 Balloon 2,890,290
84 300 09/01/23 290 290 Fully Amortizing -
85 120 01/01/09 294 114 Balloon 2,839,503
86 120 10/01/08 351 111 Balloon 3,013,286
87 120 07/01/08 348 108 HyperAm 3,026,598
88 240 06/01/19 299 239 BALLOON 1,337,853
88.10 240 06/01/19 299 239 Balloon 789,391
88.20 240 06/01/19 299 239 Balloon 548,462
89 240 04/01/19 357 237 Balloon 1,992,402
90 84 08/01/05 349 73 Balloon 3,123,945
100 120 04/01/09 357 117 Balloon 2,900,185
101 120 04/01/09 240 117 BALLOON 2,571,339
101.10 120 04/01/09 240 117 Balloon 365,017
101.20 120 04/01/09 240 117 Balloon 296,069
101.30 120 04/01/09 240 117 Balloon 300,125
101.40 120 04/01/09 240 117 Balloon 770,591
101.50 120 04/01/09 240 117 Balloon 472,494
101.60 120 04/01/09 240 117 Balloon 367,044
102 120 02/01/08 343 103 Balloon 2,843,459
103 120 09/01/08 350 110 Balloon 2,760,771
104 120 08/01/08 349 109 HyperAm 2,788,969
105 120 04/01/09 297 117 Balloon 2,873,549
106 120 02/01/09 235 115 BALLOON 2,184,350
106.10 120 02/01/09 235 115 Balloon 1,038,462
106.20 120 02/01/09 235 115 Balloon 1,145,889
107 120 06/01/09 359 119 HyperAm 2,667,380
108 120 12/01/08 293 113 Balloon 2,534,334
109 120 04/01/09 297 117 Balloon 2,438,168
110 240 05/01/18 226 226 Fully Amortizing -
111 144 05/01/11 358 142 Balloon 2,481,717
112 120 03/01/09 236 116 Balloon 2,074,996
113 120 09/01/08 290 110 HyperAm 2,389,456
114 120 04/01/09 357 117 Balloon 2,531,947
115 240 04/01/19 357 237 Balloon 1,675,161
116 84 06/01/06 299 83 Balloon 2,487,740
117 120 04/01/09 297 117 Balloon 2,288,685
118 120 12/15/08 294 114 Balloon 2,271,603
119 240 11/01/18 292 232 Balloon 1,020,036
120 120 04/01/09 357 117 Balloon 2,412,997
121 120 05/01/09 358 118 Balloon 2,420,313
122 120 12/01/08 293 113 Balloon 2,239,976
123 120 04/01/08 285 105 Balloon 1,213,974
124 120 01/01/09 294 114 Balloon 2,206,147
125 120 04/01/09 357 117 Balloon 2,278,927
126 216 09/01/16 206 206 Fully Amortizing -
127 120 02/01/09 295 115 Balloon 2,030,461
128 120 04/01/09 237 117 BALLOON 1,810,004
128.10 120 04/01/09 237 117 Balloon 1,371,524
128.20 120 04/01/09 237 117 Balloon 438,480
129 144 02/01/11 139 139 FULLY AMORTIZING 59,192
129.10 144 02/01/11 139 139 Fully Amortizing 33,037
129.20 144 02/01/11 139 139 Fully Amortizing 26,155
130 120 08/01/08 289 109 Balloon 2,006,953
131 120 05/01/09 298 118 Balloon 1,963,533
132 120 06/01/09 239 119 Balloon 1,670,194
133 120 11/01/08 292 112 Balloon 1,853,406
134 120 08/01/08 349 109 Balloon 1,960,533
135 120 03/01/09 296 116 Balloon 1,821,640
136 120 04/01/09 297 117 Balloon 1,856,285
137 121 10/01/08 230 111 Balloon 1,522,432
138 120 07/01/07 276 96 Balloon 1,825,138
139 120 04/01/09 297 117 Balloon 1,809,683
140 120 12/01/08 353 113 Balloon 1,925,719
141 144 04/01/11 237 141 Balloon 1,249,840
142 120 12/01/08 293 113 Balloon 1,697,026
143 120 12/01/08 293 113 Balloon 1,710,726
144 120 08/01/08 289 109 HyperAm 1,676,252
145 120 06/01/09 299 119 Balloon 1,638,498
146 120 05/01/09 358 118 Balloon 1,761,716
147 120 04/01/09 240 117 BALLOON 1,565,094
147.10 120 04/01/09 240 117 Balloon 541,763
147.20 120 04/01/09 240 117 Balloon 321,045
147.30 120 04/01/09 240 117 Balloon 702,286
148 121 03/31/09 296 117 Balloon 1,640,915
149 120 07/01/08 348 108 Balloon 1,752,465
150 120 06/01/09 359 119 Balloon 1,740,747
151 120 12/01/07 281 101 Balloon 1,608,418
152 120 04/01/09 297 117 Balloon 1,579,951
153 120 09/01/08 290 110 Balloon 1,535,784
154 120 03/01/09 356 116 Balloon 1,599,843
155 120 02/01/09 295 115 Balloon 1,482,626
156 144 06/01/11 299 143 Balloon 1,331,871
157 144 04/01/11 357 141 Balloon 1,429,342
158 120 06/01/08 347 107 Balloon 1,470,107
159 180 11/01/13 352 172 Balloon 1,299,073
160 120 04/01/09 237 117 Balloon 1,143,371
161 120 01/01/09 294 114 Balloon 1,346,760
162 240 09/01/18 230 230 Fully Amortizing -
163 120 10/01/08 291 111 Balloon 1,283,875
164 120 04/01/09 357 117 Balloon 1,380,630
165 120 05/01/09 298 118 Balloon 1,250,660
166 120 11/01/08 292 112 Balloon 1,252,828
167 120 05/01/09 298 118 Balloon 1,217,694
168 120 03/01/09 296 116 Balloon 1,240,658
169 120 02/01/09 295 115 Balloon 1,230,198
170 120 10/01/08 291 111 HyperAm 1,216,535
171 120 09/01/08 290 110 HyperAm 1,210,627
172 162 06/01/12 233 155 Balloon 772,857
173 120 03/01/09 296 116 Balloon 1,204,958
174 120 04/01/09 297 117 Balloon 1,228,968
175 60 09/01/03 230 50 HyperAm 1,309,258
176 120 03/01/09 356 116 Balloon 1,270,586
177 120 03/01/09 296 116 Balloon 1,190,989
178 120 12/29/08 270 114 Balloon 1,114,349
179 120 04/01/09 237 117 Balloon 1,006,816
180 240 02/01/19 295 235 Balloon 561,127
181 120 10/01/08 291 111 Balloon 1,129,811
182 120 12/01/08 293 113 Balloon 1,161,142
183 120 02/01/09 235 115 Balloon 966,286
184 120 12/01/07 281 101 Balloon 1,164,349
185 120 05/03/09 299 119 Balloon 1,131,621
186 120 08/01/08 289 109 HyperAm 1,090,526
187 120 05/01/09 298 118 Balloon 1,041,084
188 120 02/01/09 355 115 Balloon 1,149,892
189 120 09/01/08 290 110 Balloon 1,041,583
190 120 02/01/09 295 115 Balloon 1,050,259
191 121 03/01/09 295 116 Balloon 1,029,423
192 120 10/01/08 291 111 Balloon 962,907
193 120 05/01/09 298 118 Balloon 953,408
194 144 02/01/11 235 139 Balloon 703,649
195 120 01/01/09 294 114 Balloon 949,022
196 120 11/01/08 292 112 Balloon 951,587
197 120 03/01/09 356 116 Balloon 1,003,828
198 240 10/01/18 231 231 Fully Amortizing -
199 120 05/01/09 298 118 Balloon 932,754
200 120 10/01/08 291 111 Balloon 882,665
201 120 04/01/09 357 117 Balloon 975,584
203 120 04/01/09 357 117 Balloon 934,580
204 120 04/01/09 357 117 Balloon 955,232
205 120 09/01/08 290 110 Balloon 856,806
206 120 01/01/09 294 114 Balloon 842,031
207 120 04/01/09 357 117 Balloon 889,178
209 120 09/01/08 290 110 Balloon 825,108
210 180 10/01/13 231 171 Balloon 451,166
211 120 01/01/09 294 114 Balloon 780,923
212 120 01/01/09 294 114 Balloon 777,641
213 240 01/01/19 234 234 Fully Amortizing 59,732
214 120 01/01/09 294 114 Balloon 707,274
215 240 04/01/19 237 237 Fully Amortizing 48,110
216 120 05/01/09 298 118 Balloon 621,625
218 120 01/01/09 294 114 Balloon 615,222
221 120 05/01/09 298 118 Balloon 564,201
222 120 06/01/08 287 107 Balloon 533,590
223 204 12/01/14 185 185 Fully Amortizing 27,039
224 240 10/01/18 231 231 Fully Amortizing 33,539
226 120 10/01/08 291 111 Balloon 492,116
227 120 03/01/09 296 116 Balloon 438,555
228 240 10/01/18 231 231 Fully Amortizing 25,101
229 180 12/01/13 173 173 Fully Amortizing -
231 120 06/01/09 285 119 Balloon 285,606
232 240 10/01/18 291 231 Balloon 136,887
233 120 10/01/08 291 111 Balloon 246,920
234 120 10/01/08 231 111 Balloon 210,370
<PAGE>
<CAPTION>
CURRENT OR FUTURE
CONTROL BALLOON/ARD DUE DUE ON SUBORDINATE APPRAISAL APPRAISAL VALUE CURRENT
NUMBER LTV RATIO ON SALE ENCUMBRANCE FINANCING VALUE "AS OF" DATE LTV RATIO YEAR BUILT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 52.6% Yes Yes Yes $117,950,000 Various 58.7% Various
1.10 52.6% Yes Yes Yes 23,500,000 03/30/99 58.7% 1985
1.20 52.6% Yes Yes Yes 6,100,000 03/31/99 58.7% 1971
1.30 52.6% Yes Yes Yes 12,100,000 03/31/99 58.7% 1979
1.40 52.6% Yes Yes Yes 4,050,000 03/30/99 58.7% 1989
1.50 52.6% Yes Yes Yes 12,300,000 04/07/99 58.7% 1989
1.60 52.6% Yes Yes Yes 13,000,000 03/25/99 58.7% 1989
1.70 52.6% Yes Yes Yes 6,000,000 04/04/99 58.7% 1966-1969
1.80 52.6% Yes Yes Yes 11,050,000 04/01/99 58.7% 1988
1.90 52.6% Yes Yes Yes 5,000,000 03/26/99 58.7% 1990
1.91 52.6% Yes Yes Yes 1,900,000 03/26/99 58.7% 1987
1.92 52.6% Yes Yes Yes 2,500,000 04/01/99 58.7% 1973
1.93 52.6% Yes Yes Yes 1,350,000 04/01/99 58.7% 1987
1.94 52.6% Yes Yes Yes 8,100,000 03/25/99 58.7% 1989
1.95 52.6% Yes Yes Yes 7,600,000 03/29/99 58.7% 1982
1.96 52.6% Yes Yes Yes 3,400,000 03/24/99 58.7% 1975
2 69.8% Yes Yes No 49,500,000 02/15/99 78.6% 1997-1999
3 63.7% Yes Yes No 38,000,000 03/01/99 71.3% 1903
4 62.6% Yes Yes No 23,000,000 04/06/99 76.3% 1998
5 70.0% Yes Yes No 15,800,000 01/18/99 78.1% 1979
6 56.9% YES YES NO 16,850,000 03/26/99 69.3% VARIOUS
6.10 56.8% Yes Yes No 6,850,000 03/26/99 69.2% 1980
6.20 57.0% Yes Yes No 10,000,000 03/26/99 69.4% 1979
7 67.8% YES YES NO 15,000,000 12/03/98 77.8% VARIOUS
7.10 69.5% Yes Yes No 11,600,000 12/03/98 79.7% 1987
7.20 61.3% Yes Yes No 3,400,000 12/03/98 70.3% 1986
8 44.2% Yes Yes No 18,000,000 02/26/99 63.8% 1976 - 1980
9 68.5% Yes Yes No 14,650,000 03/05/99 77.5% 1985-1987
10 61.6% Yes Yes No 15,400,000 03/20/98 70.8% 1998
11 57.9% Yes Yes No 15,700,000 08/27/98 67.7% 1988
12 53.9% Yes Yes No 15,700,000 11/20/98 66.2% 1984
13 59.0% Yes Yes No 14,300,000 10/09/98 72.4% 1955-1979
14 66.9% Yes Yes No 12,900,000 11/17/97 76.6% 1920
15 53.7% Yes Yes No 14,490,000 06/16/98 64.4% 1998
16 68.5% Yes Yes No 11,500,000 05/25/98 79.4% circa 1987 or 88
17 0.0% Yes Yes No 11,800,000 04/02/98 74.0% 1983
18 60.9% YES PRIOR CONSENT NO 11,390,000 VARIOUS 74.9% VARIOUS
18.10 60.9% Yes Prior Consent No 880,000 03/17/99 74.8% 1982
18.20 62.3% Yes Prior Consent No 2,150,000 03/17/99 76.6% 1985
18.30 60.9% Yes Prior Consent No 2,200,000 03/16/99 74.8% 1987
18.40 60.6% Yes Prior Consent No 1,900,000 03/18/99 74.5% 1986
18.50 60.9% Yes Prior Consent No 1,910,000 03/23/99 74.8% 1985
18.60 60.0% Yes Prior Consent No 2,350,000 03/16/99 73.7% 1987
19 70.3% Yes Yes No 10,815,000 11/10/98 78.5% 1993
20 65.0% Yes Yes No 11,450,000 04/07/99 73.9% 1970
21 64.9% Yes Yes No 11,000,000 02/16/98 74.2% 1988
22 60.3% YES YES NO 9,370,000 VARIOUS 73.3% VARIOUS
22.10 57.2% Yes Yes No 1,310,000 12/09/98 69.5% 1985
22.20 49.6% Yes Yes No 1,560,000 12/08/98 60.3% 1987
22.30 59.2% Yes Yes No 1,370,000 12/09/98 72.0% 1984
22.40 63.4% Yes Yes No 2,430,000 12/08/98 77.1% 1986
22.50 64.1% Yes Yes No 2,700,000 12/08/98 77.9% 1985
23 63.3% Yes Yes No 8,825,000 06/27/98 75.9% 1986
24 63.9% Yes Prior Consent No 8,900,000 08/07/98 74.9% 1988
25 72.4% Yes Yes No 8,780,000 08/03/95 75.2% 1978
26 5.1% Yes Yes No 6,700,000 12/17/98 96.6% 1995
27 0.0% Yes Yes No 8,800,000 05/13/98 72.4% 1956
28 44.1% YES YES NO 11,650,000 VARIOUS 53.6% VARIOUS
28.10 45.5% Yes Yes No 3,940,000 12/10/98 55.3% 1983
28.20 50.4% Yes Yes No 2,890,000 12/11/98 61.3% 1976
28.30 37.6% Yes Yes No 4,820,000 12/11/98 45.8% 1983
29 61.5% Yes Yes No 7,820,000 11/16/98 75.3% 1955-1986
30 52.4% Yes Yes No 9,100,000 12/14/98 63.9% 1988-1989
31 59.9% Yes Yes No 7,825,000 04/03/98 74.1% 1984
32 43.8% Yes Yes Yes 10,000,000 04/01/99 57.9% 1984
33 65.0% YES YES NO 7,700,000 01/26/99 74.8% VARIOUS
33.10 65.0% Yes Yes No 1,500,000 01/26/99 74.8% 1986/1991
33.20 65.0% Yes Yes No 3,700,000 01/26/99 74.8% 1978
33.30 65.0% Yes Yes No 2,500,000 01/26/99 74.8% 1996
34 49.2% Yes Yes No 9,800,000 07/01/98 58.7% 1988
35 69.0% Yes Yes No 7,300,000 05/05/98 78.6% 1975-1978
36 61.0% Yes Yes No 8,350,000 03/12/99 68.2% 1991
37 66.7% Yes Yes No 7,600,000 09/21/98 74.4% 1903-1913-1897
38 48.1% Yes Yes No 7,900,000 06/11/98 68.2% 1984
39 56.7% Yes Yes No 7,805,000 11/03/98 68.8% 1995-1996
40 58.3% Yes Yes No 7,500,000 06/09/98 71.3% 1983
41 66.9% Yes Yes No 6,800,000 05/20/98 76.5% 1997
42 60.0% Yes Yes No 6,950,000 07/24/98 73.9% 1978
43 62.5% Yes Yes No 6,575,000 06/19/98 78.1% 1974
44 64.7% Yes Yes No 6,250,000 07/28/98 79.7% 1991
45 60.2% Yes Yes No 7,220,000 12/04/97 68.9% circa 1972
46 56.9% Yes Yes Yes 6,700,000 09/15/97 73.6% 1989
47 64.5% Yes Yes No 6,550,000 03/11/99 74.3% 1986
48 55.2% Yes Prior Consent No 7,100,000 10/01/98 68.4% 1996/1997
49 67.2% YES YES NO 6,350,000 05/02/98 76.3% VARIOUS
49.10 67.2% Yes Yes No 3,175,000 05/02/98 76.3% 1988
49.20 67.2% Yes Yes No 725,000 76.3% 1988
49.30 67.2% Yes Yes No 2,450,000 76.3% 1976
50 54.1% Yes Yes No 6,725,000 01/06/99 71.5% 1975
51 57.6% Yes Yes No 6,200,000 06/15/98 77.1% 1990
52 64.2% Yes Yes No 6,000,000 08/13/98 79.1% 1984
53 50.3% Yes Yes No 7,490,000 07/14/98 62.1% 1967-1970
54 58.1% Yes Yes No 5,850,000 06/15/98 77.9% 1991
55 67.7% Yes Yes No 5,590,000 05/05/99 79.1% 1972
56 0.0% Yes Yes No 6,000,000 06/03/98 73.6% 1947
57 67.8% Yes Yes No 5,650,000 01/25/99 77.7% 1984
58 0.0% Yes Yes No 8,300,000 05/12/99 51.9% 1994/1998
59 58.9% Yes Prior Consent No 5,780,000 06/22/98 73.4% 1947/61/74/94/96/98
60 0.0% Yes Yes No 6,200,000 07/20/98 68.3% 1988
61 0.0% Yes Yes No 8,250,000 07/01/98 50.9% 1993-1994
62 61.4% Yes Yes No 6,100,000 11/19/98 68.7% 1986
63 33.3% Yes Yes No 9,500,000 12/15/98 44.0% 1917
64 43.7% Yes Yes No 6,250,000 06/11/98 66.6% 1920-1940
65 61.0% Yes Yes No 6,000,000 03/26/98 68.8% 1958-1977
66 61.3% Yes Yes No 5,500,000 02/12/98 74.6% 1990
67 55.2% Yes Yes No 5,900,000 03/30/99 69.3% 1990-1991
68 66.2% Yes Yes No 5,350,000 02/01/99 74.6% 1998
69 60.8% Yes Yes No 5,340,000 08/18/98 74.3% 1976-1977
70 42.1% Yes Yes No 6,900,000 06/30/98 57.3% 1980
71 48.7% Yes Yes No 5,700,000 03/01/99 69.3% 1972
72 67.4% Yes Yes No 4,650,000 04/28/98 81.9% 1990
73 52.3% Yes Yes No 5,900,000 04/21/98 64.5% 1996
74 34.1% Yes Yes No 8,900,000 02/18/98 42.2% 1988
75 55.8% Yes Yes No 5,400,000 04/01/98 69.0% 1879
76 55.7% Yes Yes No 5,400,000 08/31/98 68.3% 1968
77 57.4% YES YES NO 5,125,000 09/02/98 71.8% VARIOUS
77.10 57.1% Yes Yes No 2,050,000 09/02/98 71.6% 1965 - 1974
77.20 58.0% Yes Yes No 1,675,000 09/02/98 72.7% 1976
77.30 57.0% Yes Yes No 1,400,000 09/02/98 71.1% 1976
78 67.3% Yes Yes No 4,900,000 05/01/98 75.0% 1997
79 0.0% Yes Prior Consent No 5,700,000 10/29/98 62.6% 1995-1996
80 60.7% Yes Yes No 4,800,000 02/23/98 73.9% 1987
81 36.2% Yes Yes No 6,100,000 12/22/97 57.9% 1964
82 59.7% Yes Yes No 4,700,000 05/27/98 74.1% 1991
83 56.7% Yes Yes No 5,100,000 12/16/98 68.3% 1984-1985
84 0.0% Yes Yes No 9,380,000 07/06/98 37.1% 1980-1982
85 51.6% Yes Yes No 5,500,000 07/02/98 63.2% 1989
86 56.0% Yes Yes No 5,380,000 09/01/98 64.6% 1988
87 56.1% Yes Yes No 5,400,000 04/20/98 64.2% 1990
88 25.5% YES YES NO 5,260,000 04/08/99 65.1% VARIOUS
88.10 26.7% Yes Yes No 2,960,000 04/08/99 68.0% 1974
88.20 23.9% Yes Yes No 2,300,000 04/08/99 60.8% 1976
89 45.0% Yes Yes No 4,425,000 02/15/99 75.8% 1998
90 72.7% Yes Prior Consent No 4,300,000 02/25/98 77.4% 1965
100 65.6% Yes Yes No 4,422,000 01/21/99 74.8% 1977 & 1995
101 40.6% YES YES NO 6,340,000 VARIOUS 51.7% VARIOUS
101.10 40.6% Yes Yes No 900,000 02/02/99 51.7% 1998
101.20 40.6% Yes Yes No 730,000 02/15/99 51.7% 1992
101.30 40.6% Yes Yes No 740,000 02/15/99 51.7% 1994
101.40 40.6% Yes Yes No 1,900,000 02/05/99 51.7% 1998
101.50 40.6% Yes Yes No 1,165,000 02/20/99 51.7% 1998
101.60 40.6% Yes Yes No 905,000 02/04/99 51.7% 1998
102 58.0% Yes Yes No 4,900,000 12/04/97 66.4% 1992
103 69.0% Yes Yes No 4,000,000 02/23/98 79.4% 1987
104 67.2% Yes Yes No 4,150,000 02/13/98 76.5% 1973
105 68.4% Yes Yes No 4,200,000 11/05/98 74.9% 1957-1968
106 28.7% YES PRIOR CONSENT NO 7,625,000 01/11/99 40.1% VARIOUS
106.10 28.7% Yes Prior Consent No 3,625,000 01/11/99 40.1% 1958
106.20 28.7% Yes Prior Consent No 4,000,000 01/11/99 40.1% 1962
107 60.6% Yes Yes No 4,400,000 03/31/99 69.3% 1998
108 55.1% Yes Yes No 4,600,000 09/24/98 66.1% 1973-1974
109 59.8% Yes Yes No 4,075,000 01/26/99 74.2% 1974
110 0.0% Yes Yes No 4,100,000 12/22/97 73.6% 1983
111 56.6% Yes Yes No 4,385,000 04/14/99 68.3% 1964, 1968-69
112 50.6% Yes Yes No 4,100,000 09/04/98 72.7% 1970-1973
113 51.9% Yes Yes No 4,600,000 04/01/98 64.4% 1941
114 70.3% Yes Yes No 3,600,000 01/07/99 79.0% 1988
115 45.3% Yes Yes No 3,700,000 02/12/99 76.2% 1998
116 63.8% Yes Prior Consent No 3,900,000 02/04/99 71.7% 1973
117 44.9% Yes Yes No 5,100,000 12/02/98 54.7% 1982
118 50.5% Yes Yes No 4,500,000 12/02/98 61.8% 1974
119 29.1% Yes Yes No 3,500,000 06/25/98 79.2% 1998
120 65.6% Yes Yes No 3,680,000 10/10/98 73.2% 1990
121 64.5% Yes Yes Yes 3,750,000 08/03/98 71.5% 1970
122 48.7% Yes Yes No 4,600,000 08/20/98 58.3% 1979
123 22.1% Yes Yes No 5,500,000 10/09/97 48.7% 1987
124 56.6% Yes Yes No 3,900,000 12/03/98 67.6% 1963
125 70.8% Yes Yes No 3,220,000 02/11/99 79.8% 1965
126 0.0% Yes Yes No 4,800,000 04/02/98 53.0% 1967
127 54.9% Yes Yes No 3,700,000 12/07/98 67.2% 1972
128 51.0% YES YES NO 3,550,000 07/21/98 69.7% VARIOUS
128.10 51.0% Yes Yes No 2,690,000 07/21/98 69.7% 1990
128.20 51.0% Yes Yes No 860,000 07/21/98 69.7% 1982
129 1.4% YES PRIOR CONSENT NO 4,300,000 10/01/98 56.9% VARIOUS
129.10 1.4% Yes Prior Consent No 2,400,000 10/01/98 56.9% 1976 & 1984
129.20 1.4% Yes Prior Consent No 1,900,000 10/01/98 56.9% 1978-CVS, 1998-TBELL
130 60.5% Yes Yes No 3,320,000 05/19/98 73.6% 1987
131 61.4% Yes Prior Consent No 3,200,000 03/23/99 75.4% 1978
132 55.2% Yes Yes No 3,025,000 04/12/99 79.7% 1969
133 62.7% Yes Yes No 2,956,000 05/12/98 77.1% 1930-1938
134 67.0% Yes Yes No 2,925,000 01/02/98 76.3% circa 1987
135 51.3% Yes Yes No 3,550,000 01/11/99 62.8% 1980
136 45.3% Yes Yes No 4,100,000 11/01/98 53.5% 1974
137 51.7% Yes Yes No 2,945,000 06/09/98 73.4% 1960
138 57.0% Yes Yes No 3,200,000 02/13/97 67.4% 1985
139 53.2% Yes Yes No 3,400,000 12/10/98 63.4% 1973
140 71.3% Yes Yes No 2,700,000 08/05/98 79.6% 1987
141 40.3% Yes Yes No 3,100,000 02/26/99 67.4% 1997
142 43.0% Yes Yes No 3,950,000 09/22/98 52.8% 1983
143 57.0% Yes Yes No 3,000,000 06/02/98 69.5% 1974-1986
144 54.1% Yes Yes No 3,100,000 05/15/98 66.9% 1978-1979
145 54.6% Yes Yes No 3,000,000 02/10/99 67.4% 1965 - 1968
146 58.7% Yes Yes No 3,000,000 02/22/99 66.6% 1971
147 40.1% YES YES NO 3,900,000 VARIOUS 51.1% VARIOUS
147.10 40.1% Yes Yes No 1,350,000 02/15/99 51.1% 1998
147.20 40.1% Yes Yes No 800,000 02/15/99 51.1% 1990
147.30 40.1% Yes Yes No 1,750,000 02/05/99 51.1% 1998
148 47.2% Yes Yes No 3,480,000 10/12/98 57.2% 1990
149 67.4% Yes Prior Consent No 2,600,000 04/06/98 76.2% 1964,1965
150 59.5% Yes Yes No 2,925,000 04/05/99 67.5% 1984
151 57.4% Yes Yes No 2,800,000 10/14/97 69.0% 1979-1996
152 46.5% Yes Prior Consent No 3,400,000 12/23/98 55.7% 1996
153 51.6% Yes Yes No 2,975,000 07/01/98 63.1% 1936
154 71.1% Yes Yes No 2,250,000 10/31/98 79.8% 1998
155 59.3% Yes Yes No 2,500,000 08/06/98 71.6% 1924
156 44.4% Yes Yes No 3,000,000 04/17/99 58.7% 1991
157 38.4% Yes Yes No 3,725,000 03/03/99 45.6% 1965
158 52.9% Yes Yes No 2,780,000 12/04/97 60.5% circa 1970
159 59.1% Yes Yes No 2,200,000 08/10/98 75.7% circa 1903
160 45.7% Yes Yes No 2,500,000 01/20/99 66.4% 1998
161 54.3% Yes Yes No 2,480,000 12/08/98 66.1% 1986
162 0.0% Yes Yes No 2,300,000 06/01/98 70.4% 1997
163 64.2% Yes Yes No 2,000,000 08/12/98 79.1% 1994
164 70.8% Yes Yes No 1,950,000 02/11/99 79.8% 1964
165 58.2% Yes Yes No 2,150,000 01/22/99 71.9% 1984
166 57.0% Yes Yes No 2,200,000 08/06/98 69.8% 1982
167 60.9% Yes Prior Consent No 2,000,000 03/17/99 74.8% 1985
168 66.2% Yes Yes No 1,875,000 12/01/98 79.7% mid-70's
169 61.5% Yes Prior Consent No 2,000,000 09/13/98 74.6% 1968
170 60.8% Yes Yes No 2,000,000 06/01/98 74.2% 1975
171 46.6% Yes Yes No 2,600,000 03/26/98 57.0% 1956
172 36.1% Yes Yes No 2,140,000 10/04/98 69.2% 1996-1997
173 62.8% Yes Yes No 1,920,000 09/18/98 77.0% 1988
174 60.8% Yes Yes No 2,020,000 12/07/98 73.1% 1968
175 49.4% Yes Yes No 2,650,000 03/12/98 55.6% 1920
176 63.5% Yes Yes No 2,000,000 01/15/99 72.8% 1986-1988
177 51.1% Yes Yes No 2,330,000 10/27/98 62.0% 1982
178 55.7% Yes Yes No 2,000,000 11/04/98 71.9% 1991
179 47.5% Yes Yes No 2,120,000 09/22/98 67.3% 1865
180 24.4% Yes Yes No 2,300,000 10/28/98 60.6% circa 1989
181 64.2% Yes Yes No 1,760,000 08/13/98 79.1% 1995
182 61.1% Yes Yes No 1,900,000 07/24/98 73.2% 1972
183 40.3% Yes Yes No 2,400,000 11/05/98 57.8% 1903
184 72.8% Yes Yes No 1,600,000 09/29/97 85.9% 1994-1996
185 44.4% Yes Yes No 2,550,000 01/11/99 52.9% 1957/1968
186 59.4% Yes Yes No 1,835,000 03/26/98 73.2% 1989
187 53.0% Yes Yes No 1,965,000 03/22/99 66.0% 1972
188 65.7% Yes Yes No 1,750,000 12/10/98 74.0% 1997
189 41.2% Yes Yes No 2,530,000 03/05/98 50.8% 1900-1920
190 51.9% Yes Prior Consent No 2,025,000 09/15/98 63.3% 1995-96
191 60.6% Yes Prior Consent No 1,700,000 10/30/98 74.6% 1978
192 64.2% Yes Yes No 1,500,000 08/18/98 79.1% 1983
193 63.6% Yes Yes No 1,500,000 02/10/99 78.6% 1995 & 1998
194 40.2% Yes Yes No 1,750,000 11/16/98 67.1% 1986 - 1987
195 52.7% Yes Yes Yes 1,800,000 12/12/98 64.1% 1986
196 61.4% Yes Yes No 1,550,000 06/04/98 74.2% 1975
197 66.9% Yes Yes No 1,500,000 01/20/99 76.3% 1954
198 0.0% Yes Yes No 1,750,000 08/03/98 64.6% 1987
199 58.3% Yes Yes No 1,600,000 01/19/99 70.4% 1920
200 64.2% Yes Yes No 1,375,000 08/13/98 79.1% 1986
201 65.0% Yes Yes No 1,500,000 01/15/99 72.4% 1997-1997
203 70.8% Yes Yes No 1,320,000 02/11/99 79.8% 1962
204 58.8% Yes Yes No 1,625,000 11/03/98 64.5% 1984
205 57.1% Yes Yes No 1,500,000 06/23/98 69.9% 1977
206 59.3% Yes Yes Yes 1,420,000 12/08/98 72.1% 1984
207 62.2% Yes Yes No 1,430,000 12/02/98 69.8% 1916
209 51.9% Yes Yes No 1,590,000 04/15/98 62.3% 1960
210 27.2% Yes Yes No 1,660,000 03/31/98 59.4% 1961-1965
211 59.6% Yes Prior Consent No 1,310,000 05/13/98 72.2% 1997
212 61.0% Yes Prior Consent No 1,275,000 05/22/98 73.9% 1997
213 4.4% Yes Yes No 1,350,000 08/06/98 64.3% 1975
214 49.1% Yes Yes Yes 1,440,000 12/11/98 59.7% 1986
215 4.0% Yes Yes No 1,200,000 12/31/98 71.5% circa 1936
216 54.1% Yes Silent Silent 1,150,000 04/02/99 65.1% 1974
218 58.6% Yes Prior Consent No 1,050,000 08/17/98 71.0% 1962
221 56.4% Yes Silent Silent 1,000,000 01/12/99 67.4% 1958/1974
222 67.1% Yes Yes No 795,000 03/26/98 79.1% 1900's
223 3.0% Yes Yes No 889,800 08/08/97 69.9% 1974
224 3.1% Yes Yes No 1,100,000 05/20/98 55.1% circa 1982
226 56.8% Yes Yes No 866,000 08/07/98 68.6% 1977
227 58.5% Yes Yes No 750,000 08/05/98 69.8% 1975
228 2.3% Yes Yes No 1,100,000 03/20/98 44.8% 1965
229 0.0% Yes Yes No 1,300,000 07/08/98 37.7% 1986
231 51.9% Yes Silent Silent 550,000 04/26/99 63.6% 1958
232 33.6% Yes Yes No 408,000 07/13/98 75.8% 1973
233 63.3% Yes Yes No 390,000 06/22/98 77.2% 1970
234 32.4% Yes Yes No 650,000 06/23/98 45.4% 1997
<PAGE>
<CAPTION>
CONTROL OWNERSHIP NET RENTABLE
NUMBER YEAR RENOVATED INTEREST SF / UNITS LARGEST TENANT NAME LARGEST TENANT SF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Various Various 2,318 NAP
1.10 1998-1999 Fee Simple 260 NAP
1.20 1996/1997 Fee Simple 130 NAP
1.30 1998 Fee Simple 155 NAP
1.40 Fee Simple 125 NAP
1.50 1998 Fee Simple 175 NAP
1.60 Fee Simple 174 NAP
1.70 1996 Fee Simple 156 NAP
1.80 Fee Simple 167 NAP
1.90 Leasehold 115 NAP
1.91 1997/98 Leasehold 167 NAP
1.92 1996 Fee Simple 159 NAP
1.93 1996 Leasehold 108 NAP
1.94 Fee Simple 121 NAP
1.95 1998 Fee Simple 181 NAP
1.96 1998 Fee Simple 125 NAP
2 Fee Simple 265,846 Sportmart 42,400
3 1983 Fee Simple 198,000 Barnes & Noble 144,000
4 Leasehold 262,269 Kohl's Department Store 86,584
5 1997 Fee Simple 317,500 Emery Worldwide Airlines, Inc. 317,500
6 VARIOUS FEE SIMPLE 76,820 VARIOUS VARIOUS
6.10 1998 Fee Simple 31,173 TRW, Inc 31,173
6.20 1998 Fee Simple 45,647 BOCA Global, Inc 45,647
7 FEE SIMPLE 240,407 VARIOUS VARIOUS
7.10 Fee Simple 209,143 BJ's Wholesale Club 119,330
7.20 Fee Simple 31,264 Party City 6,899
8 1996 Leasehold 406,359 Waremart foods 52,759
9 Fee Simple 250
10 Fee Simple 46,887 Litchfield's Toys 3,244
11 Fee Simple 212
12 1996-1998 Fee Simple 148,512 BankBoston 73,656
13 Fee Simple 100,644 Grand Union 40,920
14 1994-1998 Fee Simple 218
15 Fee Simple 66,650 Brenden Theatres Corporation 66,650
16 Fee Simple 128,065 Trendsetter Furniture 15,000
17 Fee Simple 437
18 VARIOUS FEE SIMPLE 389
18.10 Fee Simple 40
18.20 ON-GOING Fee Simple 87
18.30 Fee Simple 63
18.40 Fee Simple 66
18.50 Fee Simple 70
18.60 ON-GOING Fee Simple 63
19 Leasehold 81,332 Mercy Integrated Health 11,586
20 1986 Fee Simple 134,067 Periphonics 54,820
21 Fee Simple 92,305 Office Depot 25,000
22 FEE SIMPLE 377
22.10 Fee Simple 63
22.20 Fee Simple 53
22.30 Fee Simple 65
22.40 Fee Simple 97
22.50 Fee Simple 99
23 Fee Simple 50,423 Sabloff & Carlini M.D. 8,856
24 Fee Simple 252,680 Hamilton Fixtures Company 252,680
25 Fee Simple 240
26 Fee Simple 121,890 Kmart 121,890
27 1989-1990 Fee Simple 199,938 Iowa DOT 49,038
28 VARIOUS FEE SIMPLE 415
28.10 1995 Fee Simple 148
28.20 1992/1995/1998 Fee Simple 106
28.30 1998 Fee Simple 161
29 1985 Fee Simple 46,324 Jeanne Body Tech 20,770
30 Fee Simple 93,763 Athletic Club 15,435
31 Fee Simple 142
32 1990 Fee Simple 85,716 BeautiControl Inc. 85,716
33 FEE SIMPLE 554
33.10 Fee Simple 120
33.20 Fee Simple 288
33.30 Fee Simple 146
34 Fee Simple 130
35 Fee Simple 118
36 Fee Simple 70,076 UT Starcom, Inc. 25,576
37 1988 Fee Simple 143
38 1994 Fee Simple 134
39 Fee Simple 39,958 Destination Salon and Spa 5,230
40 Fee Simple 120
41 Leasehold 30,587 Border's Books 15,648
42 1989 Fee Simple and Leasehold 35,673 D.L. Ryan Companies 35,673
43 1997 Fee Simple 99,556 ABCO 26,620
44 Fee Simple 127,691 K-Mart Corp. Store #3934 86,479
45 1995-1997 Fee Simple 148
46 1995 New pads Fee Simple 56,435 Drug Emporium, Inc. 25,000
47 Fee Simple 145
48 Fee Simple 51,808 Office Max, Inc. 23,315
49 VARIOUS 563
49.10 Fee Simple 215
49.20 Fee Simple 186
49.30 Fee Simple 162
50 1994 Fee Simple 89,977 GSA - Department of Justice 30,626
51 Fee Simple 148
52 Fee Simple 32,600 Coldwell Banker 32,000
53 1985-1998 Fee Simple 307
54 Fee Simple 138
55 1998 Fee Simple 164
56 1986 Fee Simple 50,148 Hawaii Super Market 43,384
57 Fee Simple 272
58 Leasehold 136,413 Iron Mountain 136,413
59 1986 Fee Simple 83,660 Revco Discount Drug (CVS) 13,832
60 Fee Simple 96
61 Fee Simple 33,222 Norwest Bank 3,550
62 Fee Simple 11,322 Laura Ashley, Inc. 1,733
63 1990 Fee Simple 253,045 Cisco Systems 70,554
64 1984 Fee Simple 46,267 C. Raimondo & Sons Construction 12,425
65 1977 Fee Simple 127
66 Fee Simple 22,395 Staples 18,851
67 Fee Simple 120
68 Fee Simple 152,200 Essex Group, Inc 152,200
69 Fee Simple 193,859 Freeman Decorating Company 193,859
70 Fee Simple 51
71 Fee Simple 213,600 Dow 160,200
72 Fee Simple 585
73 Fee Simple 120
74 Fee Simple 152
75 1985 Fee Simple 12,000 Fletcher Asset Management 12,000
76 Fee Simple 112
77 FEE SIMPLE 246
77.10 Fee Simple 120
77.20 Fee Simple 66
77.30 Fee Simple 60
78 Fee Simple 60
79 Fee Simple 78
80 Fee Simple 100
81 1981 Fee Simple 177
82 Fee Simple 40,526 GSA 40,526
83 Fee Simple 102,624 Penrose 11,700
84 Fee Simple 483
85 1995 Fee Simple 62,758 HUD 5,847
86 Fee Simple 49,308 Comfort Shoppe, Inc. 17,365
87 Fee Simple 29,855 Ultimate Video 6,750
88 VARIOUS FEE SIMPLE 284
88.10 1998 Fee Simple 168
88.20 Fee Simple 116
89 Fee Simple 30,450 Office Depot, Inc. 30,450
90 1996 Fee Simple 79
100 1996 Fee Simple 52,221 Scolaris Food & Drug 41,370
101 VARIOUS 19,223 VARIOUS
101.10 Fee Simple 2,950 Arby's Restaurant 2,950
101.20 Fee Simple 2,252 Taco Bell Restaurant 2,252
101.30 Fee Simple 2,269 Taco Bell (Unit # 16393) 2,269
101.40 Fee Simple 6,385 Tony Roma's (Romacorp, Inc.) 6,385
101.50 Fee Simple 2,164 Del Taco Restaurant 2,164
101.60 Fee Simple 3,203 Winger's USA 3,203
102 Fee Simple 80
103 Fee Simple 51,164 Gold's Gym 16,267
104 1997 Fee Simple 26,804 Fidelity 3,430
105 Fee Simple 206
106 VARIOUS VARIOUS 150
106.10 1991 Fee Simple 83
106.20 1991 Fee Simple 67
107 Fee Simple 13,905 Walgreens 13,905
108 Fee Simple 62,850 Louapre and Kokemor 8,914
109 1998 Fee Simple 134
110 Fee Simple 82,120
111 1996-97 Fee Simple 66
112 Fee Simple 104
113 Fee Simple 25,000 Mount Fuji Properties 18,600
114 Fee Simple 46
115 Fee Simple 29,951 Office Depot, Inc. 29,951
116 Fee Simple 295
117 1985 Fee Simple 42,259 Pike Place Brewing 20,017
118 Fee Simple 202,191 Bike Athletic Company 202,191
119 Fee Simple 72
120 Fee Simple 22,626 Cort Furniture Rental Co 5,000
121 Fee Simple 76
122 Fee Simple 77,632 Raymour & Flanigan Furniture 75,000
123 Fee Simple 94,085 Pharmhouse 28,500
124 1996 Fee Simple 110
125 Fee Simple 97
126 1975 Fee Simple 46,165 Sanders Furniture 9,067
127 Fee Simple 105,600 K.V.R. Investment Group, Inc. 19,200
128 VARIOUS VARIOUS 132
128.10 1994 Fee Simple 82
128.20 1987 Fee Simple 50
129 VARIOUS VARIOUS 38,921 VARIOUS
129.10 1996 Fee Simple 27,100 Sears Roebuck & Co. (Hardware) 21,000
129.20 1995-CVS Fee Simple 11,821 CVS Pharmacy 9,700
130 1991 Fee Simple 31,983 Chamness Relocation 5,363
131 Fee Simple 127
132 1998 Fee Simple 160
133 Fee Simple 23,600 CVS Drugs 11,500
134 Fee Simple 86
135 Fee Simple 57,282 Thrift Land 20,232
136 1986 Fee Simple 38,000 Youngstown Area Comm Actn Cncl 13,414
137 1997 Fee Simple 192
138 Fee Simple 27,126 DeDomenico Pizza & Restaurant 2,744
139 Fee Simple 124 Wendy's International, Inc. 2,517
140 1986 Fee Simple 41
141 Fee Simple 52,145 Somers Convention Furniture 52,145
142 Fee Simple 28,787 County of Marin 7,743
143 1985 Fee Simple 41,000 Walgreens 15,500
144 Fee Simple 76,500 Stylecraft 7,650
145 1997 Fee Simple 80,982 Logan's Grocery 26,218
146 1996-1998 Fee Simple 120
147 VARIOUS 11,321 VARIOUS
147.10 Fee Simple 2,669 Jack-in-the-Box 2,669
147.20 Fee Simple 2,355 Taco Bell Restaurant 2,355
147.30 Fee Simple 6,297 Tony Roma's Restaurant 6,297
148 Fee Simple 131
149 Fee Simple 63
150 Fee Simple 35,915 Sports Arenas 4,924
151 Fee Simple 60
152 Fee Simple 70,250
153 1980s Fee Simple 15,183 Presage Software 8,536
154 Fee Simple 14,932 Dollar Tree 4,800
155 1986 Fee Simple 32,398 Ansaphone, Inc. 4,552
156 Fee Simple 27,747 Winan's Furniture 18,440
157 Fee Simple 52
158 1994 Fee Simple 60
159 1995-1996 Fee Simple 7,000 D'Agostino's Supermarket 7,000
160 Fee Simple 16,500 Advance Auto Parts 7,000
161 Fee Simple 80
162 Fee Simple 21,450 Sounds Easy Video 4,850
163 Fee Simple 13,160 Coldwell Banker 9,790
164 Fee Simple 66
165 Fee Simple 36,138 Stony Brook Family Medical 4,250
166 Fee Simple 11,250 L'Orience Nails and Skin 2,000
167 ON-GOING Fee Simple 77
168 1996 Fee Simple 14,156 American Auto Parts 2,000
169 1997 Fee Simple 127
170 1998 Fee Simple 27,206 Veterans Administration 9,999
171 1986 Fee Simple 49,913 American Archives 13,475
172 Fee Simple 10,125 Smyrna CVS, Inc. 10,125
173 Fee Simple 404
174 1998 Fee Simple 136
175 1998 Fee Simple 7,280 Mark Rubinoff (Barber) 2,400
176 Fee Simple 72
177 1988 Fee Simple 32,295 Merry X Ray Chemical 4,295
178 Fee Simple 90,000 Thomson Consumer Electronics 90,000
179 1989 & 1998 Fee Simple 45
180 over past 70+ yr Fee Simple 16,891 Windemere RE 4,971
181 Fee Simple 10,500 Coldwell Banker 10,500
182 1976 Fee Simple 48
183 1989 Fee Simple 24,409 Bullock, Smith & Partners 9,440
184 Fee Simple 17,879 Kinkos 6,048
185 1986 Fee Simple 53,059 Nationwide Furniture Warehouse 13,154
186 Fee Simple 33,507 Piggly Wiggly 18,356
187 Fee Simple 112
188 Fee Simple 52
189 1997-99 Fee Simple 14,715 Lok Sing Restaurant 4,376
190 Fee Simple 23,314 Zetec, Inc. 23,314
191 Fee Simple 40,258 Continental Divide 15,576
192 Fee Simple 10,500 Coldwell Banker 8,750
193 Fee Simple 122
194 Fee Simple 20,251 Chang's Garden Chinese Rest. 4,700
195 Fee Simple 87
196 Fee Simple 46
197 1991 Fee Simple 42
198 Fee Simple 21,293
199 1997 & 1999 Fee Simple 37,455 Landmark America LLC 10,702
200 Fee Simple 11,100 Coldwell Banker 11,100
201 Fee Simple 10,978 Hollywood Video 6,950
203 Fee Simple 46
204 Fee Simple 71
205 Fee Simple 24
206 Fee Simple 61
207 1996 Fee Simple 30
209 1996 Fee Simple 87
210 Fee Simple 61
211 Fee Simple 10,000 Big 5 Sporting Goods 10,000
212 Fee Simple 10,000 Big 5 Sporting Goods 10,000
213 1991 Fee Simple 42
214 1996-1997 Fee Simple 44
215 1996 Fee Simple 5,000 Trade Fair Supermarket 5,000
216 Fee Simple 32,539 Family Dollar Stores of Ohio 8,300
218 Fee Simple 33,231 CVS/Revco Drug Store 13,000
221 1983 Fee Simple 22,207 Unistrut Western 16,227
222 1997 Fee Simple 17
223 Fee Simple 50
224 Fee Simple 8,746 Robert G. Dinmore 3,978
226 Fee Simple 33,770 Kinetic Concepts Inc. 4,320
227 Fee Simple 99
228 Fee Simple 32
229 Fee Simple 17,858 Brandley's Cantina 5,363
231 Fee Simple 29
232 Fee Simple 12
233 1995 Fee Simple 14
234 Fee Simple 9,646 Colotex Electrical Supply 6,431
<PAGE>
<CAPTION>
CONTROL LARGEST TENANT PHYSICAL OCCUPANCY ORIGINAL
NUMBER SF AS A % OF TOTAL OCCUPANCY % AS OF DATE LTV RATIO 1997 NOI 1998 NOI UNDERWRITTEN NOI
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 58.9% $12,107,690 $13,116,819 $10,765,635
1.10 60.6% 01/31/99 58.9% 1,964,369 2,086,240 1,838,964
1.20 72.8% 01/31/99 58.9% 620,142 635,525 493,504
1.30 81.6% 01/31/99 58.9% 1,187,268 1,658,051 1,310,533
1.40 82.3% 01/31/99 58.9% 734,607 699,497 521,163
1.50 67.2% 01/31/99 58.9% 1,575,647 1,349,983 1,113,187
1.60 71.7% 01/31/99 58.9% 1,439,100 1,441,918 1,196,328
1.70 70.4% 01/31/99 58.9% 619,761 789,915 632,685
1.80 70.2% 01/31/99 58.9% 1,040,279 1,097,561 918,118
1.90 76.9% 01/31/99 58.9% 585,231 649,421 516,342
1.91 73.8% 01/31/99 58.9% 142,934 247,389 126,629
1.92 54.9% 01/31/99 58.9% 240,394 320,024 165,843
1.93 54.5% 01/31/99 58.9% 146,921 159,339 94,020
1.94 72.5% 01/31/99 58.9% 856,572 1,010,484 880,429
1.95 67.1% 01/31/99 58.9% 954,465 971,472 755,886
1.96 60.2% 01/31/99 58.9% 0 0 202,003
2 16.0% 100.0% 03/19/99 78.8% 0 0 4,222,747
3 72.7% 100.0% 04/29/99 71.5% 3,260,820 3,195,173 3,218,939
4 33.0% 88.9% 05/13/99 76.3% 0 0 2,083,701
5 100.0% 100.0% 04/30/99 78.2% 0 0 1,529,563
6 VARIOUS 100.0% 03/26/99 69.4% 0 0 1,526,287
6.10 100.0% 100.0% 03/26/99 69.3% 0 0 619,357
6.20 100.0% 100.0% 03/26/99 69.5% 0 0 906,930
7 VARIOUS 96.5% 01/28/99 78.1% 1,305,953 1,416,475 1,490,381
7.10 57.1% 99.3% 01/28/99 80.0% 1,305,953 1,416,475 1,145,111
7.20 22.1% 85.9% 01/28/99 70.6% 0 0 345,270
8 13.0% 93.0% 05/17/99 63.9% 1,719,939 1,753,436 1,712,575
9 94.0% 03/30/99 77.7% 956,135 1,110,127 1,178,138
10 6.9% 90.0% 03/08/99 71.4% 0 1,093,872 1,244,132
11 93.9% 04/01/99 68.2% 1,014,855 0 1,120,185
12 49.6% 95.0% 04/01/99 66.4% 710,405 789,230 1,477,054
13 40.7% 97.0% 05/27/99 73.0% 1,155,447 1,128,981 1,197,098
14 96.4% 12/31/98 77.5% 1,158,380 787,733 1,017,197
15 100.0% 100.0% 07/01/98 64.9% 0 0 1,312,699
16 11.7% 91.0% 05/19/99 80.0% 884,908 1,140,607 1,171,239
17 93.0% 03/01/99 75.0% 1,194,813 1,146,198 1,058,090
18 94.7% VARIOUS 75.0% 1,093,396 1,330,846 1,205,556
18.10 92.5% 02/22/99 75.0% 68,103 101,234 93,050
18.20 89.7% 04/22/99 76.7% 200,893 242,342 219,854
18.30 100.0% 04/23/99 75.0% 214,156 279,454 246,622
18.40 92.4% 04/22/99 74.6% 183,927 210,752 194,235
18.50 97.1% 04/23/99 75.0% 197,295 212,913 192,874
18.60 95.2% 04/22/99 73.9% 229,022 284,151 258,921
19 14.3% 96.3% 02/07/99 78.6% 1,002,292 876,576 1,000,060
20 40.9% 99.0% 03/18/99 73.9% 97,623 1,004,422 1,177,950
21 27.1% 97.0% 03/26/99 74.9% 290,956 532,995 1,024,493
22 92.9% 03/25/99 73.8% 969,052 1,061,071 978,287
22.10 96.8% 03/25/99 70.0% 146,925 151,771 137,353
22.20 94.3% 03/25/99 60.7% 145,073 141,138 134,095
22.30 92.3% 03/25/99 72.5% 125,716 161,271 144,643
22.40 93.8% 03/25/99 77.7% 241,063 287,471 261,899
22.50 89.9% 03/25/99 78.4% 310,275 319,420 300,297
23 17.6% 100.0% 07/01/98 76.5% 520,864 597,650 772,040
24 100.0% 100.0% 12/01/98 75.0% 534,948 587,140 800,281
25 95.4% 04/01/99 78.0% 771,391 781,639 777,740
26 100.0% 100.0% 12/17/98 97.0% 655,977 655,977 636,364
27 24.5% 100.0% 06/01/99 73.9% 984,292 1,033,009 942,013
28 95.2% VARIOUS 54.0% 921,445 996,227 890,620
28.10 88.5% 02/26/99 55.7% 346,039 373,422 330,490
28.20 99.1% 03/25/99 61.7% 259,099 302,490 264,552
28.30 98.8% 03/25/99 46.1% 316,307 320,315 295,578
29 44.8% 100.0% 03/25/99 75.8% 753,991 775,952 698,495
30 16.5% 94.0% 03/01/99 64.3% 305,896 973,441 829,734
31 82.5% 04/30/98 75.0% 0 1,156,000 792,085
32 100.0% 100.0% 05/14/99 58.0% 0 0 943,107
33 74.9% 674,337 709,012 705,563
33.10 99.2% 03/10/99 74.9% 110,343 73,134 131,372
33.20 100.0% 04/01/99 74.9% 402,975 411,192 355,801
33.30 100.0% 03/10/99 74.9% 161,019 224,686 218,390
34 76.2% 07/31/98 59.2% 1,171,143 1,187,069 878,772
35 99.0% 04/30/99 79.2% 0 0 585,849
36 36.5% 100.0% 03/12/99 68.3% 870,336 854,586 780,168
37 99.0% 12/01/98 74.7% 621,713 721,903 633,131
38 68.9% 06/30/98 69.6% 963,766 812,878 753,024
39 13.1% 94.5% 12/01/98 69.2% 795,555 710,463 655,888
40 94.0% 06/30/98 72.0% 797,877 961,000 832,055
41 51.2% 100.0% 03/25/99 77.2% 0 458,847 569,122
42 100.0% 100.0% 09/01/98 74.8% 0 0 586,013
43 26.7% 93.0% 12/31/98 79.1% 724,438 597,590 670,149
44 67.7% 100.0% 12/31/98 80.0% 650,801 639,238 613,773
45 95.0% 10/09/98 69.7% 579,451 687,573 552,827
46 44.3% 100.0% 12/31/98 74.6% 614,045 665,333 574,134
47 98.0% 03/01/99 74.4% 612,173 605,648 602,061
48 45.0% 100.0% 05/01/99 68.9% 209,921 508,061 615,266
49 76.9% 660,109 0 577,659
49.10 100.0% 08/01/98 76.9% 660,109 0 577,659
49.20 100.0% 76.9% 0 0 0
49.30 0.0% 76.9% 0 0 0
50 34.0% 92.7% 02/28/99 71.8% 679,741 727,671 717,751
51 97.0% 12/31/98 77.7% 468,668 485,678 436,354
52 98.2% 100.0% 09/18/98 80.0% 337,201 694,677 591,520
53 94.0% 07/07/98 62.8% 348,607 723,642 585,235
54 100.0% 12/31/98 78.5% 456,892 478,348 426,381
55 85.4% 03/01/99 79.8% 458,211 0 554,474
56 86.5% 100.0% 08/01/98 75.0% -190,435 0 568,215
57 92.3% 02/04/99 77.9% 543,168 563,781 575,676
58 100.0% 100.0% 04/13/99 52.6% 0 0 530,501
59 16.5% 97.1% 01/04/99 74.4% 535,400 593,495 565,049
60 76.0% 04/30/98 69.4% 764,000 764,782 619,687
61 10.7% 96.0% 06/03/99 52.5% 787,426 839,316 734,896
62 15.3% 100.0% 11/30/98 68.9% 570,579 628,534 478,926
63 27.9% 86.3% 02/03/99 44.2% 655,625 817,357 783,837
64 26.9% 100.0% 05/31/99 67.2% 531,454 590,660 535,377
65 88.1% 12/31/98 69.2% 806,285 1,082,527 830,819
66 84.2% 100.0% 04/28/98 75.5% 572,536 610,878 536,075
67 100.0% 03/29/99 69.5% 570,823 570,631 503,402
68 100.0% 100.0% 01/22/99 74.8% 0 0 438,321
69 100.0% 100.0% 08/24/98 74.9% 475,148 0 475,190
70 50.0% 07/01/98 58.0% 901,825 1,554,907 1,594,392
71 75.0% 100.0% 11/24/98 69.7% 471,518 522,800 570,092
72 100.0% 05/01/99 82.8% 485,541 456,915 456,254
73 86.0% 06/30/98 65.3% 262,796 559,312 540,492
74 96.0% 12/31/98 42.7% 1,215,157 1,471,055 671,339
75 100.0% 100.0% 06/19/98 70.0% 0 0 432,080
76 94.0% 02/11/99 68.9% 612,200 650,447 565,932
77 98.7% VARIOUS 72.2% 538,984 601,054 513,119
77.10 99.2% 03/17/99 72.0% 215,948 270,257 212,538
77.20 98.5% 03/17/99 73.1% 175,366 168,873 161,876
77.30 98.3% 01/13/99 71.4% 147,670 161,924 138,705
78 100.0% 01/15/99 75.5% 0 486,259 427,785
79 84.6% 04/21/99 63.2% 459,275 556,778 562,027
80 99.0% 03/04/98 75.0% 494,975 566,792 514,073
81 97.0% 05/01/98 58.8% 444,528 0 439,690
82 100.0% 100.0% 07/08/98 75.0% 420,408 439,747 414,091
83 11.4% 100.0% 03/01/99 68.6% 547,063 677,327 638,801
84 97.0% 02/01/99 37.6% 881,662 847,376 738,358
85 9.3% 91.0% 06/01/98 63.6% 194,560 263,672 511,979
86 35.2% 100.0% 02/28/99 65.1% 461,401 503,918 449,009
87 22.6% 96.0% 05/01/99 64.8% 542,234 648,602 510,404
88 93.6% 04/30/99 65.1% 409,834 462,962 473,354
88.10 94.6% 04/30/99 68.1% 249,871 267,502 273,870
88.20 92.0% 04/30/99 60.9% 159,963 195,460 199,484
89 100.0% 100.0% 03/05/99 75.9% 0 0 369,537
90 98.7% 05/01/99 77.9% 419,038 433,165 438,013
100 79.2% 100.0% 03/03/99 75.0% 353,833 427,404 433,609
101 51.7% 0 0 579,323
101.10 100.0% 100.0% 02/01/99 51.7% 0 0 71,359
101.20 100.0% 100.0% 04/19/99 51.7% 0 0 68,959
101.30 100.0% 100.0% 04/19/99 51.7% 0 0 62,195
101.40 100.0% 100.0% 01/04/99 51.7% 0 0 170,452
101.50 100.0% 100.0% 01/11/99 51.7% 0 0 116,896
101.60 100.0% 100.0% 01/11/99 51.7% 0 0 89,462
102 100.0% 12/19/97 67.4% 478,065 367,920 432,980
103 31.8% 97.7% 04/01/99 80.0% 381,362 438,621 453,124
104 12.8% 95.0% 04/01/99 77.1% 256,995 324,809 385,010
105 96.0% 02/01/99 75.0% 395,460 364,044 372,403
106 40.4% 1,128,143 0 509,650
106.10 89.0% 02/01/99 40.4% 697,190 0 339,830
106.20 97.7% 01/31/99 40.4% 430,953 0 169,820
107 100.0% 100.0% 04/27/99 69.3% 0 0 352,441
108 14.2% 93.4% 09/30/98 66.5% 416,290 473,393 421,135
109 96.3% 03/01/99 74.5% 373,457 473,028 408,946
110 100.0% 04/30/99 75.6% 552,368 530,339 415,296
111 100.0% 02/25/99 68.4% 439,943 448,156 420,732
112 89.4% 01/31/99 73.2% 495,797 468,603 412,523
113 74.4% 80.1% 03/01/99 65.2% 481,523 537,201 442,997
114 93.5% 02/01/99 79.2% 324,376 366,123 326,981
115 100.0% 100.0% 03/05/99 76.4% 0 0 310,808
116 95.9% 02/09/99 71.8% 251,854 295,475 333,111
117 47.4% 100.0% 02/01/99 54.9% 427,037 470,423 416,802
118 100.0% 100.0% 12/02/98 62.2% 0 0 394,029
119 96.0% 12/31/98 80.0% 0 0 295,873
120 22.1% 100.0% 02/26/99 73.4% 0 0 322,530
121 97.4% 03/01/99 71.6% 263,717 281,613 283,874
122 96.6% 100.0% 11/17/98 58.7% 0 0 382,066
123 30.3% 93.2% 05/04/99 52.7% 562,829 682,782 613,248
124 60.0% 10/31/98 68.0% 379,385 599,539 553,440
125 93.0% 03/31/99 80.0% 224,115 318,739 285,696
126 19.6% 100.0% 04/21/99 54.2% 501,855 522,810 404,257
127 18.2% 100.0% 03/23/99 67.6% 0 329,005 358,372
128 70.0% 421,536 531,689 455,073
128.10 60.9% 12/31/98 70.0% 352,462 409,990 0
128.20 63.0% 12/31/98 70.0% 150,372 158,815 0
129 58.1% 435,233 368,931 402,933
129.10 77.5% 100.0% 12/08/98 58.1% 253,334 257,498 227,766
129.20 82.1% 100.0% 12/07/98 58.1% 181,899 111,433 175,167
130 16.8% 97.0% 08/31/98 74.6% 332,903 299,076 303,743
131 96.8% 04/23/99 75.6% 332,314 359,855 335,196
132 98.1% 04/26/99 79.8% 226,748 0 362,945
133 48.7% 100.0% 03/25/99 77.8% 286,107 366,771 272,315
134 91.0% 07/14/98 76.9% 327,499 500,524 230,113
135 35.3% 84.5% 03/30/99 63.1% 136,699 295,463 326,193
136 35.3% 93.7% 03/28/99 53.7% 210,648 332,614 389,639
137 97.0% 05/01/99 74.7% 0 150,155 335,602
138 10.1% 84.0% 10/01/98 59.4% 204,216 318,646 326,734
139 6.0% 52.9% 11/01/97 63.5% 444,573 495,357 332,692
140 100.0% 04/19/99 80.0% 264,181 273,382 248,275
141 100.0% 100.0% 03/15/99 67.7% 0 0 292,652
142 26.9% 100.0% 05/13/99 55.7% 293,911 246,983 332,482
143 37.8% 100.0% 06/30/98 70.0% 324,328 345,708 280,677
144 10.0% 100.0% 05/12/99 67.7% 270,418 245,010 273,128
145 32.4% 100.0% 05/03/99 67.5% 286,406 316,192 288,803
146 100.0% 04/01/99 66.7% 181,594 228,417 240,013
147 51.1% 0 0 348,477
147.10 100.0% 100.0% 01/11/99 51.1% 0 0 112,891
147.20 100.0% 100.0% 01/11/99 51.1% 0 0 65,103
147.30 100.0% 100.0% 01/11/99 51.1% 0 0 170,483
148 89.0% 06/30/98 57.5% 265,788 274,498 295,242
149 98.4% 05/01/99 76.9% 194,433 218,042 227,914
150 13.7% 97.0% 04/29/99 67.5% 243,387 225,502 264,897
151 93.0% 12/31/98 70.5% 0 179,518 202,911
152 90.0% 03/23/99 55.9% 145,676 301,476 291,231
153 56.2% 100.0% 03/31/99 63.9% 223,702 248,748 234,931
154 32.2% 100.0% 01/06/99 80.0% 0 23,189 207,018
155 14.1% 100.0% 03/01/99 72.0% 213,081 215,161 252,429
156 66.5% 100.0% 04/22/99 58.8% 252,213 267,734 238,584
157 100.0% 03/30/99 45.6% 206,387 264,799 221,682
158 100.0% 04/19/99 61.2% 142,781 217,124 185,758
159 100.0% 100.0% 07/20/98 76.1% 0 0 179,498
160 42.4% 100.0% 03/08/99 66.7% 0 90,928 223,175
161 96.3% 03/25/99 66.5% 186,915 247,524 230,347
162 22.6% 100.0% 04/08/99 71.7% 0 141,764 234,067
163 74.4% 100.0% 12/31/98 80.0% 206,005 251,016 208,908
164 95.0% 03/31/99 80.0% 138,664 228,459 192,903
165 11.8% 90.2% 04/28/99 72.1% 164,267 218,969 245,096
166 17.8% 100.0% 04/21/99 70.5% 158,044 235,792 191,761
167 97.4% 04/22/99 75.0% 197,418 229,587 209,140
168 14.1% 100.0% 05/11/99 80.0% 139,001 145,901 187,200
169 96.9% 03/31/99 75.0% 172,451 189,931 188,851
170 36.8% 95.0% 01/28/99 75.0% 155,166 197,446 188,653
171 27.0% 100.0% 04/28/98 57.7% 205,262 361,830 192,407
172 100.0% 100.0% 02/12/99 70.1% 0 189,009 170,407
173 100.0% 01/25/99 77.3% 197,770 198,087 176,118
174 79.4% 03/31/99 73.3% 180,222 178,813 188,391
175 33.0% 100.0% 03/30/99 56.6% 170,053 246,585 301,125
176 98.6% 01/12/99 73.0% 185,952 206,847 206,427
177 13.3% 100.0% 09/10/98 62.2% 212,897 200,011 193,819
178 100.0% 100.0% 03/31/99 72.5% 194,990 204,285 188,222
179 100.0% 03/16/99 67.6% 114,256 183,836 204,716
180 29.4% 100.0% 03/31/99 60.9% 229,713 229,514 184,561
181 100.0% 100.0% 09/18/98 80.0% 171,289 211,516 176,801
182 96.0% 03/01/98 73.7% 193,849 234,738 193,441
183 38.7% 100.0% 03/31/99 58.3% 294,305 296,936 193,972
184 33.8% 100.0% 03/31/99 87.5% 147,689 190,308 193,530
185 24.8% 100.0% 04/20/99 52.9% 268,124 276,197 288,570
186 54.8% 100.0% 05/28/99 74.1% 187,462 194,472 160,236
187 99.1% 03/15/99 66.2% 152,835 -270,682 182,697
188 100.0% 12/31/98 74.3% 0 94,833 132,071
189 29.7% 100.0% 10/31/98 51.4% 0 190,399 208,583
190 100.0% 100.0% 03/31/99 63.7% 179,860 190,462 187,775
191 38.7% 100.0% 05/01/99 75.0% 199,115 198,574 210,217
192 83.3% 100.0% 09/18/98 80.0% 108,422 179,822 141,411
193 95.1% 04/12/99 78.7% 0 123,228 154,114
194 23.2% 100.0% 01/14/99 67.7% 173,218 169,115 170,089
195 90.8% 03/25/99 64.6% 182,319 195,127 177,377
196 95.0% 06/26/98 74.8% 138,406 219,872 165,748
197 92.9% 02/05/99 76.5% 142,817 149,700 144,415
198 100.0% 02/28/99 65.7% 163,666 146,510 138,323
199 28.6% 96.3% 03/22/99 70.5% 66,102 82,122 180,370
200 100.0% 100.0% 09/18/98 80.0% 98,072 165,625 138,277
201 63.3% 100.0% 12/31/98 72.5% 0 178,836 132,338
203 91.0% 03/31/99 80.0% 103,486 140,839 126,067
204 95.8% 04/01/99 64.6% 113,823 126,839 123,037
205 92.0% 03/31/99 70.7% 135,782 136,207 117,056
206 83.6% 02/26/99 72.6% 148,850 156,002 146,374
207 100.0% 02/01/99 69.9% 126,413 126,096 124,275
209 99.0% 12/31/98 62.9% 107,409 158,691 133,388
210 72.0% 05/01/98 60.2% 234,308 246,973 230,315
211 100.0% 100.0% 04/01/99 72.7% 0 117,448 116,073
212 100.0% 100.0% 04/01/99 74.4% 0 113,891 115,706
213 80.0% 07/01/98 64.8% 237,681 292,311 148,901
214 97.7% 03/25/99 60.1% 119,462 158,594 119,149
215 100.0% 100.0% 71.8% 126,320 126,000 112,864
216 25.5% 89.4% 03/01/99 65.2% 160,913 160,221 113,345
218 39.1% 88.4% 04/29/99 71.4% 118,439 116,451 115,605
221 73.1% 100.0% 03/15/99 67.5% 98,178 100,830 94,313
222 100.0% 03/25/98 80.0% 0 138,071 90,230
223 90.0% 07/31/98 73.1% 128,239 108,577 94,802
224 45.5% 100.0% 07/16/98 55.9% 85,525 102,292 86,383
226 12.8% 92.0% 12/01/98 69.3% 80,471 92,400 92,550
227 98.0% 11/16/98 70.0% 106,640 102,623 68,800
228 100.0% 04/12/99 45.5% 84,870 153,024 85,753
229 30.0% 100.0% 12/31/98 38.5% 145,588 195,407 130,495
231 93.1% 01/01/99 63.6% 69,232 70,307 62,309
232 100.0% 06/18/98 76.5% 39,970 48,906 37,685
233 100.0% 07/27/98 78.0% 45,882 51,754 38,406
234 66.7% 100.0% 04/21/98 46.2% 0 55,228 49,872
<PAGE>
<CAPTION>
ANNUAL ANNUAL
UNDERWRITTEN UNDERWRITTEN
CONTROL UNDERWRITTEN REPLACEMEN REPLACEMENT U/W U/W NET ORIGINAL LOAN CUT-OFF DATE
NUMBER NET CASH FLOW RESERVES RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $10,765,635 2,685,185 $1,158.48 1.66 1.66 $29,961.17 $29,892.00
1.10 1,838,964 327,301 1,258.85 1.66 1.66 53,219.26 53,096.39
1.20 493,504 156,711 1,205.47 1.66 1.66 27,628.72 27,564.93
1.30 1,310,533 280,399 1,809.03 1.66 1.66 45,965.08 45,858.95
1.40 521,163 95,517 764.14 1.66 1.66 19,077.41 19,033.36
1.50 1,113,187 203,795 1,164.54 1.66 1.66 41,384.85 41,289.30
