<PAGE>
PROSPECTUS SUPPLEMENT
(to Prospectus dated October 5, 1999)
$804,863,000 (Approximate)
DLJ Commercial Mortgage Corp., the Depositor
DLJ Commercial Mortgage Trust, the Trust
Commercial Mortgage Pass Through Certificates, Series 1999-CG3,
Class S, Class A-1A, Class A-1B, Class A-1C, Class A-2, Class A-3,
Class A-4, Class A-5, Class B-1 and Class B-2
We are the depositor named above. We have prepared this prospectus
supplement in order to offer the classes of commercial mortgage pass-through
certificates identified above. These certificates are the only securities
offered pursuant to this prospectus supplement. This prospectus supplement
specifically relates to, and is accompanied by, our prospectus dated October 5,
1999. We will not list the offered certificates on any national securities
exchange or any automated quotation system of any registered securities
associations, such as NASDAQ.
The offered certificates will represent interests only in the trust
identified above. They will not represent interests in or obligations of any
other party. The assets of the trust will include a pool of secured loans, the
collateral for which primarily consists of multifamily and commercial real
properties. Those loans will have an "initial mortgage pool balance" of
approximately $899,289,205. We will acquire those loans from GE Capital Access,
Inc. (50.6% by balance) and Column Financial, Inc. (49.4% by balance). No
governmental agency or instrumentality or private insurer has insured or
guaranteed the offered certificates or any of the loans that back them.
-------------------------
You should fully consider the risk factors beginning on page S-28 in this
prospectus supplement and on page 13 in the accompanying prospectus prior to
investing in the offered certificates.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
--------------------------
Donaldson, Lufkin & Jenrette Securities Corporation, the "underwriter",
will purchase the offered certificates from us, subject to the satisfaction of
various conditions. We intend to deliver the offered certificates in book-entry
form only through the facilities of The Depository Trust Company, in the United
States, or Cedel Bank, Societe Anonyme or the Euroclear System, in Europe, on or
about October 12, 1999, against payment for those certificates in immediately
available funds. Proceeds to us from the sale of the offered certificates will
be an amount equal to approximately 100.75% of the initial aggregate principal
balance of the offered certificates, plus accrued interest, before deducting
expenses payable by us.
The underwriter is offering the offered certificates subject to prior
sale, when, as and if delivered to and accepted by it. The underwriter currently
intends to sell the offered certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. See "Method of Distribution" in this prospectus supplement.
Donaldson, Lufkin & Jenrette
The date of this prospectus supplement is October 5, 1999.
<PAGE>
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Important Notice about the Information Contained in this Prospectus
Supplement, the Accompanying Prospectus and the Related Registration
Statement.................................................................S-3
Forward-Looking Statements...................................................S-3
Summary of Prospectus Supplement.............................................S-4
Risk Factors................................................................S-28
Description of the Mortgage Pool............................................S-41
Servicing of the Mortgage Loans.............................................S-93
Description of the Offered Certificates....................................S-124
Yield and Maturity Considerations..........................................S-149
Use of Proceeds............................................................S-157
Federal Income Tax Consequences............................................S-157
Certain ERISA Considerations...............................................S-160
Legal Investment...........................................................S-165
Method of Distribution.....................................................S-166
Legal Matters..............................................................S-167
Ratings....................................................................S-167
Exhibit A-1--Certain Characteristics of the Mortgage Loans and the
Underlying Real Properties...................................A-1-1
Exhibit A-2--Mortgage Pool Information.....................................A-2-1
Exhibit B--Form of Trustee Report............................................B-1
Exhibit C--Decrement Tables for the Certificates of the
"A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1"
and "B-2" Classes..............................................C-1
Exhibit D--Price/Yield Tables for the Certificates of the "S" Class..........D-1
Exhibit E--Global Clearance, Settlement and Tax Documentation Procedures.....E-1
Exhibit F--Summary Term Sheet................................................F-1
Prospectus
Important Notice about the Information Presented in this Prospectus............3
Available Information; Incorporation by Reference..............................3
Summary of Prospectus..........................................................4
Risk Factors..................................................................13
Description of the Trust Assets...............................................32
Yield and Maturity Considerations.............................................56
DLJ Commercial Mortgage Corp..................................................62
Description of the Certificates...............................................63
Description of the Governing Documents........................................71
Description of Credit Support.................................................81
Certain Legal Aspects of Mortgage Loans.......................................83
Federal Income Tax Consequences...............................................98
State and Other Tax Consequences.............................................139
ERISA Considerations.........................................................139
Legal Investment.............................................................145
Use of Proceeds..............................................................147
Method of Distribution.......................................................147
Legal Matters................................................................148
Financial Information........................................................149
Rating.......................................................................149
S-2
<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT,
THE ACCOMPANYING PROSPECTUS AND THE RELATED REGISTRATION STATEMENT
Information about the offered certificates is contained in two separate
documents, each of which provides summary information in the front part thereof
and more detailed information in the text that follows: (a) this prospectus
supplement, which describes the specific terms of the offered certificates; and
(b) the accompanying prospectus, which provides general information, some of
which may not apply to the offered certificates. You should read both this
prospectus supplement and the accompanying prospectus in full to obtain material
information concerning the offered certificates.
In addition, we have filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, with
respect to the offered certificates. This prospectus supplement and the
accompanying prospectus form a part of that registration statement. However,
this prospectus supplement and the accompanying prospectus do not contain all of
the information contained in our registration statement. For further information
regarding the documents referred to in this prospectus supplement and the
accompanying prospectus, you should refer to our registration statement and the
exhibits to it. Our registration statement and the exhibits to it can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at its public reference section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices located at: Chicago regional
office, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and
New York regional office, Seven World Trade Center, New York, New York 10048.
Copies of these materials can also be obtained electronically through the SEC's
internet web site (http:\\www.sec.gov).
You should only rely on the information contained in this prospectus
supplement, the accompanying prospectus and our registration statement. We have
not authorized any person to give any other information or to make any
representation that is different from the information contained in this
prospectus supplement, the accompanying prospectus or our registration
statement.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus includes the
words "expects", "intends", "anticipates", "estimates" and similar words and
expressions. These words and expressions are intended to identify forward-
looking statements. Any forward-looking statements are made subject to risks and
uncertainties which could cause actual results to differ materially from those
stated. These risks and uncertainties include, among other things, declines in
general economic and business conditions, increased competition, changes in
demographics, changes in political and social conditions, regulatory initiatives
and changes in customer preferences, many of which are beyond our control and
the control of any other person or entity related to this offering. The
forward-looking statements made in this prospectus supplement are accurate as of
the date stated on the cover of this prospectus supplement. We have no
obligation to update or revise any forward-looking statement.
S-3
<PAGE>
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SUMMARY OF PROSPECTUS SUPPLEMENT
This summary contains selected information regarding the offering being
made by this prospectus supplement. It does not contain all of the information
you need to consider in making your investment decision. To understand all of
the terms of the offering of the offered certificates, you should read carefully
this prospectus supplement and the accompanying prospectus in full.
Introduction to the Transaction
The offered certificates will be part of a series of commercial mortgage
pass-through certificates designated as the Series 1999-CG3 Commercial Mortgage
Pass-Through Certificates and consisting of multiple classes. The table below
identifies the respective classes of that series, specifies various
characteristics of each of those classes and indicates which of those classes
are offered by this prospectus supplement and which are not. The footnotes to
the table below follow on the next page.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Series 1999-CG3 Commercial Mortgage Pass-Through Certificates
- ------------------------------------------------------------------------------------------------------------------------------------
Approx.
Initial Aggregate % of Weighted
Principal Initial Approx. Pass-Through Initial Average Principal
Class(1) Ratings(2) Balance or Mortgage Initial Credit Rate Pass-Through Life Window(5)
Notional Pool Support(4) Description Rate (years)(5)
Amount(3) Balance
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Offered Certificates
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S Aaa/AAA $899,289,205(6) N/A N/A Variable IO(7) 0.8943% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
A-1A Aaa/AAA $140,618,000 15.64% 27.75% Fixed 7.1200% 5.7 11/99-10/08
- ------------------------------------------------------------------------------------------------------------------------------------
A-1B Aaa/AAA $509,118,000 56.61% 27.75% Fixed 7.3400% 9.7 10/08-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
A-1C Aa1/AAA $17,716,000 1.97% 25.78% Fixed 7.4400% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
A-2 Aa2/AA $25,000,000 2.78% 23.00% WAC Cap(8) 7.5400% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
A-3 A2/A $49,461,000 5.50% 17.50% WAC Cap(8) 7.7300% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
A-4 A3/A $13,489,000 1.50% 16.00% WAC Cap(8) 7.8300% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
A-5 Baa1/A- $15,738,000 1.75% 14.25% WAC Cap(8) 8.1200% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
B-1 Baa2/BBB $17,986,000 2.00% 12.25% WAC(9) 8.2400% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
B-2 Baa3/BBB- $15,737,000 1.75% 10.50% WAC(9) 8.2400% 9.9 9/09-9/09
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Offered Certificates(10)
- ------------------------------------------------------------------------------------------------------------------------------------
B-3 N/A $26,979,000 3.00% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
B-4 N/A $13,489,000 1.50% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
B-5 N/A $8,993,000 1.00% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
B-6 N/A $11,241,000 1.25% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
B-7 N/A $8,993,000 1.00% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
B-8 N/A $8,993,000 1.00% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
C N/A $4,497,000 0.50% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
D N/A $11,241,205 1.25% N/A WAC Cap(8) 6.9250% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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S-4
<PAGE>
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- ----------
(1) The respective classes of certificates identified in the table above
entitle their holders to varying degrees of seniority for purposes of--
o receiving payments of interest and, if and when applicable, payments
of principal; and
o bearing the effects of losses on the secured loans that will back
the series "1999-CG3" certificates, as well as default-related and
other unanticipated expenses of the related commercial mortgage
trust.
The class "S", "A-1A" and "A-1B" certificates are the most senior. The
remaining classes of certificates identified in the table above are listed
from top to bottom in descending order of seniority.
(2) Ratings shown are those of Moody's Investors Service, Inc. and Fitch IBCA,
Inc., respectively.
(3) The actual initial aggregate principal balance or notional amount of any
class of certificates identified in the table above may be larger or
smaller than the amount shown above, depending on the actual size of the
initial mortgage pool balance. The actual size of the initial mortgage
pool balance may be as much as 5% larger or smaller than the amount
presented in this prospectus supplement.
(4) Represents the initial aggregate principal balance, expressed as a
percentage of the initial mortgage pool balance, of all classes of the
series "1999-CG3" certificates that are subordinate to the indicated
class.
(5) Calculated based on the following assumptions with respect to each secured
loan that will back the series "1999-CG3" certificates--
o the related borrower timely makes all payments on that loan,
o if that loan has an anticipated repayment date, as described under
"--The Mortgage Loans and the Underlying Real Properties" below, the
loan will be paid in full on that date, and
o that loan will not otherwise be prepaid prior to stated maturity.
Further based on the other "Maturity Assumptions" described under "Yield
and Maturity Considerations" in this prospectus supplement.
(6) Initial aggregate notional amount. The aggregate notional amount of the
class "S" certificates will equal the aggregate principal balance of the
other classes of certificates identified in the table above outstanding
from time to time. The aggregate notional amount of the class "S"
certificates will be used solely to calculate the accrual of interest with
respect to those certificates. The class "S" certificates will not have
principal balances and will not entitle their holders to payments of
principal.
(7) "Variable IO" refers to a variable pass-through rate that is equal to the
excess, if any, of (i) a weighted average coupon derived from net interest
rates on the secured loans that will back the series "1999-CG3"
certificates, over (ii) a weighted average of the pass-through rates in
respect of each of the other classes of certificates identified in the
table above.
(8) "WAC Cap" refers to a variable pass-through rate that is equal to the
lesser (i) of the initial pass-through rate for the subject class of
certificates and a (ii) weighted average coupon derived from net interest
rates on the secured loans that will back the series "1999-CG3"
certificates.
(9) "WAC"refers to a variable pass-through rate that is equal to a weighted
average coupon derived from net interest rates on the secured loans that
will back the series "1999-CG3" certificates.
(10) The series "1999-CG3" non-offered certificates will also include the
following classes of certificates which are not shown above: "E", "R-I",
"R-II" and "R-III". These other non-offered certificates do not have
principal balances, notional amounts or pass-through rates. They do not
provide any material credit support for the offered certificates.
--------------------
- --------------------------------------------------------------------------------
S-5
<PAGE>
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The Trust ....................... The series "1999-CG3" certificates will
evidence the entire beneficial ownership of
a common law trust designated as the DLJ
Commercial Mortgage Trust 1999-CG3. We will
form the DLJ Commercial Mortgage Trust
1999-CG3 at or prior to the time of initial
issuance of the series "1999-CG3"
certificates. Throughout this prospectus
supplement, we refer to the DLJ Commercial
Mortgage Trust 1999-CG3 as the "trust".
The assets of the trust will include a pool
of secured loans, the collateral for which
primarily consists of multifamily and
commercial real properties. We will deposit
those loans into the trust at the time of
initial issuance of the series "1999-CG3"
certificates. Throughout this prospectus
supplement, we refer to those loans as the
"mortgage loans" and to the pool thereof as
the "mortgage pool".
The Governing Document .......... The governing document for purposes of
forming the trust and issuing the series
"1999-CG3" certificates will be a pooling
and servicing agreement to be dated as of
October 1, 1999. Whenever we refer in this
prospectus supplement to the "pooling and
servicing agreement", we mean that
particular pooling and servicing agreement.
The pooling and servicing agreement will
also govern the servicing and administration
of the mortgage loans and the other assets
of the trust. A copy of the pooling and
servicing agreement will be filed with the
SEC as an exhibit to a current report on
Form 8-K, within 15 days after the initial
issuance of the series "1999-CG3"
certificates. The SEC will make that current
report on Form 8-K and its exhibits
available to the public for inspection.
The parties to the pooling and servicing
agreement will include us, a trustee, a
master servicer and a special servicer.
Whenever we refer in this prospectus
supplement to the "trustee", the "master
servicer" or the "special servicer", we mean
the person or entity acting in that capacity
under the pooling and servicing agreement.
Source of the Mortgage Loans .... We are not the originator of the mortgage
loans. We will acquire the mortgage loans
from two separate parties, which we refer to
in this prospectus supplement as the
"mortgage loan sellers". One of the mortgage
loan sellers is affiliated with us and the
underwriter. An affiliate of the other
mortgage loan seller may acquire some of the
series "1999-CG3" non-offered certificates.
Each of the mortgage loans was originated
by--
- --------------------------------------------------------------------------------
S-6
<PAGE>
- --------------------------------------------------------------------------------
o the related mortgage loan seller,
o the parent or another affiliate of the
related mortgage loan seller, or
o a correspondent in the related
mortgage loan seller's conduit lending
program.
Relevant Parties
"We" and "Us" ................... Our name is DLJ Commercial Mortgage Corp.,
and we are a Delaware corporation. Our
address is 277 Park Avenue, 9th Floor, New
York, New York 10172 and our telephone
number is (212) 892-3000. We will form the
trust and deposit the mortgage loans into
it. See "DLJ Commercial Mortgage Corp." in
the accompanying prospectus.
Initial Trustee ................. Norwest Bank Minnesota, National
Association, a national banking association,
will act as the initial trustee. See
"Description of the Offered
Certificates--The Trustee" in this
prospectus supplement. The trustee will also
have, or be responsible for appointing an
agent to perform, additional duties with
respect to tax administration. We refer to
the trustee or its agent in that capacity as
the "tax administrator" in this prospectus
supplement.
Initial Master Servicer ......... GE Capital Loan Services, Inc., a Delaware
corporation, will act as the initial master
servicer. See "Servicing of the Mortgage
Loans--The Initial Master Servicer and the
Initial Special Servicer" in this prospectus
supplement. The initial master servicer is
an affiliate of GE Capital Access, Inc., one
of the mortgage loan sellers. An affiliate
of the initial master servicer may acquire
some of the series "1999-CG3" non-offered
certificates.
Initial Special Servicer ........ GMAC Commercial Mortgage Corporation, a
California corporation, will act as the
initial special servicer. See "Servicing of
the Mortgage Loans--The Initial Master
Servicer and the Initial Special Servicer"
in this prospectus supplement. The initial
special servicer or one of its affiliates
may acquire some of the series "1999-CG3"
non-offered certificates.
- --------------------------------------------------------------------------------
S-7
<PAGE>
- --------------------------------------------------------------------------------
Controlling Class
of Certificateholders ........ The holders of certificates representing a
majority interest in a designated
"controlling class" of the series "1999-CG3"
certificates will have the right, subject to
the conditions described in this prospectus
supplement, to--
o replace the special servicer, and
o select a representative that may
direct and advise the special servicer
on various servicing matters.
Unless there are significant losses on the
mortgage pool, the controlling class of the
series "1999-CG3" certificates will be a
class of non-offered certificates. See
"Servicing of the Mortgage Loans--The
Controlling Class Representative" and
"--Replacement of the Special Servicer" in
this prospectus supplement.
Mortgage Loan Sellers ........... We will acquire 55 of the mortgage loans,
representing 50.6% of the initial mortgage
pool balance, from GE Capital Access, Inc.,
a Delaware corporation and an affiliate of
the initial master servicer. We will acquire
the remaining 105 mortgage loans,
representing 49.4% of the initial mortgage
pool balance, from Column Financial, Inc.,
which is a Delaware corporation and one of
our affiliates. See "Description of the
Mortgage Pool--The Mortgage Loan Sellers and
the Originators" in this prospectus
supplement.
Originators ..................... GE Capital Access, Inc. acquired each of the
mortgage loans that it is selling to us from
its parent, General Electric Capital
Corporation, by capital contribution.
General Electric Capital Corporation
originated each of those mortgage loans.
Column Financial, Inc. originated 99 of the
mortgage loans that it is selling to us,
representing 47.0% of the initial mortgage
pool balance. It acquired the remaining
mortgage loans that it is selling to us from
the originator of those loans, Union Capital
Investments, LLC.
See "Description of the Mortgage Pool--The
Mortgage Loan Sellers and the Originators"
in this prospectus supplement.
Underwriter ..................... Donaldson, Lufkin & Jenrette Securities
Corporation, a Delaware corporation, is the
underwriter of the offering being made by
this prospectus supplement. The underwriter
is an affiliate of both us and Column
Financial, Inc. See "Method of Distribution"
in this prospectus supplement.
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S-8
<PAGE>
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Relevant Dates and Periods
Cut-off Date .................... The mortgage loans will be considered part
of the trust as of a "cut-off date" of
October 1, 1999. All payments and
collections received on the mortgage loans
after that date, excluding any payments or
collections that represent amounts due on or
before that date, will belong to the trust.
Accordingly, October 1, 1999 is the date as
of which we present much of the information
relating to the mortgage pool and the
underlying real properties in this
prospectus supplement.
Issue Date ...................... The date of initial issuance, or "issue
date", for the offered certificates will be
on or about October 12, 1999.
Payment Date .................... Payments on the offered certificates are
scheduled to occur monthly, commencing in
November 1999. During any given month, the
"payment date" will be the later of--
o the tenth calendar day of that month,
or, if that tenth calendar day of that
month is not a business day, then the
next succeeding business day, and
o the fourth business day following the
fourth calendar day of that month.
Record Date ..................... The "record date" for each monthly payment
on an offered certificate will be the last
business day of the prior calendar month.
The registered holders of the offered
certificates at the close of business on
each record date, will be entitled to
receive any payments on those certificates
on the following payment date.
Collection Period ............... Amounts available for payment on the offered
certificates on any payment date will depend
on the payments and other collections
received, and any advances of payments due,
on the mortgage loans during the related
collection period. Each "collection
period"--
o will relate to a particular payment
date,
o will be approximately one month long,
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S-9
<PAGE>
- --------------------------------------------------------------------------------
o will begin when the prior collection
period ends or, in the case of the
first collection period, will begin on
October 2, 1999, and
o will end during the month of, but
prior to, the related payment date.
Interest Accrual Period ......... The amount of interest payable with respect
to the offered certificates on any payment
date will be a function of the interest
accrued during the related interest accrual
period. The "interest accrual period" for
any payment date will be the calendar month
immediately preceding the month in which
that payment date occurs.
Rated Final Payment Date ........ As discussed in this prospectus supplement,
each rating assigned to the offered
certificates will represent the respective
rating agency's assessment of the likelihood
of timely receipt by the holders of those
certificates of all interest to which they
are entitled on each payment date and,
except in the case of the class "S"
certificates, the ultimate receipt by the
holders of those certificates of all
principal to which they are entitled by the
related final payment date. The "rated final
payment date" is the payment date in October
2032. This is the first payment date
following the third anniversary of the end
of the amortization term for the mortgage
loan with the longest remaining amortization
term as of the date of initial issuance of
the series "1999-CG3" certificates.
Assumed Final Payment Date ...... The assumed final payment date for each
class of offered certificates will occur in
the calendar month and year set forth below
for that class.
Month and Year
of Assumed Final
Class Payment Date
----- ------------
S September 2024
A-1A October 2008
A-1B September 2009
A-1C September 2009
A-2 September 2009
A-3 September 2009
A-4 September 2009
A-5 September 2009
B-1 September 2009
B-2 September 2009
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S-10
<PAGE>
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The "assumed final payment date" for each
class of offered certificates will be the
payment date on which the holders of those
certificates would be expected to receive
their last payment based upon--
o the assumption that each underlying
borrower timely makes all payments on
its mortgage loan,
o the assumption that each mortgage loan
with an anticipated repayment date is
paid in full on that date,
o the assumption that no underlying
borrower otherwise prepays its
mortgage loan prior to stated
maturity, and
o the other "Maturity Assumptions" set
forth under "Yield and Maturity
Considerations" in this prospectus
supplement.
Description of the Offered Certificates
Registration and Denominations .. We intend to deliver the offered
certificates in book-entry form in original
denominations of:
o in the case of the class "S"
certificates, $10,000 initial notional
amount and in any whole dollar
denomination in excess of $10,000; and
o in the case of the other offered
certificates, $10,000 initial
principal balance and in any whole
dollar denomination in excess of
$10,000.
You will hold your certificates through The
Depository Trust Company, in the United
States, or Cedel Bank, Societe Anonyme or
The Euroclear System, in Europe. Transfers
within DTC, Cedel or Euroclear, as the case
may be, will be in accordance with the usual
rules and operating procedures of the
relevant system. As a result, you will not
receive a fully registered physical
certificate representing your interest in
any offered certificate, except under the
limited circumstances described in this
prospectus supplement and in the
accompanying prospectus. Cross-market
transfers between persons holding directly
or indirectly through DTC, on the one hand,
and counterparties holding directly or
indirectly through Cedel or Euroclear on the
other, may be accomplished in DTC through
the relevant depositaries of Cedel or
Euroclear. We may elect to terminate the
book-entry system through DTC with respect
to any portion of any class of offered
certificates. See "Description
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S-11
<PAGE>
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of the Offered Certificates--Registration
and Denominations" in this prospectus
supplement and "Description of the
Certificates--Book-Entry Registration and
Definitive Certificates" in the accompanying
prospectus.
Payments
A. General ...................... The trustee will make payments of interest
and principal to the respective classes of
series "1999-CG3" certificateholders
entitled to those payments, sequentially as
follows:
Payment Order Class
------------- -----
1 S, A-1A and A-1B*
2 A-1C
3 A-2
4 A-3
5 A-4
6 A-5
7 B-1
8 B-2
9 B-3
10 B-4
11 B-5
12 B-6
13 B-7
14 B-8
15 C
16 D
-----------------
* Allocation of interest payments among
these classes is pro rata based on
entitlement. Allocation of principal
payments between the class "A-1A" and
"A-1B" certificates is described
below. The class "S" certificates do
not have principal balances and do not
entitle their holders to payments of
principal.
See "Description of the Offered
Certificates--Payments--Priority of
Payments" in this prospectus supplement.
B. Payments of Interest ......... Each class of offered certificates will bear
interest. In each case, that interest will
accrue during each interest accrual period
based upon--
o the pass-through rate applicable for
the particular class for that interest
accrual period,
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S-12
<PAGE>
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o the aggregate principal balance or
notional amount, as the case may be,
of the particular class outstanding
immediately prior to the related
payment date, and
o the assumption that each year consists
of 12 30-day months.
A whole or partial prepayment on a mortgage
loan may not be accompanied by the amount of
one full month's interest on the prepayment.
As and to the extent described in this
prospectus supplement, these shortfalls may
be allocated to reduce the amount of accrued
interest otherwise payable to the holders of
the respective classes of interest-bearing
series "1999-CG3" certificates, including
the offered certificates, on a pro rata
basis in accordance with the respective
amounts of interest otherwise payable on
those classes for the corresponding interest
accrual period.
On each payment date, subject to available
funds and the payment priorities described
above, you will be entitled to receive your
proportionate share of all unpaid
distributable interest accrued in respect of
your class of offered certificates through
the end of the related interest accrual
period.
See "Description of the Offered
Certificates--Payments--Payments of
Interest" and "--Payments--Priority of
Payments" in this prospectus supplement.
C. Payments of Principal ........ The class "S" certificates do not have
principal balances and do not entitle their
holders to payments of principal. Subject to
available funds and the payment priorities
described above, however, the holders of
each other class of offered certificates
will be entitled to receive a total amount
of principal over time equal to the
aggregate principal balance of their
particular class. The trustee must make
payments of principal in a specified
sequential order to ensure that--
o No payments of principal will be made
to the holders of any class of series
"1999-CG3" non-offered certificates
until the aggregate principal balance
of the offered certificates is reduced
to zero.
o No payments of principal will be made
to the holders of the class "A-1C",
"A-2", "A-3", "A-4", "A-5", "B-1" or
"B-2" certificates until, in the case
of each of those classes, the
aggregate principal balance of all
more senior classes of offered
certificates is reduced to zero.
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S-13
<PAGE>
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o No payments of principal will be made
to the holders of the class "A-1B"
certificates until either:
(i) the aggregate principal balance
of the class "A-1A"
certificates is reduced to zero;
or
(ii) the class "A-1A" and "A-1B"
certificates are the only
outstanding series "1999-CG3"
certificates with principal
balances.
Under the circumstances described in clause
(ii) of the prior sentence, payments of
principal will be made to the holders of the
class "A-1A" and the "A-1B" certificates on
a pro rata basis in accordance with the
respective outstanding principal balances of
those certificates.
The total payments of principal to be made
on the respective classes of the series
"1999-CG3" certificates entitled thereto on
any payment date will be a function of--
o the amount of scheduled payments of
principal due or, in some cases,
deemed due on the mortgage loans
during the related collection period,
which payments are either received as
of the end of that collection period
or advanced by the master servicer,
and
o the amount of any prepayments and
other unscheduled collections of
previously unadvanced principal in
respect of the mortgage loans that are
received during the related collection
period.
See "Description of the Offered
Certificates--Payments--Payments of
Principal" and "--Payments--Priority of
Payments" in this prospectus supplement.
D. Payments of Prepayment
Premiums and Yield
Maintenance Charges .......... If any prepayment premium or yield
maintenance charge is collected on a
mortgage loan, then the trustee will pay
that amount in the proportions described in
this prospectus supplement, to--
o the holders of the class "S"
certificates, and/or
o the holders of the class or classes of
offered certificates, if any, then
entitled to receive payments of
principal.
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S-14
<PAGE>
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See "Description of the Offered
Certificates--Payments--Payments of
Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement.
Reductions of Certificate
Balances in Connection
With Losses and Certain
Expenses ..................... Realized losses on the mortgage loans,
together with default-related and other
unanticipated expenses of the trust, may
cause the aggregate principal balance of the
mortgage pool, net of advances of principal,
to be less than the aggregate principal
balance of the series "1999-CG3"
certificates. If and to the extent that
those losses and expenses cause such a
deficit to exist following the payments made
on the series "1999-CG3" certificates on any
payment date, then the aggregate principal
balances of those classes of certificates of
that series with principal balances, will be
successively reduced in the following order,
until that deficit is eliminated:
Reduction Order Class
--------------- -----
1 D
2 C
3 B-8
4 B-7
5 B-6
6 B-5
7 B-4
8 B-3
9 B-2
10 B-1
11 A-5
12 A-4
13 A-3
14 A-2
15 A-1C
16 A-1A and A-1B*
-----------------
* Pro rata by outstanding principal
balance.
See "Description of the Offered
Certificates--Reductions of Certificate
Principal Balances in Connection With
Realized Losses and Additional Trust Fund
Expenses" in this prospectus supplement.
Advances of Delinquent Monthly
Debt Service Payments ........ Except as described below, the master
servicer will be required to make advances
with respect to any delinquent monthly
payments, other than balloon payments, of
principal and/or interest due on the
mortgage loans. In addition, if (i) the
master servicer fails to make any advance
that it is required to make and
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S-15
<PAGE>
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(ii) the trustee is aware of the failure,
the trustee will be required to make the
advance. Neither of the master servicer nor
the trustee, however, will be required to
make any advance that it determines, in its
good faith and reasonable judgment, will not
be recoverable from proceeds of the related
mortgage loan. As described in this
prospectus supplement, any party that makes
an advance will be entitled to be reimbursed
for the advance, together with interest
thereon at the prime rate described in this
prospectus supplement.
If certain adverse events or circumstances,
which we will describe later in this
prospectus supplement, occur or exist with
respect to any mortgage loan or the
underlying real property for that loan, the
special servicer will be obligated to obtain
a new appraisal of or, in limited cases,
conduct a valuation of that real property.
If, based on that appraisal or other
valuation, it is determined that (i) the
principal balance of, and other delinquent
amounts due under, that mortgage loan exceed
(ii) 90% of the new estimated value of that
real property, then the amount otherwise
required to be advanced in respect of
interest on that mortgage loan will be
reduced, generally in the same proportion
that such excess bears to the principal
balance of the mortgage loan, net of related
advances of principal. Due to the payment
priorities, this reduction in advances will
reduce the funds available to pay interest
on the most subordinate class of
interest-bearing series "1999-CG3"
certificates then outstanding.
See "Description of the Offered
Certificates--Advances of Delinquent Monthly
Debt Service Payments" and "Servicing of the
Mortgage Loans--Required Appraisals" in this
prospectus supplement. See also "Description
of the Certificates--Advances in Respect of
Delinquencies" in the accompanying
prospectus.
Reports to Certificateholders ... On each payment date, the trustee will
provide to the registered holders of the
offered certificates a monthly report
substantially in the form of Exhibit B to
this prospectus supplement. The trustee's
report will detail the payments made to the
series "1999-CG3" certificateholders on that
payment date and the performance of the
mortgage loans and the underlying real
properties.
Upon reasonable prior notice, you may also
review at the trustee's offices during
normal business hours a variety of
information and documents that pertain to
the mortgage loans
- --------------------------------------------------------------------------------
S-16
<PAGE>
- --------------------------------------------------------------------------------
and the underlying real properties,
including loan documents, borrower operating
statements, rent rolls and property
inspection reports, to the extent the
trustee receives the information and
documents.
See "Description of the Offered
Certificates--Reports to Certificateholders;
Certain Available Information" in this
prospectus supplement.
Optional Termination ............ Specified parties to the transaction may
terminate the trust when the aggregate
principal balance of the mortgage pool, net
of advances of principal, is less than
approximately 1.0% of the initial mortgage
pool balance. See "Description of the
Offered Certificates--Termination" in this
prospectus supplement.
The Mortgage Loans and the Underlying Real Properties
General ......................... Each of the mortgage loans is the obligation
of a borrower to repay a specified sum with
interest. Each of the mortgage loans will be
secured by a mortgage lien on the ownership
and/or leasehold interest of the related
borrower in one or more commercial or
multifamily real properties. Except for
limited permitted encumbrances, which we
will describe later in this prospectus
supplement, that mortgage lien will be a
first priority lien.
All of the mortgage loans are or should be
considered nonrecourse. None of the mortgage
loans are insured or guaranteed by any
governmental agency or instrumentality or by
any private mortgage insurer.
We include in this prospectus supplement a
variety of information regarding the
mortgage loans and the underlying real
properties. In reviewing this information,
you should be aware that--
o All numerical information provided
with respect to the mortgage loans is
provided on an approximate basis.
o All weighted average information
provided with respect to the mortgage
loans or any sub-group of mortgage
loans reflects the weighting of those
mortgage loans by their respective
scheduled principal balances as of
October 1, 1999. The "scheduled
principal balance" of
- --------------------------------------------------------------------------------
S-17
<PAGE>
- --------------------------------------------------------------------------------
any mortgage loan, as of any date of
determination, will equal its then
unpaid principal balance, after
application of all payments of
principal due with respect to the
mortgage loan on or before that date,
whether or not those payments are
received.
o In presenting the 10/1/99 scheduled
principal balances of the mortgage
loans, we have assumed that--
(i) all scheduled payments of
principal and/or interest due on
the mortgage loans on or before
October 1, 1999 are timely made,
and,
(ii) there are no prepayments or
other unscheduled collections of
principal with respect to any of
the mortgage loans during the
period from September 1, 1999 up
to and including October 1,
1999.
o When information with respect to the
underlying real properties is
expressed as a percentage of the
initial mortgage pool balance, the
percentages are based upon the 10/1/99
scheduled principal balances of the
related mortgage loans.
o Some of the mortgage loans provide
that they are cross-collateralized
and cross-defaulted with one or more
other mortgage loans. Except as
otherwise indicated, when a mortgage
loan is cross-collateralized and
cross-defaulted with another mortgage
loan, we have presented the
information regarding those mortgage
loans as if each of them was secured
only by a mortgage lien on the
corresponding real property identified
on Exhibit A-1 to this prospectus
supplement. One such exception is that
each and every mortgage loan in any
particular group of
cross-collateralized and
cross-defaulted mortgage loans is
treated as having the same
loan-to-value ratio and the same debt
service coverage ratio. None of the
mortgage loans is cross-collateralized
with any loan that will not be
included in the trust.
o In some cases, when multiple
underlying real properties secure a
single mortgage loan, we have
allocated that mortgage loan among
those properties based upon--
(i) relative appraised values,
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S-18
<PAGE>
- --------------------------------------------------------------------------------
(ii) relative underwritten net cash
flow, or
(iii) prior allocations reflected in
the related loan documents,
for purposes of providing certain
property-specific information.
o In some cases, when multiple parcels
of real property secure a single
mortgage loan, we have treated those
parcels as a single "real property"
because of their proximity to each
other, the interrelationship of their
operations or for other reasons deemed
appropriate by us.
o Whenever we refer to a particular
underlying real property by name, we
mean the property identified by that
name on Exhibit A-1 to this prospectus
supplement.
o Statistical information regarding the
mortgage loans may change prior to the
date of initial issuance of the series
"1999-CG3" certificates due to changes
in the composition of the mortgage
pool prior to that date.
For more detailed information on the
mortgage loans than is provided in this
"Summary of Prospectus Supplement" section,
see the following sections in this
prospectus supplement:
o "Description of the Mortgage Pool"
o "Risk Factors--Risks Related to the
Mortgage Loans"
o Exhibit A-1 - Certain Characteristics
of the Mortgage Loans and the
Underlying Real Properties
o Exhibit A-2 - Mortgage Pool
Information
Payment Terms ................... Each mortgage loan currently accrues
interest at the annual rate specified with
respect to that loan on Exhibit A-1 to this
prospectus supplement. Except as otherwise
described below, the mortgage interest rate
for each mortgage loan is, in the absence of
default, fixed for the entire term of the
loan.
Each mortgage loan provides for scheduled
payments of principal and/or interest to be
due on the first day of each month. We refer
to these scheduled payments as "monthly debt
service payments".
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S-19
<PAGE>
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One hundred forty-five of the mortgage
loans, representing 78.3% of the initial
mortgage pool balance, provide for:
o an amortization schedule that is
significantly longer than its
remaining term to stated maturity; and
o a substantial payment of principal on
its maturity date.
We refer to these 145 mortgage loans as the
"balloon loans".
Eight of the mortgage loans, representing
19.5% of the initial mortgage pool balance,
provide material incentives to the related
borrower to pay the mortgage loan in full by
a specified date, which we refer to as an
"anticipated repayment date". There can be
no assurance, however, that these incentives
will result in any of these mortgage loans
being paid in full on or before its
anticipated repayment date. The incentives,
which in each case will become effective as
of the related anticipated repayment date,
include:
o The calculation of interest in excess
of the initial mortgage interest rate.
The additional interest will be
deferred and will be payable only
after the outstanding principal
balance of the mortgage loan is paid
in full.
o The application of excess cash flow
from the underlying real property to
pay the principal amount of the
mortgage loan. The payment of
principal will be in addition to the
principal portion of the normal
monthly debt service payment.
We refer to these eight mortgage loans as
the "ARD loans".
The remaining seven mortgage loans,
representing 2.3% of the initial mortgage
pool balance, have payment schedules that
provide for the payment of these mortgage
loans in full or substantially in full by
their respective maturity dates. We refer to
these seven mortgage loans as the "fully
amortizing loans".
Delinquency Status .............. None of the mortgage loans was 30 days or
more delinquent in respect of any monthly
debt service payment as of October 1, 1999
or at any time during the 12-month period
preceding that date.
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S-20
<PAGE>
- --------------------------------------------------------------------------------
Prepayment Lock-Out Periods ..... A prepayment lock-out period is currently in
effect for all of the mortgage loans. Set
forth below is information regarding the
remaining terms of those lock-out periods:
Maximum remaining lock-out
period: 293 months
Minimum remaining lock-out
period: 56 months
Weighted average remaining
lock-out period: 115 months
Defeasance ...................... One hundred fifty-nine of the mortgage
loans, representing 99.8% of the initial
mortgage pool balance, permit the related
borrower to obtain a release of the
underlying real property (or, where
applicable, one or more of the underlying
real properties) from the lien of the
related mortgage by delivering U.S. Treasury
obligations as substitute collateral.
However, with three exceptions, none of the
mortgage loans permits defeasance prior to
the second anniversary of the date of
initial issuance of the series "1999-CG3"
certificates.
Additional Statistical Information
A. General Characteristics ...... The mortgage pool will have the following
general characteristics as of October 1,
1999:
Initial mortgage pool
balance(1)....................$899,289,205
Number of mortgage loans.................160
Number of underlying real
properties ............................167
Maximum 10/1/99 scheduled
principal balance..............$48,969,762
Minimum 10/1/99 scheduled
principal balance.................$401,415
Average 10/1/99 scheduled
principal balance(2)............$5,620,558
Maximum mortgage interest
rate................................9.220%
Minimum mortgage interest
rate................................6.830%
Weighted average mortgage
interest rate.......................8.041%
Maximum original term to
maturity or anticipated
repayment date..................300 months
Minimum original term to
maturity or anticipated
repayment date...................60 months
Weighted average original
term to maturity or
anticipated repayment date......123 months
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S-21
<PAGE>
- --------------------------------------------------------------------------------
Maximum remaining term to
maturity or anticipated
repayment date..................299 months
Minimum remaining term to
maturity or anticipated
repayment date...................59 months
Weighted average remaining
term to maturity or
anticipated repayment date......120 months
Maximum underwritten debt
service coverage ratio(3)(5).........2.39x
Minimum underwritten debt
service coverage ratio(3)(5).........1.20x
Weighted average underwritten
debt service coverage ratio(3)(5)....1.36x
Maximum 10/1/99 loan-to-value
ratio(4)(5)..........................80.0%
Minimum 10/1/99 loan-to-value
ratio(4)(5)..........................37.1%
Weighted average 10/1/99 loan-
to-value ratio(4)(5).................70.3%
---------------------
(1) Subject to a permitted variance of
plus or minus 5%.
(2) Presented without regard to the
cross-collateralization. If each group
of cross-collateralized mortgage loans
were treated as a single mortgage
loan, the average 10/1/99 scheduled
principal balance would be $5,877,707.
