<PAGE>
Filed Pursuant to Rule 424B(5)
Registration File No.: 333-64765
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS
IS DELIVERED. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 7, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 29, 1998)
$776,136,000
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 18 classes of certificates. Only the classes described in the
following table are offered by this prospectus supplement. An additional 11
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 241 fixed rate
mortgage loans secured by first liens on 269 commercial and multifamily
residential properties.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CERTIFICATE
INITIAL CLASS RATING (6)
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 ......... $230,000,000 (2)% June 15, 2008 5.692 Aaa AAA
Class A-2 ......... $399,650,000 (2)% April 15, 2009 9.379 Aaa AAA
Class B ........... $ 41,540,000 (3)% April 15, 2009 9.711 Aa2 AA+
Class C ........... $ 45,913,000 (3)% May 15, 2009 9.775 A2 A
Class D ........... $ 13,118,000 (3)% June 15, 2009 9.850 A3 A-
Class E ........... $ 30,610,000 (4)% June 15, 2009 9.878 Baa2 BBB
Class F ........... $ 15,305,000 (5)% April 15, 2010 9.988 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, Class C and Class D Certificates
accrue interest at the Weighted Average Net Mortgage Rate, less %, %
and %, respectively.
(4) Initial Pass-Through Rate. The Class E Certificates accrue interest at
the Weighted Average Net Mortgage Rate, less %.
(5) Initial Pass-Through Rate. The Class F Certificates accrue interest at
the Weighted Average Net Mortgage Rate, less %.
(6) 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 , 1999
<PAGE>
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Commercial Mortgage Pass-Through Certificates, Series 1999-C2
Geographic Overview of Mortgage Pool
IDAHO
5 properties
$19,258,284
2.20% of total
WYOMING
1 property
$2,796,884
0.32% of total
MISSOURI
2 properties
$8,969,969
1.03% of total
IOWA
1 property
$6,367,553
0.73% of total
ILLINOIS
1 property
$1,086,058
0.12% of total
WISCONSIN
2 properties
$4,815,665
0.55% of total
MICHIGAN
6 properties
$9,284,172
1.06% of total
INDIANA
13 properties
$23,135,155
2.65% of total
OHIO
20 properties
$35,187,894
4.02% of total
PENNSYLVANIA
17 properties
$46,595,319
5.33% of total
NEW YORK
20 properties
$81,923,831
9.37% of total
NEW HAMPSHIRE
4 properties
$23,654,485
2.70% of total
MAINE
3 properties
$2,622,128
0.30% of total
MASSACHUSETTS
7 properties
$26,861,061
3.07% of total
<PAGE>
CONNECTICUT
4 properties
$11,648,615
1.33% of total
NEW JERSEY
6 properties
$23,178,390
2.65% of total
DELAWARE
1 property
$1,150,115
0.13% of total
MARYLAND
7 properties
$35,022,379
4.00% of total
VIRGINIA
1 property
$1,795,528
0.21% of total
DISTRICT OF COLUMBIA
1 property
$2,278,281
0.26% of total
NORTH CAROLINA
3 properties
$17,758,904
2.03% of total
WEST VIRGINIA
1 property
$17,536,726
2.01% of total
SOUTH CAROLINA
1 property
$1,895,613
0.22% of total
GEORGIA
8 properties
$29,841,213
3.41% of total
TENNESSEE
5 properties
$11,558,426
1.32% of total
FLORIDA
25 properties
$49,151,322
5.62% of total
KENTUCKY
1 property
$1,496,807
0.17% of total
ALABAMA
4 properties
$4,426,527
0.51% of total
<PAGE>
LOUISIANA
4 properties
$13,981,438
1.60% of total
ARKANSAS
1 property
$6,469,716
0.74% of total
OKLAHOMA
2 properties
$3,706,926
0.42% of total
TEXAS
12 properties
$27,771,947
3.18% of total
KANSAS
4 properties
$9,643,469
1.10% of total
COLORADO
8 properties
$15,037,019
1.72% of total
ARIZONA
12 properties
$63,555,147
7.27% of total
UTAH
2 properties
$3,616,134
0.41% of total
HAWAII
1 property
$5,203,290
0.59% of total
CALIFORNIA
34 properties
$175,543,355
20.07% of total
NEVADA
8 properties
$23,589,552
2.70% of total
OREGON
3 properties
$5,815,946
0.67% of total
WASHINGTON
8 properties
$19,291,481
2.21% of total
[ ] (is less than or equal to) 1.00%
of Cut-off Date Balance
[ ] 1.01 - 5.00%
of Cut-off Date Balance
[ ] 5.01 - 10.00%
of Cut-off Date Balance
[ ] (greater than) 10.00%
of Cut-off Date Balance
PERCENT OF CUT-OFF DATE BALANCE BY PROPERTY TYPE
Office 14.19%
Hotel-Full Service 8.22%
Industrial 7.27%
Mixed Use 4.04%
Hotel-Limited Service 3.16%
Other 5.72%
Retail 31.51%
Housing Related 25.88%
<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
Changes in Mortgage Pool Characteristics ......... S-48
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-80
The Pooling and Servicing Agreement .............. S-80
Material Federal Income Tax Consequences ......... S-98
ERISA Considerations ............................. S-100
Legal Investment ................................. S-103
Plan of Distribution ............................. S-103
Use of Proceeds .................................. S-104
Legal Matters .................................... S-104
Ratings .......................................... S-104
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 $230,000,000 Aaa/AAA 26.30% 28.00%
CLASS A-2 $399,650,000 Aaa/AAA 45.70% 28.00%
CLASS B $ 41,540,000 Aa2/AA+ 4.75% 23.25%
CLASS C $ 45,913,000 A2/A 5.25% 18.00%
CLASS D $ 13,118,000 A3/A-- 1.50% 16.50%
CLASS E $ 30,610,000 Baa2/BBB 3.50% 13.00%
CLASS F $ 15,305,000 Baa3/BBB-- 1.75% 11.25%
Private Certificates (not offered hereby)
CLASS A-EC(2) $874,522,722 Aaa/AAAr N/A N/A
CLASS G $ 15,307,000 Ba1/BB+ 1.75% 9.50%
CLASS H $ 19,674,000 NR(3)/BB+ 2.25% 7.25%
CLASS J $ 6,559,000 NR(3)/BB 0.75% 6.50%
CLASS K $ 6,559,000 NR(3)/BB-- 0.75% 5.75%
CLASS L $ 17,491,000 NR(3)/B+ 2.00% 3.75%
CLASS M $ 4,373,000 NR(3)/B 0.50% 3.25%
CLASS N $ 8,746,000 B3/NR(3) 1.00% 2.25%
CLASS O $ 19,677,722 NR(3)/NR(3) 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) Rating not obtained by the Depositor from such Rating Agency.
The Class R-I and Class R-II 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 (2) 5.692 8/1999 - 6/2008
Class A-2 (2) 9.379 6/2008 - 4/2009
Class B (3) 9.711 4/2009 - 4/2009
Class C (3) 9.775 4/2009 - 5/2009
Class D (3) 9.850 5/2009 - 6/2009
Class E (4) 9.878 6/2009 - 6/2009
Class F (5) 9.988 6/2009 - 4/2010
Private Certificates (not offered hereby)
Class A-EC (6) 9.063 N/A
Class G 11.482 4/2010 - 4/2011
Class H 11.861 4/2011 - 7/2011
Class J 12.616 7/2011 - 10/2012
Class K 13.475 10/2012 - 5/2013
Class L 14.197 5/2013 - 3/2014
Class M 15.216 3/2014 - 4/2015
Class N 16.757 4/2015 - 5/2017
Class O 19.812 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 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 Pass-Through Rate for the Class B, Class C
and Class D Certificates will be a per annum rate equal to the Weighted
Average Net Mortgage Rate, less %, % and %, respectively.
(4) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate, less %.
(5) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate, less %.
(6) Initial Pass-Through Rate. The related Pass-Through Rate will be a per
annum rate equal to a fraction, (a) the numerator of which is the excess
of (i) the Weighted Average Net Mortgage Rate multiplied by the Class
A-EC Notional Balance over (ii) the weighted averages of the Pass-Through
Rates of the Class A-1, Class A-2, 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 multiplied by the sum of the Class A-1, Class
A-2, 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 Certificate Balances,
and (b) the denominator of which is the Class A-EC Notional Balance.
The Class R-I and Class R-II Certificates are not represented in this
table and are not offered hereby.
S-6
<PAGE>
GENERAL................ The Certificates will consist of 18 classes, 7 of
which will be the Offered Certificates and 11 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-II Certificates representing more than
a 50% Percentage Interest of the Class R-II
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 , 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 ........... April 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 and Class R-II
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 and Class A-EC
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-EC, Class R-I and Class R-II 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 of the holders of the Subordinate
Certificates to receive distributions of interest and
S-9
<PAGE>
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 and Class R-II 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 and Class R-II 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 two 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 and Class
R-II 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 and Class A-2
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.
99 of the mortgage loans, representing approximately
20.01% 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"). 47 of those mortgage
loans, representing approximately 10.38% 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 60.88% 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 7.10% 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); 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 ................................. $874,522,722
Number of Mortgage Loans ...................................... 241
Average Mortgage Loan Balance ................................. $ 3,628,725
Largest Mortgage Loan Balance ................................. $ 69,289,658
Smallest Mortgage Loan Balance ................................ $ 295,304
Weighted Average Mortgage Rate (Gross) ........................ 7.611%
Weighted Average Mortgage Rate (Net) .......................... 7.546%
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 ............................ 1.407
Range of DSCRs ................................................ 1.01x - 3.76x
Weighted Average LTV (Current) ................................ 69.67%
Range of LTVs (Current) ....................................... 37.09-96.56%
Weighted Average Balloon/ARD LTV .............................. 54.22%
Percentage of Cut-off Date Balance made up of:
Fully Amortizing Loans ....................................... 6.17%
Balloon Loans (including ARD Loans) .......................... 93.83%
</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................. 7 0.30%
$500,000- $999,999................. 26 2.38
$1,000,000- $1,999,999................. 71 11.96
$2,000,000- $2,999,999................. 40 11.17
$3,000,000- $3,999,999................. 32 12.69
$4,000,000- $4,999,999................. 25 12.90
$5,000,000- $5,999,999................. 15 9.54
$6,000,000- $6,999,999................. 6 4.54
$8,000,000- $8,999,999................. 4 3.87
$9,000,000- $9,999,999................. 4 4.30
$10,000,000-$11,999,999................. 6 7.44
$12,000,000-$14,999,999................. 1 1.41
$15,000,000-$19,999,999................. 1 2.01
$20,000,000-$39,999,999................. 2 7.55
$40,000,000-$69,289,658................. 1 7.92
-- ------
Total .................................. 241 100.00%
=== ======
</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 1.22
1.21-1.25 ......... 25 11.85
1.26-1.30 ......... 51 24.54
1.31-1.35 ......... 43 19.00
1.36-1.40 ......... 29 8.96
1.41-1.45 ......... 23 5.21
1.46-1.50 ......... 17 5.32
1.51-1.55 ......... 11 4.81
1.56-1.60 ......... 11 2.81
1.61-1.65 ......... 7 2.48
1.66-1.70 ......... 2 8.07
1.71-1.75 ......... 3 0.76
1.76-1.80 ......... 3 1.05
1.91-1.95 ......... 2 0.32
1.96-2.00 ......... 3 0.57
2.01-2.50 ......... 4 1.28
2.51-3.76 ......... 1 0.45
-- ------
Total ............. 241 100.00%
=== ======
</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% ......... 3 0.54%
40.01%-45.00% ......... 4 1.31
45.01%-50.00% ......... 4 0.79
50.01%-55.00% ......... 10 2.98
55.01%-60.00% ......... 19 12.52
60.01%-65.00% ......... 27 8.75
65.01%-70.00% ......... 50 17.13
70.01%-75.00% ......... 67 26.12
75.01%-80.00% ......... 54 28.53
80.01%-85.00% ......... 1 0.44
85.01%-95.00% ......... 1 0.16
95.01%-96.56% ......... 1 0.74
-- ------
Total ................. 241 100.00%
=== ======
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CUT-OFF DATE
PROPERTY TYPE MORTGAGED PROPERTIES BALANCE
- -------------------------------------- ---------------------- -------------
<S> <C> <C>
Retail--Anchored ................... 20 16.63%
Retail--Unanchored ................. 34 10.05
Retail--Single Tenant .............. 17 3.95
Retail--Shadow Anchored ............ 2 0.88
-- ------
Retail Subtotal .................. 73 31.51
Multifamily ........................ 76 22.24
Manufactured Housing ............... 16 3.64
-- ------
Housing Related Subtotal ......... 92 25.88
Office ............................. 28 14.19
Hotel--Full Service ................ 16 8.22
Industrial ......................... 19 7.27
Mixed Use .......................... 15 4.04
Hotel--Limited Service ............. 9 3.16
Nursing Home ....................... 8 3.15
Self-Storage ....................... 6 1.36
Assisted Living Facility ........... 2 0.80
Congregate Care .................... 1 0.41
-- ------
Total .............................. 269 100.00%
=== ======
</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 8.24
2007 .......... 3 0.62
2008 .......... 75 31.15
2009 .......... 115 43.03
2011 .......... 9 4.42
2012 .......... 1 0.17
2013 .......... 9 3.35
2014 .......... 1 0.07
2016 .......... 1 0.29
2017 .......... 1 0.49
2018 .......... 9 2.37
2019 .......... 8 1.86
2020 .......... 2 1.22
2023 .......... 2 1.40
--- ------
Total ......... 241 100.00%
=== ======
</TABLE>
57 of the mortgage loans, representing approximately
19.01% 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
2.47% 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
65.17% 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
2.12% 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
2.70% 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
7.92% 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.
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
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 86.1% 86.2% 85.9% 82.5%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 1.3 1.3 1.3 1.4
4.00% to 4.99% ................... 0.6 0.6 0.6 0.6
3.00% to 3.99% ................... 0.5 0.5 0.5 0.5
2.00% to 2.99% ................... 0.5 0.5 0.5 0.5
1.00% to 1.99% ................... 10.2 10.2 10.4 13.4
0.00% to 0.99% ................... 0.8 0.8 0.8 0.0
Total Yield Maintenance ........... 13.9 13.8 14.1 16.3
Total of Yield Maintenance,
Lockout/Defeasance ............... 100.0 100.0 100.0 98.9
Percentage Premium:
5.00% or greater ................. 0.0 0.0 0.0 0.0
4.00% to 4.99% ................... 0.0 0.0 0.0 0.0
3.00% to 3.99% ................... 0.0 0.0 0.0 0.4
2.00% to 2.99% ................... 0.0 0.0 0.0 0.0
1.00% to 1.99% ................... 0.0 0.0 0.0 0.0
Total Percentage Premium .......... 0.0 0.0 0.0 0.4
Open (no Call Protection) ......... 0.0 0.0 0.0 0.8
Total All Categories .............. 100.0 100.0 100.0 100.0
Current Pool Balance ($MM)......... 874.5 863.2 850.8 837.3
Pool Factor(3) .................... 100.0 98.7 97.3 95.7
<CAPTION>
07/03 07/04 07/05 07/06 07/07 07/08
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 79.2% 70.7% 70.3% 75.8% 73.7% 65.3%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 1.4 1.3 1.3 1.2 1.8 1.9
4.00% to 4.99% ................... 0.6 0.6 0.6 0.7 0.7 0.7
3.00% to 3.99% ................... 1.2 1.4 1.4 0.8 0.3 0.1
2.00% to 2.99% ................... 0.5 0.5 0.5 0.6 0.0 0.0
1.00% to 1.99% ................... 16.5 16.4 16.5 19.4 20.6 14.3
0.00% to 0.99% ................... 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance ........... 20.2 20.2 20.3 22.6 23.4 16.9
Total of Yield Maintenance,
Lockout/Defeasance ............... 99.4 91.0 90.6 98.4 97.1 82.2
Percentage Premium:
5.00% or greater ................. 0.1 0.5 0.0 0.5 0.3 0.4
4.00% to 4.99% ................... 0.0 0.1 0.5 0.0 0.0 0.0
3.00% to 3.99% ................... 0.0 0.0 0.5 0.6 0.5 0.0
2.00% to 2.99% ................... 0.4 0.0 0.0 0.5 1.2 0.0
1.00% to 1.99% ................... 0.0 8.4 0.0 0.0 0.5 0.6
Total Percentage Premium .......... 0.5 9.0 1.0 1.6 2.5 1.0
Open (no Call Protection) ......... 0.2 0.0 8.5 0.0 0.4 16.8
Total All Categories .............. 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($MM)......... 816.4 799.7 782.9 697.4 677.6 617.4
Pool Factor(3) .................... 93.4 91.4 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 2.12% 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
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 67.1% 67.8% 59.6% 59.5%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 3.2 3.0 3.0 2.8
4.00% to 4.99% ................... 4.2 4.3 4.1 4.2
3.00% to 3.99% ................... 0.3 0.3 0.4 0.3
2.00% to 2.99% ................... 0.0 0.0 0.0 0.0
1.00% to 1.99% ................... 20.6 20.1 20.2 17.5
0.00% to 0.99% ................... 0.0 0.0 0.0 0.0
Total Yield Maintenance ........... 28.3 27.7 27.6 24.8
Total of Yield Maintenance,
Lockout/Defeasance ............... 95.4 95.5 87.2 84.4
Percentage Premium:
5.00% or greater ................. 2.5 0.0 0.0 0.0
4.00% to 4.99% ................... 2.1 2.4 0.0 0.0
3.00% to 3.99% ................... 0.0 2.1 3.4 0.0
2.00% to 2.99% ................... 0.0 0.0 3.1 3.3
1.00% to 1.99% ................... 0.0 0.0 0.0 3.2
Total Percentage Premium .......... 4.6 4.5 6.5 6.5
Open (no Call Protection) ......... 0.0 0.0 6.3 9.1
Total All Categories .............. 100.0 100.0 100.0 100.0
Current Pool Balance ($MM)......... 101.9 96.7 63.1 57.8
Pool Factor(3) .................... 11.6 11.1 7.2 6.6
<CAPTION>
07/13 07/14 07/15 07/16 07/17 07/18
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 42.2% 52.0% 53.6% 55.8% 59.5% 64.0%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 0.0 0.0 0.0 0.0 0.0 0.0
4.00% to 4.99% ................... 4.9 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................... 0.0 6.9 0.0 0.0 0.0 0.0
2.00% to 2.99% ................... 0.0 0.0 7.4 0.0 0.0 0.0
1.00% to 1.99% ................... 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
Total Yield Maintenance ........... 24.2 20.9 21.1 21.3 12.0 9.7
Total of Yield Maintenance,
Lockout/Defeasance ............... 66.4 72.9 74.7 77.0 71.5 73.7
Percentage Premium:
5.00% or greater ................. 2.7 4.0 0.0 0.0 0.0 0.0
4.00% to 4.99% ................... 0.0 3.0 4.2 0.0 0.0 0.0
3.00% to 3.99% ................... 0.0 0.0 0.0 4.4 0.0 0.0
2.00% to 2.99% ................... 0.0 0.0 0.0 0.0 4.6 0.0
1.00% to 1.99% ................... 6.2 5.2 5.5 6.0 6.5 4.9
Total Percentage Premium .......... 8.9 12.2 9.7 10.3 11.2 4.9
Open (no Call Protection) ......... 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
Current Pool Balance ($MM)......... 47.0 31.5 27.4 23.0 18.7 14.3
Pool Factor(3) .................... 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 2.12% 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 MORTGAGE Your investment decision should take into
LOANS ARE SUBJECT TO SPECIAL RISKS account that commercial and multifamily
WHICH MAY ADVERSELY AFFECT YOUR mortgage lending generally involves risks
INVESTMENT. that are different than those faced in
connection with other types of 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 AND POOR The age, construction quality and design
CONSTRUCTION QUALITY MAY of a particular Mortgaged Property may
ADVERSELY AFFECT THE VALUE AND affect the occupancy level and the
CASH FLOW OF THE MORTGAGED occupancy fees that may be charged. Poorly
PROPERTIES. constructed Mortgaged Properties are
likely to require more expenditures for
maintenance, repairs and improvements.
Even 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 FOR Some of the Mortgaged Properties would
OTHER USES MAY SUBSTANTIALLY require substantial capital expenditures
LOWER THE LIQUIDATION VALUE to convert to an alternative use. If the
OF A MORTGAGED PROPERTY IN operation of any such Mortgaged Properties
CERTAIN CIRCUMSTANCES. becomes unprofitable due to, among other
factors, (1) competition, (2) age of the
improvements, (3) decreased demand, and
(4) 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, EXPIRATION We cannot assure you that (1) leases that
AND RELETTING OF LEASES ENTAIL expire can be renewed, (2) the space
RISKS WHICH MAY ADVERSELY AFFECT covered by leases that expire or are
YOUR INVESTMENT. terminated can be leased in a timely
manner at comparable rents or on
comparable terms or (3) the borrower will
have the cash or be 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 COMPETITIVE The Mortgaged Properties face competition
POSITION OF THE MORTGAGED from various sources, which could
PROPERTIES MAY ADVERSELY AFFECT adversely affect such properties' net
THEIR VALUE AND CASH FLOW. operating income and market values and,
therefore, your investment. Factors
affecting the competitive position of a
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
OPERATION OF performance of the respective property
THE MORTGAGED PROPERTIES. managers of the Mortgaged 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 ARE 25 of the mortgage loans, representing
SUBJECT TO CERTAIN RISKS approximately 11.39% of the Cut-off Date
WHICH COULD ADVERSELY Balance, are secured by hotel, motel and
AFFECT THEIR VALUE AND other similar properties. The value and
CASH FLOW. cash flow of 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 SUBJECT TO 28 of the mortgage loans, representing
CERTAIN RISKS WHICH COULD approximately 14.19% of the Cut-off Date
ADVERSELY AFFECTTHEIR VALUE Balance, are secured by office properties.
AND CASH FLOW. Significant factors affecting the value
of office 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 2.07% 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 SUBJECT 67 of the mortgage loans, representing
TO CERTAIN RISKS WHICH approximately 31.14% of the Cut-off Date
COULD ADVERSELY AFFECT THEIR Balance, are secured by retail properties.
VALUE AND CASH FLOW. The value and cash flow of retail
properties will 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) 16.63%
Unanchored 10.05%
Occupied by Single Tenant 3.58%
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.
S-22
<PAGE>
Continued growth of these alternative
retail outlets could adversely affect the
rents collectible at the retail properties
securing mortgage loans in the trust fund.
NURSING HOMES AND ASSISTED LIVING 11 of the mortgage loans, representing
PROPERTIES ARE SUBJECT TO CERTAIN approximately 4.36% of the Cut-off Date
RISKS WHICH COULD ADVERSELY AFFECT Balance, are secured by residential health
THEIR VALUE AND CASH FLOW. care facilities consisting of nursing
homes, assisted living facilities or
congregate care 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.
S-23
<PAGE>
MULTIFAMILY PROPERTIES ARE 76 of the mortgage loans, representing
SUBJECT TO CERTAIN RISKS approximately 22.24% of the Cut-off Date
WHICH COULD ADVERSELY Balance, are secured by multifamily
AFFECT THEIR VALUE AND properties. A large number of factors may
CASH FLOW. adversely affect the value and successful
operation of a multifamily property,
including:
(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 COMMUNITIES 16 of the mortgage loans, representing
ARE SUBJECT TO CERTAIN RISKS WHICH approximately 3.64% of the Cut-off Date
COULD ADVERSELY AFFECT THEIR VALUE Balance, are secured by manufactured
AND CASH FLOW. housing communities. Mortgage loans
secured by liens on 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 ARE TO 6 of the mortgage loans, representing
SUBJECT CERTAIN RISKS WHICH approximately 1.36% of the Cut-off Date
COULD ADVERSELY AFFECT THEIR Balance, are secured by self-storage
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
S-24
<PAGE>
(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).
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 ARE SUBJECT TO 19 of the mortgage loans, representing
CERTAIN RISKS WHICH COULD ADVERSELY approximately 7.27% of the Cut-off Date
AFFECT THEIR VALUE AND CASH FLOW. Balance, are secured by industrial
properties. Various factors may adversely
affect 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 CONTAIN Some of the tenant leases, including some
ATTORNMENT PROVISIONS OR ARE NOT of the anchor tenant leases, do not
SUBORDINATE TO MORTGAGE LIENS, contain provisions that require the
THE FORECLOSURE VALUE OF THE tenant to attorn to, or recognize as
MORTGAGED PROPERTY COULD landlord under the lease, a successor
BE ADVERSELY AFFECTED. owner of the property following
foreclosure. Some of the leases, including
some of the anchor tenant leases, may be
either subordinate to the liens created by
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 GUARANTEED. No mortgage loan is insured or guaranteed
by the 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
REMEDIES FOLLOWING are non-recourse loans. Therefore,
BORROWER DEFAULT. recourse generally 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
S-25
<PAGE>
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.
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 LOANS AND In general, a mortgage pool composed of
BORROWERS DECREASES DIVERSIFICATION loans having larger average balances
AND MAY INCREASE THE RISK OF YOUR and a smaller number of loans may be
INVESTMENT. subject to losses that are more severe
than other pools having smaller average
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 THE TRUST If the trust fund acquires a Mortgaged
FUND TO CERTAIN TAXES. Property pursuant to a foreclosure or
deed-in-lieu of 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 OF THE As principal payments or prepayments are
MORTGAGE POOL DUE TO PAYMENT made on various mortgage loans, you
PATTERNS MAY DECREASE may be subject to more concentrated risk
DIVERSIFICATION AND INCREASE due to the reduction in both the
THE RISK OF YOUR INVESTMENT. diversity of types of Mortgaged Properties
and the number of borrowers. Because
principal on the 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 ADVERSELY Repayments by borrowers and the market
AFFECT THE VALUE AND CASH FLOW values of the Mortgaged Properties
OF MORTGAGED PROPERTIES. could be affected by:
(1) economic conditions generally or in
the 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
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(5) other factors that are beyond the
control of the borrowers.
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 CONDITION OF The environmental condition of a Mortgaged
MORTGAGED PROPERTIES MAY Property may be affected by the operations
SUBJECT THE TRUST FUND TO of tenants and occupants. Current and
LIABILITY UNDER FEDERAL future environmental laws, ordinances or
AND STATE LAWS. regulations may impose additional
compliance obligations on business
operations that 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
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damage or threat was caused by a prior or
current owner or operator, if (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;
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<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 MORTGAGED In general, other than as disclosed herein
PROPERTY AS SECURITY FOR ANOTHER and in Annex A attached hereto, the
LOAN, THE VALUE OF THE MORTGAGED borrower is prohibited from obtaining
PROPERTY MAY BE ADVERSELY another loan secured by the Mortgaged
AFFECTED. Property without the mortgagee's approval.
See "Description of the Mortgage
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
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<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 TO ENFORCE The mortgage loans generally contain
DUE-ON-SALE, DUE-ON-ENCUMBRANCE AND "due-on-sale" and "due-on-encumbrance"
DEBT-ACCELERATION CLAUSES, ADVERSELY clauses that permit the mortgagee to
AFFECTING EXERCISE OF REMEDIES UPON accelerate the maturity of the mortgage
DEFAULTED MORTGAGE LOANS. loan if the related borrower sells or
otherwise transfers or encumbers the
related Mortgaged Property or its interest
in the Mortgaged 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
MAY ADVERSELY AFFECT PAYMENT OF legal entities. Most of the borrowers that
MORTGAGE LOANS. are legal entities are not bankruptcy
remote entities. 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
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<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 OCCURRENCE OF The rate and the timing of delinquencies
BORROWER DELINQUENCIES AND DEFAULTS and defaults on the mortgage loans will
MAY ADVERSELY AFFECT YOUR affect:
INVESTMENT.
(1) the amount of distributions on your
certificates;
(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
REPORTS ARE OF LIMITED should not rely on appraisals and
VALUE IN HELPING YOU MAKE engineering reports on Mortgaged
YOUR INVESTMENT DECISION. Properties as your only indicator of the
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
MAY ADVERSELY AFFECT THE VALUE AND subject to applicable building and zoning
INCOME OF MORTGAGED PROPERTY. ordinances and codes affecting the
construction and use of real 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 WITH A borrower may be required to incur costs
APPLICABLE LAWS AND REGULATIONS to comply with various existing and future
MAY ADVERSELY AFFECT A BORROWER'S federal, state or local laws and
ABILITY TO REPAY ITS MORTGAGE LOAN. regulations applicable to the related
Mortgaged Property. Such costs, or the
imposition of injunctive relief, penalties
or fines in connection with the borrower's
noncompliance, could negatively
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<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 ENFORCEABILITY OF Arrangements whereby certain of the
CROSS-COLLATERALIZATION ARRANGEMENTS mortgage loans are cross-collateralized
MAY HAVE AN ADVERSE EFFECT ON and cross-defaulted with one or more
RECOURSE IN THE EVENT OF A DEFAULT related mortgage loans could be challenged
ON A CROSS-COLLATERALIZED MORTGAGE as fraudulent conveyances by the creditors
LOAN. or the bankruptcy estate of any of the
related borrowers. Under federal and most
state fraudulent conveyance statutes, the
incurring of an obligation or the transfer
of property, including 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 A Certain of the Mortgaged Properties are
SINGLE-TENANT PROPERTY COULD leased wholly or in large part to a single
BE ADVERSELY AFFECTED BY A tenant or are wholly or in large
TENANT'S DEFAULT ON ITS LEASE. part owner-occupied. Any default by such a
tenant could adversely affect the related
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 BORROWER From time to time, there may be legal
MAY ADVERSELY AFFECT THE proceedings pending or threatened against
BORROWER'S ABILITY TO MEET the borrowers and their affiliates
ITS MORTGAGE LOAN OBLIGATIONS. relating to their business. We cannot
assure you that any such litigation will
not 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 SPECIAL The Master Servicer and Special
SERVICER MAY HAVE INTERESTS Servicer may purchase and own
DIFFERENT FROM THOSE OF THE Certificates, including the
TRUST FUND DUE TO THE MASTER Subordinate Certificates. Under such
SERVICER'S OR SPECIAL circumstances, it is possible that the
SERVICER'S PURCHASE OF interests of the Master Servicer or
CERTIFICATES AND SERVICING OF Special Servicer, as a holder of the
NON-TRUST FUND LOANS. Certificates of any class, may differ from
those of the Certificateholders of any
other class. The Master Servicer and
Special Servicer have advised the
Depositor that they intend to continue to
service existing mortgage loans and new
mortgage
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<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 REGARDING In deciding whether to purchase any
PRINCIPAL PAYMENTS AND PREPAYMENTS Offered Certificates, you should make an
MAY LEAD TO A LOWER THAN EXPECTED independent decision as to the appropriate
YIELD ON YOUR INVESTMENT. prepayment assumptions to be used. The
yield on the Offered Certificates of any
class will depend on, among 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 BALLOON Substantially all of the mortgage loans
PAYMENTS MAY ADVERSELY AFFECT YOUR are Balloon Loans. Balloon Loans involve
INVESTMENT. a greater risk of default than
self-amortizing loans. The ability of 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.
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<PAGE>
THE INEFFECTIVENESS OF RESTRICTIONS Restrictions on voluntary prepayments
ON VOLUNTARY PREPAYMENTS MAY contained in a promissory note (for
ADVERSELY AFFECT THE YIELD OF example, Lockout Periods, Yield Maintenance
YOUR INVESTMENT Charges and Prepayment Premiums) affect the
rate and timing of principal payments 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, SPECIAL The Master Servicer or the Trustee will
SERVICING FEES, OTHER SERVICING be entitled to receive interest on
EXPENSES AND ADDITIONAL TRUST FUND unreimbursed Advances at the Advance Rate.
EXPENSES MAY REDUCE THE AMOUNT OF Reimbursements will be made no ater than
DISTRIBUTIONS ON YOUR CERTIFICATES. the Distribution Date following the date
on which funds are available to reimburse
such Advance. The Master Servicer's or the
Trustee's 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
<PAGE>
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."
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<PAGE>
THE ABSENCE OF A SECONDARY There is currently no secondary market for
MARKET FOR YOUR CERTIFICATES the Offered Certificates. The Underwriters
MAY ADVERSELY AFFECT THE have told us that they currently intend to
LIQUIDITY OF YOUR INVESTMENT. buy and sell (that is, "make a market" in)
the Offered 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 MAY ADVERSELY year 2000 may disrupt the ability of
AFFECT YOUR INVESTMENT. computerized systems to 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 241 commercial and multifamily "whole"
mortgage loans (the "Mortgage Loans"). The Mortgage Loans have an aggregate
Cut-off Date Principal Balance of approximately $874,522,722 (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); 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>
MORTGAGED CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE
------------- ---------- -------
<S> <C> <C>
Retail--Anchored .................. 20 16.63
Retail--Unanchored ................ 34 10.05
Retail--Single Tenant ............. 17 3.95
Retail--Shadow Anchored ........... 2 0.88
-- ------
Retail Subtotal .................. 73 31.51
Multifamily ....................... 76 22.24
Manufacturered Housing ............ 16 3.64
-- ------
Housing Related Subtotal ......... 92 25.88
Office ............................ 28 14.19
Hotel--Full Service ............... 16 8.22
Industrial ........................ 19 7.27
Mixed Use ......................... 15 4.04
Hotel--Limited Service ............ 9 3.16
Nursing Home ...................... 8 3.15
Self-Storage ...................... 6 1.36
Assisted Living Facility .......... 2 0.80
Congregate Care ................... 1 0.41
-- ------
Total ............................. 269 100.00%
=== ======
</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.
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<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 14, 1999. The Transferor will purchase 99 and
22 Mortgage Loans (representing approximately 32.02% and 7.10% 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 60.88% 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 14, 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 Mortgage Properties,
representing approximately 5.94% 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 Mortgage Properties, 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 0.60%
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 7.31% 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 case unless each Rating Agency has
been notified of the intention to do so and each Rating Agency has indicated
that such
S-37
<PAGE>
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 M 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. 222 of the Mortgage Loans (the "Balloon
Loans"), representing approximately 93.83% 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 54.22%.
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.
57 of the Mortgage Loans, representing approximately 19.01% 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 2.47% 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 65.17% 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 2.12% 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 2.70% 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 7.92% 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.
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.
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 67.28%
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
S-39
<PAGE>
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 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 9 of the
Mortgage Loans, representing approximately 0.73% 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 borrwer, 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.
S-40
<PAGE>
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;
(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.
S-41
<PAGE>
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.
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.
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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.
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 7.92% of the Cut-off Date Balance. The ten largest individual
Mortgage Loans have Cut-off Date Principal Balances that represent in the
aggregate approximately 25.41% 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 21.65%
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 3.44% and 1.52% 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 7.92% of the Cut-off Date
Balance.
20 Mortgage Loans, representing approximately 5.51% 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 15.71% 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 20.07%
New York ............. 20 9.37%
Arizona .............. 12 7.27%
Florida .............. 25 5.62%
Pennsylvania ......... 17 5.33%
Ohio ................. 20 4.02%
</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;
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<PAGE>
(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;
(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 9.80%
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. 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.
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<PAGE>
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.
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 96 of the Mortgage Loans, representing
approximately 39.5% 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
S-45
<PAGE>
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.
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, replacement reserves, 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). 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.
S-46
<PAGE>
(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.
(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
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<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
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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 a REMIC
to fail to be a REMIC. In certain cases, the Mortgage Loans 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);
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(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
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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
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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
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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
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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)
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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
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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)
214-1000.
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.
47 of the Mortgage Loans, representing approximately 10.38% 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
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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 17.01% 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."
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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.
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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.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 18 classes, to be designated as the Class A-1,
Class A-2, Class A-EC, 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 and
Class R-II 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-EC 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-EC Notional Balance" as of any date is equal to the
sum of the Certificate Balances of the Class A-1, Class A-2, 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.
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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 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).
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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.
The "Pooled Principal Distribution Amount" for any Distribution Date will
be equal to the sum (without duplication) of:
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(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:
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(1) concurrently to the Class A-1, Class A-2 and Class A-EC 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;
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(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;
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(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-EC 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-EC 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 to the Class A-EC Certificates.
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 to the Class A-EC Certificates.
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.
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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, all Prepayment
Premiums and Yield Maintenance Charges will be distributed to holders of the
Class A-EC Certificates. 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 and Class A-EC 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-EC
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:
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<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 ........... April 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-II Certificates representing greater than a 50%
Percentage Interest of the Class R-II 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
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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, each
such holder will be required to deliver an opinion of counsel to the effect
that such purchase (or such right to purchase) would not cause either 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 either REMIC or (2) an
accountant's certification to the effect that such purchase would not result in
the realization of any net income to either REMIC.
DELIVERY, FORM AND DENOMINATION
Book-Entry Certificates. No Person acquiring an Offered 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
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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.
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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.
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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-EC 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-EC 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).
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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 M 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-EC 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. 222 of the Mortgage Loans,
representing 93.83% 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-EC 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.
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<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-EC 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-II
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;
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<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 29, 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 74 74 74 100 100 100 100
July 15, 2004 .................. 67 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 5.5 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 Closing
Date 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).
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<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 Closing
Date 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 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 Closing
Date 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).
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<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 .................. 23 17 15 11
Jult 15, 2010 .................. 0 0 0 0
July 15, 2011 .................. 0 0 0 0
Weighted Avg. Life (2) ......... 10.0 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 Closing
Date 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).
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<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 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;
(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
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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.
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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.
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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,
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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
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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;
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(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;
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(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
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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.
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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
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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.
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"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.
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; 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
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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;
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(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;
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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.
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"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.
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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.global
trustservices.com.
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.
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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-EC 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-EC Certificates, 1%.
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
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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, two separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to the trust
fund, creating two 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 A-EC, Class B, Class C, Class D
and Class E Certificates will be a class of REMIC "regular interests" and (b)
Class R-I Certificates and the Class R-II Certificates each will be the sole
class of "residual interests" in a related 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. 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 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. See generally "Federal Income Tax Consequences--Federal
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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.
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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-100
<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-101
<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-102
<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 , 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 ......... $ $
Class A-2 ......... $ $
Class B ........... $ $
Class C ........... $ $
Class D ........... $ $
Class E ........... $ $
Class F ........... $ $
</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-103
<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 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.