1.60 1,196,328 224,908 1,292.57 1.66 1.66 43,991.46 43,889.90
1.70 632,685 198,534 1,272.65 1.66 1.66 22,646.49 22,594.21
1.80 918,118 198,743 1,190.08 1.66 1.66 38,960.10 38,870.16
1.90 516,342 103,352 898.71 1.66 1.66 25,600.38 25,541.28
1.91 126,629 168,728 1,010.35 1.66 1.66 6,699.02 6,683.56
1.92 165,843 178,140 1,120.38 1.66 1.66 9,258.00 9,236.63
1.93 94,020 54,747 506.92 1.66 1.66 7,360.11 7,343.12
1.94 880,429 113,904 941.36 1.66 1.66 39,416.13 39,325.13
1.95 755,886 258,894 1,430.35 1.66 1.66 24,723.46 24,666.38
1.96 202,003 121,512 972.10 1.66 1.66 16,015.60 15,978.62
2 4,129,843 26,544 0.10 1.29 1.26 146.70 146.40
3 3,009,796 38,007 0.19 1.38 1.29 137.12 136.86
4 1,970,030 26,227 0.10 1.33 1.26 66.92 66.87
5 1,417,803 31,750 0.10 1.41 1.31 38.90 38.87
6 1,400,712 11,523 0.15 1.44 1.32 152.30 152.00
6.10 568,725 4,676 0.15 1.44 1.32 152.31 152.01
6.20 831,987 6,847 0.15 1.44 1.32 152.30 152.00
7 1,356,970 48,070 0.20 1.53 1.39 51.03 50.83
7.10 1,039,848 41,817 0.20 1.48 1.34 44.37 44.20
7.20 317,122 6,253 0.20 1.72 1.58 76.77 76.47
8 1,546,406 60,954 0.15 1.50 1.35 28.30 28.25
9 1,178,138 85,716 342.86 1.25 1.25 45,508.00 45,412.74
10 1,179,983 4,713 0.10 1.41 1.33 234.61 232.46
11 1,077,785 42,400 200.00 1.38 1.33 50,471.70 50,097.54
12 1,268,796 37,327 0.25 1.52 1.31 70.20 69.97
13 1,148,472 16,463 0.16 1.32 1.27 103.73 102.90
14 1,017,197 43,600 200.00 1.25 1.25 45,871.56 45,300.07
15 1,312,699 27,606 0.41 1.50 1.50 141.04 140.05
16 1,026,526 12,807 0.10 1.72 1.51 71.84 71.25
17 1,058,090 143,375 328.09 1.41 1.41 20,251.72 19,989.76
18 1,094,767 110,789 279.03 1.61 1.46 22,541.61 22,493.62
18.10 76,571 16,479 411.98 1.61 1.32 16,500.00 16,464.87
18.20 192,713 27,141 311.97 1.52 1.33 18,965.52 18,925.14
18.30 230,872 15,750 250.00 1.70 1.60 26,190.48 26,134.72
18.40 176,066 18,169 275.29 1.56 1.42 21,477.27 21,431.55
18.50 175,374 17,500 250.00 1.54 1.40 20,464.29 20,420.72
18.60 243,171 15,750 250.00 1.70 1.60 27,559.52 27,500.85
19 921,373 12,200 0.15 1.36 1.25 104.51 104.31
20 968,160 33,517 0.25 1.57 1.29 63.12 63.08
21 936,632 16,620 0.18 1.51 1.38 89.27 88.47
22 879,237 99,050 261.71 1.59 1.43 18,611.63 18,488.30
22.10 118,753 18,600 295.24 1.67 1.45 14,555.56 14,459.10
22.20 119,520 14,575 275.00 1.58 1.41 17,867.92 17,749.52
22.30 128,643 16,000 246.15 1.63 1.45 15,276.92 15,175.69
22.40 238,149 23,750 244.85 1.55 1.41 19,453.61 19,324.70
22.50 274,172 26,125 263.89 1.58 1.45 21,393.94 21,252.17
23 772,040 53,757 1.07 1.23 1.23 133.87 132.78
24 729,078 25,268 0.10 1.36 1.24 26.42 26.37
25 777,740 18,000 75.00 1.23 1.23 28,541.67 27,524.70
26 636,364 0 0.00 1.01 1.01 53.33 53.08
27 845,358 43,711 0.22 1.49 1.34 32.51 31.85
28 776,495 114,125 275.00 1.61 1.40 15,022.42 14,922.87
28.10 289,790 40,700 275.00 1.68 1.48 14,817.57 14,719.38
28.20 235,402 29,150 275.00 1.66 1.48 16,811.32 16,699.92
28.30 251,303 44,275 275.00 1.49 1.27 13,788.82 13,697.45
29 652,347 4,632 0.10 1.34 1.25 127.90 127.15
30 650,464 9,376 0.10 1.59 1.25 62.39 61.97
31 792,085 118,445 834.12 1.52 1.52 41,302.82 40,818.54
32 788,942 21,540 0.25 1.64 1.37 67.67 67.58
33 649,995 100.30 1.47 1.35 10,406.14 10,390.49
33.10 113,598 17,774 148.12 1.47 1.35 9,358.77 9,344.69
33.20 330,507 25,294 87.83 1.47 1.35 9,618.73 9,604.27
33.30 205,890 12,500 85.62 1.47 1.35 12,820.23 12,800.95
34 878,772 132,613 1,020.10 1.61 1.61 44,615.38 44,264.05
35 585,849 37,101 314.42 1.28 1.28 48,983.05 48,591.68
36 688,177 13,314 0.19 1.57 1.39 81.34 81.25
37 633,131 62,205 435.00 1.29 1.29 39,720.28 39,541.42
38 753,024 112,848 842.15 1.38 1.38 41,044.78 40,231.90
39 622,163 7,824 0.20 1.34 1.28 135.14 134.39
40 832,055 30,000 250.00 1.77 1.77 45,000.00 44,585.72
41 538,836 4,588 0.15 1.32 1.25 171.64 170.11
42 571,930 13,912 0.39 1.33 1.30 145.77 144.01
43 588,660 19,911 0.20 1.51 1.33 52.23 51.56
44 584,404 29,369 0.23 1.42 1.35 39.16 38.99
45 552,827 41,182 278.26 1.35 1.35 33,986.49 33,622.88
46 545,916 11,287 0.20 1.34 1.27 88.60 87.37
47 565,811 36,250 250.00 1.49 1.40 33,620.69 33,543.08
48 579,222 5,181 0.10 1.49 1.40 94.39 93.69
49 577,659 32.99 1.49 1.49 8,676.73 8,608.46
49.10 577,659 18,573 86.39 1.49 1.49 11,360.47 11,271.08
49.20 0 0 0.00 1.49 1.49 2,998.58 2,974.99
49.30 0 0 0.00 1.49 1.49 11,634.34 11,542.80
50 576,153 22,499 0.25 1.59 1.27 53.62 53.40
51 436,354 47,689 322.22 1.14 1.14 32,567.57 32,311.94
52 553,556 4,890 0.15 1.45 1.36 147.24 145.65
53 585,235 69,271 225.64 1.47 1.47 15,309.45 15,161.18
54 426,381 40,831 295.88 1.17 1.17 33,260.87 32,999.80
55 517,574 36,900 225.00 1.64 1.53 27,195.12 26,968.14
56 536,769 10,012 0.20 1.28 1.21 89.73 88.09
57 514,476 61,200 225.00 1.55 1.39 16,176.47 16,140.52
58 516,754 13,747 0.10 1.28 1.25 32.03 31.55
59 488,982 19,898 0.24 1.53 1.33 51.40 50.69
60 619,687 89,142 928.56 1.52 1.52 44,791.67 44,111.36
61 692,610 7,406 0.22 1.59 1.50 130.34 126.48
62 459,301 1,132 0.10 1.32 1.27 370.96 370.25
63 607,692 63,261 0.25 1.99 1.54 16.60 16.53
64 493,597 6,940 0.15 1.44 1.33 90.78 89.96
65 830,819 31,750 250.00 2.42 2.42 32,677.17 32,486.51
66 513,680 3,359 0.15 1.47 1.41 185.31 183.22
67 473,402 30,000 250.00 1.42 1.33 34,166.67 34,085.22
68 427,474 15,220 0.10 1.31 1.27 26.28 26.23
69 443,584 19,462 0.10 1.36 1.27 20.63 20.47
70 1,594,392 34,425 675.00 3.76 3.76 78,431.37 77,475.47
71 495,092 21,360 0.10 1.47 1.28 18.59 18.49
72 456,254 8,343 14.26 1.34 1.34 6,581.20 6,507.88
73 540,492 36,000 300.00 1.57 1.57 32,083.33 31,704.39
74 671,339 48,567 319.52 2.00 2.00 25,000.00 24,699.05
75 411,800 3,809 0.32 1.31 1.24 315.00 310.42
76 565,932 28,000 250.00 1.75 1.75 33,214.29 32,947.02
77 451,619 61,500 250.00 1.60 1.40 15,036.59 14,964.93
77.10 182,538 30,000 250.00 1.66 1.43 12,291.67 12,232.62
77.20 145,376 16,500 250.00 1.53 1.37 18,545.45 18,456.36
77.30 123,705 15,000 250.00 1.58 1.40 16,666.67 16,588.98
78 427,785 18,000 300.00 1.34 1.34 61,666.67 61,264.27
79 541,903 20,124 258.00 1.57 1.51 46,153.85 45,730.40
80 514,073 30,000 300.00 1.54 1.54 36,000.00 35,481.40
81 439,690 44,250 250.00 1.43 1.43 20,254.24 19,948.18
82 373,565 27,786 0.69 1.35 1.22 86.98 85.91
83 572,176 17,381 0.17 1.97 1.77 34.11 33.92
84 738,358 171,383 354.83 2.47 2.47 7,298.14 7,203.74
85 438,473 15,500 0.25 1.67 1.43 55.77 55.39
86 413,470 14,792 0.30 1.60 1.47 70.98 70.44
87 459,265 4,478 0.15 1.78 1.60 117.23 116.08
88 402,194 71,160 250.56 1.47 1.25 12,024.65 12,012.51
88.10 231,710 42,160 250.95 1.44 1.22 11,994.05 11,981.94
88.20 170,484 29,000 250.00 1.51 1.29 12,068.97 12,056.78
89 365,883 3,654 0.12 1.31 1.30 110.34 110.10
90 418,263 19,750 250.00 1.52 1.46 42,405.06 42,101.49
100 420,046 7,833 0.15 1.52 1.47 63.50 63.37
101 550,691 0.25 1.70 1.61 170.42 170.42
101.10 67,977 443 0.15 1.70 1.61 157.64 157.64
101.20 65,021 1,172 0.52 1.70 1.61 167.50 167.50
101.30 58,457 970 0.43 1.70 1.61 168.52 168.52
101.40 162,293 958 0.15 1.70 1.61 153.76 153.76
101.50 111,605 806 0.37 1.70 1.61 278.18 278.18
101.60 85,338 500 0.16 1.70 1.61 146.00 146.00
102 432,980 16,000 200.00 1.63 1.63 41,250.00 40,658.39
103 425,461 7,379 0.14 1.75 1.64 62.54 62.03
104 357,571 5,360 0.20 1.42 1.32 119.39 118.38
105 372,403 10,300 50.00 1.25 1.25 15,291.26 15,268.71
106 450,495 394.37 1.56 1.38 20,533.33 20,372.74
106.10 304,630 35,200 424.10 1.56 1.38 17,641.71 17,503.74
106.20 145,865 23,955 357.54 1.56 1.38 24,115.49 23,926.88
107 350,355 2,086 0.15 1.34 1.33 219.35 219.19
108 362,031 12,570 0.20 1.48 1.27 48.69 48.35
109 368,746 40,200 300.00 1.50 1.35 22,649.25 22,573.53
110 415,296 33,104 0.40 1.39 1.39 37.75 36.75
111 376,182 44,550 675.00 1.70 1.52 45,454.55 45,386.38
112 380,387 32,136 309.00 1.38 1.27 28,846.15 28,646.58
113 421,889 6,000 0.24 1.69 1.61 120.00 118.53
114 314,193 12,788 278.00 1.35 1.30 61,978.26 61,856.46
115 307,214 3,594 0.12 1.31 1.29 94.32 94.11
116 318,361 14,750 50.00 1.32 1.27 9,491.53 9,480.96
117 360,647 6,339 0.15 1.56 1.35 66.26 66.06
118 339,900 48,526 0.24 1.60 1.38 13.85 13.75
119 295,873 18,000 250.00 1.23 1.23 38,888.89 38,491.75
120 310,645 3,244 0.14 1.37 1.32 119.33 119.11
121 283,874 3,800 50.00 1.17 1.17 35,328.95 35,291.89
122 356,104 11,645 0.15 1.51 1.41 34.78 34.54
123 528,248 18,817 0.20 1.62 1.40 30.82 28.48
124 553,440 68,744 624.95 2.20 2.20 24,090.91 23,948.48
125 285,696 24,250 250.00 1.32 1.32 26,546.39 26,492.48
126 347,518 6,850 0.15 1.51 1.30 56.32 55.06
127 303,729 11,880 0.11 1.53 1.30 23.67 23.55
128 455,073 52,460 397.42 1.72 1.72 18,825.76 18,743.02
128.10 0 0.00 1.72 1.72 22,963.41 22,862.49
128.20 0 0.00 1.72 1.72 12,040.00 11,987.08
129 384,828 3,422 0.09 1.27 1.22 64.23 62.83
129.10 211,036 0 0.00 1.27 1.22 51.49 50.37
129.20 173,792 0 0.00 1.27 1.22 93.45 91.41
130 268,712 6,397 0.20 1.40 1.24 77.38 76.43
131 303,446 31,750 250.00 1.58 1.43 19,045.28 19,004.73
132 314,945 48,000 300.00 1.50 1.31 15,087.50 15,061.69
133 260,219 3,563 0.15 1.38 1.32 97.46 96.54
134 230,113 28,847 335.43 1.29 1.29 26,162.79 25,935.89
135 272,413 12,915 0.23 1.55 1.29 39.09 38.93
136 345,404 7,563 0.20 1.80 1.59 57.89 57.75
137 335,602 38,400 200.00 1.58 1.58 11,458.33 11,251.77
138 308,455 8,160 0.30 1.48 1.40 70.04 79.46
139 332,692 54,458 439.18 1.60 1.60 17,419.35 17,372.32
140 248,275 11,644 284.00 1.33 1.33 52,682.93 52,443.49
141 287,437 5,215 0.10 1.39 1.37 40.27 40.06
142 280,731 6,621 0.23 1.83 1.54 76.42 72.42
143 239,021 9,430 0.23 1.51 1.28 51.22 50.82
144 254,003 15,300 0.20 1.47 1.37 27.45 27.09
145 243,844 14,440 0.18 1.55 1.30 25.01 24.98
146 240,013 6,000 50.00 1.46 1.46 16,666.67 16,644.24
147 331,656 0.23 1.68 1.60 176.13 176.13
147.10 107,833 655 0.25 1.68 1.60 258.61 258.61
147.20 61,473 990 0.42 1.68 1.60 173.68 173.68
147.30 162,350 945 0.15 1.68 1.60 142.09 142.09
148 295,242 6,833 52.16 1.62 1.62 15,267.18 15,207.12
149 209,293 18,621 295.57 1.41 1.30 31,746.03 31,462.30
150 224,369 8,979 0.25 1.50 1.27 54.99 54.96
151 202,911 15,000 250.00 1.16 1.16 32,916.67 32,212.69
152 280,693 10,538 0.15 1.63 1.57 27.05 26.97
153 215,775 3,188 0.21 1.43 1.31 125.14 123.69
154 199,552 2,240 0.15 1.35 1.30 120.55 120.25
155 212,962 6,480 0.20 1.53 1.29 55.56 55.26
156 216,770 4,162 0.15 1.43 1.30 63.54 63.47
157 207,382 14,300 275.00 1.48 1.38 32,692.31 32,626.33
158 185,758 15,000 250.00 1.33 1.33 28,333.33 28,031.66
159 172,540 1,050 0.15 1.31 1.26 239.29 237.86
160 211,063 2,475 0.15 1.37 1.30 101.09 100.55
161 208,347 22,000 275.00 1.56 1.41 20,612.50 20,475.91
162 218,554 4,290 0.20 1.47 1.37 76.92 75.47
163 192,867 1,975 0.15 1.54 1.42 121.58 120.27
164 192,903 16,500 250.00 1.47 1.47 23,636.36 23,588.36
165 184,453 9,413 0.26 1.73 1.30 42.89 42.80
166 180,244 1,688 0.15 1.43 1.34 137.78 136.50
167 189,890 19,250 250.00 1.59 1.44 19,480.52 19,439.05
168 176,746 3,256 0.23 1.35 1.27 105.96 105.56
169 181,935 6,916 54.46 1.39 1.34 11,811.02 11,745.44
170 160,643 4,560 0.17 1.44 1.22 55.13 54.58
171 164,495 7,487 0.15 1.49 1.27 30.05 29.70
172 170,407 1,519 0.15 1.20 1.20 148.15 146.24
173 176,118 4,830 11.96 1.36 1.36 3,675.74 3,659.90
174 188,391 3,400 25.00 1.36 1.36 10,882.35 10,851.16
175 280,991 1,456 0.20 2.06 1.92 206.04 202.21
176 183,757 22,670 314.86 1.68 1.49 20,277.78 20,217.50
177 175,625 3,230 0.10 1.47 1.34 44.90 44.72
178 172,812 9,000 0.10 1.45 1.33 16.11 15.98
179 193,466 11,250 250.00 1.38 1.30 31,844.44 31,690.04
180 176,637 2,534 0.15 1.35 1.29 82.88 82.49
181 171,551 1,575 0.15 1.48 1.44 134.10 132.65
182 193,441 12,000 250.00 1.48 1.48 29,166.67 28,965.25
183 172,974 11,472 0.47 1.46 1.30 57.36 56.82
184 179,837 2,698 0.15 1.46 1.36 78.30 76.83
185 249,019 11,142 0.21 2.21 1.91 25.44 25.42
186 150,879 9,000 0.27 1.32 1.24 40.59 40.07
187 154,697 28,000 250.00 1.58 1.33 11,607.14 11,580.85
188 132,071 1,300 25.00 1.21 1.21 25,000.00 24,905.91
189 194,573 3,666 0.25 1.80 1.68 88.35 87.30
190 176,669 2,257 0.10 1.64 1.54 55.33 55.01
191 179,065 12,480 0.31 1.89 1.61 31.67 31.48
192 128,865 1,575 0.15 1.39 1.27 114.29 113.05
193 148,014 6,100 50.00 1.42 1.37 9,680.33 9,659.47
194 145,454 5,318 0.26 1.44 1.23 58.52 58.01
195 153,452 23,925 275.00 1.71 1.48 13,356.32 13,267.82
196 165,748 11,500 250.00 1.58 1.58 25,217.39 25,002.50
197 132,865 11,550 275.00 1.47 1.36 27,333.33 27,256.21
198 138,323 3,194 0.15 1.27 1.27 54.01 53.07
199 140,388 9,084 0.24 1.61 1.25 30.12 30.06
200 124,125 1,665 0.15 1.48 1.33 99.10 98.03
201 123,555 1,647 0.15 1.38 1.28 99.11 98.93
203 126,067 11,500 250.00 1.42 1.42 22,956.52 22,909.90
204 123,037 3,550 50.00 1.25 1.25 14,788.73 14,766.21
205 117,056 6,600 275.00 1.27 1.27 44,166.67 43,655.57
206 130,149 16,225 265.98 1.59 1.41 16,901.64 16,789.64
207 116,775 7,500 250.00 1.45 1.37 33,333.33 33,268.60
209 133,388 5,350 61.49 1.45 1.45 11,494.25 11,376.55
210 230,315 32,400 531.15 2.26 2.26 16,393.44 16,153.55
211 110,443 1,000 0.10 1.35 1.28 95.20 94.58
212 110,113 980 0.10 1.35 1.28 94.80 94.19
213 148,901 22,083 525.79 1.55 1.55 20,833.33 20,652.68
214 105,949 13,200 300.00 1.54 1.37 19,681.82 19,551.39
215 110,306 750 0.15 1.28 1.25 172.40 171.58
216 94,087 4,881 0.15 1.62 1.35 23.05 23.01
218 91,559 6,183 0.19 1.70 1.35 22.57 22.42
221 84,765 2,665 0.12 1.46 1.31 30.40 30.34
222 90,230 5,100 300.00 1.35 1.35 37,411.76 36,987.23
223 94,802 12,500 250.00 1.33 1.33 13,000.00 12,432.03
224 83,568 1,312 0.15 1.38 1.33 70.32 69.29
226 80,094 5,066 0.15 1.70 1.48 17.77 17.60
227 68,800 4,950 50.00 1.37 1.37 5,303.03 5,284.20
228 85,753 8,000 250.00 1.72 1.72 15,625.00 15,387.07
229 117,461 3,572 0.20 2.21 1.99 28.00 27.44
231 60,859 1,450 50.00 1.82 1.77 12,068.97 12,055.84
232 37,685 3,000 250.00 1.29 1.29 26,000.00 25,769.80
233 38,406 3,500 250.00 1.44 1.44 21,714.29 21,496.01
234 44,136 1,447 0.15 1.70 1.50 31.10 30.61
<PAGE>
<CAPTION>
MONTHLY
ECONOMIC
MONTHLY & OTHER
CONTROL REPLACEMENT MONTHLY MONTHLY MONTHLY MONTHLY P&I RESERVE
NUMBER PAID TO DATE RESERVES TAX ESCROW INSURANCE ESCROW TI/LC PAYMENT RESERVE PAYMENT PAYMENT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 07/01/99 186,030 149,610 31,900 - - 118,750
1.10 07/01/99
1.20 07/01/99
1.30 07/01/99
1.40 07/01/99
1.50 07/01/99
1.60 07/01/99
1.70 07/01/99
1.80 07/01/99
1.90 07/01/99
1.91 07/01/99
1.92 07/01/99
1.93 07/01/99
1.94 07/01/99
1.95 07/01/99
1.96 07/01/99
2 07/01/99 2,215 29,132 11,399 7,754 - -
3 07/01/99 - - - - - -
4 07/01/99 - 734 1,357 - - -
5 07/01/99 2,395 - - 2,083 - -
6 07/01/99 961 15,446 2,307 - - -
6.10 07/01/99 390 6,268 936 - - -
6.20 07/01/99 571 9,178 1,371 - - -
7 07/01/99 - 11,174 1,990 - - -
7.10 07/01/99 - 9,721 1,728 - - -
7.20 07/01/99 - 1,453 262 - - -
8 07/01/99 - 25,691 2,853 - - 461
9 07/01/99 7,146 12,132 1,351 - - -
10 07/01/99 - - - - - -
11 07/01/99 - 12,442 1,428 - - -
12 07/01/99 - 27,652 987 - - 4,000
13 07/01/99 - 28,187 - - - -
14 07/01/99 3,533 2,425 2,359 - - -
15 07/01/99 1,972 15,093 2,962 - - -
16 07/01/99 1,611 18,687 2,275 - - -
17 07/01/99 9,105 9,032 - - - -
18 07/01/99 - 11,970 - - - -
18.10 07/01/99 - 1,021 - - - -
18.20 07/01/99 - 2,716 - - - -
18.30 07/01/99 - 2,352 - - - -
18.40 07/01/99 - 2,389 - - - -
18.50 07/01/99 - 1,171 - - - -
18.60 07/01/99 - 2,321 - - - -
19 07/01/99 1,017 14,993 681 6,778 - -
20 07/01/99 - 26,190 1,591 128,048 - -
21 07/01/99 1,385 6,290 782 - - -
22 07/01/99 - 13,256 - - - -
22.10 07/01/99 - 2,463 - - - -
22.20 07/01/99 - 1,545 - - - -
22.30 07/01/99 - 1,551 - - - -
22.40 07/01/99 - 2,850 - - - -
22.50 07/01/99 - 4,847 - - - -
23 07/01/99 - 7,186 427 3,572 - -
24 07/01/99 521 6,559 2,028 - - -
25 07/01/99 - 2,400 - - - -
26 07/01/99 - - - - - -
27 07/01/99 - 18,439 1,332 - - -
28 07/01/99 - 10,088 - - - -
28.10 07/01/99 - 2,808 - - - -
28.20 07/01/99 - 3,350 - - - -
28.30 07/01/99 - 3,930 - - - -
29 07/01/99 386 6,712 588 3,846 - -
30 07/01/99 781 18,829 1,852 14,221 - -
31 07/01/99 9,870 6,258 2,917 - - -
32 07/01/99 - 8,270 831 - - -
33 07/01/99 2,146 5,583 1,026 - - -
33.10 07/01/99
33.20 07/01/99
33.30 07/01/99
34 07/01/99 9,357 7,418 1,700 - - -
35 07/01/99 2,757 9,057 1,542 - - -
36 07/01/99 1,085 11,619 555 6,000 - -
37 07/01/99 5,184 12,068 1,641 - - 10,594
38 07/01/99 10,350 4,845 1,711 - - -
39 07/01/99 652 2,356 1,059 2,810 - -
40 07/01/99 2,100 2,908 2,749 - - -
41 07/01/99 510 3,977 2,680 1,081 - -
42 07/01/99 1,174 - - - - -
43 07/01/99 9,043 5,406 553 - - -
44 07/01/99 2,403 - - - - -
45 07/01/99 - 9,974 4,723 - - -
46 07/01/99 - 6,550 - 2,083 - -
47 07/01/99 - 7,916 1,288 - - -
48 07/01/99 233 3,795 375 - - -
49 07/01/99 1,553 4,727 953 - - -
49.10 07/01/99
49.20 07/01/99
49.30 07/01/99
50 07/01/99 - 9,575 620 - - -
51 07/01/99 3,157 4,014 - - - -
52 07/01/99 - - - 1,358 - -
53 07/01/99 - 8,293 2,565 - - -
54 07/01/99 2,875 3,901 - - - -
55 07/01/99 - 11,168 946 - - -
56 07/01/99 861 7,895 895 - - -
57 07/01/99 - 11,749 2,412 - - -
58 07/01/99 - - - - - -
59 07/01/99 - 4,611 479 - - -
60 07/01/99 - 6,366 1,354 - - -
61 07/01/99 - - - - - -
62 07/01/99 - 7,652 625 1,635 - -
63 07/01/99 - 16,395 725 3,333 - -
64 07/01/99 578 7,599 771 - - -
65 07/01/99 - 4,870 919 - - -
66 07/01/99 280 - 568 1,870 - -
67 07/01/99 - 12,145 1,095 - - -
68 07/01/99 - - - 578 - -
69 07/01/99 1,622 4,833 433 2,625 - -
70 07/01/99 2,857 5,898 586 - 25,000 -
71 07/01/99 1,780 4,919 753 6,250 - -
72 07/01/99 695 1,962 689 - - -
73 07/01/99 2,500 7,715 2,982 - - -
74 07/01/99 - 4,425 - - - -
75 07/01/99 260 8,921 1,250 - - -
76 07/01/99 2,333 9,648 - - - -
77 07/01/99 5,125 3,027 1,902 - - -
77.10 07/01/99 2,500 1,220 881 - - -
77.20 07/01/99 1,375 843 557 - - -
77.30 07/01/99 1,250 964 464 - - -
78 07/01/99 1,250 2,800 971 - - -
79 07/01/99 1,656 6,661 1,336 - - -
80 07/01/99 2,083 1,659 1,659 - - -
81 07/01/99 3,688 22,506 778 - - -
82 07/01/99 2,431 2,167 420 - - -
83 07/01/99 1,500 5,368 617 5,200 - -
84 07/01/99 12,075 14,323 - - - -
85 07/01/99 1,084 4,856 353 4,167 - -
86 07/01/99 - 6,468 352 - - -
87 07/01/99 373 4,725 469 - - -
88 07/01/99 - 3,731 1,406 - - -
88.10 07/01/99 - 2,733 822 - - -
88.20 07/01/99 - 998 584 - - -
89 07/01/99 - - 1,468 - - -
90 07/01/99 322 2,471 2,527 - - -
100 07/01/99 - 2,981 - - - -
101 07/01/99 - 3,725 - - - -
101.10 07/01/99
101.20 07/01/99
101.30 07/01/99
101.40 07/01/99
101.50 07/01/99
101.60 07/01/99
102 07/01/99 - 3,834 621 - - -
103 07/01/99 - 4,936 1,855 1,245 - -
104 07/01/99 583 3,560 491 2,165 - -
105 07/01/99 - 3,101 540 - - -
106 07/01/99 - 3,449 2,836 - - -
106.10 07/01/99
106.20 07/01/99
107 07/01/99 - - 444 - - -
108 07/01/99 1,048 5,063 1,136 4,925 - 1,743
109 07/01/99 - 1,933 1,824 - - -
110 07/01/99 - 2,944 730 - - -
111 07/01/99 1,375 6,254 804 - - -
112 07/01/99 - 5,127 1,924 - - -
113 07/01/99 389 12,728 835 1,417 2,500 -
114 07/01/99 - 2,938 332 - - -
115 07/01/99 - - 1,503 - - -
116 07/01/99 631 728 458 - - -
117 07/01/99 - 2,789 - - - -
118 07/01/99 4,820 - - - - -
119 07/01/99 1,200 3,192 476 - - -
120 07/01/99 270 5,093 314 967 - -
121 07/01/99 317 3,963 449 - - -
122 07/01/99 971 4,156 1,227 2,165 - -
123 07/01/99 1,568 5,241 1,028 - - -
124 07/01/99 4,583 2,115 789 - - -
125 07/01/99 2,021 4,168 809 - - -
126 07/01/99 385 3,690 1,600 4,250 - -
127 07/01/99 - 5,019 2,789 - - -
128 07/01/99 3,289 7,466 3,852 - - -
128.10 07/01/99
128.20 07/01/99
129 07/01/99 400 2,792 250 - - -
129.10 07/01/99
129.20 07/01/99
130 07/01/99 533 2,773 464 2,093 - -
131 07/01/99 - 4,400 - - - -
132 07/01/99 3,334 2,278 1,223 - - -
133 07/01/99 295 3,580 846 - - -
134 07/01/99 2,400 2,887 440 - - -
135 07/01/99 - 3,879 - 3,400 - -
136 07/01/99 630 2,623 552 - - -
137 07/01/99 3,200 3,395 1,768 - - -
138 07/01/99 340 11,748 930 - - -
139 07/01/99 4,538 5,053 1,468 - - -
140 07/01/99 - 3,625 409 - - -
141 07/01/99 - 1,659 1,191 - - -
142 07/01/99 - 3,667 665 - - -
143 07/01/99 786 2,836 747 1,042 - -
144 07/01/99 1,658 3,708 367 - - -
145 07/01/99 - 3,072 769 - - -
146 07/01/99 - 1,187 264 - - -
147 07/01/99 - 4,995 - - - -
147.10 07/01/99
147.20 07/01/99
147.30 07/01/99
148 07/01/99 569 1,887 462 - - -
149 07/01/99 1,537 3,717 351 - - -
150 07/01/99 - 1,590 1,212 - - -
151 07/01/99 - 669 635 - - -
152 07/01/99 182 4,059 475 - - -
153 07/01/99 - 2,022 323 - - -
154 07/01/99 187 2,788 387 585 - -
155 07/01/99 540 6,284 519 3,209 - -
156 07/01/99 - 1,641 424 - - -
157 07/01/99 - 1,445 455 - - -
158 07/01/99 1,250 3,218 1,494 - - -
159 07/01/99 - - - - - -
160 07/01/99 - 646 709 - - -
161 07/01/99 - 2,561 - - - -
162 07/01/99 304 1,336 253 1,257 - -
163 07/01/99 548 - - - - -
164 07/01/99 1,375 2,646 552 - - -
165 07/01/99 - 6,177 596 - - -
166 07/01/99 141 2,468 344 960 - -
167 07/01/99 - 1,189 - - - -
168 07/01/99 271 4,160 286 871 - -
169 07/01/99 576 1,062 142 - - -
170 07/01/99 380 1,386 236 2,335 - -
171 07/01/99 417 3,852 1,022 - - -
172 07/01/99 - - - - - -
173 07/01/99 118 3,047 324 - - -
174 07/01/99 - 2,734 378 - - -
175 07/01/99 118 5,257 2,500 - - -
176 07/01/99 - 2,602 953 - - -
177 07/01/99 287 1,835 911 1,526 - -
178 07/01/99 750 2,216 206 1,289 386 -
179 07/01/99 - 2,949 700 1,350 - -
180 07/01/99 - 2,054 668 - - -
181 07/01/99 131 - - 438 - -
182 07/01/99 1,000 1,380 672 - - -
183 07/01/99 1,008 2,960 841 - - -
184 07/01/99 - 2,564 384 - - -
185 07/01/99 1,115 2,391 405 - - -
186 07/01/99 750 1,476 355 945 - -
187 07/01/99 - 1,498 1,165 - - -
188 07/01/99 - 1,186 64 - - -
189 07/01/99 313 6,720 1,503 - - -
190 07/01/99 62 1,324 188 800 - -
191 07/01/99 1,034 3,038 158 - - -
192 07/01/99 - - - 415 - -
193 07/01/99 - 1,831 100 - - -
194 07/01/99 - 5,120 557 - - -
195 07/01/99 - 2,646 - - - -
196 07/01/99 - 1,161 485 - - -
197 07/01/99 - 3,547 335 - - -
198 07/01/99 - 1,437 253 - - -
199 07/01/99 - 1,884 143 2,500 - -
200 07/01/99 139 - - 463 - -
201 07/01/99 138 260 170 732 - -
203 07/01/99 958 1,957 379 - - -
204 07/01/99 - 1,505 415 - - -
205 07/01/99 550 541 237 - - -
206 07/01/99 - 2,039 - - - -
207 07/01/99 650 1,646 198 - - -
209 07/01/99 - 545 189 - - -
210 07/01/99 - 1,437 542 - - -
211 07/01/99 67 - - - - -
212 07/01/99 61 - - - - -
213 07/01/99 - 1,019 268 - - -
214 07/01/99 - 1,108 - - - -
215 07/01/99 - 2,534 232 - - -
216 07/01/99 - 1,696 188 - - -
218 07/01/99 515 479 433 - - -
221 07/01/99 - 1,010 83 - - -
222 07/01/99 - 1,071 388 - - -
223 07/01/99 - 1,464 2,183 - - -
224 07/01/99 - 947 286 - - -
226 07/01/99 422 1,808 128 - - -
227 07/01/99 - 466 3,700 - - -
228 07/01/99 - 2,749 580 - - -
229 07/01/99 - 2,180 250 - - -
231 07/01/99 - 1,483 148 - - -
232 07/01/99 - 743 348 - - -
233 07/01/99 - 824 587 - - -
234 07/01/99 - 1,056 102 410 - -
<PAGE>
<CAPTION>
CURRENT REPAIR &
CONTROL REMEDIATION CURRENT REPLACEMENT CURRENT TAX CURRENT INSURANCE CURRENT TI/LC
NUMBER RESERVE BALANCE RESERVE BALANCE RESERVE BALANCE RESERVE BALANCE RESERVE BALANCE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 1,011,764 79,263 1,109,780 186,785 -
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
1.91
1.92
1.93
1.94
1.95
1.96
2 - 6,660 45,022 56,995 23,314
3 - - - - -
4 - - 7,341 6,784 -
5 20,570 9,582 - - 12,500
6 1,250 961 108,121 16,145 -
6.10 507 779 50,144 7,487 -
6.20 743 1,141 73,423 10,965 -
7 - - 122,913 27,856 -
7.10 - - 106,935 24,190 -
7.20 - - 15,978 3,666 -
8 - - 25,691 8,560 2,900,000
9 - 55,982 36,396 6,755 -
10 - - - - -
11 - - 29,233 10,588 -
12 - - 55,304 1,974 -
13 - - 82,296 - 5
14 - 4,467 47,508 26,895 -
15 - 13,902 117,074 53,321 -
16 - 16,258 50,113 15,034 -
17 - 39,576 25,031 - -
18 155,450 - 83,795 - -
18.10 - - 8,170 - -
18.20 41,125 - 21,277 - -
18.30 24,750 - 18,818 - -
18.40 68,325 - 19,115 - -
18.50 500 - 9,366 - -
18.60 21,250 - 18,570 - -
19 - 3,053 44,979 8,172 20,355
20 - - 61,809 3,754 -
21 - 15,235 25,190 2,913 -
22 29,313 - 40,787 - -
22.10 16,375 - 8,008 - -
22.20 - - 4,707 - -
22.30 - - 4,907 - -
22.40 - - 8,319 - -
22.50 12,938 - 14,846 - -
23 2,875 - 79,047 3,414 21,430
24 - 1,042 35,535 10,977 -
25 - - 9,176 - -
26 - - - - -
27 - - 78,454 17,296 154,579
28 213,013 - 80,698 - -
28.10 61,700 - 22,460 - -
28.20 438 - 26,802 - -
28.30 150,875 - 31,436 - -
29 90,706 1,549 73,836 8,819 15,430
30 2,915 4,723 175,530 16,672 61,345
31 - 80,486 12,757 26,579 -
32 - - 49,620 4,989 -
33 - 4,306 37,030 3,077 -
33.10
33.20
33.30
34 - 8,879 (23,442) 22,103 -
35 49,466 30,922 12,475 7,589 -
36 - 2,170 46,475 1,666 12,000
37 - 36,429 96,543 26,255 -
38 138 115,297 14,767 12,551 -
39 19,308 10,515 13,164 6,815 11,276
40 - 2,600 23,195 32,983 -
41 - 5,098 10,541 2,083 10,812
42 36,781 11,874 - - 205,234
43 - 29,860 12,775 - 38,738
44 20,356 9,669 - - -
45 - - 10,262 3,865 -
46 - - 31,686 - 38,092
47 18,288 - 31,563 6,442 -
48 - 1,400 407 40 -
49 6,676 33,255 - 5,849 -
49.10
49.20
49.30
50 - - 76,603 4,961 262,751
51 - 32,536 8,140 - -
52 - - - - 10,981
53 45,648 - 51,218 36,727 -
54 - 18,934 7,887 - -
55 - - 57,818 33 -
56 - 7,749 13,483 9,842 -
57 - - 70,492 19,293 -
58 - - - - -
59 40,842 - 27,663 5,366 -
60 - 20,266 16,353 11,779 -
61 - - - - -
62 - - 38,260 1,875 6,560
63 - - 114,762 5,076 238,521
64 4,215 3,470 22,798 7,724 -
65 - - 9,335 9,193 -
66 - 2,240 - 4,355 15,125
67 - - 24,289 2,190 -
68 - - - - 1,157
69 43,750 8,109 38,667 6,067 13,125
70 26,722 19,999 57,847 6,447 -
71 47,738 5,342 29,514 3,010 87,579
72 - 7,351 3,096 6,690 -
73 - 22,500 19,538 28,558 -
74 - - 13,230 - -
75 - 3,120 64,483 18,750 -
76 - 11,667 28,943 3,538 -
77 95,982 15,462 24,218 4,783 -
77.10 22,188 7,558 9,760 (201) -
77.20 73,794 4,125 6,745 804 -
77.30 - 3,779 7,713 4,180 -
78 - 11,250 10,870 4,544 -
79 - 8,307 18,366 3,682 -
80 - 15,780 5,647 14,927 -
81 - 44,635 221,297 11,674 -
82 12,020 21,879 19,500 3,235 514,945
83 12,632 6,016 22,125 4,317 143,136
84 1,800 25,353 28,846 - -
85 - 5,441 24,661 2,230 20,916
86 31,148 - 43,111 1,925 -
87 - 3,732 14,644 6,095 -
88 97,125 - - 9,950 -
88.10 54,000 - - 4,108 -
88.20 43,125 - - 5,842 -
89 - - - 5,873 -
90 - 3,559 15,079 15,445 -
100 - - 5,961 - -
101 - - 18,976 9,221 660,159
101.10
101.20
101.30
101.40
101.50
101.60
102 - - 18,581 3,805 -
103 12,722 - 39,509 19,153 13,874
104 - 5,833 10,194 2,452 21,647
105 7,879 - 27,909 3,238 -
106 45,242 - 23,992 28,359 -
106.10
106.20
107 - - - 3,997 -
108 - 7,118 29,534 10,222 18,106
109 - - 14,229 12,802 -
110 - - 13,483 11,013 -
111 - 2,755 43,775 3,214 -
112 16,637 - 35,889 17,313 -
113 53,381 3,501 76,377 6,126 12,753
114 21,990 - 2,938 667 -
115 - - - 6,010 -
116 19,375 631 5,663 3,560 -
117 - - 5,578 - 260,000
118 395,600 - - - -
119 - 8,449 24,573 5,239 -
120 752 812 20,372 3,764 2,903
121 72,000 85,634 15,852 4,488 -
122 3,189 1,373 39,875 4,909 15,234
123 - 25,311 49,662 303 -
124 20,921 27,606 21,154 11,041 -
125 - 6,063 25,028 5,661 -
126 - 395 31,773 12,798 44,526
127 160,942 - 20,076 25,098 -
128 88,840 13,175 67,197 27,662 -
128.10
128.20
129 1,255 2,102 13,002 1,161 -
129.10
129.20
130 - 5,864 27,628 6,034 23,023
131 25,626 - 26,398 - -
132 105,586 3,334 9,114 6,115 -
133 1,875 1,770 15,044 11,993 -
134 54,694 21,851 6,398 4,814 -
135 50,639 - 15,514 - 10,278
136 10,573 1,892 13,570 2,859 -
137 - 25,600 785 11,589 -
138 - 7,471 30,457 5,742 -
139 450 13,615 35,371 11,743 -
140 7,762 - 13,641 1,228 -
141 - - 6,637 4,765 -
142 7,700 6,439 32,075 5,115 -
143 49,999 3,929 15,040 5,231 5,210
144 - 18,233 15,490 4,394 -
145 - - 3,072 4,614 125,370
146 - - 11,865 3,701 -
147 - - 40,255 - -
147.10
147.20
147.30
148 - 1,142 5,743 6,376 -
149 - 18,665 3,718 350 -
150 - - 7,950 10,907 50,000
151 - - 1,473 6,015 -
152 - 546 17,131 2,010 -
153 - 4,963 36,004 3,806 -
154 3,762 748 22,304 3,092 1,760
155 3,206 2,160 18,851 5,191 12,836
156 - - 6,562 848 -
157 - - 4,335 2,732 -
158 - 4,109 (264) 1,469 -
159 - - - - -
160 - - 646 5,443 -
161 - - 6,437 - -
162 - 2,757 14,691 435 11,399
163 - - - - 4,431
164 - 4,125 15,878 3,862 -
165 - - 12,353 1,787 -
166 938 985 21,991 3,096 21,718
167 34,313 - 9,512 - -
168 21,574 1,362 29,119 1,719 4,371
169 - 2,889 8,313 1,112 -
170 - 2,460 2,803 1,870 44,365
171 - 4,215 23,112 8,178 -
172 - - - - -
173 4,025 474 22,301 1,621 -
174 - - 19,139 1,891 -
175 757 1,180 31,541 28,674 -
176 - - 18,217 8,579 -
177 - - 14,676 5,466 22,772
178 - - 4,868 699 6,445
179 - - 24,842 2,799 4,050
180 - - 9,920 3,187 -
181 - 925 - - 3,541
182 11,434 11,707 6,788 13,778 -
183 4,025 4,032 18,249 4,767 -
184 - 350,000 19,624 1,939 6,480
185 - 1,115 2,391 405 -
186 - 7,500 14,522 3,513 9,453
187 26,400 - 10,487 6,990 -
188 - - 4,742 256 100,000
189 - 2,813 46,472 12,288 -
190 - 309 4,461 637 4,011
191 3,771 5,187 9,209 474 -
192 2,940 - - - 3,356
193 - - 8,515 500 -
194 - - 25,601 3,427 -
195 25,175 - 21,166 - -
196 122 - 8,542 - -
197 26,666 - 21,284 1,673 -
198 - - 5,567 2,778 -
199 - - 3,767 1,434 2,500
200 - 981 - - 3,744
201 - 276 1,298 1,696 1,465
203 - 2,874 11,744 2,656 -
204 940 - 13,546 2,489 -
205 - 4,400 2,100 2,843 -
206 - - 6,328 - -
207 6,488 1,302 3,293 2,534 -
209 - - 1,750 1,887 -
210 - - 7,255 2,154 -
211 - 473 - - -
212 - 426 - - -
213 - 4,140 6,364 4,559 -
214 - - 8,868 - -
215 - - 17,738 1,853 -
216 40,404 - 11,190 1,243 -
218 19,575 3,102 3,124 2,827 -
221 - - 2,586 213 -
222 - - 1,499 1,344 -
223 - - 11,709 1,928 -
224 - - 6,629 3,332 -
226 - 3,405 18,172 1,534 -
227 - - 3,730 3,700 -
228 4,249 - 9,244 1,739 -
229 - - 15,474 925 -
231 781 - 14,630 1,333 -
232 - - 6,683 3,832 -
233 - - 5,770 5,152 -
234 - - 935 1,019 3,308
<PAGE>
<CAPTION>
CONTROL CURRENT P&I CURRENT ENVIRONMENTAL CURRENT ECONOMIC
NUMBER RESERVE BALANCE RESERVE BALANCE RESERVE (& OTHER) BALANCE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 - 9,924 2,649,500
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
1.91
1.92
1.93
1.94
1.95
1.96
2 - - 396,943
3 - - -
4 - - -
5 - - -
6 - - -
6.10 - - -
6.20 - - -
7 - - -
7.10 - - -
7.20 - - -
8 - - 923
9 - - -
10 - - -
11 - - -
12 - 2,500 1,018,493
13 - - 129
14 - - 15,000
15 - - 1,114,480
16 - - -
17 - - 14,199
18 - - -
18.10 - - -
18.20 - - -
18.30 - - -
18.40 - - -
18.50 - - -
18.60 - - -
19 - - -
20 - 100,000 -
21 - - -
22 - - -
22.10 - - -
22.20 - - -
22.30 - - -
22.40 - - -
22.50 - - -
23 - - -
24 - - -
25 - - -
26 - - -
27 - - -
28 - - -
28.10 - - -
28.20 - - -
28.30 - - -
29 - - 77,270
30 - - 22,266
31 - - -
32 - - 850,000
33 91,982 - -
33.10
33.20
33.30
34 - - -
35 - - -
36 - - -
37 - - 180,132
38 - - -
39 - - 70,463
40 - - -
41 - - 6
42 - - -
43 - - -
44 - - -
45 - - -
46 - - -
47 - - -
48 - - -
49 - - -
49.10
49.20
49.30
50 - - -
51 - - -
52 - - -
53 - - -
54 - - -
55 - 1,027 126,396
56 - - -
57 - - -
58 - - -
59 - 1,168 26,985
60 - - -
61 - - -
62 - - -
63 - 31,125 50,000
64 - 1,875 -
65 - - -
66 - - 18,494
67 - - -
68 - - -
69 - - 1,300
70 176,183 - -
71 300,316 - -
72 - - -
73 - - -
74 - - -
75 - - -
76 - - -
77 - - -
77.10 - - -
77.20 - - -
77.30 - - -
78 - - -
79 - - -
80 - - -
81 - - -
82 - - -
83 - - -
84 - - 16,388
85 - - -
86 - - -
87 - - -
88 - 1,125 -
88.10 - 1,125 -
88.20 - - -
89 - - -
90 - - -
100 - 1,136 -
101 - - -
101.10
101.20
101.30
101.40
101.50
101.60
102 - - -
103 - - -
104 - - 90,157
105 - - -
106 - 1,262 -
106.10
106.20
107 - - -
108 - - 2,490
109 - 1,125 -
110 - - -
111 - 627 -
112 - 1,139 -
113 22,551 - -
114 - - -
115 - - -
116 - - -
117 - - -
118 - - -
119 - - -
120 - - -
121 - - -
122 - - 7,654
123 - - -
124 - - -
125 - - -
126 - - -
127 - 2,092 -
128 - - -
128.10
128.20
129 - - -
129.10
129.20
130 - - -
131 - 350 -
132 - 1,125 -
133 - - -
134 - - -
135 - - -
136 - - -
137 - - -
138 - - -
139 - - -
140 - - -
141 - - -
142 - - -
143 - - -
144 - - -
145 - 1,128 42,542
146 - - -
147 - - 1,844
147.10
147.20
147.30
148 - - -
149 - - -
150 - 1,125 -
151 - 1,067 -
152 - - -
153 - - -
154 - - 138,440
155 - - -
156 - - -
157 - 1,125 -
158 - - -
159 - - -
160 - - -
161 - - -
162 - - -
163 - - -
164 - - -
165 - - -
166 - - -
167 - - -
168 - - 5,000
169 - - -
170 - - -
171 - - -
172 - - -
173 - - -
174 - - -
175 - - 2,000
176 - 20,237 -
177 - - -
178 1,930 - -
179 - 1,336 2,800
180 - - -
181 - - -
182 - - -
183 - - -
184 - - -
185 - - -
186 - - -
187 - - -
188 - - -
189 - - -
190 - - -
191 - - -
192 - - -
193 - - -
194 - - -
195 - - -
196 - - -
197 - 1,137 -
198 - - -
199 - 1,125 -
200 - - -
201 - - -
203 - - -
204 - - -
205 - - -
206 - - -
207 - - -
209 - - -
210 - - -
211 - - -
212 - - -
213 - - -
214 - - -
215 - - 5,000
216 - - -
218 - - -
221 - - -
222 - - -
223 - 1,068 -
224 - - -
226 - - -
227 27,822 - -
228 - - -
229 - - -
231 - - -
232 - - -
233 - - -
234 - - -
</TABLE>
<PAGE>
ANNEX B
INTEREST ONLY LOANS
<TABLE>
<CAPTION>
ORIGINAL INTEREST REMAINING INTEREST
CONTROL # LOAN # PROPERTY NAME ONLY PERIOD ONLY PERIOD
<S> <C> <C> <C> <C>
58 2261 Iron Mountain Building 7 0
147 6347 Captec Franchise III 24 21
101 6348 Captec Franchise IV 24 21
</TABLE>
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX C
AFFILIATED BORROWERS(1)
<TABLE>
<CAPTION>
PERCENT OF
CUT-OFF DATE RELATIONSHIP OF
LOAN NUMBERS BALANCE BORROWER CROSS-COLLATERALIZED AND CROSS-DEFAULTED
- ---------------------------------------- -------------- ------------------- ----------------------------------------
<S> <C> <C> <C>
6218, 6219, 6620, 6621, 6223 0.78% Affiliated Entities Cross-collateralized and Cross-defaulted
6029, 6033, 6034 0.71% Affiliated Entities Cross-collateralized and Cross-defaulted
4164695, 4164709, 4164733,
4164814, 4164831, GL991009 0.98% Affiliated Entities Cross-collateralized and Cross-defaulted
4164873, 4164954, 6031, 6032, 6217, 6222 0.99% Affiliated Entities No
--------------
TOTAL 3.46%
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0221331, 03-0221428 1.53% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
5410,5551 1.52% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0221361, 03-0221362 1.41% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0810081, 03-0810102 1.36% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
215990028, 215990053 1.34% Same Borrower Cross-collateralized and Cross-defaulted
- ---------------------------------------- -------------- ------------------- ----------------------------------------
5201,6098 1.34% Same Borrower Cross-collateralized and Cross-defaulted
- ---------------------------------------- -------------- ------------------- ----------------------------------------
5554,5655 1.15% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0810083, 03-0810084, 03-0810086,
03-0810087, 03-0810089 1.15% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0221365, 03-0221366 1.07% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0221336, 03-0221425 0.77% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
1109,5942 0.73% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
6415,6416 0.71% Same Borrower No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
03-0810090, 03-0810112 0.67% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
4163231, 4165039 0.63% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
6347,6348 0.61% Same Borrower No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
410990035, 410990036, 410990037 0.60% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
400980013, 400980014 0.48% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
5623, 5624, 5625 0.42% Affiliated Entities Cross-defaulted
- ---------------------------------------- -------------- ------------------- ----------------------------------------
5434,5435 0.39% Same Borrower Cross-collateralized and Cross-defaulted
- ---------------------------------------- -------------- ------------------- ----------------------------------------
4162471, 4163281 0.22% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
4161262, 4163176 0.22% Affiliated Entities No
- ---------------------------------------- -------------- ------------------- ----------------------------------------
</TABLE>
- ------------
(1) Affiliated Borrower means that a principal of or person that has control
of a borrower (through ownership of a controlling interest in its general
partner or managing member or otherwise) also has control of another
borrower (in any such manner).
C-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX D
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 BOND PAYMENT SUMMARY PAGE # 1-1
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Original Certificate Beginning Certificate Principal Interest
Class Cusip# Balance Balance Distribution Distribution
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Prepayment Penalties Collateral Support Total Distribution Ending Certificate
(PP/YMC) Deficit Balance
Allocation/(Reimb)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class Cusip# Original Notional Beginning Notional Interest Distribution Prepayment Penalties
Amount Amount (PP/YMC)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
Total Distribution Ending Notional
Balance
- ------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
If there are any questions or comments, please contact the Administrator listed
below.
- --------------------------------------------------------------------------------
Nina Velastegui
The Chase Manhattan Bank
450 West 33rd Street, 15 Floor
New York, NY 10001
212-946-7600
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-1
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 BOND PAYMENT SUMMARY PAGE # 1-2
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
Factor Information Per $1,000
- -----------------------------------------------------------------------------------------------------------------
Class Cusip# Principal Distribution Interest Distribution End Prin Balance Pass Through Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Factor Information Per $1,000 Pass Through Rates
- -----------------------------------------------------------------------------------------------------------------
Class Cusip# Interest Distribution Ending Notional Current Pass Through Next Pass Through
Balance Rate Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-2
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 BOND PAYMENT SUMMARY PAGE # 2-1
RECORD DATE: 30-Jul-1999
Sec. 4.02(a)(iii) P&I Advances
Sec. 4.02(a)(iv) Servicing Compensation
Sec. 4.02(a)(iv) Trustee Compensation
Sec. 4.02(a)(iv) Special Servicing Compensation
Sec. 4.02(a)(v) Aggregate Stated Principal Balance
Sec. 4.02(a)(vi) Aggregate Number of Mortgage
Aggregate Mortgage Principal Balance
Weighted Average Remaining Term to Maturity
Weighted Average Mortgage Rate
Sec. 4.02(a)(vii) Loans Delinquent
- --------------------------------------------------------------------------------
Period Number Aggregated Principal
Balance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sec. 4.02(a)(viii) Appraisal Value of REO Property
Sec. 4.02(a)(x) Accrued Certificate Interest
- --------------------------------------------------------------------------------
Class Accrued Cert Interest Cert Deferred Interest
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-3
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 BOND PAYMENT SUMMARY PAGE # 2-2
RECORD DATE: 30-Jul-1999
Sec. 4.02(a)(xvi) Appraisal Redemption Amounts
- --------------------------------------------------------------------------------
Loan Number Appraisal Reductions Appraisal Reductions
Effected Amounts
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sec. 4.02(a)(xviii) Class Unpaid Interest Shortfall
- --------------------------------------------------------------------------------
Class Current Unpaid Cumulative Unpaid
Interest Shortfall Interest Shortfall
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-4
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIST DATE: 17-Aug-1999 DISTRIBUTION MORTGAGE OF LOAN CHARACTERISTICS PAGE # 3-1
RECORD DATE: 30-Jul-1999
</TABLE>
<TABLE>
<CAPTION>
STRATIFICATION BY ENDING SCHEDULED BALANCE AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Ending Scheduled Balance Amount Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,000,000 or Less 0 0.00 0.00 0 0.000000 0.000000
$1,000,001 to $2,000,000 0 0.00 0.00 0 0.000000 0.000000
$2,000,001 to $4,000,000 0 0.00 0.00 0 0.000000 0.000000
$4,000,001 to $6,000,000 0 0.00 0.00 0 0.000000 0.000000
$6,000,001 to $8,000,000 0 0.00 0.00 0 0.000000 0.000000
$8,000,001 to $10,000,000 0 0.00 0.00 0 0.000000 0.000000
$10,000,001 to $15,000,000 0 0.00 0.00 0 0.000000 0.000000
$15,000,001 to $20,000,000 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Average Principal Balance: 0.00
<CAPTION>
STRATIFICATION BY CURRENT NOTE RATE
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Current Note Rate Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7.50000% or Less 0 0.00 0.00 0 0.000000 0.000000
7.51000% to 7.75000% 0 0.00 0.00 0 0.000000 0.000000
7.76000% to 8.00000% 0 0.00 0.00 0 0.000000 0.000000
8.01000% to 8.25000% 0 0.00 0.00 0 0.000000 0.000000
8.26000% to 8.50000% 0 0.00 0.00 0 0.000000 0.000000
8.51000% to 8.75000% 0 0.00 0.00 0 0.000000 0.000000
8.76000% to 9.00000% 0 0.00 0.00 0 0.000000 0.000000
9.01000% to 9.25000% 0 0.00 0.00 0 0.000000 0.000000
9.26000% to 9.50000% 0 0.00 0.00 0 0.000000 0.000000
9.51000% to 9.75000% 0 0.00 0.00 0 0.000000 0.000000
9.76000% to 10.00000% 0 0.00 0.00 0 0.000000 0.000000
10.01000% to 11.01000% 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-5
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIST DATE: 17-Aug-1999 DISTRIBUTION MORTGAGE OF LOAN CHARACTERISTICS PAGE # 3-2
RECORD DATE: 30-Jul-1999
</TABLE>
<TABLE>
<CAPTION>
STRATIFICATION BY REMAINING STATED TERM (BALLOON LOANS ONLY)
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Remaining Stated Term Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
70 months or Less 0 0.00 0.00 0 0.000000 0.000000
71 months to 90 months 0 0.00 0.00 0 0.000000 0.000000
91 months to 110 months 0 0.00 0.00 0 0.000000 0.000000
111 months to 115 months 0 0.00 0.00 0 0.000000 0.000000
116 months to 120 months 0 0.00 0.00 0 0.000000 0.000000
121 months to 200 months 0 0.00 0.00 0 0.000000 0.000000
201 months to 0 months 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRATIFICATION BY REMAINING STATED TERM (FULLY AMORTIZING LOANS ONLY)
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Remaining Stated Term Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
70 months or Less 0 0.00 0.00 0 0.000000 0.000000
71 months to 90 months 0 0.00 0.00 0 0.000000 0.000000
91 months to 110 months 0 0.00 0.00 0 0.000000 0.000000
111 months to 115 months 0 0.00 0.00 0 0.000000 0.000000
116 months to 120 months 0 0.00 0.00 0 0.000000 0.000000
121 months to 200 months 0 0.00 0.00 0 0.000000 0.000000
201 months to 0 months 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-6
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIST DATE: 17-Aug-1999 DISTRIBUTION MORTGAGE OF LOAN CHARACTERISTICS PAGE # 3-3
RECORD DATE: 30-Jul-1999
</TABLE>
<TABLE>
<CAPTION>
STRATIFICATION BY DEBT SERVICE COVERAGE RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Debt Service Coverage Ratio Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1.000000 or Less 0 0.00 0.00 0 0.000000 0.000000
1.010000 to 1.200000 0 0.00 0.00 0 0.000000 0.000000
1.210000 to 1.240000 0 0.00 0.00 0 0.000000 0.000000
1.250000 to 1.300000 0 0.00 0.00 0 0.000000 0.000000
1.310000 to 1.400000 0 0.00 0.00 0 0.000000 0.000000
1.410000 to 1.500000 0 0.00 0.00 0 0.000000 0.000000
1.510000 to 1.600000 0 0.00 0.00 0 0.000000 0.000000
1.610000 to 1.700000 0 0.00 0.00 0 0.000000 0.000000
1.710000 to 1.800000 0 0.00 0.00 0 0.000000 0.000000
1.810000 to 1.900000 0 0.00 0.00 0 0.000000 0.000000
1.910000 to 2.000000 0 0.00 0.00 0 0.000000 0.000000
2.010000 to 2.300000 0 0.00 0.00 0 0.000000 0.000000
2.310000 to 2.400000 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRATIFICATION BY SEASONING
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Seasoning Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12 months or Less 0 0.00 0.00 0 0.000000 0.000000
13 months to 24 months 0 0.00 0.00 0 0.000000 0.000000
25 months to 36 months 0 0.00 0.00 0 0.000000 0.000000
37 months to 48 months 0 0.00 0.00 0 0.000000 0.000000
49 months to 60 months 0 0.00 0.00 0 0.000000 0.000000
61 months to 72 months 0 0.00 0.00 0 0.000000 0.000000
73 months to 84 months 0 0.00 0.00 0 0.000000 0.000000
85 months to 96 months 0 0.00 0.00 0 0.000000 0.000000
97 months to 108 months 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-7
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIST DATE: 17-Aug-1999 DISTRIBUTION MORTGAGE OF LOAN CHARACTERISTICS PAGE # 3-4
RECORD DATE: 30-Jul-1999
</TABLE>
<TABLE>
<CAPTION>
STRATIFICATION BY STATE CODE
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
State Code Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA 0 0.00 0.00 0 0.000000 0.000000
CALIFORNIA 0 0.00 0.00 0 0.000000 0.000000
COLORADO 0 0.00 0.00 0 0.000000 0.000000
CONNECTICUT 0 0.00 0.00 0 0.000000 0.000000
FLORIDA 0 0.00 0.00 0 0.000000 0.000000
GEORGIA 0 0.00 0.00 0 0.000000 0.000000
ILLINOIS 0 0.00 0.00 0 0.000000 0.000000
INDIANA 0 0.00 0.00 0 0.000000 0.000000
MASSACHUSETTS 0 0.00 0.00 0 0.000000 0.000000
MARYLAND 0 0.00 0.00 0 0.000000 0.000000
MICHIGAN 0 0.00 0.00 0 0.000000 0.000000
MISSOURI 0 0.00 0.00 0 0.000000 0.000000
NEW JERSEY 0 0.00 0.00 0 0.000000 0.000000
NEW YORK 0 0.00 0.00 0 0.000000 0.000000
OHIO 0 0.00 0.00 0 0.000000 0.000000
OREGON 0 0.00 0.00 0 0.000000 0.000000
PENNSYLVANIA 0 0.00 0.00 0 0.000000 0.000000
SOUTH CAROLINA 0 0.00 0.00 0 0.000000 0.000000
TENNESSEE 0 0.00 0.00 0 0.000000 0.000000
TEXAS 0 0.00 0.00 0 0.000000 0.000000
VIRGINIA 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRATIFICATION BY PROPERTY TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of Principal Balance % of Agg. ------------------------------------
Property Type Loans ($) Prin. Bal. WAM Note Rate(%) DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Office 0 0.00 0.00 0 0.000000 0.000000
Industrial 0 0.00 0.00 0 0.000000 0.000000
Multi-Family 0 0.00 0.00 0 0.000000 0.000000
Retail, Anchored 0 0.00 0.00 0 0.000000 0.000000
Detail, Unanchored 0 0.00 0.00 0 0.000000 0.000000
Ministorage 0 0.00 0.00 0 0.000000 0.000000
Multiple 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 0 0.00 0.00 0 0.000000 0.000000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Debt Coverage Service Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures become available from
borrowers on an asset level. The trustee makes no representation as to the
accuracy of the data provided by the borrower for this calculation.