(3) Calculated as described under
"Description of the Mortgage
Pool--Certain Mortgage Pool
Characteristics" in this prospectus
supplement, based on--
o the total cash flow that the
related mortgage loan seller has
estimated will be available from
the underlying real property or
properties to pay the annual
debt service on the subject
mortgage loan and any other
mortgage loans that are cross-
collateralized with it, and
o the scheduled annual debt
service that will be payable on
the subject mortgage loan and
any other mortgage loans that
are cross-collateralized with
it, assuming, in the case of
mortgage loans with an initial
interest-only period, that
amortization has begun.
(4) Calculated as described under
"Description of the Mortgage
Pool--Certain Mortgage Pool
Characteristics" in this prospectus
supplement, based on--
o the 10/1/99 scheduled principal
balance for that mortgage loan
and any other mortgage loans
that are cross-collateralized
with it, and
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S-22
<PAGE>
- --------------------------------------------------------------------------------
o the estimated value of the
underlying real property or
properties as set forth in the
most recent appraisal(s)
obtained by or otherwise in the
possession of the related
mortgage loan seller.
(5) Excludes the one mortgage loan that is
secured by an underlying real property
subject to a "credit tenant lease".
B. Geographic Concentration .... The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, underlying real
properties located in the indicated states:
% of
Initial
Mortgage
Number of Pool
State Properties Balance
----- ---------- -------
California 21 17.3%
Texas 34 15.2%
New York 6 10.8%
Michigan 7 5.1%
The remaining underlying real properties are
located throughout 33 other states and the
District of Columbia. No more than 4.6% of
the initial mortgage pool balance is secured
by real properties located in any of these
other jurisdictions.
C. Property Types ............... The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, underlying real
properties operated for each indicated
purpose:
% of
Initial
Mortgage
Number of Pool
Property Type Properties Balance
------------- ---------- -------
Multifamily Rental 74 34.0%
Office 19 21.0%
Retail 37 20.3%
Hospitality 7 11.4%
Full Service
Hotels 6 11.0%
Limited Service
Hotels 1 0.4%
Manufactured
Housing Community 10 5.4%
Mixed Use 8 3.4%
Industrial 6 2.7%
Self Storage 4 0.8%
Credit Tenant Lease* 1 0.6%
Independent/Assisted
Living 1 0.4%
------------------
* One office property is subject to a
credit tenant lease.
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S-23
<PAGE>
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D. Encumbered Interests ......... The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, underlying real
properties for which the encumbered interest
is as indicated:
% of
Initial
Encumbered Interest Mortgage
in the Underlying Number of Pool
Real Property Properties Balance
------------- ---------- -------
Ownership* 162 90.3%
Ownership in part,
Leasehold in part 4 8.9%
Leasehold 1 0.8%
-------------
* "Ownership" also includes cases where
the ownership and leasehold interests
in the same property are both
encumbered.
Legal and Investment Considerations
Federal Income
Tax Consequences .............. The trustee or its agent will make elections
to treat designated portions of the assets
of the trust as three separate "real estate
mortgage investment conduits" under Sections
860A through 860G of the Internal Revenue
Code of 1986. The designations for each
REMIC are as follows:
o "REMIC I", the lowest tier REMIC, will
generally hold the mortgage loans, as
well as any of the underlying real
properties that may have been acquired
by the trust following a borrower
default, but will exclude collections
of additional interest accrued and
deferred as to payment in respect of
each mortgage loan with an anticipated
repayment date that remains
outstanding past that date. However,
each of certain individual mortgage
loans may be the sole asset of a
separate REMIC and the "regular
interest" of each of those "single
mortgage loan REMICs", instead of the
related mortgage loan, will be an
asset of REMIC I.
o "REMIC II" will hold the "regular
interests" in REMIC I.
o "REMIC III" will hold the "regular
interests" in REMIC II.
Any assets not included in a REMIC will
constitute a grantor trust for federal
income tax purposes.
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S-24
<PAGE>
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The offered certificates will be treated as
"regular interests" in REMIC III. This means
that they will be treated as newly issued
debt instruments for federal income tax
purposes. You will have to report income on
your offered certificates in accordance with
the accrual method of accounting even if you
are otherwise a cash method taxpayer. The
offered certificates will not represent any
interest in the grantor trust referred to
above.
The class "S" and "B-2" certificates will be
issued with more than a de minimis amount of
original issue discount. The class "B-1"
certificates will be issued with a de
minimis amount of original issue discount.
The other offered certificates will not be
issued with any original issue discount. If
you own an offered certificate issued with
original issue discount, you may have to
report original issue discount income and be
subject to a tax on this income before you
receive a corresponding cash payment.
For a more detailed discussion of the
federal income tax aspects of investing in
the offered certificates, see "Federal
Income Tax Consequences" in this prospectus
supplement and "Federal Income Tax
Consequences" in the accompanying
prospectus.
ERISA ........................... We anticipate that certain retirement plans
and other employee benefit plans and
arrangements subject to Title I of the
Employee Retirement Income Security Act of
1974, commonly referred to as "ERISA", or
Section 4975 of the Internal Revenue Code of
1986 will be able to invest in the class
"S", "A-1A" and "A-1B" certificates, without
giving rise to a prohibited transaction.
This is based upon an individual prohibited
transaction exemption granted to the
underwriter by the U.S. Department of Labor.
However, investments in the other offered
certificates by, on behalf of or with assets
of these entities, will be restricted as
described under "Certain ERISA
Considerations" in this prospectus
supplement.
If you are a fiduciary of any retirement
plan or other employee benefit plan or
arrangement subject to Title I of ERISA or
section 4975 of the Internal Revenue Code of
1986, you should review carefully with your
legal advisors whether the purchase or
holding of the offered certificates could
give rise to a transaction that is
prohibited under ERISA or Section 4975 of
the Internal Revenue Code of 1986. See
"Certain ERISA Considerations" in this
prospectus supplement and "ERISA
Considerations" in the accompanying
prospectus.
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S-25
<PAGE>
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Legal Investment ................ The offered certificates will not be
"mortgage related securities" within the
meaning of the Secondary Mortgage Market
Enhancement Act of 1984.
You should consult your own legal advisors
to determine whether and to what extent the
offered certificates will be legal
investments for you. See "Legal Investment"
in this prospectus supplement and in the
accompanying prospectus.
Certain Investment
Considerations ............... The rate and timing of payments and other
collections of principal on or in respect of
the mortgage loans will affect the yield to
maturity on each offered certificate. In the
case of offered certificates purchased at a
discount, a slower than anticipated rate of
payments and other collections of principal
on the mortgage loans could result in a
lower than anticipated yield. In the case of
class "S" certificates or any other offered
certificates purchased at a premium, a
faster than anticipated rate of payments and
other collections of principal on the
mortgage loans could result in a lower than
anticipated yield. If you are contemplating
the purchase of class "S" certificates, you
should be aware that--
o the yield to maturity on those
certificates will be highly sensitive
to the rate and timing of principal
prepayments and other liquidations on
or in respect of the mortgage loans,
and
o that an extremely rapid rate of
prepayments and/or other liquidations
on or in respect of the mortgage loans
could result in a substantial loss of
your initial investment.
The pass-through rates for the class "S",
"A-2", "A-3", "A-4", "A-5", "B-1" and "B-2"
certificates are, in each case, equal to,
based upon or limited by a weighted average
of net interest rates derived from the
mortgage loans. That weighted average will
vary as principal is received on the various
mortgage loans at different rates and will
be adversely affected by voluntary and
involuntary prepayments on those mortgage
loans with relatively high mortgage interest
rates. See "Yield and Maturity
Considerations" in this prospectus
supplement and in the accompanying
prospectus.
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S-26
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Ratings ........................ It is a condition to their issuance that the
respective classes of the offered
certificates receive the credit ratings
shown in the table entitled "Series 1999-CG3
Commercial Mortgage Pass-Through
Certificates" on page S-4.
The ratings of the offered certificates
address the timely payment of interest and,
except in the case of the class "S"
certificates, the ultimate payment of
principal on or before the rated final
payment date. A security rating is not a
recommendation to buy, sell or hold
securities and the assigning rating agency
may revise or withdraw its rating at any
time.
For a description of the limitations of the
ratings of the offered certificates, see
"Ratings" in this prospectus supplement.
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S-27
<PAGE>
RISK FACTORS
The offered certificates are not suitable investments for all investors.
In particular, you should not purchase any class of offered certificates unless
you understand and are able to bear the risks associated with that class.
The offered certificates are complex securities and it is important that
you possess, either alone or together with an investment advisor, the expertise
necessary to evaluate the information contained in this prospectus supplement
and the accompanying prospectus in the context of your financial situation.
You should consider the following factors, as well as those set forth
under "Risk Factors" in the accompanying prospectus, in deciding whether to
purchase any offered certificates. The "Risk Factors" section in the
accompanying prospectus includes a number of general risks associated with
making an investment in the offered certificates.
Risks Related to the Offered Certificates
Many Factors, Including Lack of Liquidity, can Adversely Affect the Market
Value of Your Certificates. There is currently no secondary market for the
offered certificates. The underwriter has informed us that it intends to make a
secondary market in the offered certificates. However, it has no obligation to
do so, and there can be no assurance that a secondary market for the offered
certificates will develop. Even if a secondary market does develop for the
offered certificates, there is no assurance that it will provide you with
liquidity of investment or that the market will continue for the life of the
offered certificates. We will not list the offered certificates on any
securities exchange or on any automated quotation system, such as NASDAQ. Lack
of liquidity could result in a significant reduction in the market value of your
certificates. In addition, the market value of your certificates at any time may
be affected by many factors, including then prevailing interest rates and the
then perceived riskiness of commercial mortgage-backed securities relative to
other investments. You may be forced to hold your certificates indefinitely.
Alternatively, you may only be able to sell your certificates at less than 100%
of their principal balance and/or the unamortized portion of your purchase price
for reasons unrelated to the performance of your certificates or the mortgage
loans. See "Risk Factors--Lack of Liquidity Will Impair Your Ability to Sell
Your Certificates and May Have an Adverse Effect on the Market Value of Your
Certificates" and "--The Market Value of Offered Certificates will be Sensitive
to Fluctuations in Prevailing Interest Rates and Spreads" in the accompanying
prospectus.
Your Timely Receipt of all Amounts Payable with Respect to Your
Certificates will Completely Depend on the Performance of the Mortgage Loans.
The mortgage loans are subject to delinquencies, defaults and losses.
The rate and timing of delinquencies and defaults on the mortgage loans
will affect the rate, timing and amount of payments on your certificates, the
yield to maturity of your certificates and the weighted average life of your
certificates. Delinquencies on the mortgage loans, unless covered by an advance
by the master servicer or the trustee, may result in shortfalls in payments of
interest and/or principal on your certificates for the current month. In
addition, even if an advance is made to cover a delinquency, the party making
that advance will have a right to receive interest on that advance that is prior
to the rights of the series "1999-CG3" certificateholders to receive payments on
their certificates. The accrual of interest on advances may result in shortfalls
in payments of interest and/or principal on the series "1999-CG3" certificates.
In
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addition, with respect to each mortgage loan that is serviced by the special
servicer, the special servicer will receive compensation out of amounts that
would otherwise have been applied to pay interest and/or principal on the series
"1999-CG3" certificates.
The series "1999-CG3" non-offered certificates, as well as any other class
or classes of offered certificates that are subordinate to your certificates,
are intended to provide credit support for your certificates. However, that
credit support is limited. There can be no assurance that it will protect you
from shortfalls and delays in payments on your certificates. As a holder of
offered certificates, you will bear the effects of any losses and other
default-related shortfalls on the mortgage loans in excess of the credit support
provided to your certificates. Even if shortfalls in payments on your
certificates are made up on a future payment date, no interest will accrue on
those shortfalls. Thus, those shortfalls would adversely affect the yield on
your certificates.
If you purchase class "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1" or "B-2"
certificates, then your certificates will provide credit support to other
classes of offered certificates. As a result, you will receive payments after,
and must bear the effects of losses on the mortgage loans before, the holders of
those other classes of offered certificates.
If the assets of the trust are insufficient to make payments on your
certificates, no other assets will be available to you for payment of the
deficiency. Neither we nor any of our affiliates have guaranteed or will
otherwise be obligated to make payments on your certificates. No governmental
agency or instrumentality or private insurer has guaranteed or insured the
payments on your certificates.
When making an investment decision, you should consider, among other
things--
o the payment priorities of the respective classes of the series
"1999-CG3" certificates,
o the order in which the principal balances of the respective classes
of the series "1999-CG3" certificates with balances will be reduced
in connection with losses and default-related shortfalls, and
o the characteristics and quality of the mortgage loans.
See "Description of the Mortgage Pool" and "Description of the Offered
Certificates--Payments" and "--Reductions of Certificate Principal Balances in
Connection With Realized Losses and Additional Trust Fund Expenses" in this
prospectus supplement. See also "Risk Factors--The Investment Performance of
Your Certificates Will Depend Upon Payments, Defaults and Losses on the
Underlying Mortgage Loans", "--Any Credit Support for Your Certificates may be
Insufficient to Protect you Against all Potential Losses" and "--Payments on the
Offered Certificates Will be Made Solely from the Limited Assets of the Related
Trust" in the accompanying prospectus.
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The Offered Certificates Have Uncertain Yields to Maturity. The yield on
your certificates will depend on (a) the price you paid for your certificates
and (b) the rate, timing and amount of payments on your certificates. The rate,
timing and amount of payments on your certificates will, in turn, depend on:
o the pass-through rate for your certificates;
o the rate and timing of payments and other collections of principal
on the mortgage loans;
o the rate and timing of defaults, and the severity of losses, if any,
on the mortgage loans;
o the rate, timing, severity and allocation of other shortfalls and
expenses that reduce amounts available for payment on your
certificates;
o the collection and payment of prepayment premiums and yield
maintenance charges with respect to the mortgage loans; and
o servicing decisions with respect to the mortgage loans.
These factors cannot be predicted with any certainty. Accordingly, you may
find it difficult to analyze the effect that these factors might have on the
yield to maturity of your certificates.
In particular, the investment performance of your certificates may vary
materially and adversely from your expectations due to the rate of prepayments
and other unscheduled collections of principal on the mortgage loans being
faster or slower than you anticipated. In deciding whether to purchase any
offered certificates, you should make an independent decision as to the
appropriate prepayment assumptions to be used.
If you purchase your certificates at a premium, and if payments and other
collections of principal on the mortgage loans occur at a rate faster than you
anticipated at the time of your purchase, then your actual yield to maturity may
be lower than you had assumed at the time of your purchase. Conversely, if you
purchase your certificates at a discount, and if payments and other collections
of principal on the mortgage loans occur at a rate slower than you anticipated
at the time of your purchase, then your actual yield to maturity may be lower
than you had assumed at the time of your purchase. You should consider that
prepayment premiums and yield maintenance charges may not be collected in all
circumstances. Furthermore, even if a prepayment premium or yield maintenance
charge is available and payable on your certificates, it may not be sufficient
to offset fully any loss in yield on your certificates.
If you purchase class "S" certificates, your yield to maturity will be
particularly sensitive to the rate and timing of principal payments and losses
on the mortgage loans. Prior to investing in those certificates, you should
fully consider the associated risks, including the risk that an extremely rapid
rate of amortization, prepayment or other liquidation of the mortgage loans
could result in your failure to recover fully your initial investment. The
ratings on the class "S" certificates do not address whether a purchaser of
those certificates would be able to recover its initial investment in them.
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The yield on the offered certificates with variable pass-through rates
could also be adversely affected if the mortgage loans with higher mortgage
interest rates pay principal faster than the mortgage loans with lower mortgage
interest rates. This is because those classes bear interest at pass-through
rates equal to, based upon or limited by, as applicable, a weighted average of
net interest rates derived from the mortgage loans.
See "Description of the Mortgage Pool", "Servicing of the Mortgage Loans",
"Description of the Offered Certificates--Payments" and "--Reductions of
Certificate Principal Balances in Connection With Realized Losses and Additional
Trust Fund Expenses" and "Yield and Maturity Considerations" in this prospectus
supplement. See also "Risk Factors--The Investment Performance of Your
Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying
Mortgage Loans" and "Yield and Maturity Considerations" in the accompanying
prospectus.
Potential Conflicts of Interest. The master servicer, the special servicer
or any of their respective affiliates may acquire series "1999-CG3"
certificates. In addition, the holders of certificates representing a majority
interest in the controlling class of the series "1999-CG3" certificates may
replace the special servicer. See "Servicing of the Mortgage Loans--Replacement
of the Special Servicer" in this prospectus supplement.
The master servicer and the special servicer each will be obligated to
observe the terms of the pooling and servicing agreement and will be governed by
the servicing standard described in this prospectus supplement. However, either
of those parties may, especially if it or an affiliate holds series "1999-CG3"
non-offered certificates, or has financial interests in or other financial
dealings with a borrower under any of the mortgage loans, have interests when
dealing with the mortgage loans that are in conflict with those of holders of
the offered certificates. For instance, a special servicer that holds series
"1999-CG3" non-offered certificates could seek to mitigate the potential for
loss to its class from a troubled mortgage loan by deferring enforcement in the
hope of maximizing future proceeds. However, that action could result in less
proceeds to the trust than would have been realized if earlier action had been
taken. In general, neither the master servicer nor the special servicer is
required to act in a manner more favorable to the offered certificates or any
particular class thereof than to the series "1999-CG3" non-offered certificates.
In addition, the master servicer and the special servicer each services
and will, in the future, service, in the ordinary course of its business,
existing and new loans for third parties, including portfolios of loans similar
to the loans that will be included in the trust. The real properties securing
these other loans may be in the same markets as, and compete with, certain of
the real properties securing the loans that will be included in the trust.
Consequently, personnel of the master servicer and special servicer may perform
services, on behalf of the trust, with respect to the mortgage loans at the same
time as they are performing services, on behalf of other persons, with respect
to other mortgage loans secured by properties that compete with the real
properties securing the mortgage loans. This may pose inherent conflicts for the
master servicer or special servicer.
Certain of the mortgage loans included in the trust may have been
refinancings of debt previously held by an affiliate of one of the mortgage loan
sellers.
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ERISA Considerations. The regulations that govern pension and other
employee benefit plans subject to ERISA and plans and other retirement
arrangements subject to Section 4975(c) of the Internal Revenue Code of 1986 are
complex. Accordingly, if you are using the assets of a plan or arrangement to
acquire offered certificates, you are urged to consult legal counsel regarding
consequences under ERISA and the Internal Revenue Code of 1986 of the
acquisition, ownership and disposition of offered certificates. In particular,
the purchase or holding of class "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1" and
"B-2" certificates by any plan or arrangement may result in a prohibited
transaction or the imposition of excise taxes or civil penalties. As a result,
these offered certificates should not be acquired by, on behalf of, or with
assets of any plan or arrangement, unless the purchase and continued holding of
the certificate or an interest in the certificate is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986 under Sections I and III of Prohibited Transaction Class
Exemption 95-60. Sections I and III of Prohibited Transaction Class Exemption
95-60 provide an exemption from the prohibited transaction rules for certain
transactions involving an insurance company general account.
See "Certain ERISA Considerations" in this prospectus supplement and
"ERISA Considerations" in the accompanying prospectus.
Risk of Year 2000. The transition from the year 1999 to the year 2000 may
disrupt the ability of computerized systems to process information. The
collection of payments on the mortgage loans, the servicing of the mortgage
loans and the payments on your certificates are dependent upon computer systems
of the master servicer, the special servicer, the trustee, borrowers, The
Depository Trust Company and other third parties. See "Risk Factors--The
Transition from the Year 1999 to the Year 2000 May Disrupt the Ability of
Computerized Systems to Process Information" in the accompanying prospectus.
We have been advised by each of the master servicer, the special servicer
and the trustee that it will use commercially reasonable efforts to be year 2000
ready by January 1, 2000, including by:
o implementing modifications to their respective existing systems;
and/or
o acquiring computer systems that are year 2000 ready.
If the master servicer, the special servicer, the trustee or any of their
respective key vendors and subcontractors do not have by the year 2000
computerized systems which are able to interpret correctly data involving dates,
the ability of that party to service the mortgage loans, in the case of the
master servicer and the special servicer, or make payments with respect to the
series "1999-CG3" certificates, in the case of the trustee, may be materially
and adversely affected.
Risks Related to the Mortgage Loans
Repayment of the Mortgage Loans Depends on the Operation of the Underlying
Real Properties. The mortgage loans are secured by mortgage liens on ownership
and/or leasehold interests in the following types of real property:
o Multifamily Rental
o Office
o Retail
o Hospitality
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o Manufactured Housing Community
o Mixed Use
o Industrial
o Self Storage
o Credit Tenant Lease*
o Independent/Assisted Living
-------------
* One office property is subject to a credit tenant lease.
The risks associated with lending on these types of real properties are
inherently different from those associated with lending on the security of
single-family residential properties. This is because, among other reasons,
repayment of each of the mortgage loans is dependent on--
o the successful operation and value of the underlying real property,
and
o the related borrower's ability to refinance the underlying real
property.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real Property and the
Related Borrower's Ability to Refinance the Property" and "Description of the
Trust Assets--Mortgage Loans--A Discussion of Various Types of Multifamily and
Commercial Properties That May Secure Mortgage Loans Underlying a Series of
Offered Certificates" in the accompanying prospectus.
The Mortgage Loans Have a Variety of Characteristics Which May Expose
Investors to Greater Risk of Default and Loss. When making an investment
decision, you should consider, among other things, the following characteristics
of the mortgage loans and/or the underlying real properties. Any or all of these
characteristics can affect, perhaps materially and adversely, the investment
performance of your certificates. Each of the respective items below includes a
cross-reference to where the associated risks are further discussed in this
prospectus supplement or in the accompanying prospectus. In addition, each of
those items may include a cross reference to where further information about the
particular characteristic may be found in this prospectus supplement.
o The Underlying Real Property Will be the Sole Asset Available to
Satisfy the Amounts Owing Under a Mortgage Loan in the Event of
Default. All of the mortgage loans are or should be considered
nonrecourse loans. If the related borrower defaults on any of the
mortgage loans, only the underlying real property, and not the other
assets of the borrower, is available to satisfy the debt. Even if
the related loan documents permit recourse to the borrower or a
guarantor, the trust may not be able to ultimately collect the
amount due under a defaulted mortgage loan. None of the mortgage
loans are insured or guaranteed by any governmental agency or
instrumentality or by any private mortgage insurer. See "Risk
Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real
Property and the Related Borrower's Ability to Refinance the
Property--Most of the Mortgage Loans Underlying Your Certificates
Will be Nonrecourse" in the accompanying prospectus.
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<PAGE>
o In Some Cases, an Underlying Real Property is Dependent on a Single
Tenant or one or a few Major Tenants. In the case of 44 underlying
real properties, securing 22.5% of the initial mortgage pool
balance, the related borrower has leased the property to at least
one tenant that occupies 25% or more of the particular property. In
the case of six of those mortgage loans, representing 3.6% of the
initial mortgage pool balance, the related borrower has leased the
underlying real property to a single tenant that occupies all or
substantially all of the particular property. Accordingly, the full
and timely payment of each of those mortgage loans is highly
dependent on the continued operation of the major tenant or tenants,
which, in some cases, is the sole tenant, at the underlying real
property. See "Risk Factors--Repayment of a Commercial or
Multifamily Mortgage Loan Depends Upon the Performance and Value of
the Underlying Real Property and the Related Borrower's Ability to
Refinance the Property--The Successful Operation of a Multifamily or
Commercial Property Depends on Tenants", "--Repayment of a
Commercial or Multifamily Mortgage Loan Depends Upon the Performance
and Value of the Underlying Real Property and the Related Borrower's
Ability to Refinance the Property--Dependence on a Single Tenant or
a Small Number of Tenants Makes a Property Riskier Collateral" and
"Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property and the
Related Borrower's Ability to Refinance the Property--Tenant
Bankruptcy Adversely Affects Property Performance" in the
accompanying prospectus. One mortgage loan, representing 0.6% of the
initial mortgage pool balance, is secured by an underlying real
property subject to a "credit tenant lease". We refer to this
mortgage loan as a "CTL loan". The CTL loan has a lower debt service
coverage ratio and a higher loan-to-value ratio than would have been
acceptable had the underlying real property been leased to a less
creditworthy tenant. The tenant, Kaiser Foundation Health Plan, Inc.
has a long-term unsecured debt rating of "A-3" from Moody's. The CTL
loan is fully amortizing over the term of the related credit tenant
lease.
o 10% or More of the Initial Mortgage Pool Balance Will be Secured by
Mortgage Liens on Each of the Following Property Types--Multifamily
Rental, Office, Retail and Hospitality. Seventy-four of the mortgage
loans, representing 34.0% of the initial mortgage pool balance, will
be secured by mortgage liens on underlying real properties used for
multifamily rental purposes. Some of the underlying multifamily
rental properties are subject to land use restrictive covenants or
contractual covenants in favor of federal or state housing agencies.
These covenants normally require that a minimum number or percentage
of units be rented to tenants who have incomes that are
substantially lower than median incomes in the applicable area or
region. These covenants may limit the potential rental rates that
may govern rentals at any of those properties, the potential tenant
base for any of those properties or both. Furthermore, five of the
underlying multifamily rental properties, securing 1.0% of the
initial mortgage pool balance, are eligible for low-income rent
subsidies from the United States Department of Housing and Urban
Development, commonly referred to as "HUD", under its "Section 8"
program. The payment of these rental subsidies to a particular
project owner is made pursuant to a housing assistance payment
contract between HUD and the owner of the project or a local public
housing authority. Upon expiration of the contract, the rental
subsidies will terminate, thereby eliminating a source of funds for
the related borrower to make payments under its mortgage loan. Also,
three of the underlying multifamily rental properties, securing 1.6%
of the initial mortgage pool balance, have material concentrations
of student tenants. Students tend to be a less stable tenant
population and may cause more
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damage than more mature tenants. Lastly, certain of the underlying
multifamily rental properties consist of, in each case, a majority of the
units in a residential condominium project. These condominium units are
subject to a condominium declaration, which may affect foreclosure.
Nineteen of the mortgage loans, representing 21.0% of the initial mortgage
pool balance, will be secured by mortgage liens on underlying real
properties used for office purposes. Some of the office properties
underlying these mortgage loans are heavily dependent on a sole tenant
that leases the entire property or on a few major tenants.
Thirty-seven of the mortgage loans, representing 20.3% of the initial
mortgage pool balance, will be secured by mortgage liens on underlying
real properties used for retail purposes. We consider 22 of those
properties, securing 15.3% of the initial mortgage pool balance, to be
anchored or shadow anchored. A "shadow anchor" is a store or business that
materially affects the draw of customers to an underlying retail property,
but which may be located at a nearby property or on a portion of that
underlying retail property that is not collateral for the related mortgage
loan.
Seven of the mortgage loans, representing 11.4% of the initial mortgage
pool balance, will be secured by mortgage liens on underlying real
properties used for hospitality purposes.
We consider--
o six of the underlying hospitality properties, securing 11.0% of the
initial mortgage pool balance, to be full service hotels, and
o one of the underlying hospitality properties, securing 0.4% of the
initial mortgage pool balance, to be a limited service hotel.
One of the underlying hospitality properties is subject to a "declaration
of condominium". See "Description of the Mortgage Pool--Additional Loan
and Property Information--Condominiums" and "--Significant Mortgage
Loans--The LaSalle Loans" in this prospectus supplement. Three of the
underlying hospitality properties are operating pursuant to operating
leases rather than franchise agreements. See "Description of the Mortgage
Pool--Additional Loan and Property Information--Operating Leases" and
"--Significant Mortgage Loans" in this prospectus supplement.
The inclusion in the trust of a significant concentration of mortgage
loans that are secured by mortgage liens on a particular type of
income-producing property makes the overall performance of the mortgage
pool materially more dependent on the factors that affect the operations
at and value of that property type. See "Description of the Trust
Assets--Mortgage Loans--A Discussion of Various Types of Multifamily and
Commercial Properties That May Secure Mortgage Loans Underlying a Series
of Offered Certificates" in the accompanying prospectus.
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o 5% or More of the Initial Mortgage Pool Balance Will be Secured by
Mortgage Liens on Real Property Located in Each of the Following
States--California, Texas, New York and Michigan. The underlying
real properties located in each of the following states secure
mortgage loans or allocated portions of mortgage loans that
represent 5% or more of the initial mortgage pool balance:
% of
Number of Initial Mortgage
State Properties Pool Balance
----- ---------- ------------
California 21 17.3%
Texas 34 15.2%
New York 6 10.8%
Michigan 7 5.1%
The inclusion of a significant concentration of mortgage loans that
are secured by mortgage liens on real properties located in a
particular state makes the overall performance of the mortgage pool
materially more depending on economic and other conditions or events
in that state. See "Risk Factors--Geographic Concentration Within a
Trust Exposes Investors to Greater Risk of Default and Loss" in the
accompanying prospectus.
o The Mortgage Pool Will Include Material Concentrations of Balloon
Loans and ARD Loans. One hundred forty-five of the mortgage loans,
representing 78.3% of the initial mortgage pool balance, are balloon
loans, and eight of the mortgage loans, representing 19.5% of the
initial mortgage pool balance, are ARD loans. The ability of a
borrower to make the required balloon payment on a balloon loan at
maturity, and the ability of a borrower to repay an ARD loan on or
before the related anticipated repayment date, in each case depends
upon its ability either to refinance the loan or to sell the
underlying real property. One hundred thirty-six balloon loans,
representing 73.7% of the initial mortgage pool balance, have
balloon payments that are scheduled to be due, and four ARD loans,
representing 14.5% of the initial mortgage pool balance, have
anticipated repayment dates that are to occur, in each case during
the 3- or 4-month period from June 1, 2009 to September 1, 2009.
Although an ARD loan may provide the related borrower with
incentives to repay the loan by the related anticipated repayment
date, the failure of that borrower to do so will not be a default
under that loan. --- See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans" in this prospectus
supplement and "Risk Factors--The Investment Performance of Your
Certificates Will Depend Upon Payments, Defaults and Losses on the
Underlying Mortgage Loans--There is an Increased Risk of Default
Associated with Balloon Payments" in the accompanying prospectus.
o The Mortgage Pool Will Include Some Disproportionately Large
Mortgage Loans and Groups of Cross-Collateralized Mortgage Loans.
The inclusion in the mortgage pool of one or more loans that have
outstanding principal balances that are substantially larger than
the other mortgage loans can result in losses that are more severe,
relative to the size of the mortgage pool, than would be the case if
the aggregate balance of the mortgage pool were distributed more
evenly. Several of the individual mortgage loans and groups of
cross-collateralized mortgage loans have 10/1/99 scheduled
principal balances that are substantially higher than the average
10/1/99 scheduled principal balance, which is $5,620,558 without
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regard to any cross-collateralization of mortgage loans and
$5,877,707 when each group of cross-collateralized mortgage loans is
treated as a single mortgage loan. The five largest mortgage loans
and groups of cross-collateralized mortgage loans represent 22.6% of
the initial mortgage pool balance. See "Description of the Mortgage
Pool--General", "--Cross-Collateralized Mortgage Loans,
Multi-Property Mortgage Loans and Mortgage Loans With Affiliated
Borrowers" and "--Significant Mortgage Loans" in this prospectus
supplement and "Risk Factors--Loan Concentration Within a Trust
Exposes Investors to Greater Risk of Default and Loss" in the
accompanying prospectus.
o The Mortgage Pool Will Include Leasehold Mortgage Loans. Five of the
underlying real properties, securing 9.7% of the initial mortgage
pool balance, are secured by mortgage liens on the related
borrower's leasehold interest in all or a portion of the underlying
real property, but not by the corresponding ownership interest in
the property that is subject to the ground lease. Because of
possible termination of the related ground lease, lending on a
leasehold interest in a real property is riskier than lending on an
actual ownership interest in that property. See "Description of the
Mortgage Pool--Additional Loan and Property Information--Leaseholds"
in this prospectus supplement. See also "Risk Factors--Ground Leases
Create Risks for Lenders that are not Present When Lending on an
Actual Ownership Interest in a Real Property" and "Certain Legal
Aspects of Mortgage Loans--Foreclosure--Leasehold Considerations"
in the accompanying prospectus.
o Some of the Underlying Real Properties are a "Legal Nonconforming
Use" or a "Legal Nonconforming Structure". Certain of the mortgage
loans are secured by mortgage liens on real property that are a
"legal nonconforming use" or a "legal nonconforming structure". This
may impair the ability of the borrower to restore the improvements
on an underlying real property to its current form or use following
a major casualty. See "Description of the Mortgage Pool--Certain
Underwriting Matters--Zoning and Building Code Compliance" in this
prospectus supplement and "Risk Factors--Changes in Zoning may
Adversely Affect the Use or Value of a Real Property" in the
accompanying prospectus.
o Some of the Underlying Real Properties are Encumbered by Subordinate
Debt. Four of the mortgage loans, representing 1.9% of the initial
mortgage pool balance, have underlying real properties which are
known to us to be encumbered by secured subordinate debt that is not
part of the mortgage pool. The existence of secured subordinate
indebtedness may adversely affect the borrower's financial viability
and/or the trust's security interest in the underlying real
property. Any or all of the following may result from the existence
of secured subordinate indebtedness on an underlying real property.
(i) refinancing the mortgage loan at maturity for the purpose of
making any balloon payments may be more difficult;
(ii) reduced cash flow could result in deferred maintenance at the
particular real property;
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(iii) if the holder of the subordinated debt files for bankruptcy or
is placed in involuntary receivership, foreclosing on the
particular real property could be delayed; and
(iv) if the underlying real property depreciates for whatever
reason, the related borrower's equity is more likely to be
wiped out, thereby eliminating the related borrower's
incentive to continue making payments on its mortgage loan.
The lender of any material subordinate debt on the underlying real
properties known to us has agreed not to foreclose or take other
legal action against the underlying real property or the related
borrower, for so long as the related mortgage loan is outstanding
and the trust has not done so.
See "Description of the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in this prospectus
supplement and "Risk Factors--Subordinate Debt Increases the
Likelihood That a Borrower Will Default on a Mortgage Loan Backing
Your Certificates" in the accompanying prospectus.
o Some of the Underlying Real Properties do not Comply With the
Americans With Disabilities Act of 1990. Not all of the underlying
real properties securing the mortgage loans comply with the
Americans with Disabilities Act of 1990. Compliance can be
expensive. See "Risk Factors--Compliance with the Americans with
Disabilities Act of 1990 May be Expensive" in the accompanying
prospectus.
o Multiple Underlying Real Properties are Owned by the same Borrower
or Affiliated Borrowers or are Occupied, in Whole or in Part, by the
Same Tenant or Affiliated Tenants. Some groups of the mortgage loans
have borrowers that, in the case of each of those groups, are the
same or under common control. See "Description of the Mortgage
Pool--Cross-Collateralized Mortgage Loans, Multi-Property Mortgage
Loans and Mortgage Loans With Affiliated Borrowers".
In addition, there may be tenants which lease space at more than one
underlying real property, and there may be tenants that are related
to or affiliated with a borrower. See Exhibit A-1 to this prospectus
supplement for a list of the three most significant tenants at each
of the underlying real properties used for retail purposes, office
purposes and industrial purposes.
The bankruptcy or insolvency of, or other financial problems with
respect to, any borrower or tenant that is (directly or through
affiliation) associated with two or more of the underlying real
properties could have an adverse effect on all of those properties
and on the ability of those properties to produce sufficient cash
flow to make required payments on the related mortgage loans in the
trust. See "Risk Factors--Repayment of a Commercial or Multifamily
Mortgage Loan Depends upon the Performance and Value of the
Underlying Real Property and the Related Borrower's Ability to
Refinance the Property--Tenant Bankruptcy Adversely Affects Property
Performance", "--Borrower Concentration Within a Trust Exposes
Investors to Greater Risk of Default and Loss" and "--Borrower
Bankruptcy Proceedings Can Delay and Impair Recovery on a Mortgage
Loan Backing Your Certificates" in the accompanying prospectus.
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o Some Borrowers Under the Mortgage Loans Will not be Special Purpose
Entities. The business activities of certain of the borrowers under
the mortgage loans are not limited to owning their respective
underlying real properties. Accordingly, the financial success of
each of those borrowers may be affected by the performance of its
other business activities, including other real estate interests.
Those other business activities increase the possibility that the
borrower may become bankrupt or insolvent.
Changes in Mortgage Pool Composition can Change the Nature of Your
Investment. If you purchase any offered certificates other than the class "A-1A"
certificates, you will be more exposed to risks associated with changes in
concentrations of borrower, loan or property characteristics than are persons
who own offered certificates that have an earlier assumed final payment date
than your certificates. See "Risk Factors--Changes in Pool Composition Will
Change the Nature of Your Investment" in the accompanying prospectus.
Lending on Income-Producing Real Properties Entails Environmental Risks.
The trust could become liable for a material adverse environmental condition at
an underlying real property. Any such potential liability could reduce or delay
payments on the offered certificates.
A third-party consultant conducted an environmental site assessment, or
updated a previously conducted assessment, with respect to 159 of the underlying
real properties, securing 99.1% of the initial mortgage pool balance, during the
19-month period ending on October 1, 1999. Each of those environmental site
assessments or updates, as the case may be, complied with industry-wide
standards. Not all of those environmental site assessments, however, satisfied
all the requirements necessary to be considered a "Phase I" environmental site
assessment. In certain cases, a third-party consultant also conducted a "Phase
II" environmental site assessment of the underlying real property. If any
assessment or update revealed a material adverse environmental condition or
circumstance at any underlying real property and the consultant recommended
action, then, depending on the nature of the condition or circumstance, the
borrower has--
o implemented or agreed to implement an operations and maintenance
plan, in the manner and within the time frames specified in the
related loan documents;
o agreed to monitor periodically nearby properties, in the manner and
within the time frames specified in the related loan documents; or
o established a reserve account with the lender to cover the estimated
cost of addressing the condition or circumstances.
In many cases, the identified condition related to the presence of
asbestos-containing materials, lead-based paint and/or radon. Where these
substances were present, the environmental consultant generally recommended, and
the related loan documents required, the establishment of an operation and
maintenance plan to address the issue or, in the case of asbestos-containing
materials and lead-based paint, an abatement or removal program. In a few cases,
the particular asbestos-containing materials or lead-based paint was in poor
condition. This could result in a claim for damages by any party injured by such
condition.
In some cases, the cost to remediate, prevent or otherwise deal with an
adverse environmental condition at a particular underlying real property was
estimated to be more than $50,000.
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<PAGE>
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a potential adverse environmental condition at
an underlying real property or a nearby property because a responsible party
with respect to that condition had already been identified.
In the case of 12 of the underlying real properties, securing 4.2% of the
initial mortgage pool balance, either--
o no environmental site assessment was conducted in connection with
the origination of the related mortgage loan, or
o a "Phase II" environmental site assessment was recommended but not
performed.
In general, the related originator's election not to take the foregoing actions
with respect to any of those underlying real properties was based upon the
delivery of a secured creditor impaired property policy covering certain
environmental matters with respect to the property. Some of those 12 underlying
real properties are, in each case, are covered by individual secured creditor
impaired property policies. In addition, we will obtain a separate secured
creditor impaired property policy covering certain environmental matters with
respect to all of the underlying real properties that are not covered by
individual policies. All of the policies referred to in the prior two sentences
provide for certain coverage limits. In addition, those policies do not provide
coverage for adverse environmental conditions at levels below legal limits or
for conditions involving asbestos and lead-based paint. In some cases, the
originator of the related mortgage loan agreed to release a principal of the
related borrower from its obligations under an environmental or hazardous
substances indemnity with respect to the particular underlying real property in
connection with the delivery of a secured creditor impaired property policy
covering that property. See "Description of the Mortgage Pool--Certain
Underwriting Matters--Environmental Insurance" in this prospectus supplement.
See "Risk Factors--Environmental Liabilities Will Adversely Affect the
Value and Operation of the Contaminated Property and May Deter a Lender from
Foreclosing" and "Certain Legal Aspects of Mortgage Loans--Environmental
Considerations" in the accompanying prospectus.