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-84
Advances................................................................ S-83
anchored property....................................................... S-22
Anticipated Repayment Date.............................................. S-37
Appraisal Reduction..................................................... S-84
Appraisal Reduction Event............................................... S-84
Appraisal Value......................................................... S-46
Appraised LTV........................................................... S-46
ARD Amount.............................................................. S-47
ARD Balance............................................................. S-47
ARD Loans............................................................... S-37
Asset Status Report..................................................... S-90
Available Funds......................................................... S-62
Available Funds Allocation.............................................. S-64
Balloon Amount.......................................................... S-47
Balloon Balance......................................................... S-47
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-EC Notional Balance............................................. S-61
Class Interest Distribution Amount...................................... S-62
Class Interest Shortfall................................................ S-63
Code.............................................................. S-11, S-98
Collection Account...................................................... S-85
Collection Period....................................................... S-63
Commission............................................................... S-3
Condemnation............................................................ S-42
Condemnation Proceeds................................................... S-62
Constant Prepayment Rate.............................. S-76, S-77, S-78, S-79
Controlling Class....................................................... S-91
Controlling Class Certificateholders.................................... S-91
Corrected Mortgage Loan................................................. S-94
CPR................................................... S-76, S-77, S-78, S-79
Cross-Collateralized Loans.............................................. S-43
Cross-Defaulted Loans................................................... S-43
Current Occupancy....................................................... S-47
Cut-off Date Balance.................................................... S-36
Cut-off Date Principal Balance.......................................... S-36
S-105
<PAGE>
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-90
Disposition Fee......................................................... S-94
Disqualified Organization.............................................. S-103
Distribution Account.................................................... S-86
Distribution Date....................................................... S-61
DSCR.............................................................. S-46, S-58
DSCRs................................................................... S-13
DTC................................................................ S-7, S-70
Due Date................................................................ S-37
Duff & Phelps.......................................................... S-101
Eligible Bank........................................................... S-86
EPA..................................................................... S-28
ERISA.................................................................. S-100
ESA..................................................................... S-28
Excess Interest......................................................... S-38
Exemption.............................................................. S-101
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-87
Interest Reserve Loan................................................... S-87
Interested Person....................................................... S-90
Liquidation Proceeds.................................................... S-62
Loan-to-Value Ratio..................................................... S-46
Lockout Period.......................................................... S-15
LTV............................................................... S-46, S-58
Master Servicer Mortgage File........................................... S-82
Monthly Debt Service.................................................... S-46
Monthly Payment......................................................... S-63
Moody's.................................................................. S-5
Mortgage................................................................ S-36
Mortgage File........................................................... S-82
Mortgage Loan Documents................................................. S-41
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-95
Net Mortgage Rate....................................................... S-63
Net Operating Income.................................................... S-46
Net REO Proceeds........................................................ S-63
NOI..................................................................... S-46
Nonrecoverable Advance.................................................. S-92
S-106
<PAGE>
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-86
Phase II................................................................ S-60
Physical Occupancy %.................................................... S-47
P&I Advance............................................................. S-83
Plan Asset Regulations................................................. S-101
Plans.................................................................. S-100
Pool Balance............................................................ S-36
Pooled Principal Distribution Amount.................................... S-63
Pooling and Servicing Agreement......................................... S-80
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-83
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-98
Remittance Date......................................................... S-83
REO Account............................................................. S-61
REO Mortgage Loan....................................................... S-64
REO Property............................................................ S-93
Residual Certificates................................................... S-11
Restricted Group....................................................... S-101
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-92
Servicing Fee Rate...................................................... S-92
shadow anchored......................................................... S-22
Similar Law............................................................ S-100
SMMEA............................................................ S-11, S-103
S&P............................................................... S-5, S-101
special purpose......................................................... S-24
Special Servicing Fee................................................... S-94
Specially Serviced Mortgage Loan........................................ S-93
Subordinate Certificates................................................. S-9
Transferor........................................................ S-11, S-57
Trustee Mortgage File................................................... S-80
Underlying Mortgage Loan Purchase Agreements............................ S-37
Underwriters........................................................... S-103
Underwriting Agreement................................................. S-103
S-107
<PAGE>
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-97
Weighted Average Net Mortgage Rate...................................... S-64
Weighted Average Remaining Term......................................... S-47
Withheld Amounts........................................................ S-87
Workout Fee............................................................. S-94
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 60.88% 7.5335%
National Realty Funding ......... 52 21.64 7.7066
KeyBank(1) ...................... 47 10.38 7.6793
Bridger ......................... 22 7.10 7.8782
--- ------- -------
Total .......................... 241 100.00% 7.6105%
=== ======= =======
<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) ...................... 118.84 70.29 1.39 90,809,416
Bridger ......................... 122.28 72.16 1.32 62,105,743
------ ----- ---- ------------
Total .......................... 123.69 69.67% 1.41x $874,522,722
====== ====== ==== ============
</TABLE>
--------
(1) 47 of the Mortgage Loans, representing approximately 10.38% 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 ....................... 220 93.22% 7.6233% 116.48 70.20% 1.40x $815,255,238
Fully Amortizing ......................... 19 6.17 7.3308 233.27 63.49 1.45 53,997,484
Interest Only, Then Amortizing Balloon ... 2 0.60 8.5000 117.00 51.47 1.61 5,270,000
--- ------ ------ ------ ----- ---- ------------
Total .............................. 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 ... 7 0.30% 8.1066% 161.54 57.72% 1.63x $ 2,611,937
500,000 - 999,999 ... 26 2.38 8.0625 132.79 66.33 1.44 20,857,093
1,000,000 - 1,999,999 ... 71 11.96 7.6413 122.51 69.06 1.39 104,622,538
2,000,000 - 2,999,999 ... 40 11.17 7.7394 126.86 67.53 1.40 97,698,765
3,000,000 - 3,999,999 ... 32 12.69 7.6114 129.29 66.92 1.56 111,014,595
4,000,000 - 4,999,999 ... 25 12.90 7.2728 140.24 70.05 1.40 112,800,162
5,000,000 - 5,999,999 ... 15 9.54 7.5417 113.02 70.74 1.37 83,467,000
6,000,000 - 6,999,999 ... 6 4.54 7.8662 142.98 77.27 1.23 39,740,936
8,000,000 - 8,999,999 ... 4 3.87 7.4929 159.97 75.14 1.33 33,842,460
9,000,000 - 9,999,999 ... 4 4.30 7.2254 110.90 74.99 1.40 37,579,798
10,000,000 - 11,999,999 ... 6 7.44 7.3134 114.39 69.73 1.31 65,099,837
12,000,000 - 14,999,999 ... 1 1.41 7.9700 119.00 78.11 1.31 12,341,663
15,000,000 - 19,999,999 ... 1 2.01 8.0000 143.00 76.25 1.26 17,536,726
20,000,000 - 39,999,999 ... 2 7.55 7.6267 117.00 75.63 1.27 66,019,555
40,000,000 - 69,289,658 ... 1 7.92 8.0800 83.00 58.74 1.66 69,289,658
--- ------ ------ ------ ----- ---- ------------
Total .................... 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 2.76% 6.3963% 111.44 74.17% 1.43x $ 24,168,433
6.5001 - 6.7500 ............. 2 0.97 6.6387 191.24 51.40 1.37 8,506,154
6.7501 - 7.0000 ............. 18 7.86 6.9343 158.72 71.98 1.41 68,778,088
7.0001 - 7.2500 ............. 34 13.85 7.1730 113.19 70.84 1.36 121,107,623
7.2501 - 7.5000 ............. 49 16.17 7.4148 119.10 72.03 1.44 141,388,986
7.5001 - 7.7500 ............. 47 18.69 7.6168 138.15 72.81 1.31 163,452,342
7.7501 - 8.0000 ............. 30 17.00 7.8698 123.44 72.17 1.33 148,703,383
8.0001 - 8.2500 ............. 27 16.12 8.1061 105.49 62.28 1.52 140,947,558
8.2501 - 8.5000 ............. 17 3.73 8.3946 106.87 62.37 1.49 32,606,916
8.5001 - 8.7500 ............. 5 1.11 8.7089 131.62 59.61 2.38 9,668,721
8.7501 - 9.0000 ............. 6 1.45 8.8108 112.99 61.62 1.44 12,704,199
9.0001 - 9.2500 ............. 2 0.21 9.1306 172.59 69.26 1.52 1,861,535
9.2501 - 9.5000 ............. 1 0.07 9.3750 107.00 79.09 1.35 628,783
--- ------ ------ ------ ----- ---- ------------
Total ...................... 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 8.24 8.0633 83.00 59.24 1.64 72,086,542
2007 .......... 3 0.62 8.2262 99.03 72.60 1.31 5,461,813
2008 .......... 75 31.15 7.3014 110.33 70.75 1.45 272,440,008
2009 .......... 115 43.03 7.7508 116.84 71.10 1.35 376,273,912
2011 .......... 9 4.42 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 3.35 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 0.49 6.5300 211.00 51.86 1.25 4,304,366
2018 .......... 9 2.37 7.4662 229.50 72.03 1.31 20,730,970
2019 .......... 8 1.86 7.9581 236.65 68.56 1.34 16,268,319
2020 .......... 2 1.22 7.7005 249.77 85.38 1.21 10,704,406
2023 .......... 2 1.40 6.9000 290.00 63.51 1.71 12,214,930
--- ------ ------ ------ ----- ---- ------------
Total ......... 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 16.63% 7.4939% 124.85 74.30% 1.31x $145,393,293
Retail--Unanchored ............ 34 10.05 7.5418 124.89 68.56 1.40 87,932,996
Retail--Single Tenant ......... 17 3.95 7.8456 168.96 73.22 1.32 34,565,101
Retail--Shadow Anchored ....... 2 0.88 6.9263 142.52 56.92 1.55 7,667,288
-- ----- ------ ------ ----- ---- ------------
Retail Subtotal .............. 73 31.51 7.5375 130.89 71.85 1.35 275,558,677
Multifamily ................... 76 22.24 7.2976 133.56 71.56 1.38 194,496,435
Manufactured Housing .......... 16 3.64 7.9558 96.91 72.03 1.34 31,864,914
-- ----- ------ ------ ----- ---- ------------
Housing Related Subtotal ..... 92 25.88 7.3902 128.40 71.62 1.38 226,361,349
Office ........................ 28 14.19 7.8098 117.70 68.93 1.32 124,104,613
Hotel--Full Service ........... 16 8.22 8.0870 84.14 59.06 1.68 71,923,991
Industrial .................... 19 7.27 7.6752 124.13 70.31 1.31 63,535,082
Mixed Use ..................... 15 4.04 7.3633 120.73 70.56 1.34 35,340,917
Hotel--Limited Service ........ 9 3.16 7.9840 139.50 66.80 1.56 27,657,348
Nursing Home .................. 8 3.15 7.7897 111.14 60.89 2.08 27,590,154
Self-Storage .................. 6 1.36 7.4916 152.84 73.09 1.39 11,881,746
Assisted Living Facility ...... 2 0.80 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 ........................ 269 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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% .............. 3 0.54% 7.3642% 250.27 37.20% 2.34x $ 4,717,071
40.01 - 45.00 ............... 4 1.31 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 2.98 7.6614 149.40 52.26 1.49 26,022,148
55.01 - 60.00 ............... 19 12.52 8.0345 97.57 58.32 1.67 109,502,306
60.01 - 65.00 ............... 27 8.75 7.6523 126.92 63.35 1.43 76,522,003
65.01 - 70.00 ............... 50 17.13 7.6023 123.07 68.08 1.41 149,822,006
70.01 - 75.00 ............... 67 26.12 7.5669 130.33 73.08 1.35 228,405,401
75.01 - 80.00 ............... 54 28.53 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 ...................... 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
--- ------ ------ ------ ----- ---- ------------
</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 .................. 112 53.59% 7.8308% 119.31 69.73% 1.38x $468,694,858
1998 .................. 123 44.39 7.3216 130.17 69.41 1.44 388,207,816
1997 .................. 5 1.26 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 ................ 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 1.22 7.3634 142.72 73.45 1.17 10,649,622
1.21 - 1.25 ......... 25 11.85 7.5781 124.90 73.16 1.24 103,659,607
1.26 - 1.30 ......... 51 24.54 7.6678 126.50 72.75 1.28 214,574,392
1.31 - 1.35 ......... 43 19.00 7.4991 121.19 71.83 1.33 166,165,846
1.36 - 1.40 ......... 29 8.96 7.6209 121.24 68.35 1.38 78,339,561
1.41 - 1.45 ......... 23 5.21 7.3737 151.83 70.93 1.42 45,574,476
1.46 - 1.50 ......... 17 5.32 7.4978 115.74 66.59 1.48 46,532,655
1.51 - 1.55 ......... 11 4.81 7.2673 143.25 69.20 1.52 42,106,779
1.56 - 1.60 ......... 11 2.81 7.7670 113.83 64.75 1.59 24,587,532
1.61 - 1.65 ......... 7 2.48 7.7090 111.53 63.39 1.62 21,679,577
1.66 - 1.70 ......... 2 8.07 8.0689 83.49 58.59 1.66 70,574,233
1.71 - 1.75 ......... 3 0.76 7.8734 123.22 67.09 1.74 6,656,531
1.76 - 1.80 ......... 3 1.05 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 ......... 3 0.57 7.6959 117.08 41.02 2.00 4,991,922
2.01 - 2.50 ......... 4 1.28 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 ............... 241 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
</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 20.07% 7.4916% 123.81 70.46% 1.38x $175,543,355
New York .............. 20 9.37 7.6730 117.53 70.22 1.33 81,923,831
Arizona ............... 12 7.27 7.1652 156.33 73.59 1.42 63,555,147
Florida ............... 25 5.62 7.7276 130.67 70.61 1.46 49,151,322
Pennsylvania .......... 17 5.33 7.9371 101.28 61.41 1.53 46,595,319
Ohio .................. 20 4.02 7.5612 123.32 72.31 1.44 35,187,894
Maryland .............. 7 4.00 7.7918 104.19 70.52 1.48 35,022,379
Georgia ............... 8 3.41 7.5447 102.27 69.37 1.46 29,841,213
Texas ................. 12 3.18 7.8038 117.63 64.27 1.45 27,771,947
Massachusetts ......... 7 3.07 7.6861 114.41 71.95 1.31 26,861,061
New Hampshire ......... 4 2.70 7.9861 121.15 70.88 1.35 23,654,485
Nevada ................ 8 2.70 7.5932 129.55 64.04 1.42 23,589,552
New Jersey ............ 6 2.65 7.3472 125.65 70.56 1.39 23,178,390
Indiana ............... 13 2.65 7.6094 136.47 66.70 1.40 23,135,155
Washington ............ 8 2.21 8.0561 121.42 61.97 1.44 19,291,481
Idaho ................. 5 2.20 7.6824 118.70 67.44 1.34 19,258,284
North Carolina ........ 3 2.03 8.0800 83.00 58.74 1.66 17,758,904
West Virginia ......... 1 2.01 8.0000 143.00 76.25 1.26 17,536,726
Colorado .............. 8 1.72 7.4306 112.27 69.13 1.44 15,037,019
Louisiana ............. 4 1.60 7.6542 115.00 71.08 1.29 13,981,438
Connecticut ........... 4 1.33 6.8959 116.67 72.76 1.39 11,648,615
Tennessee ............. 5 1.32 7.5312 116.37 67.23 1.44 11,558,426
Kansas ................ 4 1.10 7.7616 155.13 67.85 1.38 9,643,469
Michigan .............. 6 1.06 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
Oregon ................ 3 0.67 7.4458 112.45 67.96 2.09 5,815,946
Hawaii ................ 1 0.59 7.2100 109.00 76.52 1.25 5,203,290
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 0.42 7.8070 118.65 74.89 1.32 3,706,926
Utah .................. 2 0.41 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 ................ 269 100.00% 7.6105% 123.69 69.67% 1.41x $874,522,722
=== ====== ====== ====== ===== ==== ============
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- -----------------------------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER CONTRIBUTOR PROPERTY NAME
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 03-0810828 GREENWICH CROWN HOTELS
1.10 03-0810828A Greenwich Atlanta Holiday Inn- Downtown
1.20 03-0810828B Greenwich Holiday Inn
1.30 03-0810828C Greenwich Holiday Inn Holidome
1.40 03-0810828D Greenwich Asheville Comfort Suites
1.50 03-0810828E Greenwich Holiday Inn Executive Park
1.60 03-0810828F Greenwich Wyndham Garden
1.70 03-0810828G Greenwich Beaver Falls Holiday Inn
1.80 03-0810828H Greenwich Courtyard by Marriott
1.90 03-0810828I Greenwich East Comfort Inn
1.91 03-0810828J Greenwich Wyndham Garden
1.92 03-0810828K Greenwich Johnstown Holiday Inn
1.93 03-0810828L Greenwich Holiday Inn Express
1.94 03-0810828M Greenwich Pottstown Comfort Inn
1.95 03-0810828N Greenwich Holiday Inn Holidome
1.96 03-0810828O Greenwich Rock Hill Holiday Inn
2 03-0810141 Greenwich Bridgepointe Shopping Center
3 03-0810618 Greenwich 122 Fifth Avenue
4 6519 NRF Dudley Farms Plaza
5 GL981131 KeyBank Emery/Busch Industrial Building
6 BRIDGER VARIOUS
6.10 215990028 Bridger 1376 Bordeaux
6.20 215990053 Bridger 1380 Bordeaux
7 NRF VARIOUS
7.10 5201 NRF Festival at Pasadena
7.20 6098 NRF Festival at Pasadena Pad Building
8 6423 NRF Palouse Empire Mall
9 03-0810140 Greenwich Ventana Vista Apartments
10 03-0810054 Greenwich Park Plaza Shopping Center
11 4088 NRF Shadowridge Heights Apartments
12 5410 NRF Bayside Office Center
13 03-0810102 Greenwich Boulder Run Shopping Center
14 03-0221360 Greenwich West 49th Street
15 03-0810072 Greenwich Brenden Theatres
16 03-0810052 Greenwich The Pavillions at Mesa
17 03-0221361 Greenwich Desert Star Apartments
18 KEYBANK VARIOUS
18.10 4164695 KeyBank Pine Lake Apartments
18.20 4164709 KeyBank Terrace Trace Apartments
18.30 4164733 KeyBank Jupiter Cove Apartments I
18.40 4164814 KeyBank Rivers End I Apartments
18.50 4164831 KeyBank Cypress Apartments
18.60 GL991009 KeyBank Jupiter Cove III
19 9811010012 Greenwich North Valley Medical Plaza
20 5554 NRF 4250 Veterans Highway
21 03-0221428 Greenwich Boardwalk @ Anderson Springs
22 KEYBANK VARIOUS
22.10 6218 KeyBank Princeton Court Apartments
22.20 6219 KeyBank Elmtree Park Apartments
22.30 6220 KeyBank Meadowood Apartments
22.40 6221 KeyBank Rosewood Commons Apartments
22.50 6223 KeyBank Acadia Court Apartments
23 03-0810596 Greenwich Pembrooke Square Medical Center
24 GL981134 KeyBank Laguna Properties Building
25 300980020 Bridger Southwind Mobile Home Estates
26 610980009 Bridger K-Mart Rogers
27 03-0810056 Greenwich Park Fair Mall
28 KEYBANK VARIOUS
28.10 6029 KeyBank Pine Terrace I & II Apartments
28.20 6033 KeyBank Sanford Court Apartments
28.30 6034 KeyBank Applewood I & II Apartments
29 03-0810110 Greenwich Buckhead Exchange
30 03-0810122 Greenwich Pascack Plaza
31 03-0810037 Greenwich Days Inn Hotel
32 5468 NRF BeautiControl Office
33 6761 NRF REXBURG STUDENT HOUSING
33.10 6761A NRF Autumn Winds Apartments
33.20 6761B NRF Somerset Apartments
33.30 6761C NRF Brookside Village Apartments
34 03081090008 Greenwich Hampton Inn - Sea Tac
35 03-0221351 Greenwich Devir Street Apartments
36 415990042 Bridger Alameda Technology Center
37 9811010011 Greenwich Clocktower Apartments Phase I
38 03-0221371 Greenwich Best Western Cascadia Inn
39 03-0810108 Greenwich Global Plaza West
40 03-0810597 Greenwich Ponce de Leon Care Center
41 03-0221420 Greenwich 1000 Henry Street
42 03-0810082 Greenwich 55 Post Road West
43 03-0221331 Greenwich Greenway Terrace
44 4794 KeyBank Rolla Center
45 03-0221336 Greenwich Bayside Willows Apartments
46 03-0221448 Greenwich Westgate Plaza
47 1109 NRF Riverfront Apartments
48 4163141 KeyBank Cheyenne Mountain Shopping Center
49 03-0810061 GREENWICH APPLE CREEK MHP / SELF STORAGE AND ORCHARD LAKE MHP (ROLL-UP
49.10 03-0810061A Greenwich Apple Creek Mobile Home Park / Self Storage
49.20 03-0810061B Greenwich First Security Self Storage
49.30 03-0810061C Greenwich Orchard Lake Mobile Home Park
50 5397 NRF Kennedy Square
51 03-0221365 Greenwich Westpointe II Apartments
52 03-0810086 Greenwich CB/Buckhead - Roswell
53 03-0810078 Greenwich Park Green Apartments
54 03-0221366 Greenwich Bridle Path Apartments
55 3770 NRF Heritage Court Apartments
56 03-0221357 Greenwich Hawaii Market Shopping Center
57 5462 NRF Santa Fe Place Apartments
58 2261 NRF Iron Mountain Building
59 1853 NRF Shore Center Shopping Center
60 03-0221330 Greenwich La Fuente Inn
61 03-0221356 Greenwich Pueblo Hills Shopping Center
62 03-0810112 Greenwich The Park Belvedere
63 4058 NRF The Hesser Center
64 03-0810584 Greenwich Lee Park Plaza
65 03-0810565 Greenwich Hood River Care Center
66 03-0810566 Greenwich 221 Route 4 East
67 6571 NRF Lochwood III Apartments
68 03-0810139 Greenwich Essex Warehouse
69 03-0810610 Greenwich Freeman Decorating Company
70 03-0810608 Greenwich Doctors Hospital of West Covina
71 9902010038 Greenwich Beven Street Warehouse
72 03-0810093 Greenwich Crescenta Valley Mini Storage
73 03-0221367 Greenwich Stonebridge Health Center
74 03-0221338 Greenwich Wagner Heights Nursing and Rehabilitation Center
75 03-0221340 Greenwich 22 East 67th Street
76 03-0810611 Greenwich Flemington Arms Apartments
77 NRF VARIOUS
77.10 5623 NRF Colonial Park Apartments
77.20 5625 NRF Jackson Trace Apartments
77.30 5624 NRF Fox Valley Apartments
78 03-0221349 Greenwich Shrewsbury Crossing Assisted Living Facility
79 4163231 KeyBank Clearwater Commons
80 03-0221355 Greenwich Gillette Nursing Home
81 03-0221427 Greenwich Sierra Apartments
82 03-0221432 Greenwich 6845 Deerpath Building
83 03-0810113 Greenwich Palace Plaza Shopping Center
84 03-0221362 Greenwich Sunplace Apartments
85 03-0810071 Greenwich Meadow Wood Crown Plaza
86 03-0221358 Greenwich Oakbridge Retail Center
87 03-0221353 Greenwich Gateway Plaza Shopping Center
88 NRF VARIOUS
88.10 5435 NRF Eagle Trace Apartments
88.20 5434 NRF Ashbury Court Apartments
89 6415 NRF Office Depot Tallahassee
90 4161904 KeyBank Westbay Assisted Living Residence
100 5900 NRF Yerington Plaza
101 6348 NRF CAPTEC FRANCHISE CAPITAL PARTNERS, L.P. IV
101.10 6348A NRF Arby's Restaurant
101.20 6348B NRF Taco Bell Restaurant
101.30 6348C NRF Taco Bell Restaurant
101.40 6348D NRF Tony Roma's Restaurant
101.50 6348E NRF Del Taco Restaurant
101.60 6348F NRF Winger's Restaurant
102 03-0810014 Greenwich English Gardens Apartments
103 03-0810030 Greenwich Pembroke Place North Shopping Center
104 03-0221434 Greenwich The Northgate Office Building
105 400980013 Bridger Heritage Estates / Flamingo Shores
106 3604 NRF HIGHLAND HALL/GOLFVIEW MANOR
106.10 3604A NRF Highland Hall
106.20 3604B NRF Golfview Manor
107 6588 NRF Walgreens Drug Store
108 9811010009 Greenwich Napoleon Medical Office Building
109 6071 NRF Teakwood Village Apartments
110 03-0221332 Greenwich Rancho San Diego Self Storage
111 6091 NRF Eden Roc Apartments & Americana Apartments A & B
112 5603 NRF Olathe Duplexes
113 03-0221423 Greenwich Jamaica Avenue Building
114 5551 NRF Queen Anne's Gate V Apartments
115 6416 NRF Office Depot Ormond Beach
116 RM991008 KeyBank Westwinds Mobile Home Park
117 5267 NRF South Arcade Retail Building
118 202980008 Bridger 2801 Red Dog Drive
119 03-0221363 Greenwich Forest Brooke Apartments
120 9811010015 Greenwich Pleasant Village Shopping Center
121 400980010 Bridger Royal View Gardens
122 9811010010 Greenwich Raymour & Flanigan Center
123 03-0221424 Greenwich Capital City Plaza
124 9812010027 Greenwich Quality Inn and Suites - Aberdeen
125 410990037 Bridger Hen-Ridge Apartments
126 03-0221426 Greenwich Graham Center
127 5369 NRF Branford Industrial Complex
128 400980015 BRIDGER COMFORT INN/KNIGHTS INN ROLL-UP
128.10 400980015A Bridger Comfort Inn
128.20 400980015B Bridger Knights Inn
129 4163257 KEYBANK KEYSTONE WAY SHOPPES / CVS PHARMACY / TACO BELL
129.10 4163257A KeyBank Sears Hardware / Keystone Way Shoppes
129.20 4163257B KeyBank CVS Pharmacy / Taco Bell
130 03-0221350 Greenwich Village Shops at Chandler
131 4164873 KeyBank Meldon Place Apartments
132 6884 NRF Monticello Village Apartments
133 03-0810590 Greenwich 12th and Monroe Shops and 1204 Newton St. NE
134 03-0810073 Greenwich Sierra Apartments
135 4740 NRF Stassney Square Shopping Center
136 4163583 KeyBank Cambridge Plaza
137 03-0810571 Greenwich Colonial Square Apartments
138 03-0221421 Greenwich Elks Plaza Shopping Center
139 9903020001 Greenwich Days Inn - Arlington
140 03-0810080 Greenwich Seth I Apartments
141 3222 NRF Post Polaris Business Center
142 60598007 Bridger 1682 Novato Blvd.
143 03-0810602 Greenwich Lindenwald Plaza Shopping Center
144 03-0221435 Greenwich T.I.G. Industrial Building
145 6243 NRF Holly Shopping Center
146 400990040 Bridger Bonneville Gardens
147 6347 NRF CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
147.10 6347A NRF Jack-in-the-Box
147.20 6347B NRF Taco Bell Restaurant
147.30 6347C NRF Tony Roma's Restaurant
148 03-0810106 Greenwich Cypress Gardens Mobile Home Park
149 4161548 KeyBank Jamestown Apartments
150 6834 NRF Sorrento Mesa Office Plaza
151 940906389 Greenwich Park Meadows Apartments
152 4165039 KeyBank Carmel Self Storage
153 600980001 Bridger 901 E Street
154 9811010014 Greenwich Princeton Woods Shopping Center
155 03-0810606 Greenwich 1212 Hancock Street
156 6914 NRF Winans Home Center
157 5090 NRF Pacific Breeze Apartments
158 03-0221425 Greenwich Hilltop Willow Branch Apartments
159 03-0810090 Greenwich D'Agostino Supermarket
160 4810 NRF Southbridge Crossing
161 6222 KeyBank Heathmore II Apartments
162 03-0221352 Greenwich Tooele Main Street Shops
163 03-0810083 Greenwich CB/Buckhead - Alpharetta
164 410990035 Bridger Sandra Court Apartments
165 5655 NRF 450 & 440 Waverly Avenue
166 03-0810605 Greenwich Westheimer Center
167 4164954 KeyBank Winthrop Court Apartments
168 03-0810111 Greenwich 3900 Richmond Avenue
169 4162366 KeyBank Middlefield Mobile Home Park
170 03-0810587 Greenwich Raintree Office Building
171 03-0810576 Greenwich 1770 Post Road Associates
172 03-0810081 Greenwich CVS Store
173 03-0810130 Greenwich Allentown Self Storage
174 400980016 Bridger Twin Valley Estates
175 03-0221359 Greenwich 636 Eighth Avenue
176 5942 NRF Land O' Lakes Village Apartments
177 201980005 Bridger 131 So. Maple Ave.
178 100980011 Bridger 4140 Lockbourne
179 4591 NRF The Colton Block
180 03-0810614 Greenwich Magnolia Center Office Building
181 03-0810089 Greenwich CB/Buckhead - Duluth
182 03-0810612 Greenwich Willows Apartments
183 202980006 Bridger Southern Station
184 940907032 Greenwich 3951 Vestal Parkway East
185 202990026 Bridger West Haven
186 03-0221369 Greenwich Milton Square Shopping Center
187 6096 NRF Kristie Manor Apartments
188 210990027 Bridger Valley View
189 03-0221327 Greenwich 282-299 Grand Street
190 4161327 KeyBank Issaquah Building
191 4163281 KeyBank Quail Street Commons
192 03-0810084 Greenwich CB/Buckhead - Fulton
193 5780 NRF Paradise Pointe
194 4410 NRF Boardwalk Boutiques
195 6032 KeyBank Palm Side Apartments
196 03-0810593 Greenwich 2600-2602 Jefferson Street
197 5965 NRF CE-FAIR Apartments
198 03-0221333 Greenwich Alamo Self Storage
199 5992 NRF 39 Forest Avenue
200 03-0810087 Greenwich CB/Buckhead - Marietta
201 03-0810064 Greenwich Diamond Plaza
202 4161653 KeyBank Southtown Blvd. Commercial Building
203 410990036 Bridger Leverington Court Apartments
204 400980014 Bridger Oak Bend MHP
205 03-0810560 Greenwich L'Abri Apartments
206 6217 KeyBank Willowood East Apartments
207 5729 NRF 200-231 Harrison Avenue
208 SM991007 KeyBank Otterbacher Manufacturing Facility
209 03-0810557 Greenwich Rambler Mobile Home Park
210 03-0810555 Greenwich Howard Johnson
211 4163176 KeyBank Big 5 Sporting Goods - KlamathFalls
212 4161262 KeyBank Big 5 Sporting Goods - Bullhead City
213 03-0810613 Greenwich Best Western Jed Prouty Motor Inn
214 6031 KeyBank Winter Woods II Apartments
215 03-0810619 Greenwich Trade Fair Supermarket
216 4162480 KeyBank Fulton East Shopping Center
217 4161734 KeyBank The Fur Plaza
218 4163214 KeyBank Park Plaza Shopping Center
219 4161645 KeyBank Renaissance Plaza
220 4161670 KeyBank Freeway VIII Center
221 4162471 KeyBank Jason Commercial Building
222 03-0221328 Greenwich Sternberg Apartments
223 940907356 Greenwich Hillcrest Apartments
224 03-0810575 Greenwich 235 Glenville Road
225 4161769 KeyBank Lantern Arms Apartments
226 03-0810594 Greenwich Commerce Park Office / Warehouse
227 03-0810615 Greenwich Bel-Air Mobile Home Park
228 03-0810533 Greenwich Parkchester Apartments
229 03-0810588 Greenwich Bandera Landing
230 SM991001 KeyBank West Coast Video - Millville
231 SM991004 KeyBank Mt. Orange Mobile Home Park
232 03-0810578 Greenwich 1215 NE 23rd Street
233 03-0810572 Greenwich Cypress Villas Apartments
234 03-0810579 Greenwich Neico Investments, LLC
</TABLE>
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CONTROL PROPERTY PROPERTY PROPERTY PROPERTY
NUMBER ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 VARIOUS VARIOUS VARIOUS VARIOUS
1.10 101 International Drive Atlanta Georgia 30303
1.20 100 South George Street Cumberland Maryland 21502
1.30 5400 Holiday Drive Frederick Maryland 21703
1.40 890 Brevard Road Asheville North Carolina 28806
1.50 8520 University Executive Park Drive Charlotte North Carolina 28262
1.60 4620 South Miami Boulevard Durham North Carolina 27703
1.70 7195 Eastwood Drive Beaver Falls Pennsylvania 15010
1.80 3327 Street Road Bensalem Pennsylvania 19020
1.90 4021 Union Deposit Road Harrisburg Pennsylvania 17109
1.91 765 Eisenhower Boulevard Harrisburg Pennsylvania 17111
1.92 250 Market Street Johnstown Pennsylvania 15901
1.93 1440 Scalp Avenue Johnstown Pennsylvania 15904
1.94 99 Robinson Street Pottstown Pennsylvania 19464
1.95 2000 Loucks Road York Pennsylvania 17404
1.96 2640 North Cherry Hill Rock Hill South Carolina 29730
2 2200 - 3020 Bridgepointe Parkway San Mateo California 94404
3 122 Fifth Avenue New York New York 10011
4 100-228 RHL Boulevard South Charleston West Virginia 25309
5 12 Celina Avenue Nashua New Hampshire 03063
6 VARIOUS SUNNYVALE CALIFORNIA 94089
6.10 1376 Bordeaux Sunnyvale California 94089
6.20 1380 Bordeaux Sunnyvale California 94089