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-8
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 DELINQUENCY DETAIL PAGE # 4-1
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Offering # of Paid Current Current Outstanding Advance
Loan Memo Cross Months Through Loan P&I P&I Description
Number Reference Delinquent Date Balance Advances Advances** (I)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NO DELINQUENT LOAN REPORTED THIS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding Outstanding
Loan Special Current Property Property Property
Status Servicer Foreclosure Protection Protection Bankruptcy
(II) Start Date Date Advances Advances Date REO Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
(I) Advance Description: A. In grace period (II) Loan Status Code:
B. Late but (less than) 1 month 1. Specially Serviced 6. Discounted Payoff
1. 1 month delinquent 2. Foreclosure 7. Foreclosure Sale
2. 2 months delinquent 3. Bankruptcy 8. Bankruptcy Sale
3. 3+ months delinquent 4. REO 9. REO Disposal
5. Prepayment in Full 10. Modification/Workout
11. Rehabilitation
**Outstanding P&I advances include current period
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-9
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 HISTORICAL INFORMATION PAGE # 5-1
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Delinquencies
Distrib. --------------------------------------------------------------------------------------------------------------------------
Date 1 Month 2 Months 3 Months(+) Foreclosures REO Modifications
--------------------------------------------------------------------------------------------------------------------------
# Balance # Balance # Balance # Balance # Balance # Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/17/99 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00
*** Note: Foreclosures and REO Totals are excluded from the Delinquent Aging Categories
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
Prepayments Rates & Maturities
- --------------------------------------------------------------------------------
Curtailment Payoffs Next Weighted Avg.
- --------------------------------------------------------------------
# Balance # Balance Coupon Remit WAM
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 $0.00 0 $0.00 0.000000 0.000000 0
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
</TABLE>
D-10
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 LOAN STATUS DETAIL PAGE # 6-1
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Loan Offering Property Standard State Principal & Interest Gross Maturity Neg
Number Memo Type Metropolitan Payment Coupon Date Amt
Cross (I) Statistical Flag
Reference Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXAMPLE N/A N/A N/A N/A $0.00 00000 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Beginning Ending Scheduled Paid Appraisal Appraisal Has Loan Loan
Scheduled Balance Balance Through Reduction Reduction Ever Been Status
Date Date Amount Specially Code
Serviced? (II)
(Y/N)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 N/A N/A $0.00 N N/A
- -----------------------------------------------------------------------------------------------------------------------------------
(I) Property Type Code: 6. Non-Exempt 12. Hotel (II) Loan Status Code: 6. Discounted Payoff
1. Single Family 7. Church 13. Industrial 1. Specially Serviced 7. Foreclosure Sale
2. Multi-Family 8. School, HCF, WF 14. Industrial/Flex 2. Foreclosure 8. Bankruptcy Sale
3. Condo, Co-op or TH 9. Retail 15. Multiple properties 3. Bankruptcy 9. REO Disposal
4. Mobile Home 10. Office 16. MiniStorage 4. REO 10. Modification/Workout
5. Plan Unit Development 11. Retail/Office 32. Warehouse 5. Prepayment in Full 11. Rehabilitation
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-11
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 MODIFIED LOAN DETAIL PAGE # 7-1
RECORD DATE: 30-Jul-1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Loan Offering Modification Modification Description
Number Memo Date
Cross
Reference
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NO MODIFIED LOANS REPORTED THIS PERIOD
- --------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-12
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 ADVANCE SUMMARY PAGE # 8-1
RECORD DATE: 30-Jul-1999
- -------------------------------------------------------------------------------
Master Servicer P&I Advances Made
Master Servicer Unembursed P&I Advanced Outstanding
Interest Accrued & Payable to Master Servicer in Respect of Advances Made
SERVICING FEE BREAKDOWN
Current Period Accrued Servicing
Less Delinquent Servicing Fees
Plus Additional Servicing Fees
Less Reductions to Servicing Fees
Plus Servicing Fees for Delinquent Payments Received
Plus Adjustment for Prior Servicing Calculations
Total Servicing Fees Collected
ALLOCATION OF INTEREST SHORTFALLS LOSSES & EXPENSES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class Accrued Certificate Prepayment Interest Beginning Unpaid Interest Loss Expenses Total Interest Payable
Interest Shortfall Interest
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
Certificate Interest Ending Unpaid
Distributable Interest
- -------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-13
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 PREPAYMENT DETAIL PAGE # 9-1
RECORD DATE: 30-Jul-1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Offering Net Net Mortgage
Loan Memo Cross Curtailment Payoff Liquidation Insurance Repurchase
Number Reference Amount Amount Proceeds Proceeds Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NO PRINCIPAL PREPAYMENT REPORTED THIS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-14
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 SPECIALLY SERVICED LOANS PAGE # 10-1
RECORD DATE: 30-Jul-1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SS Current Balance Net
Distribution Loan Transfer Spec Serv Scheduled Transfer Prop Interest Operating
Date Number OMCR Date Code (II) Balance Date Type (I) St Rate Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NO SPECIALLY SERVICED LOANS REPORTED THIS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Debt Service
Distribution NOI Coverage Maturity Rem Inspection Appraisal Appraisal
Date Date Ratio Date Term Date Date Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NO SPECIALLY SERVICED LOANS REPORTED THIS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(I) Property Type Code: 6. Non-Exempt 12. Hotel
1. Single Family 7. Church 13. Industrial
2. Multi-Family 8. School, HCF, WF 14. Industrial/Flex
3. Condo, Co-op or TH 9. Retail 15. Multiple properties
4. Mobile Home 10. Office 16. MiniStorage
5. Plan Unit Development 11. Retail/Office 32. Warehouse
(II) Special Service Code:
(1) Request to waive prepayment penalty (5) In Foreclosure
(2) Payment default (6) Now REO
(3) Request to modify or workout (7) Paid Off
(4) Borrower Bankruptcy (8) Returned to Master Servicer
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
D-15
<PAGE>
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
STATEMENT TO CERTIFICATEHOLDERS
- --------------------------------------------------------------------------------
DIST DATE: 17-Aug-1999 REALIZED LOSS DETAIL PAGE # 11-1
RECORD DATE: 30-Jul-1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Offering Gross Net
Memo Beginning Proceeds % Net Proceeds %
Loan Cross Appraisal Appraisal Scheduled Gross Scheduled Liquidation Liquidation Scheduled Realized
Number Reference Date Value Balance Proceeds Principal Expenses Proceeds Balance Loss
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NO SPECIALLY SERVICED LOANS REPORTED THIS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
[CHASE LOGO] NATIONAL REALTY FUNDING L.C.
MASTER SERVICER
(Copyright) 1998, CHASE MANHATTAN BANK
- --------------------------------------------------------------------------------
</TABLE>
D-16
<PAGE>
ANNEX E
EXCEPTIONS TO MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
GREENWICH LOANS
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- --------- ---------------------------- -------- -----------------------------------
<S> <C> <C> <C>
2 Bridgepointe (3) Has the benefit of a
Shopping Center non-consolidation opinion but the
borrower does not have an
independent director.
- --------- ---------------------------- -------- -----------------------------------
38 Best Western Cascadia Inn (44) Does not contain provisions
78 Shrewsbury Crossing Assisted providing for a lockbox at or
Living Facility before the ARD date.
82 6845 Deerpath Building
--------- ---------------------------- -------- -----------------------------------
41 1000 Henry Street (38) The Mortgaged Property has not been
45 Bayside Willows Apartments inspected by the originator of the
80 Gillette Nursing Home Mortgage Loan or the Seller within
126 Graham Center the 12 months preceding the Closing
162 Tooele Main Street Shops Date.
--------- ---------------------------- -------- -----------------------------------
</TABLE>
BRIDGER FINANCE LOANS
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- --------- ------------------------- -------- ---------------------------------
<S> <C> <C> <C>
105 Heritage Estates/Flamingo (24) A small portion of the site along
Shores the shoreline of Lake Jessie is
located in Flood Zone A-2, a
100-year flood zone. According to
the surveyor, no more than 10
pads (out of 205) are located
within this flood zone. The only
borrower-owned structure located
in the flood zone area is a small
maintenance facility. The
remaining portion of the site is
located in Flood Zone C. Flood
insurance was not required by the
Lender.
- --------- ------------------------- -------- ---------------------------------
121 Royal View Gardens (39) The related Mortgaged Property
also secures a subordinate lien.
- --------- ------------------------- -------- ---------------------------------
</TABLE>
E-1
<PAGE>
NRFINANCE LOANS
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ----------- ------------------------------- ---------- -----------------------------------------
<S> <C> <C> <C>
101 Captec IVa (10) The Mortgaged Properties constituting the
147 Captec IIIa security consist of separate parcels
leased to restaurant owners or operators
as tenants. One of the tenants of the
related Captec IIIa borrower and four of
the tenants of the related Captec IVa
borrower have been granted purchase
options under their respective leases
which entitle such tenants to acquire
such parcels. In each case, the purchase
price for such parcel is equal to a
specific amount stated in the applicable
tenant's lease. The related borrower may
obtain a release of the Mortgage from
each such parcel provided the entire
amount payable by such tenant under its
purchase option is paid directly to the
Seller and the related borrower otherwise
complies with all the requirements of the
promissory note evidencing such Mortgage
Loan with respect to the exercise of such
purchase option.
- ----------- ------------------------------- ---------- -----------------------------------------
157 Pacific Breeze (10) A small unimproved portion of the
Apartments Mortgaged Property constituting the
security is the subject of a potential
adverse possession claim. The Seller has
determined that releasing the disputed
parcel will not have an adverse impact on
the value of the Mortgaged Property. The
Seller has agreed to consider releasing
the disputed parcel from the lien of the
related Mortgage provided certain
conditions set forth in such Mortgage are
satisfied.
E-2
<PAGE>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ----------- ------------------------------- ---------- -----------------------------------------
24 Laguna (10) An agreement between the lender and the
Properties related borrower requires an unimproved
Building portion of the Mortgaged Property
(approximately 4.3 acres of the original
15.46 acre parcel) to be released
provided certain conditions set forth in
the agreement are satisfied. The related
borrower is not required to pay any fee
or premium in consideration for the
release but is required to pay all costs
and expenses incurred by the mortgagee in
connection with the review and approval
of the requested release and is required
to provide any easement or similar
agreements for the benefit of the
mortgagee covering such matters as
parking and access, maintenance,
utilities, water and drainage, and
restrictions on any construction or
improvements to the released portion of
the Mortgaged Property.
- ----------- ------------------------------- ---------- -----------------------------------------
231 Mt. Orange Mobile Home Park (14) The related Mortgage Loan Documents do
not specifically require the related
borrower to maintain business
interruption or rental continuation
coverage. However, the related Mortgage
permits the mortgagee to require the
related borrower to obtain and maintain
any insurance which the mortgagee may
reasonably require.
- ----------- ------------------------------- ---------- -----------------------------------------
216 Fulton East Shopping Center (36) The related Mortgage Loan Documents for
221 Jason Commercial Building the referenced loans (collectively the
231 Mt. Orange Mobile Home Park "KeyBank Small Loans") provide for full
recourse against the related borrower
(and in certain cases against a principal
of such borrower).
E-3
<PAGE>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ----------- ------------------------------- ---------- -----------------------------------------
216 Fulton East Shopping Center (38) None of the related Mortgaged Properties
221 Jason Commercial Building securing the KeyBank Small Loans were
231 Mt. Orange Mobile Home Park inspected by the originator prior to the
Closing Date, but each Mortgaged Property
was reviewed in connection with an
appraisal of each such Mortgaged Property
prior to the origination of the related
Mortgage Loan.
- ----------- ------------------------------- ---------- -----------------------------------------
216 Fulton East Shopping Center (39) The KeyBank Small Loans are secured by
221 Jason Commercial Building Mortgages that do not provide for
231 Mt. Orange Mobile Home Park acceleration of the payment of the unpaid
balance of the Mortgage Loan if the
related borrower further encumbers the
related Mortgaged Property.
- ----------- ------------------------------- ---------- -----------------------------------------
216 Fulton East Shopping Center (41) With respect to the KeyBank Small Loans,
221 Jason Commercial Building the related Mortgage Loan Documents do
231 Mt. Orange Mobile Home Park not require unsolicited annual operating
statements with respect to the related
Mortgaged Property but require the
related borrower, upon request of the
mortgagee, to provide such operating
statements on a quarterly basis.
E-4
<PAGE>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ----------- ------------------------------- ---------- -----------------------------------------
216 Fulton East Shopping Center (46) With respect to each KeyBank Small Loan,
221 Jason Commercial Building the Mortgage Loan substantially complied
231 Mt. Orange Mobile Home Park with all of the terms, conditions, and
requirements of the Seller's underwriting
standards at the time of the Seller's
purchase of such Mortgage Loan, subject
to the following exceptions approved by
the Seller upon its purchase of the
Mortgage Loan: (a) all third party
reports made on the related Mortgaged
Property were abbreviated and contained
less information than the third party
reports on which the Seller relies for
Mortgage Loans it originates; (b) other
than an appraisal of the related
Mortgaged Property, no site inspection or
independent market study was conducted
prior to origination or purchase; (c)
review and analysis of environmental
conditions of the related Mortgaged
Property was based on transaction screen
assessments, rather than Phase I ESAs,
performed on the Mortgaged Property; and
(d) all loan write-ups for the Mortgage
Loan were abbreviated and contained less
information than the loan write-ups on
which the Seller relies for Mortgage
Loans it originates.
- ----------- ------------------------------- ---------- -----------------------------------------
8 Palouse Empire (29) Lessor of the property is not
Mall specifically required to enter into a new
ground lease upon termination of such
Ground Lease as a result of the rejection
of such Ground Lease in a bankruptcy
proceeding or otherwise.
E-5
<PAGE>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ----------- ------------------------------- ---------- -----------------------------------------
(40) Annex A identifies several Mortgage Loans
secured by Mortgaged Properties under
common ownership. In addition, Annex C to
this Prospectus Supplement identifies
Mortgage Loans to affiliated borrowers
and identifies in which instances the
Mortgage Loans to such borrowers are
cross-collateralized or cross-defaulted
with other Mortgage Loans to the same or
related borrowers.
- ----------- ------------------------------- ---------- -----------------------------------------
107 Walgreens (44) Provides that after the Anticipated
Prepayment Date, interest will accrue at
a rate equal to the greater of (i) the
interest rate in effect prior to the
Anticipated Repayment Date plus two
percentage points per annum, or (ii) the
treasury rate plus two percentage points
per annum.
- ----------- ------------------------------- ---------- -----------------------------------------
</TABLE>
E-6
<PAGE>
ANNEX F
F-1
- -------------------------------------------------------------------------------
STRUCTURAL AND COLLATERAL TERM SHEET
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C2
$771,491,000 (APPROXIMATE)
- -------------------------------------------------------------------------------
The information included herein is provided solely by Prudential Securities
Incorporated and Greenwich NatWest Limited, as agent for National Westminster
Bank, Plc (collectively known as the "Underwriters") for the Prudential
Securities Secured Financing Corporation, Series 1999-C2 transaction. The
analysis in this report is based on information provided by Greenwich Capital
Financial Products, Inc. ("Greenwich"), National Realty Finance L.C. ("NRF"),
KeyBank National Association ("Key") and Bridger Commercial Realty Finance LLC
("Bridger"), collectively known as the "Loan Contributors." 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.
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-2
- -------------------------------------------------------------------------------
STRUCTURAL AND COLLATERAL TERM SHEET
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C2
$771,491,000 (APPROXIMATE)
- -------------------------------------------------------------------------------
APPROXIMATE SECURITIES STRUCTURE:
<TABLE>
<CAPTION>
APPROX. EXPECTED WEIGHTED
EXPECTED FACE/NOTIONAL CREDIT AVERAGE PRINCIPAL
RATING AMOUNT SUPPORT LIFE PAYMENT
CLASS MOODYS/S&P ($MM) (% OF UPB) (YEARS)(a) WINDOW (a)
- ----- ----------- ----- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
OFFERED CERTIFICATES
A-1 Aaa/AAA $229,000,000 28.00% 5.70 8/99 - 6/08
A-2 Aaa/AAA 396,880,000 28.00 9.38 6/08 - 4/09
B Aa2/AA+ 41,293,000 23.25 9.71 4/09 - 4/09
C A2/A 45,639,000 18.00 9.78 4/09 - 5/09
D A3/A- 13,040,000 16.50 9.86 5/09- 6/09
E Baa2/BBB 30,426,000 13.00 9.88 6/09 - 6/09
F Baa3/BBB- 15,213,000 11.25 10.04 6/09 - 6/10
PRIVATE CERTIFICATES (NOT OFFERED HEREBY)
A-EC1 Privately Offered 869,289,765 N/A 9.07 N/A
A-EC2 Privately Offered 97,798,765 N/A 14.58 N/A
G Privately Offered 15,213,000 9.50 11.54 6/10 - 5/11
H Privately Offered 19,559,000 7.25 11.87 5/11 - 8/11
J Privately Offered 6,520,000 6.50 12.69 8/11 - 11/12
K Privately Offered 6,520,000 5.75 13.51 11/12 - 6/13
L Privately Offered 17,386,000 3.75 14.21 6/13 - 4/14
M Privately Offered 4,347,000 3.25 15.26 4/14 - 5/15
N Privately Offered 8,693,000 2.25 16.79 5/15 - 5/17
O Privately Offered 19,560,765 0.00 19.83 5/17 - 9/23
- ----------------------------------------------------------------------------------------------
Total $869,289,765
</TABLE>
(a) Calculated at 0% CPR and no balloon or ARD extensions.
COLLATERAL FACTS:
- -----------------
Cut-off Date Balance: $869,289,765
Number of Mortgage Loans: 234
Number of Mortgaged Properties: 262
Average Cut-off Date Balance: $3,714,914
Weighted Average Gross Coupon: 7.605%
Weighted Average Remaining Amortization Term (months): 309
Weighted Average Cut-off Date DSCR: 1.41x
Weighted Average Cut-off Date LTV: 69.70%
Weighted Average Balloon/ARD LTV Ratio: 54.23%
Weighted Average Remaining Term to Maturity/ARD (months): 124
SIGNIFICANT PROPERTY TYPE CONCENTRATIONS:
- -----------------------------------------
<TABLE>
<CAPTION>
CUT-OFF DATE # OF % OF WTD. AVG. WTD. AVG.
PROPERTY TYPE BALANCE PROPERTIES POOL DSCR COUPON (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Retail-Anchored $145,393,293 20 16.73 1.31 7.4939
Retail-Unanchored 86,492,118 32 9.95 1.39 7.5237
Retail-Single Tenant 34,190,747 16 3.93 1.32 7.8390
Shadow Anchored 7,667,288 2 0.88 1.55 6.9263
--------- - ---- ---- ------
Total Retail Related 273,743,445 70 31.49 1.34 7.5305
Multifamily 193,898,605 75 22.31 1.38 7.2946
Manufac. Housing 31,864,914 16 3.67 1.34 7.9558
---------- -- ---- ---- ------
Total Housing Related 225,763,519 91 25.97 1.38 7.3880
Office 123,360,302 27 14.19 1.32 7.8111
Hotel - Full Service 71,923,991 16 8.27 1.68 8.0870
Industrial 61,459,499 17 7.07 1.31 7.6358
Other 113,039,010 41 13.00 1.59 7.6715
- --------------------------------------------------------------------------------------
Total $869,289,765 262 100.00% 1.41x 7.6051%
</TABLE>
LOAN CONTRIBUTORS:
<TABLE>
<CAPTION>
LOAN CUT-OFF DATE # OF MORTGAGE WTD. AVG. WTD. AVG.
CONTRIBUTORS BALANCE LOANS % OF POOL DSCR COUPON
- ------------ ------------ ------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
GREENWICH $532,378,772 120 61.24% 1.44x 7.5335%
NRF 189,228,790 52 21.77 1.35 7.7066
KEY 85,576,459 40 9.84 1.39 7.6285
BRIDGER 62,105,743 22 7.14 1.32 7.8782
-------------- -- ---- ---- ------
TOTAL $869,289,765 234 100.00% 1.41x 7.6051%
</TABLE>
===============================================================================
IMPORTANT CHARACTERISTICS:
Lead Manager & Placement Prudential Securities Incorporated
Agent:
Co-Manager & Placement Greenwich NatWest Limited, as Agent for
Agent: National Westminster Bank, Plc.
Loan Contributors: Greenwich Capital Financial Products, Inc.
("Greenwich")
National Realty Finance L.C. ("NRF")
KeyBank National Association ("Key")
Bridger Commercial Realty Finance LLC ("Bridger")
Transferor for NRF, Key Prudential Securities Credit Corporation ("PSCC")
and Bridger:
Master Servicer: National Realty Funding L.C., a Missouri limited
liability company.
Special Servicer: National Realty Funding L.C.
Trustee: The Chase Manhattan Bank, a New York
Banking Corporation with its principal
offices in New York. The Trustee will be
obligated to make any principal and
interest advances required to be made in
the event that the Master Servicer or
Special Servicer defaults in its performance
of its obligation to make such advances.
Pricing Date: July 22, 1999
Settlement Date: July 28, 1999
Cut-off Date: July 1, 1999
Determination Date: The 11th of each month, or if such a day
is not a Business Day, the next Business Day.
First Determination Date: August 11, 1999
Distribution Date: The 15th of each month, or if that day is not a
Business Day, the Business Day immediately
following the 15th day. The Distribution Date
will be no fewer than four business days after
the related Determination Date
First Distribution Date: August 17, 1999
ERISA Eligible: A-1, A-2, A-EC1 & A-EC2
SMMEA: Not eligible
Structure: Sequential. See "Structural Overview" herein.
Interest Accrual Period: Calendar month before the month in which such
Distribution Date occurs.
Day Count: 30/360
Tax Treatment: REMIC
Rated Final
Distribution Date: June 16, 2031
Clean-up Call: 1%
Minimum Denominations: The Class A-1 and Class A-2 Certificates will
be issued in minimum denominations of $25,000.
The Class B Certificates will be offered in
minimum denominations of $50,000. The remaining
Offered Certificates will be offered in minimum
denominations of $100,000. Investments in
excess of minimum denominations may be made in
multiples of $1.
Pricing Assumption: The loans are assumed to pay as scheduled to
their respective maturity or Anticipated
Repayment Dates.
SIGNIFICANT STATE CONCENTRATIONS:
- ---------------------------------
<TABLE>
<CAPTION>
CUT-OFF DATE # OF WTD. AVG.
STATE BALANCE PROPERTIES % OF POOL DSCR
- ------------ ------------ ------------- -------- ---------
<S> <C> <C> <C> <C>
CALIFORNIA $175,543,355 34 20.19% 1.38x
NEW YORK 81,176,256 19 9.34 1.32
ARIZONA 63,555,147 12 7.31 1.42
FLORIDA 49,151,322 25 5.65 1.46
PENNSYLVANIA 46,595,319 17 5.36 1.53
OTHER 453,268,367 155 52.14 1.41
----------- --- ----- ----
TOTAL $869,289,765 262 100.00% 1.41x
</TABLE>
===============================================================================
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-3
TRANSACTION HIGHLIGHTS
o Diversification:
-- 234 loans secured by 262 properties
-- Top 5 loans equal 19.00% of pool; Top 10 equal 25.56%
-- 40 states in total plus one property in the District of
Columbia, including California 20.19%, New York 9.34%,
Arizona 7.31%, Florida 5.65%, Pennsylvania 5.36%, Maryland
4.03%; no other state >= 4.00%;
-- Maturity/ARD distribution equals 42.77% and 31.25% in 2009
and 2008, respectively, and no other year more than 8.29%
o Underwriting:
-- 1.41x Weighted Average Cut-off Date DSCR
-- 69.70% Weighted Average Cut-off Date LTV
-- 54.23% Weighted Average Balloon/ARD LTV
-- 309 Month Weighted Average Remaining Amortization Term
GENERAL POOL CHARACTERISTICS
Number of Loans: 234
Number of Properties: 262
Aggregate Cut-off Date Principal Balance: $869,289,765
Aggregate Original Principal Balance: $875,069,200
Weighted Average Gross Coupon: 7.605%
Gross Coupon Range: 6.270% - 9.375%
Weighted Average Net Coupon: 7.540%
Net Coupon Range: 6.217% - 9.322%
Average Cut-off Date Principal Balance: $3,714,914
Average Original Principal Balance: $3,739,612
Maximum Cut-off Date Principal Balance: $69,289,658
Minimum Cut-off Date Principal Balance: $295,304
Maximum Original Principal Balance: $69,450,000
Minimum Original Principal Balance: $300,000
Weighted Average Cut-off Date DSCR: 1.41x
Cut-off Date DSCR Range: 1.01x - 3.76x
Weighted Average Cut-off Date LTV: 69.70%
Cut-off Date LTV Range: 37.09% - 96.56%
Weighted Average Original LTV: 70.16%
Original LTV Range: 37.58% - 97.00%
Weighted Average Balloon/ARD LTV: 54.23%
Balloon/ARD LTV Range: 22.07% - 72.77%
Weighted Average Age (First Pay through Last Pay): 6.163 months
Age Range: 1 - 44 months
Weighted Avg. Remaining Amortization Term: 309 months
Remaining Amortization Term Range: 139 - 359 months
Weighted Average Original Amortization Term: 315 months
Original Amortization Term Range: 144 - 360 months
Weighted Avg. Rem. Term to Maturity/ARD: 124 months
Remaining Term Range: 40 - 290 months
Weighted Average Original Term to Maturity/ARD: 130 months
Original Term Range: 60 - 300 months
STRUCTURAL OVERVIEW
o The Mortgage Pool will be comprised of 234 mortgage loans with an
approximate Cut-off Date Balance of $869,289,765.
-- 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, A-EC1 and A-EC2)
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 National Realty Funding L.C. National
Realty Funding is rated Average by Standard & Poor's, and is an
approved Master Servicer by Moody's.
o The Special Servicer will be National Realty Funding L.C. National
Realty Funding is rated Average by Standard & Poor's, and is an
approved Special Servicer by Moody's.
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 TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-4
CALL PROTECTION TABLE
<TABLE>
<CAPTION>
7/99 7/00 7/01 7/02 7/03 7/04 7/05 7/06 7/07 7/08
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 86.1% 86.1% 85.9% 82.4% 79.1% 71.2% 70.7% 76.3% 74.2% 65.7%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater 1.4 1.3 1.3 1.4 1.4 1.3 1.3 1.2 1.8 1.9
4.00% to 4.99% 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.7
3.00% to 3.99% 0.5 0.5 0.5 0.5 1.2 1.4 1.4 0.8 0.3 0.1
2.00% to 2.99% 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.0 0.0
1.00% to 1.99% 10.2 10.2 10.5 13.5 16.6 15.9 16.0 18.9 20.0 13.6
0.00% to 0.99% 0.8 0.8 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance 13.9 13.9 14.1 16.4 20.3 19.8 19.8 22.1 22.8 16.3
Total of Yield Maintenance
and Lockout / Defeasance 100.0 100.0 100.0 98.8 99.4 90.9 90.5 98.4 97.0 82.0
Percentage Premium:
5.00% or greater 0.0 0.0 0.0 0.0 0.1 0.5 0.0 0.5 0.3 0.4
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.1 0.5 0.0 0.0 0.0
3.00% to 3.99% 0.0 0.0 0.0 0.4 0.0 0.0 0.5 0.6 0.5 0.0
2.00% to 2.99% 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.5 1.2 0.0
1.00% to 1.99% 0.0 0.0 0.0 0.0 0.0 8.5 0.0 0.0 0.5 0.6
Total Percentage Premium 0.0 0.0 0.0 0.4 0.5 9.1 1.0 1.6 2.5 1.0
Open (no Call Protection) 0.0 0.0 0.0 0.8 0.2 0.0 8.5 0.0 0.4 17.0
--- --- --- --- --- --- --- --- --- ----
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) 869.3 858.0 845.7 832.3 811.6 795.0 778.3 692.9 673.3 613.3
Pool Factor (%) 100.0 98.7 97.3 95.7 93.4 91.5 89.5 79.7 77.5 70.6
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
7/09 7/10 7/11 7/12 7/13 7/14 7/15 7/16 7/17 7/18
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 67.2% 67.9% 59.6% 59.5% 42.2% 52.0% 53.6% 55.8% 59.5% 64.0%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater 3.2 3.0 3.0 2.8 0.0 0.0 0.0 0.0 0.0 0.0
4.00% to 4.99% 4.2 4.2 4.1 4.2 4.9 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% 0.3 0.3 0.4 0.3 0.0 6.9 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 7.4 0.0 0.0 0.0
1.00% to 1.99% 20.5 20.1 20.2 17.5 19.2 14.0 13.7 21.3 12.0 9.7
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 28.2 27.6 27.6 24.8 24.2 20.9 21.1 21.3 12.0 9.7
Total of Yield Maintenance
and Lockout / Defeasance 95.4 95.5 87.2 84.4 66.4 72.9 74.7 77.0 71.5 73.7
Percentage Premium:
5.00% or greater 2.5 0.0 0.0 0.0 2.7 4.0 0.0 0.0 0.0 0.0
4.00% to 4.99% 2.1 2.4 0.0 0.0 0.0 3.0 4.2 0.0 0.0 0.0
3.00% to 3.99% 0.0 2.1 3.4 0.0 0.0 0.0 0.0 4.4 0.0 0.0
2.00% to 2.99% 0.0 0.0 3.1 3.3 0.0 0.0 0.0 0.0 4.6 0.0
1.00% to 1.99% 0.0 0.0 0.0 3.2 6.2 5.2 5.5 6.0 6.5 4.9
Total Percentage Premium 4.6 4.5 6.5 6.5 8.9 12.2 9.7 10.3 11.2 4.9
Open (no Call Protection) 0.0 0.0 6.3 9.1 24.7 14.8 15.6 12.6 17.3 21.3
--- --- --- --- ---- ---- ---- ---- ---- ----
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) 102.2 97.0 63.1 57.8 47.0 31.5 27.4 23.0 18.7 14.3
Pool Factor (%) 11.8 11.2 7.3 6.6 5.4 3.6 3.1 2.6 2.1 1.6
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-5
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 A-EC1 and Class A-EC2 Certificates as follows:
Yield Maintenance Charges:
--------------------------
o The Yield Maintenance Charges will be allocated between
Classes of Certificates based on the product of (a) the
principal distributed to each such Class (other than the
Class A-EC1 and Class A-EC2 Certificates) as a percentage of
the principal distributed to all Classes and (b) the Base
Interest Fraction, with the remainder being distributed to
the Class A-EC1 and Class A-EC2 Certificates.
Base (Pass-Through Rate - Discount Rate)
Interest = -------------------------------------------------
Fraction (Mortgage Rate - Discount Rate)
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 A-EC1 and Class A-EC2 Certificates as interest
rates decrease, and a decrease in the allocation to such
Classes as interest rates rise.
Fixed Percentage Prepayment Premiums:
- -------------------------------------
o Twenty-five percent of the Prepayment Premiums collected
during any Collection Period will be allocated to the Offered
Certificates then entitled to principal distributions on a
pro rata basis, based on the amount of principal distributed
to each class as a percentage of the amount of principal
distributed to all classes. The remaining 75% of all
Prepayment Premiums will be allocated 85% and 15% to the
Class A-EC1 and Class A-EC2 Certificates, respectively.
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
WA 2.14% OK 0.43% IN 2.66% NC 2.04%
OR 0.58% TX 3.19% KY 0.17% SC 0.22%
ID 2.22% HI 0.60% TN 1.33% FL 5.65%
WY 0.32% IA 0.73% AL 0.51% NH 2.72%
CA 20.19% MO 1.03% OH 3.74% ME 0.30%
NV 2.71% AR 0.74% WV 2.02% MA 3.09%
UT 0.42% LA 1.61% GA 3.43% CT 1.34%
CO 1.73% WI 0.55% NY 9.34% NJ 2.62%
AZ 7.31% IL 0.12% PA 5.36% DE 0.13%
KS 1.11% MI 1.07% VA 0.21% MD 4.03%
DC 0.26%
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-6
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
STATES PROPERTIES BALANCE INTEREST RATE* (MONTHS) LTV DSCR BALANCE
- ------ ---------- ------- ------------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA 34 20.19% 7.4916 % 123.81 70.46% 1.38 x $175,543,355
NEW YORK 19 9.34 7.6626 117.55 70.52 1.32 81,176,256
ARIZONA 12 7.31 7.1652 156.33 73.59 1.42 63,555,147
FLORIDA 25 5.65 7.7276 130.67 70.61 1.46 49,151,322
PENNSYLVANIA 17 5.36 7.9371 101.28 61.41 1.53 46,595,319
MARYLAND 7 4.03 7.7918 104.19 70.52 1.48 35,022,379
OHIO 17 3.74 7.4669 123.89 72.27 1.44 32,514,480
GEORGIA 8 3.43 7.5447 102.27 69.37 1.46 29,841,213
TEXAS 12 3.19 7.8038 117.63 64.27 1.45 27,771,947
MASSACHUSETTS 7 3.09 7.6861 114.41 71.95 1.31 26,861,061
NEW HAMPSHIRE 4 2.72 7.9861 121.15 70.88 1.35 23,654,485
NEVADA 8 2.71 7.5932 129.55 64.04 1.42 23,589,552
INDIANA 13 2.66 7.6094 136.47 66.70 1.40 23,135,155
NEW JERSEY 5 2.62 7.3291 125.78 70.49 1.39 22,804,036
IDAHO 5 2.22 7.6824 118.70 67.44 1.34 19,258,284
WASHINGTON 7 2.14 8.0414 121.70 62.12 1.45 18,598,177
NORTH CAROLINA 3 2.04 8.0800 83.00 58.74 1.66 17,758,904
WEST VIRGINIA 1 2.02 8.0000 143.00 76.25 1.26 17,536,726
COLORADO 8 1.73 7.4306 112.27 69.13 1.44 15,037,019
LOUISIANA 4 1.61 7.6542 115.00 71.08 1.29 13,981,438
CONNECTICUT 4 1.34 6.8959 116.67 72.76 1.39 11,648,615
TENNESSEE 5 1.33 7.5312 116.37 67.23 1.44 11,558,426
KANSAS 4 1.11 7.7616 155.13 67.85 1.38 9,643,469
MICHIGAN 6 1.07 7.5959 123.94 66.18 1.44 9,284,172
MISSOURI 2 1.03 7.3613 116.45 77.41 1.31 8,969,969
ARKANSAS 1 0.74 7.7500 247.00 96.56 1.01 6,469,716
IOWA 1 0.73 7.5500 229.00 72.36 1.34 6,367,553
HAWAII 1 0.60 7.2100 109.00 76.52 1.25 5,203,290
OREGON 2 0.58 7.4246 112.37 69.40 2.21 5,071,636
WISCONSIN 2 0.55 7.1033 110.44 66.96 1.41 4,815,665
ALABAMA 4 0.51 7.3603 115.66 71.69 1.39 4,426,527
OKLAHOMA 2 0.43 7.8070 118.65 74.89 1.32 3,706,926
UTAH 2 0.42 7.3336 168.14 68.28 1.42 3,616,134
WYOMING 1 0.32 7.6500 83.00 71.71 1.27 2,796,884
MAINE 3 0.30 9.0960 153.74 70.44 1.37 2,622,128
DISTRICT OF COLUMBIA 1 0.26 7.1500 112.00 77.07 1.32 2,278,281
SOUTH CAROLINA 1 0.22 8.0800 83.00 58.74 1.66 1,895,613
VIRGINIA 1 0.21 7.6400 116.00 79.80 1.30 1,795,528
KENTUCKY 1 0.17 7.3700 118.00 74.84 1.44 1,496,807
DELAWARE 1 0.13 7.7500 112.00 74.20 1.58 1,150,115
ILLINOIS 1 0.12 8.0400 117.00 72.40 1.28 1,086,058
- ---- ------ ------ ----- ---- ---------
TOTAL 262 100.00% 7.6051 % 123.74 69.70% 1.41 x $869,289,765
====================================================================================================================================
</TABLE>
* The Weighted Average Interest Rate on each stratification table listed herein
indicates the Gross Mortgage Rate.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-7
DISTRIBUTION OF PROPERTY TYPES BY CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
PROPERTY TYPES PROPERTIES BALANCE INTEREST RATE (MONTHS) LTV DSCR BALANCE
- ---------------- ---------- ------- ------------- -------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL-ANCHORED 20 16.73 % 7.4939 % 124.85 74.30 % 1.31 x $145,393,293
RETAIL-UNANCHORED 32 9.95 7.5237 125.05 68.92 1.39 86,492,118
RETAIL-SINGLE TENANT 16 3.93 7.8390 169.51 73.20 1.32 34,190,747
RETAIL-SHADOW ANCHORED 2 0.88 6.9263 142.52 56.92 1.55 7,667,288
- ---- ------ ------ ----- ---- ---------
RETAIL SUBTOTAL 70 31.49 7.5305 130.99 71.98 1.34 273,743,445
MULTIFAMILY 75 22.31 7.2946 133.62 71.57 1.38 193,898,605
MANUFACTURED HOUSING 16 3.67 7.9558 96.91 72.03 1.34 31,864,914
-- ---- ------ ----- ----- ---- ----------
HOUSING SUBTOTAL 91 25.97 7.3880 128.43 71.63 1.38 225,763,519
OFFICE 27 14.19 7.8111 117.73 69.00 1.32 123,360,302
HOTEL - FULL SERVICE 16 8.27 8.0870 84.14 59.06 1.68 71,923,991
INDUSTRIAL 17 7.07 7.6358 124.39 70.18 1.31 61,459,499
MIXED USE 15 4.07 7.3633 120.73 70.56 1.34 35,340,917
HOTEL - LIMITED SERVICE 9 3.18 7.9840 139.50 66.80 1.56 27,657,348
NURSING HOME 8 3.17 7.7897 111.14 60.89 2.08 27,590,154
SELF-STORAGE 6 1.37 7.4916 152.84 73.09 1.39 11,881,746
ASSISTED LIVING FACILITY 2 0.81 7.7667 92.42 76.13 1.40 7,001,874
CONGREGATE CARE 1 0.41 7.8000 235.00 62.58 1.51 3,566,971
- ---- ------ ------ ----- ---- ---------
TOTAL 262 100.00 % 7.6051 % 123.74 69.70 % 1.41 x $869,289,765
===================================================================================================================================
</TABLE>
LTV RANGE AT CUT-OFF DATE
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
STATES LOANS BALANCE INTEREST RATE (MONTHS) LTV DSCR BALANCE
- ------ ---------- ------- ------------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
35.01 - 40.00 % 2 0.46 % 7.0938 % 275.55 37.17 % 2.41 x $3,969,496
40.01 - 45.00 4 1.32 8.0578 127.44 42.41 1.66 11,485,194
45.01 - 50.00 4 0.79 7.5220 117.03 46.84 1.36 6,876,945
50.01 - 55.00 10 2.99 7.6614 149.40 52.26 1.49 26,022,148
55.01 - 60.00 17 12.43 8.0349 97.36 58.32 1.68 108,064,692
60.01 - 65.00 27 8.80 7.6523 126.92 63.35 1.43 76,522,003
65.01 - 70.00 49 17.17 7.5997 123.10 68.08 1.41 149,224,175
70.01 - 75.00 64 25.99 7.5538 130.47 73.07 1.35 225,955,464
75.01 - 80.00 54 28.70 7.4329 120.54 77.76 1.31 249,519,121
80.01 - 85.00 1 0.44 7.4700 110.00 81.87 1.34 3,807,107
85.01 - 95.00 1 0.16 8.2300 101.00 85.86 1.36 1,373,704
95.01 - 96.56 1(1) 0.74 7.7500 247.00 96.56 1.01 6,469,716
---- ---- ------ ------ ----- ---- ---------
TOTAL 234 100.00 % 7.6051 % 123.74 69.70 % 1.41 x $869,289,765
====================================================================================================================================
</TABLE>
(1) Mortgage Loan Control #26, which has a 96.56% LTV, is a credit tenant
loan that is secured by net lease obligations of a rated tenant or
guarantor.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-8
LTV RANGE AT MATURITY DATE OR ARD
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
LOAN-TO-VALUE RATIO LOANS BALANCE* RATE (MONTHS) LTV DSCR BALANCE
- ------------------- ---------- ------------ --------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
15.01 - 35.00 % 11 2.63 % 7.8887 % 161.56 53.27% 1.51 x $22,838,722
35.01 - 40.00 4 1.03 7.3841 147.34 54.41 1.34 8,913,389
40.01 - 45.00 14 5.13 8.0223 124.81 59.33 1.62 44,576,588
45.01 - 50.00 16 4.61 7.8463 130.41 63.48 1.44 40,047,689
50.01 - 55.00 29 17.27 7.9066 100.50 62.32 1.52 150,124,528
55.01 - 60.00 51 17.23 7.3986 119.52 70.54 1.39 149,794,760
60.01 - 65.00 50 21.70 7.5330 116.04 73.80 1.36 188,607,782
65.01 - 70.00 29 19.80 7.4435 114.35 77.36 1.32 172,157,897
70.01 - 75.00 10 3.65 7.8643 95.09 78.42 1.31 31,761,210
-- ---- ------ ----- ----- ---- ----------
TOTAL 214 93.04 %(1) 7.6223 % 115.44 69.90% 1.41 x $808,822,565
===================================================================================================================================
</TABLE>
* Includes only balloon/ARD loans.
- ---------------
(1) The Percent of Cut-off Date Balance does not add up to 100% because this
table does not include fully amortizing Mortgage Loans.
PAYMENT TYPES
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
PAYMENT TYPES LOANS BALANCE* RATE (MONTHS) LTV DSCR BALANCE
- ------------------- ---------- ------------ --------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
AMORTIZING BALLOON 212 92.44% 7.6165% 115.43 70.03 % 1.41x $803,552,565
FULLY AMORTIZING 20 6.96 7.3756 234.74 67.03 1.40 60,467,200
INTEREST ONLY, THEN
AMORTIZING BALLOON
2 0.61 8.5000 117.00 51.47 1.61 5,270,000
----- ---- ------ ------ ----- ---- ---------
TOTAL 234 100.00% 7.6051% 123.74 69.70 % 1.41x $869,289,765
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-9
DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
DSCR LOANS BALANCE RATE (MONTHS) LTV DSCR BALANCE
- ---- ---------- ------------ ----------- ------------ -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.01 - 1.15 X 2 1.29 % 7.3547 % 214.70 88.30% 1.07 x $11,251,884
1.16 - 1.20 4 1.23 7.3634 142.72 73.45 1.17 10,649,622
1.21 - 1.25 25 11.92 7.5781 124.90 73.16 1.24 103,659,607
1.26 - 1.30 49 24.52 7.6656 126.59 72.85 1.28 213,136,778
1.31 - 1.35 43 19.12 7.4991 121.19 71.83 1.33 166,165,846
1.36 - 1.40 28 8.94 7.6161 121.28 68.35 1.38 77,741,731
1.41 - 1.45 21 5.08 7.3338 153.05 70.81 1.42 44,118,662
1.46 - 1.50 16 5.24 7.4635 115.67 66.44 1.48 45,538,532
1.51 - 1.55 11 4.84 7.2673 143.25 69.20 1.52 42,106,779
1.56 - 1.60 11 2.83 7.7670 113.83 64.75 1.59 24,587,532
1.61 - 1.65 7 2.49 7.7090 111.53 63.39 1.62 21,679,577
1.66 - 1.70 2 8.12 8.0689 83.49 58.59 1.66 70,574,233
1.71 - 1.75 3 0.77 7.8734 123.22 67.09 1.74 6,656,531
1.76 - 1.80 3 1.06 7.6073 113.40 69.88 1.77 9,181,202
1.91 - 1.95 2 0.32 7.9781 82.99 54.28 1.92 2,820,763
1.96 - 2.00 2 0.49 7.5014 117.27 41.66 2.00 4,244,348
2.01 - 2.50 4 1.29 7.5002 172.82 57.83 2.37 11,224,891
2.51 - 3.76 1 0.45 8.7500 112.00 57.26 3.76 3,951,249
- ---- ------ ------ ----- ---- ---------
TOTAL 234 100.00 % 7.6051 % 123.74 69.70% 1.41 x $869,289,765
====================================================================================================================================
</TABLE>
(1) Mortgage Loan Control #26, which has a 1.01x DSCR, is a credit tenant
loan that is secured by net lease obligations of a rated tenant or
guarantor.
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED
RANGE OF GROSS MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE CUT-OFF DATE
MORTGAGE RATES LOANS BALANCE RATE (MONTHS) LTV DSCR BALANCE
- -------------- ----- ------- ---- -------- --- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
6.2501 - 6.5000 % 3 2.78 % 6.3963 % 111.44 74.17% 1.43x $24,168,433
6.5001 - 6.7500 2 0.98 6.6387 191.24 51.40 1.37 8,506,154
6.7501 - 7.0000 18 7.91 6.9343 158.72 71.98 1.41 68,778,088
7.0001 - 7.2500 34 13.93 7.1730 113.19 70.84 1.36 121,107,623
7.2501 - 7.5000 49 16.26 7.4148 119.10 72.03 1.44 141,388,986
7.5001 - 7.7500 46 18.72 7.6169 138.26 72.88 1.31 162,708,031
7.7501 - 8.0000 30 17.11 7.8698 123.44 72.17 1.33 148,703,383
8.0001 - 8.2500 26 16.15 8.1055 105.44 62.25 1.52 140,349,728
8.2501 - 8.5000 15 3.63 8.3927 106.58 62.32 1.49 31,539,259
8.5001 - 8.7500 4 0.99 8.7188 133.84 57.73 2.50 8,587,261
8.7501 - 9.0000 5 1.38 8.8115 112.80 63.13 1.41 11,956,624
9.0001 - 9.2500 1 0.10 9.2000 234.00 64.25 1.55 1,867,412
9.2501 - 9.5000 1 0.07 9.3750 107.00 79.09 1.35 628,783
- ---- ------ ------ ----- ---- -------
TOTAL 234 100.00 % 7.6051 % 123.74 69.70% 1.41x $869,289,765
=================================================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-10
TEN LARGEST MORTGAGE LOANS BY CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
NUMBER OF PERCENT OF AVERAGE AVERAGE WEIGHTED
MORTGAGED CUT-OFF DATE INTEREST CUT-OFF DATE AVERAGE CUT-OFF DATE
PROPERTY NAME PROPERTIES BALANCE RATE LTV DSCR BALANCE
- ------------- ---------- ------- ---- --- ---- -------
<S> <C> <C> <C> <C> <C> <C>
CROWN HOTELS 15 7.97% 8.0800 % 58.74 % 1.66 x $69,289,658
BRIDGEPOINTE SHOPPING CENTER 1 4.48 7.5200 78.63 1.26 38,921,165
122 FIFTH AVENUE 1 3.12 7.7800 71.31 1.29 27,098,390
DUDLEY FARMS PLAZA 1 2.02 8.0000 76.25 1.26 17,536,726
EMERY/BUSCH INDUSTRIAL BUILDING 1 1.42 7.9700 78.11 1.31 12,341,663
BORDEAUX PROPERTIES 2 1.34 7.7700 69.30 1.32 11,676,920
FESTIVAL AT PASADENA 2 1.34 7.4500 77.77 1.39 11,635,676
PALOUSE EMPIRE MALL 1 1.32 7.7500 63.77 1.35 11,479,097
VENTANA VISTA APARTMENTS 1 1.31 7.3700 77.50 1.25 11,353,185
PARK PLAZA SHOPPING CENTER 1 1.25 7.0700 70.77 1.33 10,899,246
- ---- ------ ----- ---- ----------
TOTAL 26 25.56% 7.7808 % 69.57 % 1.41 x $222,231,725
===================================================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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.
<PAGE>
F-11
SUMMARIES OF THE TEN LARGEST MORTGAGE LOANS
CONTROL #: 1.00 LOAN #: 03-0810828 - CROWN HOTELS
- ------------------------------------------------------------
CONTROL #: 1.10 LOAN #: 03-0810828A - ATLANTA HOLIDAY INN - DOWNTOWN
CONTROL #: 1.20 LOAN #: 03-0810828B - CUMBERLAND HOLIDAY INN
CONTROL #: 1.30 LOAN #: 03-0810828C - FREDERICK HOLIDAY INN HOLIDOME
CONTROL #: 1.40 LOAN #: 03-0810828D - ASHEVILLE COMFORT SUITES
CONTROL #: 1.50 LOAN #: 03-0810828E - CHARLOTTE HOLIDAY INN EXECUTIVE PARK
CONTROL #: 1.60 LOAN #: 03-0810828F - DURHAM WYNDHAM GARDEN
CONTROL #: 1.70 LOAN #: 03-0810828G - BEAVER FALLS HOLIDAY INN
CONTROL #: 1.80 LOAN #: 03-0810828H - BENSALEM COURTYARD BY MARRIOTT
CONTROL #: 1.90 LOAN #: 03-0810828I - HARRISBURG EAST COMFORT INN
CONTROL #: 1.91 LOAN #: 03-0810828J - HARRISBURG WYNDHAM GARDEN
CONTROL #: 1.92 LOAN #: 03-0810828K - JOHNSTOWN HOLIDAY INN
CONTROL #: 1.93 LOAN #: 03-0810828L - JOHNSTOWN HOLIDAY INN EXPRESS
CONTROL #: 1.94 LOAN #: 03-0810828M - POTTSTOWN COMFORT INN
CONTROL #: 1.95 LOAN #: 03-0810828N - YORK HOLIDAY INN HOLIDOME
CONTROL #: 1.95 LOAN #: 03-0810828O - ROCK HILL HOLIDAY INN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $69,289,658 Property Type: See Below
Loan Type: Principal and Interest Balloon Location: See Below
Origination Date: 5/3/1999 Year Built/Renovated: See Below
Maturity Date: 5/31/2006 Number of Rooms: 2,318
Term: 7 years Cut-off Date Balance/rm: $29,892
Mortgage Rate: 8.08% Original Amortization: 25 years
Annual Debt Service: $6,476,546 Appraised Value: $117,950,000
Underwritten DSCR: 1.66x Current LTV: 58.7%
Underwritten Cash Flow: $10,765,635 Balance at Maturity LTV: 52.6%
Balance at Maturity: $62,043,338
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Crown Hotels Loan (the "Crown Hotels Loan") is secured by fifteen (15)
first mortgages or deeds of trust on fifteen (15) hotel properties located in
Georgia, Maryland, North Carolina, Pennsylvania, and South Carolina (the "Crown
Hotels Properties"). The Crown Hotels Loan was originated on May 3, 1999 to
refinance existing debt, pay the costs and expenses of the transaction, and
fund the required reserves.
BORROWER. The Borrower is Crown American Associates, a Pennsylvania
business trust, and its wholly-owned subsidiary, Maryland Motel
Management, Inc., a Maryland corporation (the "Crown Hotels
Borrower"). The Crown Hotels Borrower is sponsored by Crown Hotel
Holding Company, the holding company of the Borrower, and its parent,
Crown Delaware Holding Company (the "Sponsors").
SECURITY. The Crown Loan is evidenced by a Promissory Note (the
"Note") secured by the fifteen (15) each of Mortgages (the
"Mortgages"), Assignments of Leases and Rents, Security Agreements,
UCC Financing Statements, and certain additional security documents,
such as Assignments of Contracts, Agreements and Equipment Leases,
Assignments of Licenses, Permits and Approvals, Assignments of
Management Agreements, and Assignments of License Agreements. As to
twelve (12) of the Crown Hotels Properties, the Mortgage is a first
lien on a fee simple interest in the respective Crown Hotels
Properties. As to three (3) of the Crown Hotels Properties, the
Mortgage is a first lien on a leasehold interest in the respective
Crown Hotels Properties.
RECOURSE. The Crown Hotels 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 funds, and unauthorized transfers or encumbrances of
the Crown Hotels Properties (the "Recourse Carveouts"). The
obligations of the Crown Hotels Borrower under the Recourse Carveouts
are guaranteed by the Sponsors pursuant to the terms of the Unsecured
Guaranties of Non- Recourse Exceptions by Borrower Sponsors to Lender.
In addition, under the terms of the Environmental Indemnity Agreement,
the Crown Hotels Borrower and the Sponsors assume liability for,
guarantee payment to Lender of, and indemnify Lender from specified
costs and liabilities arising out of the environmental condition of
the Crown Hotels Properties.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.08% per annum until the
Maturity Date of May 31, 2006 (the "Maturity Date"). The Crown Hotels
Loan requires monthly payments of principal and interest of $539,712
through the Maturity Date. The Crown Hotels Loan accrues interest
based on the actual number of days elapsed during any period for which
interest is payable computed on the basis of a 360-day year. Upon an
Event of Default, the Mortgage Rate increases to 13.08%.
CASH MANAGEMENT/LOCKBOX. With respect to each of the Crown Hotels
Properties, the Crown Hotels Borrower is required to deposit receipts
daily into a local depository account. The depository accounts are to
be swept at least three times per week into an operating account.
Credit card receipts (and also rents if requested by Lender) must be
deposited directly into such operating account. Each of the accounts
is required to be in the name of the Crown Hotels Borrower and the
Lender (or at the Lender's election, in the name of a collateral agent
or trustee for the benefit of the Lender and the Junior Lender). Prior
to an Event of Default or a Cash Restriction Condition, the Crown
Hotels Borrower has free access to the funds in the accounts.
A "Cash Restriction Condition" occurs if the debt service coverage
ratio falls below 1.35 to 1.00, or if a cash restriction condition
occurs under the Junior Loan. The Junior Loan imposes a cash
restriction condition when the debt service coverage ratio, calculated
on the aggregate of the Crown Hotels Loan and the Junior Loan, is
below 1.25 to 1.00. The Cash Restriction Condition continues until the
Crown Hotels Borrower achieves the minimum ratios for three
consecutive months.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-12
When a Cash Restriction Condition is in effect, (i) the Crown Hotels
Borrower is prohibited from making distributions and paying related
party items, except that a management fee to the related party manager
can be paid at a reduced rate of 3% of gross revenues; and (ii) the
Crown Hotels Borrower is permitted to retain funds in an amount
sufficient to pay two months' operating expenses, debt service, and
the Lender's reserves, and one months' reduced management fee. Funds
in excess of those amounts are paid to a special reserve account of
the Lender. The funds in such account may be drawn by the Crown Hotels
Borrower, on appropriate documentation and in the absence of an Event
of Default, to pay shortfalls in operating expenses and debt service.
If the debt service coverage ratios remain below the minimum for three
consecutive months, the money in such account can be used to repay the
indebtedness.
PREPAYMENT. The Crown Hotels Borrower may not prepay the Crown Hotels
Loan, in whole or in part, except as described below and under the
description of the Renovation Reserve below. For any prepayment, the
Crown Hotels Borrower must provide the lender with 30 days' prior
written notice, and the Borrower must not be in default.
Prepayment in Full
The Crown Hotels Borrower may prepay the Crown Hotels Loan in full at
any time upon payment of accrued and unpaid interest, fees, other
amounts then outstanding, and the Prepayment Consideration.
Prepayment in Part
After the earlier to occur of two years after the date of the
securitization of the Crown Hotels Loan and May 3, 2002, and upon the
bona fide sale of a Crown Hotels Property to a third party, the Crown
Hotels Borrower may prepay a portion of the Crown Hotels Loan equal to
the release price for such Crown Hotels Property, provided that the
Crown Hotels Borrower must pay the Prepayment Consideration for the
amount prepaid, and that the Crown Hotels Borrower may not make such
prepayment if either (a) the prepayment (together with any prior
prepayment(s)) exceeds 25% of the original principal balance of the
Crown Hotels Loan, or (b) the prepayment results in a decrease in the
debt service coverage ratio from that which existed immediately prior
to the prepayment.
Prepayment Consideration
The Prepayment Consideration is calculated as follows:
a. if the prepayment is prior to the fifth anniversary of closing,
then the greater of (i) 1% of the prepayment amount, or (ii) the Yield
Maintenance Amount (equal to the then-present value (determined by
discounting at the rate of U.S. Treasuries having a maturity
corresponding to the remaining term of the Crown Hotels Loan) of the
excess, if any, of (A) the amount of the monthly interest which would
otherwise be payable on the principal balance being prepaid from the
date of the prepayment to and including the maturity date, over (B)
the amount of the monthly interest which the lender would earn if the
principal balance being prepaid were reinvested for the period from
the date of the prepayment to and including the Maturity Date at said
rate of U.S. Treasuries);
b. if the prepayment is after the fifth anniversary of closing but
prior to the sixth anniversary of closing, then 1% of the prepayment
amount; or
c. if the prepayment is after the sixth anniversary of closing, then
zero.
DEFEASANCE. The Crown Hotels Borrower may defease the Crown Hotels
Loan, in whole or in part, and obtain the release of any of the Crown
Hotels Properties from the lien of the respective Mortgage at any time
after the earlier to occur of two years after the REMIC "start-up
date" and November 30, 2002 by providing the Lender with direct,
non-callable U.S. Treasuries sufficient to amortize with interest the
Allocated Loan Amount(s) of the Crown Hotels Property(ies).
TRANSFER OF CROWN HOTELS PROPERTY(IES) OR INTEREST IN CROWN HOTELS
BORROWER. The Lender shall have the option to declare the Crown Hotels
Loan immediately due and payable upon the transfer of the Crown Hotels
Property(ies) or any ownership interest in the Crown Hotels Borrower,
except for the pledge to the holder of the Junior Loan.
ESCROWS/RESERVES.
Real Estate Taxes and Insurance
Each month, the Crown Hotels Borrower is required to deposit 1/12th of
the Lender's estimate of the annual charges for real estate taxes,
environmental insurance premiums (if applicable), and all other
insurance premiums (if requested by the Lender). So long as (i) no
Event of Default exists, (ii) the Crown Hotels Borrower has provided
the Lender with bills and other documents in a timely manner, and
(iii) sufficient funds are held by the Lender for the payment of the
real estate taxes and insurance premiums, the Lender will either pay
these items or disburse to the Crown Hotels Borrower an amount
sufficient to pay these items.
Seasonality Reserve
On the first day of each month from April through November, the Crown
Hotels Borrower is required to deposit $118,750 into a Seasonality
Reserve account held by the Lender. At closing, the Crown Hotels
Borrower deposited $237,500 into the Seasonality Reserve for the
months of April and May. During the months of December through March,
to the extent that receipts are insufficient to pay all of the Crown
Hotels Borrower's operating expenses and other required amounts, the
Crown Hotels Borrower may draw upon the Seasonality Reserve to fund
the deficiency, provided that no uncured Event of Default exists, and
provided further that the Crown Hotels Borrower provides to the Lender
documentation and certifications requested by the Lender to
substantiate the need for the disbursement. The Crown Hotels Borrower
may draw any remaining balance in the Seasonality Reserve on April 1
of each year.
Deferred Maintenance Reserve
At closing, the Crown Hotels Borrower deposited $1,011,764 into a
Deferred Maintenance Reserve account held by the Lender, equal to 110%
of the Lender's estimated cost of repair of deferred maintenance at
the Crown Hotels Properties as indicated in the engineering reports.
The funds must be applied solely to deferred maintenance, which must
be corrected by November 2, 1999.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-13
Renovation Reserve
At closing, the Crown Hotels Borrower deposited $2,412,000 into a
Renovation Reserve account held by the Lender for work to be completed
at two of the 15 properties in the pool. $300,000 of the funds is for
core modernization work at the Charlotte Holiday Inn, which is
estimated to be completed by the fall of 1999. The remaining
$2,112,000 of funds are for the Property Improvement Plan that is
anticipated to be necessary at the Beaver Falls Holiday Inn when the
current Holiday Inn license expires in September, 1999. If the funds
remaining in the Renovation Reserve upon completion of all renovation
work (i) equal or exceed $250,000, they will be applied as a
prepayment of the Crown Hotels Loan, or (ii) are less than $250,000,
then, upon satisfaction of certain requirements, they will be released
to the Crown Hotels Borrower.
Capital Expenditure Reserve
Each month, the Crown Hotels Borrower is required to deposit 1/12th of
4% of the gross revenues as budgeted for the then-current fiscal year
in a Capital Expenditure Reserve account held by the Lender for the
completion of capital improvement items and for furniture, fixtures
and equipment for use at the Crown Hotels Properties. Where a Crown
Hotels Property is currently being renovated or has recently undergone
a renovation, the deposits into the Capital Expenditure Reserve may be
suspended or decreased. The funds may be used by the Crown Hotels
Borrower solely for capital improvements, furniture, fixtures and
equipment in accordance with capital plans approved in advance by the
Lender. In addition, such funds may be utilized for unbudgeted
expenditures of the same kind incurred in emergencies, subject to the
reasonable approval of the Lender.
Environmental Reserve
At closing, the Crown Hotels Borrower deposited $9,924 into an
Environmental Reserve account held by the Lender, equal to 110% of the
Lender's estimated cost to remediate the concerns at two of the Crown
Hotels Properties.
SUBORDINATE/OTHER DEBT. SFT II, Inc., a subsidiary of Starwood
Financial Trust (the" Junior Lender"), made a loan (the "Junior Loan")
to the Crown Hotels Borrower in the amount of $20,268,203. The
interest rate of the Junior Loan equals that rate which would cause
the blended interest rate for the aggregate of the Crown Hotels Loan
and the Junior Loan to be 8.99%. As collateral for the Junior Loan,
(i) the Crown Hotels Borrower granted to the Junior Lender a second
priority security interest in all property in which the Crown Hotels
Borrower granted to the Lender a first priority security interest, and
(ii) Crown Hotel Holding Company pledged to the Junior Lender its
interests in Crown Hotel Associates Corporation (the parent of the
Borrower) and Crown Hospitality Holdings, Inc.
Pursuant to the Subordination and Intercreditor Agreement, (a) the
Junior Loan is subordinate to the Crown Hotels Loan, (b) the Junior
Lender may not accelerate or foreclose the Junior Loan (except in
connection with a UCC sale of the pledged entity interests) unless and
until the commencement of foreclosure of the Crown Hotels Loan, (c)
the Junior Lender has a right of first refusal to purchase the Crown
Hotel Loan if sold by the securitization trustee, and (d) in the event
that the Crown Hotels Borrower defaults on the Crown Hotels Loan, the
Junior Lender has an option to purchase the Crown Hotels Loan for the
outstanding indebtedness. If the Crown Hotels Loan is sold or
transferred by the securitization trustee at a price equal to at least
the outstanding indebtedness, then the Subordination and Intercreditor
Agreement is no longer binding.