Lending on Income-Producing Properties Entails Risks Related to Property
Condition. Licensed engineers inspected all of the underlying real properties
during the 19-month period preceding October 1, 1999 to assess the structure,
exterior walls, roofing, interior construction, mechanical and electrical
systems and general condition of the site, buildings and other improvements
located at each underlying real property. At certain of the underlying real
properties, the inspections identified conditions requiring escrows to be
established for repairs or replacements estimated to cost in excess of $100,000.
In most of these cases, the originator required the related borrower to fund
reserves, or deliver letters of credit or other instruments, to cover these
costs.
Limitations on Enforceability of Cross-Collateralization. The mortgage
pool will include 160 mortgage loans that are secured, including through
cross-collateralization with other mortgage loans, by multiple underlying real
properties. These mortgage loans are identified in the tables contained in
Exhibit A-1. The purpose of securing any particular mortgage loan or group of
cross-collateralized mortgage loans
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with multiple real properties is to reduce the risk of default or ultimate loss
as a result of an inability of any particular property to generate sufficient
net operating income to pay debt service. However, five of these mortgage loans
permit--
o the release of one or more of the underlying real properties from
the related mortgage lien, and/or
o a full or partial termination of the applicable
cross-collateralization, in each case, upon the satisfaction of the
conditions described under "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans" in this
prospectus supplement.
In addition, when multiple real properties secure a mortgage loan or group
of cross-collateralized mortgage loans, the amount of the mortgage encumbering
any particular one of those properties may be less than the full amount of the
related mortgage loan or group of cross-collateralized mortgage loans (in
general, to avoid recording tax). This mortgage amount may equal the appraised
value or allocated loan amount for the underlying real property and will limit
the extent to which proceeds from the property will be available to offset
declines in value of the other properties securing the same mortgage loan or
group of cross-collateralized mortgage loans.
Three mortgage loans are, in each case, secured by real properties located
in two or more states. These mortgage loans represent 7.3% of the initial
mortgage pool balance. Foreclosure actions are brought in state court and the
courts of one state cannot exercise jurisdiction over property in another state.
Upon a default under any of these mortgage loans, it may not be possible to
foreclose on the related underlying real properties simultaneously.
Limited Information Causes Uncertainty. Some of the mortgage loans are
acquisition financing. Accordingly, limited or no operating information is
available with respect to the underlying real properties for those mortgage
loans. As a result, you may find it difficult to analyze the performance of
those properties.
Prior Bankruptcies. Some of the borrowers under the mortgage loans or
their affiliates have been parties to, and/or some of the underlying real
properties have been the subject of, prior bankruptcy proceedings.
DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will have an initial mortgage pool balance of
$899,289,205, subject to a variance of plus or minus 5%. The "initial mortgage
pool balance" will equal the aggregate 10/1/99 scheduled principal balance of
the mortgage loans. The "scheduled principal balance" of any mortgage loan, as
of any date of determination, is equal to its unpaid principal balance as of
that date, after application of all scheduled payments of principal due in
respect of the mortgage loan on or before that date, whether or not those
payments were received. The 10/1/99 scheduled principal balances of the mortgage
loans will range from $401,415 to $48,969,762, and the average 10/1/99 scheduled
principal balance of the mortgage loans will be $5,620,558.
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<PAGE>
Each of the mortgage loans is an obligation of the related borrower to
repay a specified sum with interest. Each of the mortgage loans is evidenced by
a promissory note and secured by a mortgage, deed of trust, deed to secure debt
or other similar security instrument (each, for purposes of this prospectus
supplement, a "mortgage") that creates a first mortgage lien on the ownership
and/or leasehold interest of the related borrower or another party in one or
more commercial or multifamily real properties, subject only to the following
(collectively, the "Permitted Encumbrances")--
o the lien of current real property taxes, ground rents, water
charges, sewer rents and assessments not yet due and payable,
o covenants, conditions and restrictions, rights of way, easements and
other matters that are of public record and/or are referred to in
the related lender's title insurance policy (or, if not yet issued,
referred to in a pro forma title policy or a "marked-up"
commitment), none of which materially interferes with the security
intended to be provided by the mortgage, the current use of the
related underlying real property or the current ability of the
related underlying real property to generate income sufficient to
service the related mortgage loan,
o exceptions and exclusions specifically referred to in such lender's
title insurance policy (or such pro forma title policy or
"marked-up" commitment), none of which materially interferes with
the security intended to be provided by the mortgage, the current
use of the related underlying real property or the current ability
of the related underlying real property to generate income
sufficient to service the related mortgage loan,
o other matters to which like properties are commonly subject, none of
which materially interferes with the security intended to be
provided by the mortgage, the use of the related underlying real
property or the current ability of the related underlying real
property to generate income sufficient to service the related
mortgage loan,
o the rights of tenants to remain, whether under ground leases or
space leases, at the underlying real property following a
foreclosure or similar proceeding, provided that those tenants are
performing under such leases, and
o if the mortgage loan is a cross-collateralized mortgage loan, the
lien of the mortgage for another mortgage loan contained in the same
group of cross-collateralized mortgage loans.
You should consider each of the mortgage loans a nonrecourse obligation of
the related borrower. In the event of a payment default by the related borrower,
recourse will be limited to the underlying real property or properties for
satisfaction of that borrower's obligations. In those cases where recourse to a
borrower or guarantor is permitted under the related mortgage loan documents, we
have not undertaken an evaluation of the financial condition of any of these
persons. None of the mortgage loans is insured or guaranteed by any governmental
entity or by any other person.
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<PAGE>
We include in this prospectus supplement a variety of information
regarding the mortgage loans and the underlying real properties. In reviewing
this information, you should be aware that--
o All numerical information provided with respect to the mortgage
loans is provided on an approximate basis.
o All weighted average information provided with respect to the
mortgage loans or any sub-group of mortgage loans reflects the
weighting of those mortgage loans by their respective 10/1/99
scheduled principal balances.
o In presenting the 10/1/99 scheduled principal balances of the
mortgage loans, we have assumed that--
(i) all scheduled payments of principal and/or interest due on the
mortgage loans on or before October 1, 1999 are timely made,
and,
(ii) there are no prepayments or other unscheduled collections of
principal with respect to any of the mortgage loans during the
period from September 1, 1999 up to and including October 1,
1999.
o When information with respect to the underlying real properties is
expressed as a percentage of the initial mortgage pool balance, the
percentages are based upon the 10/1/99 scheduled principal balances
of the related mortgage loans.
o Some of the mortgage loans provide that they are
cross-collateralized and cross-defaulted with one or more other
mortgage loans. Except as otherwise indicated, when a mortgage loan
is cross-collateralized and cross-defaulted with another mortgage
loan, we have presented the information regarding those mortgage
loans as if each of them was secured only by a mortgage lien on the
corresponding real property identified on Exhibit A-1 to this
prospectus supplement. One such exception is that each and every
mortgage loan in any particular group of cross-collateralized and
cross-defaulted mortgage loans is treated as having the same
loan-to-value ratio and the same debt service coverage ratio. None
of the mortgage loans is cross-collateralized with any loan that
will not be included in the trust.
o In some cases, when multiple underlying real properties secure a
single mortgage loan, we have allocated that mortgage loan among
those properties based upon--
(i) relative appraised values,
(ii) relative underwritten net cash flow, or
(iii) prior allocations reflected in the related loan documents,
for purposes of providing certain property-specific information.
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<PAGE>
o In some cases, when multiple parcels of real property secure a
single mortgage loan, we have treated those parcels as a single
"real property" because of their proximity to each other, the
interrelationship of their operations or for other reasons deemed
appropriate by us.
o Whenever we refer to a particular underlying real property by name,
we mean the property identified by that name on Exhibit A-1 to this
prospectus supplement.
o Statistical information regarding the mortgage loans may change
prior to the date of initial issuance of the series "1999-CG3"
certificates due to changes in the composition of the mortgage pool
prior to that date.
Cross-Collateralized Mortgage Loans, Multi-Property Mortgage Loans and Mortgage
Loans With Affiliated Borrowers
The mortgage pool includes 15 mortgage loans that are, in each case,
individually or through cross-collateralization with other mortgage loans,
secured by two or more real properties. However, the amount of the mortgage
encumbering any particular one of those properties may be less than the full
amount of the related mortgage loan or group of cross-collateralized mortgage
loans in the trust, generally to avoid recording tax. The mortgage amount may
equal the appraised value or allocated loan amount for the particular real
property, thereby limiting the extent to which proceeds from that property would
be available to offset declines in value of the other underlying real properties
securing the same mortgage loan or group of cross-collateralized mortgage loans
in the trust.
Five of the mortgage loans referred to in the prior paragraph entitle the
related borrower(s) to obtain a release of one or more of the underlying real
properties and/or a termination of any applicable cross-collateralization,
subject, in each case, to the fulfillment of one or more of the following
conditions--
o the pay down of the mortgage loan(s) in an amount equal to a
specified percentage, which is usually 125%, of the portion of the
total loan amount allocated to the property or properties to be
released;
o the satisfaction of certain debt service coverage and loan-to-value
tests for the property or properties that will remain as collateral;
and/or
o receipt by the lender of confirmation from each applicable rating
agency that the action will not result in a qualification, downgrade
or withdrawal of any of the then-current ratings of the series
"1999-CG3" certificates.
In addition, certain of the mortgage loans referred to in the prior paragraph
also entitle the related borrower to a release of one or more of the underlying
real properties through defeasance. See "--Certain Terms and Conditions of the
Mortgage Loans--Defeasance Loans" below.
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<PAGE>
The table below identifies the underlying real properties that secure the
individual multi-property mortgage loans ("Multi") and groups of
cross-collateralized mortgage loans ("Cross") that will, in each case, represent
at least 1.0% of the initial mortgage pool balance.
<TABLE>
<CAPTION>
Number of States % of
Where the Initial Mortgage
Property Names Multi/Cross Properties are Located Pool Balance
- -------------- ----------- ---------------------- ------------
<S> <C> <C> <C>
Radisson South - Bloomington and Le Meridien - Dallas Cross 2 5.16%
Shadow Creek Apts., Copper Cove Apts., Hilltop Apts.,
Foxboro Apts. and The Pinnacle Apts. Multi 1 4.26%
Ameriserve - Burlington, NJ and Ameriserve - Grand Rapids, MI Multi 2 1.68%
</TABLE>
The table below shows the underlying real properties that secure the
groups of non-cross-collateralized mortgage loans that, in the case of each of
those groups, represent 1.0% or more of the initial mortgage pool balance and
generally are secured by underlying real properties with the same managing
entity and/or have the same or affiliated borrowers.
<TABLE>
<CAPTION>
Number of States % of
Where the Initial Mortgage
Property Names Properties are Located Pool Balance
- -------------- ---------------------- ------------
<S> <C> <C>
Southshore Beach & Tennis Club and The Atrium 1 6.94%
Country Oaks Apartments, Garden Wood Apartments,
Lakes at Palm Beach and Candlewyck Apartments 3 5.27%
Legg Mason Center and Commerce Centre 1 2.19%
Marketplace at Centerpoint, Applegate Square Shopping Center
and Centerpoint Corporate Center 1 1.47%
Waters of Winrock Apartments and The Hill at Woodway 1 1.31%
Holiday Inn Southeast, Indianapolis, IN and Holiday Inn - Oklahoma City, OK 2 1.28%
Arrowhead Shopping Center and Heritage Hills Retail Center 2 1.21%
Sequoia Bend Apartments and Tantara Club Apartments 1 1.12%
</TABLE>
Certain Terms and Conditions of the Mortgage Loans
Due Dates. All of the mortgage loans provide for scheduled payments of
principal and/or interest to be due on the first day of each month. We refer to
these scheduled payments as "monthly debt service payments".
Mortgage Rates; Calculations of Interest. In general, each of the mortgage
loans bears interest at a mortgage interest rate that, in the absence of
default, is fixed until maturity. However, as described below, each of the
mortgage loans that has an anticipated repayment date will accrue interest after
that date at a rate that is in excess of its mortgage interest rate prior to
that date.
As of October 1, 1999, the mortgage interest rates for the mortgage loans
ranged from 6.830% per annum to 9.220% per annum, and the weighted average
mortgage interest rate for the mortgage loans was 8.041%.
None of the mortgage loans provides for negative amortization or, except
as described below with respect to the mortgage loans with anticipated repayment
dates, for the deferral of interest.
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<PAGE>
Each of the mortgage loans will accrue interest on the basis of one of the
following conventions:
o the actual number of days elapsed during each one-month accrual
period in a year of 360 days (an "actual/360 basis"); or
o a 360-day year consisting of twelve 30-day months (a "30/360
basis").
The table below shows the number of, and percentage of initial mortgage
pool balance represented by, mortgage loans that accrue interest based on each
of the foregoing conventions.
% of
Number of Initial Mortgage
Interest Accrual Basis Mortgage Loans Pool Balance
- ---------------------- -------------- ------------
Actual/360 Basis 157 94.4%
30/360 Basis 3 5.6%
Balloon Loans. One hundred forty-five of the mortgage loans, representing
78.3% of the initial mortgage pool balance, are balloon loans.
A "balloon loan" is characterized by--
o an amortization schedule that is significantly longer than the
actual term of the mortgage loan, and
o a substantial payment being due in respect of the mortgage loan on
its stated maturity date.
ARD Loans. Eight of the mortgage loans, representing 19.5% of the initial
mortgage pool balance, are ARD loans.
An "ARD loan" is characterized by the following features:
o A maturity date that is generally 25 to 30 years following
origination.
o The designation of an "anticipated repayment date" that is generally
ten years following origination. The anticipated repayment date for
each of the ARD loans is listed on Exhibit A-1 to this prospectus
supplement.
o The ability of the related borrower to prepay the mortgage loan,
without restriction, including without any obligation to pay a
prepayment premium or a yield maintenance charge, at any time on or
after a date that is generally three to six months prior to the
related anticipated repayment date.
o Until its anticipated repayment date, the calculation of interest at
its initial mortgage interest rate.
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<PAGE>
o From and after its anticipated repayment date, the accrual of
interest at a revised annual rate that is, in most cases, equal to
the sum of (i) its initial mortgage interest rate, plus (ii) a
specified margin that is, in some cases, not more than two
percentage points.
o The deferral of any additional interest, which we refer to as
"Post-ARD Additional Interest", accrued in respect of the mortgage
loan from and after the related anticipated repayment date at the
difference between its revised mortgage interest rate and its
initial mortgage interest rate. Post-ARD Additional Interest may, in
some cases, compound at the new revised mortgage interest rate. Any
Post-ARD Additional Interest accrued in respect of an ARD loan
following its anticipated repayment date will not be payable until
the entire principal balance of the mortgage loan has been paid in
full.
o From and after its anticipated repayment date, the accelerated
amortization of the mortgage loan out of any and all monthly cash
flow from the underlying real property which remains after payment
of the applicable monthly debt service payments and permitted
operating expenses and capital expenditures. These accelerated
amortization payments and the Post-ARD Additional Interest are
considered separate from the monthly debt service payments due in
respect of an ARD loan.
In the case of each of the ARD loans, the related borrower has agreed to
enter into a cash management agreement not less than three months prior to the
related anticipated repayment date if it has not already done so. The related
borrower or the manager of the underlying real property will be required under
the terms of that cash management agreement to deposit or cause the deposit of
all revenue from that property received after the related anticipated repayment
date into a designated account controlled by the lender under the ARD loan.
Fully Amortizing Loans. Seven of the mortgage loans, representing 2.3% of
the initial mortgage pool balance, are fully amortizing loans.
A "fully amortizing loan" is generally characterized by--
o constant monthly debt service payments throughout the substantial
term of the mortgage loan, and
o an amortization schedule that is approximately equal to the actual
term of the mortgage loan.
However, a "fully amortizing loan" does not have either--
o an anticipated repayment date, or
o the associated repayment incentives.
Amortization of Principal. The table below shows, in months, the original
and, as of October 1, 1999, the remaining amortization schedules and terms to
maturity for the mortgage loans or the specified sub-groups of mortgage loans.
For purposes of the following table, ARD loans are assumed to "mature" on their
respective anticipated repayment dates.
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<PAGE>
<TABLE>
<CAPTION>
Fully Amortizing
Balloon Loans ARD Loans Loans All Mortgage Loans
------------- --------- ----- ------------------
<S> <C> <C> <C> <C>
Original Term to Maturity
Maximum 120 240 300 300
Minimum 60 120 177 60
Weighted Average 118 127 254 123
Remaining Term to Maturity
Maximum 119 227 299 299
Minimum 59 108 176 59
Weighted Average 116 123 247 120
Original Amortization Term
Maximum 360 360 300 360
Minimum 180 300 177 177
Weighted Average 354 329 254 346
Remaining Amortization Term
Maximum 359 359 299 359
Minimum 177 287 176 176
Weighted Average 351 324 247 344
</TABLE>
Some of the mortgage loans provide for a recast of the amortization
schedule and an adjustment of the monthly debt service payments on the mortgage
loan upon application of specified amounts of condemnation proceeds or insurance
proceeds to pay the unpaid principal balance of the mortgage loan.
Voluntary Prepayment Provisions. In general, at origination, the mortgage
loans provided for:
o a period (a "prepayment lock-out period") during which voluntary
principal prepayments are prohibited, followed by
o a period (an "open prepayment period") during which voluntary
principal prepayments may be made without any prepayment
consideration.
However, at origination, one mortgage loan, representing 0.2% of the
initial mortgage pool balance, provided for:
o a prepayment lock-out period, followed by
o a period during which voluntary prepayments are permitted with the
payment of prepayment consideration, followed by
o an open prepayment period.
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<PAGE>
Notwithstanding otherwise applicable lock-out periods, partial prepayments
of some of the mortgage loans are required under the circumstances described
under "--Certain Terms and Conditions of the Mortgage Loans--Other Prepayment
Provisions" below.
The table titled "Characteristics of the Mortgage Loans" on Exhibit A-1
shows the type of prepayment provision that corresponds to each mortgage loan,
commencing as of its respective date of origination. In addition, the table
titled "Prepayment Provisions as of 10/1/99" on Exhibit A-2 shows a breakdown of
the mortgage loans based on (i) remaining term to stated maturity (or, in the
case of the ARD loans, to their respective anticipated repayment dates) and (ii)
the remaining prepayment lock-out period applicable to, and the remaining
period, if any, during which prepayment consideration is payable upon a
voluntary prepayment of, each mortgage loan. The prepayment restrictions
relating to each of the mortgage loans generally do not apply to prepayments
arising out of a casualty or condemnation of the underlying real property, and
prepayments of this type are generally not required to be accompanied by any
prepayment consideration. The aggregate characteristics of the prepayment
provisions of the mortgage pool will vary over time as--
o lock-out periods expire and mortgage loans enter periods during
which a prepayment consideration may be required in connection with
principal prepayments and, thereafter, enter open prepayment
periods, and
o mortgage loans are prepaid, repurchased, replaced or liquidated on
account of default or delinquency.
The table titled "Mortgage Pool Prepayment Profile" on Exhibit A-2 shows
the percentage of the aggregate scheduled principal balance of the mortgage
loans expected to be outstanding immediately prior to the payment date occurring
in October of each year (through 2018) as to which each type of prepayment
provision would be in effect, based on the "Maturity Assumptions" and a 0% CPR.
See "Yield and Maturity Considerations--The Maturity Assumptions" in this
prospectus supplement.
As described below under "--Defeasance Loans", substantially all of the
mortgage loans permit the borrower to obtain a release of the underlying real
property (or, where applicable, one or more of the underlying real properties)
from the lien of the related mortgage by delivering U.S. government securities
as substitute collateral. With three exceptions, none of the mortgage loans
permit defeasance prior to the second anniversary of the date of initial
issuance of the series "1999-CG3" certificates. The table titled "Prepayment
Type as of 10/1/99" on Exhibit A-2 shows a breakdown of the mortgage loans based
on (i) the type of combination of prepayment and/or defeasance provisions and
(ii) the remaining prepayment lock-out period applicable to, and the remaining
period, if any, during which prepayment consideration is payable upon a
voluntary prepayment of, each of those mortgage loans.
Prepayment Lock-out Periods. All of the mortgage loans provide for
prepayment lock-out periods as of October 1, 1999 and--
o the maximum remaining prepayment lock-out period as of that date is
293 months,
o the minimum remaining prepayment lock-out period as of that date is
56 months, and
o the weighted average remaining prepayment lock-out period as of that
date is 115 months.
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<PAGE>
Notwithstanding otherwise applicable lock-out periods, partial prepayments
of some mortgage loans are required under the circumstances described under
"--Certain Terms and Conditions of the Mortgage Loans--Other Prepayment
Provisions" below.
Prepayment Consideration. One mortgage loan, representing 0.2% of the
initial mortgage pool balance, provides for the payment of prepayment
consideration in connection with a voluntary prepayment during part of the loan
term. That prepayment consideration will equal the greater of:
o 1.0% of the amount prepaid; and
o a yield maintenance charge equal to the sum of the present values on
the date of prepayment of the "monthly interest shortfalls" for the
remaining term of the mortgage loan to its stated maturity date,
discounted at a monthly compounded rate equal to the yield to
maturity computed by a linear interpolation of the on-the-run U.S.
Treasury curve of the then remaining weighted average life of the
mortgage loan, calculated in accordance with the related loan
documents.
For purposes of the foregoing, the "monthly interest shortfall" will be
calculated for each applicable due date following the date of prepayment and
will equal 1/12 of the product of:
o the principal amount being prepaid; multiplied by
o the excess, if any, of--
(i) the yield derived from compounding semi-annually the mortgage
interest rate of the prepaid mortgage loan, over
(ii) the Treasury yield described above compounded on a semi-annual
basis.
Prepayment premiums and yield maintenance charges received on the mortgage
loans, whether in connection with voluntary or involuntary prepayments, will be
allocated and paid to the persons, in the amounts and in accordance with the
priorities described under "Description of the Offered
Certificates--Payments--Payments of Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement. Limitations may exist under applicable
state law on the enforceability of the provisions of the mortgage loans that
require payment of prepayment premiums or yield maintenance charges, and neither
we nor the underwriter makes any representation or warranty as to the
collectability of any prepayment premium or yield maintenance charge in respect
of any of the those mortgage loans. See "Risk Factors--Some Provisions in the
Mortgage Loans Underlying Your Certificates May be Challenged as Being
Unenforceable--Prepayment Premiums, Fees and Charges" and "Certain Legal Aspects
of Mortgage Loans--Default Interest and Limitations on Prepayments" in the
accompanying prospectus.
Open Prepayment Periods. Where a mortgage loan provides for an open
prepayment period, the open prepayment period generally begins three to six
months prior to stated maturity (or, in the case of an ARD loan, prior to the
related anticipated repayment date).
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<PAGE>
Other Prepayment Provisions. Certain of the mortgage loans provide for
mandatory partial prepayments, notwithstanding any lock-out period that may
otherwise be in effect. In some cases, the related borrower has established
reserves or delivered a letter of credit that will be applied to a partial
prepayment of the mortgage loan if one or more property performance conditions
do not occur.
An example of the foregoing relates to the mortgage loan secured by the
underlying real property identified on Exhibit A-1 as 45 Broadway. In that case,
the related borrower has provided a letter of credit in the amount of $2,000,000
as additional security for that mortgage loan. Upon satisfying certain
conditions, including the maintenance of a debt service coverage ratio of at
least 1.30x, the related borrower may replace the $2,000,000 letter of credit
with a $1,000,000 letter of credit. Upon satisfying certain other conditions,
including a debt service coverage ratio of 1.35x, the related borrower may
obtain a complete release of the letter of credit. If any such letter of credit
exists on September 1, 2004, the master servicer will be required to apply it to
a partial prepayment of the mortgage loan, without prepayment consideration. See
"Description of the Mortgage Pool--Significant Mortgage Loans--The 45 Broadway
Loan" in this prospectus supplement.
Investors should not expect any prepayment consideration to be paid in
connection with any mandatory partial prepayment described above.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. Each of the mortgage
loans contain both a "due-on-sale" clause and a "due-on-encumbrance" clause. In
general, except for the permitted transfers discussed below, these clauses
either permit the holder of the related mortgage to accelerate the maturity of
the mortgage loan if the borrower sells or otherwise transfers or encumbers the
underlying real property or prohibit the borrower from doing so without the
consent of the holder of the mortgage. See, however, "Risk Factors--The
Investment Performance of Your Certificates Will Depend upon Payments, Defaults
and Losses on the Underlying Mortgage Loans--Delinquencies, Defaults and Losses
on the Underlying Mortgage Loans May Affect the Amount and Timing of Payments on
Your Certificates" and "--Some Provisions in the Mortgage Loans Underlying Your
Certificates may be Challenged as Being Unenforceable--Due-on-Sale and Debt
Acceleration Clauses" and "Certain Legal Aspects of Mortgage Loans--Due on Sale
and Due-on-Encumbrance Provisions" in the accompanying prospectus.
Many of the mortgage loans permit one or more of the following types of
transfers:
o transfers of the underlying real property if specified conditions
are satisfied, which conditions normally include--
(i) confirmation by each applicable rating agency that the
transfer will not result in a qualification, downgrade or
withdrawal of any of its then current ratings of the series
"1999-CG3" certificates, or
(ii) the reasonable acceptability of the transferee to the lender;
o a transfer of the underlying real property to a person that is
affiliated with or otherwise related to the borrower;
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o certain specified transfers by the borrower of the underlying real
property in accordance with the provisions of the mortgage loan; or
o a transfer of certain ownership interests in the borrower.
Defeasance Loans. All but one of the mortgage loans permit the borrower to
deliver U.S. government securities as substitute collateral.
Each of these mortgage loans permits, during specified periods and subject
to certain conditions, the related borrower to pledge to the holder of the
mortgage loan the requisite amount of direct, non-callable U.S. government
securities (the "defeasance collateral") and obtain a release of the underlying
real property (or, in the case of a mortgage loan secured by multiple real
properties, one or more of the underlying real properties). In general, the
defeasance collateral to be delivered in connection with the defeasance of any
mortgage loan must provide for a series of payments that--
o will be made prior, but as closely as possible, to all successive
due dates through and including the maturity date, and
o will, in the case of each due date, be in a total amount equal to or
greater than the monthly debt service payment (including, if
applicable, any balloon payment) scheduled to be due on that date
(with any excess to be returned to the related borrower).
For purposes of determining the defeasance collateral for an ARD loan,
however, that mortgage loan will be treated as if a balloon payment is due on
its anticipated repayment date.
If fewer than all of the real properties securing any particular mortgage
loan or group of cross-collateralized mortgage loans are to be released in
connection with any defeasance, the requisite defeasance collateral will be
calculated based on the allocated loan amount for the properties to be released
and the portion of the monthly debt service payments attributable to that
allocated loan amount.
In connection with any delivery of defeasance collateral, the related
borrower will be required to deliver a security agreement granting the trust a
first priority security interest in the collateral, together with an opinion of
counsel confirming the first priority status of the security interest.
With three exceptions, none of the mortgage loans may be defeased prior to
the second anniversary of the date of initial issuance of the series "1999-CG3"
certificates.
Certain Mortgage Pool Characteristics
General. A detailed presentation of certain characteristics of the
mortgage loans and the underlying real properties, on an individual basis and in
tabular format, is shown on Exhibits A-1 and A-2 to this prospectus supplement.
Certain terms that appear in those exhibits, as well as elsewhere in this
prospectus supplement, are defined or otherwise discussed below. Due to
rounding, percentages and amounts in the tables on Exhibits A-1 and A-2 to this
prospectus supplement may not add up to the indicated totals. See the notes to
the tables on Exhibit A-1 for an identification of each group of mortgage loans
that are collectively represented by a single mortgage note or form a group of
cross-collateralized mortgage loans.
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1. "Underwritten net cash flow" is, with respect to each of the underlying
real properties, the estimated total cash flow from that property expected
to be available for annual debt service on the related mortgage loan. In
general, that estimate--
o was made at the time of origination of the related mortgage loan or
in connection with the transactions described in this prospectus
supplement, and
o is equal to the excess of the estimated annual revenues (as
described below) over the estimated annual operating expenses (also
described below) for the property.
(a) The "estimated annual revenues" generally equal, for each of the
underlying real properties, the base estimated annual revenues for
that property, adjusted upward or downward, as appropriate, to
reflect any revenue modifications made as discussed below.
The "base estimated annual revenues" for each of the underlying real
properties were generally assumed to equal--
o in the case of multifamily rental properties and manufactured
housing communities, the annualized amounts of gross potential
rents,
o in the case of hospitality properties, estimated average room
sales, and
o in the case of other commercial properties, monthly
contractual base rents as reflected in the rent roll or
leases, plus tenant reimbursements.
The "revenue modifications" made to the base estimated annual
revenues for any underlying real property for purposes of
establishing its estimated annual revenues include--
o adjusting the revenues downwards by applying a combined
vacancy and rent loss (including concessions) adjustment that
reflected then current occupancy or, in some cases, an
occupancy that was itself adjusted for historical trends or
market rates of occupancy with consideration to competitive
properties,
o adjusting the revenues upwards to reflect, in the case of some
tenants, increases in base rents scheduled to occur during the
following 12 months,
o adjusting the revenues upwards for percentage rents based on
contractual requirements, sales history and historical trends
and, additionally, for other estimated income consisting of,
among other items, late fees, laundry income, application
fees, cable television fees, storage charges, electrical pass
throughs, pet charges, janitorial services, furniture rental
and parking fees,
o adjusting the revenues downwards in certain instances where
rental rates were determined to be significantly above market
rates and the subject space was then currently leased to
tenants that did not have long-term leases or were believed to
be unlikely to renew their leases, and
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o in the case of hospitality properties, adjusting the revenues
upwards to include estimated revenues from food and beverage,
telephones and other hotel related income.
By way of example, estimated annual revenues generally include:
o for multifamily rental properties and manufactured housing
communities, rental and other revenues;
o for hospitality properties, room, food and beverage, telephone
and other revenues; and
o for other commercial properties, base rent, percentage rent,
expense reimbursements and other revenues.
In the case of an owner-occupied property for which no leases exist,
the estimated annual revenues were--
o determined on the assumption that the property was "net
leased" to a single tenant at market rents, and
o derived from rental rate and vacancy information for the
surrounding real estate market.
(b) The "estimated annual operating expenses" generally equal, for each
of the underlying real properties, the historical annual operating
expenses for that property, adjusted upward or downward, as
appropriate, to reflect any expense modifications made as discussed
below.
The "historical annual operating expenses" each of the underlying real
properties generally consist of historical expenses reflected in the
operating statements and/or other financial information provided by the
related borrower. The historical expenses with respect to each of the
underlying real properties were generally obtained/estimated--
o from operating statements relating to a complete fiscal year of the
borrower ended in 1996, 1997 or 1998 or a trailing 12-month period
ended in 1998 or 1999,
o by annualizing the amount of expenses for partial 1997, 1998 or 1999
periods for which operating statements were available, with certain
adjustments for some items deemed inappropriate for annualization,
o by calculating a stabilized estimate of operating expenses which
takes into consideration historical financial statements and
material changes in the operating position of the property, such as
newly signed leases and market data, or
o if the property was recently constructed, by calculating an estimate
of operating expenses based upon the appraisal of the property or
market data.
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The "expense modifications" made to the historical annual operating
expenses for any underlying real property for purposes of calculating its
estimated annual operating expenses include--
o assuming, in most cases, that a management fee, equal to
approximately 3% to 5% of total revenues, was payable to the
property manager,
o adjusting certain historical expense items upwards or downwards to
reflect inflation and/or industry norms for the particular type of
property,
o including the underwritten recurring replacement reserve amounts,
o adjusting historical expenses downwards by eliminating certain items
which are considered non-recurring in nature or which are considered
capital improvements, including recurring capital improvements,
o in the case of hospitality properties, adjusting historical expenses
to reflect reserves for furniture, fixtures and equipment of between
4% and 5% of total revenues,
o in the case of hospitality properties and certain multifamily rental
properties, retail properties and industrial properties, adjusting
historical expenses upward or downward to result in an
expense-to-room or expense-to-total revenues ratio that approximates
historical or industry norms, and
o in the case of certain underlying real properties used primarily for
office, retail and industrial purposes, adjusting historical
expenses to account for stabilized tenant improvements and leasing
commissions at costs consistent with historical trends or prevailing
market conditions. However, for some tenants with longer than
average lease terms or which were considered anchor tenants at a
particular retail property, or in areas which were considered not to
require these improvements, adjustments were not made to reflect
tenant improvements and leasing commissions.
The amount of any underwritten recurring replacement reserve amounts
and/or underwritten leasing commissions and tenant improvements for each
of the underlying real properties is shown in the table titled
"Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1.
The underwritten recurring replacement reserve amounts shown on Exhibit
A-1 are expressed as dollars per unit in the case of multifamily rental
properties and manufactured housing communities, a percentage of total
departmental revenues in the case of hospitality properties and dollars
per leasable square footage in the case of other commercial properties.
By way of example, estimated annual operating expenses generally include
salaries and wages, the costs or fees of utilities, repairs and
maintenance, replacement reserves, marketing, insurance, management,
landscaping, security (if provided at the property) and the amount of
taxes, general and administrative expenses, ground lease payments and
other costs. They do not reflect, however, any deductions for debt
service, depreciation and amortization or capital expenditures or reserves
for any of these items (except as described above). In the case of those
underlying real properties used in whole or in part for retail, office and
industrial
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purposes, estimated annual operating expenses include both expenses that
may be recovered from tenants and those that are not. In the case of
certain underlying real properties used in whole or in part for retail,
office and industrial purposes, estimated annual operating expenses may
have included leasing commissions and tenant improvement costs. In the
case of hospitality properties, estimated annual operating expenses
include departmental expenses, reserves for furniture, fixtures and
equipment, management fees and, where applicable, franchise fees.
The management fees and reserves assumed in calculating underwritten net
cash flow differ in many cases from actual management fees and reserves
actually required under the loan documents for the mortgage loans. In
addition, actual conditions at the underlying real properties will differ,
and may differ substantially, from the conditions assumed in calculating
underwritten net cash flow. In particular, in the case of those underlying
real properties used for retail, office and industrial purposes, the
assumptions regarding tenant vacancies, tenant improvements and leasing
commissions, future rental rates, future expenses and other conditions
used in calculating underwritten net cash flow may differ substantially
from actual conditions. Furthermore, the underwritten net cash flow for
each of the underlying real properties does not reflect the effects of
future competition or economic cycles. Accordingly, there can be no
assurance that the underwritten net cash flow for any of the underlying
real properties shown on Exhibit A-1 to this prospectus supplement will be
representative of the actual future net cash flow for the particular
property.
Underwritten net cash flow and the revenues and expenditures used to
determine underwritten net cash flow for each of the underlying real
properties are derived from generally unaudited information furnished by
the related borrower. However, in certain cases, an accounting firm
performed agreed upon procedures, or employees of the related originator
performed cash flow verification procedures, that were intended to
identify any errors in the information provided by the related borrower.
Audits of information furnished by borrowers could result in changes to
the information. These changes could in turn result in the underwritten
net cash flow shown on Exhibit A-1 to this prospectus supplement being
overstated. Net income for any of the underlying real properties as
determined under generally accepted accounting principles ("GAAP") would
not be the same as the underwritten net cash flow for the property shown
on Exhibit A-1 to this prospectus supplement. In addition, underwritten
net cash flow is not a substitute for or comparable to operating income as
determined in accordance with GAAP as a measure of the results of a
property's operations nor a substitute for cash flows from operating
activities determined in accordance with GAAP as a measure of liquidity.
2. "Underwritten net operating income" is, with respect to each of the
underlying real properties, the underwritten net cash flow for the
property, increased by any and all of the following items that were
included in the estimated annual operating expenses for the property for
purposes of calculating that underwritten net cash flow--
o underwritten recurring replacement reserve amounts;
o capital improvements, including recurring capital improvements;
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o in the case of hospitality properties, expenses for furniture,
fixtures and equipment; and
o in the case of certain of the underlying real properties used
primarily for office, retail and industrial purposes, underwritten
leasing commissions and tenant improvements.
3. The "Most Recent Appraised Value" for each of the underlying real
properties is the "as is" or, if provided, the "as cured" value estimate
reflected in the most recent appraisal obtained by or otherwise in the
possession of the related mortgage loan seller. The appraiser's "cured
value", as stated in the appraisal, is generally calculated as the sum
of--
o the "as is" value set forth in the related appraisal, plus
o the estimated costs (as of the date of the appraisal), if any, of
implementing any deferred maintenance required to be undertaken
immediately or in the short term under the terms of the related
mortgage loan.
In general, the amount of costs assumed by the appraiser for these
purposes is based on--
o an estimate by the individual appraiser,
o an estimate by the related borrower,
o the estimate set forth in the property condition assessment
conducted in connection with the origination of the related mortgage
loan, or
o a combination of these estimates.
4. "Underwritten debt service coverage ratio" or "U/W DSCR" means:
(a) with respect to any mortgage loan (other than a mortgage loan
secured, including through cross-collateralization with other
mortgage loans, by multiple real properties), the ratio of (i) the
underwritten net cash flow for the related underlying real property,
to (ii) 12 times the monthly debt service payment for that mortgage
loan due on October 1, 1999; and
(b) with respect to any mortgage loan that is secured, including through
cross-collateralization, by multiple real properties, the ratio of
(i) the total underwritten net cash flow for those properties, to
(ii) 12 times the monthly debt service payment(s) for that mortgage
loan (and any and all other mortgage loans with which it is
cross-collateralized) due on October 1, 1999.
5. "10/1/99 loan-to-value ratio", "cut-off date loan-to-value ratio",
"10/1/99 LTV ratio" or "cut-off date LTV ratio" means:
(a) with respect to any mortgage loan (other than a mortgage loan
secured, including through cross-collateralization with other
mortgage loans, by multiple real properties), the ratio of (i) the
10/1/99 scheduled principal balance of that mortgage loan, to (ii)
the Most Recent Appraised Value of the underlying real property; and
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(b) with respect to any mortgage loan that is secured, including through
cross-collateralization, by multiple real properties, the ratio of
(i) the entire 10/1/99 scheduled principal balance of that mortgage
loan (and any and all other mortgage loans with which it is cross-
collateralized), to (ii) the total Most Recent Appraised Value for
those properties.
6. "Leasable square footage", "S.F." or "Sq. Ft." means, in the case of any
underlying real property that is a commercial property (other than a
hospitality property), the estimated square footage of the gross leasable
area at the property, as reflected in information provided by the related
borrower or in the appraisal on which the Most Recent Appraised Value of
the property is based.
7. "Units" means (a) in the case of any underlying real property that is a
multifamily rental property, the estimated number of apartments at the
particular property, regardless of the number or size of rooms in the
apartments, and (b) in the case of any underlying real property that is a
manufactured housing community, the estimated number of pads at the
particular property to which a mobile home can be hooked up, in each case,
as reflected in information provided by the related borrower or in the
appraisal on which the Most Recent Appraised Value is based.
8. "Rooms" means, in the case of any underlying real property that is a
hospitality property, the estimated number of rooms and/or suites, without
regard to the size of the rooms or the number or size of the rooms in the
suites, as reflected in information provided by the related borrower or in
the appraisal on which the Most Recent Appraised Value of the property is
based.
9. "Occupancy rate at underwriting" or "occupancy rate at U/W" generally
means the percentage of leasable square footage, in the case of underlying
real properties that are commercial properties (other than hospitality
properties), or units, in the case of underlying real properties that are
multifamily rental properties and manufactured housing communities, of the
subject property that were occupied or leased as of the approximate date
of the original underwriting of the related mortgage loan or such later
date as we considered appropriate, in any event as reflected in
information provided by the related borrower or in the appraisal on which
the Most Recent Appraised Value of the property is based. Information
shown in this prospectus supplement with respect to any weighted average
of occupancy rates at underwriting excludes hospitality properties from
the relevant calculations.
10. A "major tenant" is any one of the top three tenants (based on the net
rentable area of its space) of a commercial property that leases at least
10% or more of the net rentable area of the property.