7 8135 RITCHIE HIGHWAY PASADENA MARYLAND 21122
7.10 8135 Ritchie Highway Pasadena Maryland 21122
7.20 8135 Ritchie Highway Pasadena Maryland 21122
8 1850 W. Pullman Road (Highway #8) Moscow Idaho 83843
9 5051 North Sabino Canyon Road Tucson Arizona 85750
10 26705, 26741, 26841, 26851, 26611 and 26601 Aliso Creek Road Aliso Viejo California 92656
11 1510 South Melrose Drive Vista California 92083
12 150 Mount Vernon Street Boston Massachusetts 02125
13 325-327 Franklin Avenue Wyckoff New Jersey 07481
14 308, 310, 318 - 332, 340 West 49th Street New York New York 10020
15 Davis Street at I-80 Vacaville California 95688
16 1837 - 1955 West Guadalupe Road Mesa Arizona 85202
17 1106 West Bell Road Phoenix Arizona 85023
18 VARIOUS VARIOUS FLORIDA VARIOUS
18.10 1924 Pine Loch Terrace Tampa Florida 33613
18.20 9135 Talina Lane Tampa Florida 33637
18.30 17873-A Thelma Avenue Jupiter Florida 33458
18.40 5520 Collins Road Jacksonville Florida 32244
18.50 6200 Cypress Point Drive Panama City Beach Florida 32408
18.60 17937 Thelma Avenue Jupiter Florida 33458
19 3811 East Bell Road Phoenix Arizona 85032
20 4250 Veterans Memorial Highway Holbrook New York 11741
21 SEC Dobson and Ray Roads Chandler Arizona 85224
22 VARIOUS VARIOUS INDIANA VARIOUS
22.10 103 Princeton Court Evansville Indiana 47715
22.20 11023 Elmtree Park Drive Indianapolis Indiana 46229
22.30 8611 Meadowood Drive Newburgh Indiana 47630
22.40 5586 Rosewood Commons Drive Indianapolis Indiana 46254
22.50 3008 Acadia Court Bloomington Indiana 47401
23 11355 Pembrooke Square Waldorf Maryland 20603
24 5005 East Philadelphia Street Ontario California 91761
25 7300 Luther Drive Sacramento California 95823
26 2115 West Walnut Avenue Rogers Arkansas 72756
27 100 Euclid Avenue Des Moines Iowa 50309
28 VARIOUS VARIOUS FLORIDA VARIOUS
28.10 322 South Burkett Avenue Callaway Florida 32404
28.20 3291 South Sanford Avenue Sanford Florida 32773
28.30 101 East New Hampshire Avenue DeLand Florida 32724
29 3167 Peachtree Road NE Atlanta Georgia 30305
30 1-23 Perlman Drive Spring Valley New York 10977
31 8350 Edes Avenue Oakland California 94621
32 2121 Midway Road Carrollton Texas 75006
33 VARIOUS VARIOUS VARIOUS VARIOUS
33.10 160 West 5th South Rexburg Idaho 83440
33.20 480 South 100 West Rexburg Idaho 83440
33.30 487 South 3rd West Rexburg Idaho 83440
34 19445 Pacific Highway South SeaTac Washington 98188
35 66, 92 and 108 Devir Street Malden Massachusetts 02148
36 1255 - 1275 Harbor Bay Parkway Alameda California 94502
37 Two Clocktower Place Nashua New Hampshire 03060
38 2800 Pacific Avenue Everett Washington 98201
39 3645 - 3675 South Durango Drive Las Vegas Nevada 89117
40 1999 Old Moultrie Road St. Augustine Florida 32086
41 1000 Henry Street Kailua-Kona Hawaii 96740
42 55 Post Road West Westport Connecticut 06880
43 15400 - 15472 North 99th Avenue Sun City Arizona 85351
44 901 & 1003 South Bishop Avenue Rolla Missouri 65401
45 530 Sunnyview Drive Pinole California 94564
46 North side of Route 30 East Whiteland Twp. Pennsylvania 19355
47 726 First Avenue North Nashville Tennessee 37201
48 1670 E. Cheyenne Mountain Boulevard Colorado Springs Colorado 80906
49 VARIOUS VARIOUS VARIOUS VARIOUS
49.10 2189 East Ohio Pike Amelia Ohio 45102
49.20 2189 East Ohio Pike Amelia Ohio 45102
49.30 969 State Route 28 Milford Ohio 45150
50 4950 West Kennedy Boulevard Tampa Florida 33609
51 6465 West Lane Stockton California 95210
52 5395 Roswell Road Atlanta Georgia 30342
53 8100 Bellaire Houston Texas 77036
54 1619 Bridle Path Drive Stockton California 95207
55 335 & 336 Center Road Vernon Connecticut 06066
56 120 East Valley Boulevard San Gabriel California 91776
57 350 North Festival Drive El Paso Texas 79912
58 6935 Flanders Drive San Diego California 92121
59 22304-22400 Lake Shore Blvd. Euclid Ohio 44123
60 1513 East 16th Street Yuma Arizona 85365
61 2221, 2233 and 2269 Rampart Boulevard Las Vegas Nevada 89128
62 101 - 115 West 79th Street New York New York 10024
63 1,25, & 77 Sundial Avenue Manchester New Hampshire 03103
64 520-540 Bergen Boulevard Palisades Park New Jersey 07650
65 729 Henderson Road Hood River Oregon 97031
66 211 Route 4 East Paramus New Jersey 07652
67 1437 Slate Run Road New Albany Indiana 47150
68 5702 Corporate Drive St. Joseph Missouri 64507
69 1000 Elmwood Park Boulevard Harahan Louisiana 70123
70 725 South Orange Avenue West Covina California 91790
71 6040 Beven Street Jefferson Parish Louisiana 70123
72 4441 Cloud Avenue La Crescenta California 91214
73 11125 Circle Drive Austin Texas 78736
74 9289 Branstetter Place Stockton California 95209
75 22 East 67th Street New York New York 10021
76 81-95 North Main Street Flemington New Jersey 08822
77 VARIOUS VARIOUS ALABAMA VARIOUS
77.10 4600 Sprague Avenue Anniston Alabama 36206
77.20 500 Whites Gap Road Jacksonville Alabama 36265
77.30 5112 McClellan Boulevard Anniston Alabama 36206
78 311 West Main Street Shrewsbury Massachusetts 01545
79 4519 East 82nd Street Indianapolis Indiana 46250
80 3310 Elm Road NE Warren Ohio 44483
81 150 - 220 Trantor Place Staten Island New York 10302
82 6845 Deerpath Road Elkridge Maryland 21227
83 2350 and 2450 Montebello Sq. Dr. Colorado Springs Colorado 80909
84 1950 North 43rd Avenue Phoenix Arizona 85035
85 1575 Delucci Lane Reno Nevada 89502
86 7944 Tree Lane Madison Wisconsin 53717
87 24933 Santa Clara Street Hayward California 94544
88 VARIOUS WICHITA KANSAS VARIOUS
88.10 925 West 29th Street South Wichita Kansas 67217
88.20 1940 South Woodlawn Wichita Kansas 67218
89 3151 Capital Circle N. E. Tallahassee Florida 32303
90 4920 Viceroy Court Cape Coral Florida 33904
100 176 West Goldfield Avenue Yerington Nevada 89447
101 VARIOUS VARIOUS VARIOUS VARIOUS
101.10 4740 Cemetery Road Hilliard Ohio 43026
101.20 32270 Van Dyke Avenue Warren Michigan 48093
101.30 67556 Main Street Richmond Michigan 48062
101.40 775 Vista Ridge Mall Drive Lewisville Texas 75067
101.50 3624 California Avenue Bakersfield California 93309
101.60 2336 East Baseline Road Mesa Arizona 85204
102 15031 West 138th Olathe Kansas 66061
103 8913-9091 Taft Street Pembroke Pines Florida 33024
104 950 Northgate Drive San Rafael California 94903
105 3275 U.S. Highway 92 Winter Haven Florida 33881
106 VARIOUS VARIOUS VARIOUS VARIOUS
106.10 239 West Pittsburgh Road New Castle Pennsylvania 16101
106.20 616 Golf Course Road Aliquippa Pennsylvania 15001
107 32732 Michigan Avenue Wayne Michigan 48184
108 2633 Napoleon Avenue New Orleans Louisiana 70115
109 515 Gardere Lane Baton Rouge Louisiana 70820
110 10499 Austin Drive Spring Valley California 91978
111 1128 Victor St. / 233 & 252 River Street East Lansing Michigan 48823
112 913 Jan Mar Olathe Kansas 66062
113 163-05 and 163-17 Jamaica Avenue Queens New York 11432
114 88 & 102 Queen Anne's Court Weymouth Massachusetts 02189
115 405 West Granada Boulevard Ormand Beach Florida 32174
116 505 Williams Street Cheyenne Wyoming 82007
117 1401-1419 First Avenue & 92-96Union Street Seattle Washington 98101
118 2801 Red Dog Drive Knoxville Tennessee 37914
119 107 Forest Brooke Way Delaware Ohio 43015
120 6700 Santa Rita Road Pleasanton California 94588
121 1351 East Pepper Drive El Cajon California 92021
122 110 - 120 South West End Boulevard Quakertown Pennsylvania 18951
123 3401 Hartzdale Drive Camp Hill Pennsylvania 17011
124 793 West Bel Air Avenue Aberdeen Maryland 21001
125 205-15 Rock Street Philadelphia Pennsylvania 19128
126 771-785 Anderson Drive, 815-825 Franciscan Drive San Rafael California 94901
127 12109-12115 Branford Street Sun Valley California 91352
128 VARIOUS VARIOUS VARIOUS VARIOUS
128.10 333 S.E. First Avenue Florida City Florida 33034
128.20 1223 N.E. First Avenue Florida City Florida 33034
129 VARIOUS VARIOUS VARIOUS VARIOUS
129.10 1122-1168 Keystone Way Carmel Indiana 46032
129.20 1391 & 1421 South Rangeline Road Carmel Indiana 46032
130 820 West Warner Road Chandler Arizona 85224
131 1736 C Brownstone Blvd. Toledo Ohio 43614
132 606 East Redbud Drive Stillwater Oklahoma 74075
133 3500 - 3520 12th Street NE and 1204 Newton Street NE Washington District of Columbia 20017
134 7475 Stockton Boulevard Sacramento California 95823
135 512 W. Stassney Lane Austin Texas 78745
136 51 South Champion Street Youngstown Ohio 44503
137 1440-91 West Rich Street Columbus Ohio 43223
138 169 - 187 West Merrick Road Freeport New York 11520
139 1195 North Watson Road Arlington Texas 76011
140 417 Margaret Plattsburgh New York 12901
141 6330 Polaris Avenue Las Vegas Nevada 89118
142 1682 Novato Blvd. Novato California 94947
143 4025 Pleasant Avenue (US 127) Hamilton Ohio 45015
144 8491 Rhonda Drive Canton Township Michigan 48188
145 104 - 224 Holly Street Nampa Idaho 83651
146 705 South Redwood Rd. Salt Lake City Utah 84104
147 VARIOUS VARIOUS VARIOUS VARIOUS
147.10 3750 Meridian Street South Puyallup Washington 98373
147.20 45590 Gratiot Avenue Macomb Michigan 48042
147.30 4521 Southside Boulevard Jacksonville Florida 32216
148 4650 East Lake Mead Boulevard Las Vegas Nevada 89115
149 1347-1394 Bluff Avenue Grandview Heights Ohio 43212
150 5230 Carroll Canyon Road San Diego California 92121
151 851-976 Mount Werner Circle Colorado Springs Colorado 80903
152 3750 Bauer Drive West Carmel Indiana 46032
153 901 E. Street San Rafael California 94901
154 17064 Jefferson Davis Highway Dumfries Virginia 22026
155 1212 Hancock Street Quincy Massachusetts 02109
156 1770 Hwy 395 Minden Nevada 89423
157 2850 Adrian Street San Diego California 92110
158 2200 Rivers Street San Pablo California 94806
159 257 West 17th Street New York New York 10011
160 Indiana Street & Highway 67 Mooresville Indiana 46158
161 5984 Heathmore Drive Indianapolis Indiana 46227
162 752-788 Main Street Tooele Utah 84074
163 3800 Mansell Road Alpharetta Georgia 30022
164 7014-24 Ridge Ave. Philadelphia Pennsylvania 19128
165 450 & 440 Waverly Avenue Patchogue New York 11772
166 5661 Westheimer Houston Texas 77056
167 720 Ridgeview Drive Frankfort Kentucky 40601
168 3900 Richmond Avenue Staten Island New York 10312
169 15871 Swine Creek Road Middlefield Township Ohio 44062
170 25 North Spruce Street Colorado Springs Colorado 80905
171 1770 - 1776 Boston Post Road Milford Connecticut 06460
172 4345 South Cobb Drive Smyrna Georgia 30080
173 1700 South 4th Street Allentown Pennsylvania 18103
174 241 Lovers Lane Charlestown New Hampshire 03603
175 636 Eighth Avenue New York New York 10018
176 21101 Voyager Boulevard Land O' Lakes Florida 34639
177 131 S. Maple Ave. S. San Francisco California 94080
178 4140 Lockbourne Road Columbus Ohio 43207
179 558-596 Main Street, 2-4 Austin Street & 8-10 Austin Street Worcester Massachusetts 01608
180 3214 West McGraw Street Seattle Washington 98199
181 3850 Pleasant Hill Road Duluth Georgia 30136
182 1661 Fifth Street Elko Nevada 89801
183 306 W. Depot Ave. Knoxville Tennessee 37917
184 3951 Vestal Parkway East Vestal New York 13850
185 3661 West Haven Center Knoxville Tennessee 37921
186 701-727 South Janesville Street Milton Wisconsin 53563
187 4814 Kristie Drive Del City Oklahoma 73115
188 700 North Reed St. Sedro Woolley Washington 98284
189 282, 284, 286, 290 and 299 Grand Street New York New York 10002
190 6010 - 221st Place Southeast Issaquah Washington 98027
191 938 Quail Street Lakewood Colorado 80215
192 3650 Habersham Road Atlanta Georgia 30305
193 118 Colony Drive Jefferson City Tennessee 37760
194 938-982 Maple Road Amherst New York 14221
195 210 Interchange Drive Palm Bay Florida 32907
196 2600 - 2602 Jefferson Street Wilmington Delaware 19802
197 14140-14168 Cedar Road University Heights Ohio 44121
198 5666 Carpinteria Avenue Carpinteria California 93013
199 39 Forest Avenue Portland Maine 04104
200 37 Johnson Ferry Road Marietta Georgia 30067
201 2000 W. 79th St. Chicago Illinois 60620
202 1881 Southtown Blvd. Moraine Ohio 45439
203 631 Leverington Ave. Philadelphia Pennsylvania 19128
204 14818 Shark St. Hudson Florida 34667
205 703 and 707 South West 16th Street Loveland Colorado 80537
206 3787 Willowood Drive Indianapolis Indiana 46236
207 200-231 Harrison Avenue Boston Massachusetts 02111
208 4768 U.S. Route 30 Crestline Ohio 44827
209 9225 East Main Street Mesa Arizona 85207
210 5171 Brecksville Road Richfield Ohio 44286
211 3500 Washburn Way Klamath Falls Oregon 97603
212 1835 Highway 95 Bullhead City Arizona 86442
213 52-54 Main Street Bucksport Maine 04416
214 15300 West Colonial Drive Winter Garden Florida 34787
215 30-08 30th Avenue Astoria New York 11102
216 2039 - 2109 Locust Street, S.E. Canal Fulton Ohio 44614
217 4830-4848 Sunrise Highway Sayville, Township of Islip New York 11782
218 2807-2829 Lower Wetumpka Road Montgomery Alabama 36110
219 1644-1684 SW Willamette Falls Drive West Linn Oregon 97068
220 20007 44th Avenue West Lynnwood Washington 98036
221 601 South Jason St. Denver Colorado 80223
222 65 Sherman Street Portland Maine 04101
223 1105 Ronstan Drive Killeen Texas 76542
224 235 Glenville Road Greenwich Connecticut 06831
225 848 Riverview Terrace Dayton Ohio 45407
226 7102-7176 Oaklawn Drive San Antonio Texas 78229
227 2201 Leonard Road Bryan Texas 77801
228 430 West 7th Street Plainfield New Jersey 07060
229 8015 Bandera Landing San Antonio Texas 28250
230 801 North High Street Millville New Jersey 08332
231 Mt. Orange Rd. Slate Hill New York 10973
232 1215 NE 23rd Street Pompano Beach Florida 33064
233 220 SW 8th Street Pompano Beach Florida 33060
234 3095 Sterling Circle Boulder Colorado 80301
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ORIGINAL
CONTROL PROPERTY PRINCIPAL
NUMBER TYPE BORROWER NAME BALANCE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 HOTEL - FULL SERVICE CROWN AMERICAN ASSOCIATES AND MARYLAND MOTEL MANAGEMENT, INC $69,450,000
1.10 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 12,500,000
1.20 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 3,400,000
1.30 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 7,200,000
1.40 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 2,700,000
1.50 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 7,600,000
1.60 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 7,500,000
1.70 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 3,900,000
1.80 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 6,500,000
1.90 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 3,250,000
1.91 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 975,000
1.92 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 1,200,000
1.93 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 750,000
1.94 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 5,100,000
1.95 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 4,975,000
1.96 Hotel - Full Service Crown American Associates and Maryland Motel Management, Inc 1,900,000
2 Retail-Anchored Bridgepointe LLC 39,000,000
3 Office 122 Fifth Associates 27,150,000
4 Retail-Anchored THF-D Charleston Development Limited Liability Company 17,550,000
5 Industrial Berkshire-Nashua, L.L.C. 12,350,000
6 INDUSTRIAL BORDEAUX PARTNERS LLC 11,700,000
6.10 Industrial Bordeaux Partners LLC 4,748,000
6.20 Industrial Bordeaux Partners, LLC 6,952,000
7 VARIOUS FESTIVAL PASADENA ASSOCIATES, L.P., ET AL. 11,680,000
7.10 Retail-Anchored Festival Pasadena Associates, L.P., et al. 9,280,000
7.20 Office Festival Pasadena Associates, L.P., et al. 2,400,000
8 Retail-Anchored Palouse Empire Mall Associates 11,500,000
9 Multifamily Ventana Vista Investors Limited Partnership 11,377,000
10 Retail-Unanchored Leaseback of California II, LLC 11,000,000
11 Multifamily HCA Shadowridge Heights LLC 10,700,000
12 Office Bayside Merchandise Mart Limited Partnership 10,425,000
13 Retail-Anchored Munico Associates 10,440,000
14 Multifamily 310 W 49 St. Assoc. LP and Haga Realty 10,000,000
15 Retail-Single Tenant Vintage Ranch Properties, L.P. 9,400,000
16 Retail-Unanchored Mesa Pavilion Associates, LLC 9,200,000
17 Multifamily Bigelow Arizona Limited Liability Company 8,850,000
18 MULTIFAMILY VARIOUS 8,546,250
18.10 Multifamily Pine Lake Apartments, Ltd. 660,000
18.20 Multifamily Terrace Trace Apartments, Ltd. 1,650,000
18.30 Multifamily Lexford FLKB, L.L.C. 1,650,000
18.40 Multifamily Rivers End Apartments, Ltd. 1,417,500
18.50 Multifamily Cypress Apartments, Ltd. 1,432,500
18.60 Multifamily Lexford FLKB II L.L.C. 1,736,250
19 Office Phoenix North Star, Ltd. 8,500,000
20 Office 4250 Vets Highway, LLC 8,462,000
21 Retail-Anchored Raydob, L.L.C. 8,240,000
22 MULTIFAMILY VARIOUS 6,862,000
22.10 Multifamily Princeton Court Apartments of Evansville, Ltd. 917,000
22.20 Multifamily Elmtree Park Apartments of Indianapolis, II, LP 947,000
22.30 Multifamily Meadowood Apartments of Warrick County, Ltd. 993,000
22.40 Multifamily Rosewood Commons Apartments ofIndianapolis, Ltd. 1,887,000
22.50 Multifamily Acadia Court Apartments of Bloomington, Ltd. 2,118,000
23 Office Charles County Resources Investors 6,750,000
24 Industrial Laguna Properties Limited Partnership 6,675,000
25 Manufactured Housing Carol E. Williams, Kimberly Layne Williams and Dale A. Will 6,850,000
26 Retail-Single Tenant K-GO, LLC 6,500,000
27 Retail-Anchored HPM Investments, Inc. 6,500,000
28 MULTIFAMILY VARIOUS 6,195,000
28.10 Multifamily Pine Terrace Apartments, Ltd. 2,193,000
28.20 Multifamily Sanford Court Investors, Ltd. 1,782,000
28.30 Multifamily Applewood Apartments, LTD. 2,220,000
29 Retail-Unanchored Krinsky-Finkel, LLC 5,925,000
30 Mixed Use Pascack Industries, Inc. 5,850,000
31 Hotel - Limited Service Brilliance Investment, LLC 5,865,000
32 Office JLH Properties, Inc. 5,800,000
33 MULTIFAMILY CORPORATE PLAZA LIMITED 5,765,000
33.10 Multifamily Corporate Plaza Limited 1,123,052
33.20 Multifamily Corporate Plaza Limited 2,770,195
33.30 Multifamily Corporate Plaza Limited 1,871,753
34 Hotel - Limited Service Airport Investment Company, Inc. 5,800,000
35 Multifamily Malden Park Place Company, LLC 5,780,000
36 Office Gloria S. Y. Gee, as Successor Trustee 5,700,000
37 Multifamily Nashua Plaza Housing Associates Limited Partnership 5,680,000
38 Hotel - Limited Service AMA Holdings, LLC, SEA Holdings, LLC, DGH Holdings, LLC and 5,500,000
39 Retail-Unanchored Durango-Twain L.L.C. 5,400,000
40 Nursing Home, Skilled Healthcare Properties of St. Augustine, Inc. 5,400,000
41 Mixed Use A.R.B.P., LLC 5,250,000
42 Office Westmark Industries, LLC 5,200,000
43 Retail-Anchored Greenway Terrace LLC 5,200,000
44 Retail-Anchored Phybell Development Corporation 5,000,000
45 Multifamily Bayside Willows, Inc. 5,030,000
46 Retail-Anchored Westgate Plaza LP 5,000,000
47 Multifamily Riverfront Partnership 4,875,000
48 Retail-Anchored Dial Realty-Cheyenne Mountain,L.L.C. 4,890,000
49 MANUFACTURED HOUSING A/C, INC. 4,885,000
49.10 Manufactured Housing A/C, Inc. 2,442,500
49.20 Self-Storage A/C, Inc. 557,736
49.30 Manufactured Housing A/C, Inc. 1,884,764
50 Office Kennedy Square Investors, L.C. 4,825,000
51 Multifamily Westpointe Limited Partnership 4,820,000
52 Mixed Use Realmark VII, L.P. 4,800,000
53 Multifamily 8100 Bellaire Corporation 4,700,000
54 Multifamily Bridle Path Place Limited Partnership 4,590,000
55 Multifamily JCM Associates, L.L.C. 4,460,000
56 Retail-Unanchored Hawaii Property, Inc. 4,500,000
57 Multifamily Merit El Paso Apartments Limited Partnership 4,400,000
58 Industrial KCSD Limited Partnership 4,369,000
59 Retail-Anchored Miles G. Carter, an Individual 4,300,000
60 Hotel - Limited Service PLJV, LLC 4,300,000
61 Retail-Shadow Anchored Patton Rampart, LLC 4,330,000
62 Retail-Unanchored Park Belvedere LLC 4,200,000
63 Office Haverford-Hathaway, LLC 4,200,000
64 Mixed Use Boulevard East Associates, Ltd. 4,200,000
65 Nursing Home, Skilled Hood River Care Associates 4,150,000
66 Retail-Anchored 221 Route 4 East Corp. 4,150,000
67 Multifamily The Sprigler Family Limited Partnership 4,100,000
68 Industrial Migo Limited Liability Company 4,000,000
69 Industrial 3501 North Causeway Associates 4,000,000
70 Nursing Home, Skilled Doctor's Hospital of West Covina, Inc. 4,000,000
71 Industrial Beven Street Properties, LLC 3,970,000
72 Self-Storage Mini Storage, Ltd. 3,850,000
73 Nursing Home SB Realty Corporation 3,850,000
74 Nursing Home Wagner Hts, LLC 3,800,000
75 Office FREP, LLC 3,780,000
76 Multifamily Flemington Fidelco, LLC 3,720,000
77 MULTIFAMILY VARIOUS 3,699,000
77.10 Multifamily Colonial Park Apartments, LLC. 1,475,000
77.20 Multifamily Jackson Trace Apartments, LLC 1,224,000
77.30 Multifamily Fox Valley Apartments, LLC 1,000,000
78 Assisted Living Facility Highland Holdings, LLC 3,700,000
79 Congregate Care Residential Care I, L.L.C. 3,600,000
80 Nursing Home, Skilled Gillette Associates, Limited Partnership 3,600,000
81 Multifamily Trantor Realty Associates 3,585,000
82 Office Peregrine Properties LLC 3,525,000
83 Retail-Unanchored Ridgeview Plaza 3,500,000
84 Multifamily Sunplace Investment Associates, LP 3,525,000
85 Office Meadow Wood Crown Plaza, Inc. 3,500,000
86 Retail-Unanchored ORC LLC, GMAIN LLC, RMAIN LLC 3,500,000
87 Retail-Shadow Anchored Atalaya Properties, Inc. 3,500,000
88 MULTIFAMILY THE MARTYNES FAMILY TRUST 3,415,000
88.10 Multifamily The Martynes Family Trust 2,015,000
88.20 Multifamily The Martynes Family Trust 1,400,000
89 Retail-Single Tenant The Richard C. Dunsay Real Property Trust 3,360,000
90 Assisted Living Facility Juniper Eventide, L.P. 3,350,000
100 Retail-Anchored Yerington Shopping Center, LLC 3,316,200
101 RETAIL-SINGLE TENANT CAPTEC FRANCHISE CAPITAL PARNERS L.P. IV 3,276,000
101.10 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 465,047
101.20 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 377,205
101.30 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 382,372
101.40 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 981,767
101.50 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 601,978
101.60 Retail-Single Tenant Captec Franchise Capital Parners L.P. IV 467,631
102 Multifamily Holiday Properties Partnership 3,300,000
103 Retail-Unanchored ADI Properties and Pembroke Biscayne, LLC 3,200,000
104 Office Northgate Group, LLC 3,200,000
105 Manufactured Housing Corrigan Group Two, L.C. 3,150,000
106 NURSING HOME TRADE AROUND THE WORLD OF PENNSYLVANIA, INC. 3,080,000
106.10 Nursing Home Trade Around the World of Pennsylvania, Inc. 1,464,262
106.20 Nursing Home Trade Around the World of Pennsylvania, Inc. 1,615,738
107 Retail-Single Tenant Chicago Salvage Stock Stores, Inc. 3,050,000
108 Office 2633 Napoleon 3,060,000
109 Multifamily Teakwood Village, L.L.C. 3,035,000
110 Self-Storage First European Ventures, LLC 3,100,000
111 Multifamily Vaer Associates, L.L.C. 3,000,000
112 Multifamily Olathe Duplexes, LLC 3,000,000
113 Retail-Unanchored Jamaica Avenue Realty LLC 3,000,000
114 Multifamily Q.A. V Limited Partnership, a Mass. Limited Partnership 2,851,000
115 Retail-Single Tenant The Richard C. Dunsay Real Property Trust 2,825,000
116 Manufactured Housing Cheyenne MHP, Limited 2,800,000
117 Retail-Unanchored Harbor Properties, Inc. 2,800,000
118 Industrial Red Dog Drive LLC 2,800,000
119 Multifamily Forest Brooke Apartments LTD 2,800,000
120 Retail-Unanchored Pleasant Village Associates 2,700,000
121 Manufactured Housing Royal View Gardens, Inc. 2,685,000
122 Retail-Unanchored Furniture Executives No. 7, L.P. 2,700,000
123 Retail-Anchored Capital Plaza Associates, LP 2,900,000
124 Hotel - Full Service Megha, Inc 2,650,000
125 Multifamily Henridge Properties, L.P. 2,575,000
126 Retail-Unanchored The Graham Center LLC 2,600,000
127 Industrial Branford Investments, LLC 2,500,000
128 HOTEL - LIMITED SERVICE PARLON CORPORATION 2,485,000
128.10 Hotel - Limited Service Parlon Corporation 1,883,000
128.20 Hotel - Limited Service Parlon Corporation 602,000
129 RETAIL-ANCHORED BARNES INVESTMENT II COMPANY 2,500,000
129.10 Retail-Anchored Barnes Investment II Company 1,395,349
129.20 Retail-Unanchored Barnes Investment II Company 1,104,651
130 Mixed Use 820 West Warner, LLC 2,475,000
131 Multifamily Meldon Place Apartments of Toledo, Ltd. 2,418,750
132 Multifamily Linden Investments, L.L.C. 2,414,000
133 Retail-Anchored 12th and Monroe LP 2,300,000
134 Multifamily Packard Properties, LLC 2,250,000
135 Retail-Unanchored Cedar Contracting, Inc. d/b/a Cedar Corporation 2,239,000
136 Office Tri-State Plaza Place Limited Partnership 2,200,000
137 Multifamily Colonial Square Investor, Ltd. 2,200,000
138 Retail-Unanchored Elks Plaza LLC 1,900,000
139 Hotel - Limited Service Kunal Hospitality, L.L.C. 2,160,000
140 Multifamily JDD, LLC 2,160,000
141 Industrial The Louis Somers and Debra Somers 1993 Living Trust 2,100,000
142 Office Asia Fountain Group, Inc. 2,200,000
143 Retail-Anchored Moskowitz Family II Ltd. 2,100,000
144 Industrial Two Irish Guys II, LLC 2,100,000
145 Retail-Anchored Bonanza Investments, LLC 2,025,000
146 Manufactured Housing The Vanderhout Family Limited Partnership 2,000,000
147 RETAIL-UNANCHORED CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III 1,994,000
147.10 Retail-Unanchored Captec Franchise Capital Partners L.P. III 690,231
147.20 Retail-Unanchored Captec Franchise Capital Partners L.P. III 409,026
147.30 Retail-Unanchored Captec Franchise Capital Partners L.P. III 894,744
148 Manufactured Housing Vegas Mobile Park One, L.P. 2,000,000
149 Multifamily Jamestown Apartments Corp. 2,000,000
150 Office Downtown Properties Development Corporation 1,975,000
151 Multifamily Park Meadows Apartments 1,975,000
152 Self-Storage Carmel Self Storage, LLC 1,900,000
153 Office Arthur Franklin Bridge Testamentary Trust 1,900,000
154 Retail-Unanchored VF-Princeton Woods 3, LLC 1,800,000
155 Office United Real Estate Investors, Inc. 1,800,000
156 Retail-Unanchored James W. Winans and Ruth C. Winans 1,763,000
157 Multifamily Edwina N. Decker Trust 1,700,000
158 Multifamily Willow Branch Apartments, Inc. 1,700,000
159 Retail-Single Tenant 257 Associates, LLC 1,675,000
160 Retail-Unanchored TKC Properties, LLC 1,668,000
161 Multifamily Heathmoore Apartments of Indianapolis, II, Inc. 1,649,000
162 Retail-Unanchored Tooele Centers, LLC 1,650,000
163 Mixed Use Realmark X, L.L.C. 1,600,000
164 Multifamily Sandra Court Properties, L.P. 1,560,000
165 Office Waverly Plaza LLC 1,550,000
166 Retail-Unanchored CP Westheimer LLC 1,550,000
167 Multifamily Winthrop Court Apartments of Frankfort, Ltd. 1,500,000
168 Mixed Use Richmond Avenue Associates 1,500,000
169 Manufactured Housing Middlefield Properties, LLC 1,500,000
170 Office Raintree Office Building LLC 1,500,000
171 Mixed Use 1770 Post Road Associates 1,500,000
172 Retail-Single Tenant Robert S. and Mary Jane Hakemian 1,500,000
173 Self-Storage National Self-Storage Associates, L.L.C. 1,485,000
174 Manufactured Housing Narje, LLC 1,480,000
175 Mixed Use Eighth Avenue Associates 1,500,000
176 Multifamily LOL Village Limited Partnership 1,460,000
177 Industrial W. Roberts Pedrick and Melanie M. Pedrick 1,450,000
178 Industrial 4140 Lockbourne Limited 1,450,000
179 Multifamily Pacific Land LLC 1,433,000
180 Mixed Use Arthur Van der Wel 1,400,000
181 Mixed Use Realmark IX, L.L.C. 1,408,000
182 Multifamily Ernest and Betty Vandegrift 1,400,000
183 Office Southern Station Partnership, Ltd. 1,400,000
184 Retail-Unanchored Colonial Properties, LLC 1,400,000
185 Retail-Unanchored West Haven Acquisition, LLC 1,350,000
186 Retail-Anchored Milton Development, LTD 1,360,000
187 Multifamily Coolidge-Kristie Equities, L.L.C. 1,300,000
188 Manufactured Housing Valley View III 1,300,000
189 Mixed Use Roman Realty Co., LLC and Dora Straus Family LP Association 1,300,000
190 Industrial KALE, LLC 1,290,000
191 Office Quail Street Company LLC 1,275,000
192 Mixed Use Realmark Habersham, L.L.C. 1,200,000
193 Manufactured Housing Paradise Pointe, L.L.C. 1,181,000
194 Retail-Unanchored Boardwalk Boutiques Partnership 1,185,000
195 Multifamily Palm Side Apartments, Ltd. 1,162,000
196 Multifamily Sudler Partnership 1,160,000
197 Multifamily Erez Ltd. 1,148,000
198 Self-Storage Carpinteria Self Storage LLC 1,150,000
199 Office 39 Forest Avenue LLC 1,128,000
200 Mixed Use Realmark I, Ltd. 1,100,000
201 Retail-Unanchored Parkway Bank & Trust Company Trust #11604 1,088,000
202 Industrial Gaile A. Morris 1,087,500
203 Multifamily Leverington Properties, L.P. 1,056,000
204 Manufactured Housing Corrigan Group, L.C. 1,050,000
205 Multifamily Blutegel 3, LLP 1,060,000
206 Multifamily Willowood East Apartments of Indianapolis, Ltd. 1,031,000
207 Multifamily 231 Harrison Avenue Limited Partnership 1,000,000
208 Industrial KOGO Leasing, Ltd. 995,000
209 Manufactured Housing AGA Property Management LLC 1,000,000
210 Hotel - Limited Service BCAM Corp. 1,000,000
211 Retail-Single Tenant No Apples I - Klamath Falls, L.L.C. 952,000
212 Retail-Single Tenant No Apples I - Bullhead City, L.L.C. 948,000
213 Hotel - Limited Service Bucksport Motel Properties, Inc. 875,000
214 Multifamily Winter Woods Apartments II, Ltd. 866,000
215 Retail-Single Tenant 30-08 Realty Corp. 862,000
216 Retail-Unanchored Galen M. Oakes and Beulah Oakes 750,000
217 Retail-Unanchored John and Eva Pappas Realty, L.L.C. 750,000
218 Retail-Unanchored Park Plaza Associates, Ltd. 750,000
219 Office Randal S. Sebastian Sandra A. Sebastian 750,000
220 Retail-Unanchored Po Lee, Yu Ling Lee, Jim Hau, Anna Hau 700,000
221 Industrial The Jason Company L.L.C. 675,000
222 Multifamily HCR Properties Limited Liability Company 636,000
223 Multifamily Killeen Hillcrest, LTD 650,000
224 Office Joan S. Orlovitz 615,000
225 Multifamily John R. Messick 600,000
226 Mixed Use Commerce Oaklawn, LTD 600,000
227 Manufactured Housing Eight Star Corporation 525,000
228 Multifamily Parkchester, Inc. 500,000
229 Retail-Unanchored South Bend Development Inc. 500,000
230 Retail-Single Tenant Russell Properties, L.L.C. 375,000
231 Manufactured Housing Geoffrey Boynton and Nancy Boynton 350,000
232 Multifamily Luis and Neyda Jimenez 312,000
233 Multifamily Aurelain and Maria Victoria Gava 304,000
234 Industrial Neico Investments, LLC 300,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
GROSS NET 1ST INT. & INTEREST
CONTROL CUT-OFF DATE LOAN MORTGAGE MORTGAGE NOTE PRIN. PAYMENT ACCRUAL
NUMBER BALANCE TYPE RATE RATE DATE DATE METHOD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $69,289,658 FIXED 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.10 12,471,141 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.20 3,392,150 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.30 7,183,377 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.40 2,693,766 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.50 7,582,454 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.60 7,482,684 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.70 3,890,996 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.80 6,484,993 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.90 3,242,497 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.91 972,749 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.92 1,197,230 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.93 748,268 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.94 5,088,225 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.95 4,963,514 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
1.96 1,895,613 Fixed 8.0800% 8.0270% 05/03/99 06/01/99 Actual / 360
2 38,921,165 Fixed 7.5200% 7.4670% 03/26/99 05/01/99 Actual / 360
3 27,098,390 Fixed 7.7800% 7.7270% 03/04/99 05/01/99 Actual / 360
4 17,536,726 Fixed 8.0000% 7.9470% 05/19/99 07/01/99 30 / 360
5 12,341,663 Fixed 7.9700% 7.9170% 05/13/99 07/01/99 Actual / 360
6 11,676,920 FIXED 7.7700% 7.6770% 04/08/99 06/01/99 ACTUAL / 360
6.10 4,738,634 Fixed 7.7700% 7.6770% 04/08/99 06/01/99 Actual / 360
6.20 6,938,286 Fixed 7.7700% 7.6770% 04/08/99 06/01/99 Actual / 360
7 11,635,676 FIXED 7.4500% 7.3470% 02/01/99 03/01/99 30 / 360
7.10 9,244,784 Fixed 7.4500% 7.3470% 02/01/99 03/01/99 30 / 360
7.20 2,390,892 Fixed 7.4500% 7.3470% 02/01/99 03/01/99 30 / 360
8 11,479,097 Fixed 7.7500% 7.6970% 05/18/99 07/01/99 Actual / 360
9 11,353,185 Fixed 7.3700% 7.3170% 03/29/99 05/01/99 Actual / 360
10 10,899,246 Fixed 7.0700% 7.0170% 06/30/98 09/01/98 30 / 360
11 10,620,679 Fixed 6.4700% 6.3670% 10/02/98 12/01/98 30 / 360
12 10,391,638 Fixed 7.9500% 7.8970% 03/02/99 05/01/99 Actual / 360
13 10,355,992 Fixed 7.2500% 7.1970% 11/11/98 01/01/99 Actual / 360
14 9,875,416 Fixed 7.0900% 7.0370% 03/04/98 05/01/98 Actual / 360