THE PROPERTIES
<TABLE>
<CAPTION>
PROPERTY 1: CONTROL #: 1.10 LOAN #: 03-0810828A - ATLANTA HOLIDAY INN - DOWNTOWN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Atlanta, GA Rooms: 260
Construction: ADR: $94.17
Year Built/Renovated: 1985/1998-1999 Appraised Value: $23,500,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $6,899,979 $6,506,740 $6,546,019 $6,546,019
Net Operating Income $2,105,066 $1,964,369 $2,086,240 $1,838,964
Net Cash Flow $2,105,066 $1,964,369 $2,086,240 $1,838,964
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 2: CONTROL #: 1.20 LOAN #: 03-0810828B - CUMBERLAND HOLIDAY INN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Cumberland, MD Rooms: 130
Construction: ADR: $61.45
Year Built/Renovated: 1972/1996-1997 Appraised Value: $6,100,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,182,910 $3,207,484 $3,134,212 $3,134,212
Net Operating Income $ 592,116 $ 620,142 $ 635,252 $ 493,504
Net Cash Flow $ 592,116 $ 620,142 $ 635,252 $ 493,504
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-14
<TABLE>
<CAPTION>
PROPERTY 3: CONTROL #: 1.30 LOAN #: 03-0810828C - FREDERICK HOLIDAY INN HOLIDOME
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Location: Frederick, MD Rooms: 155
Construction: ADR: $78.29
Year Built/Renovated: 1979/1998 Appraised Value: $12,100,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $5,256,247 $5,379,069 $6,101,076 $5,607,983
Net Operating Income $1,231,487 $1,187,268 $1,658,051 $1,310,533
Net Cash Flow $1,231,487 $1,187,268 $1,658,051 $1,310,533
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 4: CONTROL #: 1.40 LOAN #: 03-0810828D - ASHEVILLE COMFORT SUITES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Asheville, NC Rooms: 125
Construction: ADR: $53.71
Year Built/Renovated: 1989/NAP Appraised Value: $4,050,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $2,086,975 $2,107,028 $2,095,708 $1,910,334
Net Operating Income $ 702,220 $ 734,607 $ 699,497 $ 521,163
Net Cash Flow $ 702,220 $ 734,607 $ 699,497 $ 521,163
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 5: CONTROL #: 1.50 LOAN #: 03-0810828E - CHARLOTTE HOLIDAY INN EXECUTIVE PARK
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Charlotte, NC Rooms: 175
Construction: ADR: $82.39
Year Built/Renovated: 1989/1998 Appraised Value: $12,300,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $4,107,834 $4,404,284 $4,075,906 $4,075,906
Net Operating Income $1,472,906 $1,575,647 $1,349,983 $1,113,187
Net Cash Flow $1,472,906 $1,575,647 $1,349,983 $1,113,187
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 6: CONTROL #: 1.60 LOAN #: 03-0810828F - DURHAM WYNDHAM GARDEN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Durham, NC Rooms: 174
Construction: ADR: $83.24
Year Built/Renovated: 1989/NAP Appraised Value: $13,000,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,878,941 $4,339,716 $4,498,161 $4,498,161
Net Operating Income $1,316,419 $1,439,100 $1,441,918 $1,196,328
Net Cash Flow $1,316,419 $1,439,100 $1,441,918 $1,196,328
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-15
<TABLE>
<CAPTION>
PROPERTY 7: CONTROL #: 1.70 LOAN #: 03-0810828G - BEAVER FALLS HOLIDAY INN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Beaver Falls, PA Rooms: 156
Construction: ADR: $63.91
Year Built/Renovated: 1966/1996 Appraised Value: $6,000,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,413,431 $3,671,109 $3,970,675 $3,970,675
Net Operating Income $ 517,349 $ 619,761 $ 789,915 $ 632,685
Net Cash Flow $ 517,349 $ 619,761 $ 789,915 $ 632,685
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 8: CONTROL #: 1.80 LOAN #: 03-0810828H - BENSALEM COURTYARD BY MARRIOTT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Bensalem, PA Rooms: 167
Construction: ADR: $81.89
Year Built/Renovated: 1988/NAP Appraised Value: $11,050,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,458,488 $3,833,438 $3,974,853 $3,974,853
Net Operating Income $ 829,723 $1,040,279 $1,097,561 $ 918,118
Net Cash Flow $ 829,723 $1,040,279 $1,097,561 $ 918,118
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 9: CONTROL #: 1.90 LOAN #: 03-0810828I - HARRISBURG EAST COMFORT INN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Harrisburg, PA Rooms: 115
Construction: ADR: $62.79
Year Built/Renovated: 1990/NAP Appraised Value: $5,000,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $2,007,307 $2,062,845 $2,112,050 $2,070,633
Net Operating Income $ 503,527 $ 585,231 $ 649,421 $ 516,342
Net Cash Flow $ 503,527 $ 585,231 $ 649,421 $ 516,342
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 10: CONTROL #: 1.91 LOAN #: 03-0810828J - HARRISBURG WYNDHAM GARDEN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Harrisburg, PA Rooms: 167
Construction: ADR: $62.14
Year Built/Renovated: 1987/1997-1998 Appraised Value: $1,900,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,251,713 $2,886,502 $3,374,564 $3,374,564
Net Operating Income $ 408,874 $ 142,934 $ 247,389 $ 126,629
Net Cash Flow $ 408,874 $ 142,934 $ 247,389 $ 126,629
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 11: CONTROL #: 1.92 LOAN #: 03-0810828K - JOHNSTOWN HOLIDAY INN
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Johnstown, PA Rooms: 159
Construction: ADR: $62.11
Year Built/Renovated: 1973/1996 Appraised Value: $2,500,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-16
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $3,501,574 $3,470,223 $3,562,799 $3,562,799
Net Operating Income $ 484,958 $ 240,394 $ 320,024 $ 165,843
Net Cash Flow $ 484,958 $ 240,394 $ 320,024 $ 165,843
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 12: CONTROL #: 1.93 LOAN #: 03-0810828L - JOHNSTOWN HOLIDAY INN EXPRESS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Johnstown, PA Rooms: 108
Construction: ADR: $49.12
Year Built/Renovated: 1987/1996 Appraised Value: $1,350,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $1,193,793 $1,063,978 $1,094,948 $1,094,948
Net Operating Income $ 301,498 $ 146,921 $ 159,339 $ 94,020
Net Cash Flow $ 301,498 $ 146,921 $ 159,339 $ 94,020
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 13: CONTROL #: 1.94 LOAN #: 03-0810828M - POTTSTOWN COMFORT INN
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Pottstown, PA Rooms: 121
Construction: ADR: $67.49
Year Built/Renovated: 1989/NAP Appraised Value: $8,100,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $2,137,364 $2,150,292 $2,278,078 $2,278,078
Net Operating Income $857,706 $ 856,572 $1,010,484 $ 880,429
Net Cash Flow $857,706 $ 856,572 $1,010,484 $ 880,429
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 14: CONTROL #: 1.95 LOAN #: 03-0810828N - YORK HOLIDAY INN HOLIDOME
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: York, PA Rooms: 181
Construction: ADR: $67.37
Year Built/Renovated: 1982/1998 Appraised Value: $7,600,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $5,288,538 $5,246,352 $5,117,886 $5,177,886
Net Operating Income $1,036,783 $ 954,465 $ 971,472 $ 755,886
Net Cash Flow $1,036,783 $ 954,465 $ 971,472 $ 755,886
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY 15: CONTROL #: 1.96 LOAN #: 03-0810828O - ROCK HILL HOLIDAY INN
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Rock Hill, SC Rooms: 125
Construction: ADR: $66.50
Year Built/Renovated: 1975/1998 Appraised Value: $3,400,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $2,430,241
Net Operating Income NAP NAP NAP $ 202,003
Net Cash Flow NAP NAP NAP $ 202,003
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-17
THE MANAGEMENT
Each of the Crown Hotels Properties is managed by Crown American Hotels
Company, a Pennsylvania corporation and an affiliate of the Crown Hotels
Borrower (the "Manager"). The Crown Hotels Borrower assigned to the Lender its
interest in the respective Management Agreements, and the rights of the Manager
under the Management Agreements were subordinated to the Crown Hotels Loan.
Upon an Event of Default or if the debt service coverage ratio, calculated on
the aggregate of the Crown Hotels Loan and the Junior Loan, is less than 1.10x
on any six calculation dates within a twelve month period, then the Lender may
replace the Manager.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-18
<TABLE>
<CAPTION>
CONTROL #: 2.00 LOAN #: 03-0810141 - BRIDGEPOINTE SHOPPING CENTER
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $38,921,165 Property Type: Retail - Anchored
Loan Type: Principal and Interest Balloon Location: San Mateo, CA
Origination Date: 3/26/1999 Year Built/Renovated: 1997 to 1999/NAP
Maturity Date: 4/01/2009 Net Rentable Square Feet: 265,846
Term: 10 years Cut-off Date Balance/sf: $146.40
Anticipated Repay Date: NAP Appraised Value: $49,500,000
Mortgage Rate: 7.52% Current LTV: 78.6%
Annual Debt Service: $3,278,736 Balance at Maturity LTV: 69.8%
Underwritten DSCR: 1.26x Percent Leased: 100%
Underwritten Cash Flow: $4,129,843 Leasing Status Date: 03/19/1999
Balance at Maturity: $34,532,966
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Bridgepointe Shopping Center Loan (the "Bridgepointe Shopping Center Loan")
is secured by a first mortgage on a 265,846 square foot anchored retail
building located in San Mateo, California (the "Bridgepointe Shopping Center
Property"). The Bridgepointe Shopping Center Loan was originated on March 26,
1999 to refinance existing debt.
BORROWER. The Borrower is Bridgepointe, LLC, a single purpose,
bankruptcy remote California limited liability company (the
"Bridgepointe Shopping Center Borrower"). The Bridgepointe Shopping
Center Borrower is sponsored by Peter Pau (the "Sponsor").
SECURITY. The Bridgepointe Shopping Center Loan is evidenced by a
Promissory Note (the "Note") secured by a Mortgage (the "Mortgage"),
an Assignment of Leases and Rents, a Security Agreement, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee simple interest in the Bridgepointe Shopping
Center Property.
RECOURSE. The Bridgepointe Shopping Center Loan is non-recourse.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.52% per annum until the
Maturity Date of April 1, 2009 (the "Maturity Date"). The Bridgepointe
Shopping Center Loan requires monthly payments of principal and
interest of $273,227.96 through the Maturity Date. The Bridgepointe
Shopping Center Loan accrues interest based on the actual number of
days elapsed during any period for which interest is payable computed
on the basis of a 360-day year. Upon an Event of Default, the Mortgage
Rate increases to 12.52%.
CASH MANAGEMENT/LOCKBOX. None.
PREPAYMENT/DEFEASANCE. Except in connection with certain casualty or
condemnation events, The Bridgepointe Shopping Center Borrower is
prohibited from prepaying the Bridgepointe Shopping Center Loan at any
time before the date three (3) months prior to the Maturity Date. The
Bridgepointe Shopping Center Loan may be prepaid at par any time
thereafter. The Bridgepointe Shopping Center Borrower may defease the
Bridgepointe Shopping Center 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 October 1, 2002, by providing the Lender with direct,
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations.
TRANSFER OF BRIDGEPOINTE SHOPPING CENTER PROPERTY OR INTEREST IN
BRIDGEPOINTE SHOPPING CENTER BORROWER. The Lender shall have the
option to declare the Bridgepointe Shopping Center Loan immediately
due and payable upon the transfer of the Bridgepointe Shopping Center
Property or any ownership interest in the Bridgepointe Shopping Center
Borrower. Notwithstanding the foregoing, the following shall not be
deemed a transfer: a) any transfer of the shares of Nikko Capital
Corp. ("Nikko"), b) any change of ownership or management of the
Bridgepointe Shopping Center Borrower due to the death or disability
of the Sponsor, so long as the Bridgepointe Shopping Center Borrower
provides a replacement for Sponsor satisfactory to Lender, or c) any
transfer of an interest in the Bridgepointe Shopping Center Borrower
between Sponsor and Nikko.
ESCROWS/RESERVES.
Real Estate Taxes and Insurance.
The Bridgepointe Shopping Center Borrower has established escrow
accounts controlled by Lender for payment of real estate taxes and
insurance premiums. The current balances of these accounts are $45,022
and $56,995, respectively, for a total of $102,017. In addition, the
Bridgepointe Shopping Center Borrower is required to deposit $29,132
for real estate taxes (except for taxes allocable to Pier One, MiMi's,
Cucina Cucina and Red Robin, and for portions of the Bridgepointe
Shopping Center Property which are separately assessed tax parcels)
and $11,399 for insurance premiums (except where a tenant pays its
insurance premiums directly to the insurer) each month into the
respective accounts.
Replacement Reserve
The Bridgepointe Shopping Center Borrower has established an escrow
account controlled by Lender to cover the costs of scheduled
replacements (the "Replacement Reserve"). The current balance of the
Replacement Reserve is $6,660. In addition, the Ventana Vista
Apartments Borrower is required to deposit $2,215 each month into the
Replacement Reserve.
Tenant Improvements Reserve
The Bridgepointe Shopping Center Borrower has established an escrow
account controlled by Lender to cover the costs of future tenant
improvements associated with releasing space in the Bridgepointe
Shopping Center Property (the "Tenant Improvements / Leasing
Commission Reserve"). The current balance of this account is $23,314.
In addition, the Bridgepointe Shopping Center Borrower is required to
deposit $7,754 each month into the Tenant Improvements / Leasing
Commission Reserve.
Tenant Holdback
The Bridgepointe Shopping Center Borrower was required to deposit
$691,442 into an account (the "Holdback Account") controlled by
Lender. The Bridgepointe Shopping Center Borrower signed a lease with
T-Zone, Inc. (the "T-Zone Lease") for 30,757 square feet (the "T-Zone
Premises"). T-
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-19
Zone was not in occupancy of the T-Zone Premises at the time of the
Bridgepointe Shopping Center Loan closing. Funds in the Holdback
Account in the amount of $355,000 will be disbursed to the
Bridgepointe Shopping Center Borrower if either of the following
should occur: (a) the T-Zone Premises is released on terms acceptable
to Lender for a term to expire no earlier than the T-Zone Lease term,
and such new tenant is then open for business, or (b) T-Zone has
assigned or sublet the T-Zone Lease, and such new tenant is then open
for business. The Bridgepointe Shopping Center Borrower also entered
into leases with Red Robin Burger and Spirit Emporium ("Red Robin"),
Ice Chalets, Inc. ("Ice Chalet"), and Scores Legendary Sports
Restaurant ("Scores"). None of these tenants were open for business at
the time of the Bridgepointe Shopping Center Loan closing. Lender
agreed to disburse the following funds from the Holdback Account upon
evidence from the Bridgepointe Shopping Center Borrower that the
respective tenant is open for business: (a) $102,498 for Red Robin,
(b) $39,451 for Ice Chalet, and (c) $194,493 for Scores. Red Robin and
Scores have both opened for business. The current balance of the
Holdback Account is $396,943.
SUBORDINATE/OTHER DEBT. The Mortgage prohibits subordinate debt and
encumbrances without Lender's prior consent.
THE PROPERTY
The Bridgepointe Shopping Center Property is an anchored retail building
located in San Mateo, California containing 265,846 square feet of net rentable
area. According to a rent roll (the "Rent Roll") provided by the Bridgepointe
Shopping Center Borrower, the Bridgepointe Shopping Center Property is 100%
leased as of March 19, 1999, and is anchored by Sportmart, Bed Bath & Beyond,
and Staples.
The Bridgepointe Shopping Center Property is a one-story retail building that
was constructed in 1997 to 1999.
<TABLE>
<CAPTION>
MAJOR TENANTS:
- --------------------------------------------------------------------------------------------------------------------------------
TENANT SQUARE FEET EXPIRATION DATE RENEWAL OPTIONS
- ------ ----------- --------------- ---------------
<S> <C> <C> <C>
Sportmart 42,400 01/31/2014 Three 5-year
Bed Bath & Beyond 35,550 01/31/2014 Three 5-year
Staples 24,144 04/30/2013 Three 5-year
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY:
- ----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $5,929,647
Net Operating Income NAP NAP NAP $4,222,747
Net Cash Flow NAP NAP NAP $4,129,843
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The Bridgepointe Shopping Center Property is managed by Nikko Capital Corp.
Headquartered in Newport Beach, California, Nikko has 27 years of real estate
experience, having developed and currently managing approximately 800,000
square feet of commercial space together with various land holdings valued at
over $150 million. Leasing of the Bridgepointe Shopping Center Property is
provided by Terranova Retail Services, the largest leasing company for retail
properties in northern California.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-20
<TABLE>
<CAPTION>
CONTROL #: 3.00 LOAN #: 03-0810618 - 122 FIFTH AVENUE
- -------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $27,098,390 Property Type: Office
Loan Type: Principal and Interest Balloon Location: New York, NY
Origination Date: 03/04/1999 Year Built/Renovated: 1903/1983
Maturity Date: 04/01/2009 Net Rentable Square Feet: 198,000
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $136.86
Mortgage Rate: 7.78% Appraised Value: $38,000,000
Annual Debt Service: $2,340,829 Current LTV: 71.3%
Underwritten DSCR: 1.29x Balance at Maturity LTV: 63.7%
Underwritten Cash Flow: $3,009,796 Percent Leased: 100%
Balance at Maturity: $24,194,111 Leasing Status Date: 04/29/1999
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE LOAN
The 122 Fifth Avenue Loan (the "122 Fifth Avenue Loan") is secured by a first
mortgage on a 198,000 square foot office building located in New York, New York
(the "122 Fifth Avenue Property"). The 122 Fifth Avenue Loan was originated on
March 4, 1999 as a consolidation and restatement of new and existing debt.
THE BORROWER. The Borrower is 122 Fifth Associates LLC, a single
purpose, bankruptcy remote New York limited liability company (the
"122 Fifth Avenue Borrower"). The 122 Fifth Avenue Borrower is
sponsored by William Haines (the "Sponsor").
SECURITY. The 122 Fifth Avenue Loan is evidenced by an Amended,
Restated and Consolidated Promissory Note (the "Note") secured by an
Amended, Restated, Consolidated and Spread Mortgage (the "Mortgage"),
an Assignment of Leases and Rents, a Security Agreement, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee simple interest in the 122 Fifth Avenue
Property.
RECOURSE. The 122 Fifth Avenue 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 funds, and unauthorized transfers
or encumbrances of the 122 Fifth Avenue Property (the "Recourse
Carveouts"). The obligations of the 122 Fifth Avenue Borrower under
the Recourse Carveouts are guaranteed by the Sponsor pursuant to the
terms of the Guaranty of Recourse Obligations of Borrower. In
addition, under the terms of the Environmental Indemnity Agreement,
the 122 Fifth Avenue 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 122 Fifth Avenue Property. The 122 Fifth Avenue Borrower has also
guaranteed the performance, within 90 days of closing, of certain
punchlist items for the Barnes & Noble space totaling approximately
$100,000.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.78% per annum until the
Maturity Date of April 1, 2009 (the "Maturity Date"). The 122 Fifth
Avenue Loan requires monthly payments of principal and interest of
$195,069.07 through the Maturity Date. The 122 Fifth Avenue Loan
accrues interest based on the actual number of days elapsed during any
period for which interest is payable computed on the basis of a
360-day year. Upon an Event of Default, the Mortgage Rate increases to
18.00%.
CASH MANAGEMENT/LOCKBOX. None.
PREPAYMENT/DEFEASANCE. Except in connection with certain casualty or
condemnation events, The 122 Fifth Avenue Borrower is prohibited from
prepaying the 122 Fifth Avenue Loan at any time before the date six
(6) months prior to the Maturity Date. The 122 Fifth Avenue Loan may
be prepaid at par any time thereafter. The 122 Fifth Avenue Borrower
may defease the 122 Fifth Avenue 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 April 1, 2003, by providing the Lender with direct,
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations.
TRANSFER OF 122 FIFTH AVENUE PROPERTY OR INTEREST IN 122 FIFTH AVENUE
BORROWER. The Lender shall have the option to declare the 122 Fifth
Avenue Loan immediately due and payable upon the transfer of the 122
Fifth Avenue Property or any ownership interest in the 122 Fifth
Avenue Borrower, except that the 122 Fifth Avenue Borrower has the
right, once during the term of the 122 Fifth Avenue Loan, to transfer
the 122 Fifth Avenue Property upon satisfaction of certain conditions.
ESCROWS/RESERVES.
Real Estate Taxes and Insurance The 122 Fifth Avenue Borrower was
required to deposit $300,000 at closing into an account (the "Reserve
Fund") controlled by Lender to pay real estate taxes and insurance
premiums. The 122 Fifth Avenue Borrower fulfilled this requirement by
posting a $350,000 Letter of Credit (see Replacement Reserve below).
The Reserve Fund must be maintained at a minimum level sufficient to
cover one-third of the annual amount of all real estate taxes and
insurance premiums. Lender may require monthly impounding following an
Event of Default.
Replacement Reserve
The 122 Fifth Avenue Borrower was required to deposit $50,000 at
closing into an account (the "Replacement Reserve") controlled by
Lender to cover the costs of scheduled replacements. The 122 Fifth
Avenue Borrower fulfilled this requirement by posting a $350,000
Letter of Credit (see Real Estate Taxes and Insurance above).
Lease Allowance Reserve
Commencing March 1, 2007, the 122 Fifth Avenue Borrower is required to
deposit $15,000 each month into an account (the "Lease Allowance
Reserve") controlled by Lender to cover the cost of future tenant
improvements and leasing commissions associated with releasing space
on the third floor of the building now occupied by The New York Times
Company (the "New York Times Lease"). The 122 Fifth Avenue Borrower
must make such deposits until the aggregate balance equals or exceeds
$180,000. The 122 Fifth Avenue Borrower may instead elect to post a
$180,000 Letter of Credit. The 122 Fifth Avenue Borrower may be
relieved of its obligation to fund the Lease Allowance Reserve if,
prior to March 1, 2007, the existing New York Times Lease is renewed
on no less favorable terms than are contained in the present New York
Times Lease for a minimum of five years
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-21
or replaced with a lease to Barnes & Noble on no less favorable terms
than are contained in the present New York Times Lease. Upon releasing
of the third floor space or portions thereof as required, the 122
Fifth Avenue Borrower may request Lender to reimburse the costs of
tenant improvements and leasing commissions incurred with such
releasing from the Lease Allowance Reserve.
Letter of Credit
At closing, the 122 Fifth Avenue Borrower was required to post two
additional Letters of Credit, one in the amount of $612,000
representing four months of free rent granted to Barnes & Noble in
year 1999 and the other in the amount of $918,000 representing three
months of free rent granted to Barnes & Noble in year 2000, to insure
that monthly loan payments due under the Note are made by the 122
Fifth Avenue Borrower. The $612,000 Letter of Credit for year 1999 was
released once the monthly loan payments were made through and
including the May 1, 1999 payment. The $918,000 Letter of Credit will
be released upon payment by the 122 Fifth Avenue Borrower of all
monthly loan payments due under the Note through and including the
April 1, 2000 payment.
SUBORDINATE/OTHER DEBT. The Mortgage prohibits subordinate debt and
encumbrances without Lender's prior consent.
THE PROPERTY
The 122 Fifth Avenue Property is an office building located in New York, New
York containing 198,000 square feet of net rentable area. According to a rent
roll (the "Rent Roll") provided by the 122 Fifth Avenue Borrower, the 122 Fifth
Avenue Property is 100% leased as of April 29, 1999, and is anchored by Barnes
& Noble, The Gap, and The New York Times.
The 122 Fifth Avenue Property is a ten-story office building with ground floor
retail space that was constructed in 1903 and renovated in 1983.
<TABLE>
<CAPTION>
MAJOR TENANTS:
- ---------------------------------------------------------------------------------------------------------------------------------
TENANT SQUARE FEET EXPIRATION DATE RENEWAL OPTIONS
<S> <C> <C> <C>
Barnes & Noble 144,920 12/31/2014 None
The Gap 27,000 * 12/31/2010 None
The New York Times 18,115 02/28/2008 None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Gap occupies 12,000 square feet of retail space on the ground floor and
15,000 square feet of storage space in the basement.
<TABLE>
<CAPTION>
OPERATING HISTORY:
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income $4,756,858 $4,925,405 $4,677,749 $4,965,075
Net Operating Income $3,074,910 $3,260,820 $3,195,173 $3,218,939
Net Cash Flow $3,074,910 $3,260,820 $3,195,173 $3,009,796
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The 122 Fifth Avenue Property is managed by Bromley Companies ("Bromley"), an
affiliate of the 122 Fifth Avenue Borrower. Bromley has managed the 122 Fifth
Avenue Property since its acquisition by the 122 Fifth Avenue Borrower.
Bromley, which currently manages approximately 1 million square feet of
commercial and residential space, is also a developer and operator of a
diversified portfolio of office, industrial, retail, and multifamily
properties.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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.
<PAGE>
F-22
<TABLE>
<CAPTION>
CONTROL #: 4.00 LOAN #: 6519 - DUDLEY FARMS PLAZA
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $17,536,726 Property Type: Retail - Anchored
Loan Type: Amortizing Balloon Location: South Charleston, WV
Origination Date: 05/19/1999 Year Built/Renovated: 1998
Maturity Date: 06/01/2011 Square Footage: 262,269
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $66.87
Term: 12 years Original Amortization: 30 years
Mortgage Rate: 8.00% Appraised Value: $23,000,000
Annual Debt Service: $1,563,289 Current LTV: 76.3%
Underwritten DSCR: 1.26x Balance at Maturity LTV: 62.6%
Underwritten Cash Flow: $1,970,030 Percent Occupied: 89%
Balance at Maturity: $14,391,789 Occupancy as of Date: 05/13/1999
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Dudley Farms Plaza (the "Dudley Farms Loan") is secured by a first mortgage
on a 262,269 square foot shopping center located in the City of South
Charleston, West Virginia (the " Dudley Farms Property"). The Dudley Farms Loan
was originated by National Realty Funding L.C. on May 19, 1999 and subsequently
acquired by National Realty Finance L.C.
BORROWER. The borrowing entity, THF-D Charleston Development LLC, a
West Virginia limited liability company (the "Dudley Farms Borrower"),
is comprised of THF Charleston Company LLC, a Class A Member and
Manager (80%) and Dudley Family, LP II, a Class B Member (20%). These
entities are all affiliated with THF Realty, which provides brokerage,
development, leasing and management services. THF Realty is
headquartered in St. Louis, Missouri and specializes in shopping
center development. The Dudley Family Limited Partnership, II is the
land lessor of the subject. The two leading investors in the subject
are E. Stanley Kroenke, and Michael Staenberg.
SECURITY. The Dudley Farms Loan is secured by a Deed of Trust,
Assignment of lease and Rents, Security Agreement, and Fixture Filing,
UCC Financing Statements and certain additional security documents.
The Deed of Trust is a fist lien on the leasehold interest in the
Dudley Farms Property.
RECOURSE. The Dudley Farms Loan is non-recourse, subject to certain
limited exceptions. Michael H. Staenberg and E. Stanley Kroenke are
the Key Principal's Limited Guarantors for the non-recourse carve out
provisions.
LOCKBOX. The Dudley Farms Loan does not include a lockbox provision.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Dudley Farms Loan
allows (i) Dudley Family, LP II, to transfer its interests, and (ii)
the Members of THF Charleston Company LLC shall be permitted to
transfer their interests, both, without the consent of Lender to (a)
another member in Manager, (b) a revocable trust of an individual
member, (c) an estate, spouse or descendant of any of the individuals
described in (a) or (b) above, or (d) any other entity as long as the
combined ownership interests in the Borrower directly or indirectly
through an entity owned or controlled by Michael J. Staenberg or E.
Stanley Kroenke equals or exceeds 51%.
ESCROWS/RESERVES. There is a tax and insurance escrow which requires
monthly deposits in an amount sufficient to pay estimates taxes and
insurance when due. However, the escrow fund for taxes is not required
for those portions of the Property currently leased to Kohl's,
Goody's, Arby's, Burger King, Eat N Park or any other tenant obligated
under its lease to pay taxes directly to the taxing authority. An
irrevocable letter of credit in the face amount of $2,147,130 has been
established and will be reduced as certain leasing achievements are
completed. The Borrower must have the following tenants in occupancy
and paying rent on or before November 1, 1999; Hallmark Cards, Van
Meter Law Office, Lilly's Jewelry and Nails and Tan. Additionally, Eat
N Park as a ground lessor must also be paying rent in accordance to
the terms of their lease on or before November 1, 1999.
GROUND LEASE/MASTER LEASE/PURCHASE OPTION. The ownership interest is
Leasehold. The current lessor is The Dudley Family Limited Partnership
II and the lessee is THF-D Charleston Development Limited Liability
Company. The lease terms include a commencement date of October 26,
1995 and a maturity date of October 26, 2094 with no options to extend
and an annual lease payment of $236,000. The ground lease is not
subordinate to the Deed of Trust. The ground lease requires the Fee
Owner to give notice of each default under the ground lease to the
Lender. In the event of Borrower default, the Lender is afforded the
opportunity to cure. Additionally, the Lender could acquire the
leasehold interest and the following the Lender's acquisition title to
the leasehold estate it can be transferred to a third party, without
the Fee Owner's consent. The Borrower cannot assign its interest
without the Fee Owner's prior written consent, which is not to be
unreasonably withheld.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-23
THE PROPERTY
The Dudley Farms property is comprised of two strips of in-line and anchored
retail space. The largest portion consists of approximately 206,579 square feet
and contains both the anchor and big box tenants listed as follows: Kohl's,
Office Max , Goodys, and Books a Million. In addition, the majority of the
smaller in-line tenants are located in this structure, which forms the southern
81% gross leaseable area of the shopping center. The northern 8% of the center
is comprised of approximately 20,392 square feet and contains Shoe Carnival,
Mattress Warehouse, Wallpaper in Stock and GNC as tenants. The remaining 11% of
gross leaseable area consists of six pad sites, three of which are leased to
Eat 'N Park, Burger King, and Arbys.
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $3,018,123
Net Operating Income NAP NAP NAP $2,083,701
Net Cash Flow NAP NAP NAP $1,970,030
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT.
THF Realty, Inc., an affiliate of the THF-D Charleston Borrower, is the
property manager. At present, THF Realty, Inc. manages and is a part-owner of
approximately 44 shopping centers with approximately 9.1 million square feet.
Approximately 24 of these centers are anchored with a Wal-Mart store. THF
Realty, Inc. also independently owns and operates six shopping centers with a
total of approximately 388,479 square feet. The organization has six
development projects under construction for a total of approximately 1.3
million square feet.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-24
<TABLE>
<CAPTION>
CONTROL #: 5.00 LOAN #: GL981131 - EMERY/BUSCH INDUSTRIAL BUILDING
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $12,341,663 Property Type: Industrial
Loan Type: Amortizing Balloon Location: Nashua, New Hampshire
Origination Date: 5/13/1999 Year Built/Renovated: 1979/1997
Maturity Date: 6/01/2009 Square Footage: 317,500
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $38.87
Term: 120 months Original Amortization: 30 years
Mortgage Rate: 7.97% Appraised Value: $15,800,000
Annual Debt Service: $1,084,341 Current LTV: 78.1%
Underwritten DSCR: 1.31x Balance at Maturity LTV: 70.0%
Underwritten Cash Flow: $1,417,803 Percent Occupied: 100%
Balance at Maturity: $11,055,257 Occupancy as of Date: April 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Emery/Busch Industrial Building loan (the "Emery/Busch Loan") is secured by
a first mortgage on 24.26 acres site improved with a one-story slab-on-grade
warehouse building containing 317,500 net rentable square feet. The property is
located in an established industrial area along Celina Avenue in the northwest
corner of the Town of Nashua, New Hampshire (the "Emery/Busch Property"). The
Emery/Busch Loan was originated by Keybank National Association and
subsequently assigned to National Realty Finance L.C.
BORROWER. The borrower is Berkshire-Nashua, LLC, a Massachusetts
limited liability company (the "Emery/Busch Borrower") which was
formed in August 1997 for the sole purpose of acquiring, owning and
operating the subject property.
SECURITY. The Emery/Busch Loan is secured by a mortgage and security
agreement, assignment of leases and rents, UCC financing statements
and certain additional security documents. The Mortgage is a first
lien on the fee interest in the Emery/Busch Property. The Emery/Busch
Loan is non-recourse, subject to certain limited exceptions.
ESCROWS/RESERVES. There is an escrow for taxes and insurance which
requires monthly deposits in an amount sufficient to pay estimated
taxes and insurance when due. A tenant improvements and leasing
commissions escrow was established at closing, with a current balance
of $ 12,500. The escrow requires biannual (each August & February)
deposits for the first six years as follows: year 1 $12,500; year 2
$25,000; year 3 $37,500; year 4 $50,000; and years 5 and 6 $62,500,
for a total of $500,000. A deferred maintenance reserve escrow with a
current balance of $20,570 was established at closing to assure
completion of identified necessary repairs. Additionally a replacement
reserve escrow was established at closing, with a current balance of $
9,582 and additional monthly installments of $2,395.
THE PROPERTY
The Emery/Busch Property is a one-story 317,500 square foot; slab-on-grade
warehouse building built on a 24.26 acre site located in an established
industrial area in the southwest corner of the Town of Nashua New Hampshire.
The property is 100% occupied by Emery Worldwide Airlines, Inc., a publicly
traded international freight and parcel delivery company. Lease Agreement as
amended and Lease for Nashua Expansion expire 3/5/05 and 3/5/02 respectively.
Each contains renewal options: A for two- (2) 36 month options or B for one (1)
12 month option. Annual Base Rent has established annual hard steps. Current
Base Rent is $1,685,500.
<TABLE>
<CAPTION>
OPERATING HISTORY
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $1,887,133
Net Operating Income NAP NAP NAP $1,529,563
Net Cash Flow NAP NAP NAP $1,417,803
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
Berkshire Development Corporation, established in 1990 and a 2% owner and
managing partner of Emery/Busch Borrower, is the leasing and property manager.
Berkshire Developments Corporation also manages it's own portfolio, including
over 4.0 million square feet of industrial and retail properties. Oscar
Plotkin, 70.25% owner of Emery/Busch Borrower, is one of Berkshire Development
Corporation's top developers in the country.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-25
<TABLE>
<CAPTION>
CONTROL #: 6.00 - VARIOUS
CONTROL #: 6.10 LOAN #: 215990028 - 1376 BORDEAUX
CONTROL #: 6.20 LOAN #: 215990053 - 1380 BORDEAUX
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $11,676,920 Property Type: Industrial
Loan Type: Amortizing Balloon Location: Sunnyvale, CA
Origination Date: 4/08/1999 Year Built/Renovated: See Below
Maturity Date: 6/01/2009 Square Footage: 76,820
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $152.00
Original Term: 121 months Original Amortization: 25 years
Mortgage Rate: 7.77% Appraised Value: $16,850,000
Annual Debt Service: $1,062,326 Current LTV: 69.3%
Underwritten DSCR: 1.32x Balance at Maturity LTV: 56.9%
Underwritten Cash Flow: $1,400,712 Percent Occupied: 100%
Balance at Maturity: $9,584,889 Occupancy as of Date: 03/26/1999
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The two Bordeaux loans are secured by first mortgages on two (2) adjacent,
fully occupied, single tenant industrial/R&D buildings in the Silicon Valley.
The 1376 Bordeaux building is leased to TRW, Inc. through 1/1/2003 and the 1380
Bordeaux building is leased to Boca Research, Inc. through 9/1/2005. The two
loans were originated on 4/8/99 in order to refinance the borrower's existing
acquisition loan.
BORROWER. The borrowing entity, Bordeaux Partners LLC, is a California
Limited Liability Company formed for the sole purpose of acquiring,
redeveloping, owning, and operating the subject property. Menlo
Equities LLC (MELLC) is the managing member of Bordeaux Partners LLC.
MELLC is a private commercial real estate investment firm formed in
January of 1995. Menlo Equities, Inc. (MEI) is the managing member and
majority owner of Menlo Equities LLC. MEI was formed in August of
1993. The Henry D. Bullock and Terri D. Bullock Living Trust is the
sole shareholder of MEI and Henry Bullock serves as Trustee of the
Trust. Richard J. Holmstrom owns the balance of MELLC and is its only
other owner.
Lender has been notified by Bordeaux Partners LLC that it has entered
into a contract to sell both the 1376 and 1380 Bordeaux Drive
properties. The contract price is $15,825,000 and the closing date is
scheduled for 60 days from 6/21/99. The proposed buyer is California
Bavarian Corporation, a California corporation. As provided for in the
loan documents, Bordeaux Partners has requested from the lender:
lender's consent to the assumption of both loans by the proposed
buyer, release of the borrower and guarantor, and substitution of the
proposed buyer as the borrower and guarantor. Per the Promissory
Notes, the Lender has requested from Bordeaux Partners the requisite
financial and other information concerning the proposed buyer which
will allow it to make a reasonable determination as to the
acceptability of the borrower requests.
SECURITY. Each Bordeaux loan is secured by a deed of trust, absolute
assignment of rents and leases, and a security agreement and fixture
filing. Each of the mortgages is a first lien on the fee interest of
the property. The Bordeaux loans are cross-collateralized and
cross-defaulted
RECOURSE. The indebtedness is non-recourse to the borrower, except for
standard carve-outs, including, fraud, misrepresentation, waste of the
property, misappropriation of funds, bankruptcy, and environmental
non-compliance. Menlo Equities LLC has executed a Limited Guaranty
whereby Guarantor assumes liability for and guarantees payment to
Lender of any and all obligations for which borrower is personally
liable, which includes the standard carve-out provisions.
LOCKBOX. A lockbox has been established for each loan whereby all
funds generated from property operations will be escrowed for that
period beginning 9 months prior to the expiration of either of the
single tenant leases. Those funds will be controlled by the lender and
will be available to the borrower for the payment of TI's and LC's in
the event either of the existing tenants does not elect to renew its
lease.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. To facilitate the sale
of either of the Bordeaux properties with 'in place' financing, the
loan documents make provision for a partial release with conditions
requiring a release price of 125% of the unpaid balance on the loan
secured by the to-be-sold collateral property (excess funds are to be
applied to the unpaid balance of the remaining loan). Additional
conditions include lender's review and approval of the residual DSC
and LTV ratios which would result from the partial release and that
they not be below 1.30x and 73% respectively.
ESCROWS/RESERVES. On the date of the closing of the Bordeaux Loans,
the lender obtained from the borrower $92,675 and $13,838 to be held
in escrow representing six months of taxes and insurance,
respectively, due on the properties and since such date the lender has
not obtained any additional amounts for taxes and insurance. Current
escrow balances as of July 1, 1999 are $92,675 for taxes and $13,838
for insurance. In the event that there are no defaults or
delinquencies under the Bordeaux Loans during the three years
succeeding the Closing Date, the escrow balances referred to in the
preceeding sentence will be released to the borrower. Additionally, a
replacement reserve escrow was established at closing and requires the
payment of monthly installments of $961. The current replacement
reserve escrow balance is $1,920 as of July 1, 1999.
THE PROPERTIES
<TABLE>
<CAPTION>
PROPERTY 1: CONTROL #: 6.10 LOAN #: 215990028 - 1376 BORDEAUX
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Sunnyvale, CA Square Footage: 31,173
Construction: Concrete Percent Occupied: 100% as of 3/26/1999
Year Built/Renovated: 1980 / 1998 Appraised Value: $6,850,000
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPERATING HISTORY
The property was purchased in June 1997 as REO and was subsequently extensively
renovated by the borrower and leased to TRW, Inc. for a five-year term
commencing 1/1/98. Historic operating information for the property was
unavailable from the previous owner and the underwriting has relied on revenue
and expense information provided by the 3/26/99 appraisal.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-26
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $748,913
Net Operating Income NAP NAP NAP $619,357
Net Cash Flow NAP NAP NAP $568,725
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The property will be managed by Menlo Equities Management Company an affiliate
of Menlo Equities LLC.
<TABLE>
<CAPTION>
PROPERTY 2: CONTROL #: 6.20 LOAN #: 215990053 - 1380 BORDEAUX
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Sunnyvale, CA Square Footage: 45,647
Construction: Concrete Percent Occupied: 100% as of 3/26/99
Year Built/Renovated: 1979 / 1998 Appraised Value: $10,000,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPERATING HISTORY
The property was purchased in June 1997 as REO and was subsequently extensively
renovated by the borrower and leased to Boca Research Inc. for a seven-year
term commencing 9/1/98. Historic operating information for the property was
unavailable from the previous owner and the underwriting has relied on revenue
and expense information provided by the 3/26/99 appraisal.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $991,453
Net Operating Income NAP NAP NAP $906,930
Net Cash Flow NAP NAP NAP $831,987
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The property will be managed by Menlo Equities Management Company an affiliate
of Menlo Equities LLC.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-27
<TABLE>
<CAPTION>
CONTROL #: 7.00 - VARIOUS
CONTROL #: 7.10 LOAN #: 5201 - FESTIVAL AT PASADENA
CONTROL #: 7.20 LOAN #: 6098 - FESTIVAL AT PASADENA PAD BUILDING
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cut-off Date Balance: $11,635,676 Property Type: Retail-Anchored/Office
Loan Type: Amortizing Balloon Location: Pasadena, MD
Origination Date: 2/01/1999 Year Built/Renovated: See Below
Maturity Date: 2/01/2009 Square Footage: 240,407
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $50.83
Original Term: 10 years Original Amortization: 30 years
Mortgage Rate: 7.45% Appraised Value: $15,000,000
Annual Debt Service: $975,225 Current LTV: 77.8%
Underwritten DSCR: 1.39x Balance at Maturity LTV: 67.8%
Underwritten Cash Flow: $1,356,970 Percent Occupied: 97%
Balance at Maturity: $10,144,745 Occupancy as of Date: 1/28/1999
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The two (2) Festival at Pasadena Loans (collectively the "Festival Loans")
include Festival at Pasadena a 209,143 square community shopping center and
Festival at Pasadena Pads a 31,264 square foot office/retail center,
(collectively the "Festival Properties") both located in Pasadena, Maryland.
The Festival Loans are secured by First Deeds of Trust. The Festival Loans were
originated by National Realty Funding L.C. on February 1, 1999 and subsequently
acquired by National Realty Finance L.C. The Festival Loans are
cross-collateralized and cross-defaulted with each other. A partial release of
the collateral under the Defeasance Option may be obtained.
BORROWER. The Borrower consists of the following entities as tenants
in common under the Co-Tenancy Agreement dated February 1, 1999:
Festival Pasadena Associates, L.P., a Delaware limited partnership;
HSG Pasadena, LLC, a Maryland limited liability company; LM Pasadena,
LLC, a Maryland limited liability company; SFG Pasadena, LLC a
Maryland limited liability company; and Garstat, Inc., a Maryland
Corporation (collectively the Festival Borrower"). These entities are
controlled by Joel Fedder, Harry Rodgers, and Herb Garten, Mr.
Fedder's law partner. Mr. Fedder is Chief Executive Officer of The
Fedder Company, which manages the subject property, and is a native of
Baltimore who has served as a Tax and Corporate Law attorney for over
30 years.
SECURITY. The Festival Loans are each secured by a fee simple First
Deed of Trust, Assignment of Leases and Rents, Security Agreement, and
Fixture Filing, UCC Financing Statements and certain additional
security documents.
RECOURSE. The Festival Loans are non-recourse, subject to certain
limited exceptions. Mr. Joel Fedder is the Key Principal's Limited
Guarantors for the non-recourse carve out provisions.
LOCKBOX. The Festival Loans do not include a lockbox provision.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Festival Loans allow
the transfer of interests in any Borrower by the current owners of
such interests to or for the benefit of one or more family members
subject to the following conditions (a) Joel Fedder, Herbert S. Garten
and/or Harry W. Rodgers, III (the "Principals") shall continue to
control the ownership of each Borrower and shall be responsible for
the management of the Property, provided, however that, upon the death
or incapacity of any of the Principals, one or more family member
shall be substituted for such Principal and (b) no guarantor shall be
released from any guaranty or indemnity agreement by virtue of such
transfer. The loan secured by the Festival at Pasadena Building Pad
further allows the Borrower to transfer its interest in the Festival
Properties to Fischer Corporation (the "Transferee") providing the
following requirements are satisfied in Lender's discretion: (a) each
entity or person constituting Borrower shall simultaneously transfer
100% of its interests in the Property to transferee; (b) no event of
default has occurred and is continuing; (c) Transferee meets all
Lender's underwriting standards; (d) Borrower reimburses Lender all
expenses incurred; (e) Transferee executes an assumption agreement and
other documents required by Lender; (f) no guarantor or indemnitor in
connection with the Loan shall be released; and (g) Lender's title
policy shall be endorsed at expense of Borrower.
ESCROWS/RESERVES. There are tax and insurance escrows which require
monthly deposits in an amount sufficient to pay estimated taxes and
insurance when due. These escrows were established at closing and
require monthly payments of $11,174 and $1,990 for taxes and insurance
respectively. Current escrow balances are $122,913 for taxes and
$27,856 for insurance.
THE PROPERTIES
The subject property, known as Festival at Pasadena, consists of a 209,143
square foot, one-story class B community shopping center situated on 18.32
acres located in Pasadena, Anne Arundel County, Maryland. Built in 1986 and
1987, the structure consists of a steel frame with exterior walls consisting of
brick veneer in the front and painted concrete masonry in the rear. Major
tenants include B.J.'s Wholesale for 57.1% of the space with a lease expiration
of November 2012 and Ollie's Bargain Mart for 14.8% of the shopping center
space with a lease expiration of August 2004. BJ's is a wholesale club concept
similar to Sam's and Price where consumers can purchase items, through
membership, at sub-retail costs due to the bulk buying power of the tenant. The
Ollie's chain has 16 stores predominately in the Baltimore metro (five) and
Pennsylvania areas. The Ollie's store is a discounter of discontinued retail
items and factory seconds.
The subject property, known as Festival at Pasadena Pad Building, consists of a
31,264 square foot, two-story class B Office/retail center situated on 3.09
acres located in Pasadena, Anne Arundel County, Maryland. The first floor
includes retail space while the second floor is office space. Built in 1987,
the structure consists of a steel frame with exterior walls consisting of brick
veneer. The major tenants for the pad building include Party City, 6,899 square
feet (22%) with a lease expiration of June 2002; Baltimore Sun 5,880 square
feet (18.8%) with a lease expiration of August 2002; and Leslie's Pool Mart
5,430 square feet (17.3%) with a lease expiration of October 2001. The Leslie's
Pool Marts lease has a kickout clause after Year 3 (10/28/99) if sales are less
than $150 per square foot. However, sales are well above that rate to date.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-28
<TABLE>
<CAPTION>
PROPERTY 1: CONTROL #: 7.10 LOAN #: 5201 - VARIOUS FESTIVAL AT PASADENA
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Pasadena, Maryland Square Footage: 209,143
Construction: Steel Frame w/ Brick Veneer Percent Occupied: 99% as of 01/28/1999
Year Built/Renovated: 1987/NAP Appraised Value: $11,600,000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 * 1997 * 1998 * UNDERWRITING
------ ------ ------- ------------
<S> <C> <C> <C> <C>
Effective Gross Income $1,901,706 $1,731,097 $1,826,661 $1,501,621 **
Net Operating Income $1,458,421 $1,305,953 $1,416,475 $1,145,111
Net Cash Flow $1,458,421 $1,305,953 $1,416,475 $1,039,848
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Operating history includes the Festival at Pasadena Pad Building.
<TABLE>
<CAPTION>
PROPERTY 2: CONTROL #: 7.20 LOAN #: 6098 - VARIOUS FESTIVAL AT PASADENA PAD BUILDING
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Location: Pasadena, Maryland Square Footage: 31,264
Construction: Steel Frame w/ Brick Veneer Percent Occupied: 86% 01/28/1999
Year Built/Renovated: 1986/NAP Appraised Value: $3,400,000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPERATING HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
1996 * 1997 * 1998 * UNDERWRITING
------ ------ ------ ------------
<S> <C> <C> <C> <C>
Effective Gross Income $419,829 **
Net Operating Income $345,270
Net Cash Flow $317,122
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Operating History is included in the Festival at Pasadena Loan.
** Stabilized EGI higher than 1998 due to a tenant taking 10,384 square feet at
$9.55 per square foot under a ten year lease.
THE MANAGEMENT
The subject is leased and managed by The Fedder Company, an owner-affiliated
company located in Glen Burnie, Maryland. The company has been in existence for
over 25 years and has built, developed or acquired over $60,000,000 in income
producing property including retail, warehouses, office, self-storage and
apartments. Fedder manages nearly 1,500,000 square feet of commercial property
in Baltimore County, Anne Arundel County, Northern Virginia and Martinsburg,
West Virginia. The company developed several office buildings in the 1980s in
Maryland. The Company purchased over 1,000,000 square feet of retail centers in
1997, selling 650,000-square feet to a REIT.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-29
<TABLE>
<CAPTION>
CONTROL #: 8.00 LOAN #: 6423 - PALOUSE EMPIRE MALL
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $11,479,097 Property Type: Retail - Anchored
Loan Type: Amortizing Balloon Location: Moscow, Idaho
Origination Date: 5/18/1999 Year Built/Renovated: 1976-1980
Maturity Date: 6/01/2009 Square Footage: 406,359
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $28.25
Original Term: 10 years Original Amortization: 20 years
Mortgage Rate: 7.75% Appraised Value: $18,000,000
Annual Debt Service: $1,142,091 Current LTV: 63.8%
Underwritten DSCR: 1.34x Balance at Maturity LTV: 44.2%
Underwritten Cash Flow: $1,546,406 Percent Occupied: 93%
Balance at Maturity: $7,946,828 Occupancy as of Date: 5/17/1999
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Palouse Empire Mall Loan (the "Palouse Mall Loan") is secured by a First
Leasehold Deed of Trust on a 406,359 square foot shopping center located in
Moscow, Idaho. (the "Palouse Mall Property"). The Palouse Loan was originated
by National Realty Funding L.C. on May 18, 1999 and subsequently acquired by
National Realty Finance L. C.
BORROWER. The borrowing entity Palouse Empire Mall Associates, a
Washington general partnership (the "Palouse Mall Borrower") is a
single asset entity, which consists of three General Partners. The
three general partners are Dr. Michael M. McCarthy (25%), G&ME Family
Trust, a Revocable Living Trust formed by Gordon and Madeline Edgren
(25%) and Patty McCarthy Trust, a Testamentary Trust formed from the
Revocable Living Trust of Patty McCarthy, with Orville Barnes, Victor
Stolle and Madeline McCarthy, Trustees (50%). Approximately 30 to 60
days after loan closing, the borrowing entity is expected to be
transferred from a G.P. to an L.L.C. The ownership interests will
remain the same under the new limited liability structure.
SECURITY. The Palouse Mall Loan is secured by a First Leasehold Deed
of Trust, Assignment of Leases and Rents, Security Agreement, and
Fixture Filing, UCC Financing Statements and certain additional
security documents.
RECOURSE. The Palouse Mall Loan is non-recourse, subject to certain
limited exceptions. G &ME Family Trust and Dr. Michael McCarthy are
the Key Principal's Limited Guarantors for the non-recourse carve out
provisions.
LOCKBOX. The Palouse Mall Loan does not include a lockbox provision.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Palouse Mall Loan
allows an ownership transfer within 90 days of closing to a limited
liability company owned by existing owners of Borrower in their
current ownership percentages.
ESCROWS/RESERVES. There is a tax and insurance escrow which requires
monthly deposits in an amount sufficient to pay estimates taxes and
insurance when due. An escrow was also established at closing in the
original amount of $2,900,000 for tenant finish improvements, leasing
commissions and capital improvements.
GROUND LEASE/MASTER LEASE/PURCHASE OPTION. The ownership interest is
Leasehold. The current lessor is The Regents of the University of
Idaho and the lessee is Palouse Empire Mall Associates. The lease
terms include a commencement date of July 23, 1973 and a termination
date of March 1, 2026, with one ten-year option remaining. The ground
lease requires the Fee Owner to give notice of each default under the
ground lease to the Lender. In the event of Borrower defaults, the
Lender is afforded the opportunity to cure. Additionally, the Lender
could acquire the leasehold interest and following the Lender's
acquisition of title to the leasehold estate it can subsequently be
transferred to a third party, without the Fee Owner's consent. The
Borrower cannot assign or sublet its interest without the Fee Owner's
consent. Ground rent is calculated at $600 per acre per year or
44.8159 acres X $600 = $26,889.54 per year. In addition, there is a
fluctuating interest payment (equal to the annual rate of yield for
domestic corporate bonds rated Aaa by Moody's) based on $300,000.
Assuming an estimated average interest rate of 7.5%, the payment is
$22,500 per year. Thus, the total minimum rent payment is
approximately $49,390 ($4115.83/month). At the end of the year, 8% of
gross rents (defined as minimum rents and percentage rents) is
calculated. The amount already paid by the borrower (approximately
$49,390) is subtracted from the 8% of gross sales and the balance is
what is due from the borrower to the University of Idaho.
THE PROPERTY
The Palouse Mall Property is comprised of a 406,359 square foot anchored,
retail center situated in six buildings located in Moscow, Idaho. The subject
was built in two phases. The first phase was constructed in 1976, which is the
portion of the mall that is not enclosed. In 1978 through 1980, the enclosed
mall portion of the subject was constructed. The major tenants are Waremart
grocery store 13%, Michaels 3.9%, JoAnn Fabrics 3.5%, Rite Aid 5.5%, Bon Marche
9.8%, Emporium Department Store 9.5%, and Office Depot 6.2%, which is to take
occupancy by year end (not included in historical income).
<TABLE>
<CAPTION>
OPERATING HISTORY
- ---------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ---- ------------
<S> <C> <C> <C> <C>
Effective Gross Income $2,931,988 $2,983,084 $3,092,726 $3,058,608
Net Operating Income $1,763,298 $1,719,939 $1,753,436 $1,712,575
Net Cash Flow $1,463,235 $1,093,648 $1,421,177 $1,546,406
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-30
THE MANAGEMENT.
Management for the subject from 1993 until September of 1997 had been Goodhale
Barbeari. In 1997 the principals decided to bring management in-house and
solicited Jim Bendickson, formerly the subject's assistant manager with
Goodhale Barbeari, to manage the subject. Day to day operational decisions are
made by Mr. Bendickson with larger, non-recurring expenditures (over $2,000 for
any one item) calling for the approval of one of the principals. PEM consists
of Jim Bendickson and his assistant/ accounting employee. Also, in the on-site
management office is a maintenance supervisor (not an employee of PEM, but on a
maintenance contract), and a marketing director and marketing assistant (not
employees of PEM but paid out of the Merchant Association dues).
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-31
<TABLE>
<CAPTION>
CONTROL #: 9.00 LOAN #: 03-0810140 - VENTANA VISTA APARTMENTS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $11,353,185 Property Type: Multifamily
Loan Type: Principal and Interest Balloon Location: Tucson, AZ
Origination Date: 3/29/1999 Year Built/Renovated: 1985 to 1987/NAP
Maturity Date: 4/01/2009 Number of Units: 250
Anticipated Repayment Date NAP Cut-off Date Balance/unit: $45,413
Term: 10 years Original Amortization: 30 years
Mortgage Rate: 7.37% Appraised Value: $14,650,000
Annual Debt Service: $942,472 Current LTV: 77.5%
Underwritten DSCR: 1.25x Balance at Maturity LTV: 68.5%
Underwritten Cash Flow: $1,178,138 Percent Occupied: 94%
Balance at Maturity: $10,036,071 Occupancy as of Date: 03/30/1999
:
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Ventana Vista Apartments Loan (the "Ventana Vista Apartments Loan") is
secured by a first Deed of Trust on a 250 unit apartment complex located in
Tucson, Arizona (the "Ventana Vista Apartments Property"). The Ventana Vista
Apartments Loan was originated on March 29, 1999 to refinance existing debt.
BORROWER. The Borrower is Ventana Vista Investors Limited Partnership,
a single asset Arizona limited partnership (the "Ventana Vista
Apartments Borrower"). The Ventana Vista Apartments Borrower is
sponsored by The Schomac Group, Inc., an Arizona corporation, and by
Ventana Vista GP Corp., the managing general partner of the Borrower
(the "Sponsors").
SECURITY. The Ventana Vista Apartments Loan is evidenced by a
Multifamily Note and Addendum to Multifamily Note (collectively, the
"Note") secured by a Multifamily Deed of Trust (the "Mortgage"), an
Assignment of Rents, a Security Agreement, UCC Financing Statements,
and certain additional security documents. The Mortgage is a first
lien on a fee simple interest in the Ventana Vista Apartments
Property.
RECOURSE. The Ventana Vista 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 funds, and unauthorized transfers
or encumbrances of the Ventana Vista Apartments Property (the
"Recourse Carveouts"). The obligations of the Ventana Vista Apartments
Borrower under the Recourse Carveouts are guaranteed by the Sponsor
pursuant to the terms of the Guaranty Agreement. In addition, under
the terms of the Environmental Indemnity Agreement, the Ventana Vista
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 Ventana
Vista Apartments Property.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.37% per annum until the
Maturity Date of April 1, 2009 (the "Maturity Date"). The Ventana
Vista Apartments Loan requires monthly payments of principal and
interest of $78,539.35 through the Maturity Date. The Ventana Vista
Apartments Loan accrues interest based on the actual number of days
elapsed during period for which interest is payable computed on the
basis of a 360-day year. Upon an Event of Default, the Mortgage Rate
increases to 12.37%.
CASH MANAGEMENT/LOCKBOX. None.
PREPAYMENT/DEFEASANCE. Except in connection with certain casualty or
condemnation events, the Ventana Vista Apartments Borrower is
prohibited from prepaying the Ventana Vista Apartments Loan at any
time before the date three (3) months prior to the Maturity Date. The
Ventana Vista Apartments Loan may be prepaid at par any time
thereafter. The Ventana Vista Apartments Borrower may defease the
Ventana Vista Apartments 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 October 1, 2002 by providing the Lender with direct,
non-callable U.S. Treasury obligations sufficient to pay its remaining
obligations.
TRANSFER OF VENTANA VISTA APARTMENTS PROPERTY OR INTEREST IN VENTANA
VISTA APARTMENTS BORROWER. The Mortgage is silent as to transfer.
ESCROWS/RESERVES.
Real Estate Taxes and Insurance
The Ventana Vista Apartments Borrower has established escrow accounts
controlled by Lender for payment of real estate taxes and insurance
premiums. The current balance of these accounts is $36,396 and $6,755,
respectively, for a total of $43,151. In addition, the Ventana Vista
Apartments Borrower is required to deposit $12,132 for real estate
taxes and $1,351 for insurance premiums each month into the respective
accounts.
Replacement Reserve
The Ventana Vista Apartments Borrower has established an escrow
account controlled by Lender to cover the costs of scheduled
replacements (the "Replacement Reserve"). The current balance of the
Replacement Reserve is $55,982. In addition, the Ventana Vista
Apartments Borrower is required to deposit $7,146 each month into the
Replacement Reserve.
SUBORDINATE DEBT. The Mortgage prohibits subordinate debt and
encumbrances without Lender's prior consent.
THE PROPERTY
The Ventana Vista Apartments Property is a 250 unit apartment project located
in Tucson, Arizona. According to a rent roll (the "Rent Roll") provided by the
Ventana Vista Apartments Borrower, the Ventana Vista Apartments Property is 94%
leased as of March 30, 1999.
The Ventana Vista Apartments Property consists of 35 one- and two-story
buildings that were constructed from 1985 to 1987.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-32
<TABLE>
<CAPTION>
OPERATING HISTORY
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ---- ------------
<S> <C> <C> <C> <C>
Effective Gross Income $1,749,359 $1,814,133 $1,991,108 $2,056,298
Net Operating Income $855,213 $956,135 $1,110,127 $1,178,138
Net Cash Flow $855,213 $956,135 $1,110,127 $1,178,138
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The Ventana Vista Apartments Property is managed by Schomac Property
Management, Inc. ("Schomac"), an affiliate of the Ventana Vista Apartments
Borrower. Schomac is the residential and commercial property management
subsidiary of The Schomac Group, Inc. ("SGI"), a privately held real estate
investment and management company formed in 1974 and headquartered in Tucson,
Arizona. SGI employs over 400 people nationwide and is the third largest real
estate related employer in southern Arizona. SGI has developed over 4,000
apartment units in Tucson and Las Vegas, in addition to approximately 800,000
square feet of office and retail space as well as 4 million square feet of self
storage space in 14 states with a combined value in excess of $400 million. SGI
has sponsored over 100 limited partnerships and has acted as a joint venture
partner with many institutional and private investors.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-33
<TABLE>
<CAPTION>
CONTROL #: 10.00 LOAN #: 03-0810054 - PARK PLAZA SHOPPING CENTER
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut-off Date Balance: $10,899,246 Property Type: Retail - Unanchored
Loan Type: Principal and Interest Balloon Location: Aliso Viejo, CA
Origination Date: 06/30/1998 Year Built/Renovated: 1998/NAP
Maturity Date: 07/01/2008 Net Rentable Square Feet: 46,887
Anticipated Repay Date: NAP Cut-off Date Balance/sf: $232.46
Mortgage Rate: 7.07% Appraised Value: $15,400,000
Annual Debt Service: $884,414 Current LTV: 70.8%
Underwritten DSCR: 1.33x Balance at Maturity LTV: 61.6%
Underwritten Cash Flow: $1,179,983 Percent Leased: 90%
Balance at Maturity: $9,490,525 Leasing Status Date: 03/08/1999
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Park Plaza Shopping Center Loan (the "Park Plaza Shopping Center Loan") is
secured by a first mortgage on a 46,887 square foot unanchored retail building
located in Aliso Viejo, California (the "Park Plaza Shopping Center Property").
The Park Plaza Shopping Center Loan was originated on June 30, 1998 to
refinance existing debt.
THE BORROWER. The Borrower is Leaseback of California II, LLC, a
single asset California limited liability company (the "Park Plaza
Shopping Center Borrower"). The Park Plaza Shopping Center Borrower is
sponsored by Ronald M. Tate, James W. Wallace, David L. Lazares, and
Daniel L. Allen (the "Sponsors").
SECURITY. The Park Plaza Shopping Center Loan is evidenced by a
Promissory Note (the "Note") secured by a Mortgage (the "Mortgage"),
an Assignment of Leases and Rents, a Security Agreement, UCC Financing
Statements, and certain additional security documents. The Mortgage is
a first lien on a fee simple interest in the Park Plaza Shopping
Center Property.
RECOURSE. The Park Plaza Shopping Center 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 funds, and unauthorized transfers
or encumbrances of the Park Plaza Shopping Center Property (the
"Recourse Carveouts"). The obligations of the Park Plaza Shopping
Center Borrower under the Recourse Carveouts are guaranteed by the
Sponsor pursuant to the terms of the Exceptions to Non-Recourse
Guaranty. In addition, under the terms of the Environmental Indemnity
Agreement, the Park Plaza Shopping Center Borrower and the Sponsors
assume liability for, guarantee payment to Lender of, and indemnify
Lender from specified costs and liabilities arising out of the
environmental condition of the Park Plaza Shopping Center Property.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.07% per annum until the
Maturity Date of July 1, 2008 (the "Maturity Date"). The Park Plaza
Shopping Center Loan requires monthly payments of principal and
interest of $73,701.13 through the Maturity Date. The Park Plaza
Shopping Center Loan accrues interest based on a 30-day month computed
on the basis of a 360-day year. Upon an Event of Default, the Mortgage
Rate increases to 12.07%.
CASH MANAGEMENT/LOCKBOX. None.
PREPAYMENT/DEFEASANCE. Except in connection with certain casualty or
condemnation events, The Park Plaza Shopping Center Borrower is
prohibited from prepaying the Park Plaza Shopping Center Loan at any
time before the date six (6) months prior to the Maturity Date. The
Park Plaza Shopping Center Loan may be prepaid at par any time
thereafter. The Park Plaza Shopping Center Borrower may prepay the
Park Plaza Shopping Center Loan, in whole but not in part, at any time
after the July 1, 2003 by paying a prepayment penalty equal to the
greater of 1% of the outstanding principal balance or a yield
maintenance calculation.
TRANSFER OF PARK PLAZA SHOPPING CENTER PROPERTY OR INTEREST IN PARK
PLAZA SHOPPING CENTER BORROWER. The Lender shall have the option to
declare the Park Plaza Shopping Center Loan immediately due and
payable upon the transfer of the Park Plaza Shopping Center Property
or any ownership interest in the Park Plaza Shopping Center Borrower.
Notwithstanding the foregoing, the Park Plaza Shopping Center Borrower
shall have a one time right to transfer the Park Plaza Shopping Center
Property upon meeting certain conditions. Also notwithstanding the
foregoing, the following shall not be deemed a transfer: any transfer
in which each of David L. Lazares and Ronald M. Tate continue to hold,
directly or through trusts, interests in the profits and losses of the
Park Plaza Shopping Center Borrower, and the aggregate of the
interests so held by both of said individuals shall constitute not
less than 50% of the profits and losses of the Park Plaza Shopping
Center Borrower.
ESCROWS/RESERVES.
Real Estate Taxes and Insurance
None.
Replacement Reserve
None.
Tenant Improvements and Leasing Commissions Reserve
None.
SUBORDINATE/OTHER DEBT. The Mortgage prohibits subordinate debt and
encumbrances without Lender's prior consent.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
F-34
THE PROPERTY
The Park Plaza Shopping Center Property is an unanchored retail building
located in Aliso Viejo, California containing 46,887 square feet of net
rentable area. According to a rent roll (the "Rent Roll") provided by the Park
Plaza Shopping Center Borrower, the Park Plaza Shopping Center Property is 90%
leased as of March 8, 1999.
The Park Plaza Shopping Center Property is a one-story retail building that was
constructed in 1998.
<TABLE>
<CAPTION>
OPERATING HISTORY:
- -------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
<S> <C> <C> <C> <C>
Effective Gross Income NAP NAP NAP $1,530,076
Net Operating Income NAP NAP NAP $1,244,132
Net Cash Flow NAP NAP NAP $1,179,983
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE MANAGEMENT
The Park Plaza Shopping Center Property is managed by America West Properties,
Inc., a company with 15 years of real estate management experience.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS 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 FINANCIAL ADVISOR OR YOUR GREENWICH NATWEST
LIMITED, AS AGENT FOR NATIONAL WESTMINSTER BANK, PLC 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 GREENWICH NATWEST
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
COMMERCIAL/MULTIFAMILY MORTGAGE PASS-THROUGH CERTIFICATES
(Issuable in Series)
Prudential Securities Secured Financing Corporation (the "Depositor") from
time to time will offer Commercial/ Multifamily Mortgage Pass-Through
Certificates (the "Offered Certificates") in "Series" by means of this
Prospectus and a separate Prospectus Supplement for each Series. The Offered
Certificates, together with any other Commercial/Multifamily Mortgage
Pass-Through Certificates of such Series, are collectively referred to herein
as the "Certificates."
The Certificates of each Series will evidence beneficial ownership
interests in a trust fund (the "Trust Fund") to be established by the
Depositor. The Certificates of a Series may be divided into two or more
"Classes' which may have different interest rates and which may receive
principal payments in differing proportions and at different times. In
addition, rights of the holders of certain Classes to receive principal and
interest may be subordinated to those of other Classes.
Each Trust Fund will consist of a pool (the "Mortgage Pool") of one or
more mortgage loans secured by first or junior liens on fee simple or
leasehold interests in commercial real estate properties, multifamily
residential properties and/or mixed residential/commercial properties and
related property and interests, conveyed to such Trust Fund by the Depositor,
and other assets, including any Credit Enhancement described in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
the Mortgage Pool may also include participation interests in such types of
mortgage loans, installment contracts for the sale of such types of
properties and/or mortgage pass-through certificates (including private
mortgage-pass-through certificates, Certificates issued or guaranteed by
FHLMC, Fannie Mae or GNMA or mortgage pass-through certificates previously
created by the Depositor). Such mortgage loans, participation interests,
installment contracts and mortgage pass-through certificates are hereinafter
referred to as the "Mortgage Loans."
The Mortgage Loans will have fixed or adjustable interest rates. Some
Mortgage Loans will fully amortize over their remaining terms to maturity and
others will provide for balloon payments at maturity. The Mortgage Loans will
provide for recourse against only the Mortgaged Properties, or provide for
recourse against the other assets of the obligors thereunder. The Mortgage
Loans will be newly originated or seasoned, and will be acquired by the
Depositor either directly or through one or more affiliates. Information
regarding each Series of Certificates, including interest and principal
payment provisions for each Class, as well as information regarding the size,
composition and other characteristics of the Mortgage Pool relating to such
Series, will be furnished in the related Prospectus Supplement. The Mortgage
Loans will be serviced by a Master Servicer identified in the related
Prospectus Supplement.
The Certificates do not represent an obligation of or an interest in the
Depositor or any affiliate thereof. Unless so specified in the related
Prospectus Supplement, neither the Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental agency or instrumentality or by any
other person or entity.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS DISCUSSED HEREIN UNDER
"RISK FACTORS" AT PAGE 12 AND SUCH INFORMATION AS MAY BE SET FORTH UNDER THE
CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING
ANY OF THE OFFERED CERTIFICATES.
The Depositor, as specified in the related Prospectus Supplement, may
elect to treat all of a specified portion of the collateral securing any
Series of Certificates or the arrangement by which a Series of Certificates
is issued as a "real estate mortgage investment conduit" (a "REMIC"). If such
election is made, each Class of Certificates of a Series will be either
Regular Certificates or Residual Certificates, as specified in the related
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Offers of the Certificates may be made through one or more different
methods, including offerings through underwriters, as more fully described
under "PLAN OF DISTRIBUTION" herein and in the related Prospectus Supplement.