11. "Year built" means, with respect to each of the underlying real
properties, the year when construction of the property was principally
completed, as reflected in information provided by the related borrower or
in the appraisal on which the Most Recent Appraised Value of the property
is based.
12. "Year renovated" means, with respect to each of the underlying real
properties, the year when the most recent substantial renovation of the
property, if any, was principally completed, as reflected in information
provided by the related borrower or in the appraisal on which the Most
Recent Appraised Value of the property is based.
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13. "Most recent debt service coverage ratio" means:
(a) with respect to any mortgage loan (other than a mortgage loan
secured, including through cross-collateralization with other
mortgage loans, by multiple real properties), the ratio of (i) the
most recent net operating income for the underlying real property,
to (ii) 12 times the monthly debt service payment for that mortgage
loan due on October 1, 1999 (or, in the case of any mortgage loan
that is currently in an interest-only period, on the first due date
after amortization begins); and
(b) with respect to any mortgage loan that is secured, including through
cross-collateralization with other mortgage loans, by multiple real
properties, the ratio of (i) the total most recent net operating
income for those properties to (ii) 12 times the monthly debt
service payment(s) for that mortgage loan (and any and all other
mortgage loans with which it is cross-collateralized) due on
October 1, 1999 (or, in the case of any mortgage loan that is
currently in an interest-only period, on the first due date after
amortization begins).
14. "Most recent operating statement date" means, with respect to each of the
mortgage loans, the date indicated on Exhibit A-1 as the "most recent
operating statement date" with respect to the mortgage loan. In general,
this date is the end date of the period covered by the latest available
annual or, in some cases, partial-year operating statement for the
underlying real property.
15. "Most recent net operating income" is, with respect to each of the
underlying real properties, the total cash flow derived from the property
that was available for annual debt service on the related mortgage loan,
calculated as the most recent revenues less most recent expenses for that
property. For purposes of calculating the most recent net operating income
for each of the underlying real properties--
o "Most recent revenues" are the revenues received, or annualized or
estimated in certain cases, in respect of the property for the
12-month period ended as of the most recent operating statement
date, based upon the latest available annual or, in some cases,
partial-year operating statement and other information furnished by
the related borrower. "Revenues" generally consist of all revenues
received in respect of the property, including--
(i) for a multifamily rental property or manufactured housing
community, rental and other revenues;
(ii) for a hospitality property, guest room rates, food and
beverage charges, telephone charges and other revenues; and
(iii) for any other commercial property, base rent, percentage rent,
expense reimbursements and other revenues.
o "Most recent expenses" are the expenses incurred, or annualized or
estimated in certain cases, for the property for the 12-month period
ended as of the most recent operating statement end date, based upon
the latest available annual or, in some cases, partial-year
operating statement and other information furnished by the related
borrower. "Expenses" generally consist of all expenses incurred for
the property, including salaries and wages, the costs or fees of
utilities,
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repairs and maintenance, marketing, insurance, management,
landscaping, security (if provided at the property) and the amount
of real estate taxes, general and administrative expenses, ground
lease payments and other costs. They do not reflect, however, any
deductions for debt service, depreciation, amortization, capital
expenditures, leasing commissions and tenant improvements or
furniture, fixtures and equipment. In the case of a hospitality
property, expenses also include expenses relating to guest rooms,
food and beverage costs, telephone bills and rental and other
expenses, and such operating expenses as general administrative
expenses, marketing expenses and franchise fees.
16. The "Maturity/ARD Balance" of each of the mortgage loans is the scheduled
principal balance of the mortgage loan due expected to be outstanding
immediately prior to stated maturity (or, in the case of an ARD loan, the
related anticipated repayment date) according to the payment schedule for
the mortgage loan and otherwise assuming no prepayments, defaults or
extensions.
17. "Maturity/ARD loan-to-value ratio" means:
(a) with respect to any mortgage loan (other than a mortgage loan
secured, including through cross-collateralization with other
mortgage loans, by multiple real properties) that provides for a
balloon payment or has an anticipated repayment date, the ratio of
(i) the Maturity/ARD Balance of the mortgage loan, to (ii) the Most
Recent Appraised Value of the underlying real property;
(b) with respect to any mortgage loan that is secured, including through
cross-collateralization with other mortgage loans, by multiple real
properties and that provides for a balloon payment or has an
anticipated repayment date, the ratio of (i) the entire Maturity/ARD
Balance of that mortgage loan (and any and all other mortgage loans
with which it is cross-collateralized), to (ii) the total Most
Recent Appraised Value of all those properties.
Additional Loan and Property Information
Delinquencies. None of the mortgage loans was as of October 1, 1999, or
has been at any time during the 12-month period preceding that date, 30 days or
more delinquent in respect of any monthly debt service payment.
Tenant Matters. Described below are special considerations regarding
tenants at the underlying real properties--
o Forty-four of the underlying real properties, securing 22.5% of the
initial mortgage pool balance, are, in each case, a retail property,
an office property or an industrial property that is leased to one
or more major tenants that each occupy 25% or more of the net
rentable area of the particular property.
o The CTL loan, representing 0.6% of the initial mortgage pool
balance, is secured by an office property that is leased to a single
tenant.
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o A number of companies are major tenants at more than one of the
underlying real properties.
o There are several cases in which a particular entity is a tenant at
multiple underlying real properties, and although it may not be a
major tenant at any of those properties, it may be significant to
the success of the properties.
o Three of the mortgage loans, representing 1.6% of the initial
mortgage pool balance, are secured by multifamily rental properties
that have material concentrations of student tenants.
Ground Leases. Five of the mortgage loans, representing 9.7% of the
initial mortgage pool balance, are secured, in whole or in material part, by a
mortgage on the borrower's leasehold interest in the underlying real property.
In each case, the related ground lease (giving effect to all extension options)
expires more than ten years after the stated maturity of the related mortgage
loan and either:
o the ground lessor has subordinated its interest in the underlying
real property to the interest of the holder of that mortgage loan;
or
o the ground lessor has agreed to give the holder of that mortgage
loan notice of, and the right to cure, any default or breach by the
lessee (except for one mortgage loan for which an escrow of all
ground lease rent payments during the term of the loan have been
escrowed).
See "Risk Factors--Ground Leases Create Risks for Lenders That Are Not
Present When Lending on an Actual Ownership Interest in a Real Property" and
"Certain Legal Aspects of Mortgage Loans--Foreclosure--Leasehold Considerations"
in the accompanying prospectus.
Additional and Other Financing. Four of the underlying real properties,
securing 1.9% of the initial mortgage pool balance, are known to us to be
encumbered by secured subordinate debt that is not part of the mortgage pool.
The following table identifies those properties, indicates the initial principal
amount of the secured subordinate debt and sets forth the 10/1/99 scheduled
principal balances of the related mortgage loans. The table also shows, in the
case of each of those properties, whether the subordinate lender has entered
into a "subordination and standstill agreement" with the holder of the related
mortgage loan whereby that subordinate lender--
o expressly subordinated its right to receive collections and proceeds
from, and otherwise deal with, that property, and
o agrees not to take any enforcement or other legal action against
that property or the related borrower as long as the related
mortgage loan is outstanding and the mortgagee under that mortgage
loan has not taken any such enforcement or other legal action.
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<TABLE>
<CAPTION>
% of Initial
10/1/99 Scheduled Mortgage Pool
Principal Balance Balance Represented Initial Principal
of Related by Related Amount of Secured
Names Mortgage Loans Mortgage Loans Subordinate Debt
- ----- -------------- -------------- ----------------
<S> <C> <C> <C>
The 700 Building $ 9,988,743 1.1% $ 4,367,223*
Lake Howard Heights Retirement $ 3,827,680 0.4% $ 477,601*
Signature Lake Apartments $ 1,896,804 0.2% $ 375,000*
Sandalwood Square $ 1,248,760 0.1% $ 351,462*
</TABLE>
- ------------------
* In these cases, the subordinate lender has entered into a subordination
and standstill agreement in favor of the mortgagee under the related
mortgage loan. In the case of Sandalwood Square, the subordinate lender
has entered into a subordination agreement only.
In addition, borrowers under four of the mortgage loans, representing 3.6%
of the initial mortgage pool balance, have unsecured debt of which we are aware.
In some cases, the lender on the debt is an affiliate of the borrower. In each
case, the lender on the unsecured debt has executed and delivered a
subordination and standstill agreement in favor of the mortgagee under the
related mortgage loan. In addition, some of the mortgage loans permit the
related borrower to incur unsecured subordinated debt in the future, subject to
conditions such as limiting the use of proceeds to refurbishing or renovating
the underlying real property and/or acquiring furniture, fixtures and equipment
for the underlying real property. Borrowers that do not meet special purpose
entity, bankruptcy-remote criteria, generally do not have any restriction on the
incurrence of unsecured debt. Additional debt, in any form, may cause a
diversion of funds from property maintenance and increase the likelihood that
the borrower will become the subject of a bankruptcy proceeding. See "Risk
Factors--Subordinate Debt Increases the Likelihood that a Borrower Will Default
on a Mortgage Loan Backing Your Certificates" and "Certain Legal Aspects of
Mortgage Loans--Subordinate Financing" in the accompanying prospectus.
Except as described above, we have not been able to confirm whether the
respective borrowers under the mortgage loans have any other debt outstanding.
Condominiums. Le Meridien Hotel, the underlying real property securing one
of the two cross-collateralized and cross-defaulted mortgage loans identified
on Exhibit A-1 as the "LaSalle Loans", is subject to a "declaration of
condominium" under the laws of the State of Texas. The declaration of
condominium sets forth the requisite percentage of unit owners which are
required to make determinations with respect to the property. There can be no
assurance given that the borrower under the LaSalle Loans will be entitled to
control decisions which may affect that underlying real property. Moreover, it
is possible that insurance and condemnation proceeds will be applied to restore
the underlying real property as provided by applicable local, state and federal
rules and regulations which pertain to the establishment and maintenance of
condominiums in the State of Texas and/or the declaration of condominium, even
where the loan documents permit application of those proceeds to make a
prepayment and that prepayment would be in the best interest of the series
"1999-CG3" certificateholders. See "Description of the Mortgage
Pool--Significant Mortgage Loans--The LaSalle Loans" in this prospectus
supplement.
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Operating Leases. The hospitality properties securing the LaSalle Loans
are operated pursuant to operating leases and the hospitality property securing
the Westin Hilton Head Loan is operated pursuant to a management agreement,
rather than franchise agreements. The operating leases entered into by the
related borrower in connection with the LaSalle Loans expire prior to the
anticipated repayment date of the LaSalle Loans. See "Description of the
Mortgage Pool--Significant Mortgage Loans" in this prospectus supplement.
Certain Underwriting Matters
General. In connection with the origination of each of the mortgage loans,
the related originator of the mortgage loan evaluated the underlying real
property or properties in a manner generally consistent with the standards
described below. See also "Description of the Trust Assets--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans" in
the accompanying prospectus.
Environmental Assessments. A third-party environmental consultant
conducted an environmental site assessment, or updated a previously conducted
assessment, with respect to 159 of the underlying real properties, representing
99.1% of the initial mortgage pool balance, during the 19-month period ending on
October 1, 1999. Each of those environmental site assessments or updates, as the
case may be, complied with industry-wide standards. Not all of those
environmental site assessments, however, satisfied all the requirements
necessary to be considered a "Phase I" environmental site assessment. The
environmental testing at any particular underlying real property did not
necessarily cover all potential environmental issues. For example, tests for
radon, lead-based paint and lead in water were performed only at multifamily
rental properties and only when the originator of the related mortgage loan
believed this testing was warranted under the circumstances.
The above-described environmental testing identified various adverse or
potentially adverse environmental conditions at the respective underlying real
properties. In many cases, the identified condition related to the presence of
asbestos-containing materials, lead-based paint and/or radon. Where these
substances were present, the environmental consultant generally recommended, and
the related loan documents required, the establishment of an operation and
maintenance plan to address the issue or, in the case of asbestos-containing
materials and lead-based paint, an abatement or removal program. In a few cases,
the particular asbestos-containing materials or lead-based paint was in poor
condition. This could result in a claim for damages by any party injured by such
condition.
In addition, underground storage tanks are or have been located at some of
the underlying real properties. However, in a few cases where an underground
storage tank was removed, closure information was not available. Also, in a few
cases where an underground storage tank is still present, the integrity of the
tank was not or could not be tested.
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In some cases, the cost to remediate, prevent or otherwise deal with an
adverse environmental condition identified by the above-described environmental
testing was estimated to cost more than $50,000. These cases include--
<TABLE>
<CAPTION>
Estimated Cost to
Property Name Environmental Condition Remediate/Address
- ------------- ----------------------- -----------------
<S> <C> <C>
Majestic Shopping Center Concentrations of contaminants from a dry $100,000 to monitor and treat potential
cleaner that are in excess of state standards off-site migration of contaminants.*
Yonkers Shopping Center High levels of Tetrachlorine in the ground water $150,000 if remediation at site is
detected. required by the state.**
</TABLE>
- ------------------
* Borrower has delivered a $150,000 letter of credit to cover this cost.
** Borrower has reserved $185,000 to cover this cost.
There are other environmental conditions at some of the underlying real
properties, such as asbestos, lead-based paint or underground storage tanks,
which did not require the establishment of significant environmental reserves or
remediation at the time the related mortgage loan was made. If any environmental
conditions are not properly addressed by the related borrower, however, it could
result in substantial environmental liability for the trust.
In cases where the environmental consultant recommended specific
remediation of an adverse environmental condition, the related originator of the
mortgage loan generally required the related borrower either: (i) to carry out
the specific remedial measures prior to closing; or (ii) to carry out the
specific remedial measures post-closing and deposit with the lender a cash
reserve in an amount equal to 100% to 125% of the estimated cost to complete the
remedial measures. Some borrowers under the mortgage loans have not satisfied
all post-closing obligations required by the related loan documents with respect
to environmental matters. There can be no assurance that recommended operations
and maintenance plans have been or will continue to be implemented.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a potential adverse environmental condition at
an underlying real property because a responsible party with respect to that
condition had already been identified.
In several cases, the environmental site assessment for an underlying real
property identified potential environmental problems at nearby properties. These
assessments indicated, however, that--
o the subject real property had not been affected or had been
minimally affected,
o the potential for the problem to affect the subject real property
was limited, or
o a person responsible for remediation had been identified.
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The information contained in this prospectus supplement regarding
environmental conditions at the respective underlying real properties is based
on the environmental site assessments referred to above and has not been
independently verified by us or the mortgage loan sellers, the underwriter, the
master servicer, the special servicer, the trustee or the affiliates of any of
these parties. There can be no assurance that the environmental assessments or
studies, as applicable, identified all environmental conditions and risks at, or
that any environmental conditions will not have a material adverse effect on the
value of or cash flow from, one or more of the underlying real properties.
In the case of each of the underlying real properties identified in the
table below, either no environmental testing was conducted in connection with
the origination of the related mortgage loan or a "Phase II" environmental site
assessment was recommended but not performed. In general, the related
originator's election not to take such action with respect to any of these
properties was based upon the delivery of a secured creditor impaired property
policy covering environmental matters with respect to that property. See
"--Certain Underwriting Matters--Environmental Insurance" below.
<TABLE>
<CAPTION>
10/1/99 Scheduled Was Any Was "Phase II"
Principal Balance of Environmental Recommended
Property Name Related Mortgage Loan Testing Conducted? But Not Performed?
- ------------- --------------------- ------------------ ------------------
<S> <C> <C> <C>
The Atrium $27,468,959 Yes Yes
Murdock Apartments $2,248,487 No N/A
Merriwood Village $1,348,592 No N/A
Glenrose Square Apartments $1,009,374 Yes Yes
Bri-Mar Building $989,128 No N/A
Casa De Dallas Apartments $959,387 No N/A
St. Charles & Prytania Street Apartments $784,558 No N/A
Butternut Apartments $773,600 Yes Yes
244-256 Orange Place Apartments $499,253 No N/A
Alan Apartments $498,892 Yes Yes
249 Orange Place Apartments $474,291 No N/A
Circa 1886 Building $401,415 No N/A
</TABLE>
The pooling and servicing agreement requires that the special servicer
obtain an environmental site assessment of an underlying real property prior to
acquiring title to the property or assuming its operation. This requirement
precludes enforcement of the security for the related mortgage loan until a
satisfactory environmental site assessment is obtained or until any required
remedial action is taken. In addition, there can be no assurance that the
requirements of the pooling and servicing agreement will effectively insulate
the trust from potential liability for a materially adverse environmental
condition at any underlying real property. See "Servicing of the Mortgage Loans"
in this prospectus supplement and "Risk Factors--Environmental Liabilities Will
Adversely Affect the Value and Operation of the Contaminated Property and May
Deter a Lender from Foreclosing" and "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations" in the accompanying prospectus.
Environmental Insurance. In connection with the issuance of the series
"1999-CG3" certificates, we will obtain a secured creditor impaired property
policy covering environmental matters with respect to the 164 underlying real
properties that are not covered by individual policies. In general, that group
policy provides coverage for the following losses, subject to the applicable
deductibles and, further, to the coverage limits discussed below:
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o in the case of mortgage loans with 10/1/99 scheduled principal
balances that are, in each case, less than $25,000,000--
(i) if during the term of the policy, a borrower defaults under
its mortgage loan and adverse environmental conditions exist
at levels above legal limits on the related underlying real
property, the insurer will indemnify the trust for the
outstanding principal balance of the related mortgage loan on
the date of the default, together with accrued interest from
the date of default until the date that the outstanding
principal balance is paid;
(ii) if the trust becomes legally obligated to pay as a result of a
claim first made against the trust and reported to the insurer
during the term of the policy, for bodily injury, property
damage or clean-up costs resulting from adverse environmental
conditions on, under or emanating from an underlying real
property, the insurer will cover that claim; and
(iii) if the trust enforces the related mortgage, the insurer will
thereafter pay clean-up costs for adverse environmental
conditions at levels above legal limits which exist on or
under the acquired underlying real property; and
o in the case of mortgage loans with 10/1/99 scheduled principal
balances that are, in each case, equal to or greater than
$25,000,000--
(i) if the trust enforces the related mortgage, the insurer will
thereafter pay clean-up costs for adverse environmental
conditions at levels above legal limits which exist on or
under the acquired underlying real property;
provided that the trustee, the master servicer and/or the special servicer first
became aware of those adverse environmental conditions during the term of the
policy and the appropriate party reported those conditions to the government in
accordance with applicable law.
The coverage limits for the secured creditor impaired property policy that
we intend to obtain to cover environmental matters with respect to those
underlying real properties that are not covered by individual policies, are
based upon the balances of the related mortgage loans. In the case of mortgage
loans with 10/1/99 scheduled principal balances that are, in each case, equal to
or greater than $25,000,000, the policy will cover clean-up costs on the related
underlying real properties only up to $10,000,000 per loss. The remaining
properties covered by the policy are grouped by balance of the related mortgage
loan. For example, one such group are those underlying real properties that
secure mortgage loans with 10/1/99 scheduled principal balances that are, in
each case, less than $1,000,000. In the case of each such group--
o the per occurrence limit will equal 125% of the principal balance of
the related mortgage loan with the largest principal balance, and
o the aggregate limit will equal 20% of the aggregate principal
balance of all the related mortgage loans.
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As discussed above, some of the underlying real properties are, in each
case, covered by an individual secured creditor impaired property policy. The
properties covered by these individual policies have no less insurance coverage
than if they were covered under the group policy described above, except the
deductible may in some cases be higher.
Each of the secured creditor impaired property policies described above,
including the group policy that we are obtaining, requires that the appropriate
party associated with the trust report a claim during the term of the policy.
None of those policies includes coverage for asbestos and lead-based paint.
Furthermore, none of those policies pays for unreimbursed servicing advances.
The premium for each of the secured creditor impaired property policies
described above, including the group policy that we are obtaining, has been or,
as of the date of initial issuance of the series "1999-CG3" certificates, will
be paid in full. The insurer under one of those policies is American
International Specialty Lines Insurance Company, which currently has a "Aaa"
financial strength rating from Moody's and a "AAA" claims-paying ability rating
from Fitch and the insurer under the remaining policies is Commerce and Industry
Insurance Co. Both insurers are member companies of the American International
Group, Inc.
Property Condition Assessments. Third-party engineering firms inspected
all of the underlying real properties or updated previously conducted
inspections during the 19-month period ending on October 1, 1999, to assess
exterior walls, roofing, interior construction, mechanical and electrical
systems and general condition of the site, buildings and other improvements
located at each of the underlying real properties.
The inspections identified various deferred maintenance items and
necessary capital improvements at some of the underlying real properties. The
resulting inspection reports generally included an estimate of cost for any
recommended repairs or replacements at an underlying real property. When repairs
or replacements were recommended, the related borrower was required to carry out
necessary repairs or replacements and, in some instances, to establish reserves,
generally in the amount of 100% to 125% of the cost estimated in the inspection
report, to fund deferred maintenance or replacement items that the reports
characterized as in need of prompt attention. See the table titled "Engineering
Reserves and Recurring Replacement Reserves" on Exhibit A-1 to this prospectus
supplement. There can be no assurance that another inspector would not have
discovered additional maintenance problems or risks, or arrived at different,
and perhaps significantly different, judgments regarding the problems and risks
disclosed by the respective inspection reports and the cost of corrective
action.
Appraisals and Market Studies. An independent appraiser that is
state-certified and/or a member of the Appraisal Institute conducted an
appraisal of each of the underlying real properties during the 19-month period
ending on October 1, 1999, in order to establish the approximate value of the
underlying real property. Those appraisals are the basis for the "Appraised
Values" for the respective underlying real properties set forth on Exhibit A-1
to this prospectus supplement.
Each of the appraisals referred to above represents the analysis and
opinions of the appraiser at or before the origination of the related mortgage
loan. The appraisals are not guarantees of, and may not be indicative of, the
present or future value of the subject underlying real property. There can be no
assurance that another appraiser would not have arrived at a different valuation
of any particular underlying real property, even if the appraiser used the same
general approach to, and the same method of, appraising that property. Neither
we nor the underwriter has confirmed the values of the respective underlying
real properties in the appraisals referred to above.
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In general, appraisals seek to establish the amount a typically motivated
buyer would pay a typically motivated seller. However, this amount could be
significantly higher than the amount obtained from the sale of a property under
a distress or liquidation sale. Implied in the Most Recent Appraised Values for
the respective underlying real properties shown on Exhibit A-1 to this
prospectus supplement, is the contemplation of a sale at a specific date and the
passing of ownership from seller to buyer under conditions whereby:
o buyer and seller are motivated;
o both parties are well informed or well advised, and each is acting
in what he considers his own best interests;
o a reasonable time is allowed to show the property in the open
market;
o payment is made in terms of cash in U.S. dollars or in comparable
financial arrangements; and
o the price paid for the property is not adjusted by special or
creative financing or sales concessions granted by anyone associated
with the sale.
Each appraisal of an underlying real property referred to above involved a
physical inspection of the property and reflects a correlation of value based on
indicated values by the sales comparison approach, the income approach and/or
the cost approach.
o In the "sales comparison approach", the subject property is compared
to similar properties that have been sold recently or for which
listing prices or offering figures are known. Data for generally
comparable properties are used and comparisons are made to
demonstrate a probable price at which the subject property would
sell if offered on the market.
o Under the "income approach", market value is determined by using the
"discounted cash flow" method of valuation or by the "direct
capitalization" method. The discounted cash flow analysis is used in
order to measure the return on a real estate investment and to
determine the present value of the future income stream expected to
be generated by the property. The future income of the property, as
projected over an anticipated holding period, and the resulting net
operating incomes or cash flows are then discounted to present value
using an appropriate discount rate. The direct capitalization method
generally converts an estimate of a single year's income expectancy
(or, in some cases, a hypothetical stabilized single years' income
expectancy) into an indication of value by dividing the income
estimate by an appropriate capitalization rate. An applicable
capitalization method and appropriate capitalization rates are
developed for use in computations that lead to an indication of
value. In utilizing the income approach, the appraiser's method of
determination of gross income, gross expense and net operating
income may vary from the method of determining underwritten net cash
flow, resulting in variances in the related net operating income
values.
o Under the "cost approach" of valuing a property, the estimated value
of the land is added to an estimate of the current replacement cost
of the improvements less depreciation from all sources.
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Either the appraisal upon which is based the Most Recent Appraised Value
for each underlying real property shown on Exhibit A-1 to this prospectus
supplement, or a separate letter, contains a statement by the respective
appraiser to the effect that the appraisal guidelines set forth in Title XI of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 were
followed in preparing that appraisal. However, neither we nor any of the
underwriter, the related mortgage loan seller or the related originator has
independently verified the accuracy of this statement.
In the case of certain mortgage loans that are acquisition financing, the
related borrower may have acquired the underlying real property at a price less
than the appraised value on which the mortgage loan was underwritten.
Zoning and Building Code Compliance. In connection with the origination of
each mortgage loan, the related originator examined whether the use and
operation of the underlying real property were in material compliance with
zoning, land-use, building, fire and health ordinances, rules, regulations and
orders then-applicable to the underlying real property. Evidence of this
compliance may have been in the form of legal opinions, certifications from
government officials, title insurance endorsements, engineering or consulting
reports and/or representations by the related borrower. In certain instances, a
certificate of occupancy was not available or, in the case of one underlying
real property, was being processed pending satisfaction of certain code
requirements. Where the property as currently operated is a permitted
nonconforming use and/or structure, an analysis was generally conducted as to--
o the likelihood that a material casualty would occur that would
prevent the property from being rebuilt in its current form, and
o whether existing replacement cost hazard insurance or, if necessary,
supplemental "law or ordinance coverage" would, in the event of a
material casualty, be sufficient to satisfy the entire mortgage loan
or, taking into account the cost of repair, be sufficient to pay
down that mortgage loan to a level that the remaining collateral
would be adequate security for the remaining loan amount.
Hazard, Liability and Other Insurance. Although exceptions exist, the
related loan documents generally require the related borrower to maintain with
respect to each of the underlying real properties the following insurance
coverage--
o Hazard insurance in an amount that is subject to a customary
deductible, at least equal to the lesser of the outstanding
principal balance of the related mortgage loan and 100% of the full
insurable replacement cost of the improvements located on the
insured property. In general, the standard form of hazard insurance
policy covers physical damage to, or destruction of, the
improvements on the insured property by fire, lightning, explosion,
smoke, windstorm and hail, riot or strike and civil commotion,
subject to the conditions and exclusions set forth in each policy.
In some cases, however, a borrower or tenant is permitted to
self-insure the subject property, provided that the insuring party
or an affiliate maintains a specified net worth.
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o If any portion of the property was in an area identified in the
federal register by the Flood Emergency Management Agency as having
special flood hazards, flood insurance meeting the requirements of
the Federal Insurance Administration guidelines was required. Such
insurance is required to be in an amount that is equal to the lesser
of: (i) the outstanding principal balance of the related mortgage
loan; (ii) except in certain cases, the full insurable value of the
insured property; and (iii) the maximum amount of insurance
available under the National Flood Insurance Act of 1968.
o Comprehensive general liability insurance against claims for
personal and bodily injury, death or property damage occurring on,
in or about the insured property, in an amount at least equal to $1
million per occurrence.
o Business interruption or rent loss insurance either in an amount not
less than 100% of the projected rental income or revenue from the
insured property for at least six months or, alternatively, in a
specified dollar amount.
In general, the underlying real properties, including those located in
California, are not insured against earthquake risks. In the case of properties
(other than those that are manufactured housing communities or self storage
facilities) located in California, a third party consultant conducted seismic
studies to assess the "probable maximum loss" for the property. In general, when
the resulting reports concluded that an underlying real property was likely to
experience a "probable maximum loss" in excess of 25% of the estimated
replacement cost of the improvements, the related originator required the
borrower to obtain earthquake insurance or establish reserves to cover the
estimated costs of completing seismic retrofitting recommended by the
consultant, unless the original loan-to-value ratio was relatively low.
With respect to each of the underlying real properties, the master
servicer is required to cause the maintenance of all insurance coverage as is
required under the related mortgage to the extent (i) the trust has an insurable
interest and (ii) the master servicer can require maintenance of insurance under
applicable law.
Under the terms of several of the mortgage loans, the related borrower is
required to keep its property insured against loss by fire, hazards, rent loss
and other hazards, casualties, liabilities and contingencies as the lender
determines to require and in the amounts and for the periods as the lender
determines to require. The master servicer will be required to use reasonable
efforts to cause the related borrowers under those mortgage loans to maintain
insurance generally in the amounts, type and scopes of coverage required under
the other mortgage loans.
Various forms of insurance maintained with respect to any of the
underlying real properties, including casualty insurance, environmental
insurance, earthquake insurance or other insurance, may be provided under a
blanket policy that also covers other underlying real properties and/or other
properties that will not secure loans in the trust. As a result of total limits
under any blanket policy, losses at other properties covered by the blanket
insurance policy may reduce the amount of insurance coverage with respect to a
property securing one of the loans in the trust. See "Risk Factors--Lack of
Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard Losses" in
the accompanying prospectus.
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With limited exception, the mortgage loans generally provide that
insurance and condemnation proceeds are to be applied either--
o to restore the underlying real property; or
o towards payment of the related mortgage loan.
If any underlying real property is acquired by the trust through
foreclosure, deed in lieu of foreclosure or otherwise following a default on the
related mortgage loan, the special servicer will be required to maintain for
that property generally the same types of insurance policies providing coverages
in the same amounts as were previously required under the mortgage that had
covered the property.
The master servicer and the special servicer may each satisfy its
obligations regarding maintenance of the hazard insurance policies referred to
in this prospectus supplement by maintaining a blanket policy or master force
placed insurance policy insuring against hazard losses on all of the related
mortgage loans. If any blanket or master policy contains a deductible clause,
however, the master servicer or the special servicer, as the case may be, will
be required, in the event of a casualty covered by the blanket or master policy,
to pay out of its own funds all sums that--
o are not paid because of the deductible clause, and
o would have been paid if an individual hazard insurance policy
referred to above had been in place.
The applicable originator and its successors and assigns are the
beneficiaries under separate title insurance policies with respect to each
mortgage loan. Each title insurer will enter into co-insurance and reinsurance
arrangements with respect to the title insurance policy as are customary in the
title insurance industry. Subject to certain exceptions, including standard
exceptions regarding claims made in the context of insolvency proceedings, each
title insurance policy will provide coverage to the trustee for the benefit of
the series "1999-CG3" certificateholders for claims made against the trustee
regarding the priority and validity of the borrowers' title to the subject
underlying real property.
Cash Management and Certain Escrows and Reserves
Cash Management. In the case of 24 of the mortgage loans, representing
approximately 41.8% of the initial mortgage pool balance, a "cash management"
system has been implemented for the deposit of property revenues into a separate
account.
In the case of certain of the mortgage loans, tenants are required to
remit rental payments to an account that is under the sole control of the lender
and the borrower is not authorized to make withdrawals from the account. In the
other cases, the related borrower or the manager of the underlying real property
is required to deposit property revenues into an account that is under the joint
control of the related borrower and the master servicer. In these other cases,
the borrower is authorized to make withdrawals from the account from time to
time until the occurrence of an event of default under the related mortgage
loan, in which case the lender would be entitled, under preexisting instructions
furnished to the depository institution at which the account is maintained, to
direct the depository institution to no longer honor payment requests made by
the borrower. In general, no later than the related anticipated repayment date,
the borrower under
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each ARD loan in the trust will be required, if it has not previously done so,
to establish an account which is under the sole control of the master servicer
and into which all revenue from the underlying real property will be directly
deposited.
Central Accounts. In the case of most of the mortgage loans, including all
of those mortgage loans as to which a "cash management" system has been
implemented, central accounts have been established for the purpose of holding
amounts required to be on deposit as reserves for taxes and insurance, capital
improvements, furniture, fixtures and equipment and certain other purposes. As
of the date of initial issuance of the series "1999-CG3" certificates, these
accounts will be under the sole control of the master servicer. In the case of
most of the mortgage loans as to which there is this type of account, the
account will be funded out of monthly escrow and/or reserve payments by the
related borrower or from funds transferred from another account.
Tax and Insurance Escrows. In the case of 152 of the mortgage loans,
representing 88.1% of the initial mortgage pool balance, tax and insurance
escrows were established, either as separate accounts or, if applicable, as
sub-accounts of another account. In those cases, the related borrower is
generally required to deposit on a monthly basis an amount equal to one-twelfth
of the annual real estate taxes and assessments and one-twelfth of the annual
premiums payable on insurance policies that the borrower is required to
maintain. If an escrow was established, the funds will be applied by the master
servicer to pay for items such as taxes, assessments and insurance premiums at
the underlying real property.
Under certain other mortgage loans, the insurance carried by the related
borrower is in the form of a blanket policy. In these cases, the amount of the
escrow is an estimate of the proportional share of the premium allocable to the
underlying real property, or the related borrower pays the premium directly.
In still other cases, either--
o the related borrower delivered letters of credit from third parties
in lieu of establishing and funding a deposit account for tax and
insurance escrows, or
o no escrow was required because a tenant at the underlying real
property is responsible for paying all or a portion of the real
estate taxes and assessments and/or insurance premiums directly.
Recurring Replacement Reserves. The table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1 to this prospectus supplement
shows the reserve deposits that the borrowers have been or are, in each case,
required to make into a separate account or, if applicable, a sub-account of
another account for capital replacements, repairs and furniture, fixtures and
equipment (such reserve, a "contractual recurring replacement reserve") and/or
for leasing commissions and tenant improvements (such a reserve, a "contractual
recurring LC & TI reserve") on the underlying real properties under the terms of
the respective mortgage loans.
The contractual recurring replacement reserves and the contractual
recurring LC & TI reserves shown in the table are, in each case, expressed as
dollars per unit for multifamily rental properties and manufactured housing
communities, a percentage of total departmental revenues for hospitality
properties and dollars per leasable square foot for other commercial properties.
The contractual recurring replacement reserves and the contractual recurring LC
& TI reserves for most of the underlying real properties are initial amounts and
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may vary over time. In these cases, the related mortgage and/or other related
loan documents may provide for applicable reserve deposits to cease upon
achieving predetermined maximum amounts in the related reserve account. In
addition, in some cases, reserves for leasing commissions and tenant
improvements were determined for specific tenant spaces, in which cases, the
execution of a lease covering the space could result in the termination and/or
release of the corresponding reserve. Under certain of the mortgage loans, the
related borrowers are permitted to deliver letters of credit from third parties
in lieu of establishing and funding a deposit account for replacement reserves
or reserves for leasing commissions and tenant improvements.
Engineering Reserves. The table titled "Engineering Reserves and Recurring
Replacement Reserves" on Exhibit A-1 to this prospectus supplement shows the
"engineering reserves" established, either as a separate account or a
sub-account or, in some cases in the form of a letter of credit pledged to the
lender, as a result of the inspections of certain of the underlying real
properties described above under "--Certain Underwriting Matters--Property
Condition Assessments". The repair/replacement items for which these reserves
were established are generally items identified by the property inspection firm
as in need of repair or replacement in order to restore the subject property to
a condition generally consistent with competitive properties of similar age and
quality or to comply with regulatory requirements. In some cases, the
engineering reserve for certain of the underlying real properties is less than
the cost estimate in the related inspection report because--
o the related originator may have considered certain items identified
in the related inspection report significant enough to require a
reserve, and/or
o certain items identified in the related inspection report have been
corrected.
The engineering reserve established for several of the underlying real
properties was a significant amount and substantially in excess of the cost
estimate set forth in the related inspection report because the related
originator required the borrower to establish reserves for the completion of
major work that had been commenced. No engineering reserve is required to be
replenished. The amounts set forth in this table represent the amounts of the
engineering reserves required at the respective dates of origination of the
corresponding mortgage loans, and there can be no assurance that the work for
which reserves were required will be completed in a timely manner or that the
reserved amount will be enough.
Significant Mortgage Loans
The 45 Broadway Loan. The "45 Broadway Loan" has a 10/1/99 scheduled
principal balance of $48,969,762, representing 5.4% of the initial mortgage pool
balance. General Electric Capital Corporation ("GECC") originated the 45
Broadway Loan. The 45 Broadway Loan is secured by a mortgage (the "45 Broadway
Mortgage") encumbering the fee simple interest of the related borrower (the "45
Broadway Borrower") in an office building (the "45 Broadway Property") located
in New York City. The 45 Broadway Borrower is a limited liability company
organized under the laws of New York. The 45 Broadway Borrower's sole managing
member is a special purpose entity known as Parkway Management Company, Inc., a
New York corporation (the "45 Broadway Managing Member").
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The 45 Broadway Loan is one of the ARD loans. It has an anticipated
repayment date of September 1, 2009 and a final maturity date of September 1,
2029. The 45 Broadway Loan amortizes on a 30-year schedule. The 45 Broadway Loan
accrues interest on an actual/360 basis at a fixed mortgage interest rate of
8.41% per annum. If the 45 Broadway Borrower does not pay the 45 Broadway Loan
in full on the anticipated repayment date, the 45 Broadway Loan will accrue
interest at a revised mortgage interest rate equal to the initial mortgage
interest rate plus two percentage points.
The 45 Broadway Borrower may not voluntarily prepay the 45 Broadway Loan
until 90 days prior to the related anticipated repayment date. At any time
following the second anniversary of the date of initial issuance of the series
"1999-CG3" certificates, but prior to the related anticipated repayment date,
the 45 Broadway Property may be released from the lien of the 45 Broadway
Mortgage through a defeasance of 100% of the unpaid principal balance of the 45
Broadway Loan. Defeasance is only permitted upon the satisfaction of certain
terms and conditions, including--
o confirmation from Moody's and Fitch that the defeasance will not
result in a withdrawal, downgrade or qualification of any of the
then current ratings on the series "1999-CG3" certificates, and
o delivery of various legal opinions and documentation.
The 45 Broadway Property. The 45 Broadway Property is an office building
with the characteristics described in the table below.
<TABLE>
<CAPTION>
Most Recent
No. of Yr. Built/ Occupancy Underwritten Appraised
Property Name Location Sq. Ft. Renovated at U/W Net Cash Flow Value
- ------------- -------- ------- --------- ------ ------------- -----
<S> <C> <C> <C> <C> <C>
45 Broadway New York, NY 368,471 1983 99% $5,425,246 $67,400,000
</TABLE>
The major tenants of the 45 Broadway Property are described in the table
below.
<TABLE>
<CAPTION>
Month and Year Square % of Total Annual
of Lease Feet of Annual Annual Base Rent Per
Tenant Expiration Leased Space Base Rent Base Rent Square Foot
- ------ ---------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Midas Kapiti/Act International Systems February 2005 26,075 $831,793 7.9% $31.90
Cozen & O'Connor August 2003 18,489 $520,239 5.0% $28.14
Josephthal Lyon & Ross Inc. February 2002 17,314 $467,478 4.4% $27.00
</TABLE>
Property Management. The 45 Broadway Property is subject to a long-term
management agreement between the 45 Broadway Borrower and the 45 Broadway
Management Company LLC ("45 Broadway Property Manager"), an affiliate of the 45
Broadway Borrower. Subject to a 30 day notice and cure period granted to the
holder of the 45 Broadway Loan, the 45 Broadway Property Manager is permitted to
terminate the management agreement for non-payment by the 45 Broadway Borrower
of management fees and any
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costs of operating the 45 Broadway property. The management agreement is not
otherwise terminable by the 45 Broadway Property Manager or by the 45 Broadway
Borrower, except with the written consent of the holder of the 45 Broadway Loan.
The holder of the 45 Broadway Loan may replace the 45 Broadway Property Manager
as property manager only upon--
o a default by the 45 Broadway Property Manager under the management
agreement, or
o the debt service coverage ratio for the 45 Broadway Loan failing to
be equal to or greater than 1.10x, or
o the 45 Broadway Property Manager becoming insolvent or a debtor in
any bankruptcy or insolvency proceeding, or
o the failure of the 45 Broadway Borrower to repay the 45 Broadway
Loan in full on its anticipated repayment date, or
o a default by the 45 Broadway Borrower under the loan documents for
the 45 Broadway Loan.