15 9,334,620 Fixed 8.0800% 8.0270% 11/02/98 01/01/99 Actual / 360
16 9,124,979 Fixed 6.2700% 6.2170% 09/11/98 11/01/98 Actual / 360
17 8,735,526 Fixed 6.9000% 6.8470% 08/28/98 10/01/98 Actual / 360
18 8,528,055 FIXED 7.3700% 7.3016% 04/28/99 06/01/99 ACTUAL / 360
18.10 658,595 Fixed 7.3700% 7.1170% 04/28/99 06/01/99 Actual / 360
18.20 1,646,487 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
18.30 1,646,487 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
18.40 1,414,482 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
18.50 1,429,450 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
18.60 1,732,554 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
19 8,483,996 Fixed 7.8200% 7.7170% 03/16/99 05/01/99 Actual / 360
20 8,456,391 Fixed 8.0600% 8.0070% 05/13/99 07/01/99 30 / 360
21 8,166,546 Fixed 7.2000% 7.1470% 07/30/98 09/01/98 Actual / 360
22 6,816,528 FIXED 7.6000% 7.5470% 12/31/98 02/01/99 ACTUAL / 360
22.10 910,923 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
22.20 940,725 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
22.30 986,420 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
22.40 1,874,496 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
22.50 2,103,965 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
23 6,695,418 Fixed 8.0500% 7.9970% 10/29/98 12/01/98 Actual / 360
24 6,664,037 Fixed 7.6900% 7.6370% 04/22/99 06/01/99 Actual / 360
25 6,605,927 Fixed 8.3770% 8.2840% 10/02/95 12/01/95 Actual / 360
26 6,469,716 Fixed 7.7500% 7.6570% 03/30/99 05/01/99 Actual / 360
27 6,367,553 Fixed 7.5500% 7.4970% 07/28/98 09/01/98 30 / 360
28 6,153,948 FIXED 7.6000% 7.5470% 12/31/98 02/01/99 ACTUAL / 360
28.10 2,178,468 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
28.20 1,770,191 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
28.30 2,205,289 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
29 5,890,277 Fixed 7.4100% 7.3570% 01/15/99 03/01/99 Actual / 360
30 5,810,908 Fixed 7.5500% 7.4970% 12/30/98 02/01/99 Actual / 360
31 5,796,232 Fixed 7.5000% 7.4470% 08/17/98 10/01/98 30 / 360
32 5,792,273 Fixed 8.3300% 8.2770% 05/24/99 07/01/99 30 / 360
33 5,756,330 FIXED 7.4500% 7.3470% 04/02/99 06/01/99 30 / 360
33.10 1,121,363 Fixed 7.4500% 7.3470% 04/02/99 06/01/99 30 / 360
33.20 2,766,029 Fixed 7.4500% 7.3470% 04/02/99 06/01/99 30 / 360
33.30 1,868,938 Fixed 7.4500% 7.3470% 04/02/99 06/01/99 30 / 360
34 5,754,326 Fixed 8.2000% 8.0970% 10/30/98 12/01/98 Actual / 360
35 5,733,819 Fixed 6.9000% 6.8470% 08/27/98 10/01/98 Actual / 360
36 5,693,384 Fixed 7.8750% 7.7820% 04/21/99 06/01/99 Actual / 360
37 5,654,423 Fixed 7.8400% 7.7370% 11/30/98 01/01/99 Actual / 360
38 5,391,074 Fixed 7.7500% 7.6970% 07/13/98 09/01/98 Actual / 360
39 5,369,824 Fixed 7.7100% 7.6570% 01/20/99 03/01/99 Actual / 360
40 5,350,286 Fixed 7.3000% 7.2470% 10/13/98 12/01/98 Actual / 360
41 5,203,290 Fixed 7.2100% 7.1570% 07/31/98 09/01/98 Actual / 360
42 5,137,311 Fixed 7.0100% 6.9570% 08/28/98 10/01/98 Actual / 360
43 5,133,243 Fixed 6.9500% 6.8970% 08/22/98 10/01/98 Actual / 360
44 4,978,092 Fixed 7.2500% 7.1970% 02/01/99 04/01/99 Actual / 360
45 4,976,186 Fixed 7.1250% 7.0720% 05/12/98 07/01/98 Actual / 360
46 4,930,706 Fixed 7.6250% 7.5720% 12/31/97 02/01/98 Actual / 360
47 4,863,747 Fixed 7.3500% 7.2470% 03/25/99 05/01/99 30 / 360
48 4,853,905 Fixed 6.9500% 6.8970% 12/07/98 02/01/99 Actual / 360
49 4,846,563 FIXED 6.9700% 6.9170% 08/20/98 10/01/98 ACTUAL / 360
49.10 2,423,281 Fixed 6.9700% 6.9170% 08/20/98 10/01/98 Actual / 360
49.20 553,348 Fixed 6.9700% 6.9170% 08/20/98 10/01/98 Actual / 360
49.30 1,869,934 Fixed 6.9700% 6.9170% 08/20/98 10/01/98 Actual / 360
50 4,804,993 Fixed 8.1500% 8.0970% 02/26/99 04/01/99 30 / 360
51 4,782,167 Fixed 6.8200% 6.7670% 09/21/98 11/01/98 Actual / 360
52 4,748,282 Fixed 7.0000% 6.9470% 09/19/98 11/01/98 Actual / 360
53 4,654,483 Fixed 7.0000% 6.9470% 10/08/98 12/01/98 Actual / 360
54 4,553,973 Fixed 6.8200% 6.7670% 09/21/98 11/01/98 Actual / 360
55 4,422,775 Fixed 6.4800% 6.4270% 09/09/98 11/01/98 30 / 360
56 4,417,440 Fixed 7.6250% 7.5720% 08/18/98 10/01/98 Actual / 360
57 4,390,221 Fixed 7.5400% 7.4870% 03/04/99 05/01/99 30 / 360
58 4,304,366 Fixed 6.5300% 6.4770% 05/29/98 02/01/99 30 / 360
59 4,240,889 Fixed 7.1100% 7.0570% 07/23/98 09/01/98 30 / 360
60 4,234,690 Fixed 7.6250% 7.5720% 08/27/98 10/01/98 Actual / 360
61 4,201,787 Fixed 6.7500% 6.6970% 09/15/98 11/01/98 Actual / 360
62 4,192,016 Fixed 7.7800% 7.7270% 03/23/99 05/01/99 Actual / 360
63 4,182,641 Fixed 8.1700% 8.0670% 02/24/99 04/01/99 30 / 360
64 4,162,310 Fixed 7.4500% 7.3970% 10/15/98 12/01/98 Actual / 360
65 4,125,787 Fixed 7.3500% 7.2970% 10/05/98 12/01/98 Actual / 360
66 4,103,282 Fixed 7.4100% 7.3970% 08/28/98 10/01/98 Actual / 360
67 4,090,227 Fixed 7.2400% 7.1870% 04/27/99 06/01/99 30 / 360
68 3,991,876 Fixed 7.5000% 7.4470% 03/05/99 05/01/99 Actual / 360
69 3,968,418 Fixed 7.3600% 7.3070% 11/04/98 01/01/99 Actual / 360
70 3,951,249 Fixed 8.7500% 8.6970% 10/15/98 12/01/98 Actual / 360
71 3,949,489 Fixed 7.6100% 7.5070% 03/23/99 05/01/99 Actual / 360
72 3,807,107 Fixed 7.4700% 7.4170% 08/27/98 10/01/98 Actual / 360
73 3,804,527 Fixed 7.5000% 7.4470% 08/17/98 10/01/98 Actual / 360
74 3,754,256 Fixed 7.3750% 7.3220% 08/21/98 10/01/98 Actual / 360
75 3,725,063 Fixed 7.2500% 7.1970% 06/19/98 08/01/98 Actual / 360
76 3,690,066 Fixed 7.2500% 7.1970% 11/02/98 01/01/99 Actual / 360
77 3,681,373 FIXED 7.2814% 7.2284% VARIOUS 04/01/99 30 / 360
77.10 1,467,914 Fixed 7.2300% 7.1770% 02/01/99 04/01/99 30 / 360
77.20 1,218,120 Fixed 7.2300% 7.1770% 02/01/99 04/01/99 30 / 360
77.30 995,339 Fixed 7.4200% 7.3670% 02/03/99 04/01/99 30 / 360
78 3,675,856 Fixed 7.8000% 7.7470% 08/07/98 10/01/98 Actual / 360
79 3,566,971 Fixed 7.8000% 7.7470% 01/15/99 03/01/99 Actual / 360
80 3,548,140 Fixed 7.8750% 7.8220% 05/26/98 07/01/98 Actual / 360
81 3,530,827 Fixed 7.0000% 6.9470% 06/06/98 08/01/98 Actual / 360
82 3,481,424 Fixed 7.2000% 7.1470% 08/13/98 10/01/98 Actual / 360
83 3,481,297 Fixed 7.9900% 7.9370% 01/13/99 03/01/99 Actual / 360
84 3,479,404 Fixed 6.9000% 6.8470% 08/28/98 10/01/98 Actual / 360
85 3,475,917 Fixed 7.3750% 7.3220% 12/07/98 02/01/99 Actual / 360
86 3,473,194 Fixed 6.9500% 6.8970% 09/30/98 11/01/98 Actual / 360
87 3,465,500 Fixed 7.1400% 7.0870% 06/10/98 08/01/98 Actual / 360
88 3,411,553 FIXED 8.2500% 8.1970% VARIOUS 07/01/99 30 / 360
88.10 2,012,966 Fixed 8.2500% 8.1970% 05/17/99 07/01/99 30 / 360
88.20 1,398,587 Fixed 8.2500% 8.1970% 05/17/99 07/01/99 30 / 360
89 3,352,502 Fixed 7.5200% 7.4170% 03/22/99 05/01/99 30 / 360
90 3,326,017 Fixed 7.7300% 7.6770% 07/15/98 09/01/98 Actual / 360
100 3,309,161 Fixed 7.7700% 7.6670% 03/02/99 05/01/99 30 / 360
101 3,276,000 FIXED 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.10 465,047 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.20 377,205 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.30 382,372 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.40 981,767 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.50 601,978 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
101.60 467,631 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
102 3,252,671 Fixed 7.0950% 7.0420% 01/26/98 03/01/98 30 / 360
103 3,173,843 Fixed 7.1500% 7.0970% 08/13/98 10/01/98 30 / 360
104 3,173,072 Fixed 7.5000% 7.4470% 07/08/98 09/01/98 Actual / 360
105 3,145,355 Fixed 8.8000% 8.6870% 03/10/99 05/01/99 Actual / 360
106 3,055,911 FIXED 8.7700% 8.7170% 01/28/99 03/01/99 30 / 360
106.10 1,452,810 Fixed 8.7700% 8.7170% 01/28/99 03/01/99 30 / 360
106.20 1,603,101 Fixed 8.7700% 8.7170% 01/28/99 03/01/99 30 / 360
107 3,047,856 Fixed 7.7700% 7.7170% 05/19/99 07/01/99 30 / 360
108 3,038,678 Fixed 8.0700% 7.9670% 11/16/98 01/01/99 Actual / 360
109 3,024,853 Fixed 7.6800% 7.6270% 03/19/99 05/01/99 30 / 360
110 3,018,094 Fixed 7.3750% 7.3220% 04/06/98 06/01/98 Actual / 360
111 2,995,501 Fixed 7.2500% 7.1970% 04/26/99 06/01/99 Actual / 360
112 2,979,245 Fixed 7.9300% 7.8770% 02/11/99 04/01/99 30 / 360
113 2,963,194 Fixed 7.2500% 7.1970% 08/24/98 10/01/98 Actual / 360
114 2,845,397 Fixed 7.6400% 7.5870% 03/02/99 05/01/99 Actual / 360
115 2,818,696 Fixed 7.5200% 7.4170% 03/22/99 05/01/99 30 / 360
116 2,796,884 Fixed 7.6500% 7.5970% 05/21/99 07/01/99 Actual / 360
117 2,791,627 Fixed 8.3700% 8.3170% 03/18/99 05/01/99 30 / 360
118 2,780,734 Fixed 7.3750% 7.2720% 12/16/98 02/01/99 Actual / 360
119 2,771,406 Fixed 7.0000% 6.9470% 10/23/98 12/01/98 Actual / 360
120 2,695,013 Fixed 7.9000% 7.7970% 03/09/99 05/01/99 Actual / 360
121 2,682,184 Fixed 8.2500% 8.1170% 04/16/99 06/01/99 Actual / 360
122 2,681,388 Fixed 8.1300% 8.0270% 11/25/98 01/01/99 Actual / 360
123 2,679,783 Fixed 7.1250% 7.0720% 03/31/98 05/01/98 Actual / 360
124 2,634,333 Fixed 8.2700% 8.1670% 12/30/98 02/01/99 Actual / 360
125 2,569,770 Fixed 7.5000% 7.4070% 03/24/99 05/01/99 Actual / 360
126 2,541,864 Fixed 7.6250% 7.5720% 08/17/98 10/01/98 Actual / 360
127 2,486,914 Fixed 8.1100% 7.9570% 01/27/99 03/01/99 30 / 360
128 2,474,078 FIXED 8.8000% 8.6670% 03/03/99 05/01/99 ACTUAL / 360
128.10 1,874,724 Fixed 8.8000% 8.6670% 03/03/99 05/01/99 Actual / 360
128.20 599,354 Fixed 8.8000% 8.6670% 03/03/99 05/01/99 Actual / 360
129 2,445,523 FIXED 7.5000% 7.4470% 01/26/99 03/01/99 ACTUAL / 360
129.10 1,364,943 Fixed 7.5000% 7.4470% 01/26/99 03/01/99 Actual / 360
129.20 1,080,580 Fixed 7.5000% 7.4470% 01/26/99 03/01/99 Actual / 360
130 2,444,311 Fixed 7.3500% 7.2970% 07/17/98 09/01/98 Actual / 360
131 2,413,601 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
132 2,409,871 Fixed 7.9400% 7.8870% 05/20/99 07/01/99 30 / 360
133 2,278,281 Fixed 7.1500% 7.0970% 09/29/98 12/01/98 Actual / 360
134 2,230,487 Fixed 6.9000% 6.8470% 07/21/98 09/01/98 Actual / 360
135 2,229,761 Fixed 8.1800% 8.0770% 02/09/99 04/01/99 30 / 360
136 2,194,346 Fixed 8.7400% 8.6870% 03/31/99 05/01/99 Actual / 360
137 2,160,339 Fixed 7.4600% 7.4070% 08/07/98 10/01/98 Actual / 360
138 2,155,348 Fixed 8.8750% 8.8220% 06/24/97 08/01/97 30 / 360
139 2,154,168 Fixed 8.4800% 8.4270% 03/23/99 05/01/99 Actual / 360
140 2,150,183 Fixed 7.8000% 7.7470% 10/30/98 01/01/99 Actual / 360
141 2,089,180 Fixed 7.9600% 7.8570% 03/30/99 05/01/99 30 / 360
142 2,084,890 Fixed 7.2500% 7.1570% 11/25/98 01/01/99 Actual / 360
143 2,083,818 Fixed 7.5000% 7.4470% 11/03/98 01/01/99 Actual / 360
144 2,072,212 Fixed 7.3300% 7.2770% 07/02/98 09/01/98 Actual / 360
145 2,022,857 Fixed 7.9600% 7.9070% 05/05/99 07/01/99 30 / 360
146 1,997,309 Fixed 7.3000% 7.1670% 04/19/99 06/01/99 Actual / 360
147 1,994,000 FIXED 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
147.10 690,231 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
147.20 409,026 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
147.30 894,744 Fixed 8.5000% 8.4470% 03/26/99 05/01/01 30 / 360
148 1,992,133 Fixed 7.8200% 7.7670% 02/09/99 04/01/99 Actual / 360
149 1,982,125 Fixed 7.1000% 7.0470% 06/26/98 08/01/98 Actual / 360
150 1,973,715 Fixed 8.1500% 8.0970% 05/05/99 07/01/99 30 / 360
151 1,932,762 Fixed 7.5000% 7.2670% 11/12/97 01/01/98 Actual / 360
152 1,894,604 Fixed 8.2100% 8.1570% 03/26/99 05/01/99 Actual / 360
153 1,878,013 Fixed 7.2500% 7.1570% 08/14/98 10/01/98 Actual / 360
154 1,795,528 Fixed 7.6400% 7.5370% 02/24/99 04/01/99 Actual / 360
155 1,790,242 Fixed 7.9000% 7.8470% 01/26/99 03/01/99 Actual / 360
156 1,761,217 Fixed 8.2400% 8.1870% 05/06/99 07/01/99 30 / 360
157 1,696,569 Fixed 8.0200% 7.8670% 03/30/99 05/01/99 30 / 360
158 1,681,899 Fixed 7.1500% 7.0970% 05/12/98 07/01/98 Actual / 360
159 1,665,010 Fixed 7.2500% 7.1970% 10/23/98 12/01/98 Actual / 360
160 1,659,061 Fixed 7.6400% 7.5870% 03/08/99 05/01/99 30 / 360
161 1,638,073 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
162 1,618,825 Fixed 7.3750% 7.3220% 08/28/98 10/01/98 Actual / 360
163 1,582,761 Fixed 7.0000% 6.9470% 09/19/98 11/01/98 Actual / 360
164 1,556,832 Fixed 7.5000% 7.4070% 03/24/99 05/01/99 Actual / 360
165 1,546,649 Fixed 7.8500% 7.7970% 04/29/99 06/01/99 30 / 360
166 1,535,609 Fixed 7.2500% 7.1970% 10/29/98 12/01/98 Actual / 360
167 1,496,807 Fixed 7.3700% 7.3170% 04/28/99 06/01/99 Actual / 360
168 1,494,291 Fixed 7.9900% 7.9370% 02/24/99 04/01/99 Actual / 360
169 1,491,671 Fixed 7.7500% 7.6970% 01/21/99 03/01/99 Actual / 360
170 1,484,789 Fixed 7.3500% 7.2970% 09/24/98 11/01/98 Actual / 360
171 1,482,493 Fixed 7.2000% 7.1470% 08/14/98 10/01/98 Actual / 360
172 1,480,704 Fixed 7.2500% 7.1970% 11/11/98 01/01/99 Actual / 360
173 1,478,602 Fixed 7.3400% 7.2870% 02/24/99 04/01/99 Actual / 360
174 1,475,758 Fixed 8.1600% 8.0270% 03/19/99 05/01/99 Actual / 360
175 1,472,071 Fixed 7.5000% 7.4470% 08/27/98 10/01/98 Actual / 360
176 1,455,660 Fixed 7.5400% 7.4870% 02/17/99 04/01/99 30 / 360
177 1,444,219 Fixed 7.7500% 7.6570% 03/03/99 04/01/99 Actual / 360
178 1,437,802 Fixed 7.2500% 7.1570% 12/29/98 02/01/99 Actual / 360
179 1,426,052 Fixed 8.4500% 8.3970% 03/19/99 05/01/99 30 / 360
180 1,393,265 Fixed 8.6300% 8.5770% 12/31/98 03/01/99 30 / 360
181 1,392,830 Fixed 7.0000% 6.9470% 09/19/98 11/01/98 Actual / 360
182 1,390,332 Fixed 8.1200% 8.0670% 11/10/98 01/01/99 Actual / 360
183 1,386,798 Fixed 7.2500% 7.0970% 01/26/99 03/01/99 Actual / 360
184 1,373,704 Fixed 8.2300% 7.9970% 11/04/97 01/01/98 Actual / 360
185 1,348,692 Fixed 8.5000% 8.3970% 05/04/99 07/01/99 Actual / 360
186 1,342,471 Fixed 7.5000% 7.4470% 07/10/98 09/01/98 Actual / 360
187 1,297,055 Fixed 7.5600% 7.5070% 04/19/99 06/01/99 30 / 360
188 1,295,108 Fixed 7.5000% 7.4070% 01/05/99 03/01/99 Actual / 360
189 1,284,575 Fixed 7.4700% 7.4170% 08/27/98 10/01/98 Actual / 360
190 1,282,547 Fixed 7.5000% 7.4470% 01/21/99 03/01/99 Actual / 360
191 1,267,409 Fixed 7.3100% 7.2570% 02/02/99 03/01/99 Actual / 360
192 1,187,071 Fixed 7.0000% 6.9470% 09/19/98 11/01/98 Actual / 360
193 1,178,455 Fixed 7.8700% 7.8170% 04/21/99 06/01/99 30 / 360
194 1,174,680 Fixed 7.9000% 7.8470% 01/26/99 03/01/99 30 / 360
195 1,154,300 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
196 1,150,115 Fixed 7.7500% 7.6970% 10/30/98 12/01/98 Actual / 360
197 1,144,761 Fixed 7.5700% 7.5170% 02/24/99 04/01/99 Actual / 360
198 1,129,992 Fixed 7.1250% 7.0720% 09/23/98 11/01/98 Actual / 360
199 1,125,933 Fixed 8.8600% 8.8070% 04/01/99 06/01/99 30 / 360
200 1,088,148 Fixed 7.0000% 6.9470% 09/19/98 11/01/98 Actual / 360
201 1,086,058 Fixed 8.0400% 7.9870% 03/11/99 05/01/99 Actual / 360
202 1,081,461 Fixed 8.6300% 8.5770% 12/22/98 02/01/99 Actual / 360
203 1,053,855 Fixed 7.5000% 7.4070% 03/24/99 05/01/99 Actual / 360
204 1,048,401 Fixed 8.6750% 8.5420% 03/02/99 05/01/99 Actual / 360
205 1,047,734 Fixed 7.2500% 7.1970% 08/05/98 10/01/98 Actual / 360
206 1,024,168 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
207 998,058 Fixed 7.6900% 7.6370% 03/16/99 05/01/99 Actual / 360
208 994,123 Fixed 9.0700% 8.8170% 05/13/99 07/01/99 Actual / 360
209 989,760 Fixed 7.9500% 7.8970% 08/17/98 10/01/98 Actual / 360
210 985,367 Fixed 8.1900% 8.1370% 09/15/98 11/01/98 Actual / 360
211 945,849 Fixed 7.7500% 7.4970% 12/11/98 02/01/99 Actual / 360
212 941,875 Fixed 7.7500% 7.4970% 12/04/98 02/01/99 Actual / 360
213 867,412 Fixed 9.2000% 9.1470% 12/08/98 02/01/99 Actual / 360
214 860,261 Fixed 7.6000% 7.5470% 12/31/98 02/01/99 Actual / 360
215 857,919 Fixed 8.2600% 8.2070% 03/26/99 05/01/99 Actual / 360
216 748,607 Fixed 8.0800% 7.8270% 04/22/99 06/01/99 Actual / 360
217 747,575 Fixed 8.8000% 8.5470% 02/18/99 04/01/99 Actual / 360
218 745,154 Fixed 7.7500% 7.4970% 12/31/98 02/01/99 Actual / 360
219 744,311 Fixed 7.5900% 7.3370% 11/24/98 01/01/99 Actual / 360
220 693,304 Fixed 8.4500% 8.1970% 12/10/98 02/01/99 Actual / 360
221 673,819 Fixed 8.3800% 8.1270% 04/12/99 06/01/99 Actual / 360
222 628,783 Fixed 9.3750% 9.3220% 05/18/98 07/01/98 Actual / 360
223 621,602 Fixed 8.3100% 8.0770% 11/04/97 01/01/98 Actual / 360
224 606,036 Fixed 8.2200% 8.1670% 09/08/98 11/01/98 Actual / 360
225 597,831 Fixed 8.2500% 7.9970% 02/02/99 04/01/99 Actual / 360
226 594,311 Fixed 7.7300% 7.6770% 09/23/98 11/01/98 Actual / 360
227 523,136 Fixed 8.3400% 8.2870% 02/05/99 04/01/99 Actual / 360
228 492,386 Fixed 7.8900% 7.8370% 09/11/98 11/01/98 Actual / 360
229 490,092 Fixed 8.4700% 8.4170% 11/04/98 01/01/99 30 / 360
230 374,353 Fixed 8.4500% 8.1970% 04/20/99 06/01/99 Actual / 360
231 349,619 Fixed 8.5000% 8.2470% 05/14/99 07/01/99 Actual / 360
232 309,238 Fixed 8.1100% 8.0570% 09/23/98 11/01/98 Actual / 360
233 300,944 Fixed 7.4000% 7.3470% 09/16/98 11/01/98 Actual / 360
234 295,304 Fixed 7.6800% 7.6270% 09/10/98 11/01/98 Actual / 360
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GRACE
CONTROL DUE PERIOD PAYMENT MONTHLY DEBT
NUMBER DATE (DAYS) FREQUENCY SERVICE CROSS COLLATERALIZED / CROSS DEFAULTED SEASONING LO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 1 5 12 $539,712.13 2 0
1.10 1 5 12 107,530.61 2 0
1.20 1 5 12 27,912.20 2 0
1.30 1 5 12 55,366.82 2 0
1.40 1 5 12 18,531.87 2 0
1.50 1 5 12 56,281.98 2 0
1.60 1 5 12 59,485.02 2 0
1.70 1 5 12 27,454.62 2 0
1.80 1 5 12 50,562.26 2 0
1.90 1 5 12 22,878.85 2 0
1.91 1 5 12 8,693.96 2 0
1.92 1 5 12 11,439.43 2 0
1.93 1 5 12 6,177.29 2 0
1.94 1 5 12 37,063.74 2 0
1.95 1 5 12 34,775.86 2 0
1.96 1 5 12 15,557.62 2 0
2 1 5 12 273,227.96 3 27
3 1 10 12 195,069.07 3 48
4 1 5 12 130,274.13 1 25
5 1 10 12 90,361.75 1 60
6 1 5 12 88,527.15 215990053, 215990028 2 36
6.10 1 5 12 35,925.38 215990053 2 36
6.20 1 5 12 52,601.77 215990028 2 36
7 1 5 12 81,268.73 6098, 5201 5 29
7.10 1 5 12 64,569.68 6098 5 29
7.20 1 5 12 16,699.05 5201 5 29
8 1 5 12 95,174.22 1 25
9 1 5 12 78,539.35 3 27
10 1 10 12 73,701.13 11 59
11 1 5 12 67,420.31 8 32
12 1 5 12 80,879.53 3 0
13 1 5 12 75,461.04 7 31
14 1 10 12 67,840.25 15 60
15 1 5 12 73,049.59 7 31
16 1 5 12 56,765.71 9 48
17 1 10 12 62,549.46 10 156
18 1 5 12 62,435.13 4164695, 4164709, 4164733, 4164814, 4164831, GL991009 2 26
18.10 1 5 12 4,821.67 4164709, 4164733, 4164814, 4164831, GL991009 2 26
18.20 1 5 12 12,054.17 4164695, 4164733, 4164814, 4164831, GL991009 2 26
18.30 1 5 12 12,054.17 4164695, 4164709, 4164814, 4164831, GL991009 2 26
18.40 1 5 12 10,355.63 4164695, 4164709, 4164733, 4164831, GL991009 2 26
18.50 1 5 12 10,465.21 4164695, 4164709, 4164733, 4164814, GL991009 2 26
18.60 1 5 12 12,684.28 4164695, 4164709, 4164733, 4164814, 4164831 2 26
19 1 5 12 61,306.72 3 27
20 1 5 12 62,445.46 1 25
21 1 10 12 56,521.60 11 60
22 1 5 12 51,156.76 6218, 6219, 6220, 6221, 6223 6 30
22.10 1 5 12 6,836.31 6219, 6220, 6221, 6223 6 30
22.20 1 5 12 7,059.96 6218, 6220, 6221, 6223 6 30
22.30 1 5 12 7,402.89 6218, 6219, 6221, 6223 6 30
22.40 1 5 12 14,067.74 6218, 6219, 6220, 6223 6 30
22.50 1 5 12 15,789.86 6218, 6219, 6220, 6221 6 30
23 1 10 12 52,321.37 8 60
24 1 5 12 48,955.06 2 26
25 1 10 12 52,638.28 44 24
26 1 5 12 52,474.56 3 120
27 1 10 12 52,562.46 11 60
28 1 5 12 46,184.22 6029, 6033, 6034 6 30
28.10 1 5 12 16,348.99 6033, 6034 6 30
28.20 1 5 12 13,284.95 6029, 6034 6 30
28.30 1 5 12 16,550.28 6029, 6033 6 30
29 1 5 12 43,439.00 5 29
30 1 5 12 43,421.42 6 30
31 1 10 12 43,341.83 10 36
32 1 5 12 47,988.44 1 25
33 1 5 12 40,112.52 2 48
33.10 1 5 12 7,814.13 2 48
33.20 1 5 12 19,274.85 2 48
33.30 1 5 12 13,023.55 2 48
34 1 5 12 45,536.48 8 48
35 1 10 12 38,067.09 10 36
36 1 5 12 41,328.96 2 36
37 1 5 12 41,046.04 7 31
38 1 10 12 45,538.69 11 114
39 1 5 12 40,646.05 5 29
40 1 10 12 39,205.69 8 36
41 1 10 12 36,048.16 11 60
42 1 10 12 36,785.70 10 34
43 1 10 12 36,920.65 10 36
44 1 5 12 36,140.34 4 28
45 1 10 12 34,243.86 13 60
46 1 10 12 35,766.51 18 96
47 1 10 12 33,587.39 3 27
48 1 10 12 34,405.67 6 30
49 1 10 12 32,401.66 10 60
49.10 1 10 12 16,200.83 10 60
49.20 1 10 12 3,699.40 10 60
49.30 1 10 12 12,501.43 10 60
50 1 5 12 37,720.85 4 28
51 1 10 12 31,807.98 9 60
52 1 10 12 33,925.40 9 33
53 1 10 12 33,218.62 8 32
54 1 10 12 30,290.09 9 60
55 1 10 12 28,131.60 9 0
56 1 10 12 36,901.78 10 34
57 1 5 12 30,886.04 3 27
58 1 5 12 34,438.02 13 0
59 1 10 12 30,693.91 11 0
60 1 10 12 33,941.73 10 36
61 1 10 12 38,554.06 9 96
62 1 5 12 30,176.43 3 27
63 1 5 12 32,890.69 4 28
64 1 10 12 30,901.16 8 90
65 1 10 12 28,592.34 8 60
66 1 10 12 30,425.60 10 60
67 1 5 12 29,608.67 2 26
68 1 5 12 27,968.58 3 27
69 1 10 12 29,196.35 7 48
70 1 10 12 35,348.43 8 60
71 1 5 12 32,249.61 3 27
72 1 10 12 28,376.07 10 34
73 1 10 12 28,723.62 10 60
74 1 10 12 28,036.62 10 60
75 1 10 12 27,584.46 12 36
76 1 10 12 26,888.42 7 48
77 1 5 12 26,811.74 5623, 5624,5625, (CROSS DEFAULTED ONLY) 4 28
77.10 1 5 12 10,642.40 5624,5625 (Cross-Defaulted Only) 4 28
77.20 1 5 12 8,831.39 5623,5624 (Cross-Defaulted Only) 4 28
77.30 1 5 12 7,337.95 5623,5625 (Cross-Defaulted Only) 4 28
78 1 10 12 26,635.21 10 36
79 1 5 12 29,915.09 5 60
80 1 10 12 27,763.25 13 60
81 1 10 12 25,575.87 12 36
82 1 10 12 25,602.26 10 34
83 1 5 12 26,990.39 5 29
84 1 10 12 24,913.77 10 156
85 1 10 12 25,580.79 6 30
86 1 5 12 23,406.88 9 36
87 1 10 12 23,865.93 12 60
88 1 5 12 26,925.57 5434, 5435 1 0
88.10 1 5 12 15,887.27 5434 1 0
88.20 1 5 12 11,038.30 5435 1 0
89 1 5 12 23,539.64 3 27
90 1 10 12 23,953.53 11 36
100 1 5 12 23,803.51 3 27
101 1 5 12 28,429.89 3 0
101.10 1 5 12 4,035.79 3 0
101.20 1 5 12 3,273.47 3 0
101.30 1 5 12 3,318.32 3 0
101.40 1 5 12 8,520.00 3 0
101.50 1 5 12 5,224.10 3 0
101.60 1 5 12 4,058.21 3 0
102 1 10 12 22,165.93 17 0
103 1 10 12 21,613.02 10 60
104 1 10 12 22,616.08 11 60
105 1 5 12 24,893.64 3 36
106 1 5 12 27,257.61 5 0
106.10 1 5 12 12,958.54 5 0
106.20 1 5 12 14,299.07 5 0
107 1 5 12 21,892.74 1 25
108 1 5 12 23,759.65 7 48
109 1 5 12 22,784.93 3 27
110 1 10 12 24,944.95 14 60
111 1 5 12 20,670.58 2 26
112 1 5 12 24,962.67 4 28
113 1 10 12 21,887.50 10 36
114 1 5 12 20,208.63 3 0
115 1 5 12 19,791.51 3 27
116 1 10 12 20,965.75 1 25
117 1 5 12 22,301.59 3 27
118 1 5 12 20,464.63 6 72
119 1 10 12 19,970.73 8 84
120 1 5 12 19,623.75 3 27
121 1 5 12 20,171.51 2 48
122 1 0 12 21,072.09 7 48
123 1 10 12 31,523.92 15 60
124 1 5 12 20,929.36 6 48
125 1 5 12 18,044.77 3 36
126 1 10 12 22,334.39 10 120
127 1 5 12 19,477.93 5 0
128 1 5 12 22,039.56 3 60
128.10 1 5 12 16,700.40 3 60
128.20 1 5 12 5,339.16 3 60
129 1 5 12 26,380.67 5 72
129.10 1 5 12 14,724.09 5 72
129.20 1 5 12 11,656.58 5 72
130 1 10 12 18,049.24 11 36
131 1 5 12 17,670.32 2 26
132 1 5 12 20,101.61 1 0
133 1 10 12 16,476.67 8 60
134 1 10 12 14,818.50 11 60
135 1 5 12 17,548.79 4 28
136 1 5 12 18,072.22 3 27
137 1 10 12 17,669.28 10 34
138 1 10 12 18,349.55 24 0
139 1 5 12 17,363.80 3 27
140 1 10 12 15,549.20 7 31
141 1 5 12 17,513.00 3 60
142 1 5 12 15,176.34 7 60
143 1 10 12 15,518.81 7 31
144 1 10 12 15,433.43 11 60
145 1 5 12 15,575.66 1 25
146 1 5 12 13,711.42 2 48
147 1 5 12 17,304.40 3 0
147.10 1 5 12 5,989.98 3 0
147.20 1 5 12 3,549.62 3 0
147.30 1 5 12 7,764.79 3 0
148 1 5 12 15,198.61 4 60
149 1 5 12 13,440.64 12 60
150 1 5 12 14,698.90 1 25
151 1 10 12 14,595.08 19 36
152 1 5 12 14,929.80 3 60
153 1 5 12 13,733.33 10 60
154 1 5 12 12,758.87 4 28
155 1 10 12 13,773.66 5 48
156 1 5 12 13,888.60 1 25
157 1 5 12 12,497.71 3 0
158 1 10 12 11,602.71 13 60
159 1 5 12 11,426.45 8 32
160 1 5 12 13,580.44 3 27
161 1 5 12 12,293.43 6 30
162 1 10 12 13,273.79 10 120
163 1 10 12 11,308.47 9 33
164 1 5 12 10,907.75 3 36
165 1 5 12 11,809.54 2 26
166 1 10 12 11,203.51 8 48
167 1 5 12 10,958.34 2 26
168 1 5 12 11,567.31 4 28
169 1 5 12 11,329.93 5 29
170 1 10 12 10,938.93 9 60
171 1 10 12 10,793.83 10 60
172 1 5 12 11,855.64 7 31
173 1 5 12 10,819.94 4 28
174 1 10 12 11,580.19 3 36
175 1 10 12 12,183.57 10 36
176 1 10 12 10,248.55 4 28
177 1 5 12 10,952.27 4 60
178 1 5 12 10,810.89 6 60
179 1 5 12 12,390.60 3 27
180 1 10 12 11,396.09 5 0
181 1 10 12 9,951.45 9 33
182 1 10 12 10,916.95 7 0
183 1 5 12 11,065.26 5 60
184 1 10 12 11,019.60 19 0
185 1 5 12 10,870.57 1 60
186 1 10 12 10,147.71 11 35
187 1 5 12 9,657.68 2 26
188 1 5 12 9,089.79 5 60
189 1 10 12 9,673.06 10 60
190 1 5 12 9,532.99 5 29
191 1 5 12 9,265.13 5 29
192 1 10 12 8,481.35 9 33
193 1 5 12 9,013.68 2 26
194 1 5 12 9,838.19 5 0
195 1 5 12 8,662.80 6 30
196 1 10 12 8,761.81 8 0
197 1 5 12 8,165.10 4 28
198 1 10 12 9,074.82 9 60
199 1 5 12 9,358.23 2 26
200 1 10 12 7,774.57 9 33
201 1 5 12 8,013.72 3 27
202 1 10 12 8,852.32 6 60
203 1 5 12 7,383.71 3 36
204 1 5 12 8,204.17 3 36
205 1 10 12 7,661.75 10 60
206 1 5 12 7,686.19 6 30
207 1 5 12 7,122.71 3 27
208 1 10 12 8,397.75 1 60
209 1 10 12 7,685.07 10 0
210 1 10 12 8,483.03 9 0
211 1 5 12 7,190.73 6 60
212 1 5 12 7,160.52 6 60
213 1 10 12 7,985.50 6 0
214 1 5 12 6,456.10 6 30
215 1 10 12 7,350.22 3 0
216 1 10 12 5,828.43 2 60
217 1 10 12 6,191.58 4 60
218 1 5 12 5,664.97 6 30
219 1 10 12 5,586.41 7 60
220 1 10 12 6,052.66 6 60
221 1 10 12 5,380.81 2 60
222 1 10 12 5,562.39 13 59
223 1 10 12 5,959.34 19 48
224 1 10 12 5,228.63 9 0
225 1 10 12 4,730.70 4 60
226 1 10 12 4,524.10 9 0
227 1 10 12 4,170.99 4 0
228 1 10 12 4,148.04 9 0
229 1 10 12 4,914.91 7 0
230 1 10 12 3,006.98 2 60
231 1 10 12 2,859.87 1 60
232 1 10 12 2,430.85 9 0
233 1 10 12 2,226.80 9 0
234 1 10 12 2,449.91 9 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
YIELD
CONTROL MAINTENANCE
NUMBER DEF YM5 YM4 YM3 YM2 YM1 YM 5% 4% 3% 2% 1% OPEN DESCRIPTION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 0 0 0 0 60 0 0 0 0 0 12 13 TREASURY FLAT
1.10 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.20 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.30 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.40 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.50 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.60 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.70 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.80 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.90 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.91 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.92 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.93 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.94 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.95 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
1.96 0 0 0 0 0 60 0 0 0 0 0 12 13 Treasury Flat
2 90 0 0 0 0 0 0 0 0 0 0 0 3
3 66 0 0 0 0 0 0 0 0 0 0 0 6
4 116 0 0 0 0 0 0 0 0 0 0 0 3
5 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
6 0 0 0 0 0 82 0 0 0 0 0 0 3
6.10 0 0 0 0 0 82 0 0 0 0 0 0 3
6.20 0 0 0 0 0 82 0 0 0 0 0 0 3
7 88 0 0 0 0 0 0 0 0 0 0 0 3
7.10 88 0 0 0 0 0 0 0 0 0 0 0 3
7.20 88 0 0 0 0 0 0 0 0 0 0 0 3
8 92 0 0 0 0 0 0 0 0 0 0 0 3
9 90 0 0 0 0 0 0 0 0 0 0 0 3
10 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
11 85 0 0 0 0 0 0 0 0 0 0 0 3
12 90 0 0 0 0 27 0 0 0 0 0 0 3 Treasury Flat
13 86 0 0 0 0 0 0 0 0 0 0 0 3
14 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
15 86 0 0 0 0 0 0 0 0 0 0 0 3
16 69 0 0 0 0 0 0 0 0 0 0 0 3
17 141 0 0 0 0 0 0 0 0 0 0 0 3
18 91 0 0 0 0 0 0 0 0 0 0 0 3
18.10 91 0 0 0 0 0 0 0 0 0 0 0 3
18.20 91 0 0 0 0 0 0 0 0 0 0 0 3
18.30 91 0 0 0 0 0 0 0 0 0 0 0 3
18.40 91 0 0 0 0 0 0 0 0 0 0 0 3
18.50 91 0 0 0 0 0 0 0 0 0 0 0 3
18.60 91 0 0 0 0 0 0 0 0 0 0 0 3
19 89 0 0 0 0 0 0 0 0 0 0 0 3
20 92 0 0 0 0 0 0 0 0 0 0 0 3
21 54 0 0 0 0 0 0 0 0 0 0 0 6
22 87 0 0 0 0 0 0 0 0 0 0 0 3
22.10 87 0 0 0 0 0 0 0 0 0 0 0 3
22.20 87 0 0 0 0 0 0 0 0 0 0 0 3
22.30 87 0 0 0 0 0 0 0 0 0 0 0 3
22.40 87 0 0 0 0 0 0 0 0 0 0 0 3
22.50 87 0 0 0 0 0 0 0 0 0 0 0 3
23 54 0 0 0 0 0 0 0 0 0 0 0 6
24 91 0 0 0 0 0 0 0 0 0 0 0 3
25 0 0 0 0 0 0 54 0 0 0 0 0 6
26 0 0 0 0 0 127 0 0 0 0 0 0 3
27 0 0 0 0 0 120 0 0 0 0 0 0 60 Treasury Flat
28 87 0 0 0 0 0 0 0 0 0 0 0 3
28.10 87 0 0 0 0 0 0 0 0 0 0 0 3
28.20 87 0 0 0 0 0 0 0 0 0 0 0 3
28.30 87 0 0 0 0 0 0 0 0 0 0 0 3
29 88 0 0 0 0 0 0 0 0 0 0 0 3
30 87 0 0 0 0 0 0 0 0 0 0 0 3
31 0 0 0 0 0 78 0 0 0 0 0 0 6 Treasury Flat
32 92 0 0 0 0 0 0 0 0 0 0 0 3
33 0 0 0 36 0 33 0 0 0 0 0 0 3 TREASURY FLAT
33.10 0 0 0 36 0 33 0 0 0 0 0 0 3 Treasury Flat
33.20 0 0 0 36 0 33 0 0 0 0 0 0 3 Treasury Flat
33.30 0 0 0 36 0 33 0 0 0 0 0 0 3 Treasury Flat
34 69 0 0 0 0 0 0 0 0 0 0 0 3
35 78 0 0 0 0 0 0 0 0 0 0 0 6
36 81 0 0 0 0 0 0 0 0 0 0 0 3
37 89 0 0 0 0 0 0 0 0 0 0 0 0
38 0 0 0 0 0 0 0 0 0 0 0 0 6
39 88 0 0 0 0 0 0 0 0 0 0 0 3
40 81 0 0 0 0 0 0 0 0 0 0 0 3
41 54 0 0 0 0 0 0 0 0 0 0 0 6
42 83 0 0 0 0 0 0 0 0 0 0 0 3
43 78 0 0 0 0 0 0 0 0 0 0 0 6
44 89 0 0 0 0 0 0 0 0 0 0 0 3
45 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
46 0 0 0 0 0 60 0 0 0 0 0 0 24 Treasury Flat
47 90 0 0 0 0 0 0 0 0 0 0 0 3
48 87 0 0 0 0 0 0 0 0 0 0 0 3
49 0 0 0 0 0 56 0 0 0 0 0 0 4 TREASURY FLAT
49.10 0 0 0 0 0 56 0 0 0 0 0 0 4 Treasury Flat
49.20 0 0 0 0 0 56 0 0 0 0 0 0 4 Treasury Flat
49.30 0 0 0 0 0 56 0 0 0 0 0 0 4 Treasury Flat
50 113 0 0 0 0 0 0 0 0 0 0 0 3
51 114 0 0 0 0 0 0 0 0 0 0 0 6
52 84 0 0 0 0 0 0 0 0 0 0 0 3
53 88 0 0 0 0 0 0 0 0 0 0 0 0
54 114 0 0 0 0 0 0 0 0 0 0 0 6
55 0 0 0 0 96 0 0 0 0 0 12 0 12 Treasury Flat
56 203 0 0 0 0 0 0 0 0 0 0 0 3
57 90 0 0 0 0 0 0 0 0 0 0 0 3
58 0 180 0 0 0 0 0 12 12 0 0 0 20 Treasury Flat
59 0 0 0 96 0 0 0 0 0 12 0 0 12 Treasury Flat
60 223 0 0 0 0 0 0 0 0 0 0 0 5
61 81 0 0 0 0 0 0 0 0 0 0 0 3
62 90 0 0 0 0 0 0 0 0 0 0 0 3
63 113 0 0 0 0 0 0 0 0 0 0 0 3
64 84 0 0 0 0 0 0 0 0 0 0 0 6
65 54 0 0 0 0 0 0 0 0 0 0 0 6
66 54 0 0 0 0 0 0 0 0 0 0 0 6
67 91 0 0 0 0 0 0 0 0 0 0 0 3
68 90 0 0 0 0 0 0 0 0 0 0 0 3
69 69 0 0 0 0 0 0 0 0 0 0 0 3
70 57 0 0 0 0 0 0 0 0 0 0 0 3
71 90 0 0 0 0 0 0 0 0 0 0 0 3
72 83 0 0 0 0 0 0 0 0 0 0 0 3
73 57 0 0 0 0 0 0 0 0 0 0 0 3
74 54 0 0 0 0 0 0 0 0 0 0 0 6
75 78 0 0 0 0 0 0 0 0 0 0 0 6
76 69 0 0 0 0 0 0 0 0 0 0 0 3
77 89 0 0 0 0 0 0 0 0 0 0 0 3
77.10 89 0 0 0 0 0 0 0 0 0 0 0 3
77.20 89 0 0 0 0 0 0 0 0 0 0 0 3
77.30 89 0 0 0 0 0 0 0 0 0 0 0 3
78 78 0 0 0 0 0 0 0 0 0 0 0 6
79 0 0 0 0 0 177 0 0 0 0 0 0 3 Treasury Flat
80 54 0 0 0 0 0 0 0 0 0 0 0 6
81 138 0 0 0 0 0 0 0 0 0 0 0 6
82 80 0 0 0 0 0 0 0 0 0 0 0 6
83 88 0 0 0 0 0 0 0 0 0 0 0 3
84 141 0 0 0 0 0 0 0 0 0 0 0 3
85 87 0 0 0 0 0 0 0 0 0 0 0 3
86 78 0 0 0 0 0 0 0 0 0 0 0 6
87 54 0 0 0 0 0 0 0 0 0 0 0 6
88 0 0 180 12 12 12 0 0 0 0 0 0 24 TREASURY FLAT
88.10 0 0 180 12 12 12 0 0 0 0 0 0 24 Treasury Flat
88.20 0 0 180 12 12 12 0 0 0 0 0 0 24 Treasury Flat
89 210 0 0 0 0 0 0 0 0 0 0 0 3
90 0 0 0 0 0 0 0 0 0 12 12 21 3
100 90 0 0 0 0 0 0 0 0 0 0 0 3
101 90 27 0 0 0 0 0 0 0 0 0 0 3 TREASURY FLAT
101.10 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
101.20 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
101.30 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
101.40 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
101.50 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
101.60 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
102 0 0 0 0 0 84 0 0 0 12 12 6 6 Treasury Flat
103 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
104 54 0 0 0 0 0 0 0 0 0 0 0 6
105 0 0 0 0 0 24 0 12 12 12 12 9 3
106 0 0 0 0 0 117 0 0 0 0 0 0 3 TREASURY FLAT
106.10 0 0 0 0 0 117 0 0 0 0 0 0 3 Treasury Flat
106.20 0 0 0 0 0 117 0 0 0 0 0 0 3 Treasury Flat
107 92 0 0 0 0 0 0 0 0 0 0 0 3
108 69 0 0 0 0 0 0 0 0 0 0 0 3
109 90 0 0 0 0 0 0 0 0 0 0 0 3
110 0 0 0 0 0 108 0 0 0 0 0 0 72 Treasury Flat
111 115 0 0 0 0 0 0 0 0 0 0 0 3
112 89 0 0 0 0 0 0 0 0 0 0 0 3
113 0 0 0 0 0 78 0 0 0 0 0 0 6 Treasury Flat
114 90 0 0 0 0 27 0 0 0 0 0 0 3 Treasury Flat
115 210 0 0 0 0 0 0 0 0 0 0 0 3
116 56 0 0 0 0 0 0 0 0 0 0 0 3
117 90 0 0 0 0 0 0 0 0 0 0 0 3
118 0 0 0 0 0 45 0 0 0 0 0 0 3
119 0 0 0 0 0 0 0 36 12 12 12 78 6
120 90 0 0 0 0 0 0 0 0 0 0 0 3
121 0 0 0 0 0 69 0 0 0 0 0 0 3
122 69 0 0 0 0 0 0 0 0 0 0 0 3
123 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
124 69 0 0 0 0 0 0 0 0 0 0 0 3
125 81 0 0 0 0 0 0 0 0 0 0 0 3
126 90 0 0 0 0 0 0 0 0 0 0 0 6
127 0 117 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
128 0 0 0 0 0 57 0 0 0 0 0 0 3
128.10 0 0 0 0 0 57 0 0 0 0 0 0 3
128.20 0 0 0 0 0 57 0 0 0 0 0 0 3
129 0 0 0 0 0 69 0 0 0 0 0 0 3 TREASURY FLAT
129.10 0 0 0 0 0 69 0 0 0 0 0 0 3 Treasury Flat
129.20 0 0 0 0 0 69 0 0 0 0 0 0 3 Treasury Flat
130 81 0 0 0 0 0 0 0 0 0 0 0 3
131 91 0 0 0 0 0 0 0 0 0 0 0 3
132 0 117 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
133 54 0 0 0 0 0 0 0 0 0 0 0 6
134 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
135 89 0 0 0 0 0 0 0 0 0 0 0 3
136 90 0 0 0 0 0 0 0 0 0 0 0 3
137 81 0 0 0 0 0 0 0 0 0 0 0 6
138 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
139 93 0 0 0 0 0 0 0 0 0 0 0 0
140 86 0 0 0 0 0 0 0 0 0 0 0 3
141 0 0 0 48 0 33 0 0 0 0 0 0 3 Treasury Flat