Certain offerings of the Certificates, as specified in the related Prospectus
Supplement, may be made in one or more transactions exempt from the
registration requirements of the Securities Act of 1933, as amended. Such
offerings are not being made pursuant to the Registration Statement of which
this Prospectus forms a part.
With respect to each Series, all of the Offered Certificates will be rated
in one of the four highest ratings categories by one or more nationally
recognized statistical rating organizations. There will have been no public
market for the Certificates of any Series prior to the offering thereof. No
assurance can be given that such a secondary market will develop as a result
of such offering or, if it does develop, that it will provide the holders of
Certificates with liquidity of investment or that it will continue.
<PAGE>
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS MAY NOT BE
USED TO CONSUMMATE SALES OF THE CERTIFICATES OFFERED HEREBY UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is October 29, 1998.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to each Series of Certificates will,
among other things, set forth with respect to such Series of Certificates:
(i) the identity of each Class within such Series; (ii) the initial aggregate
principal amount, the interest rate (the "Pass-Through Rate") (or the method
for determining it) and the authorized denominations of each Class of
Certificates of such Series; (iii) certain information concerning the
Mortgage Loans relating to such Series, including the principal amount, type
and characteristics of such Mortgage Loans on the date of issue of such
Series of Certificates; (iv) the circumstances, if any, under which the
Certificates of such Series are subject to redemption prior to maturity; (v)
the final scheduled distribution date of each Class of Certificates of such
Series; (vi) the method used to calculate the aggregate amount of principal
available and required to be applied to the Certificates of such Series on
each Distribution Date; (vii) the order of the application of principal and
interest payments to each Class of Certificates of such Series and the
allocation of principal to be so applied; (viii) the extent of subordination
of any Subordinate Certificates; (ix) the principal amount of each Class of
Certificates of such Series that would be outstanding on specified
Distribution Dates, if the Mortgage Loans relating to such Series were
prepaid at various assumed rates; (x) the Distribution Dates for each Class
of Certificates of such Series; (xi) relevant financial information with
respect to the Mortgagor(s) and the Mortgaged Properties underlying the
Mortgage Loans relating to such Series, if applicable; (xii) information with
respect to the terms of the Subordinate Certificates or Residual
Certificates, if any, of such Series; (xiii) additional information with
respect to the Credit Enhancement, if any, relating to such Series; (xiv)
additional information with respect to the plan of distribution of such
Series; and (xv) whether the Certificates of such Series will be registered
in the name of the nominee of The Depository Trust Company or another
depository.
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of the material terms of the documents
referred to herein and therein, but neither contains nor will contain all of
the information set forth in the Registration Statement (the "Registration
Statement") of which this Prospectus and the related Prospectus Supplement is
a part. For further information, reference is made to such Registration
Statement and the exhibits thereto which the Depositor has filed with the
Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended (the "1933 Act"). Statements contained in this
Prospectus and any Prospectus Supplement as to the contents of any contract
or other document referred to are summaries and in each instance reference is
made to the copy of the contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects
by such reference. Copies of the Registration Statement may be obtained from
the Commission, upon payment of the prescribed charges, or may be examined
free of charge at the Commission's offices. Reports and other information
filed with the Commission can be inspected and copied at prescribed rates at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at Seven World Trade Center, 13th Floor, New York, New York 10048;
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of the Agreement pursuant to which a Series of
Certificates is issued will be provided to each person to whom a Prospectus
and the related Prospectus Supplement are delivered, upon written or oral
request directed to: Prudential Securities Secured Financing Corporation, One
New York Plaza, New York, New York 10292 attention, David Rodgers, (212)
214-1000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
With respect to the Trust Fund for each Series, there are incorporated
herein by reference all documents and reports filed or caused to be filed by
the Depositor with respect to such Trust Fund pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, after the date of
this Prospectus and prior to the termination of the offering of the Offered
Certificates evidencing an interest in such Trust Fund. The Depositor will
provide or cause to be provided without charge to each person to whom this
Prospectus is delivered in connection with the offering of one or more
Classes of Certificates,
2
<PAGE>
upon request, a copy of any or all such documents or reports incorporated
herein by reference, in each case to the extent such documents or reports
relate to one or more of such Classes of such Certificates, other than the
exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). The Depositor has determined
that its financial statements are not material to the offering of any of the
Offered Certificates. See "FINANCIAL INFORMATION." Requests to the Depositor
should be directed to: Prudential Securities Secured Financing Corporation,
One New York Plaza, New York, New York 10292, attention, David Rodgers, (212)
214-1000.
REPORTS
In connection with each distribution and annually, Certificateholders will
be furnished with statements containing information with respect to principal
and interest payments and the related Trust Fund, as described herein and in
the applicable Prospectus Supplement for such Series. Any financial
information contained in such reports most likely will not have been examined
or reported upon by an independent public accountant. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders." The Master Servicer for each
Series will furnish periodic statements setting forth certain specified
information relating to the Mortgage Loans to the related Trustee, and, in
addition, annually will furnish such Trustee with a statement from a firm of
independent public accountants with respect to the examination of certain
documents and records relating to the servicing of the Mortgage Loans in the
related Trust Fund. See "SERVICING OF THE MORTGAGE LOANS--Evidence of
Compliance." Copies of the monthly and annual statements provided by the
Master Servicer to the Trustee will be furnished to Certificateholders of
each Series upon request addressed to the Depositor's principal executive
offices are located at Prudential Securities Secured Financing Corporation,
One New York Plaza, New York, New York 10292, attention David Rodgers, (212)
214-1000.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PROSPECTUS SUPPLEMENT......................................................................... 2
ADDITIONAL INFORMATION........................................................................ 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ............................................ 2
REPORTS ...................................................................................... 3
SUMMARY OF PROSPECTUS ........................................................................ 7
RISK FACTORS ................................................................................. 12
Limited Liquidity ........................................................................... 12
Limited Assets .............................................................................. 12
Average Life of Certificates; Prepayments; Yields ........................................... 12
Limited Nature of Ratings ................................................................... 13
Risks Associated with Lending on Income Producing Properties ................................ 13
Material Federal Tax Considerations Regarding Residual Certificates ......................... 14
Material Federal Tax Considerations Regarding Original Issue Discount ....................... 14
Certain Tax Considerations of Variable Rate Certificates .................................... 15
Nonrecourse Mortgage Loans .................................................................. 15
Delinquent Mortgage Loans ................................................................... 15
Junior Mortgage Loans ....................................................................... 15
Balloon Payments ............................................................................ 15
Extensions and Modifications of Defaulted Mortgage Loans; Additional Servicing Fees ........ 15
Risks Related to the Mortgagor's Form of Entity and Sophistication .......................... 16
Credit Enhancement Limitations .............................................................. 16
Risks to Subordinated Certificateholders .................................................... 17
Taxable Income in Excess of Distributions Received .......................................... 17
Due-on-Sale Clauses and Assignments of Leases and Rents ..................................... 17
Environmental Risks ......................................................................... 18
ERISA Considerations ........................................................................ 18
Control ..................................................................................... 18
Book-Entry Registration ..................................................................... 18
THE DEPOSITOR ................................................................................ 19
USE OF PROCEEDS .............................................................................. 19
DESCRIPTION OF THE CERTIFICATES .............................................................. 19
General ..................................................................................... 19
Distributions on Certificates ............................................................... 20
Accounts .................................................................................... 21
Amendment ................................................................................... 23
Termination ................................................................................. 24
Reports to Certificateholders ............................................................... 24
The Trustee ................................................................................. 24
THE MORTGAGE POOLS ........................................................................... 25
General ..................................................................................... 25
Assignment of Mortgage Loans ................................................................ 26
Representations and Warranties .............................................................. 27
SERVICING OF THE MORTGAGE LOANS .............................................................. 29
General ..................................................................................... 29
Collections and Other Servicing Procedures .................................................. 29
Insurance ................................................................................... 30
Fidelity Bonds and Errors and Omissions ..................................................... 31
Servicing Compensation and Payment of Expenses .............................................. 31
4
<PAGE>
PAGE
--------
Advances .................................................................................... 32
Modifications, Waivers and Amendments ....................................................... 32
Evidence of Compliance ...................................................................... 32
Certain Matters with Respect to the Master Servicer, the Special Servicer, the Trustee and
the Depositor .............................................................................. 33
Events of Default ........................................................................... 34
Rights upon Event of Default................................................................. 35
CREDIT ENHANCEMENT............................................................................ 36
General ..................................................................................... 36
Enhancement Limitations ..................................................................... 36
Subordinate Certificates .................................................................... 36
Reserve Funds ............................................................................... 37
Cross-Support Features ...................................................................... 37
Certificate Guarantee Insurance ............................................................. 38
Limited Guarantee ........................................................................... 38
Letter of Credit ............................................................................ 38
Pool Insurance Policies; Special Hazard Insurance Policies .................................. 38
Surety Bonds ................................................................................ 38
Fraud Coverage .............................................................................. 38
Mortgagor Bankruptcy Bond ................................................................... 39
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS .................................................. 39
General ..................................................................................... 39
Types of Mortgage Instruments ............................................................... 39
Personality ................................................................................. 40
Installment Contracts ....................................................................... 40
Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries............................... 40
Foreclosure ................................................................................. 42
Environmental Risks.......................................................................... 47
Enforceability of Certain Provisions ........................................................ 50
Soldiers' and Sailors' Relief Act ........................................................... 51
Applicability of Usury Laws ................................................................. 52
Alternative Mortgage Instruments ............................................................ 52
Leases and Rents ............................................................................ 53
Secondary Financing; Due-on-Encumbrance Provisions .......................................... 53
Certain Laws and Regulations ................................................................ 53
Type of Mortgaged Property .................................................................. 54
Criminal Forfeitures ........................................................................ 54
Americans With Disabilities Act ............................................................. 54
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ..................................................... 55
Federal Income Tax Consequences for REMIC Certificates ...................................... 55
Taxation of Regular Certificates ............................................................ 58
Taxation of Residual Certificates ........................................................... 64
Taxes that may be Imposed on the REMIC Pool ................................................. 71
Liquidation of the REMIC Pool ............................................................... 71
Administrative Matters ...................................................................... 72
Limitations on Deduction of Certain Expenses ................................................ 72
Taxation of Certain Foreign Investors ....................................................... 72
Backup Withholding .......................................................................... 73
Reporting Requirements ...................................................................... 73
5
<PAGE>
PAGE
--------
Federal Income Tax Consequences for Certificates as to Which No REMIC Election is Made ...... 74
Standard Certificates ...................................................................... 74
Stripped Certificates ...................................................................... 77
Federal Income Tax Consequences for FASIT Certificates ...................................... 80
Reporting Requirements and Backup Withholding ............................................... 80
Taxation of Certain Foreign Investors ....................................................... 80
STATE AND OTHER TAX CONSIDERATIONS ........................................................... 81
ERISA CONSIDERATIONS ......................................................................... 81
Prohibited Transactions ..................................................................... 81
Unrelated Business Taxable Income-Residual Interests ........................................ 83
LEGAL INVESTMENT ............................................................................. 83
PLAN OF DISTRIBUTION ......................................................................... 85
LEGAL MATTERS ................................................................................ 86
FINANCIAL INFORMATION ........................................................................ 86
RATING ....................................................................................... 86
</TABLE>
6
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each
Series of Certificates contained in the Prospectus Supplement to be prepared
and delivered in connection with the offering of such Series. An Index of
Significant Definitions is included at the end of this Prospectus.
Title of Certificates ......... Commercial/Multifamily Mortgage Pass-Through
Certificates, issuable in Series (the
"Certificates").
Depositor ..................... Prudential Securities Secured Financing
Corporation, One New York Plaza, New York,
New York 10292. Its telephone number is
(212) 214-1000.
Master Servicer ............... The Master Servicer for each Series of
Certificates will be named in the related
Prospectus Supplement. See "SERVICING OF THE
MORTGAGE LOANS--General."
Special Servicer .............. The special servicer (the "Special
Servicer"), if any, for each Series of
Certificates, will be named, or the
circumstances in accordance with which a
Special Servicer will be appointed, will be
described in the related Prospectus
Supplement. See "SERVICING OF THE MORTGAGE
LOANS--General."
Trustee ....................... The trustee (the "Trustee") for each Series
of Certificates will be named in the related
Prospectus Supplement. See "DESCRIPTION OF
THE CERTIFICATES--The Trustee."
The Trust Fund ................ Each Series of Certificates will represent
in the aggregate the entire beneficial
ownership interest in a Trust Fund
consisting primarily of the following:
A. Mortgage Pool ............. The primary assets of each Trust Fund will
consist of a pool of mortgage loans (the
"Mortgage Pool") secured by first or junior
mortgages, deeds of trust or similar
security instruments (each, a "Mortgage")
on, or installment contracts ("Installment
Contracts") for the sale of, fee simple or
leasehold interests in property improved by
office buildings, health-care related
properties, congregate care facilities,
hotels and motels, industrial properties,
warehouse, mini-warehouse, and self-storage
facilities, mobile home parks, multifamily
properties, cooperative apartment buildings,
nursing homes, office/retail properties,
anchored retail properties, single-tenant
retail properties, unanchored retail
properties and other commercial real estate
properties, multifamily residential
properties and/or mixed residential
commercial properties (each, a "Mortgaged
Property"). A Mortgage Pool may also include
any or all of the participation interests in
such types of mortgage loans, private-label
mortgage pass-through or collateralized
mortgaged obligations certificates,
certificates issued or guaranteed by FHLMC,
Fannie Mae or GNMA. Each such mortgage loan,
Installment Con-
7
<PAGE>
tract, participation interest or certificate
or collateralized mortgage obligation is
herein referred to as a "Mortgage Loan." The
Mortgage Loans will not be guaranteed or
insured by the Depositor or any of its
affiliates. The Prospectus Supplement will
indicate whether the Mortgage Loans will be
guaranteed or insured by any governmental
agency or instrumentality or other person.
The Mortgage Loans will have the additional
characteristics described under "THE
MORTGAGE POOLS" herein and "DESCRIPTION
MORTGAGE POOL" in the related Prospectus
Supplement. All Mortgage Loans will have
been purchased, either directly or
indirectly, by the Depositor on or before
the date of initial issuance of the related
Series of Certificates.
All Mortgage Loans will be of one or more of
the following types: Mortgage Loans with
fixed interest rates; Mortgage Loans with
adjustable interest rates; Mortgage Loans
whose principal balances fully amortize over
their remaining terms to maturity. Mortgage
Loans whose principal balances do not fully
amortize, but instead provide for a
substantial principal payment at the stated
maturity of the loan; Mortgage Loans that
provide for recourse against only the
Mortgaged Properties; Mortgage Loans that
provide for recourse against the other
assets of the related mortgagors; and any
other types of Mortgages described in the
related Prospectus Supplement.
Certain Mortgage Loans may provide that
scheduled interest and principal payments
thereon are applied first to interest
accrued from the last date to which interest
has been paid to the date such payment is
received and the balance thereof is applied
to principal. and other Mortgage Loans may
provide for payment of interest in advance
rather than in arrears. Each Mortgage Loan
may contain prohibitions on prepayment or
require payment of a premium or a yield
maintenance penalty in connection with a
prepayment, in each case as described in the
related Prospectus Supplement. The Mortgage
Loans may provide for payments of principal,
interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such
other interval as is specified in the
related Prospectus Supplement.
B. Accounts .................. A Collection Account and a Distribution
Account. The Master Servicer generally will
be required to establish and maintain an
account (the "Collection Account") in the
name of the Trustee on behalf of the
Certificateholders into which the Master
Servicer will, to the extent described
herein and in the related Prospectus
Supplement, deposit all payments and
collections received or advanced with
respect to the Mortgage Loans. The Trustee
generally will be required to establish an
account (the "Distribution Account") into
which the Master Servicer will deposit
amounts held in the Collection Account from
which distributions of principal and
interest will be made. Such distributions
will be made to the Certificateholders in
the
8
<PAGE>
manner described in the related Prospectus
Supplement. Funds held in the Collection
Account and Distribution Account may be
invested in certain short-term, investment
grade obligations.
C. Credit Enhancement ........ If so provided in the related Prospectus
Supplement, credit enhancement with respect
to one or more Classes of Certificates of a
Series or the related Mortgage Loans
("Credit Enhancement"). Credit Enhancement
may be in the form of a letter of credit,
the subordination of one or more Classes of
the Certificates of such Series, the
establishment of one or more reserve funds,
surety bonds, certificate guarantee
insurance, limited guarantees, or another
type of credit support, or a combination
thereof. It is unlikely that Credit
Enhancement will protect against all risks
of loss or guarantee repayment of the entire
principal balance of the Certificates and
interest thereon. The amount and types of
coverage, the identification of the entity
providing the coverage (if applicable) and
related information with respect to each
type of Credit Enhancement, if any, will be
described in the applicable Prospectus
Supplement for a Series of Certificates. See
"RISK FACTORS--Credit Enhancement
Limitations" and "CREDIT
ENHANCEMENT--General."
Description of Certificates ... The Certificates of each Series will be
issued pursuant to a Pooling and Servicing
Agreement (the "Agreement"). If so specified
in the applicable Prospectus Supplement,
Certificates of a given Series may be issued
in several Classes, which may pay interest
at different rates, may represent different
allocations of the right to receive
principal and interest payments, and certain
of which may be subordinated to other
Classes in the event of shortfalls in
available cash flow from the underlying
mortgage loans. Alternatively, or in
addition, Classes may be structured to
receive principal payments in sequence. Each
Class in a group of sequential pay Classes
would be entitled to be paid in full before
the next Class in the group is entitled to
receive any principal payments. A Class of
Certificates may also provide for payments
of principal only or interest only or for
disproportionate payments of principal and
interest. Each Series of Certificates
(including any Class or Classes of
Certificates of such Series not offered
hereby) will represent in the aggregate the
entire beneficial ownership interest in the
Trust Fund. See "PROSPECTUS SUPPLEMENT" for
a listing of additional characteristics of
the Certificates that will be included in
the Prospectus Supplement for each Series.
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates. Unless so specified in the
related Prospectus Supplement, neither the
Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental
agency or instrumentality or by any other
person or entity. See "RISK FACTORS--Limited
Assets" and "DESCRIPTION OF THE
CERTIFICATES."
9
<PAGE>
Distributions on Certificates . Distributions of principal and interest on
the Certificates of each Series will be made
to the registered holders thereof on the day
(the "Distribution Date") specified in the
related Prospectus Supplement, beginning in
the period specified in the related
Prospectus Supplement following the
establishment related Trust Fund.
With respect to each Series of Certificates
on each Distribution Date, the Trustee (or
such other paying agent as may be identified
in the applicable Prospectus Supplement)
will distribute to the Certificateholders
the amounts described in the related
Prospectus Supplement that are due to be
paid on such Distribution Date. In general,
such amounts will include previously
undistributed payments of principal
(including principal prepayments, if any)
and interest on the Mortgage Loans received
by the Master Servicer or the Special
Servicer, if any, after a date specified in
the related Prospectus Supplement (the
"Cut-off Date") and prior to the day
preceding each Distribution Date specified
in the related Prospectus Supplement.
Advances ...................... The related Prospectus Supplement will set
forth the obligations, if any, of the Master
Servicer and the Special Servicer, if any,
as part of their servicing responsibilities,
to make certain advances with respect to
delinquent payments on the Mortgage Loans,
payments of taxes, assessments, insurance
premiums and other required payments. See
"DESCRIPTION OF THE CERTIFICATES--Advances."
Termination ................... The obligations of the parties to the
Agreement for each Series will terminate
upon: (i) the purchase of all of the assets
of the related Trust Fund, as described in
the related Prospectus Supplement; (ii) the
later of (a) the distribution to
Certificateholders of that Series of final
payment with respect to the last outstanding
Mortgage Loan or (b) the disposition of all
property acquired upon foreclosure or
deed-in-lieu of foreclosure with respect to
the last outstanding Mortgage Loan and the
remittance to the Certificateholders of all
funds due under the Agreement; (iii) the
sale of the assets of the related Trust Fund
after the principal amounts of all
Certificates have been reduced to zero under
circumstances set forth in the Agreement; or
(iv) mutual consent of the parties and all
Certificateholders. With respect to each
Series, the Trustee will give or cause to be
given written notice of termination of the
Agreement to each Certificateholder and,
unless otherwise specified in the applicable
Prospectus Supplement, the final
distribution under the Agreement will be
made only upon surrender and cancellation of
the related Certificates at an office or
agency specified in the notice of
termination. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
Tax Status of the Certificates The Certificates of each Series will
constitute either (i) "Regular Interests"
("Regular Certificates") and "Residual
Interests" ("Residual Certificates") in a
Trust Fund treated as a REMIC under
10
<PAGE>
Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests in a Trust Fund treated as a
grantor trust under applicable provisions of
the Code. For the treatment of Regular
Certificates, Residual Certificates or
grantor trust certificates under the Code,
see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES" herein and in the related
Prospectus Supplement.
ERISA Considerations .......... Fiduciaries of employee benefit plans or of
certain other retirement plans and
arrangements that are subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975
of the Code should carefully review with
their legal advisors whether the purchase or
holding of Certificates may give rise to a
transaction that is prohibited or is not
otherwise permissible either under ERISA or
Section 4975 of the Code. See "ERISA
CONSIDERATIONS" herein and in the related
Prospectus Supplement.
Legal Investment .............. The related Prospectus Supplement will
indicate whether the Offered Certificates
will constitute "mortgage related
securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984.
Accordingly, investors whose investment
authority is subject to legal restrictions
should consult their own legal advisors to
determine whether and to what extent the
Certificates constitute legal investments
for them. See "LEGAL INVESTMENT" herein and
in the related Prospectus Supplement.
Rating ........................ At the date of issuance, as to each Series,
each Class of Offered Certificates will be
rated not lower than investment grade by one
or more nationally recognized statistical
rating agencies (each a "Rating Agency").
See "RATING" herein and "RATINGS" in the
related Prospectus Supplement.
11
<PAGE>
RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may, be set forth in "RISK FACTORS" in the related Prospectus
Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such
Series remain outstanding. The market value of Certificates will fluctuate
with changes in prevailing rates of interest. Consequently, any sale of
Certificates by a holder in any secondary market that may develop may be at a
discount from 100% of their original principal balance or from their purchase
price. Furthermore, secondary market purchasers may look only hereto, to the
related Prospectus Supplement and to the reports to Certificateholders
delivered pursuant to the Agreement as described herein under the heading
"DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders" and
"SERVICING OF THE MORTGAGE LOANS--Evidence of Compliance" for information
concerning the Certificates. Certificateholders will have only those
redemption rights and the Certificates will be subject to early retirement
only under the circumstances described herein or in the related Prospectus
Supplement. See "DESCRIPTION OF THE CERTIFICATES--Termination."
LIMITED ASSETS
A Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series only if so specified in the related
Prospectus Supplement. If the related Prospectus Supplement does not specify
that a Series of Certificates will have a claim against or security interest
in the Trust Funds for another Series and the related Trust Fund is
insufficient to make payments on such Certificates, no other assets will be
available for payment of the deficiency. Additionally, certain amounts
remaining in certain funds or accounts, including the Distribution Account,
the Collection Account and any accounts maintained as Credit Enhancement, may
be withdrawn under certain conditions, as described in the related Prospectus
Supplement. In the event of such withdrawal, such amounts will not be
available for future payment of principal of or interest on the Certificates.
If so provided in the Prospectus Supplement for a Series of Certificates
consisting of one or more Classes of Subordinate Certificates, on any
Distribution Date in respect of which losses or shortfalls in collections on
the Mortgaged Properties have been realized, the amount of such losses or
shortfalls will be borne first by one or more Classes of the Subordinate
Certificates, and, thereafter, by the remaining Classes of Certificates in
the priority and manner and subject to the limitations specified in such
Prospectus Supplement.
AVERAGE LIFE OF CERTIFICATES; PREPAYMENTS; YIELDS
Prepayments on the Mortgage Loans in any Trust Fund generally will result
in a faster rate of principal payments on one or more Classes of the related
Certificates than if payments on such Mortgage Loans were made as scheduled.
Thus, the prepayment experience on the Mortgage Loans may affect the average
life of each Class of related Certificates. The rate of principal payments on
pools of mortgage loans varies between pools and from time to time is
influenced by a variety of economic, demographic, geographic, social, tax,
legal and other factors. There can be no assurance as to the rate of
prepayment on the Mortgage Loans in any Trust Fund or that the rate of
payments will conform to any model described in any Prospectus Supplement. If
prevailing interest rates fall significantly below the applicable rates borne
by the Mortgage Loans included in a Trust Fund, principal prepayments are
likely to be higher than if prevailing rates remain at or above the rates
home by those Mortgage Loans. As a result, the actual maturity of any Class
of Certificates could occur significantly earlier than expected.
Alternatively, the actual maturity of any Class of Certificates could occur
significantly later than expected as a result of prepayment premiums or the
existence of defaults on the Mortgage Loans, particularly at or near their
maturity dates. In addition, the Master Servicer or the Special Servicer, if
any, may have the option under the Agreement for such Series to extend the
maturity of the Mortgage Loans following a default in the payment of a
balloon payment, which would also have the effect of extending the average
life of each
12
<PAGE>
Class of related Certificates. A Series of Certificates may include one or
more Classes of Certificates with priorities of payment and, as a result,
yields on other Classes of Certificates, including Classes of Offered
Certificates, of such Series may be more sensitive to prepayments on Mortgage
Loans. A Series of Certificates may include one or more Classes offered at a
significant premium or discount. Yields on such Classes of Certificates will
be sensitive, and in some cases extremely sensitive, to prepayments on
Mortgage Loans. With respect to interest only or disproportionately interest
weighted Classes purchased at a premium, such Classes may not return their
purchase Prices under rapid repayment scenarios. See "YIELD AND MATURITY
CONSIDERATIONS" in the related Prospectus Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a Class of Certificates will
reflect such Rating Agency's assessment solely of the likelihood that holders
of Certificates of such Class will receive payments to which such
Certificateholders are entitled under the related Agreement. Such rating will
not constitute an assessment of the likelihood that principal prepayments on
the related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood
of early optional termination of the Series Of Certificates. Such rating will
not address the possibility that prepayment at higher or lower rates than
anticipated by an investor may cause such investor to experience a lower than
anticipated yield or that an investor purchasing a Certificate at a
significant premium, or a Certificate that is entitled to disproportionately
low, nominal or no principal distributions, might fail to recoup its initial
investment under certain prepayment scenarios. Each Prospectus Supplement
will identify any payment to which holders of Offered Certificates of the
related Series are entitled that is not covered by the applicable rating. See
"Credit Enhancement Limitations."
RISKS ASSOCIATED WITH LENDING ON INCOME PRODUCING PROPERTIES
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single-family
property. For example, the ability of a mortgagor to repay a loan secured by
an income-producing property typically is dependent primarily upon the
successful operation of such property rather than any independent income or
assets of the mortgagor; thus, the value of an income-producing property is
directly related to the net operating income, as defined in the prospectus
supplement, derived from such property. In contrast, the ability of a
mortgagor to repay a single-family loan typically is dependent primarily upon
the mortgagor's household income, rather than the capacity of the property to
produce income; thus, other than in geographical areas where employment is
dependent upon a particular employer or an industry, the mortgagor's income
tends not to reflect directly the value of such property. A decline in the
net operating income of an income-producing property will likely affect both
the performance of the related loan as well as the liquidation value of such
property, whereas a decline in the income of a mortgagor on a single-family
property will likely affect the performance of the related loan but may not
affect the liquidation value of such property.
Further, the concentration of default foreclosure and loss risks for
Mortgage Loans in a particular Trust Fund or the related Mortgaged Properties
will generally be greater than for pools of single-family loans both because
the Mortgage Loans in a Trust Fund will generally consist of a smaller number
of loans than would a single-family pool of comparable aggregate unpaid
principal balance and because of the higher principal balance of individual
Mortgage Loans.
The performance of a mortgage loan secured by an income-producing property
leased by the mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both;
the risks associated with such loans may be offset by the number of tenants
or, if applicable, a diversity of types of business operated by such tenants.
A number of the Mortgage Loans may be secured by liens on owner-occupied
Mortgaged Properties or on Mortgaged Properties leased to a single tenant.
Accordingly, a decline in the financial condition of the borrower or single
tenant, as applicable, may have a disproportionately greater effect on the
net operating income from such Mortgaged Properties than would be the case
with respect to Mortgaged Properties with multiple tenants. Furthermore, the
value of
13
<PAGE>
any mortgaged property may be adversely affected by risks generally incident
to interests in real property, including changes in general or local economic
conditions and/or specific industry segments, declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real
estate tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters; and other factors beyond the control of the Master Servicer or the
Special Servicer, if any.
Additional risk may be presented by the type and use of a particular
mortgaged property. For instance, mortgaged properties that operate as
hospitals, nursing homes or convalescent homes may present special risks to
mortgagees due to the significant governmental regulation of the ownership,
operation, maintenance, control and financing of health care institutions.
Mortgages encumbering mortgaged properties that are owned by the mortgagor
under a condominium form of ownership are subject to the declaration, by-laws
and other rules and regulations of the condominium association. Hotel and
motel properties are often operated pursuant to franchise, management or
operating agreements that may be terminable by the franchiser or operator.
Moreover, the transferability of a hotel's operating, liquor and other
licenses upon a transfer of the hotel, whether through purchase or
foreclosure, is subject to local law requirements. In addition, mortgaged
properties that are multifamily residential properties or cooperatively owned
multifamily properties may be subject to rent control laws, which could
impact the future cash flows of such properties. Any such risks will be more
fully described in the related Prospectus Supplement under the captions "RISK
FACTORS" and "DESCRIPTION OF THE MORTGAGE POOL."
If applicable, certain legal aspects of the Mortgage Loans for a Series of
Certificates may be described in the related Prospectus Supplement. See also
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS."
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their
receipt of cash payments, as described in "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates".
Accordingly, under certain circumstances, holders of Offered Certificates
that constitute Residual Certificates may have taxable income and tax
liabilities arising from such investment during a taxable year in excess of
the cash received during such period. The requirement that holders of
Residual Certificates report their pro rata share of the taxable income and
net loss of the REMIC will continue until the Certificate Balances of all
classes of Certificates of the related series have been reduced to zero, even
though holders of Residual Certificates have received full payment of their
stated interest and principal. A portion (or, in certain circumstances, all)
of such Certificateholder's share of the REMIC taxable income may be treated
as "excess inclusion" income to such holder which (i) generally, will not be
subject to offset by losses from other activities, (ii) for a tax-exempt
holder, will be treated as unrelated business taxable income and (iii) for a
foreign holder, will not qualify for exemption from withholding tax.
Individual holders of Residual Certificates may be limited in their ability
to deduct servicing fees and other expenses of the REMIC. In addition,
Residual Certificates are subject to certain restrictions on transfer.
Because of the special tax treatment of Residual Certificates, the taxable
income arising in a given year on a Residual Certificate will not be equal to
the taxable income associated with investment in a corporate bond or stripped
instrument having similar cash flow characteristics and pre-tax yield.
Therefore, the after-tax yield on the Residual Certificate may be
significantly less than that of a corporate bond or stripped instrument
having similar cash flow characteristics.
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with "original issue discount" for
federal income tax purposes, which generally will result in recognition of
some taxable income in advance of the receipt of cash attributable to such
income. See "Material Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular Certificates."
14
<PAGE>
CERTAIN TAX CONSIDERATIONS OF VARIABLE RATE CERTIFICATES
There are certain tax matters as to which counsel to the Depositor is
unable to opine at the time of the issuance of the Prospectus due to
uncertainty in the law. Specifically, the treatment of Interest Weighted
Certificates and Variable Rate Regular Interests are subject to unsettled law
which creates uncertainty as to the exact method of income accrual which
should control. The REMIC will accrue income using a method which is
consistent with certain regulations; however, there can be no assurance that
such method will be controlling.
NONRECOURSE MORTGAGE LOANS
It is anticipated that a substantial portion of the Mortgage Loans
included in any Trust Fund will be nonrecourse loans or loans for which
recourse may be restricted or unenforceable. As to such Mortgage Loans, in
the event of mortgagor default, recourse may he had only against the specific
multifamily or commercial property and such other assets, if any, as have
been pledged to secure the Mortgage Loan. With respect. to those Mortgage
Loans that provide for recourse against the mortgagor and its assets
generally, there can be no assurance that such recourse will ensure a
recovery in respect of a defaulted Mortgage Loan greater than the liquidation
value of the related Mortgaged Property.
DELINQUENT MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series of Certificates may include Mortgage Loans that are
delinquent; provided, however, that such delinquent Mortgage Loans may only
constitute up to, but not including, 20% (by principal balance) of the Trust
Fund. If so specified in the related Prospectus Supplement, the servicing of
such Mortgage Loans will be performed by a Special Servicer. Credit
Enhancement, if provided with respect to a particular Series of Certificates,
may not cover all losses related to such delinquent Mortgage Loans, and
investors should consider the risk that the inclusion of such Mortgage Loans
in the Trust Fund may adversely affect the rate of defaults and prepayments
on Mortgaged Properties and the yield on the Certificates of such Series.
JUNIOR MORTGAGE LOANS
Certain of the Mortgage Loans may be junior mortgage loans. The primary
risk to holders of mortgage loans secured by junior liens is the possibility
that a foreclosure of a related senior lien would extinguish the junior lien
and that adequate funds will not be received in connection with such
foreclosure to pay the debt held by the holder of such junior mortgage loan
after satisfaction of all related senior liens.
See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Junior Mortgages; Rights
of Senior Mortgagees or Beneficiaries" and "--Foreclosure" for a discussion
of additional risks to holders of mortgage loans secured by junior liens.
BALLOON PAYMENTS
Certain of the Mortgage Loans as of the Cut-off Date may not be fully
amortizing over their terms to maturity and, thus, will require substantial
principal payments (i.e., balloon payments) at their stated maturity.
Mortgage loans with balloon payments involve a greater degree of risk because
the ability of a mortgagor to make a balloon payment typically will depend
upon its ability either to refinance the loan or to sell the related
mortgaged property in a timely manner. The ability of a mortgagor to
accomplish either of these goals will be affected by a number of factors,
including the level of available mortgage rates at the time of sale or
refinancing, the mortgagor's equity in the related mortgaged property, the
financial condition and operating history of the mortgagor and the related
mortgaged property, tax laws, rent control laws (with respect to certain
multifamily properties and mobile home parks), reimbursement rates (with
respect to certain hospitals, nursing homes and congregate care facilities),
renewability of operating licenses, prevailing general economic conditions
and the availability of credit for commercial or multifamily, as the case may
be, real properties generally.
EXTENSIONS AND MODIFICATIONS OF DEFAULTED MORTGAGE LOANS; ADDITIONAL
SERVICING FEES
In order to maximize recoveries on defaulted Mortgage Loans, a Master
Servicer or Special Servicer, if any, will be permitted (within the
parameters specified in the related Prospectus Supplement) to extend and
modify Mortgage Loans that are in default or as to which a payment default is
reasonably foreseeable,
15
<PAGE>
including in particular with respect to balloon payments. In addition, a
Master Servicer or a Special Servicer, if any, may receive workout fees,
management fees, liquidation fees or other similar fees based on receipts
from or proceeds of such Mortgage Loans. Although a Master Servicer or
Special Servicer, if any, generally will be required to determine that any
such extension or modification is reasonably likely to produce a greater
recovery amount than liquidation, there can be no assurance that such
flexibility with respect to extensions or modifications or payment of a
workout fee will increase the amount of receipts from or proceeds of Mortgage
Loans that are in default or as to which a payment default is reasonably
foreseeable.
RISKS RELATED TO THE MORTGAGOR'S FORM OF ENTITY AND SOPHISTICATION
Mortgage loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of mortgage loans made to individuals. For example, an entity, as
opposed to an individual, may be more inclined to seek legal protection from
its creditors, such as a mortgagee, under the bankruptcy laws. Unlike
individuals involved in bankruptcies, various types of entities generally do
not have personal assets and creditworthiness at stake. The bankruptcy of a
mortgagor may impair the ability of the mortgagee to enforce its rights and
remedies under the related mortgage. See "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--Foreclosure--Bankruptcy Law." The mortgagor's sophistication
may increase the likelihood of protracted litigation or bankruptcy in default
situations. The more sophisticated a mortgagor is, the more likely it will be
aware of its rights, remedies and defenses against its mortgagee and the more
likely it will have the resources to make effective use of all of its rights,
remedies and defenses.
CREDIT ENHANCEMENT LIMITATIONS
The Prospectus Supplement for a Series of Certificates will describe any
Credit Enhancement in the related Trust Fund, which may include letters of
credit, insurance policies, surety bonds, limited guarantees, reserve funds
or other types of credit support, or combinations thereof. Use of Credit
Enhancement will be subject to the conditions and limitations described
herein and in the related Prospectus Supplement and is not expected to cover
all potential losses or risks or guarantee repayment of the entire principal
balance of the Certificates and interest thereon.
A Series of Certificates may include one or more Classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce
the risk to holders of Senior Certificates of delinquent distributions or
ultimate losses, the amount of subordination will be limited and may decline
or be reduced to zero under certain circumstances. In addition, if principal
payments on one or more Classes of Certificates of a Series are made in a
specified order of priority, any limits with respect to the aggregate amount
of claims under any related Credit Enhancement may be exhausted before the
principal of the lower priority Classes of Certificates of such Series has
been repaid. As a result, the impact of significant losses and shortfalls on
the Mortgaged Properties may fall primarily upon those Classes of
Certificates having a lower priority of payment. Moreover, if a form of
Credit Enhancement covers more than one Series of Certificates, holders of
Certificates of one Series will be subject to the risk that such Credit
Enhancement will be exhausted by the claims of the holders of Certificates of
one or more other Series.
The amount, type and nature of Credit Enhancement, if any, established
with respect to a Series of Certificates will be determined on the basis of
criteria established by each Rating Agency rating Classes of the Certificates
of such Series. Such criteria are sometimes based upon an actuarial analysis
of the behavior of mortgage loans in a larger group. Such analysis is often
the basis upon which each Rating Agency determines the amount of Credit
Enhancement required with respect to each such Class. There can be no
assurance that the historical data supporting any such actuarial analysis
will accurately reflect future experience nor any assurance that the data
derived from a large pool of mortgage loans accurately predicts the
delinquency, foreclosure or loss experience of any particular pool of
Mortgage Loans. No assurance can be given with respect to any Mortgage Loan
that the appraised value of the related Mortgaged Property has remained or
will remain at its level as of the origination date of such Mortgage Loan.
Moreover, there is no assurance that appreciation of real estate values
generally will limit loss experiences on commercial or multifamily
properties. If the commercial or multifamily residential real
16
<PAGE>
estate markets should experience an overall decline in property values such
that the outstanding principal balances of the Mortgage Loans in a particular
Trust Fund and any secondary financing on the related Mortgaged Properties
become equal to or greater than the value of the Mortgaged Properties, the
rates of delinquencies, foreclosures and losses could be higher than those
now generally experienced by institutional lenders for similar mortgage
loans. In addition, adverse economic conditions (which may or may not affect
real property values) may affect the timely payment by mortgagors of
scheduled payments of principal and interest on the Mortgage Loans and,
accordingly, the rates of delinquencies, foreclosures and losses with respect
to any Trust Fund. To the extent that such losses are not covered by Credit
Enhancement, such losses will be borne, at least in part, by the holders of
one or more Classes of the Certificates of the related Series. See "Limited
Nature of Ratings," "DESCRIPTION OF THE CERTIFICATES" and "CREDIT
ENHANCEMENT."
RISKS TO SUBORDINATED CERTIFICATEHOLDERS
If so provided in the related Prospectus Supplement, a Series of
Certificates may include one or more Classes of Subordinate Certificates
(which may include Offered Certificates). If losses or shortfalls in
collections on Mortgaged Properties are realized, the amount of such losses
or shortfalls will be borne first by one or more Classes of the Subordinate
Certificates. The remaining amount of such losses or shortfalls, if any, will
be borne by the remaining Classes of Certificates in the priority and subject
to the limitations specified in such Prospectus Supplement. In addition to
the foregoing, any Credit Enhancement, if applicable, may be used by the
Certificates of a higher priority of payment before the principal of the
lower priority Classes of Certificates of such Series has been repaid.
Therefore, the impact of significant losses and shortfalls on the mortgaged
properties may fall primarily upon those Classes of Certificates with a lower
payment priority.
TAXABLE INCOME IN EXCESS OF DISTRIBUTIONS RECEIVED
A holder of a certificate in a Class of Subordinate Certificates could be
allocated taxable income attributable to accruals of interest and original
issue discount in excess of cash distributed to such holder if mortgage loans
were in default giving rise to delays in distributions. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Regular Interests--Treatment of
Subordinate Certificates" herein.
DUE-ON-SALE CLAUSES AND ASSIGNMENTS OF LEASES AND RENTS
Mortgages may contain a due-on-sale clause, which permits the mortgagee to
accelerate the maturity of the mortgage loan if the mortgagor sells,
transfers or conveys the related mortgaged property or its interest in the
mortgaged property. Mortgages may also include a debt-acceleration clause,
which permits the mortgagee to accelerate the debt upon a monetary or
non-monetary default of the mortgagor. Such clauses are generally enforceable
subject to certain exceptions. The courts of all states will enforce clauses
providing for acceleration in the event of a material payment default. The
equity courts of any state, however, may refuse the foreclosure of a mortgage
or deed of trust when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable.
The related Prospectus Supplement will describe whether and to what extent
the Mortgage Loans will be secured by an assignment of leases and rents
pursuant to which the mortgagor typically assigns its right, title and
interest as landlord under the leases on the related Mortgaged Property and
the income derived therefrom to the mortgagee as further security for the
related Mortgage Loan, while retaining a license to collect rents for so long
as there is no default. In the event the mortgagor defaults, the license
terminates and the mortgagee is entitled to collect rents. Such assignments
are typically not perfected as security interests prior to the mortgagee's
taking possession of the related mortgaged property and/or appointment of a
receiver. Some state laws may require that the mortgagee take possession of
the mortgaged property and obtain a judicial appointment of a receiver before
becoming entitled to collect the rents. In addition, if bankruptcy or similar
proceedings are commenced by or in respect of the mortgagor, the mortgagee's
ability to collect the Tents may be adversely affected. See "CERTAIN LEGAL
ASPECTS OF THE MORTGAGE LOANS--Leases and Rents."
17
<PAGE>
ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under the laws of certain states, contamination
of a property may give rise to a lien on the property to assure the costs of
cleanup. In several states. such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), a mortgagee may be liable
as an "owner" or "operator" for costs of addressing releases or threatened
releases of hazardous substances that require remedy at a property. if agents
or employees of the mortgagee have become sufficiently involved in the
operations of the mortgagor, regardless of whether the environmental damage
or threat was caused by a prior owner. A mortgagee also risks such liability
on foreclosure of the mortgage. Each Agreement will generally provide that
the Master Servicer or the Special Servicer, if any, acting on behalf of the
Trust Fund, may not acquire title to a Mortgaged Property securing a Mortgage
Loan or take over its operation unless the Master Servicer or Special
Servicer, as applicable, has previously determined, based upon a report
prepared by a person who regularly conducts environmental audits, that: (i)
the Mortgaged Property is in compliance with applicable environmental laws,
and there are no circumstances present at the Mortgaged Property relating to
the use, management or disposal of any hazardous substances, hazardous
materials, wastes or petroleum based materials for which investigation,
testing, monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation; or (ii) if the Mortgaged
Property is not so in compliance or such circumstances are so present, then
it would be in the best economic interest of the Trust Fund to acquire title
to the Mortgaged Property and further to take such actions as would be
necessary and appropriate to effect such compliance and/or respond to such
circumstances, which may include obtaining an environmental insurance policy.
The related Prospectus Supplement may impose additional restrictions on the
ability of the Master Servicer or the Special Servicer, if any, to take any
of the foregoing actions. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Environmental Risks."
ERISA CONSIDERATIONS
Generally, title I of ERISA and certain sections of the Code apply to
investments made by employee benefit plans and transactions involving the
assets of such plans. Due to the complexity of regulations that govern such
plans, prospective benefit plan investors that are subject to ERISA or the
Code are urged to consult their own counsel regarding consequences under
ERISA of acquisition, ownership and disposition of the Offered Certificates
of any Series. See "ERISA CONSIDERATIONS."
CONTROL
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates of a Series or a similar means of allocating decision-making
under the related Agreement, which will be specified in the related
Prospectus Supplement ("Voting Rights"), will be required to direct, and will
be sufficient to bind all Certificateholders of such Series to, certain
actions, including amending the related Agreement in certain circumstances.
See "SERVICING OF THE MORTGAGE LOANS--Events of Default," "--Rights Upon
Event of Default" and "DESCRIPTION OF THE CERTIFICATES--Amendment."
BOOK-ENTRY REGISTRATION
The related Prospectus Supplement may provide that one or more Classes of
the Certificates initially will be represented by one or more certificates
registered in the name of the nominee for The Depository Trust Company, and
will not be registered in the names of the Certificateholders or their
nominees. Because of this, unless and until definitive certificates, as
defined in the Prospectus Supplement, are issued, beneficial owners of the
Certificates of such Class or Classes will not be recognized by the Trustee
as "Certificateholders" (as that term is to be used in the related
Agreement). Hence, until such time as definitive certificates are issued, the
beneficial owners will be able to exercise the rights of Certificateholders
only indirectly through The Depository Trust Company and its participating
organizations. See "DESCRIPTION OF THE CERTIFICATES--General."
18
<PAGE>
THE DEPOSITOR
Prudential Securities Financing Corp. was incorporated in the State of
Delaware on August 26, 1988 as a wholly owned, limited purpose finance
subsidiary of Prudential Securities Group. The principal executive offices of
the Depositor are located at One New York Plaza, New York, New York 10292,
attention David Rodgers, (212) 214-1000.
The Depositor will have no servicing obligations or responsibilities with
respect to any Series of Certificates, Mortgage Pool or Trust Fund. The
Depositor does not have, nor is it expected in the future to have, any
significant assets.
The Depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling mortgage assets to such trusts. Neither the Depositor, its parent nor
any of the Depositor's affiliates will insure or guarantee distributions on
the Certificates of any Series.
Unless otherwise specified in the applicable Prospectus Supplement, the
assets of the Trust Funds will be acquired by the Depositor directly or
through one or more affiliates.
USE OF PROCEEDS
The Depositor will apply all or substantially all of the net proceeds from
the sale of each Series of Offered Certificates to purchase the Mortgage
Loans relating to such Series, to repay indebtedness that has been incurred
to obtain funds to acquire Mortgage Loans, to obtain Credit Enhancement, if
any, for the Series and to pay costs of structuring, issuing and underwriting
the Certificates. If so specified in the related Prospectus Supplement,
Certificates may be exchanged by the Depositor for Mortgage Loans.
DESCRIPTION OF THE CERTIFICATES
The Certificates of each Series will he issued pursuant to a separate
Pooling and Servicing Agreement (the "Agreement") to be entered into among
the Depositor, the Master Servicer, the Special Servicer, if any, and the
Trustee for that Series and any other parties described in the applicable
Prospectus Supplement, substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus is a part or in such other
form as may be described in the applicable Prospectus Supplement. The
following summaries describe certain provisions expected to be common to each
Series and the Agreement with respect to the underlying Trust Fund. However,
the Prospectus Supplement for each Series will describe more fully the
Certificates and the provisions of the related Agreement, which may be
different from the summaries set forth below.
At the time of issuance, the Offered Certificates of each Series will be
rated "investment grade," typically one of the four highest generic rating
categories, by at least one nationally recognized statistical rating
organization. Each of such rating organizations specified in the applicable
Prospectus Supplement as rating the Offered Certificates of the related
Series is hereinafter referred to as a "Rating Agency." A security rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning Rating Agency.
GENERAL
The Certificates of each Series will be issued in registered or book-entry
form and will represent beneficial ownership interests in the trust fund (the
"Trust Fund") created pursuant to the Agreement for such Series. The Trust
Fund for each Series will primarily comprise, to the extent provided in the
Agreement: (i) the Mortgage Loans conveyed to the Trustee pursuant to the
Agreement; (ii) all payments on or collections in respect of the Mortgage
Loans due after the Cut-off Date; (iii) any REO property, as defined in the
Prospectus Supplement; (iv) all revenue received in respect of REO Property;
(v) insurance policies with respect to such Mortgage Loans; (vi) any
assignments of leases, rents and profits and security agreements; (vii) any
indemnities or guaranties given as additional security for such Mortgage
Loans; (viii) the Trustee's right, title and interest in and to any reserve
or escrow accounts established pursuant to any of the Mortgage Loan documents
(each, a "Reserve Account"); (ix) the Collection Account;
19
<PAGE>
(x) the Distribution Account and the REO Account; (xi) any environmental
indemnity agreements relating to such Mortgaged Properties; (xii) the rights
and remedies under the Mortgage Loan Purchase and Sale Agreement; (xiii) the
proceeds of any of the foregoing (excluding interest earned on deposits in
any Reserve Account, to the extent such interest belongs to the related
mortgagor); and (xiv) such other assets or rights as are described in the
related Prospectus Supplement. In addition, the Trust Fund for a Series may
include private mortgage pass-through certificates, certificates issued or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the
Federal National Mortgage Association ("Fannie Mae") or the Governmental
National Mortgage Association ("GNMA") or mortgage pass-through certificates
previously created by the Depositor, as well as various forms of Credit
Enhancement. See "CREDIT ENHANCEMENT." Such other assets will be described
more fully in the related Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, Certificates of a
given Series may be issued in several Classes, which may pay interest at
different rates, may represent different allocations of the right to receive
principal and interest payments, and certain of which may be subordinated to
other Classes in the event of shortfalls in available cash flow from the
underlying Mortgage Loans. Alternatively, or in addition, Classes may be
structured to receive principal payments in sequence. Each Class in a group
of sequential pay Classes would be entitled to be paid in full before the
next Class in the group is entitled to receive any principal payments. A
Class of Certificates may also provide for payments of principal only or
interest only or for disproportionate payments of principal and interest.
Subordinate Certificates of a given Series of Certificates may he offered in
the same Prospectus Supplement as the Senior Certificates of such Series or
may be offered in a separate offering document. Each Class of Certificates of
a Series will be issued in the minimum denominations specified in the related
Prospectus Supplement.
The Prospectus Supplement for any Series including Classes similar to any
of those described above will contain a complete description of their
characteristics and risk factors, including, as applicable, (i) mortgage
principal prepayment effects on the weighted average lives of Classes; (ii)
the risk that interest only, or disproportionately interest weighted, Classes
purchased at a premium may not return their purchase prices under rapid
prepayment scenarios; and (iii) the degree to which an investor's yield is
sensitive to principal prepayments.
The Offered Certificates of each Series will be freely transferable and
exchangeable at the office specified in the related Agreement and Prospectus
Supplement, provided, however, that certain Classes of Certificates may be
subject to transfer restrictions described in the related Prospectus
Supplement. If specified in the related Prospectus Supplement, the
Certificates may be transferable only on the books of The Depository Trust
Company or another deposition, identified in such Prospectus Supplement.
DISTRIBUTIONS ON CERTIFICATES
Distributions of principal and interest on the Certificates of each Series
will be made to the registered holders thereof ("Certificateholders") by the
Trustee (or such other paying agent as may be identified in the related
Prospectus Supplement) on the day (the "Distribution Date") specified in the
related Prospectus Supplement, beginning in the period specified in the
related Prospectus Supplement following the establishment of the related
Trust Fund. Distributions for each Series will be made by check mailed to the
address of the person entitled thereto as it appears on the certificate
register for such Series maintained by the Trustee or by wire transfer if so
specified in the related Prospectus Supplement. The final distribution in
retirement of the Certificates of each Series will be made only upon
presentation and surrender of the Certificates at the office or agency
specified in the notice to the Certificateholders of such final distribution.
In addition, the Prospectus Supplement relating to each Series will set forth
the applicable due period, prepayment period, record date, Cut-off Date and
determination date in respect of each Series of Certificates.
With respect to each Series of Certificates on each Distribution Date, the
Trustee (or such other paying agent as may be identified in the applicable
Prospectus Supplement) will distribute to the Certificateholders the amounts
described in the related Prospectus Supplement that are due to be paid on
such Distribution Date. In general, such amounts will include previously
undistributed payments of
20
<PAGE>
principal (including principal prepayments, if any) and interest on the
Mortgage Loans received by the Master Servicer or the Special Servicer, if
any, after a date specified in the related Prospectus Supplement (the
"Cut-off Date") and prior to the day preceding each Distribution Date
specified in the related Prospectus Supplement.
ACCOUNTS
It is expected that the Agreement for each Series of Certificates will
provide that the Trustee establish an account (the "Distribution Account")
into which the Master Servicer will deposit amounts held in the Collection
Account from which Certificateholder distributions will be made with respect
to a given Distribution Date. On each Distribution Date, the Trustee will
apply amounts on deposit in the Distribution Account generally to make
distributions of interest and principal to the Certificateholders in the
manner described in the related Prospectus Supplement.
It is also expected that the Agreement for each Series of Certificates
will provide that the Master Servicer establish and maintain an account (the
"Collection Account") in the name of the Trustee for the benefit of
Certificateholders. The Master Servicer will generally be required to deposit
into the Collection Account all amounts received on or in respect of the
Mortgage Loans. The Master Servicer will be entitled to make certain
withdrawals from the Collection Account to, among other things: (i) remit
certain amounts for the related Distribution Date into the Distribution
Account; (ii) pay Property Protection Expenses, taxes, assessments and
insurance premiums and certain third-party expenses in accordance with the
Agreement; (iii) pay accrued and unpaid servicing fees and other servicing
compensation to the Master Servicer and the Special Servicer, if any, and
(iv) reimburse the Master Servicer, the Special Servicer, if any, the Trustee
and the Depositor for certain expenses and provide indemnification to the
Depositor. the Master Servicer and the Special Servicer, if any, as described
in the Agreement. "Property Protection Expenses" comprise certain costs and
expenses incurred in connection with defaulted Mortgage Loans, acquiring
title to, or management of, REO Property or the sale of defaulted Mortgage
Loans or REO Properties, as more fully described in the related Agreement.
The applicable Prospectus Supplement may provide for additional circumstances
in which the Master Servicer will be entitled to make withdrawals from the
Collection Account.
The amount at any time credited to the Collection Account or the
Distribution Account may be invested in Permitted Investments that are
payable on demand or in general mature or are subject to withdrawal or
redemption on or before the business day preceding the next succeeding Master
Servicer Remittance Date, in the case of the Collection Account, or the
business day preceding the next succeeding Distribution Date, in the case of
the Distribution Account. The Master Servicer will be required to remit
amounts on deposit in the Collection Account that are required for
distribution to Certificateholders to the Distribution Account on or before
the business day preceding the related Distribution Date (the "Master
Servicer Remittance Date"). The income from the investment of funds in the
Collection Account and the Distribution Account in Permitted Investments will
constitute additional servicing compensation for the Master Servicer, and the
risk of loss of funds in the Collection Account and the Distribution Account
resulting from such investments will be home by the Master Servicer. The
amount of each such loss will be required to be deposited by the Master
Servicer in the Collection Account or the Distribution Account, as the case
may be, promptly as realized.
It is expected that the Agreement for each Series of Certificates will
provide that an account (the "REO Account") will be established and
maintained in order to be used in connection with REO Properties and, if
specified in the related Prospectus Supplement, certain other Mortgaged
Properties. To the extent set forth in the Agreement, certain withdrawals
from the REO Account will be made to, among other things, (i) make
remittances to the Collection Account as required by the Agreement; (ii) pay
taxes, assessments, insurance premiums, other amounts necessary for the
proper operation, management and maintenance of the REO Properties and such
Mortgaged Properties and certain third-party expenses in accordance with the
Agreement; and (iii) provide for the reimbursement of certain expenses in
respect of the REO Properties and such Mortgaged Properties.
The amount at any time credited to the REO Account may be invested in
Permitted Investments that are payable on demand or mature, or are subject to
withdrawal or redemption, on or before the business
21
<PAGE>
day preceding the day on which such amounts are required to be remitted to
the Master Servicer for deposit in the Collection Account. The income from
the investment of funds in the REO Account in Permitted Investments will be
for the benefit of the Master Servicer, or the Special Servicer, if
applicable, and the risk of loss of funds in the REO Account resulting from
such investments will be borne by the Master Servicer, or the Special
Servicer, if applicable.
"Permitted Investments" will generally consist of one or more of the
following, unless the Rating Agencies rating Certificates of a Series require
other or additional investments:
(i) direct obligations of, or guarantees as to timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America;
(ii) direct obligations of the FHLMC (debt obligations only), Fannie Mae
(debt obligations only), the Federal Farm Credit System (consolidated
system-wide bonds and notes only), the Federal Home Loan Banks
(consolidated debt obligations only), the Student Loan Marketing
Association (debt obligations only), the Financing Corp. (consolidated
debt obligations only) and the Resolution Funding Corp. (debt obligations
only);
(iii) federal funds time deposits in, or certificates of deposit of, or
bankers' acceptances, or repurchase obligations, all having maturities of
not more than 365 days, issued by any bank or trust company, savings and
loan association or savings bank, depositing institution or trust company
having the highest short-term debt obligation from Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies, Inc. ("S&P") or
A+1, at least one of the Rating Agencies rating such Certificates, or such
lower rating as will not result in the downgrade or withdrawal of the
rating or ratings then assigned to the Certificates by any Rating Agency
rating such Certificates;
(iv) commercial paper having a maturity of 365 days or less (including
both non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one
year after the date of issuance thereof and demand notes that constitute
vehicles for investment in commercial paper) that is rated by each Rating
Agency rating such Certificates in its highest short-term unsecured rating
category;
(v) units of taxable money market funds or mutual funds, which funds seek
to maintain a constant asset value and have been rated by each Rating
Agency rating such Certificates as Permitted Investments with respect to
this definition;
(vi) if previously confirmed in writing to the Trustee, any other demand,
money market or time deposit, or any other obligation, security or
investment. as may be acceptable to each Rating Agency rating such
Certificates as a permitted investment of funds backing securities having
ratings equivalent to each Rating Agency's highest initial rating of the
Certificates; and
(vii) such other obligations as are acceptable as Permitted Investments
to each Rating Agency rating such Certificates;
provided, however, that (a) if S&P is rating such Certificates, none of
such obligations or securites listed above may have an "r" highlighter
affixed to its rating if rated by S&P; (b) except with respect to units
of money market funds pursuant to clause (v) above, each such obligation or
security will have a fixed dollar amount of principal due at maturity which
cannot vary or change; (c) except with respect to units of money market funds
pursuant to clause (v) above, if any such obligation or security provides for
a variable rate of interest, interest will be tied to a single interest rate
index plus a single fixed spread (if any) and move proportionately with that
index; and (d) if any of the obligations or securities listed in paragraphs
(iii)-(vi) above are not rated by each Rating Agency rating such
Certificates, such investment will nonetheless qualify as a Permitted
Investment if it is rated by one of the Rating Agencies rating such
Certificates and one other nationally recognized statistical rating
organization; and provided, further, that such instrument continues to
qualify as a "cash flow investment" pursuant to Code Section 860G(a)(6)
earning a passive return in the nature of interest and that no instrument or
22
<PAGE>
security will be a Permitted Investment if (i) such instrument or security
evidences a right to receive only interest payments or (ii) the right to
receive principal and interest payments derived from the underlying
investment provides a yield to maturity in excess of 120% of the yield to
maturity at par of such underlying investment as of the date of its
acquisition.
AMENDMENT
Generally, the Agreement for each Series will provide that it may be
amended from time to time by the parties thereto, without the consent of any
of the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions therein that may be inconsistent with any other
provisions therein, (iii) to amend any provision thereof to the extent
necessary or desirable to maintain the rating or ratings assigned to each of
the Classes of Certificates by each Rating Agency or (iv) to make any other
provisions with respect to matters or questions arising under the Agreement
that will not (a) be inconsistent with the provisions of the Agreement, (b)
result in the downgrading, withdrawal or qualification of the rating or
ratings then assigned to any outstanding Class of Certificates and (c)
adversely affect in any material respect the interests of any
Certificateholder, as evidenced by an opinion of counsel.
Each Agreement will also provide that it may be amended from time to time
by the parties thereto with the consent of the holders of each of the Classes
of Regular Certificates representing not less than a percentage specified in
the related Agreement of each Class of Certificates affected by the amendment
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall: (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans that are required to be distributed
on any Certificate without the consent of each affected Certificateholder;
(ii) change the percentage of Certificates the holders of which are required
to consent to any action or inaction under the Agreement, without the consent
of the holders of all Certificates then outstanding; or (iii) alter the
obligations of the Master Servicer or the Trustee to make an advance without
the consent of the holders of all Certificates representing all of the Voting
Rights of the Class or Classes affected thereby.
Further, the Agreement for each Series may provide that the parties
thereto, at any time and from time to time, without the consent of the
Certificateholders, may amend the Agreement to modify, eliminate or add to
any of its provisions to such extent as shall be necessary to maintain the
qualification of any REMIC related to such Series or to prevent the
imposition of any additional material state or local taxes, at all times that
any of the Certificates are outstanding, provided, however, that such action,
as evidenced by an opinion of counsel, is necessary or helpful to maintain
such qualification or to prevent the imposition of any such taxes, and would
not adversely affect in any material respect the interest of any
Certificateholder.
The related Prospectus Supplement will specify the method for allocating
Voting Rights among holders of Certificates of a Class. Any Certificate
beneficially owned by the Depositor, the Master Servicer, the Special
Servicer (if any), any mortgagor, the Trustee, a manager or any of their
respective affiliates will be deemed not to be outstanding; provided,
however, that, Certificates beneficially owned by the Master Servicer, the
Special Servicer (if any), or any affiliate thereof will be deemed to be
outstanding in connection with any required consent to an amendment of the
Agreement that relates to an action that would materially adversely affect in
any material respect the interests of the Certificateholders of any Class
while the Master Servicer, the Special Servicer (if any), or any such
affiliate owns not less than a percentage specified in the related Agreement
of such Class.
The Agreement relating to each Series may provide that no amendment to
such Agreement will be made unless there has been delivered in accordance
with such Agreement an opinion of counsel to the effect that such amendment
will not cause such Series to fail to qualify as a REMIC at any time that any
of the Certificates are outstanding.
The Prospectus Supplement for a Series may describe other or different
provisions concerning the amendment of the related Agreement required by the
Rating Agencies rating Certificates of such Series.
23
<PAGE>
TERMINATION
The obligations of the parties to the Agreement for each Series will
terminate upon: (i) the purchase of all of the assets of the related Trust
Fund, as described in the related Prospectus Supplement; (ii) the later of
(a) the distribution to Certificateholders of that Series of final payment
with respect to the last outstanding Mortgage Loan or (b) the disposition of
all property acquired upon foreclosure or deed-in-lieu of foreclosure with
respect to the last outstanding Mortgage Loan and the remittance to the
Certificateholders of all funds due under the Agreement; (iii) the sale of
the assets of the related Trust Fund after the principal amounts of all
Certificates have been reduced to zero under circumstances set forth in the
Agreement; or (iv) mutual consent of the parties and all Certificateholders.
With respect to each Series, the Trustee will give or cause to be given
written notice of termination of the Agreement to each Certificateholder and
the final distribution under the Agreement will be made only upon surrender
and cancellation of the related Certificates at an office or agency specified
in the notice of termination.
REPORTS TO CERTIFICATEHOLDERS
Concurrently with each distribution for each Series, the Trustee (or such
other paying agent as may be identified in the applicable Prospectus
Supplement) will forward to each Certificateholder a statement setting forth
such information relating to such distribution as is specified in the
Agreement and described in the applicable Prospectus Supplement.
THE TRUSTEE
The Depositor will select a bank or trust company to act as trustee (the
"Trustee") under the Agreement for each Series and the Trustee will be
identified, and its obligations under that Agreement will be described, in
the applicable Prospectus Supplement. The Rating Agencies rating Certificates
of a Series may require the appointment of a Fiscal Agent to guarantee
certain obligations of the Trustee. Such Fiscal Agent will be a party to the
Agreement. In such event, the Fiscal Agent will be identified, and its
obligations under the Agreement will be described, in the applicable
Prospectus Supplement. See "SERVICING OF THE MORTGAGE LOAN--Certain Matters
with Respect to the Master Servicer, the Special Servicer, the Trustee and
the Depositor."
24
<PAGE>
THE MORTGAGE POOLS
GENERAL
Each Mortgage Pool will consist of mortgage loans secured by first or
junior mortgages, deeds of trust or similar security instruments (each, a
"Mortgage") on, or installment contracts ("Installment Contracts") for the
sale of, fee simple or leasehold interests in properties improved by office
buildings, health-care related properties, congregate care facilities, hotels
and motels, industrial properties, warehouse, mini-warehouse, and
self-storage facilities, mobile home parks, multifamily properties,
cooperative apartment buildings, nursing homes, office/retail properties,
anchored retail properties, single-tenant retail properties, unanchored
retail properties and other commercial real estate properties, multifamily
residential properties and/or mixed residential commercial properties (each,
a "Mortgaged Property"). A Mortgage Pool may also include participation
interests in such types of mortgage loans, private-label mortgage
pass-through certificates, certificates issued or guaranteed by FHLMC, Fannie
Mae or GNMA, mortgage pass-through certificates, or collateralized mortgage
obligations. Each such mortgage loan, Installment Contract, participation
interest, certificate, or collateralized mortgage obligation is herein
referred to as a "Mortgage Loan."
All Mortgage Loans will be of one or more of the following types:
1. Mortgage Loans with fixed interest rates;
2. Mortgage Loans with adjustable interest rates;
3. Mortgage Loans whose principal balances fully amortize over
their remaining terms to maturity;
4. Mortgage Loans whose principal balances do not fully amortize,
but instead provide for a substantial principal payment at the
stated maturity of the loan;
5. Mortgage Loans that provide for recourse against only the
Mortgaged Properties;
6. Mortgage Loans that provide for recourse against the other
assets of the related mortgagors; and
7. Any other types of Mortgage Loans described in the applicable
Prospectus Supplement.