Cash Management. The 45 Broadway Borrower has established a lockbox
account. The tenants at the 45 Broadway Property must deposit their rent
payments directly into the lockbox account. On the first day of each month, the
holder of the 45 Broadway Mortgage is paid an amount equal to the scheduled
monthly payments, and any reserve payments and other amounts due under the 45
Broadway Loan. Any excess amounts remaining on deposit in the lockbox account
are then paid to the 45 Broadway Borrower.
Letters of Credit. The 45 Broadway Borrower has provided a letter of
credit in the amount of $2,000,000.00 as additional security for the 45 Broadway
Loan. This letter of credit must remain outstanding until it is drawn upon or it
is replaced or released, all as described below.
If and when (i) the underwritten debt service coverage ratio for the 45
Broadway Loan equals or exceeds 1.30x for the preceding 12 months and (ii) the
ratio of the 45 Broadway Property's net cash flow to the original mortgage loan
balance of $49,000,000, equals or exceeds 12.5%, the 45 Broadway Borrower may
replace the $2,000,000.00 letter of credit with a $1,000,000.00 letter of
credit. If and when (i) the debt service coverage ratio for the 45 Broadway Loan
equals or exceeds 1.35x for the preceding 12 months and (ii) the ratio of the 45
Broadway Property's net cash flow to the original mortgage loan balance of
$49,000,000, equals or exceeds 13.5%, then the holder of the 45 Broadway Loan
must release the letter of credit.
If any such letter of credit exists on September 1, 2004, then, at its
option, the holder of the 45 Broadway Loan may either (i) draw on that letter of
credit in full or (ii) require the 45 Broadway Borrower to pay an amount equal
to that letter of credit, and, thereafter, in either case, may apply that draw
or payment to prepay the 45 Broadway Loan without prepayment penalty. Upon such
prepayment, the letter of credit would be released.
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<PAGE>
Most Recent Appraised Value. The 45 Broadway Loan has a 10/1/99
loan-to-value ratio of 72.7% based on a Most Recent Appraised Value of the 45
Broadway Property of $67,400,000. That appraised value is derived from an
appraisal conducted during June 1999.
The 10/1/99 loan-to-value ratio of the 45 Broadway Loan is 69.7%, based
on--
o the 10/1/99 scheduled principal balance of the 45 Broadway Loan,
reduced by the $2,000,000 current amount of the letter of credit
referred to above, and
o the Most Recent Appraised Value of the 45 Broadway Property.
Underwritten Debt Service Coverage Ratio. The underwritten debt service
coverage ratio of the 45 Broadway Loan is 1.21x, based on an aggregate annual
debt service of $4,483,760.04 and an aggregate underwritten net cash flow of
$5,425,246.
Additional Indebtedness Prohibited. The 45 Broadway Borrower may not
encumber the 45 Broadway Property with any subordinate financing. It is,
however, permitted in the ordinary course of business, to incur limited amounts
of unsecured trade debt and to grant security interests in equipment and other
personal property purchased for use at the 45 Broadway Property.
Transfer of Ownership Interests. The 45 Broadway Mortgage prohibits the
transfer of interests in the 45 Broadway Property or in the 45 Broadway Borrower
without the consent of the holder of the 45 Broadway Loan, except in limited
circumstances. The 45 Broadway Mortgage permits the managing member, as well as
the four additional members of the 45 Broadway Borrower, to transfer all or part
of their interests in the 45 Broadway Borrower to certain permitted transferees.
If, however, any transfer would result in a permitted transferee owning a 49% or
more interest in the 45 Broadway Borrower or a transfer of a direct or indirect
interest in (i) the 45 Broadway Borrower presently owned by the 45 Broadway
Managing Member or (ii) the 45 Broadway Managing Member, then, the holder of the
45 Broadway Loan must receive the following in connection with any such
transfer--
o confirmation from Moody's and Fitch that the transfer will not
result in a withdrawal, downgrade or qualification of any of the
then-current ratings of the series "1999-CG3" certificates;
o a legal opinion and other evidence that the 45 Broadway Borrower,
its shareholders, partners, or members, as the case may be, will
continue to be, following the transfer, single-purpose entities in
accordance with rating agency standards;
o notice of the transfer, together with copies of all transfer
documents, at least ten days prior to the date of the transfer; and
o payment of all reasonable out-of-pocket costs and expenses incurred
by the holder in connection with the transfer.
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<PAGE>
Reserves. The 45 Broadway Borrower--
o has deposited $1,356,000 with the holder of the 45 Broadway Loan,
and
o is required to continue to deposit with the holder of the 45
Broadway Loan $65,000 monthly until the amount on deposit, excluding
the initial $1,356,000, equals or exceeds $1,250,000,
for tenant improvements, lease rollovers and leasing commission obligations. At
any time that the amount on deposit decreases to an amount below $1,250,000, or,
if after September 1, 2007, the holder of the 45 Broadway Loan determines that
the scheduled rollover following such date until the related anticipated
repayment date exceeds 75,000 rentable square feet, then, in each case, the 45
Broadway Borrower is required to resume the monthly deposit.
The LaSalle Loans. The "LaSalle Loans" consist of two cross-defaulted and
cross-collateralized mortgage loans with an aggregate 10/1/99 scheduled
principal balance of $46,403,465, representing 5.2% of the initial mortgage pool
balance. GECC originated the LaSalle Loans. The LaSalle Loans are secured by
first mortgages (collectively, the "LaSalle Mortgages") on--
o the fee interest in a hotel property in Texas (the "LaSalle Texas
Fee Property"),
o the fee interest in a hotel property in Minnesota (the "LaSalle
Minnesota Fee Property"), and
o the leasehold interest in a portion of the property adjacent to the
LaSalle Minnesota Fee Property which is used for parking facilities
(the "Minnesota Leased Property"; and, together with the LaSalle
Texas Fee Property and the LaSalle Minnesota Fee Property, the
"LaSalle Properties").
The LaSalle Texas Fee Property is subject to a condominium regime. The borrower
under the LaSalle Loans (the "LaSalle Borrower") is a special purpose limited
partnership organized under the laws of Delaware. The LaSalle Borrower is also
an affiliate of LaSalle Hotel Properties (the "LaSalle REIT"), which is (a) the
sole general partner of LaSalle Hotel Operating Partnership L.P., which owns
100% of the limited partner interest of the LaSalle Borrower, and (b) the 100%
owner of the sole general partner of the LaSalle Borrower.
Each of the LaSalle Loans is an ARD loan. Each of the LaSalle Loans has an
anticipated repayment date of August 1, 2009 and a final maturity of August 1,
2024. Each of the LaSalle Loans amortizes on a 25-year schedule. Each of the
LaSalle Loans accrues interest on a 30/360 basis at a fixed mortgage interest
rate of 8.10% per annum. If the LaSalle Borrower does not pay the LaSalle Loan
in full on the anticipated repayment date, the LaSalle Loans will accrue
interest at a revised mortgage interest rate equal to the initial mortgage
interest rate plus two percentage points.
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<PAGE>
The LaSalle Borrower may not voluntarily prepay the LaSalle Loans until
180 days prior to the related anticipated repayment date. At any time following
the second anniversary of the date of initial issuance of the series "1999-CG3"
certificates, but prior to the related anticipated repayment date, the LaSalle
Borrower may obtain a release of the LaSalle Properties from the lien of the
LaSalle Mortgage through a defeasance of the LaSalle Loans (or, if fewer than
all of the LaSalle Properties are to be released, through a defeasance of that
portion of the LaSalle Loans as is equal to 125% of the allocated loan amount
for the related property to be released). Defeasance is only permitted upon the
satisfaction of certain conditions, including--
o confirmation from Moody's and Fitch that the defeasance will not
result in a withdrawal, downgrade or qualification of any of the
then current ratings on the series "1999-CG3" certificates,
o delivery of various legal opinions and documentation, and
o if less than the entire aggregate amount of the LaSalle Loans is
defeased--
(a) the debt service coverage ratio for the non-defeased portion
of the LaSalle Loans (based on the LaSalle Property or
Properties that will remain subject to the liens of the
LaSalle Mortgages) must be at least equal to the greater of
(i) the debt service coverage ratio for the LaSalle Loans
(based on all the LaSalle Properties, including those that are
being released) for the 12 months immediately prior to the
defeasance and (ii) the debt service coverage ratio for the
LaSalle Loans (based on all the LaSalle Properties, including
those that are being released) at origination, and
(b) the loan-to-value ratio for the non-defeased portion of the
LaSalle Loans (based on the LaSalle Property or Properties
that will remain subject to the liens of the LaSalle
Mortgages) must be at least equal to the lesser of (i) the
combined loan-to-value ratio for the LaSalle Loans (based on
all the LaSalle Properties, including those that are being
released) immediately prior to the defeasance and (ii) the
combined loan-to-value ratio for the LaSalle Loans (based on
all the LaSalle Properties, including those that are being
released) at origination.
The LaSalle Properties. The LaSalle Properties are controlled by the
LaSalle REIT. The LaSalle Properties consist of two hotels with the
characteristics described in the table below. The hotel in Texas is operated as
a Le Meridien Hotel and is leased to MHI Leasco Dallas, Inc. ("MHI"), a
subsidiary of Le Meriden, pursuant to an operating lease (the "Meridien
Operating Lease"). The Meridien Operating Lease has a term which expires on
April 30, 2008. GECC, the LaSalle Borrower and MHI have entered into a
subordination, non-disturbance and attornment agreement with respect to the
Meridien Operating Lease. The hotel in Minnesota is operated as a Radisson Hotel
and is leased to Radisson Bloomington Corporation ("Radisson") pursuant to an
operating lease (the "Radisson Operating Lease"). The Radisson Operating Lease
has a term which expires on April 30, 2009. GECC, the LaSalle Borrower and
Radisson have entered into a subordination, non-disturbance and attornment
agreement with respect to the Radisson Operating Lease. Radisson and MHI are not
affiliated with the LaSalle Borrower. Under each of the Meridien Operating Lease
and the Radisson Operating Lease, the LaSalle Borrower collects rent due under
the related operating lease based upon revenues from the related LaSalle
Property rather than upon income at the related LaSalle Property.
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<PAGE>
<TABLE>
<CAPTION>
Most Recent
No. of Yr. Built/ Avg. Appraised
Hotel Location Rooms Renovated Occup (1) ADR(1)(2) RevPar(1)(3) Value
- ----- -------- ----- --------- -------- --------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Radisson South - Bloomington Bloomington, MN 565 1970/1998 68% $ 96.53 $65.42 $53,200,000
Le Meridien - Dallas Dallas, TX 407 1978/1995 65% $122.66 $78.89 $33,000,000
</TABLE>
- ---------------------
(1) Based on trailing 12 months ended February 28, 1999.
(2) "ADR" means average daily rate.
(3) "RevPar" means revenue per available room.
Property Management. To the extent permitted pursuant to the terms of the
Meridien Operating Lease and the Radisson Operating Lease, or in the event the
LaSalle Borrower engages a property manager with respect to either or both of
the LaSalle Properties (with the consent of the holder of the LaSalle Loans),
then, in each case, the holder of the LaSalle Loans may replace the manager
upon--
(i) the manager becoming insolvent or a debtor in a bankruptcy or
insolvency proceeding,
(ii) the failure of the LaSalle Borrower to repay the LaSalle Loans in
full on the anticipated repayment date, or
(iii) a default by the LaSalle Borrower under the loan documents for the
LaSalle Loans.
Cash Management. The LaSalle Borrower has established a lockbox account.
MHI and Radisson have agreed, pursuant to their respective subordination,
non-disturbance and attornment agreements, to deposit all rent due to the
LaSalle Borrower pursuant to the operating leases directly into the lockbox
account. Unless and until the occurrence of certain events, such as a decline in
the debt service coverage ratio below 1.40x for the trailing 12 months, the
LaSalle Borrower will have access to such funds in the lockbox account.
Most Recent Appraised Value. The LaSalle Loans have a 10/1/99
loan-to-value ratio of 53.8% based upon an aggregate Most Recent Appraised Value
of the LaSalle Properties of $86,200,000. That aggregate appraised value is
derived from appraisals conducted during March 1999.
Underwritten Debt Service Coverage Ratio. The underwritten debt service
coverage ratio of the LaSalle Loan is 1.85x, based on an aggregate annual debt
service of $4,343,764.44 and an aggregate underwritten net cash flow of
$8,045,219.
Additional Indebtedness Prohibited. Without the consent of the holder of
the LaSalle Loans, the LaSalle Borrower may not encumber the LaSalle Properties
with any subordinate financing. It is, however, permitted, in the ordinary
course of business, to incur limited amounts of unsecured trade debt and to
grant security interests in equipment and other personal property purchased for
use at the LaSalle Properties. The amount of unsecured trade debt is not to
exceed at any one time 2% of the initial loan amount relating to the LaSalle
Property at which that equipment or personal property is to be used.
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<PAGE>
Transfer of Ownership Interests. With limited exceptions, the LaSalle
Mortgage prohibits the transfer of the interests in the LaSalle Properties or in
the LaSalle Borrower without the consent of the holder of the LaSalle Loans. The
LaSalle Mortgages permit the following transfers without the consent of the
holder of the LaSalle Loans:
o any transfer of all or any shares of beneficial interests in the
LaSalle REIT for so long as the shares of the LaSalle REIT continue
to be publicly traded on a national stock exchange,
o any issuance of additional shares of the LaSalle REIT, and
o any transfer of limited partnership interests or issuance of
additional limited partnership units in the LaSalle Operating
Partnership, provided that after giving effect to the transfer or
issuance, the LaSalle REIT owns more than 51% of the LaSalle
Operating Partnership.
Reserves. Instead of making monthly payments into the escrow fund
established for taxes and insurance premium obligations of the LaSalle Borrower,
the LaSalle Borrower is permitted to deliver (a) a cash deposit in an amount
equal to approximately 50% of the estimated amount for taxes and insurance
premiums, or (b) a letter of credit in such amount.
The Alliance Portfolio. The "Alliance Portfolio" consists of five
cross-defaulted and cross-collateralized mortgage loans (the "Alliance Loans")
with an aggregate 10/1/99 scheduled principal balance of $38,336,336,
representing 4.3% of the initial mortgage pool balance. Column Financial, Inc.
("Column") originated the Alliance Portfolio. The borrower under the Alliance
Portfolio (the "Alliance Borrower") is a limited liability company organized
under the laws of Delaware, the general partner of which is Alliance PK SPE,
Inc. The Alliance Loans are secured by mortgages (the "Alliance Mortgages") on
the fee simple interests of the Alliance Borrower in five multifamily rental
properties (the "Alliance Properties"), all of which are located in Texas.
Each Alliance Loan is a balloon loan which matures on July 1, 2009 and
amortizes on a 30-year schedule. Each Alliance Loan accrues interest on an
actual/360 basis at a fixed mortgage interest rate of 7.83% per annum.
The Alliance Borrower may not voluntarily prepay the Alliance Loans until
six months prior to maturity. After the second anniversary of the date of
initial issuance of the series "1999-CG3" certificates, the Alliance Borrower
may obtain a release of any of the Alliance Properties from the lien of the
Alliance Mortgages through a defeasance of the Alliance Loans (or, if fewer than
all of the Alliance Properties are to be released, through a defeasance of that
portion of the Alliance Loans as is equal to or greater than 125% of the
allocated loan amount for each Alliance Property to be released). Defeasance is
only permitted upon the satisfaction of certain conditions, including--
o delivery of various legal opinions and documentation,
o if less than the entire aggregate amount of the Alliance Loans is
defeased, the debt service coverage ratio for the non-defeased
portion of the Alliance Loans (based on the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) must be at
least
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<PAGE>
equal to the greater of (i) the debt service coverage ratio for the
Alliance Loans (based on all the Alliance Properties, including
those that are being released) immediately prior to the defeasance
and (ii) the debt service coverage ratio for the Alliance Loans
(based on all the Alliance Properties, including those that are
being released) at origination, and
o if less than the entire aggregate amount of the Alliance Loans is
defeased, the loan-to-value ratio for the non-defeased portion of
the Alliance Loans (based on all the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) is not
greater than 80%.
The Alliance Properties. The Alliance Properties consist of five
multifamily rental properties having the characteristics described in the table
below.
<TABLE>
<CAPTION>
No. of Yr. Built/ Occupancy Most Recent Underwritten
Property Name Location Units Renovated at U/W Appraised Value Net Cash Flow
- ------------- -------- ----- --------- ------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shadow Creek Apartments North Richland Hills, TX 240 1986/1996 91% $11,300,000 $ 932,085
Copper Cove Apartments Houston, TX 270 1984 96% 10,500,000 949,103
Hilltop Apartments North Richland Hills, TX 238 1985/1996 91% 10,450,000 852,494
Foxboro Apartments Houston, TX 220 1984 97% 9,100,000 749,236
The Pinnacle Apartments Lewisville, TX 150 1986/1998 95% 7,700,000 645,132
----------- ----------
Total/Wtd. Avg. $49,050,000 $4,128,050
</TABLE>
Property Management. The Alliance Properties are subject to management
agreements between the Alliance Borrower and Alliance Residential Management,
LLC (the "Alliance Property Manager"), an affiliate of the Alliance Borrower.
The holder of the Alliance Loans may replace the Alliance Property Manager only
upon--
o a default by the Alliance Property Manager under the management
agreement, or
o that holder's acquiring title to the related Alliance Property by
foreclosure or otherwise, or
o a 50% or greater change in control of the ownership of the Alliance
Property Manager, unless Moody's and Fitch have confirmed that the
change in control would not result in a downgrade of any of the
ratings on the series "1999-CG3" certificates, or
o a default by the Alliance Borrower under the loan documents for the
Alliance Loans or by the Alliance Property Manager under the
management agreement.
Cash Management. The Alliance Borrower must cause all rents from the
Alliance Properties to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Alliance Loans,
the Alliance Borrower will have access to that rent account.
Most Recent Appraised Value. The Alliance Loans have a 10/1/99
loan-to-value ratio of 78.2%, based on an aggregate Most Recent Appraised Value
of the Alliance Properties of $49,050,000. That aggregate appraised value is
derived from appraisals conducted between June 7, 1999 and July 1, 1999.
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<PAGE>
Underwritten Debt Service Coverage Ratio. The underwritten debt service
coverage ratio of the Alliance Loans is 1.24x, based on an aggregate annual debt
service of $3,326,738.28 and an aggregate underwritten net cash flow of
$4,128,050.
Additional Indebtedness Prohibited. The Alliance Borrower may not encumber
the Alliance Properties with subordinate financing without the consent of the
holder of the Alliance Loans. The Alliance Borrower may incur unsecured debt.
Transfer of Ownership Interests. In general, the Alliance Mortgages
prohibit the transfer of interests in the Alliance Properties or ownership
interests in the Alliance Borrower without the consent of the holder of the
Alliance Loans, except in limited circumstances. Transfer to Blackfoot
Associates of the 39% ownership interest in the Alliance Borrower currently held
by Alliance Holdings Investment LLC is permitted. The holder of the Alliance
Loans must consent to transfers of the Alliance Properties upon satisfaction of
certain underwriting criteria.
Renovation Obligation and Reserves. Pursuant to the terms of the Alliance
Mortgage, the Alliance Borrower has agreed to complete approximately $1.6
million in renovation work on the Alliance Properties within one year from the
date of origination. The Alliance Borrower has established a repair and
remediation reserve in the amount of $276,370 for any deferred maintenance,
repairs and/or remedial or corrective work on the Alliance Properties.
Zoning. Three of the Alliance Properties (Hilltop Apartments, Shadow Creek
Apartments and Pinnacle Apartments) have more apartments per acre than are
currently allowed pursuant to the local zoning ordinances. In the event of the
partial destruction of 50% or more of any of these properties, the Alliance
Borrower would have to obtain permission from the respective local authority in
order to rebuild at the same apartment density.
The Westin Hilton Head Loan. The "Westin Hilton Head Loan" has a 10/1/99
scheduled principal balance of $34,953,502, representing 3.9% of the initial
mortgage pool balance. GECC originated the Westin Hilton Head Loan. The Westin
Hilton Head Loan is secured by a mortgage (the "Westin Hilton Head Mortgage")
encumbering the fee simple interest of the related borrower (the "Westin Hilton
Head Borrower") in a hotel and resort property (the "Westin Hilton Head
Property") located on Hilton Head Island in South Carolina. The Westin Hilton
Head Borrower is a limited partnership organized under the laws of Delaware. It
is wholly-owned and controlled by wholly-owned subsidiaries of Caesar Park
Hotels & Resorts, Inc.
The Westin Hilton Head Loan is one of the ARD loans. It has an anticipated
repayment date of August 1, 2009 and a final maturity of August 1, 2027. The
Westin Hilton Head Loan amortizes on a 28-year schedule. The Westin Hilton Head
Loan accrues interest on an actual/360 basis at a fixed mortgage interest rate
of 8.17% per annum. If the Westin Hilton Head Borrower does not pay the Westin
Hilton Head Loan in full by the anticipated repayment date, the Westin Hilton
Head Loan will accrue interest a revised mortgage interest rate equal to the
initial mortgage interest rate plus two percentage points.
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<PAGE>
The Westin Hilton Head Borrower may not voluntarily prepay the Westin
Hilton Head Loan until three months prior to the related anticipated repayment
date. At any time following the second anniversary of the date of initial
issuance of the series "1999-CG3" certificates, but prior to the anticipated
repayment date, the Westin Hilton Head Property may be released from the lien of
the Westin Hilton Head Mortgage through a defeasance of 100% of the unpaid
principal balance of the Westin Hilton Head Loan. Defeasance is only permitted
upon the satisfaction of certain terms and conditions, including--
o confirmation from Moody's and Fitch that the defeasance will not
result in a downgrading, withdrawal or qualification of any of the
then current ratings on the series "1999-CG3" certificates, and
o delivery of various legal opinions and documentation.
The Westin Hilton Head Property. The Westin Hilton Head Property is a
full-service hotel and resort facility located on Hilton Head Island in South
Carolina, with the characteristics described in the table below:
<TABLE>
<CAPTION>
Most Recent
No. of Yr. Built/ Avg. Underwritten Appraised
Hotel Location Rooms Renovated Occup (1) ADR(1)(2) RevPar(1)(3) Net Cash Flow Value
- ----- -------- ----- --------- -------- --------- ------------ ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Westin Resort - Hilton Head Island, SC 412 1984/1997 64% $169.26 $109.02 $7,626,447 $81,700,000
Hilton Head Island
</TABLE>
- ---------------------
(1) Based on trailing 12 months ended April 30, 1999.
(2) "ADR" means average daily rate.
(3) "RevPar" means revenue per available room.
The Westin Hilton Head Property has three restaurants, a 13,200 square
foot ballroom, 25,236 square feet of conference space and three swimming pools.
Guests of the Westin Hilton Head Property have access to two of the three
18-hole golf courses and the 16 tennis courts at the adjacent Port Royal Golf &
Racquet facility.
Property Management. The Westin Hilton Head Property is subject to a
long-term management agreement with Westin Hotel Company (the "Westin Hilton
Head Property Manager"), an affiliate of Starwood Hotels & Resorts Worldwide,
Inc. The term of the management agreement expires on December 31, 2019. The
Westin Hilton Head Property Manager is obligated under the management agreement
to operate the Westin Hilton Head Property as a "Westin" hotel and resort and to
promote the Westin Hilton Head Property within Westin's corporate marketing
program and worldwide reservations system. The Westin Hilton Head Property
Manager has entered into a consent, subordination, non-disturbance and
attornment agreement with the holder of the Westin Hilton Head Loan, in which
the Westin Hilton Head Property Manager has agreed to the assignment of the
management agreement to the lender and to recognize the holder as the "owner"
under the management agreement in the event that the Westin Hilton Head Borrower
defaults under the Westin Hilton Head Loan. The management agreement is not
terminable by the Westin Hilton Head Borrower or the Westin Hilton Head Property
Manager, except with the express written consent of the holder of the Westin
Hilton Head Loan. The holder of the Westin Hilton Head Loan may replace the
Westin Hilton Head Property Manager as property manager only upon acquisition of
title to the Westin Hilton Head Property by foreclosure or otherwise.
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<PAGE>
Cash Management. The Westin Hilton Head Property Manager is required to
deposit daily directly into a cash management account established by the holder
of the Westin Hilton Head Loan all operating revenues from the Westin Hilton
Head Property. Further, all credit card companies or credit card clearing banks
are required to deposit directly into the cash management account all receipts
payable with respect to the Westin Hilton Head Property. Prior to the occurrence
of (i) a reduction in the debt service coverage ratio below 1.40x, (ii) the
related anticipated repayment date, or (iii) an event of default under the
Westin Hilton Head Loan, the Westin Hilton Head Borrower will have access to the
amounts deposited in the cash management account.
Most Recent Appraised Value. The Westin Hilton Head Loan has a 10/1/99
loan-to-value ratio of 42.8%, based on a Most Recent Appraised Value of the
Westin Hilton Head Property of $81,700,000. That appraised value is derived from
an appraisal dated January 1, 1999.
Underwritten Debt Service Coverage Ratio. The underwritten debt service
coverage ratio of the Westin Hilton Head Loan is 2.39x, based on an aggregate
annual debt service of $3,185,361.84 and an aggregate underwritten net cash flow
of $7,626,447.
Additional Indebtedness Prohibited. The Westin Hilton Head Borrower may
not encumber the Westin Hilton Head Property with any subordinate financing. It
is, however, permitted to incur unsecured trade debt and, subject to certain
limitations, to grant security interests in equipment and other personal
property purchased for use at the property.
Transfer of Ownership Interests. The Westin Hilton Head Mortgage prohibits
the transfer of interests in the Westin Hilton Head Property without the consent
of the holder of the Westin Hilton Head Mortgage, except that such holder's
consent may not be unreasonably withheld if certain conditions are satisfied,
including receipt by the holder of the Westin Hilton Head Mortgage of--
o evidence that the proposed transferee is a reputable entity with
sufficient net worth and sufficient experience in the ownership and
management of properties similar to the Westin Hilton Head Property,
o confirmation from Moody's and Fitch that the transfer will not
result in a downgrading, withdrawal or qualification of any of the
then-current ratings of the series "1999-CG3" certificates, and
o a legal opinion and other evidence that the proposed transferee and
its partners, members or shareholders are single-purpose entities in
accordance with rating agency standards.
The Westin Hilton Head Mortgage also prohibits the transfer of interests
in the Westin Hilton Head Borrower without the consent of the holder of the
Westin Hilton Head Mortgage, unless certain conditions are satisfied. The
consent of the holder of the Westin Hilton Head Loan is not required where--
o after giving effect to the transfer(s), Caesar Park Hotels & Resorts
continues to own and control 51% of the economic, beneficial and
voting interests in the Westin Hilton Head Borrower and 100% of the
ownership interests in the general partner of the Westin Hilton Head
Borrower,
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o the holder of the Westin Hilton Head Loan receives confirmation from
Moody's and Fitch that the transfer will not result in a downgrade,
withdrawal or qualification of any of the then-current ratings of
the series "1999-CG3" certificates, and
o the holder of the Westin Hilton Head Loan receives satisfactory
evidence that the Westin Hilton Head Borrower and its partners will,
following the transfer(s), continue to be single-purpose entities,
in accordance with rating agency standards.
Southshore Beach & Tennis Club Loan. The Southshore Beach & Tennis Club
loan (the "Southshore Loan") has a 10/1/99 scheduled principal balance of
$34,941,132, representing 3.9% of the initial mortgage pool balance. GECC
originated the Southshore Loan. The Southshore Loan is secured by a mortgage
(the "Southshore Mortgage") encumbering the fee simple interest of the related
borrower (the "Southshore Borrower") in a multifamily rental property (the
"Southshore Property") in Alameda, California. The Southshore Borrower is a
California limited partnership.
The Southshore Loan is a balloon loan, which matures on July 1, 2009. The
Southshore Loan amortizes on a 30-year schedule. The Southshore Loan accrues
interest on an actual/360 basis at a fixed mortgage interest rate of 7.78% per
annum.
The Southshore Borrower may not voluntarily prepay the Southshore Loan
until three months prior to the maturity date. After the second anniversary of
the date of initial issuance of the series "1999-CG3" certificates, the
Southshore Property may be released from the lien of the Southshore Mortgage
through a defeasance of 100% of the unpaid principal balance of the Southshore
Loan. Defeasance is only permitted upon the satisfaction of certain terms and
conditions, including delivery of legal opinions and documentation.
The Southshore Property is a multifamily rental property with the
characteristics described in the table below:
<TABLE>
<CAPTION>
# of Occupancy Most Recent
Property Name Location Year Built Apartments at U/W Appraised Value U/W NCF
- ------------- -------- ---------- ---------- ------ --------------- -------
<S> <C> <C> <C> <C> <C> <C>
Southshore Beach & Tennis Club Alameda, CA 1974 450 95% $48,500,000 $4,000,095
</TABLE>
The Southshore Beach & Tennis Club is located on the shore of San
Francisco Bay. The property has a fitness center, five tennis courts, a
basketball court and four outdoor pool areas.
Property Management. The Southshore Property is subject to a long term
management agreement with Maxim Property Management (the "Southshore Property
Manager"), an affiliate of the Southshore Borrower. The management agreement is
terminable by the holder of the Southshore Loan upon default by the Southshore
Property Manager under the management agreement or the occurrence of an event of
default under the Southshore Loan.
Most Recent Appraised Value. The Southshore Loan has a 10/1/99
loan-to-value ratio of 72.0% based on a Most Recent Appraised Value of the
Southshore Property of $48,500,000. That appraised value is derived from an
appraisal conducted in May 1999.
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Underwritten Debt Service Coverage Ratio. The underwritten debt service
coverage ratio of the Southshore Loan is 1.33x, based on an annual debt service
of $3,017,643.12 and an underwritten net cash flow of $4,000,095.
Additional Indebtedness Prohibited. The Southshore Borrower may not
encumber the Southshore Property with any subordinate indebtedness, other than
trade or operational debt incurred in the ordinary course of business or
financing for equipment or other personal property used at the Southshore
Property.
Transfer of Ownership Interest. The Southshore Mortgage prohibits the
transfer of the Southshore Property or any controlling interest in the
Southshore Borrower without the consent of the holder of the Southshore Loan.
Related Mortgage Loans. The Southshore Borrower is controlled by Sanford
N. Diller. Mr. Diller also controls the borrower under the mortgage loan secured
by The Atrium.
The Mortgage Loan Sellers and the Originators
General. GECA (as defined below) acquired all of the mortgage loans that
it intends to sell to us, representing 50.6% of the initial mortgage pool
balance, from GECC through a contribution of Capital. GECC originated all of the
GECA mortgage loans.
Column originated 99 of the mortgage loans that it intends to sell to us,
representing 47.0% of the initial mortgage pool balance. It acquired six of the
mortgage loans that it intends to sell to us, representing 2.4% of the initial
mortgage pool balance, from Union Capital (as defined below). Union Capital
directly originated all of the mortgage loans that it transferred to Column.
GE Capital Access, Inc. and General Electric Capital Corporation. GE
Capital Access, Inc. ("GECA") is a wholly owned subsidiary of GECC. Since 1996,
GECA and its affiliates have originated or acquired approximately $7.8 billion
of commercial mortgage loans in connection with its capital markets programs.
Through its GE Capital Real Estate division, GECC has been lending and investing
in the commercial real estate industry for over 25 years and has a portfolio of
approximately $16.9 billion of assets. GE Capital Real Estate originates and
acquires commercial mortgage loans through approximately 20 offices located
throughout North America.
Column Financial, Inc. Column is a corporation organized under the laws of
Delaware, and its principal offices are in Atlanta, Georgia. Column underwrites
and closes multifamily rental and commercial mortgage loans through its own
origination offices and various correspondents in local markets across the
country. Loan underwriting and quality control procedures are undertaken
principally in regional offices located in Bethesda, Maryland; Chicago,
Illinois; Cleveland, Ohio; Dallas, Texas; Denver, Colorado; Hollywood, Florida;
Houston, Texas; Los Angeles, California; Nashville, Tennessee; New York, New
York; Newport Beach, California; Norwalk, Connecticut; Philadelphia,
Pennsylvania; San Francisco, California; Seattle Washington and Tampa, Florida.
Column has closed more than $7.5 billion of commercial and multifamily rental
mortgage loans since beginning operations in 1993. Column is a wholly-owned
subsidiary of DLJ Mortgage Capital, Inc., which in turn is wholly-owned
subsidiary of Donaldson, Lufkin & Jenrette, Inc., our parent and the parent of
the underwriter.
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Union Capital Investments, LLC. Union Capital Investments, LLC ("Union
Capital") is a limited liability company, with its principal offices in Atlanta,
Georgia. Union Capital is primarily involved in conduit lending, and it
originates, underwrites and closes first mortgage loans secured by all types of
multifamily rental and commercial real estate throughout the United States. The
principals of Union Capital have been involved in the conduit lending field
since January 1993.
The information set forth in this prospectus supplement concerning the
mortgage loan sellers and the originators has, in each case, been provided by
the party, and we do not nor does the underwriter make any representation or
warranty as to the accuracy or completeness of this information.
Assignment of the Mortgage Loans
On or before the date of initial issuance of the series "1999-CG3"
certificates, the following transfers of the mortgage loans will occur. In each
case, the transferor will assign the subject mortgage loans, without recourse,
to the transferee.
---------------- --------------
GECA Column
----------------- ---------------
-----------------
55 mortgage loans DLJ Commercial 105 mortgage loans
$454,972,144 Mortgage Corp. $444,317,061
-----------------
All mortgage loans
$899,289,205
-----------------
Trust
-----------------
In connection with the foregoing transfers, each mortgage loan seller will
be required to deliver the following documents, among others, to the trustee
with respect to each of its mortgage loans--
o either (i) the original promissory note, endorsed without recourse
to the order of the trustee, or (ii) if the original promissory note
has been lost, a copy of that note, together with a lost note
affidavit;
o the original or a copy of the mortgage, together with originals or
copies of any intervening assignments of that document, in each case
(unless the particular document has not been returned from the
applicable recording office) with evidence of recording thereon;
o the original or a copy of any separate assignment of leases and
rents, together with originals or copies of any intervening
assignments of that document, in each case (unless the particular
document has not been returned from the applicable recording office)
with evidence of recording thereon;
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o either (i) a completed assignment of the related mortgage in favor
of the trustee, in recordable form, or (ii) a certified copy of that
assignment as sent for recording;
o either (i) a completed assignment of any separate related assignment
of leases and rents in favor of the trustee, in recordable form, or
(ii) a certified copy of that assignment as sent for recording;
o originals or copies of all assumption, modifications and
substitution agreements in those instances where the terms or
provisions of the mortgage or promissory note have been modified or
the mortgage loan has been assumed;
o an original or copy of the lender's title insurance policy or, if a
title insurance policy has not yet been issued, a commitment for
title insurance "marked-up" at the closing of the mortgage loan; and
o in those cases where applicable, the original or a copy of the
related ground lease.
The trustee, either directly or through a custodian, is required to hold
all of the documents delivered to it with respect to the mortgage loans in trust
for the benefit of the series "1999-CG3" certificateholders and, within a
specified period of time following the delivery, to conduct a review of those
documents. All of the above-described documents actually delivered to the
trustee in respect of any of the mortgage loans will collectively be the
"mortgage file" for that mortgage loan. The scope of the trustee's review of
each mortgage file is, in general, limited solely to confirming that the
documents listed above have been received. None of the trustee, the master
servicer, the special servicer or any custodian is under any duty or obligation
to inspect, review or examine any of the documents relating to the mortgage
loans to determine whether the document is valid, effective, enforceable, in
recordable form or otherwise appropriate for the represented purpose.
Within a specified period following the later of (i) the date on which the
series "1999-CG3" certificates are initially issued and (ii) the date on which
all recording information necessary to complete the subject document is received
by the trustee, the trustee must submit for recording in the real property
records of the applicable jurisdiction each of the assignments of recorded loan
documents in its favor described above. Because most of the mortgage loans are
newly originated, many of those assignments cannot be completed and recorded
until the related mortgage and/or assignment of leases and rents, reflecting the
necessary recording information, is returned from the applicable recording
office.
Representations and Warranties
As of the date of initial issuance of the series "1999-CG3" certificates--
o GECA will make with respect to each mortgage loan sold by it to us,
o Union Capital will make with respect to each mortgage loan
originated by it, sold to Column and resold to us, and
o Column will make with respect to each other mortgage loan sold by it
to us,
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certain representations and warranties generally to the effect listed below,
together with such other representations and warranties as may be required by
the rating agencies. The respective representations and warranties of Column,
GECA and Union Capital may not be identical. For purposes of this prospectus
supplement--
o GECA will be the "warranting party" with respect to each mortgage
loan sold by it to us,
o Union Capital will be the "warranting party" with respect to each
mortgage loan originated by it, sold to Column and resold to us, and
o Column will be the "warranting party" with respect to each other
mortgage loan sold by it to us.
The representations and warranties to be made in respect of each mortgage loan
by the related warranting party will include:
o The information relating to the mortgage loan, substantially similar
to that set forth in the loan schedule attached to the pooling and
servicing agreement, will be accurate and complete in all material
respects as of October 1, 1999.
o Immediately prior to its transfer and assignment of the mortgage
loan, the warranting party had good and marketable title to, and was
the sole owner of, the mortgage loan.
o The related mortgage is a valid enforceable first lien upon the
related underlying real property and all buildings thereon and
fixtures thereto, free and clear of all liens and encumbrances other
than Permitted Encumbrances.
o The related mortgage has not been satisfied, canceled, rescinded or
subordinated.
o To the knowledge of the warranting party, there is no proceeding
pending for the total or partial condemnation of the underlying real
property for that mortgage loan.
o Except as otherwise contemplated by the next sentence, there exists
an American Land Title Association or equivalent form of lender's
title insurance policy or a pro forma policy on which the required
premium has been paid, insuring the related originator, its
successors and assigns, as to the first priority lien of the related
mortgage in the original principal amount of the mortgage loan after
all advances of principal, subject only to (i) the lien of current
real property taxes, ground rents, water charges, sewer rents and
assessments not yet due and payable and (ii) the other exceptions
set forth in the policy. Alternatively, there exists a marked up
title insurance commitment from the closing of the mortgage loan to
issue such a policy.
o The proceeds of that mortgage loan have been fully disbursed except
in those cases where the full amount of the mortgage loan has been
made, but a portion of the proceeds is being held back pending
satisfaction of certain leasing criteria, repairs and other matters
with respect to the related underlying real property and there is no
requirement for future advances under the mortgage loan.
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o If the related mortgage is a deed of trust, a trustee, duly
qualified under applicable law, has been properly designated and
currently serves.
o To the knowledge of the warranting party, the related underlying
real property is free and clear of any damage that would materially
and adversely affect its value as security for the mortgage loan.
o The promissory note, the mortgage and each other agreement executed
by or on behalf of the related borrower in connection with the
mortgage loan is the legal, valid and binding obligation of the
related maker, subject to any non-recourse provisions contained in
any of the foregoing agreements and any applicable state
anti-deficiency or market value limit deficiency legislation. In
addition, each of the foregoing agreements is enforceable against
the maker in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally,
or by general principles of equity.
The representations and warranties made by Column, GECA and Union Capital
as described above will be assigned by us to the trustee pursuant to the pooling
and servicing agreement. If there exists a breach of any of the above-described
representations and warranties made by Column, GECA or Union Capital that
materially and adversely affects the value of the subject mortgage loan or the
interests of the series "1999-CG3" certificateholders therein, then that breach
will be a "material breach" of the representation and warranty. The rights of
the trust against the applicable warranting party with respect to any material
breach are described under "--Cures, Repurchases and Substitutions" below.