142 0 0 0 0 0 57 0 0 0 0 0 0 3
143 86 0 0 0 0 0 0 0 0 0 0 0 3
144 54 0 0 0 0 0 0 0 0 0 0 0 6
145 92 0 0 0 0 0 0 0 0 0 0 0 3
146 0 0 0 0 0 69 0 0 0 0 0 0 3
147 90 27 0 0 0 0 0 0 0 0 0 0 3 TREASURY FLAT
147.10 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
147.20 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
147.30 90 27 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
148 0 0 0 0 0 58 0 0 0 0 0 0 3 Treasury Flat
149 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
150 92 0 0 0 0 0 0 0 0 0 0 0 3
151 0 0 0 0 0 78 0 0 0 0 0 0 6 Treasury Flat
152 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
153 0 0 0 0 0 57 0 0 0 0 0 0 3
154 89 0 0 0 0 0 0 0 0 0 0 0 3
155 66 0 0 0 0 0 0 0 0 0 0 0 6
156 116 0 0 0 0 0 0 0 0 0 0 0 3
157 0 0 141 0 0 0 0 0 0 0 0 0 3 Treasury Flat
158 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
159 145 0 0 0 0 0 0 0 0 0 0 0 3
160 90 0 0 0 0 0 0 0 0 0 0 0 3
161 87 0 0 0 0 0 0 0 0 0 0 0 3
162 114 0 0 0 0 0 0 0 0 0 0 0 6
163 84 0 0 0 0 0 0 0 0 0 0 0 3
164 81 0 0 0 0 0 0 0 0 0 0 0 3
165 91 0 0 0 0 0 0 0 0 0 0 0 3
166 69 0 0 0 0 0 0 0 0 0 0 0 3
167 91 0 0 0 0 0 0 0 0 0 0 0 3
168 89 0 0 0 0 0 0 0 0 0 0 0 3
169 88 0 0 0 0 0 0 0 0 0 0 0 3
170 54 0 0 0 0 0 0 0 0 0 0 0 6
171 54 0 0 0 0 0 0 0 0 0 0 0 6
172 128 0 0 0 0 0 0 0 0 0 0 0 3
173 89 0 0 0 0 0 0 0 0 0 0 0 3
174 0 0 0 0 0 81 0 0 0 0 0 0 3
175 18 0 0 0 0 0 0 0 0 0 0 0 6
176 89 0 0 0 0 0 0 0 0 0 0 0 3
177 0 0 0 0 0 57 0 0 0 0 0 0 3
178 0 0 0 0 0 57 0 0 0 0 0 0 3
179 90 0 0 0 0 0 0 0 0 0 0 0 3
180 0 0 0 0 0 180 0 12 12 12 12 9 3 Treasury Flat
181 84 0 0 0 0 0 0 0 0 0 0 0 3
182 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
183 0 0 0 0 0 57 0 0 0 0 0 0 3
184 0 96 0 0 0 0 0 12 0 0 0 0 12 Treasury Flat
185 0 0 0 0 0 57 0 0 0 0 0 0 3
186 79 0 0 0 0 0 0 0 0 0 0 0 6
187 91 0 0 0 0 0 0 0 0 0 0 0 3
188 0 0 0 0 0 57 0 0 0 0 0 0 3
189 0 0 0 0 0 54 0 0 0 0 0 0 6 Treasury Flat
190 88 0 0 0 0 0 0 0 0 0 0 0 3
191 89 0 0 0 0 0 0 0 0 0 0 0 3
192 84 0 0 0 0 0 0 0 0 0 0 0 3
193 91 0 0 0 0 0 0 0 0 0 0 0 3
194 0 141 0 0 0 0 0 0 0 0 0 0 3 Treasury Flat
195 87 0 0 0 0 0 0 0 0 0 0 0 3
196 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
197 89 0 0 0 0 0 0 0 0 0 0 0 3
198 120 0 0 0 0 0 0 0 0 0 0 0 60
199 91 0 0 0 0 0 0 0 0 0 0 0 3
200 84 0 0 0 0 0 0 0 0 0 0 0 3
201 93 0 0 0 0 0 0 0 0 0 0 0 0
202 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
203 81 0 0 0 0 0 0 0 0 0 0 0 3
204 0 0 0 0 0 24 0 12 12 12 12 9 3
205 54 0 0 0 0 0 0 0 0 0 0 0 6
206 87 0 0 0 0 0 0 0 0 0 0 0 3
207 90 0 0 0 0 0 0 0 0 0 0 0 3
208 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
209 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
210 0 0 0 0 0 120 0 12 12 12 12 6 6 Treasury Flat
211 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
212 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
213 0 0 0 0 0 120 0 12 12 12 12 12 60 Treasury Flat
214 87 0 0 0 0 0 0 0 0 0 0 0 3
215 0 0 0 0 0 180 0 12 12 12 12 6 6 Treasury Flat
216 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
217 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
218 87 0 0 0 0 0 0 0 0 0 0 0 3
219 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
220 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
221 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
222 0 0 0 0 0 0 0 13 12 12 12 6 6
223 0 60 0 72 0 0 0 0 0 0 0 0 24 Treasury Flat
224 0 0 0 0 0 120 0 12 12 12 12 12 60 Treasury Flat
225 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
226 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
227 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
228 0 0 0 0 0 120 0 12 12 12 12 12 60 Treasury Flat
229 0 0 0 0 0 120 0 12 12 12 12 6 6 Treasury Flat
230 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
231 0 0 0 0 0 57 0 0 0 0 0 0 3 Treasury Flat
232 0 0 0 0 0 120 0 12 12 12 12 12 60 Treasury Flat
233 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
234 0 0 0 0 0 114 0 0 0 0 0 0 6 Treasury Flat
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YIELD ORIGINAL REMAINING BALLOON,
MAINTENANCE ORIGINAL TERM TO MATURITY REMAINING TERM TO FULLY
CONTROL CALCULATION AMORTIZATION MATURITY OR DATE AMORTIZATION MATURITY OR AMORTIZING
NUMBER METHOD TERM ARD OR ARD TERM ARD OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4 300 85 05/31/06 298 83 BALLOON
1.10 300 85 05/31/06 298 83 Balloon
1.20 300 85 05/31/06 298 83 Balloon
1.30 300 85 05/31/06 298 83 Balloon
1.40 300 85 05/31/06 298 83 Balloon
1.50 300 85 05/31/06 298 83 Balloon
1.60 300 85 05/31/06 298 83 Balloon
1.70 300 85 05/31/06 298 83 Balloon
1.80 300 85 05/31/06 298 83 Balloon
1.90 300 85 05/31/06 298 83 Balloon
1.91 300 85 05/31/06 298 83 Balloon
1.92 300 85 05/31/06 298 83 Balloon
1.93 300 85 05/31/06 298 83 Balloon
1.94 300 85 05/31/06 298 83 Balloon
1.95 300 85 05/31/06 298 83 Balloon
1.96 300 85 05/31/06 298 83 Balloon
2 360 120 04/01/09 357 117 Balloon
3 360 120 04/01/09 357 117 Balloon
4 344 144 06/01/11 343 143 Balloon
5 1 360 120 06/01/09 359 119 Balloon
6 3 300 121 06/01/09 298 119 BALLOON
6.10 300 121 06/01/09 298 119 Balloon
6.20 300 121 06/01/09 298 119 Balloon
7 360 120 02/01/09 355 115 BALLOON
7.10 360 120 02/01/09 355 115 Balloon
7.20 360 120 02/01/09 355 115 Balloon
8 235 120 06/01/09 234 119 Balloon
9 360 120 04/01/09 357 117 Balloon
10 5 360 119 07/01/08 349 108 Balloon
11 360 120 11/01/08 352 112 Balloon
12 1 291 120 04/01/09 288 117 Balloon
13 300 120 12/01/08 293 113 Balloon
14 4 360 120 04/01/08 345 105 HyperAm
15 300 120 12/01/08 293 113 Balloon
16 360 120 10/01/08 351 111 Balloon
17 300 300 09/01/23 290 290 Fully Amortizing
18 300 120 05/01/09 298 118 BALLOON
18.10 300 120 05/01/09 298 118 Balloon
18.20 300 120 05/01/09 298 118 Balloon
18.30 300 120 05/01/09 298 118 Balloon
18.40 300 120 05/01/09 298 118 Balloon
18.50 300 120 05/01/09 298 118 Balloon
18.60 300 120 05/01/09 298 118 Balloon
19 360 119 03/01/09 357 116 Balloon
20 360 120 06/01/09 359 119 Balloon
21 360 120 08/01/08 349 109 HyperAm
22 300 120 01/01/09 294 114 BALLOON
22.10 300 120 01/01/09 294 114 Balloon
22.20 300 120 01/01/09 294 114 Balloon
22.30 300 120 01/01/09 294 114 Balloon
22.40 300 120 01/01/09 294 114 Balloon
22.50 300 120 01/01/09 294 114 Balloon
23 300 120 11/01/08 292 112 Balloon
24 324 120 05/01/09 322 118 Balloon
25 3 344 84 10/02/02 300 40 Balloon
26 3 250 250 02/01/20 247 247 Balloon
27 5 240 240 08/01/18 229 229 Fully Amortizing
28 300 120 01/01/09 294 114 BALLOON
28.10 300 120 01/01/09 294 114 Balloon
28.20 300 120 01/01/09 294 114 Balloon
28.30 300 120 01/01/09 294 114 Balloon
29 300 120 02/01/09 295 115 Balloon
30 300 120 01/01/09 294 114 Balloon
31 5 300 120 09/01/08 290 110 Balloon
32 264 120 06/01/09 263 119 Balloon
33 1 360 120 05/01/09 358 118 BALLOON
33.10 360 120 05/01/09 358 118 Balloon
33.20 360 120 05/01/09 358 118 Balloon
33.30 360 120 05/01/09 358 118 Balloon
34 300 120 11/01/08 292 112 Balloon
35 360 120 09/01/08 350 110 HyperAm
36 360 120 05/01/09 358 118 Balloon
37 360 120 12/01/08 353 113 Balloon
38 240 120 08/01/08 229 109 HyperAm
39 300 120 02/01/09 295 115 Balloon
40 300 120 11/01/08 292 112 Balloon
41 360 120 08/01/08 349 109 Balloon
42 300 120 09/01/08 290 110 Balloon
43 300 120 09/01/08 290 110 Balloon
44 300 120 03/01/09 296 116 Balloon
45 4 360 120 06/01/08 347 107 Balloon
46 5 360 180 01/01/13 342 162 Balloon
47 360 120 04/01/09 357 117 Balloon
48 300 120 01/01/09 294 114 Balloon
49 5 360 120 09/01/08 350 110 BALLOON
49.10 360 120 09/01/08 350 110 Balloon
49.20 360 120 09/01/08 350 110 Balloon
49.30 360 120 09/01/08 350 110 Balloon
50 300 144 03/01/11 296 140 Balloon
51 360 180 10/01/13 351 171 Balloon
52 300 120 10/01/08 291 111 Balloon
53 300 120 11/01/08 292 112 Balloon
54 360 180 10/01/13 351 171 Balloon
55 1 360 120 10/01/08 351 111 Balloon
56 240 240 09/01/18 230 230 Fully Amortizing
57 360 120 04/01/09 357 117 Balloon
58 1 217 224 02/01/17 211 211 Fully Amortizing
59 1 300 120 08/01/08 289 109 Balloon
60 264 264 09/01/20 254 254 Fully Amortizing
61 180 180 10/01/13 171 171 Fully Amortizing
62 360 120 04/01/09 357 117 Balloon
63 300 144 03/01/11 296 140 Balloon
64 300 180 11/01/13 292 172 Balloon
65 360 120 11/01/08 352 112 Balloon
66 300 120 09/01/08 290 110 Balloon
67 300 120 05/01/09 298 118 Balloon
68 360 120 03/31/09 357 117 Balloon
69 300 120 12/01/08 293 113 Balloon
70 240 120 11/01/08 232 112 Balloon
71 240 120 04/01/09 237 117 Balloon
72 300 120 09/01/08 290 110 Balloon
73 300 120 09/01/08 290 110 Balloon
74 300 120 09/01/08 290 110 Balloon
75 300 120 07/01/08 288 108 Balloon
76 300 120 12/01/08 293 113 Balloon
77 300 120 03/01/09 296 116 BALLOON
77.10 300 120 03/01/09 296 116 Balloon
77.20 300 120 03/01/09 296 116 Balloon
77.30 300 120 03/01/09 296 116 Balloon
78 360 120 09/01/08 350 110 HyperAm
79 1 240 240 02/01/19 235 235 Fully Amortizing
80 300 120 06/01/08 287 107 HyperAm
81 300 180 07/01/13 288 168 HyperAm
82 300 120 09/01/08 290 110 HyperAm
83 300 120 02/01/09 295 115 Balloon
84 300 300 09/01/23 290 290 Fully Amortizing
85 300 120 01/01/09 294 114 Balloon
86 360 120 10/01/08 351 111 Balloon
87 360 120 07/01/08 348 108 HyperAm
88 1 300 240 06/01/19 299 239 BALLOON
88.10 300 240 06/01/19 299 239 Balloon
88.20 300 240 06/01/19 299 239 Balloon
89 360 240 04/01/19 357 237 Balloon
90 360 84 08/01/05 349 73 Balloon
100 360 120 04/01/09 357 117 Balloon
101 1 240 120 04/01/09 240 117 BALLOON
101.10 240 120 04/01/09 240 117 Balloon
101.20 240 120 04/01/09 240 117 Balloon
101.30 240 120 04/01/09 240 117 Balloon
101.40 240 120 04/01/09 240 117 Balloon
101.50 240 120 04/01/09 240 117 Balloon
101.60 240 120 04/01/09 240 117 Balloon
102 5 360 120 02/01/08 343 103 Balloon
103 5 360 120 09/01/08 350 110 Balloon
104 360 120 08/01/08 349 109 HyperAm
105 3 300 120 04/01/09 297 117 Balloon
106 1 240 120 02/01/09 235 115 BALLOON
106.10 240 120 02/01/09 235 115 Balloon
106.20 240 120 02/01/09 235 115 Balloon
107 360 120 06/01/09 359 119 HyperAm
108 300 120 12/01/08 293 113 Balloon
109 300 120 04/01/09 297 117 Balloon
110 4 240 240 05/01/18 226 226 Fully Amortizing
111 360 144 05/01/11 358 142 Balloon
112 240 120 03/01/09 236 116 Balloon
113 4 300 120 09/01/08 290 110 HyperAm
114 1 360 120 04/01/09 357 117 Balloon
115 360 240 04/01/19 357 237 Balloon
116 300 84 06/01/06 299 83 Balloon
117 300 120 04/01/09 297 117 Balloon
118 3 300 120 12/15/08 294 114 Balloon
119 300 240 11/01/18 292 232 Balloon
120 360 120 04/01/09 357 117 Balloon
121 3 360 120 05/01/09 358 118 Balloon
122 300 120 12/01/08 293 113 Balloon
123 4 300 120 04/01/08 285 105 Balloon
124 300 120 01/01/09 294 114 Balloon
125 360 120 04/01/09 357 117 Balloon
126 216 216 09/01/16 206 206 Fully Amortizing
127 1 300 120 02/01/09 295 115 Balloon
128 3 240 120 04/01/09 237 117 BALLOON
128.10 240 120 04/01/09 237 117 Balloon
128.20 240 120 04/01/09 237 117 Balloon
129 1 144 144 02/01/11 139 139 FULLY AMORTIZING
129.10 144 144 02/01/11 139 139 Fully Amortizing
129.20 144 144 02/01/11 139 139 Fully Amortizing
130 300 120 08/01/08 289 109 Balloon
131 300 120 05/01/09 298 118 Balloon
132 1 240 120 06/01/09 239 119 Balloon
133 300 120 11/01/08 292 112 Balloon
134 5 360 120 08/01/08 349 109 Balloon
135 300 120 03/01/09 296 116 Balloon
136 300 120 04/01/09 297 117 Balloon
137 240 121 10/01/08 230 111 Balloon
138 5 300 120 07/01/07 276 96 Balloon
139 300 120 04/01/09 297 117 Balloon
140 360 120 12/01/08 353 113 Balloon
141 1 240 144 04/01/11 237 141 Balloon
142 3 300 120 12/01/08 293 113 Balloon
143 300 120 12/01/08 293 113 Balloon
144 300 120 08/01/08 289 109 HyperAm
145 300 120 06/01/09 299 119 Balloon
146 3 360 120 05/01/09 358 118 Balloon
147 1 240 120 04/01/09 240 117 BALLOON
147.10 240 120 04/01/09 240 117 Balloon
147.20 240 120 04/01/09 240 117 Balloon
147.30 240 120 04/01/09 240 117 Balloon
148 5 300 121 03/31/09 296 117 Balloon
149 1 360 120 07/01/08 348 108 Balloon
150 360 120 06/01/09 359 119 Balloon
151 4 300 120 12/01/07 281 101 Balloon
152 1 300 120 04/01/09 297 117 Balloon
153 3 300 120 09/01/08 290 110 Balloon
154 360 120 03/01/09 356 116 Balloon
155 300 120 02/01/09 295 115 Balloon
156 300 144 06/01/11 299 143 Balloon
157 1 360 144 04/01/11 357 141 Balloon
158 4 360 120 06/01/08 347 107 Balloon
159 360 180 11/01/13 352 172 Balloon
160 240 120 04/01/09 237 117 Balloon
161 300 120 01/01/09 294 114 Balloon
162 240 240 09/01/18 230 230 Fully Amortizing
163 300 120 10/01/08 291 111 Balloon
164 360 120 04/01/09 357 117 Balloon
165 300 120 05/01/09 298 118 Balloon
166 300 120 11/01/08 292 112 Balloon
167 300 120 05/01/09 298 118 Balloon
168 300 120 03/01/09 296 116 Balloon
169 300 120 02/01/09 295 115 Balloon
170 300 120 10/01/08 291 111 HyperAm
171 300 120 09/01/08 290 110 HyperAm
172 240 162 06/01/12 233 155 Balloon
173 300 120 03/01/09 296 116 Balloon
174 3 300 120 04/01/09 297 117 Balloon
175 240 60 09/01/03 230 50 HyperAm
176 360 120 03/01/09 356 116 Balloon
177 3 300 120 03/01/09 296 116 Balloon
178 3 276 120 12/29/08 270 114 Balloon
179 240 120 04/01/09 237 117 Balloon
180 5 300 240 02/01/19 295 235 Balloon
181 300 120 10/01/08 291 111 Balloon
182 5 300 120 12/01/08 293 113 Balloon
183 3 240 120 02/01/09 235 115 Balloon
184 4 300 120 12/01/07 281 101 Balloon
185 3 300 120 05/03/09 299 119 Balloon
186 300 120 08/01/08 289 109 HyperAm
187 300 120 05/01/09 298 118 Balloon
188 3 360 120 02/01/09 355 115 Balloon
189 4 300 120 09/01/08 290 110 Balloon
190 300 120 02/01/09 295 115 Balloon
191 300 121 03/01/09 295 116 Balloon
192 300 120 10/01/08 291 111 Balloon
193 300 120 05/01/09 298 118 Balloon
194 1 240 144 02/01/11 235 139 Balloon
195 300 120 01/01/09 294 114 Balloon
196 5 300 120 11/01/08 292 112 Balloon
197 360 120 03/01/09 356 116 Balloon
198 240 240 10/01/18 231 231 Fully Amortizing
199 300 120 05/01/09 298 118 Balloon
200 300 120 10/01/08 291 111 Balloon
201 360 120 04/01/09 357 117 Balloon
202 1 300 120 01/01/09 294 114 Balloon
203 360 120 04/01/09 357 117 Balloon
204 3 360 120 04/01/09 357 117 Balloon
205 300 120 09/01/08 290 110 Balloon
206 300 120 01/01/09 294 114 Balloon
207 360 120 04/01/09 357 117 Balloon
208 2 300 120 06/01/09 299 119 Balloon
209 5 300 120 09/01/08 290 110 Balloon
210 5 240 180 10/01/13 231 171 Balloon
211 1 300 120 01/01/09 294 114 Balloon
212 1 300 120 01/01/09 294 114 Balloon
213 5 240 240 01/01/19 234 234 Fully Amortizing
214 300 120 01/01/09 294 114 Balloon
215 5 240 240 04/01/19 237 237 Fully Amortizing
216 2 300 120 05/01/09 298 118 Balloon
217 2 300 120 03/01/09 296 116 Balloon
218 300 120 01/01/09 294 114 Balloon
219 2 300 120 12/01/08 293 113 Balloon
220 2 240 120 01/01/09 234 114 Balloon
221 2 300 120 05/01/09 298 118 Balloon
222 300 120 06/01/08 287 107 Balloon
223 4 204 204 12/01/14 185 185 Fully Amortizing
224 5 240 240 10/01/18 231 231 Fully Amortizing
225 2 300 120 03/01/09 296 116 Balloon
226 5 300 120 10/01/08 291 111 Balloon
227 5 300 120 03/01/09 296 116 Balloon
228 5 240 240 10/01/18 231 231 Fully Amortizing
229 5 180 180 12/01/13 173 173 Fully Amortizing
230 2 300 120 05/01/09 298 118 Balloon
231 2 286 120 06/01/09 285 119 Balloon
232 5 300 240 10/01/18 291 231 Balloon
233 5 300 120 10/01/08 291 111 Balloon
234 5 240 120 10/01/08 231 111 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CURRENT OR
DUE FUTURE APPRAISAL CURRENT
CONTROL BALLOON/ARD BALLOON/ARD ON DUE ON SUBORDINATE APPRAISAL VALUE "AS LTV
NUMBER BALANCE LTV RATIO SALE ENCUMBRANCE FINANCING VALUE OF" DATE RATIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $62,043,338 52.6% YES YES YES $117,950,000 Various 58.7%
1.10 12,361,326 52.6% Yes Yes Yes 23,500,000 03/30/99 58.7%
1.20 3,208,685 52.6% Yes Yes Yes 6,100,000 03/31/99 58.7%
1.30 6,364,768 52.6% Yes Yes Yes 12,100,000 03/31/99 58.7%
1.40 2,130,356 52.6% Yes Yes Yes 4,050,000 03/30/99 58.7%
1.50 6,469,971 52.6% Yes Yes Yes 12,300,000 04/07/99 58.7%
1.60 6,838,181 52.6% Yes Yes Yes 13,000,000 03/25/99 58.7%
1.70 3,156,083 52.6% Yes Yes Yes 6,000,000 04/04/99 58.7%
1.80 5,812,453 52.6% Yes Yes Yes 11,050,000 04/01/99 58.7%
1.90 2,630,069 52.6% Yes Yes Yes 5,000,000 03/26/99 58.7%
1.91 999,426 52.6% Yes Yes Yes 1,900,000 03/26/99 58.7%
1.92 1,315,035 52.6% Yes Yes Yes 2,500,000 04/01/99 58.7%
1.93 710,119 52.6% Yes Yes Yes 1,350,000 04/01/99 58.7%
1.94 4,260,712 52.6% Yes Yes Yes 8,100,000 03/25/99 58.7%
1.95 3,997,706 52.6% Yes Yes Yes 7,600,000 03/29/99 58.7%
1.96 1,788,447 52.6% Yes Yes Yes 3,400,000 03/24/99 58.7%
2 34,532,966 69.8% Yes Yes No 49,500,000 02/15/99 78.6%
3 24,194,111 63.7% Yes Yes No 38,000,000 03/01/99 71.3%
4 14,391,789 62.6% Yes Yes No 23,000,000 04/06/99 76.3%
5 11,055,257 70.0% Yes Yes No 15,800,000 01/18/99 78.1%
6 9,584,889 56.9% YES YES NO 16,850,000 03/26/99 69.3%
6.10 3,889,662 56.8% Yes Yes No 6,850,000 03/26/99 69.2%
6.20 5,695,227 57.0% Yes Yes No 10,000,000 03/26/99 69.4%
7 10,144,745 67.8% YES YES NO 15,000,000 12/03/98 77.8%
7.10 8,060,207 69.5% Yes Yes No 11,600,000 12/03/98 79.7%
7.20 2,084,537 61.3% Yes Yes No 3,400,000 12/03/98 70.3%
8 7,946,828 44.2% Yes Yes No 18,000,000 02/26/99 63.8%
9 10,036,071 68.5% Yes Yes No 14,650,000 03/05/99 77.5%
10 9,490,525 61.6% Yes Yes No 15,400,000 03/20/98 70.8%
11 9,082,659 57.9% Yes Yes No 15,700,000 08/27/98 67.7%
12 8,466,889 53.9% Yes Yes No 15,700,000 11/20/98 66.2%
13 8,441,262 59.0% Yes Yes No 14,300,000 10/09/98 72.4%
14 8,635,778 66.9% Yes Yes No 12,900,000 11/17/97 76.6%
15 7,787,417 53.7% Yes Yes No 14,490,000 06/16/98 64.4%
16 7,880,237 68.5% Yes Yes No 11,500,000 05/25/98 79.4%
17 - 0.0% Yes Yes No 11,800,000 04/02/98 74.0%
18 6,937,816 60.9% YES PRIOR CONSENT NO 11,390,000 Various 74.9%
18.10 535,785 60.9% Yes Prior Consent No 880,000 03/17/99 74.8%
18.20 1,339,465 62.3% Yes Prior Consent No 2,150,000 03/17/99 76.6%
18.30 1,339,465 60.9% Yes Prior Consent No 2,200,000 03/16/99 74.8%
18.40 1,150,721 60.6% Yes Prior Consent No 1,900,000 03/18/99 74.5%
18.50 1,162,899 60.9% Yes Prior Consent No 1,910,000 03/23/99 74.8%
18.60 1,409,481 60.0% Yes Prior Consent No 2,350,000 03/16/99 73.7%
19 7,597,004 70.3% Yes Yes No 10,815,000 11/10/98 78.5%
20 7,444,850 65.0% Yes Yes No 11,450,000 04/07/99 73.9%
21 7,133,818 64.9% Yes Yes No 11,000,000 02/16/98 74.2%
22 5,604,287 60.3% YES YES NO 9,370,000 Various 73.3%
22.10 748,926 57.2% Yes Yes No 1,310,000 12/09/98 69.5%
22.20 773,428 49.6% Yes Yes No 1,560,000 12/08/98 60.3%
22.30 810,997 59.2% Yes Yes No 1,370,000 12/09/98 72.0%
22.40 1,541,137 63.4% Yes Yes No 2,430,000 12/08/98 77.1%
22.50 1,729,799 64.1% Yes Yes No 2,700,000 12/08/98 77.9%
23 5,585,092 63.3% Yes Yes No 8,825,000 06/27/98 75.9%
24 5,685,101 63.9% Yes Prior Consent No 8,900,000 08/07/98 74.9%
25 6,354,434 72.4% Yes Yes No 8,780,000 08/03/95 75.2%
26 344,013 5.1% Yes Yes No 6,700,000 12/17/98 96.6%
27 - 0.0% Yes Yes No 8,800,000 05/13/98 72.4%
28 5,059,539 44.1% YES YES NO 11,650,000 Various 53.6%
28.10 1,791,053 45.5% Yes Yes No 3,940,000 12/10/98 55.3%
28.20 1,455,384 50.4% Yes Yes No 2,890,000 12/11/98 61.3%
28.30 1,813,103 37.6% Yes Yes No 4,820,000 12/11/98 45.8%
29 4,811,000 61.5% Yes Yes No 7,820,000 11/16/98 75.3%
30 4,770,750 52.4% Yes Yes No 9,100,000 12/14/98 63.9%
31 4,689,465 59.9% Yes Yes No 7,825,000 04/03/98 74.1%
32 4,377,694 43.8% Yes Yes Yes 10,000,000 04/01/99 57.9%
33 5,007,231 65.0% YES YES NO 7,700,000 01/26/99 74.8%
33.10 975,435 65.0% Yes Yes No 1,500,000 01/26/99 74.8%
33.20 2,406,072 65.0% Yes Yes No 3,700,000 01/26/99 74.8%
33.30 1,625,724 65.0% Yes Yes No 2,500,000 01/26/99 74.8%
34 4,819,362 49.2% Yes Yes No 9,800,000 07/01/98 58.7%
35 5,035,687 69.0% Yes Yes No 7,300,000 05/05/98 78.6%
36 5,092,896 61.0% Yes Yes No 8,350,000 03/12/99 68.2%
37 5,068,804 66.7% Yes Yes No 7,600,000 09/21/98 74.4%
38 3,796,242 48.1% Yes Yes No 7,900,000 06/11/98 68.2%
39 4,423,574 56.7% Yes Yes No 7,805,000 11/03/98 68.8%
40 4,371,277 58.3% Yes Yes No 7,500,000 06/09/98 71.3%
41 4,546,243 66.9% Yes Yes No 6,800,000 05/20/98 76.5%
42 4,172,533 60.0% Yes Yes No 6,950,000 07/24/98 73.9%
43 4,107,534 62.5% Yes Yes No 6,575,000 06/19/98 78.1%
44 4,046,044 64.7% Yes Yes No 6,250,000 07/28/98 79.7%
45 4,347,295 60.2% Yes Yes No 7,220,000 12/04/97 68.9%
46 3,814,583 56.9% Yes Yes Yes 6,700,000 09/15/97 73.6%
47 4,224,868 64.5% Yes Yes No 6,550,000 03/11/99 74.3%
48 3,916,248 55.2% Yes Prior Consent No 7,100,000 10/01/98 68.4%
49 4,263,809 67.2% YES YES NO 6,350,000 05/02/98 76.3%
49.10 2,131,905 67.2% Yes Yes No 3,175,000 05/02/98 76.3%
49.20 486,813 67.2% Yes Yes No 725,000 76.3%
49.30 1,645,092 67.2% Yes Yes No 2,450,000 76.3%
50 3,634,940 54.1% Yes Yes No 6,725,000 01/06/99 71.5%
51 3,568,216 57.6% Yes Yes No 6,200,000 06/15/98 77.1%
52 3,851,628 64.2% Yes Yes No 6,000,000 08/13/98 79.1%
53 3,770,032 50.3% Yes Yes No 7,490,000 07/14/98 62.1%
54 3,397,974 58.1% Yes Yes No 5,850,000 06/15/98 77.9%
55 3,786,799 67.7% Yes Yes No 5,590,000 05/05/99 79.1%
56 - 0.0% Yes Yes No 6,000,000 06/03/98 73.6%
57 3,829,164 67.8% Yes Yes No 5,650,000 01/25/99 77.7%
58 - 0.0% Yes Yes No 8,300,000 05/12/99 51.9%
59 3,402,168 58.9% Yes Prior Consent No 5,780,000 06/22/98 73.4%
60 - 0.0% Yes Yes No 6,200,000 07/20/98 68.3%
61 - 0.0% Yes Yes No 8,250,000 07/01/98 50.9%
62 3,742,736 61.4% Yes Yes No 6,100,000 11/19/98 68.7%
63 3,166,059 33.3% Yes Yes No 9,500,000 12/15/98 44.0%
64 2,732,841 43.7% Yes Yes No 6,250,000 06/11/98 66.6%
65 3,657,785 61.0% Yes Yes No 6,000,000 03/26/98 68.8%
66 3,370,630 61.3% Yes Yes No 5,500,000 02/12/98 74.6%
67 3,255,467 55.2% Yes Yes No 5,900,000 03/30/99 69.3%
68 3,540,079 66.2% Yes Yes No 5,350,000 02/01/99 74.6%
69 3,244,941 60.8% Yes Yes No 5,340,000 08/18/98 74.3%
70 2,906,747 42.1% Yes Yes No 6,900,000 06/30/98 57.3%
71 2,777,303 48.7% Yes Yes No 5,700,000 03/01/99 69.3%
72 3,132,560 67.4% Yes Yes No 4,650,000 04/28/98 81.9%
73 3,087,149 52.3% Yes Yes No 5,900,000 04/21/98 64.5%
74 3,036,898 34.1% Yes Yes No 8,900,000 02/18/98 42.2%
75 3,011,319 55.8% Yes Yes No 5,400,000 04/01/98 69.0%
76 3,007,805 55.7% Yes Yes No 5,400,000 08/31/98 68.3%
77 2,940,340 57.4% YES YES NO 5,125,000 09/02/98 71.8%
77.10 1,170,857 57.1% Yes Yes No 2,050,000 09/02/98 71.6%
77.20 971,612 58.0% Yes Yes No 1,675,000 09/02/98 72.7%
77.30 797,871 57.0% Yes Yes No 1,400,000 09/02/98 71.1%
78 3,297,645 67.3% Yes Yes No 4,900,000 05/01/98 75.0%
79 - 0.0% Yes Prior Consent No 5,700,000 10/29/98 62.6%
80 2,915,016 60.7% Yes Yes No 4,800,000 02/23/98 73.9%
81 2,205,292 36.2% Yes Yes No 6,100,000 12/22/97 57.9%
82 2,803,784 59.7% Yes Yes No 4,700,000 05/27/98 74.1%
83 2,890,290 56.7% Yes Yes No 5,100,000 12/16/98 68.3%
84 - 0.0% Yes Yes No 9,380,000 07/06/98 37.1%
85 2,839,503 51.6% Yes Yes No 5,500,000 07/02/98 63.2%
86 3,013,286 56.0% Yes Yes No 5,380,000 09/01/98 64.6%
87 3,026,598 56.1% Yes Yes No 5,400,000 04/20/98 64.2%
88 1,337,853 25.5% YES YES NO 5,260,000 04/08/99 65.1%
88.10 789,391 26.7% Yes Yes No 2,960,000 04/08/99 68.0%
88.20 548,462 23.9% Yes Yes No 2,300,000 04/08/99 60.8%
89 1,992,402 45.0% Yes Yes No 4,425,000 02/15/99 75.8%
90 3,123,945 72.7% Yes Prior Consent No 4,300,000 02/25/98 77.4%
100 2,900,185 65.6% Yes Yes No 4,422,000 01/21/99 74.8%
101 2,571,339 40.6% YES YES NO 6,340,000 Various 51.7%
101.10 365,017 40.6% Yes Yes No 900,000 02/02/99 51.7%
101.20 296,069 40.6% Yes Yes No 730,000 02/15/99 51.7%
101.30 300,125 40.6% Yes Yes No 740,000 02/15/99 51.7%
101.40 770,591 40.6% Yes Yes No 1,900,000 02/05/99 51.7%
101.50 472,494 40.6% Yes Yes No 1,165,000 02/20/99 51.7%
101.60 367,044 40.6% Yes Yes No 905,000 02/04/99 51.7%
102 2,843,459 58.0% Yes Yes No 4,900,000 12/04/97 66.4%
103 2,760,771 69.0% Yes Yes No 4,000,000 02/23/98 79.4%
104 2,788,969 67.2% Yes Yes No 4,150,000 02/13/98 76.5%
105 2,873,549 68.4% Yes Yes No 4,200,000 11/05/98 74.9%
106 2,184,350 28.7% YES PRIOR CONSENT NO 7,625,000 01/11/99 40.1%
106.10 1,038,462 28.7% Yes Prior Consent No 3,625,000 01/11/99 40.1%
106.20 1,145,889 28.7% Yes Prior Consent No 4,000,000 01/11/99 40.1%
107 2,667,380 60.6% Yes Yes No 4,400,000 03/31/99 69.3%
108 2,534,334 55.1% Yes Yes No 4,600,000 09/24/98 66.1%
109 2,438,168 59.8% Yes Yes No 4,075,000 01/26/99 74.2%
110 - 0.0% Yes Yes No 4,100,000 12/22/97 73.6%
111 2,481,717 56.6% Yes Yes No 4,385,000 04/14/99 68.3%
112 2,074,996 50.6% Yes Yes No 4,100,000 09/04/98 72.7%
113 2,389,456 51.9% Yes Yes No 4,600,000 04/01/98 64.4%
114 2,531,947 70.3% Yes Yes No 3,600,000 01/07/99 79.0%
115 1,675,161 45.3% Yes Yes No 3,700,000 02/12/99 76.2%
116 2,487,740 63.8% Yes Prior Consent No 3,900,000 02/04/99 71.7%
117 2,288,685 44.9% Yes Yes No 5,100,000 12/02/98 54.7%
118 2,271,603 50.5% Yes Yes No 4,500,000 12/02/98 61.8%
119 1,020,036 29.1% Yes Yes No 3,500,000 06/25/98 79.2%
120 2,412,997 65.6% Yes Yes No 3,680,000 10/10/98 73.2%
121 2,420,313 64.5% Yes Yes Yes 3,750,000 08/03/98 71.5%
122 2,239,976 48.7% Yes Yes No 4,600,000 08/20/98 58.3%
123 1,213,974 22.1% Yes Yes No 5,500,000 10/09/97 48.7%
124 2,206,147 56.6% Yes Yes No 3,900,000 12/03/98 67.6%
125 2,278,927 70.8% Yes Yes No 3,220,000 02/11/99 79.8%
126 - 0.0% Yes Yes No 4,800,000 04/02/98 53.0%
127 2,030,461 54.9% Yes Yes No 3,700,000 12/07/98 67.2%
128 1,810,004 51.0% YES YES NO 3,550,000 07/21/98 69.7%
128.10 1,371,524 51.0% Yes Yes No 2,690,000 07/21/98 69.7%
128.20 438,480 51.0% Yes Yes No 860,000 07/21/98 69.7%
129 59,192 1.4% YES PRIOR CONSENT NO 4,300,000 10/01/98 56.9%
129.10 33,037 1.4% Yes Prior Consent No 2,400,000 10/01/98 56.9%
129.20 26,155 1.4% Yes Prior Consent No 1,900,000 10/01/98 56.9%
130 2,006,953 60.5% Yes Yes No 3,320,000 05/19/98 73.6%
131 1,963,533 61.4% Yes Prior Consent No 3,200,000 03/23/99 75.4%
132 1,670,194 55.2% Yes Yes No 3,025,000 04/12/99 79.7%
133 1,853,406 62.7% Yes Yes No 2,956,000 05/12/98 77.1%
134 1,960,533 67.0% Yes Yes No 2,925,000 01/02/98 76.3%
135 1,821,640 51.3% Yes Yes No 3,550,000 01/11/99 62.8%
136 1,856,285 45.3% Yes Yes No 4,100,000 11/01/98 53.5%
137 1,522,432 51.7% Yes Yes No 2,945,000 06/09/98 73.4%
138 1,825,138 57.0% Yes Yes No 3,200,000 02/13/97 67.4%
139 1,809,683 53.2% Yes Yes No 3,400,000 12/10/98 63.4%
140 1,925,719 71.3% Yes Yes No 2,700,000 08/05/98 79.6%
141 1,249,840 40.3% Yes Yes No 3,100,000 02/26/99 67.4%
142 1,697,026 43.0% Yes Yes No 3,950,000 09/22/98 52.8%
143 1,710,726 57.0% Yes Yes No 3,000,000 06/02/98 69.5%
144 1,676,252 54.1% Yes Yes No 3,100,000 05/15/98 66.9%
145 1,638,498 54.6% Yes Yes No 3,000,000 02/10/99 67.4%
146 1,761,716 58.7% Yes Yes No 3,000,000 02/22/99 66.6%
147 1,565,094 40.1% YES YES NO 3,900,000 Various 51.1%
147.10 541,763 40.1% Yes Yes No 1,350,000 02/15/99 51.1%
147.20 321,045 40.1% Yes Yes No 800,000 02/15/99 51.1%
147.30 702,286 40.1% Yes Yes No 1,750,000 02/05/99 51.1%
148 1,640,915 47.2% Yes Yes No 3,480,000 10/12/98 57.2%
149 1,752,465 67.4% Yes Prior Consent No 2,600,000 04/06/98 76.2%
150 1,740,747 59.5% Yes Yes No 2,925,000 04/05/99 67.5%
151 1,608,418 57.4% Yes Yes No 2,800,000 10/14/97 69.0%
152 1,579,951 46.5% Yes Prior Consent No 3,400,000 12/23/98 55.7%
153 1,535,784 51.6% Yes Yes No 2,975,000 07/01/98 63.1%
154 1,599,843 71.1% Yes Yes No 2,250,000 10/31/98 79.8%
155 1,482,626 59.3% Yes Yes No 2,500,000 08/06/98 71.6%
156 1,331,871 44.4% Yes Yes No 3,000,000 04/17/99 58.7%
157 1,429,342 38.4% Yes Yes No 3,725,000 03/03/99 45.6%
158 1,470,107 52.9% Yes Yes No 2,780,000 12/04/97 60.5%
159 1,299,073 59.1% Yes Yes No 2,200,000 08/10/98 75.7%
160 1,143,371 45.7% Yes Yes No 2,500,000 01/20/99 66.4%
161 1,346,760 54.3% Yes Yes No 2,480,000 12/08/98 66.1%
162 - 0.0% Yes Yes No 2,300,000 06/01/98 70.4%
163 1,283,875 64.2% Yes Yes No 2,000,000 08/12/98 79.1%
164 1,380,630 70.8% Yes Yes No 1,950,000 02/11/99 79.8%
165 1,250,660 58.2% Yes Yes No 2,150,000 01/22/99 71.9%
166 1,252,828 57.0% Yes Yes No 2,200,000 08/06/98 69.8%
167 1,217,694 60.9% Yes Prior Consent No 2,000,000 03/17/99 74.8%
168 1,240,658 66.2% Yes Yes No 1,875,000 12/01/98 79.7%
169 1,230,198 61.5% Yes Prior Consent No 2,000,000 09/13/98 74.6%
170 1,216,535 60.8% Yes Yes No 2,000,000 06/01/98 74.2%
171 1,210,627 46.6% Yes Yes No 2,600,000 03/26/98 57.0%
172 772,857 36.1% Yes Yes No 2,140,000 10/04/98 69.2%
173 1,204,958 62.8% Yes Yes No 1,920,000 09/18/98 77.0%
174 1,228,968 60.8% Yes Yes No 2,020,000 12/07/98 73.1%
175 1,309,258 49.4% Yes Yes No 2,650,000 03/12/98 55.6%
176 1,270,586 63.5% Yes Yes No 2,000,000 01/15/99 72.8%
177 1,190,989 51.1% Yes Yes No 2,330,000 10/27/98 62.0%
178 1,114,349 55.7% Yes Yes No 2,000,000 11/04/98 71.9%
179 1,006,816 47.5% Yes Yes No 2,120,000 09/22/98 67.3%
180 561,127 24.4% Yes Yes No 2,300,000 10/28/98 60.6%
181 1,129,811 64.2% Yes Yes No 1,760,000 08/13/98 79.1%
182 1,161,142 61.1% Yes Yes No 1,900,000 07/24/98 73.2%
183 966,286 40.3% Yes Yes No 2,400,000 11/05/98 57.8%
184 1,164,349 72.8% Yes Yes No 1,600,000 09/29/97 85.9%
185 1,131,621 44.4% Yes Yes No 2,550,000 01/11/99 52.9%
186 1,090,526 59.4% Yes Yes No 1,835,000 03/26/98 73.2%
187 1,041,084 53.0% Yes Yes No 1,965,000 03/22/99 66.0%
188 1,149,892 65.7% Yes Yes No 1,750,000 12/10/98 74.0%
189 1,041,583 41.2% Yes Yes No 2,530,000 03/05/98 50.8%
190 1,050,259 51.9% Yes Prior Consent No 2,025,000 09/15/98 63.3%
191 1,029,423 60.6% Yes Prior Consent No 1,700,000 10/30/98 74.6%
192 962,907 64.2% Yes Yes No 1,500,000 08/18/98 79.1%
193 953,408 63.6% Yes Yes No 1,500,000 02/10/99 78.6%
194 703,649 40.2% Yes Yes No 1,750,000 11/16/98 67.1%
195 949,022 52.7% Yes Yes Yes 1,800,000 12/12/98 64.1%
196 951,587 61.4% Yes Yes No 1,550,000 06/04/98 74.2%
197 1,003,828 66.9% Yes Yes No 1,500,000 01/20/99 76.3%
198 - 0.0% Yes Yes No 1,750,000 08/03/98 64.6%
199 932,754 58.3% Yes Yes No 1,600,000 01/19/99 70.4%
200 882,665 64.2% Yes Yes No 1,375,000 08/13/98 79.1%
201 975,584 65.0% Yes Yes No 1,500,000 01/15/99 72.4%
202 914,339 63.1% Yes Silent No 1,450,000 11/17/98 74.6%
203 934,580 70.8% Yes Yes No 1,320,000 02/11/99 79.8%
204 955,232 58.8% Yes Yes No 1,625,000 11/03/98 64.5%
205 856,806 57.1% Yes Yes No 1,500,000 06/23/98 69.9%
206 842,031 59.3% Yes Yes Yes 1,420,000 12/08/98 72.1%
207 889,178 62.2% Yes Yes No 1,430,000 12/02/98 69.8%
208 846,905 62.7% Yes Silent No 1,350,000 03/11/99 73.6%
209 825,108 51.9% Yes Yes No 1,590,000 04/15/98 62.3%
210 451,166 27.2% Yes Yes No 1,660,000 03/31/98 59.4%
211 780,923 59.6% Yes Prior Consent No 1,310,000 05/13/98 72.2%
212 777,641 61.0% Yes Prior Consent No 1,275,000 05/22/98 73.9%
213 59,732 4.4% Yes Yes No 1,350,000 08/06/98 64.3%
214 707,274 49.1% Yes Yes Yes 1,440,000 12/11/98 59.7%
215 48,110 4.0% Yes Yes No 1,200,000 12/31/98 71.5%
216 621,625 54.1% Yes Silent Silent 1,150,000 04/02/99 65.1%
217 634,466 31.7% Yes Silent Silent 2,000,000 12/12/98 37.4%
218 615,222 58.6% Yes Prior Consent No 1,050,000 08/17/98 71.0%
219 612,602 47.9% Yes Silent Silent 1,280,000 10/01/98 58.2%
220 503,623 42.0% Yes Silent Silent 1,200,000 08/17/98 57.8%
221 564,201 56.4% Yes Silent Silent 1,000,000 01/12/99 67.4%
222 533,590 67.1% Yes Yes No 795,000 03/26/98 79.1%
223 27,039 3.0% Yes Yes No 889,800 08/08/97 69.9%
224 33,539 3.1% Yes Yes No 1,100,000 05/20/98 55.1%
225 499,944 57.1% Yes Yes Silent 875,000 01/07/99 68.3%
226 492,116 56.8% Yes Yes No 866,000 08/07/98 68.6%
227 438,555 58.5% Yes Yes No 750,000 08/05/98 69.8%
228 25,101 2.3% Yes Yes No 1,100,000 03/20/98 44.8%
229 - 0.0% Yes Yes No 1,300,000 07/08/98 37.7%
230 314,053 62.6% Yes Silent Silent 501,600 08/27/98 74.6%
231 285,606 51.9% Yes Silent Silent 550,000 04/26/99 63.6%
232 136,887 33.6% Yes Yes No 408,000 07/13/98 75.8%
233 246,920 63.3% Yes Yes No 390,000 06/22/98 77.2%
234 210,370 32.4% Yes Yes No 650,000 06/23/98 45.4%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL YEAR OWNERSHIP NET RENTABLE
NUMBER YEAR BUILT RENOVATED INTEREST SF / UNITS LARGEST TENANT NAME
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 VARIOUS VARIOUS VARIOUS 2,318 NAP
1.10 1985 1998-1999 Fee Simple 260 NAP
1.20 1971 1996/1997 Fee Simple 130 NAP
1.30 1979 1998 Fee Simple 155 NAP
1.40 1989 Fee Simple 125 NAP
1.50 1989 1998 Fee Simple 175 NAP
1.60 1989 Fee Simple 174 NAP
1.70 1966-1969 1996 Fee Simple 156 NAP
1.80 1988 Fee Simple 167 NAP
1.90 1990 Leasehold 115 NAP
1.91 1987 1997/98 Leasehold 167 NAP
1.92 1973 1996 Fee Simple 159 NAP
1.93 1987 1996 Leasehold 108 NAP
1.94 1989 Fee Simple 121 NAP
1.95 1982 1998 Fee Simple 181 NAP
1.96 1975 1998 Fee Simple 125 NAP
2 1997-1999 Fee Simple 265,846 Sportmart
3 1903 1983 Fee Simple 198,000 Barnes & Noble
4 1998 Leasehold 262,269 Kohl's Department Store
5 1979 1997 Fee Simple 317,500 Emery Worldwide Airlines, Inc.