Mortgage Loans may also be secured by one or more assignments of leases
and rents, management agreements or operating agreements relating to the
Mortgaged Property and in some cases by certain letters of credit, personal
guarantees or both. Pursuant to an assignment of leases and rents, the
obligor on the related promissory note, bond, mortgage consolidation
agreement, installment contract or other similar instrument (each, a "Note")
assigns its right, title and interest as landlord under each lease and the
income derived therefrom to the related mortgagee, while retaining a license
to collect the rents for so long as there is no default. If the obligor
defaults, the license terminates and the related mortgagee is entitled to
collect the rents from tenants to he applied to the monetary obligations of
the obligor. State law may limit or restrict the enforcement of the
assignment of leases and rents by a mortgagee until the mortgagee takes
possession of the related mortgaged property and/or a receiver is appointed.
See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Leases and Rents."
If so specified in the related Prospectus Supplement, a Trust Fund may
include a number of Mortgage Loans with a single obligor or related obligors
thereunder; provided, however, that the principal balance of the mortgage
loans to a single obligor or group of related obligors will not exceed 45% of
the initial principal amount of the Certificates for a Series. In addition,
in the event that the Mortgage Pool securing Certificates for any Series
includes a Mortgage Loan or mortgage-backed security or a group of Mortgage
Loans or mortgage-backed securities of a single obligor or group of
affiliated obligors representing 10% or more, but less than 45%, of the
principal amount of such Certificates, the Prospectus Supplement will contain
information, including financial information, regarding the credit quality of
the obligors. The Mortgage Loans will be newly originated or seasoned, and
will be acquired by the Depositor either directly or through one or more
affiliates.
25
<PAGE>
Unless otherwise specified in the Prospectus Supplement for a Series, the
Mortgage Loans will not be insured or guaranteed by the United States, any
governmental agency, any private mortgage insurer or any other person or
entity.
The Prospectus Supplement relating to each Series will specify the
Mortgage Loan Seller or Mortgage Loan Sellers relating to the Mortgage Loans,
which may include, among others, Real Estate Investment Trusts ("REITs"),
commercial banks, savings and loan associations, other financial
institutions, mortgage banks, credit companies, insurance companies, real
estate developers or other HUD approved lenders, and the underwriting
criteria to the extent available in connection with originating the Mortgage
Loans. The criteria applied by the Depositor in selecting the Mortgage Loans
to be included in a Mortgage Pool will vary from Series to Series. The
Prospectus Supplement relating to each Series also will provide specific
information regarding the characteristics of the Mortgage Loans, as of the
Cut-off Date, including, among other things: (i) the aggregate principal
balance of the Mortgage Loans; (ii) the types of properties securing the
Mortgage Loans and the aggregate principal balance of the Mortgage Loans
secured by each type of property; (iii) the interest rate or range of
interest rates of the Mortgage Loans; (iv) the origination dates and the
original and, with respect to seasoned Mortgage Loans, remaining terms to
stated maturity of the Mortgage Loans; (v) the loan-to-value ratios at
origination and, with respect to seasoned Mortgage Loans, current loan
balance-to-original value ratios of the Mortgage Loans; (vi) the geographic
distribution of the Mortgaged Properties underlying the Mortgage Loans; (vii)
the minimum interest rates, margins, adjustment caps, adjustment frequencies,
indices and other similar information applicable to adjustable rate Mortgage
Loans; (viii) the debt service coverage ratios relating to the Mortgage
Loans; and (ix) payment delinquencies, if any, relating to the Mortgage
Loans. The applicable Prospectus Supplement will also specify any materially
inadequate, incomplete or obsolete documentation relating to the Mortgage
Loans and other characteristics of the Mortgage Loans relating to each
Series. If specified in the applicable Prospectus Supplement, the Depositor
may segregate the Mortgage Loans in a Mortgage Pool into separate "Mortgage
Loan Groups" (as described in the related Prospectus Supplement) as part of
the structure of the payments of principal and interest on the Certificates
of a Series. In such case, the Depositor will disclose the above-specified
information by Mortgage Loan Group.
The Depositor will file a current report on Form 8-K (the "Form 8-K") with
the Commission within 15 days after the initial issuance of each Series of
Certificates (each, a "Closing Date"), as specified in the related Prospectus
Supplement, which will set forth information with respect to the Mortgage
Loans included in the Trust Fund for a Series as of the related Closing Date.
The Form 8-K will be available to the Certificateholders of the related
Series promptly after its filing.
ASSIGNMENT OF MORTGAGE LOANS
At the time of issuance of the Certificates of each Series, the Depositor
will cause the Mortgage Loans to be assigned to the Trustee, together with
all scheduled payments of interest and principal due after the Cut-off Date
(whether received) and all payments of interest and principal received by the
Depositor or the Master Servicer on or with respect to the Mortgage Loans
after the Cut-off Date. The Trustee, concurrently with such assignment, will
execute and deliver Certificates evidencing the beneficial ownership
interests in the related Trust Fund to the Depositor in exchange for the
Mortgage Loans. Each Mortgage Loan will be identified in a schedule appearing
as an exhibit to the Agreement for the related Series (the "Mortgage Loan
Schedule"). The Mortgage Loan Schedule will include, among other things, as
to each Mortgage Loan, information as to its outstanding principal balance as
of the close of business on the Cut-off Date, as well as information
respecting the interest rate, the scheduled monthly (or other periodic)
payment of principal and interest as of the Cut-off Date, the maturity date
of each Note and the address of the property securing the Note.
In addition, the Depositor will, as to each Mortgage Loan, deliver to the
Trustee: (i) the Note, endorsed to the order of the Trustee without recourse;
(ii) the Mortgage and an executed assignment thereof in favor of the Trustee
or otherwise as required by the Agreement; (iii) any assumption, modification
or substitution agreements relating to the Mortgage Loan; (iv) a mortgagee's
title insurance policy (or owner's policy in the case of an Installment
Contract), together with its endorsements, or an
26
<PAGE>
attorney's opinion of title issued as of the date of origination of the
Mortgage Loan; (v) if the security losses are not covered by the methods of
Credit Enhancement or the insurance policies described herein and/or in the
related Prospectus Supplement, the ability of the Trust Fund to pay principal
of and interest on the Certificates may be adversely affected. Even if credit
support covers all losses resulting from defaults and foreclosure, the effect
of defaults and foreclosures may be to increase prepayment experience on the
Mortgage Loans, thus shortening weighted average life and affecting yield to
maturity.
REPRESENTATIONS AND WARRANTIES
The seller of a Mortgage Loan to the Depositor (the "Mortgage Loan
Seller"), which may be an affiliate of the Depositor, will have made
representations and warranties in respect of the Mortgage Loans sold by such
Mortgage Loan Seller to the Depositor. Such representations and warranties
will generally include, among other things: (i) with respect to each
Mortgaged Property, that title insurance (or in the case of Mortgaged
Properties located in areas where such policies are generally not available,
an attorney's opinion of title) and any required hazard insurance was
effective at the origination of each Mortgage Loan, and that each policy (or
opinion of title) remained in effect on the date of purchase of the Mortgage
Loan from the Mortgage Loan Seller, (ii) that the Mortgage Loan Seller had
good and marketable (or indefeasible, in the case of real property located in
Texas) title to each such Mortgage Loan, (iii) with respect to each Mortgaged
Property, that each mortgage constituted a valid first lien on the Mortgaged
Property (subject only to permissible title insurance exceptions); (iv) that
there were no delinquent tax or assessment liens against the Mortgaged
Property; and (v) that each Mortgage Loan was current as to all required
payments. The Prospectus Supplement for a Series will specify the
representations and warranties being made by the Mortgage Loan Seller.
All of the representations and warranties of a Mortgage Loan Seller in
respect of a Mortgage Loan generally will have been made as of the date on
which such Mortgage Loan Seller sold the Mortgage Loan to the Depositor. The
related Prospectus Supplement will indicate if a different date is
applicable. A substantial period of time may have elapsed between such date
and the date of the initial issuance of the Series of Certificates evidencing
an interest in such Mortgage Loan. Since the representations and warranties
of the Mortgage Loan Seller do not address events that may occur following
the sale of a Mortgage Loan by the Mortgage Loan Seller, the repurchase
obligation of the Mortgage Loan Seller described below will not arise if, on
or after the date of the sale of a Mortgage Loan by the Mortgage Loan Seller
to the Depositor, the relevant event occurs that would have given rise to
such an obligation. However, the Depositor will not include any Mortgage Loan
in the Trust Fund for any Series of Certificates if anything has come to the
Depositor's attention that would cause it to believe that the representations
and warranties of the Mortgage Loan Seller will not be accurate and complete
in all material respects in respect of such Mortgage Loan as of the related
Cut-off Date. If so specified in the related Prospectus Supplement, the
Depositor will make certain representations and warranties for the benefit of
Certificateholder of a Series in respect of a Mortgage Loan that relate to
the period commencing on the date of sale of such Mortgage Loan to the
Depositor.
Upon the discovery of the breach of any representation or warranty made by
the Mortgage Loan Seller in respect of a Mortgage Loan that materially and
adversely affects the interests of the Certificateholders of the related
Series. Such Mortgage Loan Seller generally will be obligated to repurchase
such Mortgage Loan at a purchase price equal to 100% of the unpaid principal
balance thereof at the date of repurchase or, in the case of a Series of
Certificates as to which the Depositor has elected to treat the related Trust
Fund as a REMIC, as defined in the Code, at such other price as may be
necessary to avoid a tax on a prohibited transaction, as described in Section
860F(a) of the Code, in each case together with accrued interest at the
interest rate for such Mortgage Loan, to the first day of the month following
such repurchase and the amount of any unreimbursed advances made by the
Master Servicer in respect of such Mortgage Loan, together with interest
thereon at the reimbursement rate. The Master Servicer will be required to
enforce such obligation of the Mortgage Loan Seller for the benefit of the
Trustee and the Certificateholders, following the practices it would employ
in its good faith business judgment were it the owner of such Mortgage Loan.
This repurchase obligation will generally constitute the sole remedy
available to the Certificateholders of such Series for a breach of a
representation or warranty by a Mortgage Loan Seller and the Depositor and
the Master Servicer will have no liability to
27
<PAGE>
the Trust Fund for any such breach. The applicable Prospectus Supplement will
indicate whether any additional remedies will be available to the
Certificateholders. No assurance can be given that a Mortgage Loan Seller
will carry out its repurchase obligation with respect to the Mortgage Loans.
If specified in the related Prospectus Supplement, the Mortgage Loan
Seller may deliver to the Trustee within a specified number of days following
the issuance of a Series of Certificates Mortgage Loans in substitution for
any one or more of the Mortgage Loans initially included in the Trust Fund
but which do not conform in one or more respects to the description thereof
contained in the related Prospectus Supplement, as to which a breach of a
representation or warranty is discovered, which breach materially and
adversely affects the interests of the Certificateholders, or as to which a
document in the related Mortgage Loan File is defective in any material
respect. The related Prospectus Supplement will describe any required
characteristics of any such substituted Mortgage Loans.
28
<PAGE>
SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicer of the Mortgage Loans (the "Master Servicer") will be
specified in the applicable Prospectus Supplement and may be an affiliate of
the Depositor. The Prospectus Supplement for the related Series will set
forth certain information concerning the Master Servicer. The Master Servicer
will be responsible for servicing the Mortgage Loans pursuant to the
Agreement for the related Series. To the extent so specified in the related
Prospectus Supplement, one or more Special Servicers may be a party to the
related Agreement or may be appointed by holders of certain Classes of
Regular Certificates representing a certain percentage specified in the
related Agreement of such Class or Classes of Certificates or by another
specified party. Certain information with respect to the Special Servicer
will be set forth in such Prospectus Supplement. A Special Servicer for any
Series of Certificates may be an affiliate of the Depositor or the Master
Servicer and may hold, or be affiliated with the holder of, Subordinate
Certificates of such Series. A Special Servicer may be entitled to any of the
rights, and subject to any of the obligations, described herein in respect of
a Master Servicer. In general, a Special Servicer's duties will relate to
defaulted Mortgage Loans or those Mortgage Loans that otherwise require
special servicing ("Specially Serviced Mortgage Loans"), including
instituting foreclosures and negotiating work-outs and will also include
asset management activities with respect to any REO Property. The related
Prospectus Supplement will describe the rights, obligations and compensation
of any Special Servicer for a particular Series of Certificates. The Master
Servicer or Special Servicer generally may subcontract the servicing of all
or a portion of the Mortgage Loans to one or more sub-servicers provided
certain conditions are met. Such sub-servicer may be an affiliate of the
Depositor and may have other business relationships with Depositor and its
affiliates.
COLLECTIONS AND OTHER SERVICING PROCEDURES
The Master Servicer and the Special Servicer, if any, will make reasonable
efforts to collect all payments called for under the Mortgage Loans and will,
consistent with the related Agreement, follow such collection procedures as
it deems necessary or desirable. Consistent with the above and unless
otherwise specified in the related Prospectus Supplement. The Master Servicer
or the Special Servicer, if applicable, may, in its discretion, waive any
late payment charge or penalty fees in connection with a late payment of a
Mortgage Loan and, if so specified in the related Prospectus Supplement, may
extend the due dates for payments due on a Note.
It is expected that the Agreement for each Series will provide that the
Master Servicer establish and maintain an escrow account (the "Escrow
Account") in which the Master Servicer will be required to deposit amounts
received from each mortgagor, if required by the terms of the related
Mortgage Loan documents, for the payment of taxes, assessments, certain
mortgage and hazard insurance premiums and other comparable items ("Escrow
Payments"). The Special Servicer, if any, will be required to remit amounts
received for such purposes on Mortgage Loans serviced by it to the Master
Servicer for deposit into the Escrow Account, and will be entitled to direct
the Master Servicer to make withdrawals from the Escrow Account as may be
required for servicing of such Mortgage Loans. Withdrawals from the Escrow
Account generally may be made to (i) effect timely payment of taxes,
assessments, mortgage and hazard insurance premiums and other comparable
items, (ii) to transfer funds to the Collection Account to reimburse the
Master Servicer or the Trustee, as applicable, for any advance with interest
thereon relating to Escrow Payments, (iii) to restore or repair the Mortgaged
Properties, (iv) to clear and terminate such account, (v) to pay interest to
mortgagors on balances in the Escrow Account, if required by the terms of the
related Mortgage Loan documents or by applicable law, (vi) to remit to the
related borrower the Financial Lease and Reporting Fee as and when required
by the related Mortgage, and (vii) to remove amounts not required to be
deposited therein. The related Prospectus Supplement may provide for other
permitted withdrawals from the Escrow Account. The Master Servicer will be
entitled to all income on the funds in the Escrow Account invested in
Permitted Investments not required to be paid to mortgagors by the terms of
the related Mortgage Loan documents or by applicable law. The Master Servicer
will be responsible for the administration of the Escrow Account.
29
<PAGE>
INSURANCE
The Agreement for each Series will require that the Master Servicer use
its reasonable efforts to or require each mortgagor to maintain insurance in
accordance with the related Mortgage Loan documents, which generally will
include a standard fire and hazard insurance policy with extended coverage.
To the extent required by the related Mortgage Loan, the coverage of each
such standard hazard insurance policy will be in an amount that is at least
equal to the lesser of (i) the full replacement cost of the improvements and
equipment securing such Mortgage Loan or (ii) the outstanding principal
balance owing on such Mortgage Loan or such amount as is necessary to prevent
any reduction in such policy by reason of the application of co-insurance and
to prevent the Trustee thereunder from being deemed to be a co-insurer, in
each case with a replacement cost rider. The Master Servicer will also use
its reasonable efforts to require each mortgagor to maintain (i) insurance
providing coverage against 12 months of rent interruptions and (ii) such
other insurance as provided in the related Mortgage Loan. Subject to the
requirements for modification, waiver or amendment of a Mortgage Loan (See
"Modifications, Waivers and Amendments"), the Master Servicer may in its
reasonable discretion consistent with the servicing standard set forth in the
related Agreement waive the requirement of a Mortgage Loan that the related
mortgagor maintain earthquake insurance on the related Mortgaged Property.
If a Mortgaged Property is located at the time of origination of the
related Mortgage Loan in a federally designated special flood hazard area,
the Master Servicer will also use its reasonable efforts to require the
related mortgagor to maintain flood insurance in an amount equal to the
lesser of the unpaid principal balance of the related Mortgage Loan and the
maximum amount obtainable with respect to the Mortgage Loan. The related
Agreement will provide that the Master Servicer will be required to maintain
the foregoing insurance if the related mortgagor fails to maintain such
insurance to the extent such insurance is available at commercially
reasonable rates and to the extent the Trustee, as mortgagee, has an
insurable interest. The cost of any such insurance maintained by the Master
Servicer will be advanced by the Master Servicer. The Master Servicer or the
Special Servicer, if any, will cause to be maintained fire and hazard
insurance with extended coverage on each REO Property in an amount that is at
least equal to the full replacement cost of the improvements and equipment.
The cost of any such insurance with respect to an REO Property will be
payable out of amounts on deposit in the related REO Account or will be
advanced by the Master Servicer. The Master Servicer or the Special Servicer,
if any, will maintain flood insurance providing substantially the same
coverage as described above on any REO Property that was located in a
federally designated special flood hazard area at the time the related
mortgage loan was originated. The Master Servicer or the Special Servicer, if
any, will maintain with respect to each REO Property (i) public liability
insurance, (ii) loss of rent endorsements and (iii) such other insurance as
provided in the related Mortgage Loan. Any such insurance that is required to
be maintained with respect to any REO Property will only be so required to
the extent such insurance is available at commercially reasonable rates. The
related Agreement will provide that the Master Servicer or Special Servicer,
if any, may satisfy its obligation to cause hazard insurance policies to be
maintained by maintaining a master force placed insurance policy insuring
against losses on the Mortgage Loans or REO Properties, as the case may be.
The incremental cost of such insurance allocable to any particular Mortgage
Loan or REO Property, if not home by the related mortgagor, will be an
expense of the Trust Fund. Alternatively, the Master Servicer or Special
Servicer, if any, may satisfy its obligation by maintaining, at its expense,
a blanket policy (i.e., not a master force placed policy) insuring against
losses on the Mortgage Loans or REO Properties, as the case may be. If such a
blanket or master force placed policy contains a deductible clause, the
Master Servicer or the Special Servicer, if any, will be obligated to deposit
in the Collection Account all sums that would have been deposited therein but
for such clause to the extent any such deductible exceeds the deductible
limitation that pertained to the related Mortgage Loan, or in the absence of
any such deductible limitation, the deductible limitation that is consistent
with the servicing standard under the related Agreement.
In general, the standard form of fire and hazard extended coverage
insurance policy will cover physical damage to, or destruction of, the
improvements on the Mortgaged Property caused by fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion, subject to the
conditions and exclusions particularized in each policy. Since the standard
hazard insurance policies relating to the
30
<PAGE>
Mortgage Loans will be underwritten by different insurers and will cover
Mortgaged Properties located in various states, such policies will not
contain identical terms and conditions. The most significant terms thereof,
however, generally will be determined by state law and conditions. Most such
policies typically will not cover any physical damage resulting from war,
revolution, governmental actions, floods and other water-related causes,
earth movement (including earthquakes, landslides and mudflows), nuclear
reaction, wet or dry rot, vermin, rodents, insects or domestic animals, theft
and, in certain cases, vandalism. The foregoing list is merely indicative of
certain kinds of uninsured risks and is not intended to be all-inclusive. Any
losses incurred with respect to Mortgage Loans due to uninsured risks
(including earthquakes, mudflows and floods) or insufficient hazard insurance
proceeds could affect distributions to the Certificateholders.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which,
in effect, will require the insured at all times to carry insurance of a
specified percentage (generally 80% to 90%) of the full replacement value of
the dwellings, structures and other improvements on the Mortgaged Property in
order to recover the full amount of any partial loss. If the insured's
coverage falls below this specified percentage, such clause will provide that
the insurer's liability in the event of partial loss will not exceed the
greater of (i) the actual cash value (the replacement cost less physical
depreciation) of the structures and other improvements damaged or destroyed
and (ii) such proportion of the loss, without deduction for depreciation, as
the amount of insurance carried bears to the specified percentage of the full
replacement cost of such dwellings, structures and other improvements.
The Prospectus Supplement may describe other provisions concerning the
insurance policies required to be maintained under the related Agreement.
Unless otherwise specified in the applicable Prospectus Supplement, no
pool insurance policy, special hazard insurance policy, bankruptcy bond,
repurchase bond or guarantee insurance will be maintained with respect to the
Mortgage Loans nor will any Mortgage Loan be subject to FHA insurance.
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the National Housing Act of
1934, as amended, and the United States Housing Act of 1937, as amended. To
the extent specified in the related Prospectus Supplement, all or a portion
of the Mortgage Loans may be insured by the FHA. The Master Servicer will be
required to take such steps as are reasonably necessary to keep such
insurance in full force and effect.
FIDELITY BONDS AND ERRORS AND OMISSIONS
The Agreement for each Series will generally require that the Master
Servicer and the Special Servicer, if applicable, obtain and maintain in
effect a fidelity bond or similar form of insurance coverage (which may
provide blanket coverage) or any combination thereof insuring against loss
occasioned by fraud, theft or other intentional misconduct of the officers
and employees of the Master Servicer and the Special Servicer, if applicable.
The related Agreement will allow the Master Servicer and the Special
Servicer, if applicable, to self-insure against loss occasioned by the errors
and omissions of the officers and employees of the Master Servicer and the
Special Servicer, if applicable, so long as certain criteria set forth in the
Agreement are met.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer's principal compensation for its activities under the
Agreement for each Series will come from the payment to it or retention by
it, with respect to each Mortgage Loan, of a "Servicing Fee" (as defined in
the related Prospectus Supplement). The exact amount and calculation of such
Servicing Fee will be established in the Prospectus Supplement and Agreement
for the related Series. Since the aggregate unpaid principal balance of the
Mortgage Loans will generally decline over time, the Master Servicer's
servicing compensation will ordinarily decrease as the Mortgage Loans
amortize.
In addition, the Agreement for a Series may provide that the Master
Servicer be entitled to receive, as additional compensation, (i) Prepayment
Premiums, late fees and certain other fees collected from
31
<PAGE>
mortgagors and (ii) any interest or other income earned on funds deposited in
the Collection Account and Distribution Account (as described under
"DESCRIPTION OF THE CERTIFICATES--Accounts") and, except to the extent such
income is required to be paid to the related mortgagors, the Escrow Account.
The Master Servicer will generally pay the fees and expenses of the
Trustee.
The amount and calculation of the fee for the servicing of Specially
Serviced Mortgage Loans (the "Special Servicing Fee") will be described in
the Prospectus Supplement and Agreement for the related Services.
In addition to the compensation described above, the Master Servicer and
the Special Servicer, if applicable (or any other party specified in the
applicable Prospectus Supplement) may retain, or be entitled to the
reimbursement of, such other amounts and expenses as are described in the
applicable Prospectus Supplement.
ADVANCES
The applicable Prospectus Supplement will set forth the obligations, if
any, of the Master Servicer and the Special Servicer, if applicable, to make
any advances with respect to delinquent payments on Mortgage Loans, payments
of taxes, assessments, insurance premiums and Property Protection Expenses or
otherwise. Any such advances will be made in the form and manner described in
the Prospectus Supplement and Agreement for the related Series.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Agreement for each Series will provide the Master Servicer or the
Special Servicer, if any, with the discretion to modify, waive or amend
certain of the terms of any Mortgage Loan without the consent of the Trustee
or any Certificateholder subject to certain conditions set forth therein,
including the condition that such modification, waiver or amendment will not
result in such Mortgage Loan ceasing to be a "qualified mortgage" under the
REMIC Regulations.
EVIDENCE OF COMPLIANCE
The Agreement for each Series will generally provide that on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, there will be furnished to
the related Trustee a report of a firm of independent certified public
accountants stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer or
Special Servicer, if any, which includes an assertion that the Master
Servicer or Special Servicer, if any, has complied with certain minimum
mortgage loan servicing standards (to the extent applicable to commercial and
multifamily mortgage loans), identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association
of America, with respect to the Master Servicer's or, if applicable, the
Special Servicer's servicing of commercial and multifamily mortgage loans
during the most recently completed calendar year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established
by the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
standards require it to report.
In rendering its report such firm may rely, as to the matters relating to
the direct servicing of commercial and multifamily mortgage loans by
sub-services, upon comparable reports of firms of independent public
accountants rendered on the basis of examination conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers. The Prospectus Supplement may provide that additional
reports of independent certified public accountants relating to the servicing
of mortgage loans may be required to be delivered to the Trustee.
In addition, the Agreement for each Series will generally provide that the
Master Servicer and the Special Servicer, if any, will each deliver to the
Trustee, the Depositor and each Rating Agency, annually on or before a date
specified in the Agreement, a statement signed by an officer of the Master
Servicer
32
<PAGE>
or the Special Servicer, as applicable, to the effect that, based on a review
of its activities during the preceding calendar year, to the best of such
officer's knowledge, the Master Servicer or the Special Servicer, as
applicable, has fulfilled in all material respects its obligations under the
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each default known to such
officer.
CERTAIN MATTERS WITH RESPECT TO THE MASTER SERVICER, THE SPECIAL SERVICER,
THE TRUSTEE AND THE DEPOSITOR
The Agreement for each Series will also provide that none of the
Depositor, the Master Servicer, the Special Servicer, if any, or any partner,
director, officer, employee or agent of the Depositor, the Master Servicer or
the Special Servicer, if any (or any general partner thereof), will be under
any liability to the Trust Fund or the Certificateholders for any action
taken, or for refraining from the taking of any action, in good faith
pursuant to the Agreement, or for errors in judgment; provided, however, that
neither the Depositor, the Master Servicer, the Special Servicer, if any, nor
any such person will be protected against any liability for a breach of any
representations or warranties under the Agreement or that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence (or, in the
case of the Master Servicer or Special Servicer, if any, a breach of the
servicing standards set forth in the Agreement) in the performance of its
duties or by reason of negligent disregard of its obligations and duties
thereunder. The Agreement will further provide that the Depositor, the Master
Servicer, the Special Servicer, if any, and any director, officer, employee
or agent of the Depositor, the Master Servicer, the Special Servicer, if any
(and any general partner thereof), will be entitled to indemnification by the
Trust Fund for any loss, liability or expense incurred in connection with any
legal action relating to the Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of its respective willful
misfeasance, bad faith, fraud or negligence (or, in the case of the Master
Servicer or the Special Servicer, if any, a breach of the servicing standard
set forth in the Agreement) in the performance of duties thereunder or by
reason of negligent disregard of its respective obligations and duties
thereunder. Any loss resulting from such indemnification will reduce amounts
distributable to Certificateholders. The Prospectus Supplement will specify
any variations to the foregoing required by the Rating Agencies rating
Certificates of a Series.
In addition, the Agreement will generally provide that none of the
Depositor, the Special Servicer or the Master Servicer, if any, will be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its duties under the Agreement and which in its opinion
does not involve it in any expense or liability. The Master Servicer or the
Special Servicer, if any, may, however, in its discretion undertake any such
action that is related to its respective obligations under the related
Agreement and that it may deem necessary or desirable with respect to the
Agreement and the rights and duties of the parties thereto and the interests
of the holders of Certificates thereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom (except any
liability related to the Master Servicer's or the Special Servicer's, if any
obligations to service the Mortgage Loans in accordance with the servicing
standard under the Agreement) will be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer or Special Servicer, if applicable, will
be entitled to be reimbursed therefor and to charge the Collection Account.
Any person into which the Master Servicer or the Special Servicer, if any,
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer, if any,
is a party, or any person succeeding to the business of the Master Servicer
or the Special Servicer, if any, will be the successor of the Master Servicer
or the Special Servicer, as applicable, under the Agreement, and will be
deemed to have assumed all of the liabilities and obligations of the Master
Servicer or the Special Servicer, as applicable, under the Agreement, if each
of the Rating Agencies has confirmed in writing that such merger or
consolidation and succession will not result in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class
of the Certificates. The related Prospectus Supplement will describe any
additional restrictions on such a merger or consolidation.
33
<PAGE>
Generally, the Master Servicer or the Special Servicer, if any, may assign
its rights and delegate its duties and obligations under the Agreement in
connection with the sale or transfer of a substantial portion of its mortgage
servicing or asset management portfolio; provided that certain conditions are
met, including the written consent of the Trustee and written confirmation by
each of the Rating Agencies that such assignment and delegation by the Master
Servicer or the Special Servicer, as applicable, will not, in and of itself,
result in a downgrading, withdrawal or qualification of the rating then
assigned by such Rating Agency to any Class of Certificates. The related
Prospectus will describe any additional restrictions on such assignment.
The Agreement will also provide that the Master Servicer or the Special
Servicer, if any, may not otherwise resign from its obligations and duties as
Master Servicer or Special Servicer thereunder, except upon the determination
that performance of its duties is no longer permissible under applicable law
and provided that such determination is evidenced by an opinion of counsel
delivered to the Trustee. No such resignation or removal may become effective
until the Trustee or a successor Master Servicer or Special Servicer, as the
case may be, has assumed the obligations of the Master Servicer or the
Special Servicer, as applicable, under the Agreement.
The Trustee under each Agreement will be named in the applicable
Prospectus Supplement. The commercial bank or trust company serving as
Trustee may have normal banking relationships with the Depositor, the Master
Servicer, the Special Servicer, if any, and/or any of their respective
affiliates.
The Trustee may resign from its obligations under the Agreement at any
time, in which event a successor Trustee will be appointed. In addition, the
Depositor may remove the Trustee if the Trustee ceases to be eligible to act
as Trustee under the Agreement or if the Trustee becomes insolvent, at which
time the Depositor will become obligated to appoint a successor Trustee. The
Trustee may also be removed at any time by the holders of Certificates
evidencing the percentage of Voting Rights specified in the applicable
Prospectus Supplement. Any resignation and removal of the Trustee, and the
appointment of a successor Trustee, will not become effective until
acceptance of such appointment by the successor Trustee.
The Depositor is not obligated to monitor or supervise the performance of
the Master Servicer, Special Servicer, if any, or the Trustee under the
Agreement.
EVENTS OF DEFAULT
Events of default with respect to the Master Servicer or the Special
Servicer, if any, as applicable (each, an "Event of Default") under the
Agreement for each Series will consist of, in summary form, (i) any failure
by the Master Servicer or the Special Servicer, if any, to remit to the
Collection Account or any failure by the Master Servicer to remit to the
Trustee for deposit into the Distribution Account any amount required to be
so remitted pursuant to the Agreement; (ii) any failure by the Master
Servicer or Special Servicer, as applicable, duly to observe or perform in
any material respect any of its other covenants or agreements or the breach
of its representations or warranties (which breach materially and adversely
affects the interests of the Certificateholders, the Trustee, the Master
Servicer or the Special Servicer, if any, with respect to any Mortgage Loan)
under the Agreement, which in each case continues unremedied for 30 days
after the giving of written notice of such failure to the Master Servicer or
the Special Servicer, as applicable, by the Depositor or the Trustee, or to
the Master Servicer or Special Servicer, if any, the Depositor and the
Trustee by the holders of Certificates evidencing Voting Rights of at least
25% of any affected Class; (iii) confirmation in writing by any of the Rating
Agencies that the then current rating assigned to any Class of Certificates
would be withdrawn, downgraded or qualified unless the Master Servicer or
Special Servicer, as applicable, is removed; (iv) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings and certain actions by, on behalf of or against the
Master Servicer or Special Servicer, as applicable, indicating its insolvency
or inability to pay its obligations; or (v) any failure by the Master
Servicer to make a required advance. The related Prospectus Supplement may
provide for other Events of Default to the extent required by the Rating
Agencies rating Certificates of a Series.
34
<PAGE>
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default remains unremedied, the Trustee may, and at
the written direction of the holders of Certificates entitled to 25% of the
aggregate Voting Rights of all Certificates will, terminate all of the rights
and obligations of the Master Servicer or Special Servicer, as the case may
be. Notwithstanding the foregoing, upon any termination of the Master
Servicer or the Special Servicer, as applicable, under the Agreement the
Master Servicer or the Special Servicer, as applicable, will continue to be
entitled to receive all accrued and unpaid servicing compensation through the
date of termination plus, in the case of the Master Servicer, all advances
and interest thereon as provided in the Agreement.
The holders of Certificates evidencing not less than 66 2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all holders of
Certificates, waive any default by the Master Servicer or Special Servicer,
if any, in the performance of its obligations under the Agreement and its
consequences, except a default in making any required deposits to (including
advances) or payments from the Collection Account or the Distribution Account
or in remitting payments as received, in each case in accordance with the
Agreement. Upon any such waiver of a past default, such default will cease to
exist, and any Event of Default arising therefrom will be deemed to have been
remedied for every purpose of the Agreement. No such waiver will extend to
any subsequent or other default or impair any right consequent thereon.
On and after the date of termination, the Trustee will succeed to all
authority and power of the Master Servicer or the Special Servicer, as
applicable, under the Agreement and will be entitled to similar compensation
arrangements to which the Master Servicer or the Special Servicer, as
applicable, would have been entitled. If the Trustee is unwilling or unable
so to act, or if the holders of Certificates evidencing a majority of the
aggregate Voting Rights so request or if the Trustee is not rated in one of
its two highest long-term debt rating categories by each of the Rating
Agencies or if the Trustee is not approved as a servicer by the Rating
Agencies, the Trustee must appoint, or petition a court of competent
jurisdiction for the appointment of, an established mortgage loan servicing
institution with a net worth of at least $10,000,000 and which is either
Fannie Mae or FHLMC approved, the appointment of which will not result in the
downgrading, withdrawal or qualification of the rating or ratings then
assigned to any Class of Certificates as evidenced in writing by each Rating
Agency, to act as successor to the Master Servicer or the Special Servicer,
as applicable, under the Agreement. Pending such appointment, the Trustee
will be obligated to act in such capacity. The Trustee and any such successor
may agree upon the servicing compensation to be paid, which in no event may
be greater than the compensation payable to the Master Servicer or the
Special Servicer, as the case may be, under the Agreement.
No Certificateholder will have any right under the Agreement to institute
any proceeding with respect to the Agreement or the Mortgage Loans, unless,
with respect to the Agreement, such holder previously shall have given to the
Trustee a written notice of a default under the Agreement and of the
continuance thereof, and unless also the holders of Certificates representing
a majority of the aggregate Voting Rights allocated to each affected Class
have made written request of the Trustee to institute such proceeding in its
own name as Trustee under the Agreement and have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, has
neglected or refused to institute such proceeding.
The Trustee will have no obligation to institute, conduct or defend any
litigation under the Agreement or in relation thereto at the request, order
or direction of any of the holders of Certificates, unless such holders of
Certificates have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
35
<PAGE>
CREDIT ENHANCEMENT
GENERAL
If specified in the related Prospectus Supplement for any Series, credit
enhancement may be provided with respect to one or more Classes thereof or
the related Mortgage Loans ("Credit Enhancement"). Credit Enhancement may be
in the form of a letter of credit, the subordination of one or more Classes
of the Certificates of such Series, the establishment of one or more reserve
funds, surety bonds, certificate guarantee insurance, the use of
cross-support features, limited guarantees or another method of Credit
Enhancement described in the related Prospectus Supplement, or any
combination of the foregoing.
It is unlikely that Credit Enhancement will provide protection against all
risks of loss or guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur that exceed the amount
covered by Credit Enhancement or that are not covered by Credit Enhancement,
Certificateholders will bear their allocable share of deficiencies. See "RISK
FACTORS--Credit Enhancement Limitations."
ENHANCEMENT LIMITATIONS
If Credit Enhancement is provided with respect to a Series, or the related
Mortgage Loans, the applicable Prospectus Supplement will include a
description of (a) the amount payable under such Credit Enhancement, (b) any
conditions to payment thereunder not otherwise described herein, (c) the
conditions (if any) under which the amount payable under such Credit
Enhancement may be reduced and under which such Credit Enhancement may be
terminated or replaced and (d) the material provisions of any agreement
relating to such Credit Enhancement. Additionally, the applicable Prospectus
Supplement will set forth certain information with respect to the issuer of
any third-party Credit Enhancement, including (i) a brief description of its
principal business activities, (ii) its principal place of business, the
jurisdiction of organization and the jurisdictions under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of
its business and (iv) its total assets and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in such
Prospectus Supplement. If the holders of any Certificates of any Series will
be materially dependent upon the issuer of any third party Credit Enhancement
for timely payment of interest and/or principal on their Certificates, the
Depositor will file a current report on Form 8-K within 15 days after the
initial issuance of such Certificates, which will include any material
information regarding such issuer, including audited financial statements to
the extent required.
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more Classes
of a Series may be Subordinate Certificates. If so specified in the related
Prospectus Supplement, the rights of the holders of subordinate Certificates
(the "Subordinate Certificates") to receive distributions of principal and
interest from the Distribution Account on any Distribution Date will be
subordinated to such rights of the holders of senior Certificates (the
"Senior Certificates") to the extent specified in the related Prospectus
Supplement. In addition, subordination may be effected by the allocation of
losses first to Subordinate Certificates in reduction of the principal
balance of such Certificates until the principal balance thereof is reduced
to zero before any losses are allocated to Senior Certificates. The Agreement
may require a trustee that is not the Trustee to be appointed to act on
behalf of holders of Subordinate Certificates.
A Series may include one or more Classes of Subordinate Certificates
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right to receive
payments will effectively be subordinate to the rights of holders of such
senior designated Classes of Certificates. A Series may also include one or
more Classes of Subordinate Certificates that will be allocated losses prior
to any losses being allocated to Classes of Subordinate Certificates
designated as being senior thereto. If so specified in the related Prospectus
Supplement, the subordination of a Class may apply only in the event of (or
may be limited to) certain types of losses not covered by insurance policies
or other Credit Enhancement, such as losses arising from damage to property
securing a Mortgage Loan not covered by standard hazard insurance policies.
36
<PAGE>
The related Prospectus Supplement will describe any such subordination in
greater detail and set forth information concerning, among other things. to
the extent applicable, (i) the amount of subordination of a Class or Classes
of Subordinate Certificates in a Series, (ii) the circumstances in which such
subordination will be applicable, (iii) the manner, if any, in which the
amount of subordination will decrease over time, (iv) the manner of funding
any related reserve fund, (v) the conditions under which amounts in any
applicable reserve fund will be used to make distributions to holders of
Senior Certificates and/or to holders of Subordinate Certificates or be
released from the applicable Trust Fund and (vi) if one or more Classes of
Subordinate Certificates of a Series are offered Certificates, the
sensitivity of distributions on such Certificates based on certain default
assumptions. See "RISK FACTORS--Risks to Subordinated Certificateholders"
herein.
RESERVE FUNDS
If specified in the related Prospectus Supplement, one or more reserve
funds (each, a "Reserve Fund") may be established with respect to one or more
Classes of the Certificates of a Series, in which cash, a letter of credit,
Permitted Investments or a combination thereof, in the amounts, if any, so
specified in the related Prospectus Supplement will be deposited. Such
Reserve Funds may also be funded over time by depositing therein a specified
amount of the distributions received on the applicable Mortgage Loans if
specified in the related Prospectus Supplement. The Depositor may pledge the
Reserve Funds to a separate collateral agent specified in the related
Prospectus Supplement.
Amounts on deposit in any Reserve Fund for one or more Classes of
Certificates of a Series will be applied by the Trustee for the purposes, in
the manner, and to the extent specified in the related Prospectus Supplement.
A Reserve Fund may be provided to increase the likelihood of timely payments
of principal of and interest on the Certificates, if required as a condition
to the rating of such Series by any Rating Agency. If so specified in the
related Prospectus Supplement, Reserve Funds may be established to provide
limited protection, in an amount satisfactory to a Rating Agency, against
certain types of losses not covered by insurance policies or other Credit
Enhancement. Reserve Funds may also be established for other purposes and in
such amounts as will be specified in the related Prospectus Supplement.
Following each Distribution Date amounts in any Reserve Fund in excess of any
amount required to be maintained therein may be released from the Reserve
Fund under the conditions and to the extent specified in the related
Prospectus Supplement and will not be available for further application by
the Trustee.
Moneys deposited in any Reserve Fund generally will be permitted to be
invested in Permitted Investments. Generally, any reinvestment income or
other gain from such investments will be credited to the related Reserve Fund
for such Series, and any loss resulting from such investments will be charged
to such Reserve Fund. If specified in the related Prospectus Supplement, such
income or other gain may be payable to the Servicer as additional servicing
compensation, and any loss resulting from such investment will be borne by
the Servicer. The Reserve Fund, if any for a Series will be a part of the
Trust Fund only if the related Prospectus Supplement so specifies. If the
Reserve Fund is not a part of the Trust Fund, the right of the Trustee to
make draws on the Reserve Fund will be an asset of the Trust Fund.
Additional information concerning any Reserve Fund will be set forth in
the related Prospectus Supplement, including the initial balance of such
Reserve Fund, the balance required to be maintained in the Reserve Fund, the
manner in which such required balance will decrease over time, the manner of
funding such Reserve Fund, the purpose for which funds in the Reserve Fund
may be applied to make distributions to Certificateholders and use of
investment earnings, if any, from the Reserve Fund.
CROSS-SUPPORT FEATURES
If the Mortgage Pool for a Series is divided into separate Mortgage Loan
Groups, each securing a separate Class or Classes of a Series, Credit
Enhancement may be provided by a cross-support feature that requires that
distributions be made on Senior Certificates secured by one Mortgage Loan
Group prior to distributions on Subordinate Certificates secured by another
Mortgage Loan Group within the Trust Fund. The related Prospectus Supplement
for a Series that includes a cross-support feature will describe the manner
and conditions for applying such cross-support feature.
37
<PAGE>
CERTIFICATE GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, certificate
guarantee insurance, if any, with respect to a Series of Certificates will be
provided by one or more insurance companies. Such certificate guarantee
insurance will guarantee, with respect to one or more Classes of Certificates
of the applicable Series, timely distributions of interest and full
distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the
related Prospectus Supplement. If so specified in the related Prospectus
Supplement, the certificate guarantee insurance will also guarantee against
any payment made to a Certificateholder that is subsequently recovered as a
"voidable preference" payment under the Bankruptcy Code. A copy of the
certificate guarantee insurance for a Series, if any, will be filed with the
Commission as an exhibit to the Form 8-K to be filed with the Commission
within 15 days of issuance of the Certificates of the applicable Series.
LIMITED GUARANTEE
If so specified in the Prospectus Supplement with respect to a Series of
Certificates, Credit Enhancement may be provided in the form of a limited
guarantee issued by a guarantor named therein.
LETTER OF CREDIT
Alternative Credit Enhancement with respect to one or more Classes of
Certificates of a Series of Certificates may be provided by the issuance of a
letter of credit by the bank or financial institution specified in the
applicable Prospectus Supplement. The coverage, amount and frequency of any
reduction in coverage provided by a letter of credit issued with respect to
one or more Classes of Certificates of a Series will be set forth in the
Prospectus Supplement relating to such Series.
POOL INSURANCE POLICIES; SPECIAL HAZARD INSURANCE POLICIES
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor will obtain a pool insurance policy for the
Mortgage Loans in the related Trust Fund. The pool insurance policy will
cover any loss (subject to the limitations described in a related Prospectus
Supplement) by reason of default to the extent a related Mortgage Loan is not
covered by any primary mortgage insurance policy. The amount and terms of any
such coverage will be set forth in the Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, for each Series
of Certificates as to which a pool insurance policy is provided, the
Depositor will also obtain a special hazard insurance policy for the related
Trust Fund in the amount set forth in such Prospectus Supplement. The special
hazard insurance policy will, subject to the limitations described in the
applicable Prospectus Supplement, protect against loss by reason of damage to
Mortgaged Properties caused by certain hazards not insured against under the
standard form of hazard insurance policy for the respective states in which
the Mortgaged Properties are located. The amount and terms of any such
coverage will be set forth in the Prospectus Supplement.
SURETY BONDS
If so specified in the Prospectus Supplement relating to a Series of
Certificates, Credit Enhancement with respect to one or more Classes of
Certificates of a Series may be provided by the issuance of a surety bond
issued by a financial guarantee insurance company specified in the applicable
Prospectus Supplement. The coverage, amount and frequency or any reduction in
coverage provided by a surety bond will be set forth in the Prospectus
Supplement relating to such Series.
FRAUD COVERAGE
If so specified in the applicable Prospectus Supplement, losses resulting
from fraud, dishonesty or misrepresentation in connection with the
origination or sale of the Mortgage Loans may be covered to a limited extent
by (i) representations and warranties to the effect that no such fraud,
dishonesty or misrepresentation had occurred, (ii) a Reserve Fund, (iii) a
letter of credit or (iv) some other method. The amount and terms of any such
coverage will be set forth in the Prospectus Supplement.
38
<PAGE>
MORTGAGOR BANKRUPTCY BOND
If so specified in the applicable Prospectus Supplement, losses resulting
from a bankruptcy proceeding relating to a mortgagor or obligor affecting the
Mortgage Loans in a Trust Fund with respect to a Series of Certificates will
be covered under a mortgagor bankruptcy bond (or any other instrument that
will not result in a withdrawal, downgrading or qualification of the rating
of the Certificates of a Series by any of the Rating Agencies that rated any
Certificates of such Series). Any mortgagor bankruptcy bond or such other
instrument will provide for coverage in an amount and with such terms meeting
the criteria of the Rating Agencies rating any Certificates of the related
Series, which amount and terms will be set forth in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because many of the legal aspects
of mortgage loans are governed by applicable state laws (which may vary
substantially), the following summaries do not purport to be complete, to
reflect the laws of any particular state, to reflect all the laws applicable
to any particular Mortgage Loan or to encompass the laws of all states in
which the properties securing the Mortgage Loans are situated. The summaries
are qualified in their entirety by reference to the applicable federal and
state laws governing the Mortgage Loans.
GENERAL
All of the Mortgage Loans are loans evidenced by (or, in the case of
mortgage pass-through certificates, supported by) a note or bond that is
secured by a lien and security interest in property created under related
security instruments, which may be mortgages, deeds of trust or deeds to
secure debt, depending upon the prevailing practice and law in the state in
which the Mortgaged Property is located. As used herein, unless the context
otherwise requires, the term "Mortgage" includes mortgages, deeds of trust
and deeds to secure debt. Any of the foregoing mortgages will create a lien
upon, or grant a title interest in, the mortgaged property, the priority of
which will depend on the terms of the mortgage, the existence of any separate
contractual arrangements with others holding interests in the mortgaged
property, the order of recordation of the mortgage in the appropriate public
recording office and the actual or constructive knowledge of the mortgagee as
to any unrecorded liens, leases or other interests affecting the mortgaged
property, Mortgages typically do not possess priority over governmental
claims for real estate taxes, assessments and, in some states, for
reimbursement of remediation costs of certain environmental conditions. See
"Environmental Risks." In addition, the Code provides priority to certain tax
liens over the lien of the mortgage. The mortgagor is generally responsible
for maintaining the property in good condition and for paying real estate
taxes, assessments and hazard insurance premiums associated with the
property.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of an
interest in real property between two parties--a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). A
deed of trust is a three-party instrument, wherein a trustor (the equivalent
of a mortgagor), grants the property to a trustee, in trust with a power of
sale, for the benefit of a beneficiary (the lender) as security for the
payment of the secured indebtedness. A deed to secure debt is a two party
instrument wherein the grantor (the equivalent of a mortgagor) conveys title
to, as opposed to merely creating a lien upon, the subject property to the
grantee (the lender) until such time as the underlying debt is repaid,
generally with a power of sale as security for the indebtedness evidenced by
the related note. As used herein, unless the context otherwise requires, the
term "mortgagor" includes a mortgagor under a mortgage, a trustor under a
deed of trust and a grantor under a deed to secure debt, and the term
"mortgagee" includes a mortgagee under a mortgage, a beneficiary under a deed
of trust and a grantee under a deed to secure debt. The mortgagee's authority
under a mortgage, the trustee's authority under a deed of trust and the
grantee's authority under a deed to secure debt are governed by the express
39
<PAGE>
provisions of the mortgage, the law of the state in which the real property
is located, certain federal laws and, in some cases, in deed of trust
transactions, the directions of the beneficiary. The Mortgage Loans (other
than Installment Contracts) will consist of (or, in the case of mortgage
pass-through certificates, be supported by) loans secured by mortgages.
The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in
real property such as a tenant's interest in a lease of land, leasehold
improvements or both, and the leasehold estate created by such lease. A
mortgage covering an interest in real property other than the fee estate
requires special provisions in the instrument creating such interest, in the
mortgage or in a separate agreement with the landlord or other party to such
instrument, to protect the mortgagee against termination of such interest
before the mortgage is paid.
PERSONALITY
Certain types of mortgaged properties, such as nursing homes, hotels,
motels and industrial plants, are likely to derive a significant part of
their value from personal property that does not constitute "fixtures" under
applicable state real property law. and hence, would not be subject to the
lien of a mortgage. Such property is generally pledged or assigned as
security to the mortgagee under the Uniform Commercial Code ("UCC"). In order
to perfect its security interest therein, the mortgagee generally must file
UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
INSTALLMENT CONTRACTS
The Mortgage Loans may also consist of Installment Contracts (also
sometimes called contracts for deed). Under an Installment Contract, the
seller (referred to in this Section as the "mortgagee") retains legal title
to the property and enters into an agreement with the purchaser (referred to
in this Section as the "mortgagor") for the payment of the purchase price
plus interest, over the term of such Installment Contract. Only after full
performance by the mortgagor of the Installment Contract is the mortgagee
obligated to convey title to the property to the mortgagor. As with mortgage
or deed of trust financing, during the effective period of the Installment
Contract, the mortgagor is generally responsible for maintaining the property
in good condition and for paying real estate taxes, assessments and hazard
insurance premiums associated with the property.
The method of enforcing the rights of the mortgagee under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing or able to enforce the Installment Contract strictly
according to its terms. The terms of Installment Contracts generally provide
that upon a default by the mortgagor, the mortgagor loses his or her right to
occupy the property, the entire indebtedness is accelerated and the
mortgagor's equitable interest in the property is forfeited. The mortgagee in
such a situation does not have to foreclose in order to obtain title to the
property, although in some cases both a quiet title action to clear title to
the property (if the mortgagor has recorded notice of the Installment
Contract) and an ejectment action to recover possession may be necessary. In
a few states, particularly in cases of a default during the early years of an
Installment Contract, ejectment of the mortgagor and a forfeiture of his or
her interest in the properly will be permitted. However, in most states, laws
(analogous to mortgage laws) have been enacted to protect mortgagors under
Installment Contracts from the harsh consequences of forfeiture. These laws
may require the mortgagee to pursue a judicial or nonjudicial foreclosure
with respect to the property, give the mortgagor a notice of default and some
grace period during which the Installment Contract may be reinstated upon
full payment of the default amount. Additionally, the mortgagor may have a
post-foreclosure statutory redemption right, and, in some states, a mortgagor
with a significant equity investment in the property may be permitted to
share in the proceeds of any sale of the property after the indebtedness is
repaid or may otherwise be entitled to a prohibition of the enforcement of
the forfeiture clause.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES OR BENEFICIARIES
Some of the Mortgage Loans may be secured by junior mortgages that are
subordinate to senior mortgages held by other lenders or institutional
investors. In such cases, the rights of the Trust Fund (and
40
<PAGE>
therefore the Certificateholders), as mortgagee under a junior mortgage, will
be subordinate to those of the mortgagee under the senior mortgage, including
the Prior rights of the senior mortgagee to: (i) receive rents, hazard
insurance proceeds and condemnation proceeds; and (ii) cause the property
securing the Mortgage Loan to be sold upon the occurrence of a default under
the senior mortgage, thereby extinguishing the lien of the junior mortgage,
unless the Master Servicer or Special Servicer, if applicable, either asserts
such subordinate interest in the related property in the foreclosure of the
senior mortgage or satisfies the defaulted senior loan. As discussed more
fully below, in many states a junior mortgagee may satisfy a defaulted senior
loan in full, or may cure such default and bring the senior loan current, in
either event adding the amounts expended to the balance due on the junior
loan. Absent a provision in the senior mortgage or the existence of a
recorded request for notice in compliance with applicable state law (if any),
no notice of default is typically required to be given to the junior
mortgagee.
The form of the mortgage used by many institutional lenders confers on the
mortgagee the right both to receive all proceeds collected under any hazard
insurance Policy and all awards made in connection with any condemnation
proceedings, and to apply such proceeds and awards to any indebtedness
secured by such mortgage in such order as the mortgagee may determine. Thus,
in the event improvements on the property are damaged or destroyed by fire or
other casualty, or in the event the property (or any part thereof) is taken
by condemnation, the mortgagee under the senior mortgage will have the prior
right to collect any applicable insurance proceeds and condemnation awards
and to apply the same to the indebtedness secured by the senior mortgage.
However, the laws of certain states may provide that, unless the security of
the mortgagee has been impaired, the mortgagor must be allowed to use any
applicable insurance proceeds or partial condemnation awards to restore the
property.
The form of mortgage used by many institutional lenders also typically
contains a "future advance" clause that provides that additional amounts
advanced to or on behalf of the mortgagor by the mortgagee are to be secured
by the mortgage. Such a clause is valid under the laws of most states. In
some states, however, the priority of any advance made under the clause
depends upon whether the advance was an "obligatory" or "optional" advance.
If the mortgagee is obligated to advance the additional amounts, the advance
may be entitled to receive the same priority as amounts initially made under
the mortgage, notwithstanding that other junior mortgages or other liens may
have encumbered the property between the date of recording of the senior
mortgage and the date of the future advance, and that the mortgagee had
actual knowledge of such intervening junior mortgages or other liens at the
time of the advance. If the mortgagee is not obligated to advance the
additional amounts and has actual knowledge of any such intervening junior
mortgages or other liens. the advance may be subordinate to such intervening
junior mortgages or other liens. In many other states, all advances under a
"future advance" clause are given the same priority as amounts initially made
under the mortgage so long as such advances do not exceed a specified "credit
limit" amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage used by many
institutional lenders obligates the mortgagor: (i) to pay all taxes and
assessments affecting the property prior to delinquency; (ii) to pay, when
due, all other encumbrances, charges and liens affecting the property that
may be prior to the lien of the mortgage; (iii) to provide and maintain
hazard insurance on the property; (iv) to maintain and repair the property
and not to commit or permit any waste thereof; and (v) to appear in and
defend any action or proceeding purporting to affect the property or the
rights of the mortgagee under the mortgage. Upon a failure of the mortgagor
to perform any of these obligations, the mortgage typically provides the
mortgagee the option to perform the obligation itself, with the mortgagor
agreeing to reimburse the mortgagee for any sums expended by the mortgagee in
connection therewith. All sums so expended by the mortgagee also typically
become part of the indebtedness secured by the mortgage. The form of mortgage
used by many institutional lenders also typically requires the mortgagor to
obtain the consent of the mortgagee as to all actions affecting the mortgaged
property, including, without limitation, all leasing activities (including
new leases and termination or modification of existing leases), any
alterations, modifications or improvements to the buildings and other
improvements forming a part of the mortgaged property and all property
management activities affecting the mortgaged property (including new
management or leasing agreements or any termination or modification of
existing management or leasing agreements). Tenants will often refuse to
execute a lease unless the mortgagee executes a written
41
<PAGE>
agreement with the tenant not to disturb the tenant's possession of its
premises in the event of a foreclosure. A senior mortgagee may refuse to
consent to matters approved by a junior mortgagee with the result that the
value of the security for the junior mortgage is diminished. For example, a
senior mortgagee may decide not to approve a lease or refuse to grant to a
tenant such a non-disturbance agreement. If, as a result, the lease is not
executed, the value of the mortgaged property may be diminished.
FORECLOSURE
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its
obligations under the note or mortgage and, by reason thereof, the
indebtedness has been accelerated, the mortgagee has the right to institute
foreclosure proceedings to sell the mortgaged property at public auction to
satisfy the indebtedness. Foreclosure procedures with respect to the
enforcement of a mortgage vary from state to state. Although there are other
foreclosure procedures available in some states that are either infrequently
used or available only in certain limited circumstances, the two primary
methods of foreclosing a mortgage are judicial foreclosure and non-judicial
foreclosure pursuant to a power of sale granted in the mortgage. In either
case, the actual foreclosure of the mortgage will be accomplished pursuant to
a public sale of the mortgaged property by a designated official or by the
trustee under a deed of trust. The purchaser at any such sale acquires only
the estate or interest in the mortgaged property encumbered by the mortgage.
For example, if the mortgage only encumbered a tenant's leasehold interest in
the property, such purchaser will only acquire such leasehold interest,
subject to the tenant's obligations under the lease to pay rent and perform
other covenants contained therein.
Judicial Foreclosure. A judicial foreclosure of a mortgage is a judicial
action initiated by the service of legal pleadings upon all necessary parties
having an interest in the real property.
Delays in completion of foreclosure may occasionally result from
difficulties in locating the necessary parties to the action. As a judicial
foreclosure is a lawsuit, it is subject to all of procedures, delays and
expenses attendant to litigation, sometimes requiring up to several years to
complete if contested. At the completion of a judicial foreclosure, if the
mortgagee prevails, the court ordinarily issues a judgment of foreclosure and
appoints a referee or other designated official to conduct a public sale of
the property. Such sales are made in accordance with procedures that vary
from state to state.
Non-Judicial Foreclosure. In the majority of cases, foreclosure of a deed
of trust (and in some instances, other types of mortgage instruments) is
accomplished by a non-judicial trustee's sale pursuant to a provision in the
deed of trust that authorizes the trustee, generally following a request from
the beneficiary, to sell the mortgaged property at public sale upon any
default by the mortgagor under the terms of the note or deed of trust. In
addition to the specific contractual requirements set forth in the deed of
trust, a non-judicial trustee's sale is also typically subject to any
applicable judicial or statutory requirements imposed in the state where the
mortgaged property is located. The specific requirements that must be
satisfied by a trustee prior to the trustee's sale vary from state to state.
Examples of the varied requirements imposed by certain states are: (i) that
notices of both the mortgagor's default and the mortgagee's acceleration of
the debt be provided to the mortgagor; (ii) that the trustee record a notice
of default and send a copy of such notice to the mortgagor, any other person
having an interest in the real property, including any junior lienholders.
any person who has recorded a request for a copy of a notice of default and
notice of sale, any successor in interest to the mortgagor and to certain
other persons; (iii) that the mortgagor, or any other person having a junior
encumbrance on the real estate, may, during a reinstatement period, cure the
default by paying the entire amount in arrears, plus, in certain states,
certain allowed costs and expenses incurred by the mortgagee in connection
with the default; and (iv) the method (publication, posting, recording,
etc.), timing, content, location and other particulars as to any required
public notices of the trustee's sale. Foreclosure of a deed to secure debt is
also generally accomplished by a non-judicial sale similar to that required
by a deed of trust, except that the mortgagee or its agent, rather than a
trustee, is typically empowered to perform the sale in accordance with the
terms of the deed to secure debt and applicable law.
42
<PAGE>
Limitations on Mortgagee's Rights. Because of the difficulty a potential
buyer at any foreclosure sale might have in determining the exact status of
title to the mortgaged property, the potential existence of redemption rights
(see "Rights of Redemption" below) and because the physical condition and
financial performance of the mortgaged property may have deteriorated during
the foreclosure proceedings and/or for a variety of other reasons, a third
party may be unwilling to purchase the property at the foreclosure sale. Some
states require that the mortgagee disclose all known facts materially
affecting the value of the mortgaged property to potential bidders at a
trustee's sale. Such disclosure may have an adverse affect on the trustee's
ability to sell the mortgaged property or the sale price thereof. Potential
buyers may be reluctant to purchase property at a foreclosure sale as a
result of the 1980 decision of the United States Court of Appeals for the
Fifth Circuit in Durrett v. Washington National Insurance Company and other
decisions that have followed its reasoning. The court in Durrett held that
even a non-collusive, regularly conducted foreclosure sale was a fraudulent
transfer under the federal Bankruptcy Code, as amended from time to time (11
U.S.C.) (the "Bankruptcy Code"), and, therefore, could be rescinded in favor
of the bankrupt's estate, if, (i) the foreclosure sale was held while the
debtor was insolvent and not more than one year prior to the filing of the
bankruptcy petition; and (ii) the price paid for the foreclosed property did
not represent "fair consideration" ("reasonably equivalent value" under the
Bankruptcy Code). Although the reasoning and result of Durrett in respect of
the Bankruptcy Code was rejected by the United States Supreme Court in May
1994, the case could nonetheless be persuasive to a court applying a state
fraudulent conveyance law that has provisions similar to those construed in
Durrett. Furthermore, a bankruptcy trustee or debtor in possession could
possibly avoid a foreclosure sale by electing to proceed under state
fraudulent conveyance law, and the period of time for which a foreclosure
sale could be subject to avoidance under such law is often greater than one
year. For these reasons, it is common for the mortgagee to purchase the
property from the trustee, referee or other designated official for an amount
equal to the outstanding principal amount of the secured indebtedness,
together with accrued and unpaid interest and the expenses of foreclosure, in
which event, if the amount bid by the mortgagee equals the full amount of
such debt, interest and expenses, the secured debt would be extinguished.
Thereafter, the mortgagee assumes the burdens of ownership and management of
the property (frequently, through the employment of a third party management
company), including third party liability, paying operating expenses and real
estate taxes and making repairs, until a sale of the property to a third
party can be arranged. The costs of operating and maintaining commercial
property may be significant and may be greater than the income derived from
that property. The costs of management and operation of those mortgaged
properties that are hotels, motels or nursing or convalescent homes or
hospitals may be particularly significant, because of the expertise,
knowledge and, with respect to nursing or convalescent homes or hospitals,
regulatory compliance required to run such operations and the effect that
foreclosure and a change in ownership may have on the public's and the
industry's (including franchisers') perception of the quality of such
operations. The mortgagee will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale
of the property may not equal the mortgagee's investment in the property.
Moreover, a mortgagee commonly incurs substantial legal fees and court costs
in acquiring a mortgaged property through contested foreclosure and/or
bankruptcy proceedings. In addition, a mortgagee may be responsible under
federal or state law for the cost of cleaning up a mortgaged property that is
environmentally contaminated. See "--Environmental Risks" below. As a result,
a mortgagee could realize an overall loss on a mortgage loan even if the
related mortgaged property is sold at foreclosure or resold after it is
acquired through foreclosure for an amount equal to the full outstanding
principal amount of the mortgage loan, plus accrued interest.
Courts may also apply general equitable principles in connection with
foreclosure proceedings to limit a mortgagee's remedies. These equitable
principles are generally designed to relieve the mortgagor from the legal
effect of his defaults under the loan documents to the extent such effect is
determined to be harsh or unfair. Examples of judicial remedies that have
been fashioned include requiring mortgagees to undertake affirmative and
expensive actions to determine the causes of the mortgagor's default and the
likelihood that the mortgagor will be able to reinstate the loan, requiring
the mortgagees to reinstate loans or recast payment schedules in order to
accommodate mortgagors who are suffering from temporary financial disability,
and limiting the rights of mortgagees to foreclose if the default under the
mortgage
43
<PAGE>
instrument is not monetary, such as the mortgagor's failing to maintain the
property adequately or executing a second mortgage affecting the property.
Finally, some courts have been faced with the issue of whether federal or
state constitutional provisions reflecting due process concerns for adequate
notice require that mortgagors under deeds of trust or mortgages receive
notices in addition to the statutorily prescribed minimum. For the most part,
these cases have upheld the notice provisions as being reasonable or have
found that the sale by a trustee under a deed of trust, or under a mortgage
having a power of sale, does not involve sufficient state action to afford
constitutional protections to the mortgagor.
Under the REMIC Regulations and the related Agreement, the Master Servicer
or Special Servicer, if any, may be permitted (and in some cases may be
required) to hire an independent contractor to operate any REO Property. The
costs of such operation may be significantly greater than the costs of direct
operation by the Master Servicer or Special Servicer, if any. See "SERVICING
OF THE MORTGAGE LOANS--Collections and Other Servicing Procedures."
Rights of Redemption. The purposes of a foreclosure are to enable the
mortgagee to realize upon its security and to bar the mortgagor, and all
persons who have an interest in the property that is subordinate to the
mortgage being foreclosed, from any exercise of their "equity of redemption."
The doctrine of equity of redemption provides that, until the property
covered by a mortgage has been sold in accordance with a properly conducted
foreclosure sale, those having an interest that is subordinate to that of the
foreclosing mortgagee have an equity of redemption and may redeem the
property by paying the entire debt with interest. In addition, in some
states, when a foreclosure action has been commenced, the redeeming party
must pay certain costs of such action. Those having an equity of redemption
must generally be made parties and joined in the foreclosure proceeding in
order for their equity of redemption to be cut off and terminated. Equity of
redemption is generally a common-law (non-statutory) right that only exists
prior to completion of the foreclosure sale is not waivable by the mortgagor
and must be exercised prior to foreclosure sale.
In contrast to the doctrine of equity of redemption, in some states, the
mortgagor and foreclosed junior lienors are given a statutory period after
the completion of a foreclosure in which to redeem the property from the
foreclosure sale by payment of a redemption price. The required redemption
price varies from state to state. Some states require the payment of the
entire principal balance of the loan, accrued interest and expenses of
foreclosure, others require the payment of the foreclosure sale price, while
other states require the payment of only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
mortgagee to sell the foreclosed property. The exercise of a statutory right
of redemption may defeat the title of any purchaser at a foreclosure sale or
any purchaser from the mortgagee subsequent to a foreclosure sale.
Consequently, the practical effect of the redemption right is often to
force the mortgagee to retain the property and pay the expenses of ownership
until the redemption period has run. Certain states permit a mortgagee to
invalidate an attempted exercise of a statutory redemption right by waiving
its right to any deficiency judgment. In some states, there is no right to
redeem property after a trustee's sale under a deed of trust.
Under the REMIC Regulations currently in effect, property acquired by
foreclosure generally must not be held for more than two years. With respect
to a Series of Certificates for which an election is made to qualify the
Trust Fund or a part thereof as a REMIC. The Agreement will permit foreclosed
property to be held for more than two years if the Trustee receives (i) an
extension from the IRS or (ii) an opinion of counsel to the effect that
holding such property for such period is permissible under the REMIC
Regulations.