Cures, Repurchases and Substitutions
If there exists a material breach of any of the representations and
warranties made with respect to any of the mortgage loans, as discussed under
"--Representations and Warranties" above, then the related warranting party will
be required either:
o to cure the material breach in all material respects; or
o subject to the discussion below regarding substitution, to
repurchase the mortgage loan at a price generally equal to the sum
of--
(i) the unpaid principal balance of the mortgage loan,
(ii) accrued and unpaid interest at the related mortgage rate to
but not including the due date occurring in the collection
period in which the repurchase occurs,
(iii) the amount of any related unreimbursed servicing advances and,
to the extent not otherwise included in the servicing
advances, the costs and expenses of enforcing the repurchase
obligation, and
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(iv) interest on any related unreimbursed advances and, if the
mortgage loan was a specially serviced mortgage loan, the
25-basis point special servicing fees earned thereon as
described under "Servicing of the Mortgage Loans--Servicing
and Other Compensation and Payment of Expenses" in this
prospectus supplement.
The time period within which the applicable warranting party must complete
such cure or repurchase will be limited to 90 days or, if it is diligently
attempting to correct the problem and certain other conditions are satisfied,
180 days following its receipt of notice of the subject material breach.
If, at any time until the second anniversary of the date of initial
issuance of the series "1999-CG3" certificates, any warranting party is required
to repurchase any mortgage loan as a result of a material breach of any of its
representations and warranties, as contemplated above, then that warranting
party may, in lieu of repurchasing the affected mortgage loan:
o replace the mortgage loan with one or more substitute mortgage loans
that (i) has certain payment terms comparable to the mortgage loan
to be replaced and (ii) is otherwise acceptable to the designated
representative of the controlling class of the series "1999-CG3"
certificateholders or, if none has been appointed, to the holder(s)
of certificates representing a majority interest in that controlling
class; and
o pay an amount generally equal to the excess of the applicable
repurchase price for the mortgage loan to be replaced over the
unpaid principal balance of the applicable replacement mortgage
loan(s) as of the date of substitution, after application of all
payments of principal due on or before that date, whether or not
those payments have been received;
except that no substitution will be permitted unless, as confirmed in writing by
each of Moody's and Fitch, it would not result in a qualification, downgrade or
withdrawal of the rating then assigned to any class of the series "1999-CG3"
certificates by that rating agency.
The warranting parties are not obligated, however, to replace rather than
repurchase any mortgage loan as to which there is a material breach. Any
substitution will be at the sole discretion of the responsible warranting party.
Furthermore, the controlling class of the series "1999-CG3" certificateholders
and their designated representative will generally have a disincentive to find
any prospective replacement mortgage loan acceptable.
If the applicable warranting party fails to repurchase or replace any
mortgage loan affected by a material breach, then, except as described in the
next paragraph, neither we nor any other person will have any obligation to do
so.
Notwithstanding the foregoing, Column will--
o make the same representations and warranties, including those
discussed under "--Representations and Warranties" above, with
respect to each mortgage loan originated by Union Capital as it does
with respect to each mortgage loan originated by it, and
o have similar cure, repurchase or replacement obligations in the
event of material breaches of those representations and warranties.
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In general, however, if (i) there exists a breach of any such
representation or warranty and a breach of any representation or warranty made
by Union Capital with respect to the same mortgage loan, (ii) those breaches
otherwise give rise to a cure, repurchase or replacement obligation on the part
of both Column and Union Capital and (iii) Union Capital fails to satisfy its
cure, repurchase or replacement obligation within the period provided therefor,
then Column will be required to cure the material breach of its representation
or warranty as to, or repurchase or replace, the affected mortgage loan. For
this purpose, the cure, repurchase or replacement period for Column (as
otherwise described above) will be deemed to commence only upon expiration of
the cure, repurchase or replacement period for Union Capital.
Each of the warranting parties may only have limited assets with which to
fulfill any repurchase/substitution obligations on its part that may arise in
respect of breaches of any of its representations or warranties. There can be no
assurance that any of the warranting parties have or will have sufficient assets
with which to fulfill any repurchase/substitution obligations that may arise.
Expenses incurred by the master servicer and the trustee with respect to
enforcing any such repurchase/substitution obligation will be borne by the
applicable warranting party or, if not, will be reimbursable out of the
collection account to be maintained by the master servicer.
Changes in Mortgage Pool Characteristics
The description in this prospectus supplement of the mortgage pool and the
underlying real properties is based upon the mortgage pool as it is expected to
be constituted at the time the offered certificates are issued, with adjustments
for the scheduled principal payments due on the mortgage loans on or before
October 1, 1999. Prior to the issuance of the offered certificates, one or more
mortgage loans may be removed from the mortgage pool if we consider the removal
necessary or appropriate. A limited number of other mortgage loans may be
included in the mortgage pool prior to the issuance of the offered certificates,
unless including those mortgage loans would materially alter the characteristics
of the mortgage pool as described in this prospectus supplement. We believe that
the information in this prospectus supplement will be generally representative
of the characteristics of the mortgage pool as it will be constituted at the
time the offered certificates are issued; however, the range of mortgage rates
and maturities, as well as the other characteristics of the mortgage loans
described in this prospectus supplement, may vary, and the actual initial
mortgage pool balance may be as much as 5% larger or smaller than the initial
mortgage pool balance specified in this prospectus supplement.
A current report on Form 8-K will be available to purchasers of the
offered certificates on or shortly after the date of initial issuance of the
series "1999-CG3" certificates. That current report on Form 8-K will be filed,
together with the pooling and servicing agreement, with the SEC within 15 days
after the initial issuance of the offered certificates. In the event mortgage
loans are removed from or added to the mortgage pool, such removal or addition
will be noted in that current report on Form 8-K.
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SERVICING OF THE MORTGAGE LOANS
General
The servicing of the mortgage loans will be governed by the pooling and
servicing agreement. The following summaries describe certain provisions of the
pooling and servicing agreement relating to the servicing and administration of
the mortgage loans and any REO properties. You should also refer to the
accompanying prospectus, in particular the section captioned "Description of the
Governing Documents" for additional important information regarding provisions
of the pooling and servicing agreement that relate to the rights and obligations
of the master servicer and the special servicer. See "Description of the
Governing Documents--Collection and Other Servicing Procedures with Respect to
Mortgage Loans" in the accompanying prospectus.
The pooling and servicing agreement provides that the master servicer and
the special servicer must each service and administer the mortgage loans and any
real estate owned by the trust for which it is responsible, directly or through
sub-servicers, in accordance with--
o any and all applicable laws, and
o the express terms of the pooling and servicing agreement and the
respective mortgage loans.
Furthermore, to the extent consistent with the foregoing, the master servicer
and the special servicer must each service and administer the mortgage loans and
any real estate owned by the trust for which it is responsible in accordance
with the following standard (the "Servicing Standard"), which is set forth in
further detail in the pooling and servicing agreement:
o with the same care, skill and diligence as is normal and usual in
its general mortgage servicing and asset management activities with
respect to comparable loans and real properties that either are part
of other third party portfolios or are held as part of its own
portfolio, whichever servicing procedures are of a higher standard;
o with a view to the timely collection of all scheduled payments of
principal and interest under the mortgage loans, the full collection
of all prepayment premiums and yield maintenance charges that may
become payable under the mortgage loans and, in the case of the
special servicer, if a mortgage loan comes into and continues in
default and, in the judgment of the special servicer, no
satisfactory arrangements can be made for the collection of the
delinquent payments, including payments of prepayment premiums and
yield maintenance charges, the maximization of the recovery on that
defaulted mortgage loan to the series "1999-CG3" certificateholders
(as a collective whole) on a present value basis; and
o without regard to:
(i) any known relationship that the master servicer or the special
servicer, as the case may be, or any of its affiliates may
have with any of the underlying borrowers or any other party
to the pooling and servicing agreement;
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(ii) the ownership of any series "1999-CG3" certificate by the
master servicer or the special servicer, as the case may be,
or by any of its affiliates;
(iii) the obligation of the master servicer or the special servicer,
as the case may be, to make advances;
(iv) the right of the master servicer or the special servicer, as
the case may be, or any of its affiliates to receive
reimbursement of costs, or the sufficiency of any compensation
payable to it under the pooling and servicing agreement or
with respect to any particular transaction;
(v) the ownership, servicing or management by the master servicer
or the special servicer, as the case may be, or any of its
affiliates of any other loans or real properties not included
in or securing, as the case may be, the mortgage pool, or the
right to service or manage for others any such other loans or
real properties; or
(vi) any obligation of the master servicer or the special servicer,
as the case may be, or any of its affiliates, as a mortgage
loan seller, to pay any indemnity or cure any document defect
or breach with respect to or to repurchase or replace any
mortgage loan.
In general, the master servicer will be responsible for the servicing and
administration of--
o all mortgage loans as to which no Servicing Transfer Event has
occurred, and
o all worked-out mortgage loans as to which no new Servicing Transfer
Event has occurred.
The special servicer, on the other hand, will be responsible for the
servicing and administration of each mortgage loan as to which a Servicing
Transfer Event has occurred and which has not yet become a worked-out mortgage
loan with respect to that Servicing Transfer Event. The special servicer will
also be responsible for the administration of each underlying real property that
has been acquired by the trust in respect of a defaulted mortgage loan through
foreclosure, deed-in-lieu of foreclosure or otherwise (each such property, for
so long as it is real estate owned by the trust, an "REO property").
Mortgage loans as to which no Servicing Transfer Event has ever occurred,
and worked-out mortgage loans as to which no new Servicing Transfer Event has
occurred, are collectively referred to in this prospectus supplement as
"performing mortgage loans". Specially serviced mortgage loans and REO
properties are collectively referred to in this prospectus supplement as
"specially serviced assets". Performing mortgage loans will include mortgage
loans which may be delinquent, but not to the point of resulting in a Servicing
Transfer Event.
Despite the foregoing, the pooling and servicing agreement will require
the master servicer to continue to collect information and prepare all reports
to the trustee required to be collected or prepared with respect to any
specially serviced assets and, otherwise, to render certain incidental services
with respect to any specially serviced assets. Neither the master servicer nor
the special servicer will have responsibility for the performance by the other
of its respective obligations and duties under the pooling and servicing
agreement.
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A mortgage loan will become a specially serviced mortgage loan, if it has
not already done so, upon the occurrence of a Servicing Transfer Event. A
"Servicing Transfer Event" will be considered to have occurred with respect to
any mortgage loan if--
(1) the related borrower fails to make when due any monthly debt service
payment, including a balloon payment, or any other payment required
under the related promissory note or the related mortgage, and
either the failure actually continues, or the master servicer
believes it will continue, unremedied for 60 days;
(2) the master servicer or any of its affiliates owns a material
economic interest in the related borrower and, because that borrower
failed to make a monthly debt service payment with respect to the
mortgage loan, the master servicer must make an advance;
(3) the master servicer determines that a default in the making of a
monthly debt service payment, including a balloon payment, or any
other material payment required to be made under the related
promissory note or the related mortgage, is likely to occur within
30 days and either (a) the default is likely to remain unremedied
for at least 60 days or (b) the related borrower has requested a
material modification of the related mortgage loan;
(4) the master servicer determines that a non-payment default has
occurred under the mortgage loan that may materially impair the
value of the related underlying real property as security for the
mortgage loan and the default continues unremedied for the
applicable cure period under the terms of the mortgage loan or, if
no cure period is specified, for 60 days;
(5) certain events of bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings occur
with respect to the related borrower or the related underlying real
property, or the related borrower takes certain actions indicating
its bankruptcy, insolvency or inability to pay its obligations;
(6) the master servicer receives notice of the commencement of
foreclosure or similar proceedings with respect to the related
underlying real property; or
(7) if the mortgage loan is a CTL loan, the master servicer determines,
in accordance with the Servicing Standard, that a material default
has occurred under the related credit tenant lease and the default
continues unremedied for 60 days.
So long as no other Servicing Transfer Event then exists, a mortgage loan
will cease to be a specially serviced mortgage loan and will become a
"worked-out mortgage loan" as to which the master servicer will re-assume
servicing responsibilities, if and when:
(a) with respect to the circumstances described in clauses (1) and (2)
of the preceding paragraph, the related borrower makes three
consecutive full and timely monthly debt service payments under the
terms of the mortgage loan, as those terms may be changed or
modified in connection with a bankruptcy or similar proceeding
involving the related borrower or by reason of a modification,
waiver or amendment granted or agreed to by the master servicer or
the special servicer;
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(b) with respect to the circumstances described in clauses (3) and (5)
above, those circumstances cease to exist in the judgment of the
special servicer;
(c) with respect to the circumstances described in clauses (4) and (7)
above, the default is cured in the judgment of the special servicer;
and
(d) with respect to the circumstances described in clause (6) above, the
proceedings are terminated.
If any cross-collateralized mortgage loan becomes a specially serviced
mortgage loan, then all the other mortgage loans with which it is
cross-collateralized must also become specially serviced mortgage loans.
The Initial Master Servicer and the Initial Special Servicer
The Master Servicer. GE Capital Loan Services, Inc., a Delaware
corporation ("GECLS"), will act as initial master servicer with respect to the
mortgage pool. GECLS is a wholly owned subsidiary of GECIA Holdings, Inc., which
is itself a wholly owned subsidiary of GE Capital Services Corporation, which is
itself a wholly owned subsidiary of the General Electric Company and an
affiliate of GECA and GECC. GECLS's principal servicing offices are located at
363 N. Sam Houston Parkway E., Suite 1200, Houston, Texas 77060.
As of June 30, 1999, GECLS serviced approximately 3,470 commercial and
multifamily real estate loans, totaling approximately $22.6 billion in aggregate
outstanding principal amounts, including loans securitized in mortgage-backed
securities transactions.
The information set forth in this prospectus supplement concerning GECLS
has been provided by it. Neither we nor the underwriter makes any representation
or warranty as to the accuracy or completeness of this information.
The Special Servicer. GMAC Commercial Mortgage Corporation, a California
Corporation ("GMACCM"), will be the special servicer with respect to the
mortgage pool. GMACCM is a wholly-owned direct subsidiary of GMAC Commercial
Holding Corporation, which in turn is a direct subsidiary of GMAC Mortgage
Group, Inc. GMAC Mortgage Group, Inc. is in turn a wholly-owned direct
subsidiary of General Motors Acceptance Corporation. The principal offices of
GMACCM are located at 650 Dresher Road, Horsham, Pennsylvania 19044.
As of March 31, 1999, GMACCM was the special servicer of a portfolio of
multifamily and commercial loans totaling approximately $30 billion in aggregate
outstanding principal amount.
The information set forth in this prospectus supplement concerning GMACCM
has been provided by it. Neither we nor the underwriter makes any representation
or warranty as to the accuracy of this information.
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Servicing and Other Compensation and Payment of Expenses
The Master Servicing Fee. The principal compensation to be paid to the
master servicer with respect to its master servicing activities will be the
master servicing fee.
The "master servicing fee":
o will be earned in respect of each and every mortgage loan, including
each specially serviced mortgage loan, if any, and each mortgage
loan, if any, as to which the related underlying real property has
become an REO property; and
o in the case of each such mortgage loan, will--
(i) be calculated on a 30/360 basis,
(ii) accrue at the related master servicing fee rate,
(iii) accrue on the same principal amount as interest accrues or is
deemed to accrue from time to time with respect to that
mortgage loan, and
(iv) be payable monthly from amounts received in respect of
interest on that mortgage loan.
The "master servicing fee" will be 0.05% per annum with respect to 158
mortgage loans, representing 97.87% of the initial mortgage pool balance, and
0.15% per annum with respect to two mortgage loans, representing 2.13% of the
initial mortgage pool balance.
Additional Master Servicing Compensation. As additional master servicing
compensation, the master servicer will be entitled to receive--
o All prepayment interest excesses, if any, collected in respect of
the entire mortgage pool. If a borrower prepays its mortgage loan,
in whole or in part, after the borrower has made its monthly debt
service payment on the related due date during any collection
period, the amount of any interest collected on the subject
prepayment for the period following that due date, less the amount
of related master servicing fees payable therefrom and exclusive of
any Default Interest and Post-ARD Additional Interest included
therein, will be a "Prepayment Interest Excess". "Default Interest"
is any interest that (i) accrues on a defaulted mortgage loan solely
by reason of the subject default and (ii) is in excess of all
interest at the related mortgage rate and any Post-ARD Additional
Interest accrued on the mortgage loan.
o All late payment charges and Default Interest, if any, that were
collected in respect of any mortgage loan and that accrued while
such mortgage loan was a performing mortgage loan (but only to the
extent that any such late payment charges and default interest have
not otherwise been applied to pay the master servicer, the special
servicer or the trustee, as applicable, interest on advances made
thereby with respect to the related mortgage loan as described in
this prospectus supplement).
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In addition, all modification fees, assumption fees, assumption
application fees, consent/waiver fees and other comparable transaction fees and
charges, if any, collected in respect of the mortgage loans will be allocated
between the master servicer and the special servicer, as additional
compensation, or otherwise applied to cover related expenses, as provided in the
pooling and servicing agreement.
The master servicer will be authorized to invest or direct the investment
of funds held in its collection account (see "--Collection Account" below), or
in any and all accounts maintained by it that are escrow and/or reserve
accounts, in certain government securities and other investment grade
obligations specified in the pooling and servicing agreement ("Permitted
Investments"). The master servicer will be entitled to retain any interest or
other income earned on those funds and will be required to cover any losses of
principal from its own funds. The master servicer will not be obligated,
however, to cover any losses resulting from the bankruptcy or insolvency of any
depository institution or trust company holding any of those accounts.
Prepayment Interest Shortfalls. If a borrower prepays a mortgage loan, in
whole or in part, prior to the related due date during any collection period and
does not pay interest on the prepayment through that due date, then the
shortfall in a full month's interest, less the amount of related master
servicing fees that would have been payable therefrom and exclusive of any
Default Interest and Post-ARD Additional Interest that would have been included
therein, will be a "prepayment interest shortfall".
The pooling and servicing agreement provides that, if any prepayment
interest shortfalls are incurred with respect to the mortgage pool during any
collection period, the master servicer must make a non-reimbursable payment (a
"Compensating Interest Payment") with respect to the related payment date in an
amount equal to the lesser of:
(a) the total amount of those prepayment interest shortfalls, and
(b) a portion of all master servicing fees, up to two basis points for
each and every mortgage loan, together with all prepayment interest
excesses, if any, that are in any case collected with respect to the
mortgage pool during the same collection period.
No other master servicing compensation will be available to cover prepayment
interest shortfalls.
Any Compensating Interest Payment made by the master servicer with respect
to any payment date will be included among the amounts payable as principal and
interest on the series "1999-CG3" certificates on that payment date as described
under "Description of the Offered Certificates--Payments" in this prospectus
supplement. If the amount of the Compensating Interest Payment made by the
master servicer with respect to any payment date is less than the total of all
prepayment interest shortfalls incurred with respect to the mortgage pool during
the related collection period, then that shortfall (a "Net Aggregate Prepayment
Interest Shortfall") will be allocated among the respective classes of
interest-bearing series "1999-CG3" certificates, in reduction of the interest
payable on those certificates, as and to the extent described under "Description
of the Offered Certificates--Payments--Payments of Interest" in this prospectus
supplement.
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Principal Special Servicing Compensation. The principal compensation to be
paid to the special servicer with respect to its special servicing activities
will be--
o the special servicing fee,
o the workout fee, and
o the liquidation fee.
The "special servicing fee":
o will be earned with respect to each specially serviced mortgage
loan, and each mortgage loan as to which the related underlying real
property has become an REO property,
o with respect to each such mortgage loan, will--
(i) be calculated on a 30/360 basis,
(ii) accrue at a "special servicing fee rate" of 0.25% per annum,
and
(iii) accrue on the same principal amount as interest accrues or is
deemed to accrue from time to time on that mortgage loan, and
o will be payable monthly from general collections on all the mortgage
loans and any REO properties on deposit in the master servicer's
collection account from time to time.
The Workout Fee. The special servicer will, in general, be entitled to
receive a workout fee with respect to each worked-out mortgage loan. The
"workout fee" will be payable out of, and will be calculated by application of a
"workout fee rate" of 1.0% to, each collection of interest and principal
received on the mortgage loan for so long as it remains a worked-out mortgage
loan, exclusive of any portion of that collection that represents a recovery of
Default Interest or Post-ARD Additional Interest. The workout fee with respect
to any worked-out mortgage loan will cease to be payable if a new Servicing
Transfer Event occurs with respect to the loan. However, a new workout fee would
become payable if the mortgage loan again became a worked-out mortgage loan with
respect to that new Servicing Transfer Event. If the special servicer is
terminated other than for cause or resigns, it will retain the right to receive
any and all workout fees payable with respect to mortgage loans that became
worked-out mortgage loans during the period that it acted as special servicer
and remained worked-out mortgage loans at the time of its termination or
resignation. The successor special servicer will not be entitled to any portion
of those workout fees. Although workout fees are intended to provide the special
servicer with an incentive to better perform its duties, the payment of any
workout fee will reduce amounts payable to the series "1999-CG3"
certificateholders.
The Liquidation Fee. The special servicer will be entitled to receive a
liquidation fee with respect to each specially serviced mortgage loan for which
it obtains a full or discounted payoff from the related borrower. The special
servicer will also be entitled to receive a liquidation fee with respect to any
specially serviced mortgage loan or REO property as to which it receives any
liquidation proceeds, condemnation
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proceeds or insurance proceeds, except as described below. As to each specially
serviced mortgage loan and REO property, the "liquidation fee" will be payable
from, and will be calculated by application of a "liquidation fee rate" of 1.0%
to, the related payment or proceeds, exclusive of any portion of that payment or
proceeds that represents a recovery of Default Interest or Post-ARD Additional
Interest.
Despite anything to the contrary described above, no liquidation fee will
be payable based on, or out of, proceeds received in connection with:
o the repurchase or replacement of any mortgage loan for a breach of
representation or warranty (see "Description of the Mortgage
Pool--Cures, Repurchases and Substitutions" in this prospectus
supplement);
o the purchase of any defaulted mortgage loan or REO property by the
master servicer, the special servicer or any holder or holders of
certificates evidencing a majority interest in the "controlling
class" of the series "1999-CG3" certificates (see "--Sale of
Defaulted Mortgage Loans" below); or
o the purchase of all of the mortgage loans and REO properties by the
master servicer, the special servicer or any holder or holders of
certificates evidencing a majority interest in the "controlling
class" of the series "1999-CG3" certificates in connection with the
termination of the trust (see "Description of the Offered
Certificates--Termination" in this prospectus supplement).
Although liquidation fees are intended to provide the special servicer
with an incentive to better perform its duties, the payment of any liquidation
fee will reduce amounts payable to the series "1999-CG3" certificateholders.
Additional Special Servicing Compensation. As additional special servicing
compensation, the special servicer will be entitled to receive all late payment
charges and Default Interest, if any, collected in respect of any mortgage loan
that accrued while the mortgage loan was a specially serviced mortgage loan, but
only to the extent that those late payment charges and Default Interest have not
otherwise been applied to pay the master servicer, the special servicer or the
trustee, as applicable, interest on advances made the master servicer, the
special servicer or the trustee, as the case may be, with respect to the related
mortgage loan as described in this prospectus supplement.
All modification fees, assumption fees, assumption application fees and
other comparable transaction fees and charges, if any, collected in respect of
the specially serviced mortgage loans, will be allocated between the master
servicer and the special servicer, as additional compensation, or otherwise
applied to cover related expenses, as provided in the pooling and servicing
agreement.
In addition, the special servicer will be authorized to invest or direct
the investment of funds held in its REO account (see "--REO Properties" below)
in Permitted Investments. The special servicer will be entitled to retain any
interest or other income earned on those funds and will be required to cover any
losses of principal from its own funds without any right to reimbursement. The
special servicer will not be obligated, however, to cover any losses resulting
from the bankruptcy or insolvency of any depository institution or trust company
holding the special servicer's REO account.
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Payment of Expenses; Servicing Advances. Each of the master servicer and
the special servicer will be required to pay its overhead and any general and
administrative expenses incurred by it in connection with its servicing
activities under the pooling and servicing agreement. The master servicer and
the special servicer will not be entitled to reimbursement for these expenses
except as expressly provided in the pooling and servicing agreement.
Any and all customary, reasonable and necessary "out of pocket" costs and
expenses incurred by the master servicer or the special servicer in connection
with the servicing of a mortgage loan after a default, delinquency or other
unanticipated event, or in connection with the administration of any REO
property, will be "servicing advances". Servicing advances will be reimbursable
from future payments and other collections, including insurance proceeds,
condemnation proceeds and liquidation proceeds, in connection with the related
mortgage loan or REO property. In addition, the special servicer may
periodically require the master servicer to reimburse the special servicer for
any servicing advances made by it. Upon reimbursing the special servicer for any
servicing advance, the master servicer will be deemed to have made the advance.
The special servicer may request the master servicer to make servicing
advances with respect to a specially serviced mortgage loan or REO property, in
lieu of the special servicer's making that advance itself. The special servicer
must make the request in writing, in a timely manner that does not adversely
affect the interests of any series "1999-CG3" certificateholder. The master
servicer must make the requested servicing advance within a specified number of
days following the master servicer's receipt of the request. If the request is
timely and properly made, the special servicer will be relieved of any
obligations with respect to a servicing advance that it requests the master
servicer to make, regardless of whether or not the master servicer actually
makes that advance.
If the master servicer or the special servicer is required under the
pooling and servicing agreement to make a servicing advance, but neither does so
within ten days after the servicing advance is required to be made, then the
trustee will be required: (a) if it has actual knowledge of the failure, to give
the defaulting party notice of its failure; and (b) if the failure continues for
three more business days, to make the servicing advance.
Despite the foregoing discussion or anything else to the contrary in this
prospectus supplement, none of the master servicer, the special servicer or the
trustee will be obligated to make servicing advances that, in the judgment of
any such party, would not be ultimately recoverable from expected collections on
the related mortgage loan or REO property. If the master servicer, the special
servicer or the trustee makes any servicing advance that it subsequently
determines, in its judgment, is not recoverable from expected collections on the
related mortgage loan or REO property, it may obtain reimbursement for that
advance, together with interest thereon, out of general collections on the
mortgage loans and any REO properties on deposit in the master servicer's
collection account from time to time.
The master servicer will be permitted to pay, and the special servicer may
direct the payment of, certain servicing expenses directly out of the master
servicer's collection account and at times without regard to the relationship
between the expense and the funds from which it is being paid, including in
connection with the remediation of any adverse environmental circumstance or
condition at any of the underlying real properties. In addition, the pooling and
servicing agreement will require the master servicer, at the direction of the
special servicer if a specially serviced asset is involved, to pay directly out
of the master servicer's collection account any servicing expense that, if
advanced by the master servicer or the special servicer, would not be
recoverable from expected collections on the related mortgage loan or REO
property, provided
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that the master servicer, or the special servicer if a specially serviced asset
is involved, has determined in accordance with the Servicing Standard that
making the payment is in the best interests of the series "1999-CG3"
certificateholders (as a collective whole).
The master servicer, the special servicer and the trustee will be entitled
to receive interest on servicing advances made by them. The interest will accrue
on the amount of each servicing advance, and compound monthly, for so long as
the servicing advance is outstanding, at a rate per annum equal to the "prime
rate" as published in the "Money Rates" section of The Wall Street Journal, as
that "prime rate" may change from time to time. Interest accrued with respect to
any servicing advance will be payable in the collection period in which that
advance is reimbursed--
o first, out of Default Interest and late payment charges collected on
the related mortgage loan during that collection period, and
o then, if and to the extent that the Default Interest and late
charges referred to in clause first above are insufficient to cover
the advance interest, out of any amounts then on deposit in the
master servicer's collection account.
Sub-Servicers
The master servicer and, subject to certain restrictions, the special
servicer may each delegate any of its servicing obligations under the pooling
and servicing agreement to any one or more third-party servicers. The master
servicer or the special servicer, as the case may be, will remain obligated
under the pooling and servicing agreement for any duties delegated to a
sub-servicer. Some of the mortgage loans are currently being serviced by
third-party servicers that are entitled to and will become sub-servicers of
these loans on behalf of the master servicer (those sub-servicers, the
"Designated Sub-Servicers"). Each sub-servicing agreement between the master
servicer or special servicer, as the case may be, and a sub-servicer must
provide that, if for any reason the master servicer or special servicer, as the
case may be, is no longer acting in that capacity, the trustee or any other
successor to the master servicer or special servicer, as applicable, may:
o assume the party's rights and obligations under the sub-servicing
agreement;
o enter into a new sub-servicing agreement with the sub-servicer on
terms which are acceptable to the trustee or successor master
servicer or special servicer, as the case may be, and that
sub-servicer; or
o terminate the sub-servicing agreement without cause.
Notwithstanding the foregoing, neither the trustee nor any other successor
master servicer may terminate the sub-servicing agreement for a Designated
Sub-Servicer without cause, unless it pays that Designated Sub-Servicer a
termination fee.
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The master servicer and special servicer will each be required to monitor
the performance of sub-servicers retained by it. The master servicer and special
servicer will each be solely liable for all fees owed by it to any sub-servicer
retained by it, irrespective of whether its compensation pursuant to the pooling
and servicing agreement is sufficient to pay those fees. Each sub-servicer will
be reimbursed by the master servicer or special servicer, as the case may be,
for certain expenditures which it makes, generally to the same extent the master
servicer or special servicer, as the case may be, would be reimbursed under the
pooling and servicing agreement.
The Controlling Class Representative
Controlling Class. As of any date of determination, the controlling class
of the series "1999-CG3" certificates (the "Controlling Class") will be the most
subordinate class of series "1999-CG3" certificates then outstanding that is
eligible to be the Controlling Class and that has an aggregate principal balance
that is not less than 25% of that class' original aggregate principal balance.
However, if no class of series "1999-CG3" certificates that is eligible to be
the Controlling Class has an aggregate principal balance that satisfies this
requirement, then the Controlling Class will be the most subordinate eligible
class of series "1999-CG3" certificates. The classes of series "1999-CG3"
certificates eligible to be the Controlling Class are the "A-1A", "A-1B",
"A-1C", "A-2", "A-3", "A-4", "A-5", "B-1", "B-2", "B-3", "B-4", "B-5", "B-6",
"B-7", "B-8", "C" and "D" classes, except that the "A-1A" and "A-1B" classes
will be treated as a single class.
Election, Resignation and Removal. The holders (or, in the case of
certificates held in book-entry form, the beneficial owners) of series
"1999-CG3" certificates representing greater than 50% of the aggregate principal
balance of the Controlling Class will be entitled to select a representative
(the "Controlling Class Representative") having certain rights and powers
described below or replace an existing Controlling Class Representative.
The trustee will be required to promptly notify all the holders (and, in
the case of certificates held in book-entry form, to the extent actually known
to certain designated officers of the trustee, all the beneficial owners) of
series "1999-CG3" certificates of the Controlling Class that they may select a
Controlling Class Representative upon:
(i) the receipt by the trustee of written requests for the selection of
a Controlling Class Representative from the holders (or, in the case
of certificates held in book-entry form, the beneficial owners) of
series "1999-CG3" certificates representing greater than 50% of the
aggregate principal balance of the Controlling Class;
(ii) the resignation or removal of the person acting as Controlling Class
Representative; or
(iii) a determination by the trustee that the Controlling Class has
changed.
The notice will explain the process for selecting a Controlling Class
Representative. The process may include the designation of the Controlling Class
Representative by any holder of series "1999-CG3" certificates representing a
majority interest in the Controlling Class by written instructions delivered to
the
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trustee. The appointment of any person as a Controlling Class Representative
will not be effective until the person provides the trustee with written
confirmation of its acceptance of its appointment, an address and telecopy
number for the delivery of notices and other correspondence and a list of
officers or employees of the person with whom the parties to the pooling and
servicing agreement may deal, including their names, titles, work addresses and
telecopy numbers.
Resignation and Removal of the Controlling Class Representative. The
Controlling Class Representative may at any time resign by giving written notice
to the trustee and to each holder (or, in the case of certificates held in
book-entry form, each beneficial owner) of series "1999-CG3" certificates of the
Controlling Class. The holders (or, in the case of certificates held in
book-entry form, the beneficial owners) of series "1999-CG3" certificates
representing greater than 50% of the aggregate principal balance of the
Controlling Class will be entitled to remove any existing Controlling Class
Representative by giving written notice to the trustee and to the existing
Controlling Class Representative.
Certain Rights and Powers of the Controlling Class Representative. The
Controlling Class Representative will be entitled to advise the special servicer
with respect to the following actions. In addition, except as otherwise
described below, the special servicer will not be permitted to take any of the
following actions as to which the Controlling Class Representative has objected
in writing within ten business days of having been notified in writing thereof
and having been provided with all reasonably requested information with respect
thereto--
o any foreclosure upon or comparable conversion, which may include
acquisitions of an REO property, of the ownership of properties
securing those specially serviced mortgage loans as come into and
continue in default;
o any modification, amendment or waiver of a monetary term, including
the timing of payments, or any material non-monetary term of a
mortgage loan;
o any proposed sale of a defaulted mortgage loan or any related REO
property, other than in connection with the termination of the trust
as described under "Description of the Offered
Certificates--Termination" in this prospectus supplement, for less
than par;
o any acceptance of a discounted payoff;
o any determination to bring an REO property into compliance with
applicable environmental laws or to otherwise address hazardous
material located at an REO property;
o any release of collateral for a mortgage loan, other than in
accordance with the terms of, or upon satisfaction of, that mortgage
loan;
o any acceptance of substitute or additional collateral for a mortgage
loan, other than in accordance with the terms of that mortgage loan;
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
o any acceptance of an assumption agreement releasing a borrower from
liability under a mortgage loan.
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In addition, except as otherwise described below, the Controlling Class
Representative may direct the special servicer to take, or to refrain from
taking, such actions as the Controlling Class Representative may consider
advisable or as to which provision is otherwise made in the pooling and
servicing agreement.
Notwithstanding the foregoing, no advice, direction or objection given or
made by the Controlling Class Representative, as contemplated by either of the
two preceding paragraphs, may--
o require or cause the special servicer to violate applicable law, the
terms of any mortgage loan or any other provision of the pooling and
servicing agreement described in this prospectus supplement or the
accompanying prospectus, including the special servicer's obligation
to act in accordance with the Servicing Standard;
o result in certain adverse tax consequences for the trust;
o expose the trust, the depositor, the master servicer, the special
servicer, the trustee or any of their respective affiliates,
directors, officers, employees or agents, to any material claim,
suit or liability; or
o materially expand the scope of the master servicer's or special
servicer's responsibilities under the pooling and servicing
agreement.
The special servicer is to disregard any such advice, direction or objection
that does so. Furthermore, the special servicer will not be obligated to seek
approval from the Controlling Class Representative for any actions to be taken
by the special servicer with respect to any particular specially serviced
mortgage loan if--
o the special servicer has, as described above, notified the
Controlling Class Representative in writing of various actions that
the special servicer proposes to take with respect to the workout or
liquidation of that mortgage loan, and
o for 60 days following the first such notice, the Controlling Class
Representative has objected to all of those proposed actions and has
failed to suggest any alternative actions that the special servicer
considers to be consistent with the Servicing Standard.
When reviewing the rest of this "Servicing of the Mortgage Loans" section,
it is important that you consider the effects that the rights and powers of the
Controlling Class Representative discussed above could have on the actions of
the special servicer.
Liability to Borrowers. In general, any and all expenses of the
Controlling Class Representative are to be borne by the holders (or, if
applicable, the beneficial owners) of the Controlling Class, in proportion to
their respective percentage interests in that class, and not by the trust.
However, if a claim is made against the Controlling Class Representative by a
borrower with respect to the pooling and servicing agreement or any particular
mortgage loan, the Controlling Class Representative is to immediately notify the
trustee, the master servicer and the special servicer. If (a) the special
servicer or the trust are also named parties to the same action, and (b) in the
sole judgment of the special servicer, (i) the Controlling Class Representative
acted in good faith, without negligence or willful misfeasance, with regard to
the particular matter at issue, and (ii) there is no potential for the special
servicer or the trust to be an adverse party in the action as regards the
Controlling Class Representative, then the special servicer on behalf of the
trust will, subject to the
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discussion under "Description of the Governing Documents--Certain Matters
Regarding the Master Servicer, the Special Servicer, the Manager and Us" in the
accompanying prospectus, assume the defense of the claim against the Controlling
Class Representative.
Liability to the Trust and Series "1999-CG3" Certificateholders. The
Controlling Class Representative may have special relationships and interests
that conflict with those of the holders of one or more classes of the offered
certificates. In addition, the Controlling Class Representative does not have
any duties to the holders of any class of series "1999-CG3" certificates other
than the Controlling Class. It may act solely in the interests of the
certificateholders of the Controlling Class and will have no liability to any
other series "1999-CG3" certificateholders for having done so. No series
"1999-CG3" certificateholder may take any action against the Controlling Class
Representative for its having acted solely in the interests of the
certificateholders of the Controlling Class.
Replacement of the Special Servicer
The holders (or, in the case of certificates held in book-entry form, the
beneficial owners) of series "1999-CG3" certificates representing more than 50%
of the aggregate principal balance of the Controlling Class may terminate an
existing special servicer and appoint a successor. In addition, if the special
servicer is terminated in connection with an event of default (see "--Events of
Default" and "--Rights Upon Event of Default" below), the holders (or, in the
case of certificates held in book-entry form, the beneficial owners) of series
"1999-CG3" certificates representing more than 50% of the aggregate principal
balance of the Controlling Class may appoint a successor. In either case, any
appointment of a successor special servicer will be subject to, among other
things, receipt by the trustee of--
(i) written confirmation from each of Moody's and Fitch that the
appointment will not result in a qualification, downgrade or
withdrawal of any of the ratings then assigned thereby to the series
"1999-CG3" certificates, and
(ii) the written agreement of the proposed special servicer to be bound
by the terms and conditions of the pooling and servicing agreement,
together with an opinion of counsel regarding, among other things,
the enforceability of the pooling and servicing agreement against
the proposed special servicer.
Subject to the foregoing, any holder (or, in the case of certificates held
in book-entry form, any beneficial owner) of a series "1999-CG3" certificate or
any of their affiliates may be appointed as special servicer.
If the certificateholders of the Controlling Class terminate an existing
special servicer without cause, then the reasonable "out-of-pocket" costs and
expenses of any related transfer of servicing duties are to be paid by the
successor special servicer or the holders (or, if applicable, the beneficial
owners) of certificates of the Controlling Class that voted to remove the
terminated special servicer, as the parties may agree. The terminated special
servicer will be entitled to:
o payment out of the master servicer's collection account for all
accrued and unpaid special servicing fees; and
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o reimbursement by the successor special servicer for any outstanding
servicing advances made by the terminated special servicer, together
with interest.
Upon reimbursement, any advance will be treated as if it were made by the
successor special servicer.
Enforcement of "Due-on-Sale" and "Due-on-Encumbrance" Provisions
Subject to the discussion under "--The Controlling Class Representative" above,
the master servicer or the special servicer, as applicable, will be required to
determine, in a manner consistent with the Servicing Standard, whether to
exercise any right the lender under any mortgage loan may have under either a
"due-on-sale" or "due-on-encumbrance clause" to accelerate payment of that
mortgage loan. However, under the circumstances described below, neither the
master servicer nor the special servicer may waive its rights or grant its
consent under any "due-on-sale" or "due-on-encumbrance" clause unless it has
received written confirmation from each applicable rating agency that this
action would not result in the qualification, downgrade or withdrawal of any of
the then-current ratings then assigned by the rating agency to the series
"1999-CG3" certificates. With respect to "due-on-sale" clauses, this requirement
will apply only if the outstanding principal balance of the subject mortgage
loan, together with the total outstanding principal balance of all other
mortgage loans that are cross-collateralized with the subject mortgage loan or
have been made to the same borrower or affiliated borrowers, is equal to or
greater than a specified percentage of the then total principal balance of the
mortgage pool. In the case of "due-on-encumbrance" provisions, this requirement
will always apply. In addition, the master servicer may not waive its rights or
grant its consent under any "due-on-sale" or "due-on-encumbrance" clause without
the consent of the special servicer.