6 VARIOUS VARIOUS FEE SIMPLE 76,820 VARIOUS
6.10 1980 1998 Fee Simple 31,173 TRW, Inc
6.20 1979 1998 Fee Simple 45,647 BOCA Global, Inc
7 VARIOUS FEE SIMPLE 240,407 VARIOUS
7.10 1987 Fee Simple 209,143 BJ's Wholesale Club
7.20 1986 Fee Simple 31,264 Party City
8 1976 - 1980 1996 Leasehold 406,359 Waremart foods
9 1985-1987 Fee Simple 250
10 1998 Fee Simple 46,887 Litchfield's Toys
11 1988 Fee Simple 212
12 1984 1996-1998 Fee Simple 148,512 BankBoston
13 1955-1979 Fee Simple 100,644 Grand Union
14 1920 1994-1998 Fee Simple 218
15 1998 Fee Simple 66,650 Brenden Theatres Corporation
16 circa 1987 or 88 Fee Simple 128,065 Trendsetter Furniture
17 1983 Fee Simple 437
18 VARIOUS VARIOUS FEE SIMPLE 389
18.10 1982 Fee Simple 40
18.20 1985 ON-GOING Fee Simple 87
18.30 1987 Fee Simple 63
18.40 1986 Fee Simple 66
18.50 1985 Fee Simple 70
18.60 1987 ON-GOING Fee Simple 63
19 1993 Leasehold 81,332 Mercy Integrated Health
20 1970 1986 Fee Simple 134,067 Periphonics
21 1988 Fee Simple 92,305 Office Depot
22 VARIOUS FEE SIMPLE 377
22.10 1985 Fee Simple 63
22.20 1987 Fee Simple 53
22.30 1984 Fee Simple 65
22.40 1986 Fee Simple 97
22.50 1985 Fee Simple 99
23 1986 Fee Simple 50,423 Sabloff & Carlini M.D.
24 1988 Fee Simple 252,680 Hamilton Fixtures Company
25 1978 Fee Simple 240
26 1995 Fee Simple 121,890 Kmart
27 1956 1989-1990 Fee Simple 199,938 Iowa DOT
28 VARIOUS VARIOUS FEE SIMPLE 415
28.10 1983 1995 Fee Simple 148
28.20 1976 1992/1995/1998 Fee Simple 106
28.30 1983 1998 Fee Simple 161
29 1955-1986 1985 Fee Simple 46,324 Jeanne Body Tech
30 1988-1989 Fee Simple 93,763 Athletic Club
31 1984 Fee Simple 142
32 1984 1990 Fee Simple 85,716 BeautiControl Inc.
33 VARIOUS VARIOUS VARIOUS 554 VARIOUS
33.10 1986/1991 Fee Simple 120
33.20 1978 288
33.30 1996 146
34 1988 Fee Simple 130
35 1975-1978 Fee Simple 118
36 1991 Fee Simple 70,076 UT Starcom, Inc.
37 1903-1913-1897 1988 Fee Simple 143
38 1984 1994 Fee Simple 134
39 1995-1996 Fee Simple 39,958 Destination Salon and Spa
40 1983 Fee Simple 120
41 1997 Leasehold 30,587 Border's Books
42 1978 1989 Fee Simple and Leasehold 35,673 D.L. Ryan Companies
43 1974 1997 Fee Simple 99,556 ABCO
44 1991 Fee Simple 127,691 K-Mart Corp. Store #3934
45 circa 1972 1995-1997 Fee Simple 148
46 1989 1995 New pads Fee Simple 56,435 Drug Emporium, Inc.
47 1986 Fee Simple 145
48 1996/1997 Fee Simple 51,808 Office Max, Inc.
49 VARIOUS VARIOUS VARIOUS 563 VARIOUS
49.10 1988 Fee Simple 215
49.20 1988 Fee Simple 186
49.30 1976 Fee Simple 162
50 1975 1994 Fee Simple 89,977 GSA - Department of Justice
51 1990 Fee Simple 148
52 1984 Fee Simple 32,600 Coldwell Banker
53 1967-1970 1985-1998 Fee Simple 307
54 1991 Fee Simple 138
55 1972 1998 Fee Simple 164
56 1947 1986 Fee Simple 50,148 Hawaii Super Market
57 1984 Fee Simple 272
58 1994/1998 Leasehold 136,413 Iron Mountain
59 1947/61/74/94/96/98 1986 Fee Simple 83,660 Revco Discount Drug (CVS)
60 1988 Fee Simple 96
61 1993-1994 Fee Simple 33,222 Norwest Bank
62 1986 Fee Simple 11,322 Laura Ashley, Inc.
63 1917 1990 Fee Simple 253,045 Cisco Systems
64 1920-1940 1984 Fee Simple 46,267 C. Raimondo & Sons Construction
65 1958-1977 1977 Fee Simple 127
66 1990 Fee Simple 22,395 Staples
67 1990-1991 Fee Simple 120
68 1998 Fee Simple 152,200 Essex Group, Inc
69 1976-1977 Fee Simple 193,859 Freeman Decorating Company
70 1980 Fee Simple 51
71 1972 Fee Simple 213,600 Dow
72 1990 Fee Simple 585
73 1996 Fee Simple 120
74 1988 Fee Simple 152
75 1879 1985 Fee Simple 12,000 Fletcher Asset Management
76 1968 Fee Simple 112
77 VARIOUS FEE SIMPLE 246
77.10 1965 - 1974 Fee Simple 120
77.20 1976 Fee Simple 66
77.30 1976 Fee Simple 60
78 1997 Fee Simple 60
79 1995-1996 Fee Simple 78
80 1987 Fee Simple 100
81 1964 1981 Fee Simple 177
82 1991 Fee Simple 40,526 GSA
83 1984-1985 Fee Simple 102,624 Penrose
84 1980-1982 Fee Simple 483
85 1989 1995 Fee Simple 62,758 HUD
86 1988 Fee Simple 49,308 Comfort Shoppe, Inc.
87 1990 Fee Simple 29,855 Ultimate Video
88 VARIOUS VARIOUS FEE SIMPLE 284
88.10 1974 1998 Fee Simple 168
88.20 1976 Fee Simple 116
89 1998 Fee Simple 30,450 Office Depot, Inc.
90 1965 1996 Fee Simple 79
100 1977 & 1995 1996 Fee Simple 52,221 Scolaris Food & Drug
101 VARIOUS VARIOUS VARIOUS 19,223 VARIOUS
101.10 1998 Fee Simple 2,950 Arby's Restaurant
101.20 1992 Fee Simple 2,252 Taco Bell Restaurant
101.30 1994 Fee Simple 2,269 Taco Bell (Unit # 16393)
101.40 1998 Fee Simple 6,385 Tony Roma's (Romacorp, Inc.)
101.50 1998 Fee Simple 2,164 Del Taco Restaurant
101.60 1998 Fee Simple 3,203 Winger's USA
102 1992 Fee Simple 80
103 1987 Fee Simple 51,164 Gold's Gym
104 1973 1997 Fee Simple 26,804 Fidelity
105 1957-1968 Fee Simple 206
106 VARIOUS VARIOUS VARIOUS 150
106.10 1958 1991 Fee Simple 83
106.20 1962 1991 Fee Simple 67
107 1998 Fee Simple 13,905 Walgreens
108 1973-1974 Fee Simple 62,850 Louapre and Kokemor
109 1974 1998 Fee Simple 134
110 1983 Fee Simple 82,120
111 1964, 1968-69 1996-97 Fee Simple 66
112 1970-1973 Fee Simple 104
113 1941 Fee Simple 25,000 Mount Fuji Properties
114 1988 Fee Simple 46
115 1998 Fee Simple 29,951 Office Depot, Inc.
116 1973 Fee Simple 295
117 1982 1985 Fee Simple 42,259 Pike Place Brewing
118 1974 Fee Simple 202,191 Bike Athletic Company
119 1998 Fee Simple 72
120 1990 Fee Simple 22,626 Cort Furniture Rental Co
121 1970 Fee Simple 76
122 1979 Fee Simple 77,632 Raymour & Flanigan Furniture
123 1987 Fee Simple 94,085 Pharmhouse
124 1963 1996 Fee Simple 110
125 1965 Fee Simple 97
126 1967 1975 Fee Simple 46,165 Sanders Furniture
127 1972 Fee Simple 105,600 K.V.R. Investment Group, Inc.
128 VARIOUS VARIOUS VARIOUS 132
128.10 1990 1994 Fee Simple 82
128.20 1982 1987 Fee Simple 50
129 VARIOUS VARIOUS VARIOUS 38,921 VARIOUS
129.10 1976 & 1984 1996 Fee Simple 27,100 Sears Roebuck & Co. (Hardware)
129.20 1978-CVS, 1998-TBELL 1995-CVS Fee Simple 11,821 CVS Pharmacy
130 1987 1991 Fee Simple 31,983 Chamness Relocation
131 1978 Fee Simple 127
132 1969 1998 Fee Simple 160
133 1930-1938 Fee Simple 23,600 CVS Drugs
134 circa 1987 Fee Simple 86
135 1980 Fee Simple 57,282 Thrift Land
136 1974 1986 Fee Simple 38,000 Youngstown Area Comm Actn Cncl
137 1960 1997 Fee Simple 192
138 1985 Fee Simple 27,126 DeDomenico Pizza & Restaurant
139 1973 Fee Simple 124 Wendy's International, Inc.
140 1987 1986 Fee Simple 41
141 1997 Fee Simple 52,145 Somers Convention Furniture
142 1983 Fee Simple 28,787 County of Marin
143 1974-1986 1985 Fee Simple 41,000 Walgreens
144 1978-1979 Fee Simple 76,500 Stylecraft
145 1965 - 1968 1997 Fee Simple 80,982 Logan's Grocery
146 1971 1996-1998 Fee Simple 120
147 VARIOUS VARIOUS VARIOUS 11,321 VARIOUS
147.10 1998 Fee Simple 2,669 Jack-in-the-Box
147.20 1990 Fee Simple 2,355 Taco Bell Restaurant
147.30 1998 Fee Simple 6,297 Tony Roma's Restaurant
148 1990 Fee Simple 131
149 1964,1965 Fee Simple 63
150 1984 Fee Simple 35,915 Sports Arenas
151 1979-1996 Fee Simple 60
152 1996 Fee Simple 70,250
153 1936 1980s Fee Simple 15,183 Presage Software
154 1998 Fee Simple 14,932 Dollar Tree
155 1924 1986 Fee Simple 32,398 Ansaphone, Inc.
156 1991 Fee Simple 27,747 Winan's Furniture
157 1965 Fee Simple 52
158 circa 1970 1994 Fee Simple 60
159 circa 1903 1995-1996 Fee Simple 7,000 D'Agostino's Supermarket
160 1998 Fee Simple 16,500 Advance Auto Parts
161 1986 Fee Simple 80
162 1997 Fee Simple 21,450 Sounds Easy Video
163 1994 Fee Simple 13,160 Coldwell Banker
164 1964 Fee Simple 66
165 1984 Fee Simple 36,138 Stony Brook Family Medical
166 1982 Fee Simple 11,250 L'Orience Nails and Skin
167 1985 ON-GOING Fee Simple 77
168 mid-70's 1996 Fee Simple 14,156 American Auto Parts
169 1968 1997 Fee Simple 127
170 1975 1998 Fee Simple 27,206 Veterans Administration
171 1956 1986 Fee Simple 49,913 American Archives
172 1996-1997 Fee Simple 10,125 Smyrna CVS, Inc.
173 1988 Fee Simple 404
174 1968 1998 Fee Simple 136
175 1920 1998 Fee Simple 7,280 Mark Rubinoff (Barber)
176 1986-1988 Fee Simple 72
177 1982 1988 Fee Simple 32,295 Merry X Ray Chemical
178 1991 Fee Simple 90,000 Thomson Consumer Electronics
179 1865 1989 & 1998 Fee Simple 45
180 circa 1989 over past 70+ yrs Fee Simple 16,891 Windemere RE
181 1995 Fee Simple 10,500 Coldwell Banker
182 1972 1976 Fee Simple 48
183 1903 1989 Fee Simple 24,409 Bullock, Smith & Partners
184 1994-1996 Fee Simple 17,879 Kinkos
185 1957/1968 1986 Fee Simple 53,059 Nationwide Furniture Warehouse
186 1989 Fee Simple 33,507 Piggly Wiggly
187 1972 Fee Simple 112
188 1997 Fee Simple 52
189 1900-1920 1997-99 Fee Simple 14,715 Lok Sing Restaurant
190 1995-96 Fee Simple 23,314 Zetec, Inc.
191 1978 Fee Simple 40,258 Continental Divide
192 1983 Fee Simple 10,500 Coldwell Banker
193 1995 & 1998 Fee Simple 122
194 1986 - 1987 Fee Simple 20,251 Chang's Garden Chinese Rest.
195 1986 Fee Simple 87
196 1975 Fee Simple 46
197 1954 1991 Fee Simple 42
198 1987 Fee Simple 21,293
199 1920 1997 & 1999 Fee Simple 37,455 Landmark America LLC
200 1986 Fee Simple 11,100 Coldwell Banker
201 1997-1997 Fee Simple 10,978 Hollywood Video
202 1964 1978 Fee Simple 47,696 M & R Flexible Packaging
203 1962 Fee Simple 46
204 1984 Fee Simple 71
205 1977 Fee Simple 24
206 1984 Fee Simple 61
207 1916 1996 Fee Simple 30
208 1982 & 1984 Fee Simple 55,110 Otterbacher Manufacturing,Inc.
209 1960 1996 Fee Simple 87
210 1961-1965 Fee Simple 61
211 1997 Fee Simple 10,000 Big 5 Sporting Goods
212 1997 Fee Simple 10,000 Big 5 Sporting Goods
213 1975 1991 Fee Simple 42
214 1986 1996-1997 Fee Simple 44
215 circa 1936 1996 Fee Simple 5,000 Trade Fair Supermarket
216 1974 Fee Simple 32,539 Family Dollar Stores of Ohio
217 1984 1992 Fee Simple 22,140 John Pappas Furs Inc.
218 1962 Fee Simple 33,231 CVS/Revco Drug Store
219 1992/1994 Fee Simple 9,334 Renaissance Development Corp.
220 1981 Fee Simple 8,166 Supercuts
221 1958/1974 1983 Fee Simple 22,207 Unistrut Western
222 1900's 1997 Fee Simple 17
223 1974 Fee Simple 50
224 circa 1982 Fee Simple 8,746 Robert G. Dinmore
225 1965 Fee Simple 49
226 1977 Fee Simple 33,770 Kinetic Concepts Inc.
227 1975 Fee Simple 99
228 1965 Fee Simple 32
229 1986 Fee Simple 17,858 Brandley's Cantina
230 1964 1994 Fee Simple 6,565 West Coast Entertainment Corp.
231 1958 Fee Simple 29
232 1973 Fee Simple 12
233 1970 1995 Fee Simple 14
234 1997 Fee Simple 9,646 Colotex Electrical Supply
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LARGEST
TENANT OCCUPANCY ORIGINAL
CONTROL LARGEST SF AS A % PHYSICAL AS OF LTV UNDERWRITTEN
NUMBER TENANT SF OF TOTAL OCCUPANCY % DATE RATIO 1997 NOI 1998 NOI NOI
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 42,400 16.0% 100.0% 03/19/99 78.8% 0 0 4,222,747
3 144,000 72.7% 100.0% 04/29/99 71.5% 3,260,820 3,195,173 3,218,939
4 86,584 33.0% 88.9% 05/13/99 76.3% 0 2,067,893 2,083,701
5 317,500 100.0% 100.0% 04/30/99 78.2% 0 0 1,529,563
6 VARIOUS VARIOUS 100.0% 03/26/99 69.4% 0 0 1,526,287
6.10 31,173 100.0% 100.0% 03/26/99 69.3% 0 0 619,357
6.20 45,647 100.0% 100.0% 03/26/99 69.5% 0 0 906,930
7 VARIOUS VARIOUS 96.5% 01/28/99 78.1% 1,305,953 1,416,475 1,490,381
7.10 119,330 57.1% 99.3% 01/28/99 80.0% 1,305,953 1,416,475 1,145,111
7.20 6,899 22.1% 85.9% 01/28/99 70.6% 0 0 345,270
8 52,759 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 3,244 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 73,656 49.6% 95.0% 04/01/99 66.4% 710,405 789,230 1,477,054
13 40,920 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 66,650 100.0% 100.0% 07/01/98 64.9% 0 0 1,312,699
16 15,000 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 11,586 14.3% 96.3% 02/07/99 78.6% 1,002,292 876,576 1,000,060
20 54,820 40.9% 99.0% 03/18/99 73.9% 97,623 1,004,422 1,177,950
21 25,000 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 8,856 17.6% 100.0% 07/01/98 76.5% 520,864 597,650 772,040
24 252,680 100.0% 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
26 121,890 100.0% 100.0% 12/17/98 97.0% 655,977 655,977 636,364
27 49,038 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 20,770 44.8% 100.0% 03/25/99 75.8% 753,991 775,952 698,495
30 15,435 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 85,716 100.0% 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 25,576 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 5,230 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 15,648 51.2% 100.0% 03/25/99 77.2% 0 458,847 569,122
42 35,673 100.0% 100.0% 09/01/98 74.8% 0 0 586,013
43 26,620 26.7% 93.0% 12/31/98 79.1% 724,438 597,590 670,149
44 86,479 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 25,000 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 23,315 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 30,626 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 32,000 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 43,384 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
58 136,413 100.0% 100.0% 04/13/99 52.6% 0 0 530,501
59 13,832 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 3,550 10.7% 96.0% 06/03/99 52.5% 787,426 839,316 734,896
62 1,733 15.3% 100.0% 11/30/98 68.9% 570,579 628,534 478,926
63 70,554 27.9% 86.3% 02/03/99 44.2% 655,625 817,357 783,837
64 12,425 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 18,851 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
68 152,200 100.0% 100.0% 01/22/99 74.8% 0 0 438,321
69 193,859 100.0% 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
71 160,200 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 12,000 100.0% 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 40,526 100.0% 100.0% 07/08/98 75.0% 420,408 439,747 414,091
83 11,700 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 5,847 9.3% 91.0% 06/01/98 63.6% 194,560 263,672 511,979
86 17,365 35.2% 100.0% 02/28/99 65.1% 461,401 503,918 449,009
87 6,750 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 30,450 100.0% 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 41,370 79.2% 100.0% 03/03/99 75.0% 353,833 427,404 433,609
101 51.7% 0 0 579,323
101.10 2,950 100.0% 100.0% 02/01/99 51.7% 0 0 71,359
101.20 2,252 100.0% 100.0% 04/19/99 51.7% 0 0 68,959
101.30 2,269 100.0% 100.0% 04/19/99 51.7% 0 0 62,195
101.40 6,385 100.0% 100.0% 01/04/99 51.7% 0 0 170,452
101.50 2,164 100.0% 100.0% 01/11/99 51.7% 0 0 116,896
101.60 3,203 100.0% 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 16,267 31.8% 97.7% 04/01/99 80.0% 381,362 438,621 453,124
104 3,430 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 13,905 100.0% 100.0% 04/27/99 69.3% 0 0 352,441
108 8,914 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 18,600 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 29,951 100.0% 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 20,017 47.4% 100.0% 02/01/99 54.9% 427,037 470,423 416,802
118 202,191 100.0% 100.0% 12/02/98 62.2% 0 0 394,029
119 96.0% 12/31/98 80.0% 0 0 295,873
120 5,000 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 75,000 96.6% 100.0% 11/17/98 58.7% 0 0 382,066
123 28,500 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 9,067 19.6% 100.0% 04/21/99 54.2% 501,855 522,810 404,257
127 19,200 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 21,000 77.5% 100.0% 12/08/98 58.1% 253,334 257,498 227,766
129.20 9,700 82.1% 100.0% 12/07/98 58.1% 181,899 111,433 175,167
130 5,363 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 11,500 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 20,232 35.3% 84.5% 03/30/99 63.1% 136,699 295,463 326,193
136 13,414 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 2,744 10.1% 84.0% 10/01/98 59.4% 204,216 318,646 326,734
139 2,517 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 52,145 100.0% 100.0% 03/15/99 67.7% 0 0 292,652
142 7,743 26.9% 100.0% 05/13/99 55.7% 293,911 246,983 332,482
143 15,500 37.8% 100.0% 06/30/98 70.0% 324,328 345,708 280,677
144 7,650 10.0% 100.0% 05/12/99 67.7% 270,418 245,010 273,128
145 26,218 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 2,669 100.0% 100.0% 01/11/99 51.1% 0 0 112,891
147.20 2,355 100.0% 100.0% 01/11/99 51.1% 0 0 65,103
147.30 6,297 100.0% 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 4,924 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 8,536 56.2% 100.0% 03/31/99 63.9% 223,702 248,748 234,931
154 4,800 32.2% 100.0% 01/06/99 80.0% 0 23,189 207,018
155 4,552 14.1% 100.0% 03/01/99 72.0% 213,081 215,161 252,429
156 18,440 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 7,000 100.0% 100.0% 07/20/98 76.1% 0 0 179,498
160 7,000 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 4,850 22.6% 100.0% 04/08/99 71.7% 0 141,764 234,067
163 9,790 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 4,250 11.8% 90.2% 04/28/99 72.1% 164,267 218,969 245,096
166 2,000 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 2,000 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 9,999 36.8% 95.0% 01/28/99 75.0% 155,166 197,446 188,653
171 13,475 27.0% 100.0% 04/28/98 57.7% 205,262 361,830 192,407
172 10,125 100.0% 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 2,400 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 4,295 13.3% 100.0% 09/10/98 62.2% 212,897 200,011 193,819
178 90,000 100.0% 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 4,971 29.4% 100.0% 03/31/99 60.9% 229,713 229,514 184,561
181 10,500 100.0% 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 9,440 38.7% 100.0% 03/31/99 58.3% 294,305 296,936 193,972
184 6,048 33.8% 100.0% 03/31/99 87.5% 147,689 190,308 193,530
185 13,154 24.8% 100.0% 04/20/99 52.9% 268,124 276,197 288,570
186 18,356 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 4,376 29.7% 100.0% 10/31/98 51.4% 0 190,399 208,583
190 23,314 100.0% 100.0% 03/31/99 63.7% 179,860 190,462 187,775
191 15,576 38.7% 100.0% 05/01/99 75.0% 199,115 198,574 210,217
192 8,750 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 4,700 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 10,702 28.6% 96.3% 03/22/99 70.5% 66,102 82,122 180,370
200 11,100 100.0% 100.0% 09/18/98 80.0% 98,072 165,625 138,277
201 6,950 63.3% 100.0% 12/31/98 72.5% 0 178,836 132,338
202 20,554 43.1% 89.8% 12/01/98 75.0% 115,306 92,478 180,556
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
208 55,110 100.0% 100.0% 05/01/99 73.7% 117,556 0 165,047
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 10,000 100.0% 100.0% 04/01/99 72.7% 0 117,448 116,073
212 10,000 100.0% 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 5,000 100.0% 100.0% 71.8% 126,320 126,000 112,864
216 8,300 25.5% 89.4% 03/01/99 65.2% 160,913 160,221 113,345
217 7,800 35.2% 87.0% 11/01/98 37.5% 83,906 98,873 174,226
218 13,000 39.1% 88.4% 04/29/99 71.4% 118,439 116,451 115,605
219 6,000 64.3% 100.0% 10/08/98 58.6% 125,113 139,932 99,698
220 1,455 17.8% 100.0% 05/01/99 58.3% 108,513 108,303 99,698
221 16,227 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 3,978 45.5% 100.0% 07/16/98 55.9% 85,525 102,292 86,383
225 95.9% 04/27/99 68.6% 66,215 105,570 91,421
226 4,320 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 5,363 30.0% 100.0% 12/31/98 38.5% 145,588 195,407 130,495
230 6,565 100.0% 100.0% 03/31/99 74.8% 59,085 62,368 59,464
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 6,431 66.7% 100.0% 04/21/98 46.2% 0 55,228 49,872
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL
ANNUAL UNDERWRITTEN
UNDERWRITTEN UNDERWRITTEN REPLACEMENT U/W NET ORIGINAL CUT-OFF DATE
CONTROL NET REPLACEMENT RESERVES PER U/W NOI CASH FLOW LOAN PER LOAN PER
NUMBER CASH FLOW RESERVES UNIT/SF DSCR DSCR UNIT/SF UNIT/SF
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $10,765,635 $2,685,185.00 $1,158.48 1.66 1.66 $29,961.17 $29,892.00
1.10 1,838,964 327,301.00 1,258.85 1.66 1.66 53,219.26 53,096.39
1.20 493,504 156,711.00 1,205.47 1.66 1.66 27,628.72 27,564.93
1.30 1,310,533 280,399.00 1,809.03 1.66 1.66 45,965.08 45,858.95
1.40 521,163 95,517.00 764.14 1.66 1.66 19,077.41 19,033.36
1.50 1,113,187 203,795.00 1,164.54 1.66 1.66 41,384.85 41,289.30
1.60 1,196,328 224,908.00 1,292.57 1.66 1.66 43,991.46 43,889.90
1.70 632,685 198,534.00 1,272.65 1.66 1.66 22,646.49 22,594.21
1.80 918,118 198,743.00 1,190.08 1.66 1.66 38,960.10 38,870.16
1.90 516,342 103,352.00 898.71 1.66 1.66 25,600.38 25,541.28
1.91 126,629 168,728.00 1,010.35 1.66 1.66 6,699.02 6,683.56
1.92 165,843 178,140.00 1,120.38 1.66 1.66 9,258.00 9,236.63
1.93 94,020 54,747.00 506.92 1.66 1.66 7,360.11 7,343.12
1.94 880,429 113,904.00 941.36 1.66 1.66 39,416.13 39,325.13
1.95 755,886 258,894.00 1,430.35 1.66 1.66 24,723.46 24,666.38
1.96 202,003 121,512.00 972.10 1.66 1.66 16,015.60 15,978.62
2 4,129,843 26,544.00 0.10 1.29 1.26 146.70 146.40
3 3,009,796 38,007.00 0.19 1.38 1.29 137.12 136.86
4 1,970,030 26,227.00 0.10 1.33 1.26 66.92 66.87
5 1,417,803 31,750.00 0.10 1.41 1.31 38.90 38.87
6 1,400,712 11,523.00 0.15 1.44 1.32 152.30 152.00
6.10 568,725 4,676.00 0.15 1.44 1.32 152.31 152.01
6.20 831,987 6,847.00 0.15 1.44 1.32 152.30 152.00
7 1,356,970 48,070.00 0.20 1.53 1.39 51.03 50.83
7.10 1,039,848 41,817.00 0.20 1.48 1.34 44.37 44.20
7.20 317,122 6,253.00 0.20 1.72 1.58 76.77 76.47
8 1,546,406 60,954.00 0.15 1.50 1.35 28.30 28.25
9 1,178,138 85,716.00 342.86 1.25 1.25 45,508.00 45,412.74
10 1,179,983 4,713.00 0.10 1.41 1.33 234.61 232.46
11 1,077,785 42,400.00 200.00 1.38 1.33 50,471.70 50,097.54
12 1,268,796 37,327.00 0.25 1.52 1.31 70.20 69.97
13 1,148,472 16,463.00 0.16 1.32 1.27 103.73 102.90
14 1,017,197 43,600.00 200.00 1.25 1.25 45,871.56 45,300.07
15 1,312,699 27,606.00 0.41 1.50 1.50 141.04 140.05
16 1,026,526 12,807.00 0.10 1.72 1.51 71.84 71.25
17 1,058,090 143,375.00 328.09 1.41 1.41 20,251.72 19,989.76
18 1,094,767 110,789.00 279.03 1.61 1.46 22,541.61 22,493.62
18.10 76,571 16,479.00 411.98 1.61 1.32 16,500.00 16,464.87
18.20 192,713 27,141.00 311.97 1.52 1.33 18,965.52 18,925.14
18.30 230,872 15,750.00 250.00 1.70 1.60 26,190.48 26,134.72
18.40 176,066 18,169.00 275.29 1.56 1.42 21,477.27 21,431.55
18.50 175,374 17,500.00 250.00 1.54 1.40 20,464.29 20,420.72
18.60 243,171 15,750.00 250.00 1.70 1.60 27,559.52 27,500.85
19 921,373 12,200.00 0.15 1.36 1.25 104.51 104.31
20 968,160 33,517.00 0.25 1.57 1.29 63.12 63.08
21 936,632 16,620.00 0.18 1.51 1.38 89.27 88.47
22 879,237 99,050.00 261.71 1.59 1.43 18,611.63 18,488.30
22.10 118,753 18,600.00 295.24 1.67 1.45 14,555.56 14,459.10
22.20 119,520 14,575.00 275.00 1.58 1.41 17,867.92 17,749.52
22.30 128,643 16,000.00 246.15 1.63 1.45 15,276.92 15,175.69
22.40 238,149 23,750.00 244.85 1.55 1.41 19,453.61 19,324.70
22.50 274,172 26,125.00 263.89 1.58 1.45 21,393.94 21,252.17
23 772,040 53,757.00 1.07 1.23 1.23 133.87 132.78
24 729,078 25,268.00 0.10 1.36 1.24 26.42 26.37
25 777,740 18,000.00 75.00 1.23 1.23 28,541.67 27,524.70
26 636,364 0.00 0.00 1.01 1.01 53.33 53.08
27 845,358 43,711.00 0.22 1.49 1.34 32.51 31.85
28 776,495 114,125.00 275.00 1.61 1.40 15,022.42 14,922.87
28.10 289,790 40,700.00 275.00 1.68 1.48 14,817.57 14,719.38
28.20 235,402 29,150.00 275.00 1.66 1.48 16,811.32 16,699.92
28.30 251,303 44,275.00 275.00 1.49 1.27 13,788.82 13,697.45
29 652,347 4,632.00 0.10 1.34 1.25 127.90 127.15
30 650,464 9,376.00 0.10 1.59 1.25 62.39 61.97
31 792,085 118,445.00 834.12 1.52 1.52 41,302.82 40,818.54
32 788,942 21,540.00 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 17,774.00 148.12 1.47 1.35 9,358.77 9,344.69
33.20 330,507 25,294.00 87.83 1.47 1.35 9,618.73 9,604.27
33.30 205,890 12,500.00 85.62 1.47 1.35 12,820.23 12,800.95
34 878,772 132,613.00 1,020.10 1.61 1.61 44,615.38 44,264.05
35 585,849 37,101.00 314.42 1.28 1.28 48,983.05 48,591.68
36 688,177 13,314.00 0.19 1.57 1.39 81.34 81.25
37 633,131 62,205.00 435.00 1.29 1.29 39,720.28 39,541.42
38 753,024 112,848.00 842.15 1.38 1.38 41,044.78 40,231.90
39 622,163 7,824.00 0.20 1.34 1.28 135.14 134.39
40 832,055 30,000.00 250.00 1.77 1.77 45,000.00 44,585.72
41 538,836 4,588.00 0.15 1.32 1.25 171.64 170.11
42 571,930 13,912.00 0.39 1.33 1.30 145.77 144.01
43 588,660 19,911.00 0.20 1.51 1.33 52.23 51.56
44 584,404 29,369.00 0.23 1.42 1.35 39.16 38.99
45 552,827 41,182.00 278.26 1.35 1.35 33,986.49 33,622.88
46 545,916 11,287.00 0.20 1.34 1.27 88.60 87.37
47 565,811 36,250.00 250.00 1.49 1.40 33,620.69 33,543.08
48 579,222 5,181.00 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 18,573.00 86.39 1.49 1.49 11,360.47 11,271.08
49.20 0 0.00 0.00 1.49 1.49 2,998.58 2,974.99
49.30 0 0.00 0.00 1.49 1.49 11,634.34 11,542.80
50 576,153 22,499.00 0.25 1.59 1.27 53.62 53.40
51 436,354 47,689.00 322.22 1.14 1.14 32,567.57 32,311.94
52 553,556 4,890.00 0.15 1.45 1.36 147.24 145.65
53 585,235 69,271.00 225.64 1.47 1.47 15,309.45 15,161.18
54 426,381 40,831.00 295.88 1.17 1.17 33,260.87 32,999.80
55 517,574 36,900.00 225.00 1.64 1.53 27,195.12 26,968.14
56 536,769 10,012.00 0.20 1.28 1.21 89.73 88.09
57 514,476 61,200.00 225.00 1.55 1.39 16,176.47 16,140.52
58 516,754 13,747.00 0.10 1.28 1.25 32.03 31.55
59 488,982 19,898.00 0.24 1.53 1.33 51.40 50.69
60 619,687 89,142.00 928.56 1.52 1.52 44,791.67 44,111.36
61 692,610 7,406.00 0.22 1.59 1.50 130.34 126.48
62 459,301 1,132.00 0.10 1.32 1.27 370.96 370.25
63 607,692 63,261.00 0.25 1.99 1.54 16.60 16.53
64 493,597 6,940.00 0.15 1.44 1.33 90.78 89.96
65 830,819 31,750.00 250.00 2.42 2.42 32,677.17 32,486.51
66 513,680 3,359.00 0.15 1.47 1.41 185.31 183.22
67 473,402 30,000.00 250.00 1.42 1.33 34,166.67 34,085.22
68 427,474 15,220.00 0.10 1.31 1.27 26.28 26.23
69 443,584 19,462.00 0.10 1.36 1.27 20.63 20.47
70 1,594,392 34,425.00 675.00 3.76 3.76 78,431.37 77,475.47
71 495,092 21,360.00 0.10 1.47 1.28 18.59 18.49
72 456,254 8,343.00 14.26 1.34 1.34 6,581.20 6,507.88
73 540,492 36,000.00 300.00 1.57 1.57 32,083.33 31,704.39
74 671,339 48,567.00 319.52 2.00 2.00 25,000.00 24,699.05
75 411,800 3,809.00 0.32 1.31 1.24 315.00 310.42
76 565,932 28,000.00 250.00 1.75 1.75 33,214.29 32,947.02
77 451,619 61,500.00 250.00 1.60 1.40 15,036.59 14,964.93
77.10 182,538 30,000.00 250.00 1.66 1.43 12,291.67 12,232.62
77.20 145,376 16,500.00 250.00 1.53 1.37 18,545.45 18,456.36
77.30 123,705 15,000.00 250.00 1.58 1.40 16,666.67 16,588.98
78 427,785 18,000.00 300.00 1.34 1.34 61,666.67 61,264.27
79 541,903 20,124.00 258.00 1.57 1.51 46,153.85 45,730.40
80 514,073 30,000.00 300.00 1.54 1.54 36,000.00 35,481.40
81 439,690 44,250.00 250.00 1.43 1.43 20,254.24 19,948.18
82 373,565 27,786.00 0.69 1.35 1.22 86.98 85.91
83 572,176 17,381.00 0.17 1.97 1.77 34.11 33.92
84 738,358 171,383.00 354.83 2.47 2.47 7,298.14 7,203.74
85 438,473 15,500.00 0.25 1.67 1.43 55.77 55.39
86 413,470 14,792.00 0.30 1.60 1.47 70.98 70.44
87 459,265 4,478.00 0.15 1.78 1.60 117.23 116.08
88 402,194 71,160.00 250.56 1.47 1.25 12,024.65 12,012.51
88.10 231,710 42,160.00 250.95 1.44 1.22 11,994.05 11,981.94
88.20 170,484 29,000.00 250.00 1.51 1.29 12,068.97 12,056.78
89 365,883 3,654.00 0.12 1.31 1.30 110.34 110.10
90 418,263 19,750.00 250.00 1.52 1.46 42,405.06 42,101.49
100 420,046 7,833.00 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 67,977 443.00 0.15 1.70 1.61 157.64 157.64
101.20 65,021 1,172.00 0.52 1.70 1.61 167.50 167.50
101.30 58,457 970.00 0.43 1.70 1.61 168.52 168.52
101.40 162,293 958.00 0.15 1.70 1.61 153.76 153.76
101.50 111,605 806.00 0.37 1.70 1.61 278.18 278.18
101.60 85,338 500.00 0.16 1.70 1.61 146.00 146.00
102 432,980 16,000.00 200.00 1.63 1.63 41,250.00 40,658.39
103 425,461 7,379.00 0.14 1.75 1.64 62.54 62.03
104 357,571 5,360.00 0.20 1.42 1.32 119.39 118.38
105 372,403 10,300.00 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 35,200.00 424.10 1.56 1.38 17,641.71 17,503.74
106.20 145,865 23,955.00 357.54 1.56 1.38 24,115.49 23,926.88
107 350,355 2,086.00 0.15 1.34 1.33 219.35 219.19