Mortgagors under Installment Contracts generally do not have the benefits
of redemption periods such as those that exist in the same jurisdiction for
mortgage loans. If redemption statutes do exist under state laws for
Installment Contracts, the redemption period may be shorter than for
mortgages.
Anti-Deficiency Legislation. Some of the Mortgage Loans will be
nonrecourse loans as to which, in the event of default by a mortgagor,
recourse may be had only against the specific property pledged to secure the
related Mortgage Loan and not against the mortgagor's other assets. Even if a
mortgage by its
44
<PAGE>
terms provides for recourse against the mortgagor, certain states have
imposed prohibitions against or limitations upon such recourse. For example,
some state statutes limit the right of the mortgagee to obtain a deficiency
judgment against the mortgagor following foreclosure or sale under a deed of
trust. A deficiency judgment is a personal judgment against the former
mortgagor equal in most cases to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
mortgagee. Other statutes require the mortgagee to exhaust the security
afforded under a mortgage by foreclosure in an attempt to satisfy the full
debt before bringing a personal action against the mortgagor. In certain
states, the mortgagee has the option of bringing a personal action against
the mortgagor on the debt without first exhausting its security, however, in
some of these states, a mortgagee choosing to pursue such an action may be
deemed to have elected its remedy and may be precluded from exercising any
remedies with respect to the security. Consequently, the practical effect of
the election requirement, when applicable, is that mortgagees will usually
proceed first against the security rather than bringing personal action
against the mortgagor. Other statutory provisions limit any deficiency
judgment against the former mortgagor following a judicial sale to the excess
of the outstanding debt over the fair market value of the property at the
time of the public sale. The purpose of these statutes is generally to
prevent a mortgagee from obtaining a large deficiency judgment against the
former mortgagor as a result of low bids, or the absence of bids, at the
judicial sale.
Leasehold Risks. Certain of the Mortgage Loans may be secured by a
mortgage encumbering the mortgagor's leasehold interest under a ground lease.
Leasehold mortgages are subject to certain risks not associated with
mortgages encumbering a fee ownership interest in the mortgaged property. The
most significant of these risks is that the ground lease creating the
leasehold estate could terminate, thereby depriving the leasehold mortgagee
of its security. The ground lease may terminate if, among other reasons, the
ground lessee breaches or defaults in its obligations under the ground lease
or there is a bankruptcy of the ground lessee or the ground lessor. Examples
of protective provisions that may be included in the related ground lease, or
a separate agreement between the ground lessee, the ground lessor and the
mortgagee, in order to minimize such risk are the right of the mortgagee to
receive notices from the ground lessor of any defaults by the mortgagor, the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the mortgagee, the right to acquire the leasehold
estate through foreclosure or otherwise prior to any termination of the
ground lease; the ability of the ground lease to be assigned to and by the
mortgagee or a purchaser at a foreclosure sale and for a release of the
assigning ground lessee's liabilities thereunder, the right of the mortgagee
to enter into a ground lease with the ground lessor on the same terms and
conditions as the old ground lease in the event of a termination thereof; and
provisions for disposition of any insurance proceeds or condemnation awards
payable upon a casualty to, or condemnation of, the mortgaged property. In
addition to the foregoing protections, the leasehold mortgage may prohibit
the ground lessee from treating the ground lease as terminated in the event
of the ground lessor's bankruptcy and rejection of the ground lease by the
trustee for the debtor-ground lessor, and may assign to the mortgagee the
debtor-ground lessee's right to reject a lease pursuant to Section 365 of the
Bankruptcy Code, although the enforceability of such assignment has not been
established. An additional manner in which to obtain protection against the
termination of the ground lease is to have the ground lessor enter into a
mortgage encumbering the fee estate in addition to the mortgage encumbering
the leasehold interest under the ground lease. Additional protection is
afforded to the mortgagee, because if the ground lease is terminated, the
mortgagee may nonetheless possess rights contained in the fee mortgage.
Without the protections described in this paragraph, a leasehold mortgagee
may be more likely to lose the collateral securing its leasehold mortgage. No
assurance can be given that any or all of the above described provisions will
be obtained in connection with any particular Mortgage Loan.
Bankruptcy Laws. Mortgagors often file bankruptcy to delay or prevent
exercise of remedies under loan documents. Numerous statutory and common law
provisions, including the Bankruptcy Code and state laws affording relief to
debtors, may interfere with and delay the ability of a mortgagee to obtain
payment of the loan, to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code virtually all
actions (including foreclosure actions and deficiency judgment proceedings)
are automatically stayed upon the filing of the bankruptcy petition and often
no interest or principal payments are made during the course of the
bankruptcy proceeding (although "adequate
45
<PAGE>
protection" payments for anticipated diminution, if any, in the value of the
mortgaged property may be made). The delay and consequences thereof caused by
such automatic stay can be significant. A particular mortgagor may become
subject to the Bankruptcy Code either by a voluntary or involuntary petition
with respect to such mortgagor or, by virtue of the doctrine of "substantive
consolidation" by an affiliate of such mortgagor becoming a debtor under the
Bankruptcy Code. Additionally, the filing of a petition in bankruptcy by or
on behalf of a junior lienor or junior mortgagee may stay the senior
mortgagee from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the mortgagee are met, the amount and terms of a mortgage or
deed of trust secured by property of the debtor may be modified under certain
circumstances. The outstanding amount of the loan secured by the real
property may be reduced to the then current value of the property (with a
corresponding partial reduction of the amount of the mortgagee's security
interest), thus leaving the mortgagee a general unsecured creditor for the
difference between such value and the outstanding balance of the loan. Other
modifications may include the reduction in the amount of each monthly
payment, which reduction may result from a reduction in the rate of interest
and/or the alteration of the repayment schedule (with or without affecting
the unpaid principal balance of the loan) and/or an extension (or
acceleration) of the final maturity date. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case
before them, that affected the curing of a mortgage loan default by paying
arrearages over a number of years. A bankruptcy court may also permit a
debtor to de-accelerate a secured loan and to reinstate the loan even though
the mortgagee had accelerated such loan and final judgment of foreclosure had
been entered in state court (provided no sale of the property had yet
occurred) prior to the filing of the debtor's petition, even if the full
amount due under the original loan is never repaid. Other types of
significant modifications to the terms of the mortgage may be acceptable to
the bankruptcy court, often depending on the particular facts and
circumstances of the specific case.
Federal bankruptcy law may also interfere with or affect the ability of a
mortgagee to enforce an assignment of rents and leases or a security interest
in hotel revenues related to the mortgaged property. In connection with a
bankruptcy proceeding involving a mortgagor, Section 362 of the Bankruptcy
Code automatically stays any attempts by the mortgagee to enforce any such
assignment or security interest. The legal proceedings necessary to resolve
such a situation can be time-consuming and may result in significant delays
in the receipt of the rents or hotel revenues. Rents or hotel revenues may
also be lost (i) if the assignment or security interest is not fully
documented or perfected under state law prior to commencement of the
bankruptcy proceeding, (ii) to the extent such rents or hotel revenues are
used by the mortgagor to maintain the mortgaged property or for other court
authorized expenses; (iii) to the extent other collateral may be substituted
therefor; and (iv) if the bankruptcy court determines that it is necessary or
appropriate "based on the equities of the case."
To the extent a mortgagor's ability to make payment on a mortgage loan is
dependent on payments under a lease of the related property, such ability may
he impaired by the commencement of a bankruptcy proceeding relating to the
lessee under such lease. Under the Bankruptcy Code, the filing of a petition
in bankruptcy by or on behalf of a lessee results in an automatic stay
barring the commencement or continuation of any state court proceeding for
past due rent, for accelerated rent, for damages or for a summary eviction
order with respect to a default under the lease that occurred prior to the
filing of the lessee's petition.
In addition, the Bankruptcy Code generally provides that a bankruptcy
trustee or debtor in possession may, subject to approval of the bankruptcy
court, either (i) assume the lease and retain it or assign it to a third
party or (ii) reject the lease. If the lease is assumed, the bankruptcy
trustee or debtor in possession (or assignee, if applicable) must cure any
defaults under the lease, compensate the lessor for its losses and provide
the lessor with "adequate assurance" of future performance. Such remedies may
be insufficient, however, as the lessor may be forced to continue under the
lease with a lessee that is a poor credit risk or an unfamiliar tenant if the
lease was assigned, and any assurances provided to the lessor may, in fact,
be inadequate. Furthermore, there may be a significant period of time between
the date that a lessee files a bankruptcy petition and the date that the
lease is assumed or rejected. Although the lessee is obligated to make all
lease payments currently with respect to the post-petition period, there is a
risk
46
<PAGE>
that such payments will not be made due to the lessees poor financial
condition. If the lease is rejected, the lessor will be treated as an
unsecured creditor with respect to its claim for damages for termination of
the lease, and the lessor must relet the mortgaged property before the flow
of lease payments will recommence. In addition, pursuant to Section 502(b)(6)
of the Bankruptcy Code, a lessor's damages for lease rejection are limited.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery, as a preferential transfer, of certain payments made by the
mortgagor under the related Mortgage Loan to the Trust Fund. Payments on
long-term debt may be protected from recovery as preferences if they are
payments in the ordinary course of business made on debts incurred in the
ordinary course of business. Whether any particular payment would be
protected depends upon the facts specific to a particular transaction. If a
Mortgage Loan includes any guaranty, and the guaranty waives any rights of
subrogation or contribution, then certain payments by the mortgagor to the
Trust Fund also may be avoided and recovered as fraudulent conveyances.
A trustee in bankruptcy or a debtor in possession or various creditors who
extend credit after a case is filed, in some cases, may be entitled to
collect costs and expenses in preserving or selling the mortgaged property
ahead of payment to the mortgagee. In certain circumstances, a trustee in
bankruptcy or debtor in possession may have the power to grant liens senior
to or pari passu with the lien of a mortgage, and analogous state statutes
and general principles of equity may also provide a mortgagor with means to
halt a foreclosure proceeding or sale and enforce a restructuring of a
mortgage loan on terms a mortgagee would not otherwise accept.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to subordinate the lien created by the mortgage loan to other
liens or the claims of general unsecured creditors. Generally, this requires
proof of "unequitable conduct" by the mortgagee. However, various courts have
expanded the grounds for equitable subordination to apply to various
non-pecuniary claims for such items as penalties and fines. A court may find
that any prepayment charge, various late payment charges and other claims by
mortgagees may be subject to equitable subordination on these grounds.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to avoid all or part of any claim or lien by the mortgagee if and
to the extent a judgment creditor, or a bona fide purchaser of real estate,
could have done so outside of bankruptcy.
Generally, this involves some defect in the language, execution or
recording of the mortgage loan documents.
ENVIRONMENTAL RISKS
Real property pledged as security to a mortgagee may be subject to
environmental risks arising from the presence of hazardous or toxic
substances on, under, adjacent to, or in such property. The environmental
condition of mortgaged properties may be affected by the actions and
operations of tenants and occupants of such properties. Of particular concern
may be those mortgaged properties that are, or have been, the site of
manufacturing, industrial or disposal activity or have been built with or
contain asbestos-containing material or other indoor pollutants. In addition,
current and future environmental laws, ordinances or regulations, including
new requirements developed by federal agencies pursuant to the mandates of
the Clean Air Act Amendments of 1990, may impose additional compliance
obligations on business operations that can he met only by significant
capital expenditures.
A mortgagee may be exposed to risks related to environmental conditions
such as the following: (i) a diminution in the value of a mortgaged property;
(ii) the potential that the mortgagor may default on a mortgage loan due to
the mortgagor's inability to pay high remediation costs or difficulty in
bringing its operations into compliance with environmental laws; (iii) in
certain circumstances as more fully described below, liability for clean-up
costs or other remedial actions, which liability could exceed the value of
such mortgaged property or the unpaid balance of the related mortgage loan;
or (iv) the inability to sell the related Mortgage Loan in the secondary
market. In certain circumstances, a mortgagee may choose not to foreclose on
contaminated property rather than risk incurring liability for remedial
actions.
47
<PAGE>
In addition, a mortgagee may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following
foreclosure). Such disclosure may decrease the amount that prospective buyers
are willing to pay for the affected property, sometimes substantially, and
thereby decrease the ability of the mortgagee to recoup its investment in a
loan upon foreclosure.
In certain states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a mortgagee
that becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination
before selling or otherwise transferring the property.
Under federal and certain states' laws, the owner's failure to perform
remedial actions required under environmental laws may in certain
circumstances give rise to a lien on the mortgaged property to ensure the
reimbursement of remedial costs incurred by federal and state regulatory
agencies. In several states such lien has priority over the lien of an
existing mortgage against such property. Since the costs of remedial action
could be substantial, the value of a mortgaged property as collateral for a
mortgage loan could be adversely affected by the existence of an
environmental condition giving rise to a lien.
Under certain circumstances, it is possible that environmental cleanup
costs, or the obligation to take remedial actions, can be imposed on a
mortgagee such as the Trust Fund with respect to each Series. Under the laws
of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), strict
liability may be imposed on present and past "owners" and "operators" of
contaminated real property for the costs of clean-up. Excluded from CERCLA's
definition of "owner" or "operator", however, is a person "who without
participating in the management of the facility, holds indicia of ownership
primarily to protect his security interest". This is known as the "secured
creditor exemption." Judicial decisions interpreting the secured creditor
exemption had varied widely, and one decision, United States v. Fleet Factors
Corp., 901 F.2d 1550 (11th Cir. 1990), cert. denied, 498 U.S. 1046 (1991),
had indicated that a lender's mere power to affect and influence a borrower's
operations might be sufficient to lead to liability on the part of the
lender. However, on September 30, 1996, the Asset Conservation, Lender
Liability, and Deposit Insurance Protection Act of 1996 (the "Lender
Liability Act") became law. The Lender Liability Act clarifies the secured
creditor exemption to impose liability only on a secured lender who exercises
control over operational aspects of the facility and thus is "participating
in management". A number of environmentally related activities before the
loan is made and during its pendency as well as "workout" steps to protect a
security interest, are identified as permissible to protect a security
interest without triggering liability. The Lender Liability Act also
identifies the circumstances in which foreclosure and post-closure activities
will not trigger CERCLA liability. The Lender Liability Act also amends the
Solid Waste Disposal Act to limit the liability of lenders holding a security
interest for costs of cleaning up contamination from underground storage
tanks. However, the Lender Liability Act has no effect on state environmental
laws similar to CERCLA that may impose liability on mortgagees and other
persons, and not all of those laws provide for a secured creditor exemption.
Liability under many of these federal and state laws may exist even if the
mortgagee did not cause or contribute to the contamination and regardless of
whether the mortgagee has actually taken possession of a mortgaged property
through foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such
liability is not limited to the original or unamortized principal balance of
a loan or to the value of the property securing a loan.
CERCLA's "innocent landowner" defense to strict liability may be available
to a mortgagee that has taken title to a mortgaged property and has performed
an appropriate environmental site assessment that does not disclose existing
contamination and that meets other requirements of the defense. However, it
is unclear whether the environmental site assessment must be conducted upon
loan origination, prior to foreclosure or both, and uncertainty exists as to
what kind of environmental site assessment must be performed in order to
qualify for the defense.
Beyond statute-based environmental liability, there exist common law
causes of action that can be asserted to redress hazardous environmental
conditions on a property (e.g., actions based on nuisance for so called toxic
torts resulting in death, personal injury or damage to property). Although it
may be more
48
<PAGE>
difficult to hold a mortgagee liable in such cases, unanticipated or
uninsured liabilities of the mortgagor may jeopardize the mortgagor ability
to meet its loan obligations. At the time the Mortgage Loans were originated,
it is possible that no environmental assessment or a very limited
environmental assessment of the Mortgaged Properties was conducted.
The related Agreement will provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title
to any Mortgaged Property or take over its operation unless the Master
Servicer or the Special Servicer, if any, has previously determined, based
upon a phase I or other specified environmental assessment prepared by a
person who regularly conducts such environmental assessments, that (a) the
Mortgaged Property is in compliance with applicable environmental laws or
that it would be in the best economic interest of the Trust Fund to take the
actions necessary to comply with such laws and (b) there are no circumstances
or conditions present at the Mortgaged Property relating to hazardous
substances for which some investigation, remediation or clean-up action could
be required or that it would be in the best economic interest of the Trust
Fund to take such actions with respect to such Mortgaged Property. This
requirement effectively precludes enforcement of the security for the related
Note until a satisfactory environmental assessment is obtained and/or any
required remedial action is taken. This requirement will reduce the
likelihood that a given Trust Fund will become liable for any environmental
conditions affecting a Mortgaged Property, but will make it more difficult to
realize on the security for the Mortgage Loan. There can be no assurance that
any environmental assessment obtained by the Master Servicer or the Special
Servicer, if any, will detect all possible environmental conditions or that
the other requirements of the Agreement, even if fully observed by the Master
Servicer or the Special Servicer, if any, will in fact insulate a given Trust
Fund from liability for environmental conditions.
"Hazardous Materials" are generally defined as any dangerous, toxic or
hazardous pollutants, chemicals, wastes or substances, including, without
limitation, those so identified pursuant to CERCLA or any other environmental
laws now existing. and specifically including, without limitation, asbestos
and asbestos-containing materials, polychlorinated biphenyls, radon gas,
petroleum and petroleum products, urea formaldehyde and any substances
classified as being "in inventory," "usable work in process" or similar
classification that would, if classified as unusable, be included in the
foregoing definition.
If a mortgagee is or becomes liable for clean-up costs, it may bring an
action for contribution against the current owners or operators, the owners
or operators at the time of on-site disposal activity or any other party who
contributed to the environmental hazard, but such persons or entities may be
without substantial assets, bankrupt or otherwise judgment proof.
Furthermore, such action against the mortgagor may be adversely affected by
the limitations on recourse in the loan documents. Similarly, in some states
anti-deficiency legislation and other statutes requiring the mortgagee to
exhaust its security before bringing a personal action against the mortgagor
(see "Anti-Deficiency Legislation" above) may curtail the mortgagee's ability
to recover from its mortgagor the environmental clean-up and other related
costs and liabilities incurred by the mortgagee. Accordingly, it is possible
that such costs could become a liability of the Trust Fund and occasion a
loss to the Certificateholders. Shortfalls occurring as the result of
imposition of any clean-up costs will be addressed in the Prospectus
Supplement and Agreement for the related Series.
Other environmental laws that may affect the value of a mortgaged
property, or impose cleanup costs or liabilities, including those related to
asbestos, radon, lead paint and underground storage tanks.
Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACMs") in the event of the remodeling, renovation or demolition of a
building. Such laws, as well as common law standards, may impose liability
for releases of ACMs and may allow third parties to seek recovery from owners
or operators of real properties for personal injuries associated with such
releases. In addition, federal law requires that building owners inspect
their facilities for ACMs and presumed ACMs (consisting of thermal system
insulation, surfacing materials and asphalt and vinyl flooring in buildings
constructed prior to 1981) and transfer all information regarding ACMs and
presumed ACMs in their facilities to successive owners.
49
<PAGE>
The United States Environmental Protection Agency (the "EPA") has
concluded that radon gas, a naturally occurring substance, is linked to
increased risks of lung cancer. Although there are no current federal or
state requirements mandating radon gas testing, the EPA and the United States
Surgeon General recommend testing residences for the presence of radon and
that abatement measures be undertaken if radon concentrations in indoor air
meet or exceed four picocuries per liter.
The Residential Lead-Based Paint Hazard Reduction Act of 1992 (the "Lead
Paint Act") requires federal agencies to promulgate regulations that will
require owners of residential housing constructed prior to 1978 to disclose
to potential residents or purchasers any known lead-paint hazards. The Lead
Paint Act creates a private right of action with treble damages available for
any failure to so notify. Federal agencies have issued regulations
delineating the scope of this disclosure obligation which became effective in
September of 1996 for owners of more than four residential dwellings and [are
to take effect in December of 1996 for owners of one to four residential
dwellings.] In addition, the ingestion of lead-based paint chips or dust
particles by children can result in lead poisoning, and the owner of a
property where such circumstances exist may be held liable for such injuries.
Finally, federal law mandates that detailed worker safety standards must be
complied with where construction, alteration, repair or renovation of
structures that contain lead, or materials that contain lead, is
contemplated.
Underground storage tanks ("USTs") are, and in the past have been,
frequently located at properties used for industrial, retail and other
business purposes. Federal law, as well as the laws of most states, currently
require USTs used for the storage of fuel or hazardous substances and waste
to meet certain standards designed to prevent releases from the USTs into the
environment. USTs installed prior to the implementation of these standards,
or that otherwise do not meet these standards, are potential sources of
contamination to the soil and groundwater. Land owners may be liable for the
costs of investigating and remediating soil and groundwater contamination
that may emanate from leaking USTs.
ENFORCEABILITY OF CERTAIN PROVISIONS
Default Interest; Late Charges; and Prepayment Fees. Some of the Mortgage
Loans may contain provisions requiring the mortgagor to pay late charges or
additional interest if required payments are not timely made. In certain
states there may be limitations upon the enforceability of such provisions,
and no assurance can be given that any of such provisions related to any
Mortgage Loan will be enforceable. Some of the Mortgage Loans may also
contain provisions prohibiting any prepayment of the loan prior to maturity
or requiring the payment of a prepayment fee in connection with any such
prepayment. Even if enforceable, a requirement for such prepayment fees may
not deter mortgagors from prepaying their mortgage loans. Although certain
states will allow the enforcement of such provisions upon a voluntary
prepayment of a mortgage loan, in other states such provisions may be
unenforceable after a mortgage loan has been outstanding for a certain number
of years or if enforcement would be unconscionable, or the allowed amount of
any prepayment fee may be limited (i.e., to a specified percentage of the
original principal amount of the mortgage loan, to a specified percentage of
the outstanding principal balance of a mortgage loan or to a fixed number of
months' interest on the prepaid amount). In certain states there may be
limitations upon the enforceability of prepayment fee provisions applicable
in connection with a default by the mortgagor or an involuntary acceleration
of the secured indebtedness, and no assurance can be given that any of such
provisions related to a mortgage loan will be enforceable under such
circumstances. The applicable laws of certain states may also treat certain
prepayment fees as usurious if in excess of statutory limits. See
"--Applicability of Usury Laws."
Due-on-Sale Provisions. The enforceability of due-on-sale provisions has
been the subject of legislation or litigation in many states, and in some
cases, typically involving single family residential mortgage transactions,
their enforceability has been limited or denied. In any event, the Garn-St
Germain Depository Institutions Act of 1982 (the "Garn-St Germain Act")
preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits mortgagees to enforce these
clauses in accordance with their terms, subject to certain exceptions. As a
result, due-on-sale clauses have become generally enforceable except in those
states whose legislatures exercised their authority to regulate the
enforceability of such clauses with respect to mortgage loans that were: (i)
originated or assumed during the "window period" under the Garn-St Germain
Act, which ended in all cases not later
50
<PAGE>
than October 15, 1982; and (ii) originated by lenders other than national
banks, federal savings institutions or federal credit unions. The Federal
Home Loan Mortgage Corporation has taken the position in its published
mortgage servicing standards that, out of a total of eleven "window period
states," five states (Arizona, Michigan, Minnesota, New Mexico and Utah) have
enacted statutes extending, on various terms and for varying periods, the
prohibition on enforcement of due-on-sale clauses with respect to certain
categories of loans that were originated or assumed during the "window
period" applicable to such state. Also, the Garn-St Germain Act does
"encourage" lenders to permit assumption of loans at the original rate of
interest or at some other rate less than the average of the original rate and
the market rates.
The Agreement for each Series generally will provide that if any Mortgage
Loan contains a provision in the nature of a "Due-on-Sale" clause, which by
its terms provides that: (i) such Mortgage Loan shall (or may at the
mortgagee's option) become due and payable upon the sale or other transfer of
an interest in the related Mortgaged Property or (ii) such Mortgage Loan may
not be assumed without the consent of the related mortgagee in connection
with any such sale or other transfer, then, for so long as such Mortgage Loan
is included in the Trust Fund, the Master Servicer or the Special Servicer,
if any, on behalf of the Trustee, shall take such actions as it deems to be
in the best interest of the Trust Fund in accordance with the servicing
standard set forth in the Agreement, and may waive or enforce any due-on-sale
clause contained in the related Note or Mortgage.
In addition, under the federal Bankruptcy Code, due-on-sale clauses may
not be enforceable in bankruptcy proceedings and may, under certain
circumstances, be eliminated in any modified mortgage resulting from such
bankruptcy proceeding.
Acceleration on Default. It is expected that the Mortgage Loans will
include a "Debt-Acceleration" clause, which permits the mortgagee to
accelerate the full debt upon a monetary or nonmonetary default of the
mortgagor. The courts of all states will enforce such acceleration clauses in
the event of a material payment default if appropriate notices of default
have been effectively given. However, the equity courts of any state may
refuse to foreclose a mortgage when an acceleration of the indebtedness would
be inequitable or unjust or the circumstances would render the acceleration
unconscionable. Furthermore, in some states, the mortgagor may avoid
foreclosure and reinstate an accelerated loan by paying only the defaulted
amounts and, in certain states, the costs and attorneys' fees incurred by the
mortgagee in collecting such defaulted payments.
State courts also are known to apply various legal and equitable
principles to avoid enforcement of the forfeiture provisions of Installment
Contracts. For example, a mortgagee's practice of accepting late payments
from the mortgagor may be deemed a waiver of the forfeiture clause. State
courts also may impose equitable grace periods for payment of arrearages or
otherwise permit reinstatement of the Installment Contract following a
default. Not infrequently, if a mortgagor under an Installment Contract has
significant equity in the property, equitable principles will be applied to
reform or reinstate the Installment Contract or to permit the mortgagor to
share the proceeds upon a foreclosure sale of the property if the sale price
exceeds the debt.
SOLDIERS' AND SAILORS' RELIEF ACT
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a mortgagor who enters military service
(including the Army, Navy, Air Force, Marines, Coast Guard, members of the
National Guard or any Reserves who are called to active duty status after the
origination of their mortgage loan and officers of the U.S. Public Health
Service assigned to duty with the military) after the origination of such
mortgagor's mortgage loan may not be charged interest (including fees and
charges) above an annual rate of 6% during the period of such mortgagor's
active duty status, unless a court orders otherwise upon application of the
mortgagee. Any shortfall in interest collections resulting from the
application of the Relief Act. to the extent not covered by any applicable
Credit Enhancement, could result in losses to the holders of the
Certificates. In addition, the Relief Act imposes limitations that would
impair the ability of the Master Servicer or the Special Servicer, if any, to
foreclose on an affected Mortgage Loan during the mortgagor's period of
active duty status and, under certain circumstances, during an additional
three months thereafter. Thus, in the event that such a Mortgage Loan goes
into
51
<PAGE>
default, there may be delays and losses occasioned by the inability to
realize upon the Mortgaged Property in a timely fashion. Because the Relief
Act applies to mortgagors who enter military service (including reservists
who are later called to active duty) after origination of their mortgage
loan, no information can be provided as to the number of Mortgage Loans that
may be affected by the Relief Act. The Relief Act may also be applicable if
the mortgagor is an entity owned or controlled by a person in a military
service.
APPLICABILITY OF USURY LAWS
State and federal usury laws limit the interest that mortgagees are
entitled to receive on a mortgage loan. In determining whether a given
transaction is usurious, courts may include charges in the form of "points"
and "fees" in the determination of the "interest" charged in connection with
a loan. If, however, the amount charged for the use of the money loaned is
found to exceed a statutorily established maximum rate, the form employed and
the degree of overcharge are both immaterial. Statutes differ in their
provision as to the consequences of a usurious loan. One type of statute
requires the mortgagee to forfeit the interest above the applicable limit or
imposes a specified penalty. Under this statutory scheme, the mortgagor may
have the recorded mortgage or deed of trust canceled upon paying its debt
with lawful interest, or the mortgagee may foreclose, but only for the debt
plus lawful interest, in either case, subject to any applicable credit for
excessive interest collected from the mortgagor and any penalty owed by the
mortgagee. A second type of statute is more severe. A violation of this type
of usury law results in the invalidation of the transaction, thereby
permitting the mortgagor to have the recorded mortgage or deed of trust
canceled without any payment and prohibiting the mortgagee from foreclosing.
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that state usury limitations do
not apply to certain types of residential (including multifamily, but not
other commercial) first mortgage loans originated by certain lenders after
March 31, 1980. A similar federal statute was in effect with respect to
mortgage loans made during the first three months of 1980. The statute
authorized any state to reimpose interest rate limits by adopting, before
April 1, 1983, a law or constitutional provision that expressly rejects
application of the federal law. In addition, even where Title V is not so
rejected, any state is authorized by law to adopt a provision limiting
discount points or other charges on mortgage loans covered by Title V.
Certain states have taken action to reimpose interest rate limits and/or to
limit discount points or other charges.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including adjustable rate mortgage
loans, originated by nonfederally chartered lenders have historically been
subjected to a variety of restrictions. Such restrictions differed from state
to state, resulting in difficulties in determining whether a particular
alternative mortgage instrument originated by a state-chartered lender was in
compliance with applicable law. These difficulties were alleviated
substantially with respect to residential (including multifamily, but not
other commercial) mortgage loans as a result of the enactment of Title VIII
of the Garn-St Germain Act ("Title VIII"). Title VIII provides that,
notwithstanding any state law to the contrary: (i) state-chartered banks may
originate alternative mortgage instruments in accordance with regulations
promulgated by the Comptroller of the Currency with respect to origination of
alternative mortgage instruments by national banks; (ii) state-chartered
credit unions may originate alternative mortgage instruments in accordance
with regulations promulgated by the National Credit Union Administration (the
"NCUN") with respect to origination of alternative mortgage instruments by
federal credit unions; and (iii) all other nonfederally chartered housing
creditors, including state-chartered savings and loan associations, state
chartered savings banks and mortgage banking companies may originate
alternative mortgage instruments in accordance with the regulations
promulgated by the Federal Home Loan Bank Board (now the Office, of Thrift
Supervision) with respect to origination of alternative mortgage instruments
by federal savings and loan associations. Title VIII authorized any state to
reject applicability of the provisions of Title VIII by adopting, prior to
October 15, 1985, a law or constitutional provision expressly rejecting the
applicability of such provisions. Certain states have taken such action. A
mortgagee's failure to comply with the applicable federal regulations in
connection with the origination of an alternative mortgage instrument could
subject such mortgage loan to state restrictions that would not otherwise be
applicable.
52
<PAGE>
LEASES AND RENTS
Some of the Mortgage Loans may be secured by an assignment of leases and
rents, either through assignment provisions incorporated in the mortgage,
through a separate assignment document or both. Under an assignment of leases
and rents, the mortgagor typically assigns to the mortgagee the mortgagor's
right, title and interest as landlord under each lease and the income derived
therefrom, while retaining a revocable license to collect the rents for so
long as there is no default under the mortgage loan documentation. In the
event of such a default, the license terminates and the mortgagee may be
entitled to collect rents. A mortgagee's failure to perfect properly its
interest in rents may result in the loss of a substantial pool of funds that
could otherwise serve as a source of repayment for the loan. Some state laws
may require that in addition to recording properly the assignment of leases
and rents, the mortgagee must also take possession of the property and/or
obtain judicial appointment of a receiver before such mortgagee is entitled
to collect rents. Although mortgagees actually taking possession of the
property may become entitled to collect the rents therefrom, such mortgagees
may also incur potentially substantial risks attendant to such possession,
including liability for environmental clean-up costs and other risks inherent
to property ownership and operation. In addition, if a bankruptcy or similar
proceeding is commenced by or in respect of the mortgagor, the mortgagee's
ability to collect the rents may also be adversely affected.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Some of the Mortgage Loans may not restrict secondary financing, thereby
permitting the mortgagor to use the Mortgaged Property as security for one or
more additional loans. Some of the Mortgage Loans may preclude secondary
financing (often by permitting the senior mortgagee to accelerate the
maturity of its loan if the mortgagor further encumbers the Mortgaged
Property) or may require the consent of the senior mortgagee, however, such
provisions may be unenforceable in certain jurisdictions under certain
circumstances. The Agreement for each Series will generally provide that if
any Mortgage Loan contains a provision in the nature of a
"Due-on-Encumbrance" clause, which by its terms: (i) provides that such
Mortgage Loan will (or may at the mortgagee's option) become due and payable
upon the creation of any lien or other encumbrance on the related Mortgaged
Property, or (ii) requires the consent of the related mortgagee to the
creation of any such lien or other encumbrance on the related Mortgaged
Property; then for so long as such Mortgage Loan is included in a given Trust
Fund, the Master Servicer or, if such Mortgage Loan is a Specially Serviced
Mortgage Loan, the Special Servicer, if any, on behalf of such Trust Fund,
will exercise (or decline to exercise) any right it may have as the mortgagee
of record with respect to such Mortgage Loan to (x) accelerate the payments
thereon or (y) withhold its consent to the creation of any such lien or other
encumbrance, in a manner consistent with the servicing standard set forth in
the Agreement.
If a mortgagor encumbers a mortgaged property with one or more junior
liens, the senior mortgagee is subjected to additional risk, such as the
following. First, the mortgagor may have difficulty servicing and repaying
multiple loans. In addition, if the junior loan permits recourse to the
mortgagor and the senior loan does not, a mortgagor may be more likely to
repay sums due on the junior loan than those due on the senior loan. Second,
acts of the senior mortgagee that prejudice the junior mortgagee or impair
the junior mortgagee's security may create a superior equity in favor of the
junior mortgagee. For example, if the mortgagor and the senior mortgagee
agree to an increase in the principal amount of, or the interest rate payable
on, the senior loan, the senior mortgagee may lose its priority to the extent
an existing junior mortgagee is prejudiced or the mortgagor is additionally
burdened. Third, if the mortgagor defaults on the senior loan and/or any
junior loan or loans, the existence of junior loans and actions taken by
junior mortgagees can impair the security available to the senior mortgagee
and can interfere with, delay and in certain circumstances even prevent the
taking of action by the senior mortgagee. Fourth, the bankruptcy of a junior
mortgagee may operate to stay foreclosure or similar proceedings by the
senior mortgagee.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply
(together with an inability to remedy any such failure) could result in
53
<PAGE>
material diminution in the value of a Mortgaged Property, which could,
together with the possibility of limited alternative uses for a particular
Mortgaged Property (e.g., a nursing or convalescent home or hospital), result
in a failure to realize the full principal amount of and interest on the
related Mortgage Loan.
TYPE OF MORTGAGED PROPERTY
A mortgagee may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
that are hospitals, nursing homes or convalescent homes may present special
risks to mortgagees in large part due to significant governmental regulation
of the ownership, operation, maintenance, control and financing of health
care institutions. Mortgages encumbering mortgaged properties that are owned
by the mortgagor under a condominium form of ownership are subject to the
declaration, by-laws and other rules and regulations of the condominium
association. Mortgaged properties that are hotels or motels may present
additional risk to the mortgagee in that: (i) hotels and motels are typically
operated pursuant to franchise, management and operating agreements that may
be terminable by the operator; and (ii) the transferability of the hotel's
operating, liquor and other licenses to the entity acquiring the hotel either
through purchase or foreclosure is subject to the vagaries of local law
requirements. In addition, mortgaged properties that are multifamily
residential properties or cooperatively owned multifamily properties may be
subject to rent control laws, which could impact the future cash flows of
such properties. See "RISK FACTORS--Risks Associated with Lending on Income
Producing Properties."
CRIMINAL FORFEITURES
Various federal and state laws (collectively, the "Forfeiture Laws")
provide for the civil or criminal forfeiture of certain property (including
real estate) used or intended to be used to commit or facilitate the
commission of a violation of certain laws (typically criminal laws), or
purchased with the proceeds of such violations. Even though the Forfeiture
Laws were originally intended as tools to fight organized crime and drug
related crimes, the current climate appears to be to expand the scope of such
laws. Certain of the Forfeiture Laws (i.e., the Racketeer Influenced and
Corrupt Organizations law and the Comprehensive Crime Control Act of 1984)
provide for notice, opportunity to be heard and for certain defenses for
"innocent lienholders." However, given the uncertain scope of the Forfeiture
Laws and their relationship to existing constitutional protections afforded
property owners, no assurance can be made that enforcement of a Forfeiture
Law with respect to any Mortgaged Property would not deprive the Trust Fund
of its security for the related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove structural, architectural and communication
barriers from existing places of public accommodation to the extent "readily
achievable." In addition, under the ADA, alterations to a place of public
accommodation or a commercial facility are to be made so that, to the maximum
extent feasible, such altered portions are readily accessible to and usable
by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a
possible financial burden on the mortgagor in its capacity as owner or
landlord, the ADA may also impose such requirements on a foreclosing
mortgagee who succeeds to the interest of the mortgagor as owner or landlord.
Furthermore, since the "readily achievable" standard may vary depending on
the financial condition of the owner or landlord, a foreclosing mortgagee who
is financially more capable than the mortgagor of complying with the
requirements of the ADA may be subject to more stringent requirements than
those to which the mortgagor is subject.
54
<PAGE>
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as
regulations (the "REMIC Regulations") promulgated by the U.S. Department of
Treasury (the "Treasury"). Investors should consult their own tax advisors in
determining the federal, state, local and other tax consequences to them of
the purchase, ownership and disposition of Certificates.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General. With respect to a particular Series of Certificates, an election
may be made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A
Trust Fund or a portion thereof as to which a REMIC election will be made
will be referred to as a "REMIC Pool". For purposes of this discussion,
Certificates of a series as to which one or more REMIC elections are made are
referred to as "REMIC Certificates" and will consist of one or more Classes
of "Regular Certificates" and one Class of "Residual Certificates" in the
case of each REMIC Pool. Qualification as a REMIC requires ongoing compliance
with certain conditions. With respect to each series of REMIC Certificates,
O'Melveny & Myers LLP, counsel to the Depositor, has advised the Depositor
that in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes
in the law, including any amendments to the Code or applicable Treasury
regulations thereunder, each REMIC Pool will qualify as a REMIC. In such
case, the Regular Certificates will be considered to be "regular interests"
in the REMIC Pool and generally will be treated for federal income tax
purposes as if they were newly originated debt instruments, and the Residual
Certificates will be considered to be "residual interests" in the REMIC Pool.
The Prospectus Supplement for each series of Certificates will indicate
whether one or more REMIC elections will be made with respect to the related
Trust Fund, in which event references to "REMIC" or "REMIC Pool" herein shall
be deemed to refer to each such REMIC Pool. If so specified in the applicable
Prospectus Supplement, the portion of a Trust Fund as to which a REMIC
election is not made may be treated as either a financial asset
securitization investment trust (a "FASIT") or as a grantor trust for federal
income tax purposes. See "--Federal Income Tax Consequences for FASIT
Certificates and "--Federal Income Tax Consequences for Certificates as to
Which No REMIC Election Is Made".
Status of REMIC Certificates. REMIC Certificates held by a domestic
building and loan association will constitute "a regular or residual interest
in a REMIC" within the meaning of Code Section 7701(a)(19)(C)(xi), but only
in the same proportion that the assets of the REMIC Pool would be treated as
"loans . . . secured by an interest in real property which is . . .
residential real property" (such as single family or multifamily properties,
but not commercial properties) within the meaning of Code Section
7701(a)(19)(C)(v) or as other assets described in Code Section
7701(a)(19)(C), and otherwise will not qualify for such treatment. REMIC
Certificates held by a real estate investment trust will constitute "real
estate assets" within the meaning of Code Section 856(c)(4)(A), and interest
on the Regular Certificates and income with respect to Residual Certificates
will be considered "interest on obligations secured by mortgages on real
property or on interests in real property" within the meaning of Code Section
856(c)(3)(B) in the same proportion that, for both purposes, the assets of
the REMIC Pool would be so treated. If at all times 95% or more of the assets
of the REMIC Pool qualify for each of the foregoing respective treatments,
the REMIC Certificates will qualify for the corresponding status in their
entirety. For purposes of Code Section 856(c)(4)(A), payments of principal
and interest on the Mortgage Loans that are reinvested pending distribution
to holders of REMIC Certificates qualify for such treatment. Where two REMIC
Pools are a part of a tiered structure they will be treated as one REMIC for
purposes of the tests described above respecting asset ownership of more or
less than 95%. REMIC Certificates held by a regulated investment company will
not constitute "Government Securities" within the meaning of Code Section
851(b)(3)(A)(i). REMIC Certificates held certain financial institutions will
constitute an "evidence of indebtedness" within the meaning of Code Section
582(c)(1). The Small Business Job
55
<PAGE>
Protection Act of 1996 (the "SBJPA of 1996") repealed the reserve method for
bad debts of domestic building and loan associations and mutual savings
banks, and thus has eliminated the asset category of "qualifying real
property loans" in former Code Section 593(d) for taxable years beginning
after December 31, 1995. The requirement in the SBJPA of 1996 that such
institutions must "recapture" a portion of their existing bad debt reserves
is suspended if a certain portion of their assets are maintained in
"residential loans" under Code Section 7701(a)(19)(C)(v), but only if such
loans were made to acquire, construct or improve the related real property
and not for the purpose of refinancing. However, no effort will be made to
identify the portion of the Mortgage Loans of any Series meeting this
requirement, and no representation is made in this regard.
Qualification as a REMIC. In order for the REMIC Pool to qualify as a
REMIC, there must be ongoing compliance on the part of the REMIC Pool with
the requirements set forth in the Code. The REMIC Pool must fulfill an asset
test, which requires that no more than a de minimis portion of the assets of
the REMIC Pool, as of the close of the third calendar month beginning after
the "Startup Day" (which for purposes of this discussion is the date of
issuance of the REMIC Certificates) and at all times thereafter, may consist
of assets other than "qualified mortgages" and "permitted investments". The
REMIC Regulations provide a safe harbor pursuant to which the de minimis
requirement is met if at all times the aggregate adjusted basis of the
nonqualified assets is less than 1% of the aggregate adjusted basis of all
the REMIC Pool's assets. An entity that fails to meet the safe harbor may
nevertheless demonstrate that it holds no more than a de minimis amount of
nonqualified assets. A REMIC also must provide "reasonable arrangements" to
prevent its residual interest from being held by "disqualified organizations"
and must furnish applicable tax information to transferors or agents that
violate this requirement. The Pooling Agreement for each Series will contain
a provision designed to meet this requirement. See "Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual Certificates
- -- Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day in exchange for Regular Certificates or Residual Certificates
or is purchased by the REMIC Pool within a three-month period thereafter
pursuant to a fixed price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, regular interests in another REMIC, loans secured by timeshare
interests and loans secured by shares held by a tenant stockholder in a
cooperative housing corporation, provided, in general, (i) the fair market
value of the real property securing the mortgage (including buildings and
structural components thereof) is at least 80% of the principal balance of
the related Mortgage Loan or underlying mortgage loan either at origination
of the relevant loan or as of the Startup Day (an original loan-to-value
ratio of not more than 125% with respect to the real property securing the
mortgage) or (ii) substantially all the proceeds of the Mortgage Loan or the
underlying mortgage loan were used to acquire, improve or protect an interest
in real property that, at the origination date, was the only security for the
Mortgage Loan or underlying mortgage loan. If the Mortgage Loan has been
substantially modified other than in connection with a default or reasonably
foreseeable default, it must meet the loan-to-value test in (i) of the
preceding sentence as of the date of the last such modification or at
closing. A qualified mortgage includes a qualified replacement mortgage,
which is any property that would have been treated as a qualified mortgage if
it were transferred to the REMIC Pool on the Startup Day and that is received
either (i) in exchange for any qualified mortgage within a three-month period
thereafter or (ii) in exchange for a "defective obligation" within a two-year
period thereafter. A "defective obligation" includes (i) a mortgage in
default or as to which default is reasonably foreseeable, (ii) a mortgage as
to which a customary representation or warranty made at the time of transfer
to the REMIC Pool has been breached, (iii) a mortgage that was fraudulently
procured by the mortgagor, and (iv) a mortgage that was not in fact
principally secured by real property (but only if such mortgage is disposed
of within 90 days of discovery). A Mortgage Loan that is "defective" as
described in clause (iv) that is not sold or, if within two years of the
Startup Day, exchanged, within 90 days of discovery, ceases to be a qualified
mortgage after such 90-day period. A qualified mortgage also includes any
regular interest in a FASIT transferred to the REMIC Pool on the Startup Day
in exchange for Regular Certificates or Residual Certificates, or purchased
by the REMIC Pool within three months after the Startup Day pursuant to a
fixed price
56
<PAGE>
contract in effect on the Startup Day, provided that at least 95% of the
value of the FASIT assets is at all times attributable to obligations
principally secured by interests in real property and which are transferred
to, or purchased by, a REMIC as provided in this sentence.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13
months, until distributed to holders of interests in the REMIC Pool. A
qualified reserve asset is any intangible property (other than a REMIC
residual interest) held for investment that is part of any reasonably
required reserve maintained by the REMIC Pool to provide for payments of
expenses of the REMIC Pool or amounts due on the regular or residual
interests in the event of defaults (including delinquencies) on the qualified
mortgages, lower than expected reinvestment returns, prepayment interest
shortfalls and certain other contingencies. The reserve fund will be
disqualified if more than 30% of the gross income from the assets in such
fund for the year is derived from the sale or other disposition of property
held for less than three months, unless required to prevent a default on the
regular interests caused by a default on one or more qualified mortgages. A
reserve fund must be reduced "promptly and appropriately" as payments on the
Mortgage Loans are received. Foreclosure property is real property acquired
by the REMIC Pool in connection with the default or imminent default of a
qualified mortgage and generally held beyond the close of the third calendar
year following the acquisition of the property by REMIC Pool for not more
than two years, with possible extensions granted by the Internal Revenue
Service (the "Service") of up to an additional four years.
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a
REMIC Pool must be either of the following: (i) one or more classes of
regular interests or (ii) a single class of residual interests on which
distributions, if any, are made pro rata. A regular interest is an interest
in a REMIC Pool that is issued on the Startup Day with fixed terms, is
designated as a regular interest, and unconditionally entitles the holder to
receive a specified principal amount (or other similar amount), and provides
that interest payments (or other similar amounts), if any, at or before
maturity either are payable based on a fixed rate or a qualified variable
rate, or consist of a specified, nonvarying portion of the interest payments
on qualified mortgages. Such a specified portion may consist of a fixed
number of basis points, a fixed percentage of the total interest, or a fixed
or qualified variable or inverse variable rate on some or all of the
qualified mortgages minus a different fixed or qualified variable rate. The
specified principal amount of a regular interest that provides for interest
payments consisting of a specified, nonvarying portion of interest payments
on qualified mortgages may be zero. A residual interest is an interest in a
REMIC Pool other than a regular interest that is issued on the Startup Day
and that is designated as a residual interest. An interest in a REMIC Pool
may be treated as a regular interest even if payments of principal with
respect to such interest are subordinated to payments on other regular
interests or the residual interest in the REMIC Pool, and are dependent on
the absence of defaults or delinquencies on qualified mortgages or permitted
investments, lower than reasonably expected returns on permitted investments,
unanticipated expenses incurred by the REMIC Pool or prepayment interest
shortfalls. Accordingly, the Regular Certificates of a series will constitute
one or more classes of regular interests, and the Residual Certificates with
respect to that series will constitute a single class of residual interests
on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for
such year and thereafter. In this event, an entity with multiple classes of
ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and the Regular Certificates may be
treated as equity interests therein. The Code, however, authorizes the
Treasury Department to issue regulations that address situations where
failure to meet one or more of the requirements for REMIC status occurs
inadvertently and in good faith, and disqualification of the REMIC Pool would
occur absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report to the Tax Reform Act of 1986 (the "1986 Act")
indicates that the relief may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the REMIC Pool's income
for the period of time in which the requirements for REMIC status are not
satisfied.
57
<PAGE>
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the
accrual method of accounting with regard to Regular Certificates, regardless
of the method of accounting otherwise used by such Regular
Certificateholders.
Original Issue Discount
Certificates on which interest is not paid currently ("Compound Interest
Certificates") will be, and other Classes of Regular Certificates may be,
issued with "original issue discount" within the meaning of Code Section
1273(a). Holders of any Class of Regular Certificates having original issue
discount generally must include original issue discount in ordinary income
for federal income tax purposes as it accrues, in accordance with the
constant yield method that takes into account the compounding of interest, in
advance of receipt of the cash attributable to such income. The following
discussion is based in part on temporary and final Treasury regulations
issued on February 2, 1994, as amended on June 14, 1996, (the "OID
Regulations") under Code Sections 1271 through 1273 and 1275 and in part on
the provisions of the 1986 Act. Regular Certificateholders should be aware,
however, that the OID Regulations do not adequately address certain issues
relevant to prepayable securities, such as the Regular Certificates. To the
extent such issues are not addressed in such regulations, the Depositor
intends to apply the methodology described in the Conference Committee Report
to the 1986 Act. No assurance can be provided that the Service will not take
a different position as to those matters not currently addressed by the OID
Regulations. Moreover, the OID Regulations include an anti-abuse rule
allowing the Service to apply or depart from the OID Regulations where
necessary or appropriate to ensure a reasonable tax result in light of the
applicable statutory provisions. A tax result will not be considered
unreasonable under the anti-abuse rule in the absence of a substantial effect
on the present value of a taxpayer's tax liability. Investors are advised to
consult their own tax advisors as to the discussion herein and the
appropriate method for reporting interest and original issue discount with
respect to the Regular Certificates.
Each Regular Certificate will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption
price at maturity" of the Regular Certificate over its "issue price". The
issue price of a Class of Regular Certificates offered pursuant to this
Prospectus generally is the first price at which a substantial amount of
Regular Certificates of that Class is sold to the public (excluding bond
houses, brokers and underwriters). Although unclear under the OID
Regulations, the Depositor intends to treat the issue price of a Class as to
which there is no substantial sale as of the issue date or that is retained
by the Depositor as the fair market value of that Class as of the issue date.
The issue price of a Regular Certificate also includes the amount paid by an
initial Regular Certificateholder for accrued interest that relates to a
period prior to the issue date of the Regular Certificate, unless the Regular
Certificateholder elects on its federal income tax return to exclude such
amount from the issue price and to recover it on the first Distribution Date.
The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but
generally will not include distributions of stated interest if such interest
distributions constitute "qualified stated interest". Under the OID
Regulations, qualified stated interest generally means interest payable at a
single fixed rate or a qualified variable rate (as described below) provided
that such interest payments are unconditionally payable at intervals of one
year or less during the entire term of the Regular Certificate. Because there
is no penalty or default remedy in the case of nonpayment of interest with
respect to a Regular Certificate, it is possible that no interest on any
Class of Regular Certificates will be treated as qualified stated interest.
However, except as provided in the following three sentences or in the
applicable Prospectus Supplement, because the underlying Mortgage
58
<PAGE>
Loans provide for remedies in the event of default, the Depositor intends to
treat interest with respect to the Regular Certificates as qualified stated
interest. Distributions of interest on a Compound Interest Certificate, or on
other Regular Certificates with respect to which deferred interest will
accrue, will not constitute qualified stated interest, in which case the
stated redemption price at maturity of such Regular Certificates includes all
distributions of interest as well as principal thereon. Likewise, the
Depositor intends to treat an "interest only" class, or a class on which
interest is substantially disproportionate to its principal amount (a
so-called "super-premium" class) as having no qualified stated interest.
Where the interval between the issue date and the first Distribution Date on
a Regular Certificate is shorter than the interval between subsequent
Distribution Dates, the interest attributable to the additional days will be
included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of
full years (i.e., rounding down partial years) from the issue date until all
distributions in reduction of are scheduled to be made by a fraction, the
numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the Regular Certificate and the denominator
of which is the stated redemption price at maturity of the Regular
Certificate. The Conference Committee Report to the 1986 Act provides that
the schedule of such distributions should be determined in accordance with
the assumed rate of prepayment of the Mortgage Loans (the "Prepayment
Assumption") and the anticipated reinvestment rate, if any, relating to the
Regular Certificates. The Prepayment Assumption with respect to a Series of
Regular Certificates will be set forth in the related Prospectus Supplement.
Holders generally must report de minimis original issue discount pro rata as
principal payments are received, and such income will be capital gain if the
Regular Certificate is held as a capital asset. However, under the OID
Regulations, Regular Certificateholders may elect to accrue all de minimis
original issue discount as well as market discount and market premium under
the constant yield method. See "Election to Treat All Interest Under the
Constant Yield Method".
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the
original issue discount on the Regular Certificate accrued during an accrual
period for each day on which it holds the Regular Certificate, including the
date of purchase but excluding the date of disposition. The Depositor will
treat the monthly period ending on the day before each Distribution Date as
the accrual period. With respect to each Regular Certificate, a calculation
will be made of the original issue discount that accrues during each
successive full accrual period (or shorter period from the date of original
issue) that ends on the day before the related Distribution Date on the
Regular Certificate. The Conference Committee Report to the 1986 Act states
that the rate of accrual of original issue discount is intended to be based
on the Prepayment Assumption. The original issue discount accruing in a full
accrual period would be the excess, if any, of (i) the sum of (a) the present
value of all of the remaining distributions to be made on the Regular
Certificate as of the end of that accrual period that are included in the
Regular Certificate's stated redemption price at maturity and (b) the
distributions made on the Regular Certificate during the accrual period that
are included in the Regular Certificate's stated redemption price at
maturity, over (ii) the adjusted issue price of the Regular Certificate at
the beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence is calculated based on
(i) the yield to maturity of the Regular Certificate at the issue date, (ii)
events (including actual prepayments) that have occurred prior to the end of
the accrual period and (iii) the Prepayment Assumption. For these purposes,
the adjusted issue price of a Regular Certificate at the beginning of any
accrual period equals the issue price of the Regular Certificate, increased
by the aggregate amount of original issue discount with respect to the
Regular Certificate that accrued in all prior accrual periods and reduced by
the amount of distributions included in the Regular Certificate's stated
redemption price at maturity that were made on the Regular Certificate in
such prior periods. The original issue discount accruing during any accrual
period (as determined in this paragraph) will then be divided by the number
of days in the period to determine the daily portion of original issue
discount for each day in the period. With respect to an initial accrual
period shorter than a full accrual period, the daily portions of original
issue discount must be determined according to an appropriate allocation
under any reasonable method.
59
<PAGE>
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for
any period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either
an increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted
issue price and the denominator of which is the excess of the remaining
stated redemption price at maturity over the adjusted issue price.
Alternatively, such a subsequent purchaser may elect to treat all such
acquisition premium under the constant yield method, as described below under
the heading "Election to Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified de minimis amount and (ii) the interest
compounds or is payable at least annually at current values of (a) one or
more "qualified floating rates", (b) a single fixed rate and one or more
qualified floating rates, (c) a single "objective rate", or (d) a single
fixed rate and a single objective rate that is a "qualified inverse floating
rate". A floating rate is a qualified floating rate if variations in the rate
can reasonably be expected to measure contemporaneous variations in the cost
of newly borrowed funds, or where such rate is subject to a fixed multiple
that is greater than 0.65, but not more than 1.35. Such rate may also be
increased or decreased by a fixed spread or subject to a fixed cap or floor,
or a cap or floor that is not reasonably expected as of the issue date to
affect the yield of the instrument significantly. Two or more qualified
floating rates will be treated as a single qualified floating rate if all
such qualified floating rates can reasonably be expected to have
approximately the same values throughout the terms of the instrument. This
requirement will be conclusively presumed to be satisfied if the values of
all such qualified floating rates are within 0.25% of each other on the issue
date. An objective rate (other than a qualified floating rate) is a rate that
is determined using a single fixed formula and that is based on objective
financial or economic information, provided that such information is not (i)
within the control of the issuer or a related party or (ii) unique to the
circumstances of the issuer or a related party. A qualified inverse floating
rate is an objective rate that is equal to a fixed rate minus a qualified
floating rate that inversely reflects contemporaneous variations in the cost
of newly borrowed funds; an inverse floating rate that is not a qualified
floating rate may nevertheless be an objective rate. A Class of Regular
Certificates may be issued under this Prospectus that does not have a
variable rate under the OID Regulations, for example, a Class that bears
different rates at different times during the period it is outstanding such
that it is considered significantly "front-loaded" or "back-loaded" within
the meaning of the OID Regulations. It is possible that such a Class may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of
contingent interest, are by their terms not applicable to Regular
Certificates. However, if final regulations dealing with contingent interest
with respect to Regular Certificates apply the same principles as the OID
Regulations, such regulations may lead to different timing of income
inclusion than would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on
the sale of contingent interest Regular Certificates as ordinary income.
Investors should consult their tax advisors regarding the appropriate
treatment of any Regular Certificate that does not pay interest at a fixed
rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to
current values of a variable rate (or the highest, lowest or
60
<PAGE>
average of two or more variable rates), including a rate based on the average
cost of funds of one or more financial institutions, or a positive or
negative multiple of such a rate (plus or minus a specified number of basis
points), or that represents a weighted average of rates on some or all of the
Mortgage Loans which bear interest at a fixed rate or at a qualifying
variable rate under the REMIC Regulations, including such a rate that is
subject to one or more caps or floors, or (ii) bearing one or more such
variable rates for one or more periods or one or more fixed rates for one or
more periods, and a different variable rate or fixed rate for other periods
qualifies as a regular interest in a REMIC. Accordingly, unless otherwise
indicated in the applicable Prospectus Supplement, the Depositor intends to
treat Regular Certificates that qualify as regular interests under this rule
in the same manner as obligations bearing a variable rate for original issue
discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity
and future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular
Certificate based on the initial rate (or, if different, the value of the
applicable variable rate as of the pricing date) for the relevant Class.
Unless otherwise specified in the applicable Prospectus Supplement, the
Depositor intends to treat such variable interest as qualified stated
interest, other than variable interest on an interest-only or super-premium
Class, which will be treated as non-qualified stated interest includible in
the stated redemption price at maturity. Ordinary income reportable for any
period will be adjusted based on subsequent changes in the applicable
interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent
that initial "teaser" rates cause sufficiently "back-loaded" interest to
create more than de minimis original issue discount. The yield on such
Regular Certificates for purposes of accruing original issue discount will be
a hypothetical fixed rate based on the fixed rates, in the case of fixed rate
Mortgage Loans, and initial "teaser rates" followed by fully indexed rates,
in the case of adjustable rate Mortgage Loans. In the case of adjustable rate
Mortgage Loans, the applicable index used to compute interest on the Mortgage
Loans in effect on the pricing date (or possibly the issue date) will be
deemed to be in effect beginning with the period in which the first weighted
average adjustment date occurring after the issue date occurs. Adjustments
will be made in each accrual period either increasing or decreasing the
amount of ordinary income reportable to reflect the actual Pass-Through Rate
on the Regular Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be deferred interest is includible in the stated redemption
price at maturity thereof. Accordingly, any deferred interest that accrues
with respect to a Class of Regular Certificates may constitute income to the
holders of such Regular Certificates prior to the time distributions of cash
with respect to such deferred interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections
and the principles applied by the OID Regulations in the context of original
issue discount, "market discount" is the amount by which the purchaser's
original basis in the Regular Certificate (i) is exceeded by the then-current
principal amount of the Regular Certificate or (ii) in the case of a Regular
Certificate having original issue discount, is exceeded by the adjusted issue
price of such Regular Certificate at the time of purchase. Such purchaser
generally will be required to recognize ordinary income to the extent of
accrued market discount on such Regular Certificate as distributions
includible in the stated redemption price at maturity thereof are received,
in an amount not exceeding any such distribution. Such market discount would
accrue in a manner to be provided in Treasury regulations and should take
into account the Prepayment Assumption. The Conference Committee Report to
the 1986 Act provides that until such regulations are issued, such market
discount
61
<PAGE>
would accrue either (i) on the basis of a constant interest rate or (ii) in
the ratio of stated interest allocable to the relevant period to the sum of
the interest for such period plus the remaining interest as of the end of
such period, or in the case of a Regular Certificate issued with original
issue discount, in the ratio of original issue discount accrued for the
relevant period to the sum of the original issue discount accrued for such
period plus the remaining original issue discount as of the end of such
period. Such purchaser also generally will be required to treat a portion of
any gain on a sale or exchange of the Regular Certificate as ordinary income
to the extent of the market discount accrued to the date of disposition under
one of the foregoing methods, less any accrued market discount previously
reported as ordinary income as partial distributions in reduction of the
stated redemption price at maturity were received. Such purchaser will be
required to defer deduction of a portion of the excess of the interest paid
or accrued on indebtedness incurred to purchase or carry a Regular
Certificate over the interest distributable thereon. The deferred portion of
such interest expense in any taxable year generally will not exceed the
accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later
than the year in which the related market discount income is recognized or
the Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, the Regular
Certificateholder may elect to include market discount in income currently as
it accrues on all market discount instruments acquired by such Regular
Certificateholder in that taxable year or thereafter, in which case the
interest deferral rule will not apply. See "Election to Treat All Interest
Under the Constant Yield Method" below regarding an alternative manner in
which such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount should be
reported in a manner similar to de minimis original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should
consult their own tax advisors regarding the application of these rules.
Investors should also consult Revenue Procedure 92-67 concerning the
elections to include market discount in income currently and to accrue market
discount on the basis of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased
at a premium. If the Regular Certificateholder holds such Regular Certificate
as a "capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to
the accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations
such as the Regular Certificates, although it is unclear whether the
alternatives to the constant yield method described above under "Market
Discount" are available. Amortizable bond premium will be treated as an
offset to interest income on a Regular Certificate rather than as a separate
deduction item. See "Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the Code Section 171
election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument
subject to such an election, (i) "interest" includes stated interest,
original issue discount, de minimis original issue discount, market discount
and de minimis market discount, as adjusted by any amortizable bond premium
or acquisition premium and (ii) the debt instrument is treated as if the
instrument were issued on the
62
<PAGE>
holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition. It is unclear whether, for this purpose, the
initial Prepayment Assumption would continue to apply or if a new prepayment
assumption as of the date of the holder's acquisition would apply. A holder
generally may make such an election on an instrument by instrument basis or
for a class or group of debt instruments. However, if the holder makes such
an election with respect to a debt instrument with amortizable bond premium
or with market discount, the holder is deemed to have made elections to
amortize bond premium or to report market discount income currently as it
accrues under the constant yield method, respectively, for all debt
instruments acquired by the holder in the same taxable year or thereafter.
The election is made on the holder's federal income tax return for the year
in which the debt instrument is acquired and is irrevocable except with the
approval of the Service. Investors should consult their own tax advisors
regarding the advisability of making such an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally
will equal the cost of the Regular Certificate to the seller, increased by
any original issue discount or market discount previously included in the
seller's gross income with respect to the Regular Certificate and reduced by
amounts included in the stated redemption price at maturity of the Regular
Certificate that were previously received by the seller, by any amortized
premium and by previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period (currently more than one year). Such
gain will be treated as ordinary income (i) if a Regular Certificate is held
as part of a "conversion transaction" as defined in Code Section 1258(c), up
to the amount of interest that would have accrued on the Regular
Certificateholder's net investment in the conversion transaction at 120% of
the appropriate applicable Federal rate under Code Section 1274(d) in effect
at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior distribution
of property that was held as a part of such transaction, (ii) in the case of
a non-corporate taxpayer, to the extent such taxpayer has made an election
under Code Section 163(d)(4) to have net capital gains taxed as investment
income at ordinary rates, or (iii) to the extent that such gain does not
exceed the excess, if any, of (a) the amount that would have been includible
in the gross income of the holder if its yield on such Regular Certificate
were 110% of the applicable Federal rate as of the date of purchase, over (b)
the amount of income actually includible in the gross income of such holder
with respect to the Regular Certificate. In addition, gain or loss recognized
from the sale of a Regular Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c). Capital gains of certain non-corporate taxpayers are subject
to a lower maximum tax rate (28%) than ordinary income of such taxpayers
(39.6%), and still a lower maximum rate (20%) for property held for more than
18 months. The maximum tax rate for corporations is the same with respect to
both ordinary income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to
defaults or delinquencies on the Mortgage Loans allocable to a particular
class of Regular Certificates, except to the extent it can be established
that such losses are uncollectible. Accordingly, the holder of a Regular
Certificate may have income, or may incur a diminution in cash flow as a
result of a default or delinquency, but may not be able to take a deduction
(subject to the discussion below) for the corresponding loss until a
subsequent taxable year. In this regard, investors are cautioned that while
they may generally cease to accrue interest income if it reasonably appears
that the interest will be uncollectible, the Internal Revenue Service may
take the position that original issue discount must
63
<PAGE>
continue to be accrued in spite of its uncollectibility until the debt
instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the rules of Code Section 166. To the extent the rules of
Code Section 166 regarding bad debts are applicable, it appears that holders
of Regular Certificates that are corporations or that otherwise hold the
Regular Certificates in connection with a trade or business should in general
be allowed to deduct as an ordinary loss any such loss sustained during the
taxable year on account of any such Regular Certificates becoming wholly or
partially worthless, and that, in general, holders of Regular Certificates
that are not corporations and do not hold the Regular Certificates in
connection with a trade or business will be allowed to deduct as a short-term
capital loss any loss with respect to principal sustained during the taxable
year on account of a portion of any class or subclass of such Regular
Certificates becoming wholly worthless. Although the matter is not free from
doubt, non-corporate holders of Regular Certificates should be allowed a bad
debt deduction at such time as the principal balance of any class or subclass
of such Regular Certificates is reduced to reflect losses resulting from any
liquidated Mortgage Loans. The Service, however, could take the position that
non-corporate holders will be allowed a bad debt deduction to reflect such
losses only after all Mortgage Loans remaining in the Trust Fund have been
liquidated or such class of Regular Certificates has been otherwise retired.
The Service could also assert that losses on the Regular Certificates are
deductible based on some other method that may defer such deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating "negative" original
issue discount which would be deductible only against future positive
original issue discount or otherwise upon termination of the Class. Holders
of Regular Certificates are urged to consult their own tax advisors regarding
the appropriate timing, amount and character of any loss sustained with
respect to such Regular Certificates. While losses attributable to interest
previously reported as income should be deductible as ordinary losses by both
corporate and non-corporate holders, the Internal Revenue Service may take
the position that losses attributable to accrued original issue discount may
only be deducted as short-term capital losses by non-corporate holders not
engaged in a trade or business. Special loss rules are applicable to banks
and thrift institutions, including rules regarding reserves for bad debts.