Modifications, Waivers, Amendments and Consents
Subject to the discussion under "--The Controlling Class Representative"
above, the special servicer, with respect to specially serviced mortgage loans,
and the master servicer, with respect to performing mortgage loans, each may,
consistent with the Servicing Standard, agree to:
o any modification, waiver or amendment of any term of any mortgage
loan;
o extend the maturity of any mortgage loan;
o defer or forgive the payment of interest on and principal of any
mortgage loan;
o defer or forgive the payment of prepayment premiums, yield
maintenance charges and late payment charges on any mortgage loan;
o permit the release, addition or substitution of collateral securing
any mortgage loan; or
o permit the release, addition or substitution of the borrower or any
guarantor of any mortgage loan.
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The ability of the special servicer, in the case of specially serviced mortgage
loans, and the master servicer, in the case of performing mortgage loans, to
agree to any of the foregoing, however, is subject to each of the following
limitations, conditions and restrictions:
o With limited exception, including with respect to certain routine
matters, the master servicer may not agree to any modification,
waiver or amendment of any term of, or take any of the other
above-referenced actions with respect to, any mortgage loans without
the consent of the special servicer, provided that such consent--
(i) is to be withheld or granted by the special servicer in
accordance with the Servicing Standard, and
(ii) will be deemed to have been granted if not expressly denied
within ten business days following the special servicer's
receipt from the master servicer of all information reasonably
requested by it in order to make an informed decision.
o With limited exception, including with respect to Post-ARD
Additional Interest as described below, the special servicer may not
agree to or consent to the master servicer's agreeing to any
modification, waiver or amendment of any term of any mortgage loan,
or take or consent to the master servicer's taking any of the other
above-referenced actions with respect to any mortgage loan, if doing
so would--
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable under the mortgage
loans, or
(ii) in the special servicer's judgment, materially impair the
security for the mortgage loan or reduce the likelihood of
timely payment of amounts due thereon,
unless a material default on the mortgage loan has occurred or, in
the special servicer's judgment, a default in respect of payment on
the mortgage loan is reasonably foreseeable, and the modification,
waiver, amendment or other action is reasonably likely to produce a
greater recovery to the series "1999-CG3" certificateholders, as a
collective whole, on a present value basis than would liquidation.
o The special servicer may not extend or consent to the master
servicer's extending the date on which any balloon payment is
scheduled to be due on any mortgage loan to a date beyond the
earliest of--
(i) the fifth anniversary of the mortgage loan's original stated
maturity date,
(ii) two years prior to the rated final payment date, and
(iii) if the mortgage loan is secured by a mortgage solely or
primarily on the related borrower's leasehold interest in the
related underlying real property, ten years prior to the end
of the then current term of the related ground lease, plus any
unilateral options to extend.
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o Neither the master servicer nor the special servicer may make or
permit any modification, waiver or amendment of any term of, or take
any of the other above-referenced actions with respect to, any
mortgage loan that would--
(i) cause any of REMIC I, REMIC II or REMIC III to fail to qualify
as a REMIC under the Internal Revenue Code of 1986,
(ii) result in the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date of any
of REMIC I, REMIC II or REMIC III under the Internal Revenue
Code of 1986, or
(iii) adversely affect the status of either grantor trust created
under the pooling and servicing agreement as a grantor trust
under the Internal Revenue Code of 1986;
o The special servicer may not permit or consent to the master
servicer's permitting any borrower to add or substitute any real
estate collateral for its mortgage loans, unless the special
servicer has first--
(i) determined, based upon an environmental assessment prepared by
an independent person who regularly conducts environmental
assessments, at the expense of the borrower, that:
(a) the additional or substitute collateral is in compliance
with applicable environmental laws and regulations, and
(b) that there are no circumstances or conditions present
with respect to the new collateral relating to the use,
management or disposal of any hazardous materials for
which investigation, testing, monitoring, containment,
clean-up or remediation would be required under any then
applicable environmental laws or regulations, and
(ii) received confirmation from each of Moody's and Fitch that the
addition or substitution of collateral will not result in a
qualification, downgrade or withdrawal of any rating then
assigned by the rating agency to a class of series "1999-CG3"
certificates.
o Subject to limited exceptions, the special servicer may not release
or consent to the master servicer's releasing any material
collateral securing an outstanding mortgage loan other than in
accordance with the terms of, or upon satisfaction of, the mortgage
loan.
The limitations, conditions and restrictions described above will not
apply to any of the acts referenced in this "--Modifications, Waivers,
Amendments and Consents" section that is required under the terms of the subject
mortgage loan in effect on the date of initial issuance of the series "1999-CG3"
certificates (or, in the case of a replacement mortgage loan, on the related
date of substitution) or that is solely within the control of the related
borrower. Also, neither the master servicer nor the special servicer will be
required to oppose the confirmation of a plan in any bankruptcy or similar
proceeding involving a borrower if, in its judgment, opposition would not
ultimately prevent the confirmation of the plan or one substantially similar,
despite the discussion above.
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Notwithstanding the foregoing, the master servicer will be permitted, in
the case of certain ARD loans, in its discretion, after the related anticipated
repayment date, to waive any or all of the Post-ARD Additional Interest accrued
on that mortgage loan, if, prior to the related maturity date, the related
borrower has requested the right to prepay the mortgage loan in full, together
with all payments required by the related loan documents in connection with the
prepayment except for that Post-ARD Additional Interest. However, the master
servicer's determination to waive the trust's right to receive that Post-ARD
Additional Interest--
o must be in accordance with the Servicing Standard, and
o will be subject to approval by the special servicer.
The master servicer will not have any liability to the trust, the series
"1999-CG3" certificateholders or any other person for any such determination
that is made in accordance with the Servicing Standard. The pooling and
servicing agreement will also limit the master servicer's and the special
servicer's ability to institute an enforcement action solely for the collection
of Post-ARD Additional Interest.
All modifications, waivers and amendments entered into in respect of the
mortgage loans are to be in writing. Each of the master servicer and the special
servicer must deliver to the trustee for deposit in the related mortgage file,
an original counterpart of the agreement relating to each modification, waiver
or amendment agreed to by it, promptly following its execution.
Required Appraisals
Promptly following the occurrence of any of the following events (each, an
"Appraisal Trigger Event") with respect to any of the mortgage loans, the
special servicer must obtain, and deliver to the trustee and master servicer a
copy of, an appraisal of the related underlying real property from an
independent appraiser meeting certain specified qualifications (a "Required
Appraisal"), unless such an appraisal had previously been obtained within the
prior 12 months--
o the mortgage loan becomes a Modified Mortgage Loan (as defined
below);
o the related borrower fails to make any monthly debt service payment
with respect to the mortgage loan and the failure continues for 60
days;
o a receiver is appointed and continues in that capacity in respect of
the underlying real property securing the mortgage loan;
o the related borrower becomes the subject of bankruptcy, insolvency
or similar proceedings; or
o the underlying real property securing the mortgage loan becomes an
REO property.
Notwithstanding the foregoing, if the unpaid principal balance of the
subject mortgage loan, net of related unreimbursed advances of principal, is
less than $1,000,000, the special servicer may perform an internal valuation of
the underlying real property.
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As a result of any such appraisal or other valuation, it may be determined
that an Appraisal Reduction Amount exists with respect to the subject mortgage
loan. The "Appraisal Reduction Amount" for any mortgage loan as to which an
Appraisal Trigger Event has occurred--
o will be determined shortly following the later of the date on which
the relevant appraisal or other valuation is obtained or performed
and the date on which the first relevant Appraisal Trigger Event
occurred, and
o will equal the excess, if any, of "x" over "y" where--
(a) "x" is equal to the sum of:
(i) the unpaid principal balance of the mortgage loan, net
of any related unreimbursed advances of principal;
(ii) to the extent not previously advanced by or on behalf of
the master servicer or the trustee, all unpaid interest,
other than any Default Interest and Post-ARD Additional
Interest, accrued on the mortgage loan through the most
recent due date prior to the date of determination;
(iii) all accrued but unpaid special servicing fees in respect
of the mortgage loan;
(iv) all related unreimbursed advances made by or on behalf
of the master servicer, the special servicer or the
trustee with respect to the required appraisal loan,
together with interest thereon; and
(v) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable,
ground rents in respect of the related underlying real
property, net of any escrow reserves held by the master
servicer or the special servicer which covers the
particular item and certain other related reserves; and
(b) "y" is equal to 90% of the resulting appraised or estimated
value of the related underlying real property or REO property,
as such appraised or estimated value may be reduced, to not
less than zero, by the amount of any obligations secured by
liens on the property that are prior to the lien of the
mortgage loan.
If, however, any Required Appraisal or other valuation is not obtained or
performed within 60 days of an Appraisal Trigger Event, and no comparable
appraisal or other valuation had been obtained or performed during the 12-month
period prior to that Appraisal Trigger Event, then until the Required Appraisal
or other valuation is obtained or performed, the "Appraisal Reduction Amount"
for the subject mortgage loan will equal approximately 25% of the unpaid
principal balance of that mortgage loan, net of any related unreimbursed
advances of principal. After receipt of the Required Appraisal or other
valuation, the special servicer will determine the Appraisal Reduction Amount,
if any, for the subject mortgage loan as described in the prior paragraph.
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An Appraisal Reduction Amount is relevant to the determination of the
amount of any advances of delinquent interest required to be made with respect
to the affected mortgage loan. See "Description of the Offered
Certificates--Advances of Delinquent Monthly Debt Service Payments" in this
prospectus supplement.
If an Appraisal Trigger Event occurs with respect to any mortgage loan,
then the special servicer will have an ongoing obligation to obtain or perform,
as the case may be, within 30 days of each anniversary of the occurrence of that
Appraisal Trigger Event, an update of the prior Required Appraisal or other
valuation. Based upon that update, the special servicer is to redetermine and
report to the trustee and the master servicer the new Appraisal Reduction
Amount, if any, with respect to the mortgage loan. This ongoing obligation will
cease if and when--
o the subject mortgage loan has become a worked-out mortgage loan as
contemplated under "--General" above,
o the subject mortgage loan has remained current for at least three
consecutive monthly debt service payments, and
o no other Servicing Transfer Event has occurred with respect to the
subject mortgage loan during the preceding three months.
The cost of each required appraisal (and any update thereof) will be
advanced by the master servicer and will be reimbursable to the master servicer
as a servicing advance.
At any time that an Appraisal Reduction Amount exists with respect to any
mortgage loan, the Controlling Class Representative will be entitled, at its own
expense, to obtain and deliver to the master servicer, the special servicer and
the trustee an appraisal that satisfies the criteria for a Required Appraisal.
Upon request of the Controlling Class Representative, the special servicer will
be required to recalculate the Appraisal Reduction Amount with respect to the
subject mortgage loan based on that appraisal.
A "Modified Mortgage Loan" is any mortgage loan as to which any Servicing
Transfer Event has occurred and which has been modified by the special servicer
in a manner that:
(A) affects the amount or timing of any payment of principal or interest
due thereon, other than, or in addition to, bringing current
scheduled payments of principal and/or interest with respect to the
mortgage loan;
(B) except as expressly contemplated by the related loan documents,
results in a release of the lien of the mortgage on any material
portion of the related underlying real property without a
corresponding principal prepayment in an amount not less than the
fair market value (as is) of the property to be released; or
(C) in the judgment of the special servicer, otherwise materially
impairs the security for the mortgage loan or reduces the likelihood
of timely payment of amounts due thereon.
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Collection Account
General. The master servicer will be required to establish and maintain an
account for purposes of holding payments and other collections that it receives
with respect to the mortgage loans. That "collection account" must be maintained
in a manner and with a depository institution that satisfies rating agency
standards for securitizations similar to the one involving the series "1999-CG3"
certificates.
The funds held in the master servicer's collection account may be held as
cash or invested in Permitted Investments. Any interest or other income earned
on funds in the master servicer's collection account will be paid to the master
servicer as additional compensation subject to the limitations set forth in the
pooling and servicing agreement.
Deposits. Under the pooling and servicing agreement, the master servicer
must deposit or cause to be deposited in its collection account within one
business day following receipt, in the case of payments and other collections on
the mortgage loans, or as otherwise required under the pooling and servicing
agreement, the following payments and collections received or made by or on
behalf of the master servicer with respect to the mortgage pool subsequent to
the date of initial issuance of the series "1999-CG3" certificates, other than
monthly debt service payments due on or before October 1, 1999, which monthly
debt service payments belong to the related mortgage loan seller:
(i) all payments on account of principal on the mortgage loans,
including principal prepayments;
(ii) all payments on account of interest on the mortgage loans, including
Default Interest and Post-ARD Additional Interest;
(iii) all prepayment premiums, yield maintenance charges and late payment
charges collected with respect to the mortgage loans;
(iv) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to an
underlying real property or the related mortgage loan, and all
proceeds received in connection with the condemnation or the taking
by right of eminent domain of an underlying real property, in each
case to the extent not otherwise required to be applied to the
restoration of the underlying real property or released to the
related borrower;
(v) all amounts received and retained in connection with the liquidation
of defaulted mortgage loans by foreclosure or as otherwise
contemplated under "--Realization Upon Defaulted Mortgage Loans"
below;
(vi) any amounts paid by Column, GECA or Union Capital in connection with
the repurchase or replacement of a mortgage loan as described under
"Description of the Mortgage Pool--Cures, Repurchases and
Substitutions" in this prospectus supplement;
(vii) any amounts paid to purchase all the mortgage loans and any REO
properties in connection with the termination of the trust as
contemplated under "Description of the Offered
Certificates--Termination" in this prospectus supplement;
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(viii) any amounts required to be deposited by the master servicer in
connection with losses incurred with respect to Permitted
Investments of funds held in the collection account;
(ix) all payments required to be paid by the master servicer or the
special servicer with respect to any deductible clause in any
blanket insurance policy as described under "Description of the
Mortgage Pool--Certain Underwriting Matters--Hazard, Liability and
Other Insurance" in this prospectus supplement;
(x) any amount required to be transferred from the special servicer's
REO account (see "--REO Properties" below); and
(xi) any amounts required to be transferred from any debt service reserve
accounts with respect to the mortgage loans.
Upon receipt of any of the amounts described in clauses (i) through (v)
above with respect to any specially serviced mortgage loan, the special servicer
is required to promptly remit these amounts to the master servicer for deposit
in the master servicer's collection account.
Withdrawals. The master servicer may make withdrawals from its collection
account for any of the following purposes, which are not listed in any order of
priority:
(i) to remit to the trustee for deposit in the trustee's payment account
(see "Description of the Offered Certificates--Payment Account" in
this prospectus supplement) on the business day preceding each
payment date, all payments and other collections on the mortgage
loans and any REO properties that are then on deposit in the
collection account, exclusive of any portion of those payments and
other collections that represents one or more of the following--
o monthly debt service payments due on a due date subsequent to
the end of the related collection period,
o payments and other collections received after the end of the
related collection period, and
o amounts that are payable or reimbursable from the collection
account to any person other than the series "1999-CG3"
certificateholders in accordance with any of clauses (ii)
through (xvii) below;
(ii) to reimburse itself, the special servicer or the trustee, as
applicable, for any unreimbursed advances made by that party, such
reimbursement to be made out of collections on the mortgage loan or
REO property as to which the advance was made;
(iii) to pay itself earned and unpaid master servicing fees in respect of
each mortgage loan, such payment to be made out of collections on
that mortgage loan that are allocable as interest;
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(iv) to pay the special servicer, out of general collections on the
mortgage loans and any REO properties, earned and unpaid special
servicing fees in respect of each specially serviced mortgage loan
and each mortgage loan as to which the related underlying property
has become an REO property;
(v) to pay the special servicer (or, if applicable, any predecessor
special servicer) earned and unpaid workout fees and liquidation
fees to which it is entitled, such payment to be made from the
sources described under "--Servicing and Other Compensation and
Payment of Expenses" above;
(vi) to reimburse itself, the special servicer or the trustee, as
applicable, out of general collections on the mortgage loans and any
REO properties, for any unreimbursed advance made by that party that
has been determined not to be ultimately recoverable pursuant to
clause (ii) above;
(vii) to pay itself, the special servicer or the trustee, as applicable,
unpaid interest on any advance made by that party, such payment to
be made out of Default Interest and late payment charges received
(A) with respect to the mortgage loan as to which the advance was
made and (B) during the collection period in which that advance is
reimbursed;
(viii) in connection with the reimbursement of advances as described in
clause (ii) or (vi) above, to pay itself, the special servicer or
the trustee, as the case may be, out of general collections on the
mortgage loans and any REO properties, any interest accrued and
payable on that advance and not otherwise payable pursuant to clause
(vii) above;
(ix) to pay itself any items of additional master servicing compensation
on deposit in the collection account as discussed under "--Servicing
and Other Compensation and Payment of Expenses--Additional Master
Servicing Compensation" above;
(x) to pay the special servicer any items of additional special
servicing compensation on deposit in the collection account as
discussed under "--Servicing and Other Compensation and Payment of
Expenses--Additional Special Servicing Compensation" above;
(xi) to pay any unpaid liquidation expenses incurred with respect to any
liquidated mortgage loan or REO property, such payments to be made
out of collections on that mortgage loan or REO property, as the
case may be;
(xii) to pay, out of general collections on the mortgage loans and any REO
properties, any servicing expenses that would, if advanced, be
nonrecoverable pursuant to clause (ii) above;
(xiii) to pay, out of general collections on the mortgage loans and any
REO properties, for certain costs and expenses incurred by the trust
in connection with the remediation of adverse environmental
conditions at any underlying real property that secures a defaulted
mortgage loan;
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(xiv) to pay itself, the special servicer, the trustee, us or any of their
or our respective directors, officers, employees and agents, as the
case may be, out of general collections on the mortgage loans and
any REO properties, any of the reimbursements or indemnities to
which we or any of those other persons or entities are entitled as
described under "Description of the Governing Documents--Certain
Matters Regarding the Master Servicer, the Special Servicer, the
Manager and Us" and "--Certain Matters Regarding the Trustee" in the
accompanying prospectus;
(xv) to pay, out of general collections on the mortgage loans and any REO
properties, for the costs of certain opinions of counsel, the cost
of recording the pooling and servicing agreement and certain
expenses incurred by the tax administrator in connection with
providing advice to the special servicer;
(xvi) to pay any other items described in this prospectus supplement as
being payable from the collection account;
(xvii) to withdraw amounts deposited in the Collection Account in error,
including amounts received on any mortgage loan or REO property that
has been purchased or otherwise removed from the trust; and
(xviii) to clear and terminate the Collection Account upon the termination
of the pooling and servicing agreement.
Realization Upon Defaulted Mortgage Loans
The pooling and servicing agreement grants to the master servicer, the
special servicer and any single certificateholder or group of certificateholders
of the Controlling Class, a right to purchase from the trust certain defaulted
mortgage loans in the priority described below.
If the special servicer has determined, in its judgment, that the sale of
any defaulted mortgage loan under the circumstances described below is in
accordance with the Servicing Standard, the special servicer must give prompt
written notice of its determination to the trustee and the master servicer. The
trustee will then be required, within five days after receipt of that notice, to
provide a similar notice to all certificateholders of the Controlling Class. Any
single certificateholder or group of certificateholders of the Controlling Class
may, at its or their option, within ten days after receiving the notice from the
trustee, purchase that defaulted mortgage loan from the trust, at a cash price
generally equal to the outstanding principal balance of, all accrued and unpaid
interest on and all unreimbursed servicing advances with respect to, the subject
mortgage loan. If two or more separate certificateholders or groups of
certificateholders of the Controlling Class want to purchase the defaulted
mortgage loan, preference will be given to the certificateholder or group of
certificateholders with the largest interest in the Controlling Class. If
certificateholders of the Controlling Class have not purchased that defaulted
mortgage loan within ten days of their having received the relevant notice, then
for a limited period, either the special servicer or the master servicer, in
that order of priority, may at its option purchase the defaulted mortgage loan
from the trust at the same cash price as was applicable for the
certificateholders of the Controlling Class. Each of the master servicer and the
special servicer may designate an affiliate to complete the purchase.
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The special servicer may offer to sell any defaulted mortgage loan not
otherwise purchased as described in the preceding paragraph, if and when the
special servicer determines, consistent with the Servicing Standard, that a sale
would be in the best economic interests of the series "1999-CG3"
certificateholders (as a collective whole). Any offer must be made in a
commercially reasonable manner for a period of not less than ten days. Subject
to the discussion in the next paragraph and under "--The Controlling Class
Representative" above, the special servicer will be required to accept the
highest cash bid received from any person that is a "fair price", determined in
accordance with the pooling and servicing agreement, for the mortgage loan.
The special servicer will not be obligated to accept the highest cash bid
if the special servicer determines, in accordance with the Servicing Standard,
that rejection of the highest cash bid would be in the best interests of the
certificateholders, as a collective whole. Furthermore, subject to the
discussion under "--The Controlling Class Representative" above, the special
servicer may accept a lower cash bid from any person or entity other than itself
or an affiliate if it determines, in accordance with the Servicing Standard,
that acceptance of the bid would be in the best interests of the
certificateholders, as a collective whole. For example, the prospective buyer
making the lower bid may be more likely to perform its obligations or the terms,
other than the price, offered by the prospective buyer making the lower bid may
be more favorable.
Neither the trustee, in its individual capacity, nor any of its affiliates
may bid for or purchase any defaulted mortgage loan or any REO property.
In connection with the sale of any defaulted mortgage loan, the special
servicer may charge prospective bidders, and retain, fees that approximate the
special servicer's actual costs in the preparation and delivery of information
pertaining to the sales or evaluating bids without obligation to deposit the
amounts into its collection account.
If a default on a mortgage loan has occurred or, in the special servicer's
judgment, a payment default is imminent, then, subject to the discussion under
"--The Controlling Class Representative" above, the special servicer may, on
behalf of the trust, take any of the following actions:
o institute foreclosure proceedings;
o exercise any power of sale contained in the related mortgage;
o obtain a deed in lieu of foreclosure; or
o otherwise acquire title to the related underlying real property, by
operation of law or otherwise.
The special servicer may not, however, acquire title to any underlying
real property, have a receiver of rents appointed with respect to any underlying
real property or take any other action with respect to any underlying real
property that would cause the trustee, for the benefit of the series "1999-CG3"
certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of the particular real property within the meaning of certain federal
environmental laws, unless--
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o the special servicer has previously received a report prepared by a
person who regularly conducts environmental audits, which report
will be an expense of the trust, and
o either:
(a) the report indicates that (i) the particular real property is
in compliance with applicable environmental laws and
regulations and (ii) there are no circumstances or conditions
present at the real property that have resulted in any
contamination for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(b) the special servicer, based solely as to environmental matters
and related costs on the information set forth in the report,
determines that taking the actions necessary to bring the
particular real property into compliance with applicable
environmental laws and regulations and/or taking the actions
contemplated by clause (a)(ii) above, is reasonably likely to
produce a greater recovery, taking into account the time value
of money, than not taking those actions.
If the trust acquires title to any underlying real property, the special
servicer, on behalf of the trust, has to sell the particular real property prior
to the close of the third taxable year following the taxable year in which that
acquisition occurred, subject to limited exceptions as described under "--REO
Properties" below.
If liquidation proceeds collected with respect to a defaulted mortgage
loan are less than the outstanding principal balance of the defaulted mortgage
loan, together with accrued interest on and reimbursable expenses incurred by
the special servicer and/or the master servicer in connection with the defaulted
mortgage loan, then the trust will realize a loss in the amount of the
shortfall. The special servicer and/or the master servicer will be entitled to
reimbursement out of the liquidation proceeds recovered on any defaulted
mortgage loan, prior to the payment of the liquidation proceeds to the series
"1999-CG3" certificateholders, for any and all amounts that represent unpaid
servicing compensation in respect of the mortgage loan, unreimbursed servicing
expenses incurred with respect to the mortgage loan and any unreimbursed
advances, including interest thereon, of delinquent payments made with respect
to the mortgage loan. In addition, amounts otherwise payable on the series
"1999-CG3" certificates may be further reduced by interest payable to the master
servicer and/or special servicer on the servicing expenses and advances.
If any underlying real property suffers sufficient damage that the
proceeds, if any, of the related hazard insurance policy are insufficient to
restore fully the damaged property, neither the special servicer nor the master
servicer will be required to expend its own funds to complete the restoration
unless it determines that--
o the restoration would be in accordance with the Servicing Standard;
and
o the expenses will be recoverable by it from related insurance
proceeds, condemnation proceeds and/or liquidation proceeds.
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REO Properties
If title to any underlying real property is acquired by the special
servicer on behalf of the trust, the special servicer will be required to sell
that property not later than the end of the third calendar year following the
year of acquisition, unless--
o the IRS grants an extension of time to sell the property, or
o the special servicer obtains an opinion of independent counsel
generally to the effect that the holding of the property subsequent
to the end of the third calendar year following the year in which
the acquisition occurred will not result in the imposition of a tax
on the trust assets or cause any of REMIC I, REMIC II or REMIC III
to fail to qualify as a REMIC under the Internal Revenue Code of
1986.
Subject to the foregoing, the special servicer will generally be required
to solicit cash offers for any REO property in a manner that will be reasonably
likely to realize a fair price for the property. The special servicer may retain
an independent contractor to operate and manage any REO property. The retention
of an independent contractor will not relieve the special servicer of its
obligations with respect to the REO property. Regardless of whether the special
servicer applies for or is granted an extension of time to sell the property,
the special servicer shall act in accordance with the Servicing Standard to
liquidate an REO property on a timely basis. If an extension is granted or
opinion given, the special servicer must sell the REO property within the period
specified in the extension or opinion.
In general, the special servicer or an independent contractor employed by
the special servicer at the expense of the trust will be obligated to operate
and manage any underlying real property acquired as REO property in a manner
that:
(i) maintains its status as "foreclosure property" under the REMIC
provisions of the Internal Revenue Code of 1986, and
(ii) is in accordance with the Servicing Standard.
The special servicer must review the operation of each REO property and
consult with the trustee, or any person appointed by the trustee to act as tax
administrator, to determine the trust's federal income tax reporting position
with respect to the income it is anticipated that the trust would derive from
the property. The special servicer could determine that it would not be
consistent with the Servicing Standard to manage and operate the property in a
manner that would avoid the imposition of a tax on "net income from foreclosure
property", within the meaning of Section 857(b)(4)(B) of the Internal Revenue
Code of 1986, or a tax on "prohibited transactions" under Section 860F of the
Internal Revenue Code of 1986. This determination is most likely to occur in the
case of an REO property that is a hotel or residential health care facility. To
the extent that income the trust receives from an REO property is subject to--
o a tax on "net income from foreclosure property", that income would
be subject to federal tax at the highest marginal corporate tax
rate, which is currently 35%,
o a tax on "prohibited transactions", that income would be subject to
federal tax at a 100% rate.
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The determination as to whether income from an REO property would be
subject to a tax will depend on the specific facts and circumstances relating to
the management and operation of each REO property. Generally, income from an REO
property that is directly operated by the special servicer would be apportioned
and classified as "service" or "non-service" income. The "service" portion of
the income could be subject to federal tax either at the highest marginal
corporate tax rate or at the 100% rate. The "non-service" portion of the income
could be subject to federal tax at the highest marginal corporate tax rate or,
although it appears unlikely, at the 100% rate. Any tax imposed on the trust's
income from an REO property would reduce the amount available for payment to the
series "1999-CG3" certificateholders. See "Federal Income Tax Consequences" in
this prospectus supplement and in the accompanying prospectus. The reasonable
"out-of-pocket" costs and expenses of obtaining professional tax advice in
connection with the foregoing will be payable out of the master servicer's
collection account.
The special servicer will be required to segregate and hold all funds
collected and received in connection with any REO property separate and apart
from its own funds and general assets. If an REO property is acquired, the
special servicer will be required to establish and maintain an account for the
retention of revenues and other proceeds derived from the REO property. That
"REO account" must be maintained in a manner and with a depository institution
that satisfies rating agency standards for securitizations similar to the one
involving the series "1999-CG3" certificates. The special servicer will be
required to deposit, or cause to be deposited, in its REO account, upon receipt,
all net income, insurance proceeds, condemnation proceeds and liquidation
proceeds received with respect to an REO property. The funds held in this REO
account may be held as cash or invested in Permitted Investments. Any interest
or other income earned on funds in the special servicer's REO account will be
payable to the special servicer, subject to the limitations described in the
pooling and servicing agreement.
The special servicer will be required to withdraw from its REO account
funds necessary for the proper operation, management, leasing, maintenance and
disposition of any REO property, but only to the extent of amounts on deposit in
the account relating to that particular REO property. Promptly following the end
of each collection period, the special servicer will be required to withdraw
from the REO account and deposit, or deliver to the master servicer for deposit,
into the master servicer's collection account the total of all amounts received
in respect of each REO property during that collection period, net of (i) any
withdrawals made out of those amounts as described in the preceding sentence and
(ii) any portion of those amounts that may be retained as reserves as described
in the next sentence. The special servicer may, subject to certain limitations
described in the pooling and servicing agreement, retain in its REO account the
portion of the proceeds and collections as may be necessary to maintain a
reserve of sufficient funds for the proper operation, management, leasing,
maintenance and disposition of the related REO property, including the creation
of a reasonable reserve for repairs, replacements, necessary capital
improvements and other related expenses.
The special servicer shall keep and maintain separate records, on a
property-by-property basis, for the purpose of accounting for all deposits to,
and withdrawals from, its REO account.
Inspections; Collection of Operating Information
The special servicer will be required, at the expense of the trust, to
inspect or cause an inspection of the related underlying real property as soon
as practicable after any mortgage loan becomes a specially serviced mortgage
loan. Beginning in 2000, the master servicer also will be required, at its own
expense, to inspect or cause an inspection of each underlying real property at
least once per calendar year (or, in the case
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of each mortgage loan with an unpaid principal balance of under $2,000,000 and
the CTL loan, once every two years), if the special servicer has not already
undertaken an inspection in that period as described in the preceding sentence.
The master servicer and the special servicer will each be required to prepare or
cause to be prepared a written report of each inspection performed by it that
generally describes the condition of the particular real property and that
specifies--
o any sale, transfer or abandonment of the property of which the
master servicer or the special servicer, as applicable, is aware, or
o any change in the property's condition, occupancy or value that the
master servicer or the special servicer, as applicable, in
accordance with the Servicing Standard, considers to be material.
The special servicer, in the case of each specially serviced mortgage
loan, and the master servicer, in the case of each performing mortgage loan,
will each be required to use reasonable efforts to collect from the related
borrower and review the following items, to the extent that those items are
required to be delivered pursuant to the related loan documents:
(i) the quarterly and annual operating statements, budgets and rent
rolls of the underlying real mortgaged property; and
(ii) the quarterly and annual financial statements of the borrower.
The special servicer will also be required to cause quarterly and annual
operating statements, budgets and rent rolls to be prepared for each REO
property. However, there can be no assurance that any operating statements
required to be delivered by a borrower will in fact be delivered, nor is the
master servicer or the special servicer likely to have any practical means of
compelling delivery.
Evidence as to Compliance
On or before April 30 of each year, beginning April 30, 2001, each of the
master servicer and the special servicer must--
o at its expense, cause a firm of independent public accountants, that
is a member of the American Institute of Certified Public
Accountants to furnish a statement to the trustee, among others, to
the effect that the firm has examined the servicing operations of
the master servicer or the special servicer, as the case may be, for
the previous year and, on the basis of that examination, conducted
substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers of
America ("USAP"), the firm confirms that the master servicer or the
special servicer, as applicable, has complied with the minimum
servicing standards identified in USAP, in all material respects,
except for the significant exceptions or errors in records that, in
the opinion of the firm, USAP requires it to report. In rendering
its report the firm may rely, as to matters relating to the direct
servicing of commercial and multifamily mortgage loans by
sub-servicers, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards, within one year of
the report, with respect to those sub-servicers.
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o deliver to the trustee, among others, a statement signed by an
officer of the master servicer or the special servicer, as the case
may be, to the effect that, to the best knowledge of that officer,
the master servicer or special servicer, as the case may be, has
fulfilled its obligations under the pooling and servicing agreement
in all material respects throughout the preceding calendar year or
portion thereof during which the series "1999-CG3" certificates were
outstanding.
Events of Default
Each of the following events, circumstances and conditions will be
considered "events of default" under the pooling and servicing agreement:
o the master servicer or the special servicer fails to deposit, or to
remit to the appropriate party for deposit, into the master
servicer's collection account or the special servicer's REO account,
as applicable, any amount required to be so deposited, and that
failure continues unremedied for two business days following the
date on which the deposit or remittance was required to be made;
o the master servicer fails to remit to the trustee for deposit in the
trustee's payment account any amount required to be so remitted, and
that failure continues unremedied for one business day following the
date on which the remittance was required to be made;
o the master servicer or the special servicer fails to timely make any
servicing advance required to be made by it under the pooling and
servicing agreement, and that failure continues unremedied for three
business days following the date on which notice has been given to
the master servicer or the special servicer, as the case may be, by
the trustee;
o the master servicer or the special servicer fails to observe or
perform in any material respect any of its other covenants or
agreements under the pooling and servicing agreement, and that
failure continues unremedied for 60 days after written notice of it
has been given to the master servicer or the special servicer, as
the case may be, by any other party to the pooling and servicing
agreement or by series "1999-CG3" certificateholders entitled to not
less than 25% of the voting rights for the "1999-CG3" series;
o it is determined that there is a breach by the master servicer or
the special servicer of any of its representations or warranties
contained in the pooling and servicing agreement that materially and
adversely affects the interests of any class of series "1999-CG3"
certificateholders, and that breach continues unremedied for 60 days
after written notice of it has been given to the master servicer or
the special servicer, as the case may be, by any other party to the
pooling and servicing agreement or by series "1999-CG3"
certificateholders entitled to not less than 25% of the voting
rights for the "1999-CG3" series;
o a decree or order of a court having jurisdiction in an involuntary
case for the appointment of a receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings
is entered against the master servicer or the special servicer and
the decree or order remains in force for a period of 30 days;
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o the master servicer or special servicer consents to the appointment
of a receiver, liquidator, trustee or similar official relating to
it or of or relating to all or substantially all of its property;
o the master servicer or special servicer admits in writing its
inability to pay its debts or take certain other actions indicating
its insolvency or inability to pay its obligations;
o one or more ratings assigned by either Moody's or Fitch to the
series "1999-CG3" certificates are qualified, downgraded or
withdrawn as a result of the master servicer or special servicer
acting in that capacity; and
o the trustee receives written notice from either Moody's or Fitch
that the continuation of the master servicer or the special
servicer, as the case may be, in that capacity would result in a
qualification, downgrade or withdrawal of any rating then assigned
by that rating agency to any class of the series "1999-CG3"
certificates.
When a single entity acts as master servicer and special servicer, an
event of default in one capacity will be an event of default in the other
capacity.
Rights Upon Event of Default
If an event of default described above under "--Events of Default" occurs
with respect to the master servicer or the special servicer and remains
unremedied, the trustee will be authorized, and at the direction of series
"1999-CG3" certificateholders entitled to not less than 25% of the voting rights
for the "1999-CG3" series, the trustee will be required, to terminate all of the
rights and obligations of the defaulting party under the pooling and servicing
agreement and in and to the trust assets other than any rights the defaulting
party may have as a series "1999-CG3" certificateholder. Upon any termination,
the trustee must either:
o succeed to all of the responsibilities, duties and liabilities of
the master servicer or special servicer, as the case may be, under
the pooling and servicing agreement; or
o appoint an established mortgage loan servicing institution to act as
successor master servicer or special servicer, as the case may be.
The holders of series "1999-CG3" certificates entitled to a majority of the
voting rights for the "1999-CG3" series may require the trustee to appoint an
established mortgage loan servicing institution to act as successor master
servicer or special servicer, as the case may be, rather than have the trustee
act as that successor. The appointment of a successor special servicer by the
trustee is subject to the rights of the holders of series "1999-CG3"
certificates evidencing a majority interest in the Controlling Class to
designate a successor special servicer as described under "--Replacement of the
Special Servicer" above.
In general, certificateholders entitled to at least 66 2/3% of the voting
rights allocated to each class of series "1999-CG3" certificates affected by any
event of default may waive the event of default. However, certain of the events
of default described under "--Events of Default" above may only be waived by all
of the holders of the affected classes of the series "1999-CG3" certificates.
Furthermore, if the trustee is required to spend any monies in connection with
any event of default, then that event of default may not be waived unless and
until the trustee has been reimbursed, with interest, by the defaulting party.
Upon any
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waiver of an event of default, the event of default will cease to exist and will
be deemed to have been remedied for every purpose under the pooling and
servicing agreement.
Sale of Master Servicing Rights
If the master servicer is terminated as a result of certain events of
default, then for a limited period the trustee will solicit bids for the master
servicer's servicing rights under the pooling and servicing agreement and will
deliver the net proceeds of any resulting sale to the terminated master
servicer. An attempted sale is to occur during the 45-day period following
termination, during which 45-day period the trustee will act as successor master
servicer. See "--Events of Default" and "--Rights Upon Event of Default" above.
DESCRIPTION OF THE OFFERED CERTIFICATES
General
The series "1999-CG3" certificates will be issued, on or about October 12,
1999, pursuant to the pooling and servicing agreement. They will represent the
entire beneficial ownership interest of the trust. The assets of the trust will
include:
o the mortgage loans;
o any and all payments under and proceeds of the mortgage loans
received after October 1, 1999, exclusive of payments of principal,
interest and other amounts due on or before that date or, in the
case of a replacement mortgage loan (see "Description of the
Mortgage Pool--Cures, Repurchases and Substitutions" in this
prospectus supplement), on or before the related date of
substitution;
o the loan documents for the mortgage loans;
o any REO properties acquired in respect of defaulted mortgage loans;
o those funds or assets as from time to time are deposited in the
master servicer's collection account, the special servicer's REO
account, the trustee's payment account (see "--Payment Account"
below) or the trustee's interest reserve account (see
"--Payments--Interest Reserve Account" below); and
o various rights incidental to the representations and warranties made
by Column, GECA and Union Capital as described under "Description of
the Mortgage Pool--Representations and Warranties" and "--Cures,
Repurchases and Substitutions" in this prospectus supplement.
The series "1999-CG3" certificates will include the following classes:
o the "A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1" and
"B-2" classes, which are the classes of series "1999-CG3"
certificates that are offered by this prospectus supplement, and
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o the "B-3", "B-4", "B-5", "B-6", "B-7", "B-8", "C", "D", "E", "R-I",
"R-II" and "R-III" classes, which are the classes of series
"1999-CG3" certificates that--
(i) will be retained or privately placed by us, and
(ii) are not offered by this prospectus supplement.
The class "A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1",
"B-2", "B-3", "B-4", "B-5", "B-6", "B-7", "B-8", "C" and "D" certificates are
the only series "1999-CG3" certificates that will have principal balances. We
refer to these certificates as the "principal balance certificates" of the
"1999-CG3" series. The principal balance of any of these certificates will
represent the total payments of principal to which the holder of the certificate
is entitled over time out of payments, or advances in lieu thereof, and other
collections on the assets of the trust. Accordingly, on each payment date, the
principal balance of each of these certificates will be permanently reduced by
any payments of principal actually made with respect to the certificate on that
payment date. See "--Payments" below. On any particular payment date, the
principal balance of each of these certificates may also be permanently reduced,
without any corresponding payment, in connection with losses on the mortgage
loans and default-related and otherwise unanticipated expenses. See
"--Reductions in Certificate Principal Balances in Connection with Realized
Losses and Additional Trust Fund Expenses" below.
The class "S" certificates will not have principal balances, and the
holders of the class "S" certificates will not be entitled to receive payments
of principal. However, each class "S" certificate will have a notional amount
for purposes of calculating the accrual of interest with respect to that
certificate. The aggregate notional amount of all the class "S" certificates
will equal the aggregate principal balance of all the series "1999-CG3"
principal balance certificates outstanding from time to time.