108 362,031 12,570.00 0.20 1.48 1.27 48.69 48.35
109 368,746 40,200.00 300.00 1.50 1.35 22,649.25 22,573.53
110 415,296 33,104.00 0.40 1.39 1.39 37.75 36.75
111 376,182 44,550.00 675.00 1.70 1.52 45,454.55 45,386.38
112 380,387 32,136.00 309.00 1.38 1.27 28,846.15 28,646.58
113 421,889 6,000.00 0.24 1.69 1.61 120.00 118.53
114 314,193 12,788.00 278.00 1.35 1.30 61,978.26 61,856.46
115 307,214 3,594.00 0.12 1.31 1.29 94.32 94.11
116 318,361 14,750.00 50.00 1.32 1.27 9,491.53 9,480.96
117 360,647 6,339.00 0.15 1.56 1.35 66.26 66.06
118 339,900 48,526.00 0.24 1.60 1.38 13.85 13.75
119 295,873 18,000.00 250.00 1.23 1.23 38,888.89 38,491.75
120 310,645 3,244.00 0.14 1.37 1.32 119.33 119.11
121 283,874 3,800.00 50.00 1.17 1.17 35,328.95 35,291.89
122 356,104 11,645.00 0.15 1.51 1.41 34.78 34.54
123 528,248 18,817.00 0.20 1.62 1.40 30.82 28.48
124 553,440 68,744.00 624.95 2.20 2.20 24,090.91 23,948.48
125 285,696 24,250.00 250.00 1.32 1.32 26,546.39 26,492.48
126 347,518 6,850.00 0.15 1.51 1.30 56.32 55.06
127 303,729 11,880.00 0.11 1.53 1.30 23.67 23.55
128 455,073 52,460.00 397.42 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 3,422.00 0.09 1.27 1.22 64.23 62.83
129.10 211,036 0.00 0.00 1.27 1.22 51.49 50.37
129.20 173,792 0.00 0.00 1.27 1.22 93.45 91.41
130 268,712 6,397.00 0.20 1.40 1.24 77.38 76.43
131 303,446 31,750.00 250.00 1.58 1.43 19,045.28 19,004.73
132 314,945 48,000.00 300.00 1.50 1.31 15,087.50 15,061.69
133 260,219 3,563.00 0.15 1.38 1.32 97.46 96.54
134 230,113 28,847.00 335.43 1.29 1.29 26,162.79 25,935.89
135 272,413 12,915.00 0.23 1.55 1.29 39.09 38.93
136 345,404 7,563.00 0.20 1.80 1.59 57.89 57.75
137 335,602 38,400.00 200.00 1.58 1.58 11,458.33 11,251.77
138 308,455 8,160.00 0.30 1.48 1.40 70.04 79.46
139 332,692 54,458.00 439.18 1.60 1.60 17,419.35 17,372.32
140 248,275 11,644.00 284.00 1.33 1.33 52,682.93 52,443.49
141 287,437 5,215.00 0.10 1.39 1.37 40.27 40.06
142 280,731 6,621.00 0.23 1.83 1.54 76.42 72.42
143 239,021 9,430.00 0.23 1.51 1.28 51.22 50.82
144 254,003 15,300.00 0.20 1.47 1.37 27.45 27.09
145 243,844 14,440.00 0.18 1.55 1.30 25.01 24.98
146 240,013 6,000.00 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
147.10 107,833 655.00 0.25 1.68 1.60 258.61 258.61
147.20 61,473 990.00 0.42 1.68 1.60 173.68 173.68
147.30 162,350 945.00 0.15 1.68 1.60 142.09 142.09
148 295,242 6,833.00 52.16 1.62 1.62 15,267.18 15,207.12
149 209,293 18,621.00 295.57 1.41 1.30 31,746.03 31,462.30
150 224,369 8,979.00 0.25 1.50 1.27 54.99 54.96
151 202,911 15,000.00 250.00 1.16 1.16 32,916.67 32,212.69
152 280,693 10,538.00 0.15 1.63 1.57 27.05 26.97
153 215,775 3,188.00 0.21 1.43 1.31 125.14 123.69
154 199,552 2,240.00 0.15 1.35 1.30 120.55 120.25
155 212,962 6,480.00 0.20 1.53 1.29 55.56 55.26
156 216,770 4,162.00 0.15 1.43 1.30 63.54 63.47
157 207,382 14,300.00 275.00 1.48 1.38 32,692.31 32,626.33
158 185,758 15,000.00 250.00 1.33 1.33 28,333.33 28,031.66
159 172,540 1,050.00 0.15 1.31 1.26 239.29 237.86
160 211,063 2,475.00 0.15 1.37 1.30 101.09 100.55
161 208,347 22,000.00 275.00 1.56 1.41 20,612.50 20,475.91
162 218,554 4,290.00 0.20 1.47 1.37 76.92 75.47
163 192,867 1,975.00 0.15 1.54 1.42 121.58 120.27
164 192,903 16,500.00 250.00 1.47 1.47 23,636.36 23,588.36
165 184,453 9,413.00 0.26 1.73 1.30 42.89 42.80
166 180,244 1,688.00 0.15 1.43 1.34 137.78 136.50
167 189,890 19,250.00 250.00 1.59 1.44 19,480.52 19,439.05
168 176,746 3,256.00 0.23 1.35 1.27 105.96 105.56
169 181,935 6,916.00 54.46 1.39 1.34 11,811.02 11,745.44
170 160,643 4,560.00 0.17 1.44 1.22 55.13 54.58
171 164,495 7,487.00 0.15 1.49 1.27 30.05 29.70
172 170,407 1,519.00 0.15 1.20 1.20 148.15 146.24
173 176,118 4,830.00 11.96 1.36 1.36 3,675.74 3,659.90
174 188,391 3,400.00 25.00 1.36 1.36 10,882.35 10,851.16
175 280,991 1,456.00 0.20 2.06 1.92 206.04 202.21
176 183,757 22,670.00 314.86 1.68 1.49 20,277.78 20,217.50
177 175,625 3,230.00 0.10 1.47 1.34 44.90 44.72
178 172,812 9,000.00 0.10 1.45 1.33 16.11 15.98
179 193,466 11,250.00 250.00 1.38 1.30 31,844.44 31,690.04
180 176,637 2,534.00 0.15 1.35 1.29 82.88 82.49
181 171,551 1,575.00 0.15 1.48 1.44 134.10 132.65
182 193,441 12,000.00 250.00 1.48 1.48 29,166.67 28,965.25
183 172,974 11,472.00 0.47 1.46 1.30 57.36 56.82
184 179,837 2,698.00 0.15 1.46 1.36 78.30 76.83
185 249,019 11,142.00 0.21 2.21 1.91 25.44 25.42
186 150,879 9,000.00 0.27 1.32 1.24 40.59 40.07
187 154,697 28,000.00 250.00 1.58 1.33 11,607.14 11,580.85
188 132,071 1,300.00 25.00 1.21 1.21 25,000.00 24,905.91
189 194,573 3,666.00 0.25 1.80 1.68 88.35 87.30
190 176,669 2,257.00 0.10 1.64 1.54 55.33 55.01
191 179,065 12,480.00 0.31 1.89 1.61 31.67 31.48
192 128,865 1,575.00 0.15 1.39 1.27 114.29 113.05
193 148,014 6,100.00 50.00 1.42 1.37 9,680.33 9,659.47
194 145,454 5,318.00 0.26 1.44 1.23 58.52 58.01
195 153,452 23,925.00 275.00 1.71 1.48 13,356.32 13,267.82
196 165,748 11,500.00 250.00 1.58 1.58 25,217.39 25,002.50
197 132,865 11,550.00 275.00 1.47 1.36 27,333.33 27,256.21
198 138,323 3,194.00 0.15 1.27 1.27 54.01 53.07
199 140,388 9,084.00 0.24 1.61 1.25 30.12 30.06
200 124,125 1,665.00 0.15 1.48 1.33 99.10 98.03
201 123,555 1,647.00 0.15 1.38 1.28 99.11 98.93
202 151,116 7,988.00 0.17 1.70 1.42 22.80 22.67
203 126,067 11,500.00 250.00 1.42 1.42 22,956.52 22,909.90
204 123,037 3,550.00 50.00 1.25 1.25 14,788.73 14,766.21
205 117,056 6,600.00 275.00 1.27 1.27 44,166.67 43,655.57
206 130,149 16,225.00 265.98 1.59 1.41 16,901.64 16,789.64
207 116,775 7,500.00 250.00 1.45 1.37 33,333.33 33,268.60
208 151,107 5,511.00 0.10 1.64 1.50 18.05 18.04
209 133,388 5,350.00 61.49 1.45 1.45 11,494.25 11,376.55
210 230,315 32,400.00 531.15 2.26 2.26 16,393.44 16,153.55
211 110,443 1,000.00 0.10 1.35 1.28 95.20 94.58
212 110,113 980.00 0.10 1.35 1.28 94.80 94.19
213 148,901 22,083.00 525.79 1.55 1.55 20,833.33 20,652.68
214 105,949 13,200.00 300.00 1.54 1.37 19,681.82 19,551.39
215 110,306 750.00 0.15 1.28 1.25 172.40 171.58
216 94,087 4,881.00 0.15 1.62 1.35 23.05 23.01
217 147,431 6,127.00 0.28 2.34 1.98 33.88 33.77
218 91,559 6,183.00 0.19 1.70 1.35 22.57 22.42
219 84,440 1,400.00 0.15 1.49 1.26 80.35 79.74
220 91,182 1,225.00 0.15 1.37 1.26 85.72 84.90
221 84,765 2,665.00 0.12 1.46 1.31 30.40 30.34
222 90,230 5,100.00 300.00 1.35 1.35 37,411.76 36,987.23
223 94,802 12,500.00 250.00 1.33 1.33 13,000.00 12,432.03
224 83,568 1,312.00 0.15 1.38 1.33 70.32 69.29
225 79,171 12,250.00 250.00 1.61 1.39 12,244.90 12,200.63
226 80,094 5,066.00 0.15 1.70 1.48 17.77 17.60
227 68,800 4,950.00 50.00 1.37 1.37 5,303.03 5,284.20
228 85,753 8,000.00 250.00 1.72 1.72 15,625.00 15,387.07
229 117,461 3,572.00 0.20 2.21 1.99 28.00 27.44
230 51,671 3,540.00 0.54 1.65 1.43 57.12 57.02
231 60,859 1,450.00 50.00 1.82 1.77 12,068.97 12,055.84
232 37,685 3,000.00 250.00 1.29 1.29 26,000.00 25,769.80
233 38,406 3,500.00 250.00 1.44 1.44 21,714.29 21,496.01
234 44,136 1,447.00 0.15 1.70 1.50 31.10 30.61
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
MONTHLY CURRENT
MONTHLY ECONOMIC REPAIR & CURRENT
MONTHLY MONTHLY MONTHLY P&I RESERVE REMEDIATION REPLACEMENT
CONTROL PAID REPLACEMENT MONTHLY INSURANCE TI/LC RESERVE (& OTHER) RESERVE RESERVE
NUMBER TO DATE RESERVES TAX ESCROW ESCROW PAYMENT PAYMENT PAYMENT BALANCE BALANCE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 07/01/99 186,030 149,610 31,900 - - 118,750 1,011,764 79,263
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 - - - 6,660
3 07/01/99 - - - - - - - -
4 07/01/99 - 734 1,357 - - - - -
5 07/01/99 2,395 - - 2,083 - - 20,570 9,582
6 07/01/99 961 15,446 2,307 - - - 1,250 961
6.10 07/01/99 390 6,268 936 - - - 507 779
6.20 07/01/99 571 9,178 1,371 - - - 743 1,141
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 - - - - 55,982
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 - - - - 4,467
15 07/01/99 1,972 15,093 2,962 - - - - 13,902
16 07/01/99 1,611 18,687 2,275 - - - - 16,258
17 07/01/99 9,105 9,032 - - - - - 39,576
18 07/01/99 - 11,970 - - - - 155,450 -
18.10 07/01/99 - 1,021 - - - - - -
18.20 07/01/99 - 2,716 - - - - 41,125 -
18.30 07/01/99 - 2,352 - - - - 24,750 -
18.40 07/01/99 - 2,389 - - - - 68,325 -
18.50 07/01/99 - 1,171 - - - - 500 -
18.60 07/01/99 - 2,321 - - - - 21,250 -
19 07/01/99 1,017 14,993 681 6,778 - - - 3,053
20 07/01/99 - 26,190 1,591 128,048 - - - -
21 07/01/99 1,385 6,290 782 - - - - 15,235
22 07/01/99 - 13,256 - - - - 29,313 -
22.10 07/01/99 - 2,463 - - - - 16,375 -
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 - - - - 12,938 -
23 07/01/99 - 7,186 427 3,572 - - 2,875 -
24 07/01/99 521 6,559 2,028 - - - - 1,042
25 07/01/99 - 2,400 - - - - - -
26 07/01/99 - - - - - - - -
27 07/01/99 - 18,439 1,332 - - - - -
28 07/01/99 - 10,088 - - - - 213,013 -
28.10 07/01/99 - 2,808 - - - - 61,700 -
28.20 07/01/99 - 3,350 - - - - 438 -
28.30 07/01/99 - 3,930 - - - - 150,875 -
29 07/01/99 386 6,712 588 3,846 - - 90,706 1,549
30 07/01/99 781 18,829 1,852 14,221 - - 2,915 4,723
31 07/01/99 9,870 6,258 2,917 - - - - 80,486
32 07/01/99 - 8,270 831 - - - - -
33 07/01/99 2,146 5,583 1,026 - - - - 4,306
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 - - - - 8,879
35 07/01/99 2,757 9,057 1,542 - - - 49,466 30,922
36 07/01/99 1,085 11,619 555 6,000 - - - 2,170
37 07/01/99 5,184 12,068 1,641 - - 10,594 - 36,429
38 07/01/99 10,350 4,845 1,711 - - - 138 115,297
39 07/01/99 652 2,356 1,059 2,810 - - 19,308 10,515
40 07/01/99 2,100 2,908 2,749 - - - - 2,600
41 07/01/99 510 3,977 2,680 1,081 - - - 5,098
42 07/01/99 1,174 - - - - - 36,781 11,874
43 07/01/99 9,043 5,406 553 - - - - 29,860
44 07/01/99 2,403 - - - - - 20,356 9,669
45 07/01/99 - 9,974 4,723 - - - - -
46 07/01/99 - 6,550 - 2,083 - - - -
47 07/01/99 - 7,916 1,288 - - - 18,288 -
48 07/01/99 233 3,795 375 - - - - 1,400
49 07/01/99 1,553 4,727 953 - - - 6,676 33,255
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 - - - - - 32,536
52 07/01/99 - - - 1,358 - - - -
53 07/01/99 - 8,293 2,565 - - - 45,648 -
54 07/01/99 2,875 3,901 - - - - - 18,934
55 07/01/99 - 11,168 946 - - - - -
56 07/01/99 861 7,895 895 - - - - 7,749
57 07/01/99 - 11,749 2,412 - - - - -
58 07/01/99 - - - - - - - -
59 07/01/99 - 4,611 479 - - - 40,842 -
60 07/01/99 - 6,366 1,354 - - - - 20,266
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 - - - 4,215 3,470
65 07/01/99 - 4,870 919 - - - - -
66 07/01/99 280 - 568 1,870 - - - 2,240
67 07/01/99 - 12,145 1,095 - - - - -
68 07/01/99 - - - 578 - - - -
69 07/01/99 1,622 4,833 433 2,625 - - 43,750 8,109
70 07/01/99 2,857 5,898 586 - 25,000 - 26,722 19,999
71 07/01/99 1,780 4,919 753 6,250 - - 47,738 5,342
72 07/01/99 695 1,962 689 - - - - 7,351
73 07/01/99 2,500 7,715 2,982 - - - - 22,500
74 07/01/99 - 4,425 - - - - - -
75 07/01/99 260 8,921 1,250 - - - - 3,120
76 07/01/99 2,333 9,648 - - - - - 11,667
77 07/01/99 5,125 3,027 1,902 - - - 95,982 15,462
77.10 07/01/99 2,500 1,220 881 - - - 22,188 7,558
77.20 07/01/99 1,375 843 557 - - - 73,794 4,125
77.30 07/01/99 1,250 964 464 - - - - 3,779
78 07/01/99 1,250 2,800 971 - - - - 11,250
79 07/01/99 1,656 6,661 1,336 - - - - 8,307
80 07/01/99 2,083 1,659 1,659 - - - - 15,780
81 07/01/99 3,688 22,506 778 - - - - 44,635
82 07/01/99 2,431 2,167 420 - - - 12,020 21,879
83 07/01/99 1,500 5,368 617 5,200 - - 12,632 6,016
84 07/01/99 12,075 14,323 - - - - 1,800 25,353
85 07/01/99 1,084 4,856 353 4,167 - - - 5,441
86 07/01/99 - 6,468 352 - - - 31,148 -
87 07/01/99 373 4,725 469 - - - - 3,732
88 07/01/99 - 3,731 1,406 - - - 97,125 -
88.10 07/01/99 - 2,733 822 - - - 54,000 -
88.20 07/01/99 - 998 584 - - - 43,125 -
89 07/01/99 - - 1,468 - - - - -
90 07/01/99 322 2,471 2,527 - - - - 3,559
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 - - 12,722 -
104 07/01/99 583 3,560 491 2,165 - - - 5,833
105 07/01/99 - 3,101 540 - - - 7,879 -
106 07/01/99 - 3,449 2,836 - - - 45,242 -
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 - 7,118
109 07/01/99 - 1,933 1,824 - - - - -
110 07/01/99 - 2,944 730 - - - - -
111 07/01/99 1,375 6,254 804 - - - - 2,755
112 07/01/99 - 5,127 1,924 - - - 16,637 -
113 07/01/99 389 12,728 835 1,417 2,500 - 53,381 3,501
114 07/01/99 - 2,938 332 - - - 21,990 -
115 07/01/99 - - 1,503 - - - - -
116 07/01/99 631 728 458 - - - 19,375 631
117 07/01/99 - 2,789 - - - - - -
118 07/01/99 4,820 - - - - - 395,600 -
119 07/01/99 1,200 3,192 476 - - - - 8,449
120 07/01/99 270 5,093 314 967 - - 752 812
121 07/01/99 317 3,963 449 - - - 72,000 85,634
122 07/01/99 971 4,156 1,227 2,165 - - 3,189 1,373
123 07/01/99 1,568 5,241 1,028 - - - - 25,311
124 07/01/99 4,583 2,115 789 - - - 20,921 27,606
125 07/01/99 2,021 4,168 809 - - - - 6,063
126 07/01/99 385 3,690 1,600 4,250 - - - 395
127 07/01/99 - 5,019 2,789 - - - 160,942 -
128 07/01/99 3,289 7,466 3,852 - - - 88,840 13,175
128.10 07/01/99
128.20 07/01/99
129 07/01/99 400 2,792 250 - - - 1,255 2,102
129.10 07/01/99
129.20 07/01/99
130 07/01/99 533 2,773 464 2,093 - - - 5,864
131 07/01/99 - 4,400 - - - - 25,626 -
132 07/01/99 3,334 2,278 1,223 - - - 105,586 3,334
133 07/01/99 295 3,580 846 - - - 1,875 1,770
134 07/01/99 2,400 2,887 440 - - - 54,694 21,851
135 07/01/99 - 3,879 - 3,400 - - 50,639 -
136 07/01/99 630 2,623 552 - - - 10,573 1,892
137 07/01/99 3,200 3,395 1,768 - - - - 25,600
138 07/01/99 340 11,748 930 - - - - 7,471
139 07/01/99 4,538 5,053 1,468 - - - 450 13,615
140 07/01/99 - 3,625 409 - - - 7,762 -
141 07/01/99 - 1,659 1,191 - - - - -
142 07/01/99 - 3,667 665 - - - 7,700 6,439
143 07/01/99 786 2,836 747 1,042 - - 49,999 3,929
144 07/01/99 1,658 3,708 367 - - - - 18,233
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 - - - - 1,142
149 07/01/99 1,537 3,717 351 - - - - 18,665
150 07/01/99 - 1,590 1,212 - - - - -
151 07/01/99 - 669 635 - - - - -
152 07/01/99 182 4,059 475 - - - - 546
153 07/01/99 - 2,022 323 - - - - 4,963
154 07/01/99 187 2,788 387 585 - - 3,762 748
155 07/01/99 540 6,284 519 3,209 - - 3,206 2,160
156 07/01/99 - 1,641 424 - - - - -
157 07/01/99 - 1,445 455 - - - - -
158 07/01/99 1,250 3,218 1,494 - - - - 4,109
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 - - - 2,757
163 07/01/99 548 - - - - - - -
164 07/01/99 1,375 2,646 552 - - - - 4,125
165 07/01/99 - 6,177 596 - - - - -
166 07/01/99 141 2,468 344 960 - - 938 985
167 07/01/99 - 1,189 - - - - 34,313 -
168 07/01/99 271 4,160 286 871 - - 21,574 1,362
169 07/01/99 576 1,062 142 - - - - 2,889
170 07/01/99 380 1,386 236 2,335 - - - 2,460
171 07/01/99 417 3,852 1,022 - - - - 4,215
172 07/01/99 - - - - - - - -
173 07/01/99 118 3,047 324 - - - 4,025 474
174 07/01/99 - 2,734 378 - - - - -
175 07/01/99 118 5,257 2,500 - - - 757 1,180
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 - - - 925
182 07/01/99 1,000 1,380 672 - - - 11,434 11,707
183 07/01/99 1,008 2,960 841 - - - 4,025 4,032
184 07/01/99 - 2,564 384 - - - - 350,000
185 07/01/99 1,115 2,391 405 - - - - 1,115
186 07/01/99 750 1,476 355 945 - - - 7,500
187 07/01/99 - 1,498 1,165 - - - 26,400 -
188 07/01/99 - 1,186 64 - - - - -
189 07/01/99 313 6,720 1,503 - - - - 2,813
190 07/01/99 62 1,324 188 800 - - - 309
191 07/01/99 1,034 3,038 158 - - - 3,771 5,187
192 07/01/99 - - - 415 - - 2,940 -
193 07/01/99 - 1,831 100 - - - - -
194 07/01/99 - 5,120 557 - - - - -
195 07/01/99 - 2,646 - - - - 25,175 -
196 07/01/99 - 1,161 485 - - - 122 -
197 07/01/99 - 3,547 335 - - - 26,666 -
198 07/01/99 - 1,437 253 - - - - -
199 07/01/99 - 1,884 143 2,500 - - - -
200 07/01/99 139 - - 463 - - - 981
201 07/01/99 138 260 170 732 - - - 276
202 07/01/99 - 1,541 130 - - - - -
203 07/01/99 958 1,957 379 - - - - 2,874
204 07/01/99 - 1,505 415 - - - 940 -
205 07/01/99 550 541 237 - - - - 4,400
206 07/01/99 - 2,039 - - - - - -
207 07/01/99 650 1,646 198 - - - 6,488 1,302
208 07/01/99 - 1,316 306 - - - - -
209 07/01/99 - 545 189 - - - - -
210 07/01/99 - 1,437 542 - - - - -
211 07/01/99 67 - - - - - - 473
212 07/01/99 61 - - - - - - 426
213 07/01/99 - 1,019 268 - - - - 4,140
214 07/01/99 - 1,108 - - - - - -
215 07/01/99 - 2,534 232 - - - - -
216 07/01/99 - 1,696 188 - - - 40,404 -
217 07/01/99 - 4,176 714 - - - - -
218 07/01/99 515 479 433 - - - 19,575 3,102
219 07/01/99 - 986 57 - - - - -
220 07/01/99 - 972 121 - - - - -
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 - - - - -
225 07/01/99 - 849 400 - - - - -
226 07/01/99 422 1,808 128 - - - - 3,405
227 07/01/99 - 466 3,700 - - - - -
228 07/01/99 - 2,749 580 - - - 4,249 -
229 07/01/99 - 2,180 250 - - - - -
230 07/01/99 - 516 191 - - - 9,711 -
231 07/01/99 - 1,483 148 - - - 781 -
232 07/01/99 - 743 348 - - - - -
233 07/01/99 - 824 587 - - - - -
234 07/01/99 - 1,056 102 410 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CURRENT
CURRENT CURRENT CURRENT CURRENT ECONOMIC
CURRENT TAX INSURANCE TI/LC P&I ENVIRONMENTAL RESERVE FINANCIAL FINANCIAL
CONTROL RESERVE RESERVE RESERVE RESERVE RESERVE (& OTHER) STATEMENT STATEMENT
NUMBER BALANCE BALANCE BALANCE BALANCE BALANCE BALANCE PAYMENT BALANCE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,109,780 186,785 - - 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 45,022 56,995 23,314 - - 396,943 - -
3 - - - - - - - -
4 7,341 6,784 - - - - - -
5 - - 12,500 - - - - -
6 108,121 16,145 - - - - - -
6.10 50,144 7,487 - - - - - -
6.20 73,423 10,965 - - - - - -
7 122,913 27,856 - - - - 487 2,920
7.10 106,935 24,190 - - - - 387 2,320
7.20 15,978 3,666 - - - - 100 600
8 25,691 8,560 2,900,000 - - 923 - -
9 36,396 6,755 - - - - - -
10 - - - - - - - -
11 29,233 10,588 - - - - 446 3,567
12 55,304 1,974 - - 2,500 1,018,493 - -
13 82,296 - 5 - - 129 - -
14 47,508 26,895 - - - 15,000 - -
15 117,074 53,321 - - - 1,114,480 - -
16 50,113 15,034 - - - - - -
17 25,031 - - - - 14,199 - -
18 83,795 - - - - - - -
18.10 8,170 - - - - - - -
18.20 21,277 - - - - - - -
18.30 18,818 - - - - - - -
18.40 19,115 - - - - - - -
18.50 9,366 - - - - - - -
18.60 18,570 - - - - - - -
19 44,979 8,172 20,355 - - - - -
20 61,809 3,754 - - 100,000 - - -
21 25,190 2,913 - - - - - -
22 40,787 - - - - - - -
22.10 8,008 - - - - - - -
22.20 4,707 - - - - - - -
22.30 4,907 - - - - - - -
22.40 8,319 - - - - - - -
22.50 14,846 - - - - - - -
23 79,047 3,414 21,430 - - - - -
24 35,535 10,977 - - - - - -
25 9,176 - - - - - - -
26 - - - - - - - -
27 78,454 17,296 154,579 - - - - -
28 80,698 - - - - - - -
28.10 22,460 - - - - - - -
28.20 26,802 - - - - - - -
28.30 31,436 - - - - - - -
29 73,836 8,819 15,430 - - 77,270 - -
30 175,530 16,672 61,345 - - 22,266 - -
31 12,757 26,579 - - - - - -
32 49,620 4,989 - - - 850,000 - -
33 37,030 3,077 - 91,982 - - 217 650
33.10
33.20
33.30
34 (23,442) 22,103 - - - - - -
35 12,475 7,589 - - - - - -
36 46,475 1,666 12,000 - - - - -
37 96,543 26,255 - - - 180,132 - -
38 14,767 12,551 - - - - - -
39 13,164 6,815 11,276 - - 70,463 - -
40 23,195 32,983 - - - - - -
41 10,541 2,083 10,812 - - 6 - -
42 - - 205,234 - - - - -
43 12,775 - 38,738 - - - - -
44 - - - - - - - -
45 10,262 3,865 - - - - - -
46 31,686 - 38,092 - - - - -
47 31,563 6,442 - - - - 203 609
48 407 40 - - - - - -
49 - 5,849 - - - - - -
49.10
49.20
49.30
50 76,603 4,961 262,751 - - - - 2,000
51 8,140 - - - - - - -
52 - - 10,981 - - - - -
53 51,218 36,727 - - - - - -
54 7,887 - - - - - - -
55 57,818 33 - - 1,027 126,396 - 2,230
56 13,483 9,842 - - - - - -
57 70,492 19,293 - - - - 125 500
58 - - - - - - - 1,125
59 27,663 5,366 - - 1,168 26,985 179 2,150
60 16,353 11,779 - - - - - -
61 - - - - - - - -
62 38,260 1,875 6,560 - - - - -
63 114,762 5,076 238,521 - 31,125 50,000 175 875
64 22,798 7,724 - - 1,875 - - -
65 9,335 9,193 - - - - - -
66 - 4,355 15,125 - - 18,494 - -
67 24,289 2,190 - - - - 171 512
68 - - 1,157 - - - - -
69 38,667 6,067 13,125 - - 1,300 - -
70 57,847 6,447 - 176,183 - - - -
71 29,514 3,010 87,579 300,316 - - - -
72 3,096 6,690 - - - - - -
73 19,538 28,558 - - - - - -
74 13,230 - - - - - - -
75 64,483 18,750 - - - - - -
76 28,943 3,538 - - - - - -
77 24,218 4,783 - - - - 154 617
77.10 9,760 (201) - - - - 61 246
77.20 6,745 804 - - - - 51 204
77.30 7,713 4,180 - - - - 42 167
78 10,870 4,544 - - - - - -
79 18,366 3,682 - - - - - -
80 5,647 14,927 - - - - - -
81 221,297 11,674 - - - - - -
82 19,500 3,235 514,945 - - - - -
83 22,125 4,317 143,136 - - - - -
84 28,846 - - - - 16,388 - -
85 24,661 2,230 20,916 - - - - -
86 43,111 1,925 - - - - - -
87 14,644 6,095 - - - - - -
88 - 9,950 - - 1,125 - 58 117
88.10 - 4,108 - - 1,125 - - -
88.20 - 5,842 - - - - 58 117
89 - 5,873 - - - - - 1,680
90 15,079 15,445 - - - - - -
100 5,961 - - - 1,136 - 142 425
101 18,976 9,221 660,159 - - - 138 553
101.10
101.20
101.30
101.40
101.50
101.60
102 18,581 3,805 - - - - - -
103 39,509 19,153 13,874 - - - - -
104 10,194 2,452 21,647 - - 90,157 - -
105 27,909 3,238 - - - - - -
106 23,992 28,359 - - 1,262 - 129 775
106.10
106.20
107 - 3,997 - - - - 125 250
108 29,534 10,222 18,106 - - 2,490 - -
109 14,229 12,802 - - 1,125 - 126 506
110 13,483 11,013 - - - - - -
111 43,775 3,214 - - 627 - 121 362
112 35,889 17,313 - - 1,139 - 125 625
113 76,377 6,126 12,753 22,551 - - - -
114 2,938 667 - - - - - -
115 - 6,010 - - - - - 1,416
116 5,663 3,560 - - - - - -
117 5,578 - 260,000 - - - 117 350
118 - - - - - - - -
119 24,573 5,239 - - - - - -
120 20,372 3,764 2,903 - - - - -
121 15,852 4,488 - - - - - -
122 39,875 4,909 15,234 - - 7,654 - -
123 49,662 303 - - - - - -
124 21,154 11,041 - - - - - -
125 25,028 5,661 - - - - - -
126 31,773 12,798 44,526 - - - - -
127 20,076 25,098 - - 2,092 - 104 625
128 67,197 27,662 - - - - - -
128.10
128.20
129 13,002 1,161 - - - - - -
129.10
129.20
130 27,628 6,034 23,023 - - - - -
131 26,398 - - - 350 - - -
132 9,114 6,115 - - 1,125 - - -
133 15,044 11,993 - - - - - -
134 6,398 4,814 - - - - - -
135 15,514 - 10,278 - - - 94 375
136 13,570 2,859 - - - - - -
137 785 11,589 - - - - - -
138 30,457 5,742 - - - - - -
139 35,371 11,743 - - - - - -
140 13,641 1,228 - - - - - -
141 6,637 4,765 - - - - 94 375
142 32,075 5,115 - - - - - -
143 15,040 5,231 5,210 - - - - -
144 15,490 4,394 - - - - - -
145 3,072 4,614 125,370 - 1,128 42,542 84 169
146 11,865 3,701 - - - - - -
147 40,255 - - - - 1,844 85 340
147.10
147.20
147.30
148 5,743 6,376 - - - - - -
149 3,718 350 - - - - - -
150 7,950 10,907 50,000 - 1,125 - - -
151 1,473 6,015 - - 1,067 - - -
152 17,131 2,010 - - - - - -
153 36,004 3,806 - - - - - -
154 22,304 3,092 1,760 - - 138,440 - -
155 18,851 5,191 12,836 - - - - -
156 6,562 848 - - - - 75 150
157 4,335 2,732 - - 1,125 - 71 283
158 (264) 1,469 - - - - - -
159 - - - - - - - -
160 646 5,443 - - - - 71 212
161 6,437 - - - - - - -
162 14,691 435 11,399 - - - - -
163 - - 4,431 - - - - -
164 15,878 3,862 - - - - - -
165 12,353 1,787 - - - - 65 194
166 21,991 3,096 21,718 - - - - -
167 9,512 - - - - - - -
168 29,119 1,719 4,371 - - 5,000 - -
169 8,313 1,112 - - - - - -
170 2,803 1,870 44,365 - - - - -
171 23,112 8,178 - - - - - -
172 - - - - - - - -
173 22,301 1,621 - - - - - -
174 19,139 1,891 - - - - - -
175 31,541 28,674 - - - 2,000 - -
176 18,217 8,579 - - 20,237 - 61 243
177 14,676 5,466 22,772 - - - - -
178 4,868 699 6,445 1,930 - - - -
179 24,842 2,799 4,050 - 1,336 2,800 60 239
180 9,920 3,187 - - - - - -
181 - - 3,541 - - - - -
182 6,788 13,778 - - - - - -
183 18,249 4,767 - - - - - -
184 19,624 1,939 6,480 - - - - -
185 2,391 405 - - - - - -
186 14,522 3,513 9,453 - - - - -
187 10,487 6,990 - - - - 52 156
188 4,742 256 100,000 - - - - -
189 46,472 12,288 - - - - - -
190 4,461 637 4,011 - - - - -
191 9,209 474 - - - - - -
192 - - 3,356 - - - - -
193 8,515 500 - - - - 49 148
194 25,601 3,427 - - - - 50 297
195 21,166 - - - - - - -
196 8,542 - - - - - - -
197 21,284 1,673 - - 1,137 - 48 239
198 5,567 2,778 - - - - - -
199 3,767 1,434 2,500 - 1,125 - 50 100
200 - - 3,744 - - - - -
201 1,298 1,696 1,465 - - - - -
202 9,752 825 - - - - - -
203 11,744 2,656 - - - - - -
204 13,546 2,489 - - - - - -
205 2,100 2,843 - - - - - -
206 6,328 - - - - - - -
207 3,293 2,534 - - - - - -
208 2,557 592 - - - - - -
209 1,750 1,887 - - - - - -
210 7,255 2,154 - - - - - -
211 - - - - - - - -
212 - - - - - - - -
213 6,364 4,559 - - - - - -
214 8,868 - - - - - - -
215 17,738 1,853 - - - 5,000 - -
216 11,190 1,243 - - - - - -
217 7,988 1,366 - - - - - -
218 3,124 2,827 - - - - - -
219 7,999 466 - - - - - -
220 - - - - - - - -
221 2,586 213 - - - - - -
222 1,499 1,344 - - - - - -
223 11,709 1,928 - - 1,068 - - -
224 6,629 3,332 - - - - - -
225 6,489 3,054 - - - - - -
226 18,172 1,534 - - - - - -
227 3,730 3,700 - 27,822 - - - -
228 9,244 1,739 - - - - - -
229 15,474 925 - - - - - -
230 1,547 572 - - - - - -
231 14,630 1,333 - - - - - -
232 6,683 3,832 - - - - - -
233 5,770 5,152 - - - - - -
234 935 1,019 3,308 - - - - -
</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 0.70% 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 0.98% Affiliated Entities No
----
TOTAL 3.44%
- -------------------------------------------- ----
03-0221331, 03-0221428 1.52% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
5410,5551 1.51% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0221361, 03-0221362 1.40% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0810081, 03-0810102 1.35% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
215990028, 215990053 1.34% Same Borrower Cross-collateralized and Cross-defaulted
- -------------------------------------------- ---- --------------------- -----------------------------------------
5201,6098 1.33% Same Borrower Cross-collateralized and Cross-defaulted
- -------------------------------------------- ---- --------------------- -----------------------------------------
5554,5655 1.14% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0810083, 03-0810084, 03-0810086,
03-0810087, 03-0810089 1.14% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0221365, 03-0221366 1.07% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0221336, 03-0221425 0.76% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
1109,5942 0.72% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
6415,6416 0.71% Same Borrower No
- -------------------------------------------- ---- --------------------- -----------------------------------------
03-0810090, 03-0810112 0.67% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
4163231, 4165039 0.62% Affiliated Entities No
- -------------------------------------------- ---- --------------------- -----------------------------------------
6347,6348 0.60% Same Borrower No
- -------------------------------------------- ---- --------------------- -----------------------------------------
410990035, 410990036, 410990037 0.59% 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
45 Bayside Willows Apartments been inspected by the originator of
80 Gillette Nursing Home the Mortgage Loan or the Seller
126 Graham Center within the 12 months preceding
162 Tooele Main Street Shops the Closing 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
147 Captec IIIa --- constituting the 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.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- -------- ------------ -------- -------------------------------------
<S> <C> <C> <C>
24 Laguna (10) An agreement between the lender
Properties and the related borrower requires
Building an unimproved 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.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- ---------- ----------------------------- -------- -----------------------------------
<S> <C> <C> <C>
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 the referenced
217 The Fur Plaza loans (collectively the "KeyBank
Small Loans") provide for full
219 Renaissance Plaza recourse against the related
borrower (and in certain cases
220 Freeway VIII Center against a principal of such
borrower).