Such taxpayers are advised to consult their tax advisors regarding the
treatment of losses on Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"),
and will not be taxed separately to the REMIC Pool. The daily portions of
REMIC taxable income or net loss of a Residual Certificateholder are
determined by allocating the REMIC Pool's taxable income or net loss for each
calendar quarter ratably to each day in such quarter and by allocating such
daily portion among the Residual Certificateholders in proportion to their
respective holdings of Residual Certificates in the REMIC Pool on such day.
REMIC taxable income is generally determined in the same manner as the
taxable income of an individual using the accrual method of accounting,
except that (i) the limitations on deductibility of investment interest
expense and expenses for the production of income do not apply, (ii) all bad
loans will be deductible as business bad debts and (iii) the limitation on
the deductibility of interest and expenses related to tax-exempt income will
apply. The REMIC Pool's gross income includes interest, original issue
discount income and market discount income, if any, on the Mortgage Loans,
reduced by amortization of any premium on the Mortgage Loans, plus income
from amortization of issue premium, if any, on the Regular Certificates, plus
income on reinvestment of cash flows and reserve assets, plus any
cancellation of indebtedness income upon allocation of realized losses to the
Regular Certificates. The REMIC Pool's deductions include interest and
original issue discount expense on the Regular Certificates, servicing fees
on the Mortgage Loans, other administrative expenses of the REMIC Pool and
realized losses on the Mortgage Loans. The requirement that Residual
Certificateholders report their pro rata share of taxable income or net loss
of the REMIC Pool will continue until there are no Certificates of any class
of the related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship
between the timing of recognition of interest and original issue
64
<PAGE>
discount or market discount income or amortization of premium with respect to
the Mortgage Loans, on the one hand, and the timing of deductions for
interest (including original issue discount) on the Regular Certificates or
income from amortization of issue premium on the Regular Certificates, on the
other hand. In the event that an interest in the Mortgage Loans is acquired
by the REMIC Pool at a discount, and one or more of such Mortgage Loans is
prepaid, the Residual Certificateholder may recognize taxable income without
being entitled to receive a corresponding amount of cash because (i) the
prepayment may be used in whole or in part to make distributions in reduction
of principal on the Regular Certificates and (ii) the discount on the
Mortgage Loans which is includible in income may exceed the deduction allowed
upon such distributions on those Regular Certificates on account of any
unaccrued original issue discount relating to those Regular Certificates.
When there is more than one class of Regular Certificates that distribute
principal sequentially, this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates when distributions in reduction of principal are being
made in respect of earlier classes of Regular Certificates to the extent that
such classes are not issued with substantial discount. If taxable income
attributable to such a mismatching is realized, in general, losses would be
allowed in later years as distributions on the later classes of Regular
Certificates are made. Taxable income may also be greater in earlier years
than in later years as a result of the fact that interest expense deductions,
expressed as a percentage of the outstanding principal amount of such a
series of Regular Certificates, may increase over time as distributions in
reduction of principal are made on the lower yielding classes of Regular
Certificates, whereas to the extent that the REMIC Pool includes fixed rate
Mortgage Loans, interest income with respect to any given Mortgage Loan will
remain constant over time as a percentage of the outstanding principal amount
of that loan. Consequently, Residual Certificateholders must have sufficient
other sources of cash to pay any federal, state or local income taxes due as
a result of such mismatching or unrelated deductions against which to offset
such income, subject to the discussion of "excess inclusions" below under
"Limitations on Offset or Exemption of REMIC Income." The timing of such
mismatching of income and deductions described in this paragraph, if present
with respect to a series of Certificates, may have a significant adverse
effect upon the Residual Certificateholder's after-tax rate of return. In
addition, a Residual Certificateholder's taxable income during certain
periods may exceed the income reflected by such Residual Certificateholder
for such periods in accordance with generally accepted accounting principles.
Investors should consult their own accountants concerning the accounting
treatment of their investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of
disposition of the Residual Certificate if earlier), determined without
taking into account the net loss for the quarter. The initial adjusted basis
of a purchaser of a Residual Certificate is the amount paid for such Residual
Certificate. Such adjusted basis will be increased by the amount of taxable
income of the REMIC Pool reportable by the Residual Certificateholder and
will be decreased (but not below zero), first, by a cash distribution from
the REMIC Pool and, second, by the amount of loss of the REMIC Pool
reportable by the Residual Certificateholder. Any loss that is disallowed on
account of this limitation may be carried over indefinitely with respect to
the Residual Certificateholder as to whom such loss was disallowed and may be
used by such Residual Certificateholder only to offset any income generated
by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not
include cash received by the REMIC Pool that represents a recovery of the
REMIC Pool's basis in its assets. Such recovery of basis by the REMIC Pool
will have the effect of amortization of the issue price of the Residual
Certificates over their life. However, in view of the possible acceleration
of the income of Residual Certificateholders described above under "Taxation
of REMIC Income", the period of time over which such issue price is
effectively amortized may be longer than the economic life of the Residual
Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue
65
<PAGE>
price of such a residual interest as zero rather than such negative amount
for purposes of determining the REMIC Pool's basis in its assets. The
preamble to the REMIC Regulations states that the Service may provide future
guidance on the proper tax treatment of payments made by a transferor of such
a residual interest to induce the transferee to acquire the interest, and
Residual Certificateholders should consult their own tax advisors in this
regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not
so provide. See "Treatment of Certain Items of REMIC Income and
Expense--Market Discount" below regarding the basis of Mortgage Loans to the
REMIC Pool and "Sale or Exchange of a Residual Certificate" below regarding
possible treatment of a loss upon termination of the REMIC Pool as a capital
loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities
regarding the determination of specific items of income and expense are
subject to differing interpretations. The Depositor makes no representation
as to the specific method that it will use for reporting income with respect
to the Mortgage Loans and expenses with respect to the Regular Certificates,
and different methods could result in different timing of reporting of
taxable income or net loss to Residual Certificateholders or differences in
capital gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount
income on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the de minimis rule described therein, and
"--Acquisition Premium."
Deferred Interest. Any deferred interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income
to the REMIC Pool and will be treated in a manner similar to the deferred
interest that accrues with respect to Regular Certificates as described above
under "Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool
allocable to such Mortgage Loans is exceeded by their unpaid principal
balances. The REMIC Pool's basis in such Mortgage Loans is generally the fair
market value of the Mortgage Loans immediately after the transfer thereof to
the REMIC Pool. The REMIC Regulations provide that such basis is equal in the
aggregate to the issue prices of all regular and residual interests in the
REMIC Pool (or the fair market value thereof at the Closing Date, in the case
of a retained Class). In respect of Mortgage Loans that have market discount
to which Code Section 1276 applies, the accrued portion of such market
discount would be recognized currently as an item of ordinary income in a
manner similar to original issue discount. Market discount income generally
should accrue in the manner described above under "Taxation of Regular
Certificates--Market Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate
of the issue prices (or the fair market value of retained Classes) of the
regular and residual interests in the REMIC Pool immediately after the
transfer thereof to the REMIC Pool. In a manner analogous to the discussion
above under "Taxation of Regular Certificates--Premium", a REMIC Pool that
holds a Mortgage Loan as a capital asset under Code Section 1221 may elect
under Code Section 171 to amortize premium on whole mortgage loans or
mortgage loans underlying mortgage backed securities ("MBS") that were
originated
66
<PAGE>
after September 27, 1985 or MBS that are REMIC regular interests under the
constant yield method. Amortizable bond premium will be treated as an offset
to interest income on the Mortgage Loans, rather than as a separate deduction
item. To the extent that the mortgagors with respect to the Mortgage Loans
are individuals, Code Section 171 will not be available for premium on
Mortgage Loans (including underlying mortgage loans) originated on or prior
to September 27, 1985. Premium with respect to such Mortgage Loans may be
deductible in accordance with a reasonable method regularly employed by the
holder thereof. The allocation of such premium pro rata among principal
payments should be considered a reasonable method; however, the Service may
argue that such premium should be allocated in a different manner, such as
allocating such premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject
to special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter
allocable to a Residual Certificate over the daily accruals for such
quarterly period of (i) 120% of the long-term applicable Federal rate that
would have applied to the Residual Certificate (if it were a debt instrument)
on the Startup Day under Code Section 1274(d), multiplied by (ii) the
adjusted issue price of such Residual Certificate at the beginning of such
quarterly period. For this purpose, the adjusted issue price of a Residual
Certificate at the beginning of a quarter is the issue price of the Residual
Certificate, plus the amount of such daily accruals of REMIC income described
in this paragraph for all prior quarters, decreased by any distributions made
with respect to such Residual Certificate prior to the beginning of such
quarterly period. Accordingly, the portion of the REMIC Pool's taxable income
that will be treated as excess inclusions will be a larger portion of such
income as the adjusted issue price of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carry forwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the
Residual Certificateholder is an organization subject to the tax on unrelated
business income imposed by Code Section 511, the Residual Certificateholder's
excess inclusions will be treated as unrelated business taxable income of
such Residual Certificateholder for purposes of Code Section 511. In
addition, REMIC taxable income is subject to 30% withholding tax with respect
to certain persons who are not U.S. Persons (as defined below under
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors"), and the portion thereof attributable to excess inclusions is not
eligible for any reduction in the rate of withholding tax (by treaty or
otherwise). See "Taxation of Certain Foreign Investors--Residual
Certificates" below. Finally, if a real estate investment trust or a
regulated investment company owns a Residual Certificate, a portion
(allocated under Treasury regulations yet to be issued) of dividends paid by
the real estate investment trust or a regulated investment company could not
be offset by net operating losses of its shareholders, would constitute
unrelated business taxable income for tax-exempt shareholders, and would be
ineligible for reduction of withholding to certain persons who are not U.S.
Persons. The SBJPA of 1996 has eliminated the special rule permitting Section
593 institutions ("thrift institutions") to use net operating losses and
other allowable deductions to offset their excess inclusion income from
Residual Certificates that have "significant value" within the meaning of the
REMIC Regulations, effective for taxable years beginning after December 31,
1995, except with respect to Residual Certificates continuously held by
thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for
a taxable year cannot be less than the excess inclusions for the year. Third,
the amount of any alternative minimum tax net operating loss deduction must
be computed without regard to any excess inclusions. These rules are
effective for taxable years beginning after December 31, 1996, unless a
Residual Certificateholder elects to have such rules apply only to taxable
years beginning after August 20, 1996.
67
<PAGE>
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as
defined below) other than in connection with the formation of a REMIC Pool,
if the Disqualified organization is required, pursuant to a binding contract,
to sell such Residual Certificate, which sale occurs within seven days after
the Startup Day, a tax would be imposed in an amount equal to the product of
(i) the present value of the total anticipated excess inclusions with respect
to such Residual Certificate for periods after the transfer and (ii) the
highest marginal federal income tax rate applicable to corporations. The
REMIC Regulations provide that the anticipated excess inclusions are based on
actual prepayment experience to the date of the transfer and projected
payments based on the Prepayment Assumption. The present value rate equals
the applicable Federal rate under Code Section 1274(d) as of the date of the
transfer for a term ending with the last calendar quarter in which excess
inclusions are expected to accrue. Such a tax generally would be imposed on
the transferor of the Residual Certificate, except that where such transfer
is through an agent (including a broker, nominee or other middleman) for a
Disqualified Organization, the tax would instead be imposed on such agent.
However, a transferor of a Residual Certificate would in no event be liable
for such tax with respect to a transfer if the transferee furnishes to the
transferor an affidavit that the transferee is not a Disqualified
Organization and, as of the time of the transfer, the transferor does not
have actual knowledge that such affidavit is false. The tax also may be
waived by the Treasury Department if the Disqualified Organization promptly
disposes of the residual interest and the transferor pays income tax at the
highest corporate rate on the excess inclusions for the period the Residual
Certificate is actually held by the Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are
allocable to the interest in the Pass-Through Entity during the period such
interest is held by such Disqualified Organization, and (ii) the highest
marginal federal corporate income tax rate. Such tax would be deductible from
the ordinary gross income of the Pass-Through Entity for the taxable year.
The Pass-Through Entity would not be liable for such tax if it has received
an affidavit from such record holder that it is not a Disqualified
Organization or stating such holder's taxpayer identification number and,
during the period such person is the record holder of the Residual
Certificate, the Pass-Through Entity does not have actual knowledge that such
affidavit is false.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government,
any international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if
all of its activities are subject to tax and, except in the case of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by any such governmental entity), any cooperative
organization furnishing electric energy or providing telephone service to
persons in rural areas as described in Code Section 1381(a)(2)(C), and any
organization (other than a farmers' cooperative described in Code Section
521) that is exempt from taxation under the Code unless such organization is
subject to the tax on unrelated business income imposed by Code Section 511,
and (ii) "Pass-Through Entity" means any regulated investment company, real
estate investment trust, common trust fund, partnership, trust or estate and
certain corporations operating on a cooperative basis. Except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to such
interest, be treated as a Pass-Through Entity.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
68
<PAGE>
provide that any attempted or purported transfer in violation of these
transfer restrictions will be null and void and will vest no rights in any
purported transferee. Each Residual Certificate with respect to a series will
bear a legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under
the Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must
be furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor
would continue to be treated as the owner of the Residual Certificates and
thus would continue to be subject to tax on its allocable portion of the net
income of the REMIC Pool. Under the REMIC Regulations, a transfer of a
"noneconomic residual interest" (as defined below) to a Residual
Certificateholder (other than a Residual Certificateholder who is not a U.S.
Person, as defined below under "Foreign Investors") is disregarded for all
federal income tax purposes if a significant purpose of the transferor is to
impede the assessment or collection of tax. A residual interest in a REMIC
(including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of the transfer, (i) the
present value of the expected future distributions on the residual interest
at least equals the product of the present value of the anticipated excess
inclusions and the highest corporate income tax rate in effect for the year
in which the transfer occurs, and (ii) the transferor reasonably expects that
the transferee will receive distributions from the REMIC at or after the time
at which taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy the accrued taxes. The anticipated excess inclusions
and the present value rate are determined in the same manner as set forth
above under "Disqualified Organizations". The REMIC Regulations explain that
a significant purpose to impede the assessment or collection of tax exists if
the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. A safe harbor is provided if (i)
the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and found that the
transferee historically had paid its debts as they came due and found no
significant evidence to indicate that the transferee would not continue to
pay its debts as they came due in the future, and (ii) the transferee
represents to the transferor that it understands that, as the holder of the
noneconomic residual interest, the transferee may incur tax liabilities in
excess of cash flows generated by the interest and that the transferee
intends to pay taxes associated with holding the residual interest as they
become due. The Pooling Agreement with respect to each series of Certificates
will require the transferee of a Residual Certificate to certify to the
matters in the preceding sentence as part of the affidavit described above
under the heading "Disqualified Organizations". The transferor must have no
actual knowledge or reason to know that such statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended
to apply to a transferee who is not a "U.S. Person" (as defined below),
unless such transferee's income is effectively connected with the conduct of
a trade or business within the United States or not otherwise subject to a
withholding tax. A Residual Certificate is deemed to have tax avoidance
potential unless, at the time of the transfer, (i) the future value of
expected distributions equals at least 30% of the anticipated excess
inclusions after the transfer, and (ii) the transferor reasonably expects
that the transferee will receive sufficient distributions from the REMIC Pool
at or after the time at which the excess inclusions accrue and prior to the
end of the next succeeding taxable year for the accumulated withholding tax
liability to be paid. If the non-U.S. Person transfers the Residual
Certificate back to a U.S. Person, the transfer will be disregarded and the
foreign transferor will continue to be treated as the owner unless
arrangements are made so that the transfer does not have the effect of
allowing the transferor to avoid tax on accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person"
69
<PAGE>
means a citizen or resident of the United States, a corporation, partnership
or other entity created or organized in or under the laws of the United
States or any State, an estate that is subject to United States federal
income tax regardless of the source of its income or a trust if (A) for
taxable years beginning after December 31, 1996 (or for taxable years ending
after August 20, 1996, if the trustee has made an applicable election), a
court within the United States is able to exercise primary supervision over
the administration of such trust, and one or more United States persons have
the authority to control all substantial decisions of such trust, or (B) for
all other taxable years, such trust is subject to United States federal
income tax regardless of the source of its income (or, to the extent provided
in applicable Treasury Regulations, certain trusts in existence on August 20,
1996 which are eligible to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under
"Taxation of Residual Certificates--Basis and Losses") of such Residual
Certificateholder in such Residual Certificate at the time of the sale or
exchange. In addition to reporting the taxable income of the REMIC Pool, a
Residual Certificateholder will have taxable income to the extent that any
cash distribution to it from the REMIC Pool exceeds such adjusted basis on
that Distribution Date. Such income will be treated as gain from the sale or
exchange of the Residual Certificate. It is possible that the termination of
the REMIC Pool may be treated as a sale or exchange of a Residual
Certificateholder's Residual Certificate, in which case, if the Residual
Certificateholder has an adjusted basis in such Residual Certificateholder's
Residual Certificate remaining when its interest in the REMIC Pool
terminates, and if such Residual Certificateholder holds such Residual
Certificate as a capital asset under Code Section 1221, then such Residual
Certificateholder will recognize a capital loss at that time in the amount of
such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii)
in the case of a non-corporate taxpayer, to the extent such taxpayer has made
an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of
Code Section 1091 will apply to dispositions of Residual Certificates where
the seller of the Residual Certificate, during the period beginning six
months before the sale or disposition of the Residual Certificate and ending
six months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark to Market Regulations
The Service has issued regulations (the "Mark to Market Regulations")
under Code Section 475 relating to the requirement that a securities dealer
mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment. The
Mark to Market Regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market. The Mark to Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
70
<PAGE>
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss
includible in the federal income tax returns of Residual Certificateholders,
but rather will be taxed directly to the REMIC Pool at a 100% rate.
Prohibited transactions generally include (i) the disposition of a qualified
mortgage other than pursuant to a (a) substitution within two years of the
Startup Day for a defective (including a defaulted) obligation (or repurchase
in lieu of substitution of a defective (including a defaulted) obligation at
any time) or for any qualified mortgage within three months of the Startup
Day, (b) foreclosure, default or imminent default of a qualified mortgage,
(c) bankruptcy or insolvency of the REMIC Pool or (d) qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is outstanding). The REMIC
Regulations indicate that the modification of a Mortgage Loan generally will
not be treated as a disposition if it is occasioned by a default or
reasonably foreseeable default, an assumption of the Mortgage Loan, the
waiver of a due-on-sale or due-on-encumbrance clause or the conversion of an
interest rate by a mortgagor pursuant to the terms of a convertible
adjustable rate Mortgage Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during
the three months following the Startup Day, (ii) made to a qualified reserve
fund by a Residual Certificateholder, (iii) in the nature of a guarantee,
(iv) made to facilitate a qualified liquidation or clean-up call and (v) as
otherwise permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property", determined by
reference to the rules applicable to real estate investment trusts.
Generally, property acquired by deed in lieu of foreclosure would be treated
as "foreclosure property" for a period of two years, with possible extensions
of up to an additional four years. Net income from foreclosure property
generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment
trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material
state income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of
its assets, provided that the REMIC Pool credits or distributes in
liquidation all of the sale proceeds plus its cash (other than amounts
retained to meet claims) to holders of Regular Certificates and Residual
Certificateholders within the 90-day period.
71
<PAGE>
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes
in a manner similar to a partnership. The form for such income tax return is
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return.
The Trustee will be required to sign the REMIC Pool's returns. Treasury
regulations provide that, except where there is a single Residual
Certificateholder for an entire taxable year, the REMIC Pool will be subject
to the procedural and administrative rules of the Code applicable to
partnerships, including the determination by the Service of any adjustments
to, among other things, items of REMIC income, gain, loss, deduction or
credit in a unified administrative proceeding. The Residual Certificateholder
owning the largest percentage interest in the Residual Certificates will be
obligated to act as "tax matters person", as defined in applicable Treasury
regulations, with respect to the REMIC Pool. Each Residual Certificateholder
will be deemed, by acceptance of such Residual Certificates, to have agreed
(i) to the appointment of the tax matters person as provided in the preceding
sentence and (ii) to the irrevocable designation of the Master Servicer as
agent for performing the functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a
taxable year of an individual taxpayer will be reduced by the lesser of (i)
3% of the excess, if any, of adjusted gross income over $124,500 for the
taxable year beginning in 1998 ($62,250 in the case of a married individual
filing a separate return) (subject to adjustments for inflation in subsequent
years) or (ii) 80% of the amount of itemized deductions otherwise allowable
for such year. In the case of a REMIC Pool, such deductions may include
deductions under Code Section 212 for the servicing fee and all
administrative and other expenses relating to the REMIC Pool, or any similar
expenses allocated to the REMIC Pool with respect to a regular interest it
holds in another REMIC. Such investors who hold REMIC Certificates either
directly or indirectly through certain pass-through entities may have their
pro rata share of such expenses allocated to them as additional gross income,
but may be subject to such limitation on deductions. In addition, such
expenses are not deductible at all for purposes of computing the alternative
minimum tax, and may cause such investors to be subject to significant
additional tax liability. Temporary Treasury regulations provide that the
additional gross income and corresponding amount of expenses generally are to
be allocated entirely to the holders of Residual Certificates in the case of
a REMIC Pool that would not qualify as a fixed investment trust in the
absence of a REMIC election. However, such additional gross income and
limitation on deductions will apply to the allocable portion of such expenses
to holders of Regular Certificates, as well as holders of Residual
Certificates, where such Regular Certificates are issued in a manner that is
similar to pass-through certificates in a fixed investment trust. In general,
such allocable portion will be determined based on the ratio that a REMIC
Certificateholder's income, determined on a daily basis, bears to the income
of all holders of Regular Certificates and Residual Certificates with respect
to a REMIC Pool. As a result, individuals, estates or trusts holding REMIC
Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single Class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the
related period on Residual Certificates. Unless otherwise indicated in the
applicable Prospectus Supplement, all such expenses will be allocable to the
Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or
other Non-U.S. Persons (as defined below), will be considered "portfolio
interest" and, therefore, generally will not be subject to 30% United States
72
<PAGE>
withholding tax, provided that such Non-U.S. Person (i) is not a "10-percent
shareholder" within the meaning of Code Section 871(h)(3)(B) or a controlled
foreign corporation described in Code Section 881(c)(3)(C) and (ii) provides
the Trustee, or the person who would otherwise be required to withhold tax
from such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial
owner and stating, among other things, that the beneficial owner of the
Regular Certificate is a Non-U.S. Person. If such statement, or any other
required statement, is not provided, 30% withholding will apply unless
reduced or eliminated pursuant to an applicable tax treaty or unless the
interest on the Regular Certificate is effectively connected with the conduct
of a trade or business within the United States by such Non-U.S. Person. In
the latter case, such Non-U.S. Person will be subject to United States
federal income tax at regular rates. Prepayment Premiums distributable to
Regular Certificateholders who are Non-U.S. Persons may be subject to 30%
United States withholding tax. Investors who are Non-U.S. Persons should
consult their own tax advisors regarding the specific tax consequences to
them of owning a Regular Certificate. The term "Non-U.S. Person" means any
person who is not a U.S. Person.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to
the conditions described in "Regular Certificates" above, but only to the
extent that (i) the Mortgage Loans (including mortgage loans underlying MBS)
were issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of
assets therein (as to which a separate REMIC election will be made), to which
the Residual Certificate relates, consists of obligations issued in
"registered form" within the meaning of Code Section 163(f)(1). Generally,
whole mortgage loans will not be, but MBS and regular interests in another
REMIC Pool will be, considered obligations issued in registered form.
Furthermore, a Residual Certificateholder will not be entitled to any
exemption from the 30% withholding tax (or lower treaty rate) to the extent
of that portion of REMIC taxable income that constitutes an "excess
inclusion". See "Taxation of Residual Certificates -- Limitations on Offset
or Exemption of REMIC Income". If the amounts paid to Residual
Certificateholders who are Non-U.S. Persons are effectively connected with
the conduct of a trade or business within the United States by such Non-U.S.
Persons, 30% (or lower treaty rate) withholding will not apply. Instead, the
amounts paid to such Non-U.S. Persons will be subject to United States
federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account
for purposes of withholding only when paid or otherwise distributed (or when
the Residual Certificate is disposed of) under rules similar to withholding
upon disposition of debt instruments that have original issue discount. See
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors" above concerning the disregard of certain transfers having "tax
avoidance potential". Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to
a "backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from
distribution on the Regular Certificates would be refunded by the Service or
allowed as a credit against the Regular Certificateholder's federal income
tax liability.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals,
73
<PAGE>
estates, non-exempt and non-charitable trusts, and partnerships who are
either holders of record of Regular Certificates or beneficial owners who own
Regular Certificates through a broker or middleman as nominee. All brokers,
nominees and all other non-exempt holders of record of Regular Certificates
(including corporations, non-calendar year taxpayers, securities or
commodities dealers, real estate investment trusts, investment companies,
common trust funds, thrift institutions and charitable trusts) may request
such information for any calendar quarter by telephone or in writing by
contacting the person designated in Service Publication 938 with respect to a
particular Series of Regular Certificates. Holders through nominees must
request such information from the nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool
to each Residual Certificateholder by the end of the month following the
close of each calendar quarter (41 days after the end of a quarter under
proposed Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service
concerning the percentage of the REMIC Pool's assets meeting the qualified
asset tests described above under "Status of REMIC Certificates".
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC
ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i). Where there is no fixed retained yield with respect to
the Mortgage Loans underlying the Standard Certificates, the holder of each
such Standard Certificate (a "Standard Certificateholder") in such series
will be treated as the owner of a pro rata undivided interest in the ordinary
income and corpus portions of the Trust Fund represented by its Standard
Certificate and will be considered the beneficial owner of a pro rata
undivided interest in each of the Mortgage Loans, subject to the discussion
below under "Recharacterization of Servicing Fees". Accordingly, the holder
of a Standard Certificate of a particular series will be required to report
on its federal income tax return its pro rata share of the entire income from
the Mortgage Loans represented by its Standard Certificate, including
interest at the coupon rate on such Mortgage Loans, original issue discount
(if any), prepayment fees, assumption fees, and late payment charges received
by the Master Servicer, in accordance with such Standard Certificateholder's
method of accounting. A Standard Certificateholder generally will be able to
deduct its share of the servicing fee and all administrative and other
expenses of the Trust Fund in accordance with its method of accounting,
provided that such amounts are reasonable compensation for services rendered
to that Trust Fund. However, investors who are individuals, estates or trusts
who own Standard Certificates, either directly or indirectly through certain
pass-through entities, will be subject to limitation with respect to certain
itemized deductions described in Code Section 67, including deductions under
Code Section 212 for the servicing fee and all such administrative and other
expenses of the Trust Fund, to the extent that such deductions, in the
aggregate, do not exceed two percent of an investor's adjusted gross income.
In addition, Code Section 68 provides that itemized deductions otherwise
allowable for a taxable year of an individual taxpayer will be reduced by the
lesser of (i) 3% of the excess, if any, of adjusted gross income
74
<PAGE>
over $124,500 for the taxable year beginning in 1998 ($62,250 in the case of
a married individual filing a separate return) (subject to adjustments for
inflation in subsequent years), or (ii) 80% of the amount of itemized
deductions otherwise allowable for such year. As a result, such investors
holding Standard Certificates, directly or indirectly through a pass-through
entity, may have aggregate taxable income in excess of the aggregate amount
of cash received on such Standard Certificates with respect to interest at
the pass-through rate on such Standard Certificates. In addition, such
expenses are not deductible at all for purposes of computing the alternative
minimum tax, and may cause such investors to be subject to significant
additional tax liability. Moreover, where there is fixed retained yield with
respect to the Mortgage Loans underlying a series of Standard Certificates or
where the servicing fee is in excess of reasonable servicing compensation,
the transaction will be subject to the application of the "stripped bond" and
"stripped coupon" rules of the Code, as described below under "Stripped
Certificates" and "Recharacterization of Servicing Fees", respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans secured by an interest in real property which
is residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage
Loans represented by that Standard Certificate is of the type described in
such section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code
Section 856(c)(4)(A) to the extent that the assets of the related Trust Fund
consist of qualified assets, and interest income on such assets will be
considered "interest on obligations secured by mortgages on real property" to
such extent within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within
the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under.
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met.
Rules regarding periodic inclusion of original issue discount income are
applicable to mortgages of corporations originated after May 27, 1969,
mortgages of noncorporate mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2,
1984. Under the OID Regulations, such original issue discount could arise by
the charging of points by the originator of the mortgages in an amount
greater than a statutory de minimis exception, including a payment of points
currently deductible by the borrower under applicable Code provisions or,
under certain circumstances, by the presence of "teaser rates" on the
Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement,
no prepayment assumption will be assumed for purposes of such accrual.
However, Code Section 1272 provides for a reduction in the amount of original
issue discount includible in the income of a holder of
75
<PAGE>
an obligation that acquires the obligation after its initial issuance at a
price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal.
Accordingly, if such Mortgage Loans acquired by a Standard Certificateholder
are purchased at a price equal to the then unpaid principal amount of such
Mortgage Loans, no original issue discount attributable to the difference
between the issue price and the original principal amount of such Mortgage
Loans (i.e., points) will be includible by such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is
unclear whether a Prepayment Assumption would apply. Rather, the holder will
accrue market discount pro rata over the life of the Mortgage Loans, unless
the constant yield method is elected. Unless indicated otherwise in the
applicable Prospectus Supplement, no prepayment assumption will be assumed
for purposes of such accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
Master Servicer were deemed to exceed reasonable servicing compensation, the
amount of such excess would represent neither income nor a deduction to
Certificateholders. In this regard, there are no authoritative guidelines for
federal income tax purposes as to either the maximum amount of servicing
compensation that may be considered reasonable in the context of this or
similar transactions or whether, in the case of the Standard Certificate, the
reasonableness of servicing compensation should be determined on a weighted
average or loan-by-loan basis. If a loan-by-loan basis is appropriate, the
likelihood that such amount would exceed reasonable servicing compensation as
to some of the Mortgage Loans would be increased. Service guidance indicates
that a servicing fee in excess of reasonable compensation ("excess
servicing") will cause the Mortgage Loans to be treated under the "stripped
bond" rules. Such guidance provides safe harbors for servicing deemed to be
reasonable and requires taxpayers to demonstrate that the value of servicing
fees in excess of such amounts is not greater than the value of the services
provided.
Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage
Loans. Under the rules of Code Section 1286, the separation of ownership of
the right to receive some or all of the interest payments on an obligation
from the right to receive some or all of the principal payments on the
obligation would result in treatment of such Mortgage Loans as "stripped
coupons" and "stripped bonds". Subject to the de minimis rule discussed below
under "--Stripped Certificates", each stripped bond or stripped coupon could
be considered for this purpose as a non-interest bearing obligation issued on
the date of issue of the Standard Certificates, and the original issue
discount rules of the Code would apply to the holder thereof. While Standard
Certificateholders would still be treated as owners of beneficial interests
in a grantor trust for federal income tax purposes, the corpus of such trust
could be viewed as excluding the portion of the Mortgage Loans the ownership
of which is attributed to the Master Servicer, or as including such portion
as a second class of equitable interest. Applicable Treasury regulations
treat such an arrangement as a fixed investment trust, since the multiple
classes of trust interests should be treated as merely facilitating direct
investments in the trust assets and the existence of multiple classes of
ownership interests is incidental to that purpose. In general, such a
recharacterization should not have any significant effect upon the timing or
amount of income reported by a Standard Certificateholder, except that the
income reported by a cash method holder may be slightly accelerated. See
"Stripped Certificates" below for a further description of the federal income
tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates. Upon sale or exchange of a
Standard Certificate, a Standard Certificateholder will recognize gain or
loss equal to the difference between the amount realized on the sale and its
aggregate adjusted basis in the Mortgage Loans and the other assets
represented by the Standard Certificate. In general, the aggregate adjusted
basis will equal the Standard Certificateholder's cost for the Standard
Certificate, increased by the amount of any income previously reported with
respect to the Standard Certificate and decreased by the amount of any losses
previously reported with
76
<PAGE>
respect to the Standard Certificate and the amount of any distributions
received thereon. Except as provided above with respect to market discount on
any Mortgage Loans, and except for certain financial institutions subject to
the provisions of Code Section 582(c), any such gain or loss would be capital
gain or loss if the Standard Certificate was held as a capital asset.
However, gain on the sale of a Standard Certificate will be treated as
ordinary income (i) if a Standard Certificate is held as part of a
"conversion transaction" as defined in Code Section 1258(c), up to the amount
of interest that would have accrued on the Standard Certificateholder's net
investment in the conversion transaction at 120% of the appropriate
applicable Federal rate in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with
respect to any prior disposition of property that was held as a part of such
transaction or (ii) in the case of a non-corporate taxpayer, to the extent
such taxpayer has made an election under Code Section 163(d)(4) to have net
capital gains taxed as investment income at ordinary income rates. Capital
gains of certain non-corporate taxpayers are subject to a lower maximum tax
rate (28%) than ordinary income of such taxpayers (39.6%) for property held
for more than one year but not more than 18 months, and a still lower maximum
rate (20%) for property held for more than 18 months. The maximum tax rate
for corporations is the same with respect to both ordinary income and capital
gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "Stripped
Certificates". Stripped Certificates include "Stripped Interest Certificates"
and "Stripped Principal Certificates" (as defined in this Prospectus) as to
which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of
resale), in the form of fixed retained yield or otherwise, an ownership
interest in a portion of the payments on the Mortgage Loans, (ii) the Master
Servicer is treated as having an ownership interest in the Mortgage Loans to
the extent it is paid (or retains) servicing compensation in an amount
greater than reasonable consideration for servicing the Mortgage Loans (see
"Standard Certificates--Recharacterization of Servicing Fees" above) and
(iii) Certificates are issued in two or more classes or subclasses
representing the right to non-pro-rata percentages of the interest and
principal payments on the Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of
the principal payments on each Mortgage Loan and/or "stripped coupons" with
respect to its pro rata share of all or a portion of the interest payments on
each Mortgage Loan, including the Stripped Certificate's allocable share of
the servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped
Certificateholders, the servicing fees will be allocated to the Stripped
Certificates in proportion to the respective entitlements to distributions of
each class (or subclass) of Stripped Certificates for the related period or
periods. The holder of a Stripped Certificate generally will be entitled to a
deduction each year in respect of the servicing fees, as described above
under "Standard Certificates--General", subject to the limitation described
therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such
stripped interest is purchased. Although the treatment of Stripped
Certificates for federal income tax purposes is not clear in certain respects
at this time, particularly where such Stripped Certificates are issued with
respect to a Mortgage Pool containing variable-rate Mortgage Loans, the
Depositor has been advised by counsel that (i) the Trust Fund will be treated
as a grantor trust under subpart E, Part 1 of subchapter J of the Code and
not as an association taxable as a corporation or a "taxable mortgage pool"
within the meaning of Code Section 7701(i), and (ii) each Stripped
77
<PAGE>
Certificate should be treated as a single installment obligation for purposes
of calculating original issue discount and gain or loss on disposition. This
treatment is based on the interrelationship of Code Section 1286, Code
Sections 1272 through 1275, and the OID Regulations. While under Code Section
1286 computations with respect to Stripped Certificates arguably should be
made in one of the ways described below under "Taxation of
Stripped--Certificates--Possible Alternative Characterizations," the OID
Regulations state, in general, that two or more debt instruments issued by a
single issuer to a single investor in a single transaction should be treated
as a single debt instrument for original issue discount purposes. The Pooling
Agreement requires that the Trustee make and report all computations
described below using this aggregate approach, unless substantial legal
authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 assume that a
Stripped Certificate will be treated as a single debt instrument issued on
the date it is purchased for purposes of calculating any original issue
discount and that the interest component of such a Stripped Certificate would
be treated as qualified stated interest under the OID Regulations. Further
pursuant to these final regulations the purchaser of such a Stripped
Certificate will be required to account for any discount as market discount
rather than original issue discount unless either (i) the initial discount
with respect to the Stripped Certificate was treated as zero under the de
minimis rule of Code Section 1273(a)(3), or (ii) no more than 100 basis
points in excess of reasonable servicing is stripped off the related Mortgage
Loans. Any such market discount would be reportable as described under
"Material Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular Certificates--Market Discount," without regard to the de minimis rule
therein, assuming that a prepayment assumption is employed in such
computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt,
counsel has advised the Depositor that Stripped Certificates owned by
applicable holders should be considered to represent "real estate assets"
within the meaning of Code Section 856(c)(4)(A), "obligation[s] principally
secured by an interest in real property" within the meaning of Code Section
860G(a)(3)(A), and "loans . . . secured by an interest in real property which
is . . . residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into
account the compounding of interest, which may be prior to the receipt of the
cash attributable to such income. Based in part on the OID Regulations and
the amendments to the original issue discount sections of the Code made by
the 1986 Act, the amount of original issue discount required to be included
in the income of a holder of a Stripped Certificate (referred to in this
discussion as a "Stripped Certificateholder") in any taxable year likely will
be computed generally as described above under "Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates". However, with the apparent exception of a Stripped Certificate
qualifying as a market discount obligation, as described above under
"General", the issue price of a Stripped Certificate will be the purchase
price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition
of original issue discount will be either accelerated
78
<PAGE>
or decelerated and the amount of such original issue discount will be either
increased or decreased depending on the relative interests in principal and
interest on each Mortgage Loan represented by such Stripped
Certificateholder's Stripped Certificate. While the matter is not free from
doubt, the holder of a Stripped Certificate should be entitled in the year
that it becomes certain (assuming no further prepayments) that the holder
will not recover a portion of its adjusted basis in such Stripped Certificate
to recognize an ordinary loss equal to such portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not
be made if the Mortgage Loans are prepaid could lead to the interpretation
that such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of
contingent interest, are by their terms not applicable to prepayable
securities such as the Stripped Certificates. However, if final regulations
dealing with contingent interest with respect to the Stripped Certificates
apply the same principles as the OID Regulations, such regulations may lead
to different timing of income inclusion that would be the case under the OID
Regulations. Furthermore, application of such principles could lead to the
characterization of gain on the sale of contingent interest Stripped
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such
subsequent purchaser will be required for federal income tax purposes to
accrue and report such excess as if it were original issue discount in the
manner described above. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of a Stripped
Certificateholder other than an original Stripped Certificateholder should be
the Prepayment Assumption or a new rate based on the circumstances at the
date of subsequent purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible
interpretations of the applicable Code provisions. For example, the Stripped
Certificateholder may be treated as the owner of (i) one installment
obligation consisting of such Stripped Certificate's pro rata share of the
payments attributable to principal on each Mortgage Loan and a second
installment obligation consisting of such Stripped Certificate's pro rata
share of the payments attributable to interest on each Mortgage Loan, (ii) as
many stripped bonds or stripped coupons as there are scheduled payments of
principal and/or interest on each Mortgage Loan or (iii) a separate
installment obligation for each Mortgage Loan, representing the Stripped
Certificate's pro rata share of payments of principal and/or interest to be
made with respect thereto. Alternatively, the holder of one or more classes
of Stripped Certificates may be treated as the owner of a pro rata fractional
undivided interest in each Mortgage Loan to the extent that such Stripped
Certificate, or classes of Stripped Certificates in the aggregate, represent
the same pro rata portion of principal and interest on each such Mortgage
Loan, and a stripped bond or stripped coupon (as the case may be), treated as
an installment obligation or contingent payment obligation, as to the
remainder. Final regulations issued on December 28, 1992 regarding original
issue discount on stripped obligations make the foregoing interpretations
less likely to be applicable. The preamble to those regulations states that
they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped
bond or stripped coupon is de minimis, and solicits comments on appropriate
rules for aggregating stripped bonds and stripped coupons under Code Section
1286.
79
<PAGE>
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income
tax purposes.
FEDERAL INCOME TAX CONSEQUENCES FOR FASIT CERTIFICATES
If and to the extent set forth in the Prospectus Supplement relating to a
particular Series of Certificates, an election may be made to treat the
related Trust Fund or one or more segregated pools of assets therein as one
or more financial asset securitization investment trusts ("FASITs") within
the meaning of Code Section 860L(a). Qualification as a FASIT requires
ongoing compliance with certain conditions. With respect to each series of
FASIT Certificates, O'Melveny & Myers LLP, counsel to the Depositor, will
advise the Depositor that in the firm's opinion, assuming (i) the making of
such an election, (ii) compliance with the Pooling Agreement and (iii)
compliance with any changes in the law, including any amendments to the Code
or applicable Treasury Regulations thereunder, each FASIT Pool will qualify
as a FASIT. In such case, the Regular Certificates will be considered to be
"regular interests" in the FASIT and will be treated for federal income tax
purposes as if they were newly originated debt instruments, and the Residual
Certificate will be considered the "ownership interest" in the FASIT Pool.
The Prospectus Supplement for each series of Certificates will indicate
whether one or more FASIT elections will be made with respect to the related
Trust Fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury Regulations have as yet been issued detailing
the circumstances under which a FASIT election may be made or the
consequences of such an election. If a FASIT election is made with respect to
any Trust Fund or as to any segregated pool of assets therein, the related
Prospectus Supplement will describe the Federal income tax consequences of
such election.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped
Certificateholder at any time during such year, such information (prepared on
the basis described above) as the Trustee deems to be necessary or desirable
to enable such Certificateholders to prepare their federal income tax
returns. Such information will include the amount of original issue discount
accrued on Certificates held by persons other than Certificateholders
exempted from the reporting requirements. The amounts required to be reported
by the Trustee may not be equal to the proper amount of original issue
discount required to be reported as taxable income by a Certificateholder,
other than an original Certificateholder that purchased at the issue price.
In particular, in the case of Stripped Certificates, unless provided
otherwise in the applicable Prospectus Supplement, such reporting will be
based upon a representative initial offering price of each class of Stripped
Certificates. The Trustee will also file such original issue discount
information with the Service. If a Certificateholder fails to supply an
accurate taxpayer identification number or if the Secretary of the Treasury
determines that a Certificateholder has not reported all interest and
dividend income required to be shown on his federal income tax return, 31%
backup withholding may be required in respect of any reportable payments, as
described above under "Material Federal Income Tax Consequences for REMIC
Certificates--Backup Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue
discount paid by the person required to withhold tax under Code Section 1441
or 1442 to nonresident aliens, foreign corporations, or other Non-U.S.
Persons generally will be subject to 30% United States withholding tax, or
such lower rate as may be provided for interest by an applicable tax treaty.
Accrued original issue discount recognized by the Standard Certificateholder
or Stripped Certificateholder on original issue discount recognized by the
Standard Certificateholder or Stripped Certificateholders on the sale or
exchange of such a Certificate also will be subject to federal income tax at
the same rate.
80
<PAGE>
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Material Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences", potential investors should consider the
state and local tax consequences of the acquisition, ownership, and
disposition of the Offered Certificates. State tax law may differ
substantially from the corresponding federal law, and the discussion above
does not purport to describe any aspect of the tax laws of any state or other
jurisdiction. Therefore, prospective investors should consult their own tax
advisors with respect to the various tax consequences of investments in the
Offered Certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA
("ERISA Plans") and prohibits certain transactions between ERISA Plans and
persons who are "parties in interest" (as defined under ERISA) with respect
to assets of such Plans. Section 4975 of the Code prohibits a similar set of
transactions between certain plans ("Code Plans," and together with ERISA
Plans, "Plans") and persons who are "disqualified persons" (as defined in the
Code) with respect to Code Plans. Certain employee benefit plans, such as
governmental plans and church plans (if no election has been made under
Section 410(d) of the Code) are not subject to the requirements of ERISA or
Section 4975 of the Code, and assets of such plans may be invested in
Certificates, subject to the provisions of other applicable federal and state
law. Any such governmental or church plan which is qualified under Section
401(a) of the Code and exempt from taxation under Section 501(a) of the Code
is, however, subject to the prohibited transaction rules set forth in Section
503 of the Code. Investments by ERISA Plans are subject to ERISA's general
fiduciary requirements, including the requirement of investment prudence and
diversification and the requirement that investments be made in accordance
with the documents governing the ERISA Plan. Before investing in a
Certificate, an ERISA Plan fiduciary should consider, among other factors,
whether to do so is appropriate in view of the overall investment policy and
liquidity needs of the ERISA Plan. Such fiduciary should especially consider
the sensitivity of the investments to the rate of principal payments
(including prepayments) on the Mortgage Loans, as discussed in the Prospectus
Supplement related to a Series.
PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibit parties in
interest with respect to ERISA Plans and disqualified persons with respect to
the Code Plans from engaging in certain transactions involving such Plans or
"plan assets" of such Plans, unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Code and Sections 502(i) and
502(l) of ERISA provide for the imposition of excise taxes and civil
penalties on certain persons that engage or participate in such prohibited
transactions. The Depositor, the Underwriter, the Master Servicer, the
Special Servicer, if any, or the Trustee or certain affiliates thereof may be
considered or may become parties in interest or disqualified persons with
respect to a Plan. If so, the acquisition or holding of Certificates by, on
behalf of or with "plan assets" of such Plan may be considered to give rise
to a "prohibited transaction" within the meaning of ERISA and/or Section 4975
of the Code, unless an administrative exemption described below or some other
exemption is available.
Further, if the underlying assets included in a Trust Fund were deemed to
constitute "plan assets," certain transactions involved in the operation of
the Trust Fund may be deemed to constitute prohibited transactions under
ERISA and/or the Code. Neither ERISA nor Section 4975 of the Code defines the
term "plan assets."
Special caution should be exercised before assets of a Plan are used to
purchase a Certificate if, with respect to such assets, the Depositor, the
Underwriter, the Master Servicer, the Special Servicer, if any, or
81
<PAGE>
the Trustee or an affiliate thereof either (a) has discretionary authority or
control with respect to the investment or management of such assets,
including the purchasing or sale of securities or other property, or (b) has
authority or responsibility to give, or regularly gives, investment advice
with respect to such assets pursuant to an agreement or understanding that
such advice will serve as a primary basis for investment decisions with
respect to such assets and that such advice will be based on the particular
needs of the Plan.
The U.S. Department of Labor (the "Department") has issued regulations
(the "Plan Asset Regulations") concerning whether a Plan's assets will be
considered to include an undivided interest in each of the underlying assets
of an entity (such as the Trust Fund) for purposes of the general fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions
of ERISA and Section 4975 of the Code, if the Plan acquires an "equity
interest" (such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an undivided interest in
each of the underlying assets of the Trust Fund. However, it cannot be
predicted in advance, nor can there be a continuing assurance whether such
exceptions may be applicable, because of the factual nature of certain of the
rules set forth in the Regulations. For example, one of the exceptions in the
Plan Asset Regulations states that the underlying assets of an entity will
not be considered "plan assets" if less than 25% of the value of each class
of equity interests is held by "Benefit Plan Investors," which are defined as
ERISA Plans, Code Plans, individual retirement accounts and employee benefit
plans not subject to ERISA (for example, governmental plans). This exemption
is tested immediately after each acquisition of an equity interest in the
entity whether upon initial issuance or in the secondary market. Absent any
restricrtions on purchase or transfer, it cannot be assured that benefit plan
investors will own less than 25% of each class of Certificates.
Pursuant to the Plan Asset Regulations, if the assets of the Trust Fund
were deemed to be "plan assets" by reason of the investment of assets of a
Plan in any Certificates, the "plan assets" of such Plan would include an
undivided interest in the Mortgage Loans, the mortgages underlying the
Mortgage Loans and any other assets held in the Trust Fund. Therefore,
because the Mortgage Loans and other assets held in the Trust Fund may be
deemed to be "plan assets" of each Plan that purchases Certificates, in the
absence of an exemption, the purchase, sale or holding of Certificates of any
Series or Class by or with the assets of a Plan could result in a prohibited
transaction and the imposition of civil penalties or excise taxes. Depending
on the relevant facts and circumstances, certain prohibited transaction
exemptions may apply to the purchase, sale or holding of Certificates of any
Series or Class by a Plan--for example, Prohibited Transaction Class
Exemption ("PTCE") 95-60, which exempts certain transactions between
insurance company general accounts and parties in interest; PTCE 91-38, which
exempts certain transactions between bank collective investment funds and
parties in interest; PTCE 90-1, which exempts certain transactions between
insurance company pooled separate accounts and parties in interest; or PTCE
84-14, which exempts certain transactions effected on behalf of a Plan by a
"qualified professional asset manager."
There can be no assurance that any of these exemptions will apply with
respect to any Plan's investment in any Certificates or, even if an exemption
were deemed to apply, that any exemption would apply to all prohibited
transactions that may occur in connection with such investment. Also, the
Department has issued individual administrative exemptions from application
of certain prohibited transaction restrictions of ERISA and the Code to most
underwriters of mortgage-backed securities (each, an "Underwriter's
Exemption"). Such an Underwriter's Exemption can only apply to
mortgage-backed securities which, among other conditions, are sold in an
offering with respect to which such an underwriter serves as the sole or a
managing underwriter, or as a selling or placement agent. If such an
Underwriter's Exemption might be applicable to a Series of Certificates, the
related Prospectus Supplement will refer to such possibility. Further, the
related Prospectus Supplement may provide that certain Classes or Series of
Certificates may not be purchased by, or transferred to, Plans or may only be
purchased by, or transferred to, an insurance company for its general account
under circumstances that would not result in a prohibited transaction.
82
<PAGE>
ANY FIDUCIARY OR OTHER PLAN INVESTOR WHO PROPOSES TO INVEST "PLAN ASSETS"
OF A PLAN IN CERTIFICATES OF ANY SERIES OR CLASS SHOULD CONSULT WITH ITS
COUNSEL WITH RESPECT TO THE POTENTIAL CONSEQUENCES UNDER ERISA AND SECTION
4975 OF THE CODE OF ANY SUCH ACQUISITION AND OWNERSHIP OF SUCH CERTIFICATES.
UNRELATED BUSINESS TAXABLE INCOME-RESIDUAL INTERESTS
The purchase of a Certificate evidencing an interest in the Residual
Interest in a Series that is treated as a REMIC by any employee benefit or
other plan that is exempt from taxation under Code Section 501(a), including
most varieties of Plans, may give rise to "unrelated business taxable income"
as described in Code Sections 511-515 and 860E. Further, prior to the
purchase of an interest in a Residual Interest, a prospective transferee may
be required to provide an affidavit to a transferor that it is not, nor is it
purchasing an interest in a Residual Interest on behalf of, a "Disqualified
Organization," which term as defined above includes certain tax-exempt
entities not subject to Code Section 511, such as certain governmental plans,
as discussed above under "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation
of Holders of Residual Certificates" and "--Restrictions on Ownership and
Transfer of Residual Certificates."
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES IMPOSED UPON
PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT
THAT INDIVIDUALS RESPONSIBLE FOR INVESTMENT DECISIONS WITH RESPECT TO ERISA
PLANS AND CODE PLANS CONSULT WITH THEIR COUNSEL REGARDING THE CONSEQUENCES
UNDER ERISA AND/OR THE CODE OF THEIR ACQUISITION AND OWNERSHIP OF
CERTIFICATES.
THE SALE OF CERTIFICATES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY THE
DEPOSITOR, THE APPLICABLE UNDERWRITER OR ANY OTHER SERVICE PROVIDER WITH
RESPECT TO THE CERTIFICATES, SUCH AS THE TRUSTEE, THE MASTER SERVICER AND THE
SPECIAL SERVICER, IF ANY, THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR
PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY
PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related Prospectus Supplement. The
appropriate characterization of those Certificates not qualifying as
"mortgage related securities" ("Non-SMMEA Certificates") under various legal
investment restriction, and thus the ability of investors subject to these
restrictions to purchase such Certificates, may be subject to significant
interpretive uncertainties. Accordingly, investors whose investment authority
is subject to legal restrictions should consult their own legal advisors to
determine whether and to what extent the Non-SMMEA Certificates constitute
legal investments for them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies, (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators as specified in SMMEA and (iii)
are part of a series evidencing interests in a Trust Fund consisting of
mortgage loans each of which is secured by a first lien on (a) a single
parcel of real estate on which is located a residential and/or mixed
residential and commercial structure or (b) one or more parcels of real
estate upon which are located one or more commercial structures will be
"mortgage related securities" for purposes of SMMEA. As "mortgage related
securities," such classes will constitute legal investments, for persons,
trusts, corporations, partnerships, associations, business trusts and
business entities (including depository institutions, insurance companies,
trustees and pension funds) created pursuant to or existing under the laws of
the United States or of any state (including the District of Columbia and
Puerto Rico) whose authorized investments are subject to state regulation, to
the same extent that obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities under applicable law. Under
SMMEA, a number of states enacted legislation on or prior to the October 3,
1991 cut-off for such enactments limiting to various extends the ability of
certain entities (in particular, insurance companies) to invest in "mortgage
related securities," secured by liens on residential, or mixed residential
and commercial properties, in most cases by requiring the affected
83
<PAGE>
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement
Act of 1994, states are authorized to enact legislation, on or before
September 23, 2001, prohibiting or restricting the purchase, holding or
investment by state regulated entities in certificates satisfying the rating
and qualified Originator requirements for "mortgage related securities," but
evidencing interests in a Trust Fund consisting, in whole or in part, of
first liens on one or more parcels of real estate upon which are located one
or more commercial structures. Accordingly, the investors affected by such
legislation will be authorized to invest in Offered Certificates qualifying
as "mortgage related securities" only to the extent provided in such
legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, effective December 31, 1996, the Office of the Comptroller
of the Currency (the "OCC") has amended 12 C.F.R. Part 1 to authorize
national banks to purchase and sell for their own account, without limitation
as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards in 12 C.F.R. Section 1.5 concerning
"safety and soundness" and retention of credit information), certain "Type IV
securities," defined in 12 C.F.R. Section 1.2(1) to include certain
"commercial mortgage-related securities" and "residential mortgage-related
securities." As so defined, "commercial mortgage-related security" and
"residential mortgage-related security" mean, in relevant part, "mortgage
related security" within the meaning of SMMEA, provided that, in the case of
a "commercial mortgage-related security," it "represents ownership of a
promissory note or certificate of interest or participation that is directly
secured by a first lien on one or more parcels of real estate upon which one
or more commercial structures are located and that is fully secured by
interests in a pool of loans to numerous obligors." In the absence of any
rule or administrative interpretation by the OCC defining the term "numerous
obligors," no representation is made as to whether any class of Certificates
will qualify as "commercial mortgage-related securities," and thus as "Type
IV securities," for investment by national banks. federal credit unions
should review NCUA Letter to Credit Unions No. 96, as modified by Letter to
Credit Unions No. 108, which includes guidelines to assist federal credit
unions in making investment decisions for mortgage related securities. The
NCUA has adopted rules, codified as 12 C.F.R. Section Section 703.5(f)-(k),
which prohibit federal credit unions from investing in certain mortgage
related securities (including securities such as certain classes of the
Offered Certificates), except under limited circumstances. Effective January
1, 1998, the NCUA has amended its rules governing investments by federal
credit unions at 12 C.F.R. Part 703; the revised rules will permit
investments in "mortgage related securities" under certain limited
circumstances, but will prohibit investments in stripped mortgage related
securities, residual interests in mortgage related securities, and commercial
mortgage related securities, unless the credit union has obtained written
approval from the NCUA to participate in the "investment pilot program"
described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as revised April 15, 1994 (the "Policy
Statement") of the Federal Financial Institutions Examination Council (the
"FFIEC"). The Policy Statement, which has been adopted by the Board of
Governors of the Federal Reserve System, the OCC, the Federal Depository
Insurance Company and the Office of Thrift Supervision, and by the NCUA (with
certain modifications), prohibits depository institutions from investing in
certain "high-risk mortgage securities" (including securities such as certain
classes of the Offered Certificates), except under limited circumstances, and
sets forth certain investment practices deemed to be unsuitable for regulated
institutions. On September 29, 1997, the FFEIC released for public comment a
proposed "Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1997 Statement"), which would replace the
Policy Statement. As proposed, the 1997 Statement would delete the specific
"high-risk mortgage securities" tests, and substitute general guidelines
which depository institutions should follow in managing risks (including
market, credit, liquidity, operational (transactional), and legal risks)
applicable to all securities (including mortgage pass-through securities and
mortgage-derivative products) used for investment purposes.
84
<PAGE>
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of
the Offered Certificates, as certain classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not
limited to, "prudent investor" provisions, percentage-of-assets limits,
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying," and, with regard to any class of
the Offered Certificates issued in book-entry form, provisions which may
restrict or prohibit investments in securities which are issued in book-entry
form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of any class of Offered Certificates for legal investment
purposes, financial institution regulatory purposes, or other purposes, or as
to the ability of particular investors to purchase any class of Offered
Certificates under applicable legal investment restrictions. These
uncertainties (and any unfavorable future determinations concerning legal
investment or financial institution regulatory characteristics of the Offered
Certificates) may adversely affect the liquidity of any class of Offered
Certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors
in determining whether and to what extent the Offered Certificates of any
class constitute legal investments or are subject to investment, capital or
other restrictions.
PLAN OF DISTRIBUTION
The Depositor may sell the Certificates offered hereby in Series either
directly or through underwriters. The related Prospectus Supplement or
Prospectus Supplements for each Series will describe the terms of the
offering for that Series and will state the public offering or purchase price
of each Class of Certificates of such Series, or the method by which such
price is to be determined, and the net proceeds to the Depositor from such
sale.
If the sale of any Certificates is made pursuant to an underwriting
agreement pursuant to which one or more underwriters agree to act in such
capacity, such Certificates will be acquired by such underwriters for their
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of
commitment therefor. Firm commitment underwriting and public reoffering by
underwriters may be done through underwriting syndicates or through one or
more firms acting alone.
The specific managing underwriter or underwriters, if any, with respect to
the offer and sale of a particular Series of Certificates will be set forth
on the cover of the Prospectus Supplement related to such Series and the
members of the underwriting syndicate, if any, will be named in such
Prospectus Supplement. The Prospectus Supplement will describe any discounts
and commissions to be allowed or paid by the Depositor to the underwriters,
any other items constituting underwriting compensation and any discounts and
commissions to be allowed or paid to the dealers. The obligations of the
underwriters will be subject to certain conditions precedent. The
underwriters with respect to a sale of any Class of Certificates will
generally be obligated to purchase all such Certificates if any are
purchased. Pursuant to each such underwriting agreement, the Depositor will
indemnify the related underwriters against certain civil liabilities,
including liabilities under the 1933 Act.
If any Certificates are offered other than through underwriters pursuant
to such underwriting agreements, the related Prospectus Supplement or
Prospectus Supplements will contain information regarding the terms of such
offering and any agreements to be entered into in connection with such
offering.
85
<PAGE>
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within
the meaning of the 1933 Act in connection with reoffers and sales by them of
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer and sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates offered hereby will be
passed upon for the Depositor by O'Melveny & Myers LLP, New York, New York,
and for the Underwriters as specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series of
Certificates and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related Series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any Class of Offered Certificates
that they shall have been rated not lower than investment grade, that is. in
one of the four highest categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates. the nature of the underlying mortgage
loans and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood
of principal prepayments by mortgagors or of the degree by which such
prepayments might differ from those originally anticipated. As a result,
certificateholders might suffer a lower than anticipated yield, and, in
addition. holders of stripped interest certificates in extreme cases might
fail to recoup the initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently
of any other security, rating.
86
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
DEFINITIONS PAGE
1933 Act................................................................... 2
1986 Act.................................................................. 57
1997 Statement............................................................ 84
ACMs...................................................................... 49
ADA....................................................................... 54
adequate protection....................................................... 45
Agreement.............................................................. 9, 19
Anti-Deficiency Legislation............................................... 49
Bankruptcy Code........................................................... 43
CERCLA................................................................ 18, 48
Certificateholders........................................................ 20
Certificates............................................................... 7
Classes.................................................................... 1
Closing Date.............................................................. 26
Code.................................................................. 11, 55
Code Plans................................................................ 81
Collection Account..................................................... 8, 21
Commission................................................................. 2
Compound Interest Certificates............................................ 58
Credit Enhancement..................................................... 9, 36
Credit Enhancement Limitations............................................ 13
Cut-off Date.......................................................... 10, 21
Department................................................................ 82
Depositor.................................................................. 1
Disqualified Organization............................................. 68, 83
Disqualified Organizations................................................ 69
Distribution Account................................................... 8, 21
Distribution Date..................................................... 10, 20
EPA....................................................................... 50
ERISA................................................................. 11, 81
ERISA Plans............................................................... 81
Escrow Account............................................................ 29
Escrow Payments........................................................... 29
Event of Default.......................................................... 34
excess servicing.......................................................... 76
Fannie Mae................................................................ 20
FASIT..................................................................... 55
FASITs.................................................................... 80
FFIEC..................................................................... 84
FHLMC..................................................................... 20
Forfeiture Laws........................................................... 54
Form 8-K.................................................................. 26
Garn-St Germain Act....................................................... 50
GNMA...................................................................... 20
Hazardous Materials....................................................... 49
Installment Contracts..................................................... 25
Lead Paint Act............................................................ 50
Lender Liability Act...................................................... 48
Mark to Market Regulations................................................ 70
Master Servicer........................................................... 29
Master Servicer Remittance Date........................................... 21
87
<PAGE>
MBS....................................................................... 66
Modifications, Waivers and Amendments..................................... 30
Mortgage.................................................................. 25
Mortgage Loan Groups...................................................... 26
Mortgage Loan Schedule.................................................... 26
Mortgage Loan Seller...................................................... 27
Mortgage Loans............................................................. 1
Mortgage Pool.............................................................. 1
Mortgaged Property..................................................... 7, 25
mortgagee................................................................. 40
mortgagor................................................................. 40
NCUN...................................................................... 52
Non-SMMEA Certificates.................................................... 83
Note...................................................................... 25
OCC....................................................................... 84
Offered Certificates....................................................... 1
OID Regulations........................................................... 58
Original Issue Discount................................................... 62
Pass-Through Rate.......................................................... 2
Permitted Investments..................................................... 22
Plan Asset Regulations.................................................... 82
Plans..................................................................... 81
Policy Statement.......................................................... 84
Prepayment Assumption..................................................... 59
Property Protection Expenses.............................................. 21
PTCE...................................................................... 82
Rating Agency......................................................... 11, 19
RATINGS................................................................... 11
reasonably equivalent value............................................... 43
Registration Statement..................................................... 2
Regular Certificateholder................................................. 58
Regular Certificates.............................................. 10, 55, 73
Regular Interests......................................................... 10
REITs..................................................................... 26
Relief Act................................................................ 51
REMIC...................................................................... 1
REMIC Regulations......................................................... 55
REO Account............................................................... 21
Reserve Account........................................................... 19
Reserve Fund.............................................................. 37
Residual Certificateholders............................................... 64
Residual Certificates..................................................... 10
Residual Interests........................................................ 10
Rights of Redemption...................................................... 43
SBJPA of 1996............................................................. 56
Senior Certificates....................................................... 36
Series..................................................................... 1
Service................................................................... 57
Servicing Fee............................................................. 31
SMMEA..................................................................... 83
S&P....................................................................... 22
Special Servicer........................................................... 7
Special Servicing Fee..................................................... 32
Specially Serviced Mortgage Loans......................................... 29
88
<PAGE>
Standard Certificateholder................................................ 74
Standard Certificates..................................................... 74
Startup Day............................................................... 56
Stripped Certificateholder................................................ 78
Stripped Certificates......................................... 74, 75, 76, 77
Subordinate Certificates.................................................. 36
super-premium............................................................. 59
thrift institutions....................................................... 67
Title V................................................................... 52
Title VIII................................................................ 52
Treasury.................................................................. 55
Trust Fund................................................................. 1
Trustee................................................................ 7, 24
UCC....................................................................... 40
Underwriter's Exemption................................................... 82
USTs...................................................................... 50
Voting Rights............................................................. 18
89
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS AND
PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION OR
REPRESENTATIONS. THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS AN OFFER TO
SELL ONLY THE CERTIFICATES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND
IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN
THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS CURRENT ONLY AS OF ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
- -----------------------------------------------------
Important Notice about Information Presented in this
Prospectus Supplement and the Accompanying
Prospectus .......................................... S-3
Where You Can Find More Information .................. S-3
Summary .............................................. S-5
Risk Factors ......................................... S-19
Description of the Mortgage Pool ..................... S-36
Prudential Securities Secured Financing Corporation . S-57
Prudential Securities Credit Corp. ................... S-57
Mortgage Loan Sellers ................................ S-57
Description of the Certificates ...................... S-61
Yield and Maturity Considerations .................... S-73
Master Servicer and Special Servicer ................. S-79
The Pooling and Servicing Agreement .................. S-79
Material Federal Income Tax Consequences ............. S-97
ERISA Considerations ................................. S-99
Legal Investment ..................................... S-102
Plan of Distribution ................................. S-102
Use of Proceeds ...................................... S-103
Legal Matters ........................................ S-103
Ratings .............................................. S-103
Index of Terms for Prospectus Supplement ............. S-105
Annex A--Mortgage Loan Characteristics ............... A-1
Annex B--Additional Step Loan and Interest Only Loan
Characteristics ..................................... B-1
Annex C--Affiliated Borrowers ........................ C-1
Annex D--Form of Statement to Certificateholders .... D-1
Annex E--Exceptions to Mortgage Loan Representations
and Warranties ...................................... E-1
Annex F--Structural and Collateral Term Sheet and Top
Ten Loan Descriptions ............................... F-1
PROSPECTUS
- -----------------------------------------------------
Prospectus Supplement ................................ 2
Additional Information ............................... 2
Incorporation of Certain Information by Reference .... 2
Reports .............................................. 3
Summary of Prospectus ................................ 7
Risk Factors ......................................... 12
The Depositor ........................................ 19
Use of Proceeds ...................................... 19
Description of the Certificates ...................... 19
The Mortgage Pools ................................... 25
Servicing of the Mortgage Loans ...................... 29
Credit Enhancement ................................... 36
Certain Legal Aspects of the Mortgage Loans ......... 39
Material Federal Income Tax Consequences ............. 55
State and Other Tax Considerations ................... 81
ERISA Considerations ................................. 81
Legal Investment ..................................... 83
Plan of Distribution ................................. 85
Legal Matters ........................................ 86
Financial Information ................................ 86
Rating ............................................... 86
Index of Significant Definitions ..................... 87
</TABLE>
$771,491,000
COMMERCIAL
MORTGAGE
PASS-THROUGH
CERTIFICATES,
SERIES 1999-C2
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
PROSPECTUS SUPPLEMENT
PRUDENTIAL SECURITIES
GREENWICH NATWEST
July 22, 1999