221 Jason Commercial Building
None of the related Mortgaged
225 Lantern Arms Apartments Properties securing the KeyBank
(38) Small Loans were inspected by the
230 Millville Retail Building originator prior to the Closing
Date, but each Mortgaged
231 Mt. Orange Mobile Home Park Property was reviewed in
connection with an appraisal of
each such Mortgaged Property
prior to the origination of the
related Mortgage Loan.
(39) The KeyBank Small Loans are
secured by Mortgages that do not
provide for acceleration of the
payment of the unpaid balance of
the Mortgage Loan if the related
borrower further encumbers the
related Mortgaged Property.
(41) With respect to the KeyBank
Small Loans, the related Mortgage
Loan Documents do 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.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- -------- ---------------- -------- --------------------------------------
<S> <C> <C> <C>
(46) With respect to each KeyBank
Small Loan, the Mortgage Loan
substantially complied 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 Mortgage 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.
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
CONTROL REP
NUMBER NAME NUMBER EXCEPTION
- -------- ----------- -------- ------------------------------------
<S> <C> <C> <C>
(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
$776,136,000 (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.
GREENWICH NATWEST
- -----------------
- ---------
NATIONAL
REALTY
FUNDING L.C.
BRIDGER
COMMERCIAL FUNDING
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 OR 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
- -------------------------------------------------------------------------------
$776,136,000 (APPROXIMATE)
APPROXIMATE SECURITIES STRUCTURE:
<TABLE>
<CAPTION>
APPROX. WEIGHTED
FACE/NOTIONAL EXPECTED CREDIT AVERAGE PRINCIPAL
EXPECTED RATING AMOUNT SUPPORT LIFE PAYMENT
CLASS MOODY'S/S&P ($MM) (% OF UPB) (YEARS)(A) WINDOW (A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PUBLICLY OFFERED
A-1 Aaa/AAA $230,000,000 28.00% 5.692 8/99 - 6/08
A-2 Aaa/AAA 399,650,000 28.00 9.379 6/08 - 4/09
B Aa2/AA+ 41,540,000 23.25 9.711 4/09 - 4/09
C A2/A 45,913,000 18.00 9.775 4/09 - 5/09
D A3/A- 13,118,000 16.50 9.850 5/09 - 6/09
E Baa2/BBB 30,610,000 13.00 9.878 6/09 - 6/09
F Baa3/BBB- 15,305,000 11.25 9.988 6/09 - 4/10
A-EC Privately Offered 874,522,722 N/A 9.063 N/A
G Not Offered 15,307,000 9.50 11.482 4/10 - 4/11
H Not Offered 19,674,000 7.25 11.861 4/11 - 7/11
J Not Offered 6,559,000 6.50 12.616 7/11 - 10/12
K Not Offered 6,559,000 5.75 13.475 10/12 - 5/13
L Not Offered 17,491,000 3.75 14.197 5/13 - 3/14
M Not Offered 4,373,000 3.25 15.216 3/14 - 4/15
N Not Offered 8,746,000 2.25 16.757 4/15 - 5/17
O Not Offered 19,677,722 0.00 19.812 5/17 - 9/23
- ----------------------------------------------------------------------------------------------------------------
Total $874,522,722
(a) Calculated at 0% CPR and no balloon or ARD extensions.
COLLATERAL FACTS:
Cut-off Date Balance: $874,522,722
Number of Mortgage Loans: 241
Number of Mortgaged Properties: 269
Average Cut-off Date Balance: $3,628,725
Weighted Average Gross Coupon: 7.611%
Weighted Average Remaining Amortization Term (months): 309
Weighted Average Cut-off Date DSCR: 1.41x
Weighted Average Cut-off Date LTV: 69.67%
Weighted Average Balloon/ARD LTV Ratio: 54.22%
Weighted Average Remaining Term to Maturity/ARD (months): 124
</TABLE>
<TABLE>
<CAPTION>
SIGNIFICANT PROPERTY TYPE CONCENTRATIONS:
CUT-OFF DATE # OF WTD. AVG. WTD. AVG.
PROPERTY TYPE BALANCE PROPERTIES % OF POOL DSCR (X) COUPON
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Retail-Anchored $145,393,293 20 16.63 1.31 7.4939
Retail-Unanchored 87,932,996 34 10.05 1.40 7.5418
Retail-Single Tenant 34,565,101 17 3.95 1.32 7.8456
Shadow Anchored 7,667,288 2 0.88 1.55 6.9263
--------- - ---- ---- ------
Total Retail Related 275,558,677 73 31.51 1.35 7.5375
Multifamily 194,496,435 76 22.24 1.38 7.2976
Manufac. Housing 31,864,914 16 3.64 1.34 7.9558
---------- -- ---- ---- ------
Total Housing Related 226,361,349 92 25.88 1.37 7.3903
Office 124,104,613 28 14.19 1.32 7.8098
Hotel - Full Service 71,923,991 16 8.22 1.68 8.0870
Industrial 63,535,082 19 7.27 1.31 7.6752
Other 113,039,010 41 12.92 1.59 7.6715
- -----------------------------------------------------------------------------------------------------------------------------------
Total $874,522,722 269 100.00% 1.41x 7.6105%
LOAN CONTRIBUTORS:
LOAN CONTRIBUTORS CUT-OFF DATE BALANCE # OF MORTGAGE LOANS % OF POOL WTD. AVG. DSCR WTD. AVG. COUPON
- -----------------------------------------------------------------------------------------------------------------------------------
GREENWICH $532,378,772 120 60.88% 1.44x 7.5335%
NRF 189,228,790 52 21.64 1.35 7.7066
KEY 90,809,416 47 10.38 1.39 7.6793
BRIDGER 62,105,743 22 7.10 1.32 7.8782
-------------- -- ---- ---- ------
TOTAL $874,522,722 241 100.00% 1.41x 7.6105%
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
IMPORTANT CHARACTERISTICS:
Lead Manager & Placement Agent: Prudential Securities Incorporated
Co-Manager & Placement Agent: Greenwich NatWest Limited, as Agent for 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 and Bridger: Prudential Securities Credit Corporation ("PSCC")
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: On or about July 16, 1999
Settlement Date: On or about July 22, 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-EC
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.
</TABLE>
<TABLE>
<CAPTION>
SIGNIFICANT STATE CONCENTRATIONS:
STATE CUT-OFF DATE BALANCE # OF PROPERTIES % OF POOL WTD. AVG. DSCR
- -------------------------- --------------------------- ----------------------- ------------- ---------------------
<S> <C> <C> <C> <C>
CALIFORNIA $175,543,355 34 20.07 % 1.38 x
NEW YORK 81,923,831 20 9.37 1.33
ARIZONA 63,555,147 12 7.27 1.42
FLORIDA 49,151,322 25 5.62 1.46
PENNSYLVANIA 46,595,319 17 5.33 1.53
OTHER 457,753,749 161 52.33 1.41
----------- --- ----- ----
TOTAL $874,522,722 269 100.00 % 1.41 x
</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 OR 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:
-- 241 loans secured by 269 properties Top 5 loans
-- equal 18.89% of pool; Top 10 equal 25.41%
-- 40 states in total plus one property in the District of
Columbia, including California 20.07%, New York 9.37%, Arizona
7.27%, Florida 5.62%, Pennsylvania 5.33%, Ohio 4.02%, Maryland
4.00%; no other state > 4.00%;
-- Maturity/ARD distribution equals 43.03% and 31.15% in 2009 and
2008, respectively, and no other year more than 8.24%
o Underwriting:
-- 1.41x Weighted Average Cut-off Date DSCR
-- 69.67% Weighted Average Cut-off Date LTV
-- 54.22% Weighted Average Balloon/ARD LTV
-- 309 Month Weighted Average Remaining Amortization Term
- -------------------------------------------------------------------------------
GENERAL POOL CHARACTERISTICS
- -------------------------------------------------------------------------------
Number of Loans: 241
Number of Properties: 269
Aggregate Cut-off Date Principal Balance: $874,522,722
Aggregate Original Principal Balance: $880,326,700
Weighted Average Gross Coupon: 7.611%
Gross Coupon Range: 6.200% - 9.375%
Weighted Average Net Coupon: 7.546%
Net Coupon Range: 6.217% - 9.322%
Average Cut-off Date Principal Balance: $3,628,725
Average Original Principal Balance: $3,652,808
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: 69.67%
Cut-off Date LTV Range: 37.09 - 96.56%
Weighted Average Original LTV: 70.12%
Original LTV Range: 37.50 - 97.00%
Weighted Average Balloon/ARD LTV: 54.22%
Balloon/ARD LTV Range: 5.13 - 72.77%
Weighted Average Age (First Pay through Last Pay): 6.152 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 241 mortgage loans with an
approximate Cut-off Date Balance of $874,522,722.
-- The regularly scheduled monthly principal payments from the
loans will be paid on a straight sequential basis (i.e., A-1,
A-2, etc.).
-- All other principal collections from the loans will be
distributed on a straight sequential basis.
-- If all Classes other than Classes A-1 and A-2 have been
reduced to zero, principal will be allocated to Class A-1 and
A-2 on a pro-rata basis.
o Each of the Classes (other than Classes A-1, A-2 and A-EC) 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 OR 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% 86.2% 85.9% 82.5% 79.2% 70.7% 70.3% 75.8% 73.7% 65.3%
Greater of Yield Maintenance or Percentage Premium of:
5.00% or greater 1.3 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 10.4 13.4 16.5 16.4 16.5 19.4 20.6 14.3
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 13.8 14.1 16.3 20.2 20.2 20.3 22.6 23.4 16.9
Total of Yield Maintenance
and Lockout / Defeasance 100.0 100.0 100.0 98.9 99.4 91.0 90.6 98.4 97.1 82.2
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 8.4 0.0 0.0 0.5 0.6
Total Percentage Premium 0.0 0.0 0.0 0.4 0.5 9.0 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 16.8
--- --- --- --- --- --- --- --- --- ----
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) 874.5 863.2 850.8 837.3 816.4 799.7 782.9 697.4 677.6 617.4
Pool Factor (%) 100.0 98.7 97.3 95.7 93.4 91.4 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 67.1% 67.8% 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 4.3 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% 20.6 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 28.3 27.7 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) 101.9 96.7 63.1 57.8 47.0 31.5 27.4 23.0 18.7 14.3
Pool Factor (%) 11.6 11.1 7.2 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 OR 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-EC 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 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-EC 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-EC
Certificates as interest rates decrease, and a decrease in the
allocation to such Classes as interest rates rise.
Fixed Percentage Prepayment Premiums:
o 75% of all Fixed Percentage Prepayment Premiums will be allocated to
the Class A-EC Certificates. The remaining 25% of the Fixed
Percentage Prepayment Premiums will be allocated to the Offered
Certificates then entitled to principal distributions.
- --------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- --------------------------------------------------------------------------------
WA 2.21% OK 0.42% IN 2.65% NC 2.03%
OR 0.67% TX 3.18% KY 0.17% SC 0.22%
ID 2.20% HI 0.59% TN 1.32% FL 5.62%
WY 0.32% IA 0.73% AL 0.51% NH 2.70%
CA 20.07% MO 1.03% OH 4.02% ME 0.30%
NV 2.70% AR 0.74% WV 2.01% MA 3.07%
UT 0.41% LA 1.60% GA 3.41% CT 1.33%
CO 1.72% WI 0.55% NY 9.37% NJ 2.65%
AZ 7.27% IL 0.12% PA 5.33% DE 0.13%
KS 1.10% MI 1.06% VA 0.21% MD 4.00%
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 OR 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 20.07 % 7.4916 % 123.81 70.46 % 1.38 x $175,543,355
NEW YORK 20 9.37 7.6730 117.53 70.22 1.33 81,923,831
ARIZONA 12 7.27 7.1652 156.33 73.59 1.42 63,555,147
FLORIDA 25 5.62 7.7276 130.67 70.61 1.46 49,151,322
PENNSYLVANIA 17 5.33 7.9371 101.28 61.41 1.53 46,595,319
OHIO 20 4.02 7.5612 123.32 72.31 1.44 35,187,894
MARYLAND 7 4.00 7.7918 104.19 70.52 1.48 35,022,379
GEORGIA 8 3.41 7.5447 102.27 69.37 1.46 29,841,213
TEXAS 12 3.18 7.8038 117.63 64.27 1.45 27,771,947
MASSACHUSETTS 7 3.07 7.6861 114.41 71.95 1.31 26,861,061
NEW HAMPSHIRE 4 2.70 7.9861 121.15 70.88 1.35 23,654,485
NEVADA 8 2.70 7.5932 129.55 64.04 1.42 23,589,552
NEW JERSEY 6 2.65 7.3472 125.65 70.56 1.39 23,178,390
INDIANA 13 2.65 7.6094 136.47 66.70 1.40 23,135,155
WASHINGTON 8 2.21 8.0561 121.42 61.97 1.44 19,291,481
IDAHO 5 2.20 7.6824 118.70 67.44 1.34 19,258,284
NORTH CAROLINA 3 2.03 8.0800 83.00 58.74 1.66 17,758,904
WEST VIRGINIA 1 2.01 8.0000 143.00 76.25 1.26 17,536,726
COLORADO 8 1.72 7.4306 112.27 69.13 1.44 15,037,019
LOUISIANA 4 1.60 7.6542 115.00 71.08 1.29 13,981,438
CONNECTICUT 4 1.33 6.8959 116.67 72.76 1.39 11,648,615
TENNESSEE 5 1.32 7.5312 116.37 67.23 1.44 11,558,426
KANSAS 4 1.10 7.7616 155.13 67.85 1.38 9,643,469
MICHIGAN 6 1.06 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
OREGON 3 0.67 7.4458 112.45 67.96 2.09 5,815,946
HAWAII 1 0.59 7.2100 109.00 76.52 1.25 5,203,290
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 0.42 7.8070 118.65 74.89 1.32 3,706,926
UTAH 2 0.41 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 1 0.26 7.1500 112.00 77.07 1.32 2,278,281
COLUMBIA
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 269 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</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 OR 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 16.63 % 7.4939 % 124.85 74.30 % 1.31 x $145,393,293
RETAIL-UNANCHORED 34 10.05 7.5418 124.89 68.56 1.40 87,932,996
RETAIL-SINGLE TENANT 17 3.95 7.8456 168.96 73.22 1.32 34,565,101
RETAIL-SHADOW ANCHORED 2 0.88 6.9263 142.52 56.92 1.55 7,667,288
- ---- ------ ------ ----- ---- ---------
RETAIL SUBTOTAL 73 31.51 7.5375 130.89 71.85 1.35 275,558,678
MULTIFAMILY 76 22.24 7.2976 133.56 71.56 1.38 194,496,435
MANUFACTURED HOUSING 16 3.64 7.9558 96.91 72.03 1.34 31,864,914
-- ---- ------ ----- ----- ---- ----------
HOUSING SUBTOTAL 92 25.88 7.3903 128.40 71.63 1.38 226,361,349
OFFICE 28 14.19 7.8098 117.70 68.93 1.32 124,104,613
HOTEL - FULL SERVICE 16 8.22 8.0870 84.14 59.06 1.68 71,923,991
INDUSTRIAL 19 7.27 7.6752 124.13 70.31 1.31 63,535,082
MIXED USE 15 4.04 7.3633 120.73 70.56 1.34 35,340,917
HOTEL - LIMITED SERVICE 9 3.16 7.9840 139.50 66.80 1.56 27,657,348
NURSING HOME 8 3.15 7.7897 111.14 60.89 2.08 27,590,154
SELF-STORAGE 6 1.36 7.4916 152.84 73.09 1.39 11,881,746
ASSISTED LIVING 2 0.80 7.7667 92.42 76.13 1.40 7,001,874
FACILITY
CONGREGATE CARE 1 0.41 7.8000 235.00 62.58 1.51 3,566,971
- ---- ------ ------ ----- ---- ---------
TOTAL 269 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</TABLE>
================================================================================
* The Weighted Average Interest Rate on each stratification table listed herein
indicates the Gross Mortgage Rate.
- --------------------------------------------------------------------------------
LTV RANGE AT CUT-OFF DATE
- --------------------------------------------------------------------------------
<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>
35.01 - 40.00 3 0.54 % 7.3642 % 250.27 37.20 % 2.34 x $4,717,071
40.01 - 45.00 4 1.31 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 2.98 7.6614 149.40 52.26 1.49 26,022,148
55.01 - 60.00 19 12.52 8.0345 97.57 58.32 1.67 109,502,306
60.01 - 65.00 27 8.75 7.6523 126.92 63.35 1.43 76,522,003
65.01 - 70.00 50 17.13 7.6023 123.07 68.08 1.41 149,822,006
70.01 - 75.00 67 26.12 7.5669 130.33 73.08 1.35 228,405,401
75.01 - 80.00 54 28.53 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 241 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</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 OR 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>
5.13 - 15.00 1 0.74 % 7.7500 % 247.00 96.56 % 1.01 x $6,469,716
15.01 - 35.00 12 2.70 7.9176 160.11 52.77 1.52 23,586,296
35.01 - 40.00 4 1.02 7.3841 147.34 54.41 1.34 8,913,389
40.01 - 45.00 15 5.18 8.0289 124.64 59.31 1.62 45,269,892
45.01 - 50.00 17 4.66 7.8416 130.09 63.39 1.44 40,792,000
50.01 - 55.00 29 17.17 7.9066 100.50 62.32 1.52 150,124,528
55.01 - 60.00 52 17.20 7.4020 119.51 70.53 1.39 150,392,591
60.01 - 65.00 53 21.85 7.5490 116.04 73.81 1.36 191,057,719
65.01 - 70.00 29 19.69 7.4435 114.35 77.36 1.32 172,157,897
70.01 - 75.00 10 3.63 7.8643 95.09 78.42 1.31 31,761,210
--- ---- ------ ----- ----- ---- ------------
TOTAL 222 93.83 %(1) 7.6289 % 116.48 70.08 % 1.40 x $820,525,238
</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 220 93.22 % 7.6233 % 116.48 70.20 % 1.40 x $815,255,238
FULLY AMORTIZING 19 6.17 7.3308 233.27 63.49 1.45 53,997,484
INTEREST ONLY,
THEN AMORTIZING 2 0.60 8.5000 117.00 51.47 1.61 5,270,000
- ---- ------ ------ ----- ---- ---------
BALLOON
TOTAL 241 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</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 OR 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(X) LOANS BALANCE RATE (MONTHS) LTV DSCR BALANCE
- ------- ----- ------- ---- -------- --- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1.01 - 1.15 2 1.29 % 7.3547 % 214.70 88.30 % 1.07 x $11,251,884
1.16 - 1.20 4 1.22 7.3634 142.72 73.45 1.17 10,649,622
1.21 - 1.25 25 11.85 7.5781 124.90 73.16 1.24 103,659,607
1.26 - 1.30 51 24.54 7.6678 126.50 72.75 1.28 214,574,392
1.31 - 1.35 43 19.00 7.4991 121.19 71.83 1.33 166,165,846
1.36 - 1.40 29 8.96 7.6209 121.24 68.35 1.38 78,339,561
1.41 - 1.45 23 5.21 7.3737 151.83 70.93 1.42 45,574,476
1.46 - 1.50 17 5.32 7.4978 115.74 66.59 1.48 46,532,655
1.51 - 1.55 11 4.81 7.2673 143.25 69.20 1.52 42,106,779
1.56 - 1.60 11 2.81 7.7670 113.83 64.75 1.59 24,587,532
1.61 - 1.65 7 2.48 7.7090 111.53 63.39 1.62 21,679,577
1.66 - 1.70 2 8.07 8.0689 83.49 58.59 1.66 70,574,233
1.71 - 1.75 3 0.76 7.8734 123.22 67.09 1.74 6,656,531
1.76 - 1.80 3 1.05 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 3 0.57 7.6959 117.08 41.02 2.00 4,991,922
2.01 - 2.50 4 1.28 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 241 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</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 2.76 % 6.3963 % 111.44 74.17 % 1.43 x $24,168,433
6.5001 - 6.7500 2 0.97 6.6387 191.24 51.40 1.37 8,506,154
6.7501 - 7.0000 18 7.86 6.9343 158.72 71.98 1.41 68,778,088
7.0001 - 7.2500 34 13.85 7.1730 113.19 70.84 1.36 121,107,623
7.2501 - 7.5000 49 16.17 7.4148 119.10 72.03 1.44 141,388,986
7.5001 - 7.7500 47 18.69 7.6168 138.15 72.81 1.31 163,452,342
7.7501 - 8.0000 30 17.00 7.8698 123.44 72.17 1.33 148,703,383
8.0001 - 8.2500 27 16.12 8.1061 105.49 62.28 1.52 140,947,558
8.2501 - 8.5000 17 3.73 8.3946 106.87 62.37 1.49 32,606,916
8.5001 - 8.7500 5 1.11 8.7089 131.62 59.61 2.38 9,668,721
8.7501 - 9.0000 6 1.45 8.8108 112.99 61.62 1.44 12,704,199
9.0001 - 9.2500 2 0.21 9.1306 172.59 69.26 1.52 1,861,535
9.2501 - 9.5000 1 0.07 9.3750 107.00 79.09 1.35 628,783
--- ------ ------ ------ ----- ---- ------------
TOTAL 241 100.00 % 7.6105 % 123.69 69.67 % 1.41 x $874,522,722
</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 OR 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
MORTGAGE 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 7.92 % 8.0800 % 58.74 % 1.66 x $69,289,658
BRIDGEPOINTE SHOPPING CENTER 1 4.45 7.5200 78.63 1.26 38,921,165
122 FIFTH AVENUE 1 3.10 7.7800 71.31 1.29 27,098,390
DUDLEY FARMS PLAZA 1 2.01 8.0000 76.25 1.26 17,536,726
EMERY/BUSCH INDUSTRIAL 1 1.41 7.9700 78.11 1.31 12,341,663
BUILDING
BORDEAUX PROPERTIES 2 1.34 7.7700 69.30 1.32 11,676,920
FESTIVAL AT PASADENA 2 1.33 7.4500 77.77 1.39 11,635,676
PALOUSE EMPIRE MALL 1 1.31 7.7500 63.77 1.35 11,479,097
VENTANA VISTA APARTMENTS 1 1.30 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 25.41 % 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 OR 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-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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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 OR 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 OR 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
PROPERTY 1: CONTROL #: 1.10 LOAN #: 03-0810828A - ATLANTA HOLIDAY INN -
DOWNTOWN
- --------------------------------------------------------------------------------
Location: Atlanta, GA Rooms: 260
Construction: ADR: $94.17
Year Built/Renovated: 1985/1998-1999 Appraised Value: $23,500,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
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>
PROPERTY 2: CONTROL #: 1.20 LOAN #: 03-0810828B - CUMBERLAND HOLIDAY INN
- --------------------------------------------------------------------------------
Location: Cumberland, MD Rooms: 130
Construction: ADR: $61.45
Year Built/Renovated: 1972/1996-1997 Appraised Value: $6,100,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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 OR 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
PROPERTY 3: CONTROL #: 1.30 LOAN #: 03-0810828C -
FREDERICK HOLIDAY INN HOLIDOME
- --------------------------------------------------------------------------------
Location: Frederick, MD Rooms: 155
Construction: ADR: $78.29
Year Built/Renovated: 1979/1998 Appraised Value: $12,100,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 4: CONTROL #: 1.40 LOAN #: 03-0810828D - ASHEVILLE COMFORT SUITES
- --------------------------------------------------------------------------------
Location: Asheville, NC Rooms: 125
Construction: ADR: $53.71
Year Built/Renovated: 1989/NAP Appraised Value: $4,050,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 5: CONTROL #: 1.50 LOAN #: 03-0810828E -
CHARLOTTE HOLIDAY INN EXECUTIVE PARK
- --------------------------------------------------------------------------------
Location: Charlotte, NC Rooms: 175
Construction: ADR: $82.39
Year Built/Renovated: 1989/1998 Appraised Value: $12,300,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 6: CONTROL #: 1.60 LOAN #: 03-0810828F - DURHAM WYNDHAM GARDEN
- --------------------------------------------------------------------------------
Location: Durham, NC Rooms: 174
Construction: ADR: $83.24
Year Built/Renovated: 1989/NAP Appraised Value: $13,000,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
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 OR 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
PROPERTY 7: CONTROL #: 1.70 LOAN #: 03-0810828G - BEAVER FALLS HOLIDAY INN
- --------------------------------------------------------------------------------
Location: Beaver Falls, PA Rooms: 156
Construction: ADR: $63.91
Year Built/Renovated: 1966/1996 Appraised Value: $6,000,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 8: CONTROL #: 1.80 LOAN #: 03-0810828H - BENSALEM COURTYARD BY MARRIOTT
- --------------------------------------------------------------------------------
Location: Bensalem, PA Rooms: 167
Construction: ADR: $81.89
Year Built/Renovated: 1988/NAP Appraised Value: $11,050,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 9: CONTROL #: 1.90 LOAN #: 03-0810828I - HARRISBURG EAST COMFORT INN
- --------------------------------------------------------------------------------
Location: Harrisburg, PA Rooms: 115
Construction: ADR: $62.79
Year Built/Renovated: 1990/NAP Appraised Value: $5,000,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 10: CONTROL #: 1.91 LOAN #: 03-0810828J - HARRISBURG WYNDHAM GARDEN
- --------------------------------------------------------------------------------
Location: Harrisburg, PA Rooms: 167
Construction: ADR: $62.14
Year Built/Renovated: 1987/1997-1998 Appraised Value: $1,900,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 11: CONTROL #: 1.92 LOAN #: 03-0810828K - JOHNSTOWN HOLIDAY INN
- --------------------------------------------------------------------------------
Location: Johnstown, PA Rooms: 159
Construction: ADR: $62.11
Year Built/Renovated: 1973/1996 Appraised Value: $2,500,000
- --------------------------------------------------------------------------------
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 OR 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
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 12: CONTROL #: 1.93 LOAN #: 03-0810828L - JOHNSTOWN HOLIDAY INN EXPRESS
- --------------------------------------------------------------------------------
Location: Johnstown, PA Rooms: 108
Construction: ADR: $49.12
Year Built/Renovated: 1987/1996 Appraised Value: $1,350,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 13: CONTROL #: 1.94 LOAN #: 03-0810828M - POTTSTOWN COMFORT INN
- --------------------------------------------------------------------------------
Location: Pottstown, PA Rooms: 121
Construction: ADR: $67.49
Year Built/Renovated: 1989/NAP Appraised Value: $8,100,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 14: CONTROL #: 1.95 LOAN #: 03-0810828N - YORK HOLIDAY INN HOLIDOME
- --------------------------------------------------------------------------------
Location: York, PA Rooms: 181
Construction: ADR: $67.37
Year Built/Renovated: 1982/1998 Appraised Value: $7,600,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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>
PROPERTY 15: CONTROL #: 1.96 LOAN #: 03-0810828O - ROCK HILL HOLIDAY INN
- --------------------------------------------------------------------------------
Location: Rock Hill, SC Rooms: 125
Construction: ADR: $66.50
Year Built/Renovated: 1975/1998 Appraised Value: $3,400,000
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
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 OR 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 OR 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
CONTROL #: 2.00 LOAN #: 03-0810141 - BRIDGEPOINTE SHOPPING CENTER
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
<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 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-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
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 OR 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
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.
MAJOR TENANTS:
- --------------------------------------------------------------------------------
TENANT SQUARE FEET EXPIRATION DATE RENEWAL OPTIONS
- ------ ----------- --------------- ---------------
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
- --------------------------------------------------------------------------------
OPERATING HISTORY:
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
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
- --------------------------------------------------------------------------------
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 OR 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
CONTROL #: 3.00 LOAN #: 03-0810618 - 122 FIFTH AVENUE
- --------------------------------------------------------------------------------
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 198,000
Feet:
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
- --------------------------------------------------------------------------------
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
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 OR 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
five years 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.
MAJOR TENANTS:
- --------------------------------------------------------------------------------
TENANT SQUARE FEET EXPIRATION DATE RENEWAL OPTIONS
- ------ ----------- --------------- ---------------
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
- --------------------------------------------------------------------------------
* 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.
OPERATING HISTORY:
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
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
- --------------------------------------------------------------------------------
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 OR 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-22
CONTROL #: 4.00 LOAN #: 6519 - DUDLEY FARMS PLAZA
<TABLE>
-----------------------------------------------------------------------------------------------
<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.
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.
OPERATING HISTORY
- --------------------------------------------------------------------------------
1996 1997 1998 (TRAILING 12) UNDERWRITING
---- ---- ------------------ -------------
Effective Gross Income NAP NAP $2,997,519 $3,018,123
Net Operating Income NAP NAP $2,067,893 $2,083,701
Net Cash Flow NAP NAP $2,067,893 $1,970,030
- --------------------------------------------------------------------------------
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 OR 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 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 OR 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
CONTROL #: 5.00 LOAN #: GL981131 - EMERY/BUSCH INDUSTRIAL BUILDING
<TABLE>
- --------------------------------------------------------------------------------------------------
<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.
OPERATING HISTORY
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
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
- --------------------------------------------------------------------------------
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 OR 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
CONTROL #: 6.00 - VARIOUS
CONTROL #: 6.10 LOAN #: 215990028 - 1376 BORDEAUX
CONTROL #: 6.20 LOAN #: 215990053 - 1380 BORDEAUX
<TABLE>
- --------------------------------------------------------------------------------------
<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
PROPERTY 1: CONTROL #: 6.10 LOAN #: 215990028 - 1376 BORDEAUX
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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 OR 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
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
Effective Gross Income NAP NAP NAP $748,913
Net Operating Income NAP NAP NAP $619,357
Net Cash Flow NAP NAP NAP $568,725
- --------------------------------------------------------------------------------
THE MANAGEMENT
The property will be managed by Menlo Equities Management Company an affiliate
of Menlo Equities LLC.
PROPERTY 2: CONTROL #: 6.20 LOAN #: 215990053 - 1380 BORDEAUX
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
Effective Gross Income NAP NAP NAP $991,453
Net Operating Income NAP NAP NAP $906,930
Net Cash Flow NAP NAP NAP $831,987
- --------------------------------------------------------------------------------
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 OR 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
CONTROL #: 7.00 - VARIOUS
CONTROL #: 7.10 LOAN #: 5201 - FESTIVAL AT PASADENA
CONTROL #: 7.20 LOAN #: 6098 - FESTIVAL AT PASADENA PAD BUILDING
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 OR 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
PROPERTY 1: CONTROL #: 7.10 LOAN #: 5201 - VARIOUS FESTIVAL AT PASADENA
<TABLE>
- ------------------------------------------------------------------------------------------
<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>
OPERATING HISTORY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
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.
PROPERTY 2: CONTROL #: 7.20 LOAN #: 6098 - VARIOUS FESTIVAL AT
PASADENA PAD BUILDING
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
OPERATING HISTORY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
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 OR 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
CONTROL #: 8.00 LOAN #: 6423 - PALOUSE EMPIRE MALL
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<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).
OPERATING HISTORY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
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 OR 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 OR 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
CONTROL #: 9.00 LOAN #: 03-0810140 - VENTANA VISTA APARTMENTS
<TABLE>
- -------------------------------------------------------------------------------------
<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 NAP Cut-off Date
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 OR 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
OPERATING HISTORY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
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 OR 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
CONTROL #: 10.00 LOAN #: 03-0810054 - PARK PLAZA SHOPPING CENTER
<TABLE>
- -----------------------------------------------------------------------------------------------
<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 OR 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.
OPERATING HISTORY:
- --------------------------------------------------------------------------------
1996 1997 1998 UNDERWRITING
---- ---- ----- ------------
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
- --------------------------------------------------------------------------------
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 OR 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.
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
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
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
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
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
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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.
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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
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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
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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."
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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,
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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
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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."
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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."
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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;
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(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
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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
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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
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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.
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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."
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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.
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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
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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
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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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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
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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.
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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
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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
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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.
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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
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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.
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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"
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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.
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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.
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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
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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,
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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
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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
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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
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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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.
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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.
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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
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================================================================================
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
Changes in Mortgage Pool Characteristics ............ S-48
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-80
The Pooling and Servicing Agreement ................. S-80
Material Federal Income Tax Consequences ............ S-98
ERISA Considerations ................................ S-100
Legal Investment .................................... S-103
Plan of Distribution ................................ S-103
Use of Proceeds ..................................... S-104
Legal Matters ....................................... S-104
Ratings ............................................. S-104
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>
$776,136,000
COMMERCIAL
MORTGAGE
PASS-THROUGH
CERTIFICATES,
SERIES 1999-C2
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
-----------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------
PRUDENTIAL SECURITIES
GREENWICH NATWEST
July , 1999
================================================================================