In general, principal balances and notional amounts will be reported on a
class-by-class basis. In order to determine the principal balance or notional
amount of any of your certificates from time to time, you may multiply the
original principal balance or notional amount of that certificate as of the date
of initial issuance of the series "1999-CG3" certificates, as specified on the
face of that certificate, by the then-applicable certificate factor for the
relevant class. The "certificate factor" for any class of offered certificates,
as of any date of determination, will equal a fraction, expressed as a
percentage, the numerator of which will be the then outstanding aggregate
principal balance or notional amount, as applicable, of that class, and the
denominator of which will be the original aggregate principal balance or
notional amount, as applicable, of that class. Certificate factors will be
reported monthly in the trustee's report.
Registration and Denominations
General. The offered certificates will be issued in book-entry form in
original denominations of:
o in the case of the class "S" certificates, $10,000 initial notional
amount and in any whole dollar denomination in excess of $10,000;
and
o in the case of the other offered certificates, $10,000 initial
principal balance and in any whole dollar denomination in excess of
$10,000.
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Each class of offered certificates will initially be represented by one or
more certificates registered in the name of Cede & Co., as nominee of The
Depository Trust Company. You will not be entitled to receive an offered
certificate issued in fully registered, certificated form, except under the
limited circumstances described in the accompanying prospectus under
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates". For so long as any class of offered certificates is held in
book-entry form--
o all references to actions by holders of those certificates will
refer to actions taken by DTC upon instructions received from
beneficial owners of those certificates through its participating
organizations, and
o all references in this prospectus supplement to payments, notices,
reports, statements and other information to holders of those
certificates will refer to payments, notices, reports and statements
to DTC or Cede & Co., as the registered holder of those
certificates, for payment to beneficial owners of offered
certificates through its participating organizations in accordance
with DTC's procedures.
The trustee will initially serve as registrar for purposes of providing
for the registration of the offered certificates and, if and to the extent
physical certificates are issued to the actual beneficial owners of any of the
offered certificates, the registration of transfers and exchanges of those
certificates.
DTC, Cedel and Euroclear. You will hold your certificates through DTC (in
the United States) or Cedel Bank, Societe Anonyme or the Euroclear System (in
Europe), if you are a participating organization of the system, or indirectly
through organizations that are participants in the systems. Cedel and Euroclear
will hold omnibus positions on behalf of organizations that are participants in
either of these systems, through customers' securities accounts in Cedel's or
Euroclear's names on the books of their respective depositaries. Those
depositaries will, in turn, hold those positions in customers' securities
accounts in the depositaries' names on the books of DTC. For a discussion of
DTC, see "Description of the Certificates--Book-Entry Registration and
Definitive Certificates" in the accompanying prospectus.
Transfers between participants in DTC will occur in accordance with DTC's
rules. Transfers between participants in Cedel and Euroclear will occur in
accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through participants in Cedel or
Euroclear, on the other, will be accomplished in DTC in accordance with DTC
rules on behalf of the relevant European international clearing system by its
depositary. However, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in that system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets it settlement
requirements, deliver instruction to its depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Participants in Cedel and Euroclear may not
deliver instructions directly to the depositaries.
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Because of time-zone differences--
o credits of securities in Cedel or Euroclear as a result of a
transaction with a DTC participant will be made during the
subsequent securities settlement processing, dated the business day
following the DTC settlement date, and
o those credits or any transactions in those securities settled during
that processing will be reported to the relevant Cedel or Euroclear
participant on that business day.
Cash received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel or Euroclear participant to a DTC participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC. For additional information regarding clearance and settlement procedures
for the offered certificates and for information with respect to tax
documentation procedures relating to the offered certificates, see Exhibit E
hereto.
The beneficial owners of offered certificates that are not participating
organizations in DTC, Cedel or Euroclear, but desire to purchase, sell or
otherwise transfer ownership or other interests in those certificates, may do so
only through participating organizations in DTC, Cedel or Euroclear. In
addition, those beneficial owners will receive all payments of principal and
interest from the trustee through DTC and its participating organizations.
Similarly, reports distributed to holders of the offered certificates pursuant
to the pooling and servicing agreement and requests for the consent of those
holders will be delivered to the beneficial owners of those certificates only
through DTC, Cedel, Euroclear and their participating organizations. Under a
book-entry format, beneficial owners of offered certificates may experience some
delay in their receipt of payments, reports and notices, since these payments,
reports and notices will be forwarded by the trustee to Cede & Co., as nominee
for DTC. DTC will forward the payments, reports and notices to its participating
organizations, which thereafter will forward them to indirect DTC participants,
Cedel, Euroclear or beneficial owners of the offered certificates, as
applicable.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of offered
certificates among participating organizations on whose behalf it acts with
respect to the offered certificates and to receive and transmit payments of
principal of, and interest on, the offered certificates. Direct and indirect DTC
participants with which beneficial owners of the offered certificates have
accounts with respect to those certificates similarly are required to make
book-entry transfers and receive and transmit the payments on behalf of those
beneficial owners. Accordingly, although the beneficial owners of offered
certificates will not possess the offered certificates, the DTC rules provide a
mechanism that will allow them to receive payments on their certificates and
will be able to transfer their interests.
Because DTC can only act on behalf of direct DTC participants, who in turn
act on behalf of indirect DTC participants and certain banks, the ability of a
beneficial owner of offered certificates to pledge those certificates to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to those certificates, may be limited due to the lack of a physical
certificate for those certificates.
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DTC has advised us that it will take any action permitted to be taken by
holders of the offered certificates under the pooling and servicing agreement
only at that direction of one or more participating organizations to whose
accounts with DTC those certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that those
actions are taken on behalf of participating organizations in DTC whose holdings
include those undivided interests.
Payment Account
General. The trustee must establish and maintain an account in which it
will hold funds pending their payment on the series "1999-CG3" certificates and
from which it will make those payments. That "payment account" must be
maintained in a manner and with a depository institution that satisfies rating
agency standards for securitizations similar to the one involving the series
"1999-CG3" certificates. Funds held in the trustee's payment account will remain
uninvested.
Deposits. On the business day prior to each payment date, the master
servicer will be required to remit to the trustee for deposit in the payment
account the following funds:
o All payments and other collections on the mortgage loans and any REO
properties that are then on deposit in the master servicer's
collection account, exclusive of any portion of those payments and
other collections that represents one or more of the following:
(a) monthly debt service payments due on a due date subsequent to
the end of the related collection period;
(b) payments and other collections received after the end of the
related collection period;
(c) amounts that are payable or reimbursable from the master
servicer's collection account to any person other than the
series "1999-CG3" certificateholders, including--
(i) amounts payable to the master servicer or the special
servicer as compensation, including master servicing
fees, special servicing fees, workout fees, liquidation
fees, assumption fees, modification fees and, to the
extent not otherwise applied to cover interest on
advances, Default Interest and late payment charges,
(ii) amounts payable in reimbursement of outstanding
advances, together with interest thereon, and
(iii) amounts payable in respect of other expenses of the
trust; and
(d) amounts deposited in the master servicer's collection account
in error.
o Any advances of delinquent monthly debt service payments and
Compensating Interest Payments made with respect to that payment
date.
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See "--Advances of Delinquent Monthly Debt Service Payments" below and
"Servicing of the Mortgage Loans--Collection Account" and "Servicing and Other
Compensation and Payment of Expenses" in this prospectus supplement.
With respect to each payment date that occurs during March, commencing in
March 2000, the trustee will be required to transfer from its interest reserve
account, which we describe under "--Interest Reserve Account" below, to its
payment account the interest reserve amounts that are then being held in that
interest reserve account with respect to those mortgage loans that accrue
interest on an actual/360 basis.
Withdrawals. The trustee may from time to time make withdrawals from its
payment account for any of the following purposes:
o to pay itself a monthly fee which is described under "--The Trustee"
below;
o to indemnify itself and certain related persons as described under
"Description of the Governing Documents--Certain Matters Regarding
the Trustee" in the accompanying prospectus;
o to pay for any opinions of counsel required to be obtained in
connection with any amendments to the pooling and servicing
agreement;
o to pay any federal, state and local taxes imposed on the trust, its
assets and/or transactions, together with all incidental costs and
expenses, that are required to be borne by the trust as described
under "Federal Income Tax Consequences--REMICs--Prohibited
Transactions Tax and Other Taxes" in the accompanying prospectus and
"Servicing of the Mortgage Loans--REO Properties" in this prospectus
supplement;
o with respect to each payment date during February of any year or
during January of any year that is not a leap year, commencing in
2000, to transfer to the trustee's interest reserve account the
interest reserve amounts required to be so transferred in that month
with respect to those mortgage loans that accrue interest on an
actual/360 basis; and
o to pay to the person entitled thereto any amounts deposited in the
payment account in error.
On each payment date, all amounts on deposit in the trustee's payment
account, exclusive of any portion of those amounts that are to be withdrawn for
the purposes contemplated in the foregoing paragraph, will be withdrawn and
applied to make payments on the series "1999-CG3" certificates. We refer to
those funds that are available to make payments on the series "1999-CG3"
certificates on any payment date as the "Available Funds" for that date. The
Available Funds for any payment date will reflect the deposits to be made to the
trustee's payment account in connection with that payment date as described
under "--Payment Account--Deposits" above.
The Available Funds for any payment date will consist of three separate
components--
o the portion of those funds that represent prepayment consideration
collected on the mortgage loans as a result of voluntary or
involuntary prepayments that occurred during the related collection
period, which will be paid to the holders of the offered
certificates as described
S-129
<PAGE>
under "--Payments--Payments of Prepayment Premiums and Yield
Maintenance Charges" below,
o the portion of those funds that represent Post-ARD Additional
Interest collected on the ARD loans during the related collection
period, which will be paid to the holders of the class "E"
certificates and which, in no event, will be paid to the holders of
the offered certificates, and
o the remaining portion of those funds, which we refer to as the
"Available P&I Funds" and which will be paid to the holders of all
the series "1999-CG3" certificates, other than the class "E"
certificates, as described under "--Payments--Priority of Payments"
below.
Interest Reserve Account
The trustee must maintain an account in which it will hold certain
"interest reserve amounts" described below with respect to those mortgage loans
that accrue interest on an actual/360 basis. That "interest reserve account"
must be maintained in a manner and with a depository that satisfies rating
agency standards for similar securitizations as the one involving the series
"1999-CG3" certificates. Funds held in the trustee's interest reserve account
will remain uninvested.
During January, except in a leap year, and February of each calendar year,
beginning in 2000, the trustee will, on or before the payment date in that
month, withdraw from its payment account and deposit in its interest reserve
account the interest reserve amount with respect to each mortgage loan that
accrues interest on an actual/360 basis and for which the monthly debt service
payment due in that month was either received or advanced. That "interest
reserve amount" for each such mortgage loan will equal one day's interest
accrued at the related mortgage interest rate on the unpaid principal balance of
that loan as of the end of the related collection period, net of all
unreimbursed advances of principal then outstanding with respect to that loan.
During March of each calendar year, beginning in 2000, the trustee will,
on or before the payment date in that month, withdraw from its interest reserve
account and deposit in its payment account any and all interest reserve amounts
then on deposit in the interest reserve account with respect to those mortgage
loans that accrue interest on an actual/360 basis. All interest reserve amounts
that are so transferred from the interest reserve account to the payment account
will be included in the Available P&I Funds for the payment date during the
month of transfer.
Payments
General. On each payment date, the trustee will, subject to the Available
Funds, make all payments required to be made on the series "1999-CG3"
certificates on that date to the holders of record as of the close of business
on the last business day of the calendar month preceding the month in which
those payments are to occur. The final payment of principal and/or interest on
any offered certificate, however, will be made only upon presentation and
surrender of that certificate at the location to be specified in a notice of the
pendency of that final payment.
S-130
<PAGE>
In order for a series "1999-CG3" certificateholder to receive payments by
wire transfer on and after any particular payment date, that certificateholder
must provide the trustee with written wiring instructions no later than the last
day of the calendar month preceding the month in which that payment date occurs.
Otherwise, that certificateholder will receive its payments by check mailed to
it.
Cede & Co. will be the registered holder of your certificates, and you
will receive payments on your certificates through DTC and its participating
organizations, until physical certificates are issued to the actual beneficial
owners. See "--Registration and Denominations" above.
Payments of Interest. All of the classes of the series "1999-CG3"
certificates will bear interest, except for the "E", "R-I", "R-II" and "R-III"
classes.
With respect to each class of interest-bearing certificates of the
"1999-CG3" series, that interest will accrue during each interest accrual period
based upon--
o the pass-through rate for that class and the related payment date,
o the aggregate principal balance or notional amount, as the case may
be, of that class outstanding immediately prior to the related
payment date, and
o the assumption that each year consists of twelve 30-day months.
On each payment date, subject to the Available P&I Funds for that date and
the priorities of payment described under "--Payments--Priority of Payments"
below, the holders of each class of interest-bearing certificates of the
"1999-CG3" series will be entitled to receive--
o the total amount of interest accrued during the related interest
accrual period with respect to that class of series "1999-CG3"
certificates, reduced by
o the portion of any Net Aggregate Prepayment Interest Shortfall for
that payment date that is allocable to that class of series
"1999-CG3" certificates.
If the holders of any class of interest-bearing certificates of the
"1999-CG3" series do not receive all of the interest to which they are entitled
on any payment date, then they will continue to be entitled to receive the
unpaid portion of that interest on future payment dates, subject to the
Available P&I Funds for those future payment dates and the priorities of payment
described under "--Payments--Priority of Payments" below.
The portion of any Net Aggregate Prepayment Interest Shortfall for any
payment date that is allocable to any particular class of interest-bearing
certificates of the "1999-CG3" series will equal the product of--
o the total amount of interest accrued during the related interest
accrual period with respect to that class of series "1999-CG3"
certificates, multiplied by
S-131
<PAGE>
o a fraction, the numerator of which is the total amount of interest
accrued during the related interest accrual period with respect to
that class of series "1999-CG3" certificates, and the denominator of
which is the total amount of interest accrued during the related
interest accrual period with respect to all of the interest-bearing
classes of the "1999-CG3" series.
Calculation of Pass-Through Rates.
General. The pass-through rates for the class "A-1A", "A-1B" and "A-1C"
certificates will be fixed at 7.120%, 7.340% and 7.440% per annum, respectively.
The pass-through rate for the class "A-2" certificates for any payment date will
equal the lesser of (i) 7.540% per annum and (ii) the Weighted Average Pool
Pass-Through Rate for that payment date. The pass-through rate for the "A-3"
certificates for any payment date will equal the lesser of (i) 7.730% per annum
and (ii) the Weighted Average Pool Pass-Through Rate for that payment date. The
pass-through rate for the "A-4" certificates for any payment date will equal the
lesser of (i) 7.830% per annum and (ii) the Weighted Average Pool Pass-Through
Rate for that payment date. The pass-through rate for the "A-5" certificates for
any payment date will equal the lesser of (i) 8.120% per annum and (ii) the
Weighted Average Pool Pass-Through Rate for that payment date. The pass-through
rates for the class "B-1" and "B-2" certificates for any payment date will, in
each case, equal the Weighted Average Pool Pass-Through Rate for that payment
date.
The pass-through rate applicable to the class "S" certificates for each
payment date will equal the excess, if any, of--
o the Weighted Average Pool Pass-Through Rate for that payment date,
over
o the weighted average of the pass-through rates for each of the
respective classes of the series "1999-CG3" principal balance
certificates for that payment date, weighted on the basis of the
relative aggregate principal balances of those classes of principal
balance certificates outstanding immediately prior to that payment
date.
The pass-through rates for the class "B-3", "B-4", "B-5", "B-6", "B-7",
"B-8", "C" and "D" certificates for each payment date will, in each case, equal
the lesser of (i) 6.925% per annum and (ii) the Weighted Average Pool
Pass-Through Rate for that payment date.
The class "E", "R-I", "R-II" and "R-III" certificates will not be
interest-bearing and, therefore, will not have pass-through rates.
Weighted Average Pool Pass-Through Rate. The "Weighted Average Pool
Pass-Through Rate" for each payment date will equal the weighted average of the
following annual rates with respect to all of the mortgage loans, weighted on
the basis of the mortgage loans' respective stated principal balances
immediately prior to that payment date:
o in the case of each mortgage loan that accrues interest on a 30/360
basis, an annual rate equal to--
(a) the mortgage interest rate in effect for that mortgage loan as
of October 1, 1999, minus
S-132
<PAGE>
(b) the sum of (i) the related master servicing fee rate and (ii)
0.002% per annum; and
o in the case of each mortgage loan that accrues interest on an
actual/360 basis, an annual rate generally equal to--
(x) a fraction, expressed as a percentage, the numerator of which
is, subject to adjustment as described below, 12 times the
amount of interest that accrued or would have accrued with
respect to that mortgage loan on an actual/360 basis during
the related interest accrual period, based on its stated
principal balance immediately preceding that payment date and
its mortgage interest rate in effect as of October 1, 1999,
and the denominator of which is the stated principal balance
of the mortgage loan immediately prior to that payment date,
minus
(y) the sum of (i) the related master servicing fee rate and (ii)
0.002% per annum.
Notwithstanding the foregoing, if the subject payment date occurs during January
(except during a leap year) or February, then, in the case of any particular
mortgage loan that accrues interest on an actual/360 basis, the numerator of the
fraction described in clause (x) of the second bullet point above will be
decreased by any interest reserve amount with respect to that mortgage loan that
is transferred from the trustee's payment account to the trustee's interest
reserve account during that month. Furthermore, if the subject payment date
occurs during March, then, in the case of any particular mortgage loan that
accrues interest on an actual/360 basis, the numerator of the fraction described
in clause (x) of the second bullet point above will be increased by any interest
reserve amounts with respect to that mortgage loan that are transferred from the
trustee's interest reserve account to the trustee's payment account during that
month.
The calculation of the Weighted Average Pool Pass-Through Rate will be
unaffected by any change in the mortgage interest rate for any mortgage loan,
including in connection with any bankruptcy or insolvency of the related
borrower or any modification of that mortgage loan agreed to by the master
servicer or the special servicer.
Stated Principal Balance. The "stated principal balance" of each mortgage
loan:
o will initially equal its scheduled principal balance as of October
1, 1999 or, in the case of a replacement mortgage loan (see
"Description of the Mortgage Pool--Cures, Repurchases and
Substitutions" in this prospectus supplement), as of the related
date of substitution; and
o will be permanently reduced on each subsequent payment date, to not
less than zero, by--
(i) that portion, if any, of the Total Principal Payment Amount
for that payment date that is attributable to that mortgage
loan (see "--Payments--Payments of Principal" below), and
(ii) the principal portion of any Realized Loss incurred in respect
of that mortgage loan during the related collection period
(see "--Reductions to Certificate Principal Balances in
Connection with Realized Losses and Additional Trust Fund
Expenses" below).
S-133
<PAGE>
However, the stated principal balance of a mortgage loan will, in all
cases, be zero as of the payment date following the collection period in which
it is determined that all amounts ultimately collectible with respect to the
mortgage loan or any related REO property have been received.
Payments of Principal. Subject to the Available P&I Funds and the priority
of payments described under "--Payments--Priority of Payments" below, the total
amount of principal payable with respect to each class of the series "1999-CG3"
principal balance certificates on each payment date will, except as described
below, equal that class' allocable share of the Total Principal Payment Amount
for that payment date.
The "Total Principal Payment Amount" for any payment date will, in
general, equal the total, without duplication, of the following:
o all payments of principal (other than voluntary principal
prepayments) received on the mortgage loans during the related
collection period, exclusive of any of those payments that
represents a late collection of principal for which an advance was
previously made for a prior payment date or that represents a
scheduled payment of principal due on or before October 1, 1999 or
on a due date subsequent to the end of the related collection
period;
o all scheduled payments of principal received on the mortgage loans
prior to, but that are due during, the related collection period;
o all voluntary principal prepayments received on the mortgage loans
during the related collection period;
o all other collections, including liquidation proceeds, condemnation
proceeds, insurance proceeds and repurchase proceeds, that were
received on or in respect of any of the mortgage loans during the
related collection period and that were identified and applied by
the master servicer as recoveries of principal thereof, in each case
net of any portion of the particular collection that represents a
late collection of principal due on or before October 1, 1999 or for
which an advance of principal was previously made for a prior
payment date; and
o all advances of principal made in respect of the mortgage loans for
that payment date.
In general, the aggregate portion of the Total Principal Payment Amount
that will be allocated to the class "A-1A" and "A-1B" certificates on each
payment date will equal:
o in the case of the class "A-1A" certificates, the lesser of (i) the
entire Total Principal Payment Amount for that payment date and (ii)
the aggregate principal balance of the class "A-1A" certificates
immediately prior to that payment date; and
o in the case of the class "A-1B" certificates, the lesser of (i) the
entire Total Principal Payment Amount for that payment date, reduced
by any portion thereof allocable to the class "A-1A" certificates as
described in the preceding bullet point, and (ii) the aggregate
principal balance of the class "A-1B" certificates immediately prior
to that payment date.
S-134
<PAGE>
However, if both of those classes are outstanding as of the occurrence of any
Senior Principal Payment Cross-Over Date, then the Total Principal Payment
Amount for each payment date on and after that Senior Principal Payment
Cross-Over Date will be allocable between those two classes on a pro rata basis
in accordance with their respective aggregate principal balances immediately
prior to that payment date, in each case up to that aggregate principal balance.
The "Senior Principal Payment Cross-Over Date" will be the first payment date,
if any, as of which the aggregate principal balance of the class "A-1A" and
"A-1B" certificates outstanding immediately prior to that payment date, equals
or exceeds the sum of:
(a) the aggregate stated principal balance of the mortgage pool that
will be outstanding immediately following that payment date, plus
(b) the lesser of--
(i) the Total Principal Payment Amount for that payment date, and
(ii) the portion of the Available P&I Funds for that payment date
that will remain after all required payments of interest on
the class "S", "A-1A" and "A-1B" certificates have been made
on that payment date.
While the class "A-1A" and "A-1B" certificates are outstanding, no portion
of the Total Principal Payment Amount for any payment date will be allocated to
any other class of series "1999-CG3" principal balance certificates. Following
the retirement of the class "A-1A" and "A-1B" certificates, the Total Principal
Payment Amount for each payment date will be allocated to the remaining classes
of the series "1999-CG3" principal balance certificates in the order of priority
set forth below, in each such case up to the lesser of (i) the portion of that
Total Principal Payment Amount that remains unallocated and (ii) the principal
balance of the particular class immediately prior to that payment date. In
general, this means that, following the retirement of the class "A-1A" and
"A-1B" certificates, the holders of the outstanding class of series "1999-CG3"
principal balance certificates that is ranked the highest in the following table
will be entitled to receive payments of principal in an amount equal to the
entire Total Principal Payment Amount for each payment date until the aggregate
principal balance of that class is reduced to zero. In no event will the holders
of any class of series "1999-CG3" principal balance certificates listed in the
following table be entitled to receive any payments of principal until the
aggregate principal balance of the class "A-1A" and "A-1B" certificates is
reduced to zero. Furthermore, in no event will the holders of any class of
series "1999-CG3" principal balance certificates listed in the following table
be entitled to receive any payments of principal until the aggregate principal
balance of all other classes, if any, of series "1999-CG3" principal balance
certificates listed above it in the following table is reduced to zero.
S-135
<PAGE>
Order of Allocation Class
------------------- -----
1. A-1C
2. A-2
3. A-3
4. A-4
5. A-5
6. B-1
7. B-2
8. B-3
9. B-4
10. B-5
11. B-6
12. B-7
13. B-8
14. C
15. D
Reimbursement Amounts. As discussed under "--Reductions of Certificate
Principal Balances in Connection with Realized Losses and Additional Trust Fund
Expenses" below, the aggregate principal balance of any class of the series
"1999-CG3" principal balance certificates may be reduced without a corresponding
payment of principal. If that occurs with respect to any such class of principal
balance certificates, then, subject to Available P&I Funds and the priority of
payment described under "--Payments--Priority of Payments" below, the holders of
that class will be entitled to be reimbursed for the amount of that reduction,
without interest. References in this prospectus supplement to the "reimbursement
amount" mean, in the case of any class of the series "1999-CG3" principal
balance certificates for any payment date, the total amount to which the holders
of that class are entitled as reimbursement for all reductions, if any, made in
the aggregate principal balance of that class on all prior payment dates as
discussed under "--Reductions of Certificate Principal Balances in Connection
with Realized Losses and Additional Trust Fund Expenses" below.
Priority of Payments. On each payment date, the trustee will apply the
Available P&I Funds for that date to make the following payments in the
following order of priority, in each case to the extent of the remaining
Available P&I Funds:
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
1 S, A-1A and A-1B Interest up to the total interest payable on those classes(1)
2A A-1A Principal up to the total principal payable on that class(2)
2B A-1B Principal up to the total principal payable on that class(2)
3 A-1A and A-1B Reimbursement up to the reimbursement amounts for those classes(3)
- ----------------------------------------------------------------------------------------------
</TABLE>
S-136
<PAGE>
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
4 A-1C Interest up to the total interest payable on that class
5 A-1C Principal up to the total principal payable on that class(4)
6 A-1C Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
7 A-2 Interest up to the total interest payable on that class
8 A-2 Principal up to the total principal payable on that class(4)
9 A-2 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
10 A-3 Interest up to the total interest payable on that class
11 A-3 Principal up to the total principal payable on that class(4)
12 A-3 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
13 A-4 Interest up to the total interest payable on that class
14 A-4 Principal up to the total principal payable on that class(4)
15 A-4 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
16 A-5 Interest up to the total interest payable on that class
17 A-5 Principal up to the total principal payable on that class(4)
18 A-5 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
19 B-1 Interest up to the total interest payable on that class
20 B-1 Principal up to the total principal payable on that class(4)
21 B-1 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
22 B-2 Interest up to the total interest payable on that class
23 B-2 Principal up to the total principal payable on that class(4)
24 B-2 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
25 B-3 Interest up to the total interest payable on that class
26 B-3 Principal up to the total principal payable on that class(4)
27 B-3 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
28 B-4 Interest up to the total interest payable on that class
29 B-4 Principal up to the total principal payable on that class(4)
30 B-4 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
</TABLE>
S-137
<PAGE>
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
31 B-5 Interest up to the total interest payable on that class
32 B-5 Principal up to the total principal payable on that class(4)
33 B-5 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
34 B-6 Interest up to the total interest payable on that class
35 B-6 Principal up to the total principal payable on that class(4)
36 B-6 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
37 B-7 Interest up to the total interest payable on that class
38 B-7 Principal up to the total principal payable on that class(4)
39 B-7 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
40 B-8 Interest up to the total interest payable on that class
41 B-8 Principal up to the total principal payable on that class(4)
42 B-8 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
43 C Interest up to the total interest payable on that class
44 C Principal up to the total principal payable on that class(4)
45 C Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
46 D Interest up to the total interest payable on that class
47 D Principal up to the total principal payable on that class(4)
48 D Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------
49 R-I, R-II and R-III Any remaining Available P&I Funds
</TABLE>
- ------------------
(1) Pro rata among the recipient classes based on the respective amounts of
interest payable thereon.
(2) On and after the Senior Principal Payment Cross-Over Date, and in any
event on the final payment date, payments 2A and 2B above will be combined
and made on a pro rata basis in accordance with the respective aggregate
principal balances of the recipient classes then outstanding.
(3) Pro rata between the recipient classes based on their respective
reimbursement amounts.
(4) No principal will be payable on the recipient class unless and until the
aggregate principal balance of all classes of the series "1999-CG3"
principal balance certificates listed above the recipient class in the
foregoing table has been reduced to zero.
-----------------------
S-138
<PAGE>
Payments of Prepayment Premiums and Yield Maintenance Charges. If any
prepayment consideration is collected during any particular collection period
with respect to any mortgage loan and that prepayment consideration is
calculated as a percentage of the amount prepaid, including where the prepayment
consideration equals the greater of a specified percentage of the amount prepaid
and an amount calculated pursuant to a yield maintenance formula, then the
entire amount of that prepayment consideration will be paid as additional
interest on the payment date corresponding to that collection period to the
holders of the class "S" certificates.
If any prepayment consideration is collected during any particular
collection period with respect to any mortgage loan and that prepayment
consideration is calculated pursuant to a yield maintenance formula, including
where the prepayment consideration equals the greater of a specified percentage
of the amount prepaid and an amount calculated pursuant to a yield maintenance
formula, then that prepayment consideration will be paid as additional interest
on the payment date corresponding to that collection period as follows:
o The holders of each class of offered certificates (other than the
class "S" certificates) then entitled to payments of principal on
that payment date will be entitled to an amount equal to the product
of--
(i) the amount of that prepayment consideration, multiplied by
(ii) a fraction, not greater than one or less than zero, the
numerator of which is equal to the excess, if any, of the
pass-through rate applicable to that class of offered
certificates for that payment date, over the relevant Discount
Rate, and the denominator of which is equal to the excess, if
any, of the mortgage interest rate for the related prepaid
mortgage loan, over the relevant Discount Rate, multiplied by
(iii) a fraction, not greater than one or less than zero, the
numerator of which is equal to the aggregate payments of
principal to be made with respect to that class of offered
certificates on that payment date, and the denominator of
which is equal to the Total Principal Payment Amount for that
payment date.
o Any portion of the prepayment consideration that may remain after
the payment(s) on the other classes of offered certificates as
contemplated by the prior bullet point, will be payable to the
holders of the class "S" certificates.
For purposes of the foregoing, the relevant "Discount Rate" will be the
rate which, when compounded monthly, is equivalent to the Treasury Rate when
compounded semi-annually. For example, a 6% per annum Treasury Rate would equate
to a 5.9263% per annum Discount Rate.
The "Treasury Rate" is the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15--Selected
Interest Rates under the heading "U.S. Government Securities/Treasury Constant
Maturities" for the week ending prior to the date of the relevant principal
prepayment, of U.S. Treasury constant maturities with a maturity date, one
longer and one shorter, most nearly approximating the weighted average life,
calculated in accordance with the related loan documents, of the prepaid
mortgage loan immediately prior to the prepayment. If Release H.15 is no longer
published, the master servicer will select a comparable publication to determine
the Treasury Rate.
S-139
<PAGE>
Neither we nor the underwriter makes any representation as to the
enforceability of the provision of any promissory note evidencing one of the
mortgage loans requiring the payment of a prepayment premium or yield
maintenance charge or as to the collectability of any prepayment premium or
yield maintenance charge. See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Prepayment Provisions" in this prospectus
supplement.
Payments of Additional Interest. The class "E" certificates will entitle
the holders to all amounts, if any, applied as Post-ARD Additional Interest
collected on the ARD loans. It is anticipated that the initial special servicer
will acquire the class "E" certificates.
Treatment of REO Properties. Notwithstanding that any underlying real
property may be acquired as part of the trust assets through foreclosure, deed
in lieu of foreclosure or otherwise, the related mortgage loan will be treated
as having remained outstanding, until the REO property is liquidated, for
purposes of determining--
o payments on the series "1999-CG3" certificates,
o allocations of Realized Losses and Additional Trust Fund Expenses to
the series "1999-CG3" certificates, and
o the amount of all fees payable to the master servicer, the special
servicer and the trustee under the pooling and servicing agreement.
In connection with the foregoing, that mortgage loan will be taken into account
when determining the Weighted Average Pool Pass-Through Rate and the Total
Principal Payment Amount for each payment date.
Operating revenues and other proceeds derived from an REO property will be
applied--
o first, to pay, or to reimburse the master servicer, the special
servicer and/or the trustee for the payment of, certain costs and
expenses incurred in connection with the operation and disposition
of the REO property, and
o thereafter, as collections of principal, interest and other amounts
"due" on the related mortgage loan.
To the extent described under "--Advances of Delinquent Monthly Debt
Service Payments" below, the master servicer and the trustee will be required to
make advances of principal and/or interest in respect of each mortgage loan as
to which the related underlying real property has become an REO property, in all
cases as if the mortgage loan had remained outstanding.
Reductions to Certificate Principal Balances in Connection With Realized Losses
and Additional Trust Fund Expenses
As a result of Realized Losses and Additional Trust Fund Expenses, the
aggregate stated principal balance of the mortgage pool may decline below the
aggregate principal balance of the series "1999-CG3" principal balance
certificates. If this occurs following the payments made to the series
"1999-CG3" certificateholders on any payment date, then the respective aggregate
principal balances of the various classes
S-140
<PAGE>
of the series "1999-CG3" principal balance certificates are to be successively
reduced in the following order, until the aggregate principal balance of the
series "1999-CG3" principal balance certificates equals the aggregate stated
principal balance of the mortgage pool that will be outstanding immediately
following that payment date.
Order of Allocation Class
------------------- -----
1. D
2. C
3. B-8
4. B-7
5. B-6
6. B-5
7. B-4
8. B-3
9. B-2
10. B-1
11. A-5
12. A-4
13. A-3
14. A-2
15. A-1C
16. A-1A and A-1B*
----------------
* Pro rata based on aggregate principal balances.
The reductions in the aggregate principal balances of the respective
classes of the series "1999-CG3" principal balance certificates, as described in
the previous paragraph, will represent an allocation of the Realized Losses
and/or Additional Trust Fund Expenses that caused the particular mismatch in
balances between the mortgage loans and the series "1999-CG3" principal balance
certificates. A reduction of this type in the aggregate principal balance of a
class of the series "1999-CG3" principal balance certificates will result in a
corresponding reduction in the aggregate notional amount of the class "S"
certificates.
Any "Realized Losses" are losses on or in respect of the mortgage loans
arising from the inability of the master servicer and/or the special servicer to
collect all amounts due and owing under the mortgage loans, including by reason
of the fraud or bankruptcy of a borrower or, to the extent not covered by
insurance, a casualty of any nature at an underlying real property. The Realized
Loss in respect of a liquidated mortgage loan (or related REO property) is an
amount generally equal to the excess, if any, of:
o the outstanding principal balance of the mortgage loan as of the
date of liquidation, together with (i) all accrued and unpaid
interest on the mortgage loan to but not including the due date in
the collection period in which the liquidation occurred, exclusive,
however, of any portion of that interest that represents Default
Interest or Post-ARD Additional Interest, and (ii) all related
unreimbursed servicing advances and unpaid liquidation expenses,
over
o the total amount of liquidation proceeds, if any, recovered in
connection with the liquidation.
S-141
<PAGE>
If any portion of the debt due under a mortgage loan is forgiven, whether in
connection with a modification, waiver or amendment granted or agreed to by the
master servicer or the special servicer or in connection with the bankruptcy,
insolvency or similar proceeding involving the related borrower, the amount
forgiven, other than Default Interest and Post-ARD Additional Interest, also
will be treated as a Realized Loss.
An "Additional Trust Fund Expense" is, in general, an expense of the trust
that (i) arises out of a default on a mortgage loan or an otherwise
unanticipated event and (ii) is not covered by a servicing advance or a
corresponding collection from the related borrower. Some examples of Additional
Trust Fund Expenses are:
o any special servicing fees, workout fees and liquidation fees paid
to the special servicer;
o any interest paid to the master servicer, the special servicer
and/or the trustee in respect of unreimbursed advances, which
interest payment is not covered out of late payment charges and
Default Interest actually collected on the related mortgage loan;
o the cost of various opinions of counsel required or permitted to be
obtained in connection with the servicing of the mortgage loans and
the administration of the other trust assets;
o certain unanticipated, non-mortgage loan specific expenses of the
trust, including--
(i) certain reimbursements and indemnifications to the trustee as
described under "Description of the Governing
Documents--Certain Matters Regarding the Trustee" in the
accompanying prospectus,
(ii) certain reimbursements to the master servicer, the special
servicer and us as described under "Description of the
Governing Documents--Certain Matters Regarding the Master
Servicer, the Special Servicer, the Manager and Us" in the
accompanying prospectus, and
(iii) certain federal, state and local taxes, and certain
tax-related expenses, payable out of the trust assets as
described under "Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other
Taxes" in the accompanying prospectus;
o rating agency fees, other than on-going surveillance fees, that
cannot be recovered from the borrower; and
o any amounts expended on behalf of the trust to remediate an adverse
environmental condition at any underlying real property securing a
defaulted mortgage loan as described under "Servicing of the
Mortgage Loans--Realization Upon Defaulted Mortgage Loans" in this
prospectus supplement.
S-142
<PAGE>
Advances of Delinquent Monthly Debt Service Payments
The master servicer will be required to make, for each payment date, an
aggregate amount of advances of principal and/or interest ("P&I advances")
generally equal to all monthly debt service payments (other than balloon
payments) and assumed monthly debt service payments, in each case net of related
master servicing fees, that (a) were due or deemed due, as the case may be, in
respect of the mortgage loans during the related collection period and (b) were
not paid by or on behalf of the respective borrowers or otherwise collected as
of the close of business on the last day of the related collection period.
Notwithstanding the foregoing, if it is determined that an Appraisal Reduction
Amount exists with respect to any mortgage loan, then the master servicer will
reduce the interest portion, but not the principal portion, of each P&I advance
that it must make with respect to that mortgage loan during the period that the
Appraisal Reduction Amount exists. The interest portion of any P&I advance
required to be made with respect to any mortgage loan as to which there exists
an Appraisal Reduction Amount, will equal the product of:
o the amount of the interest portion of that P&I advance that would
otherwise be required to be made for the subject payment date
without regard to this sentence and the prior sentence, multiplied
by
o a fraction, the numerator of which is equal to the stated principal
balance of the mortgage loan, net of the Appraisal Reduction Amount,
and the denominator of which is equal to the stated principal
balance of the mortgage loan. See "Servicing of the Mortgage
Loans--Required Appraisals" in this prospectus supplement.
With respect to any payment date, the master servicer will be required to make
P&I advances either out of its own funds or, subject to the replacement thereof
as and to the extent provided in the pooling and servicing agreement, funds held
in the master servicer's collection account that are not required to be part of
the Available Funds for that payment date.
If the master servicer fails to make a required P&I advance and the
trustee is aware of that failure, the trustee will be obligated to make the
advance. See "--The Trustee" below.
The master servicer and the trustee will each be entitled to recover any
P&I advance made by it, out of its own funds, from collections on the mortgage
loan as to which the advance was made. Neither the master servicer nor the
trustee will be obligated to make any P&I advance that, in its judgment, would
not ultimately be recoverable out of collections on the related mortgage loan.
If the master servicer or the trustee makes any P&I advance that it subsequently
determines, in its judgment, will not be recoverable out of collections on the
related mortgage loan, it may obtain reimbursement for that advance, together
with interest accrued thereon as described below, out of general collections on
the mortgage loans and any REO properties on deposit in the master servicer's
collection account from time to time. See "Description of the
Certificates--Advances in Respect of Delinquencies" in the accompanying
prospectus and "Servicing of the Mortgage Loans--Collection Account" in this
prospectus supplement.
S-143
<PAGE>
The master servicer and the trustee will each be entitled to receive
interest on P&I advances made thereby out of its own funds. That interest will
accrue on the amount of each P&I advance, and compound monthly, for so long as
that advance is outstanding at an annual rate equal to the "prime rate" as
published in the "Money Rates" section of The Wall Street Journal, as that
"prime rate" may change from time to time. Interest accrued with respect to any
P&I advance will be payable in the collection period in which that advance is
reimbursed--
o first, out of Default Interest and late payment charges collected on
the related mortgage loan during that collection period, and
o then, if and to the extent that the Default Interest and late
charges referred to in clause first are insufficient to cover the
advance interest, out of any amounts then on deposit in the master
servicer's collection account.
Any delay between a sub-servicer's receipt of a late collection of a
monthly debt service payment as to which a P&I advance was made and the
forwarding of that late collection to the master servicer, will increase the
amount of interest accrued and payable to the master servicer or the trustee, as
the case may be, on that P&I advance. To the extent not offset by Default
Interest and/or late payment charges accrued and actually collected, interest
accrued on outstanding P&I advances will result in a reduction in amounts
payable on the series "1999-CG3" certificates.
An "assumed monthly debt service payment" will be an amount of principal
and/or interest deemed due with respect to:
o each mortgage loan that is delinquent in respect of its balloon
payment beyond the end of the collection period in which its
maturity date occurs and as to which no arrangements have been
agreed to for the collection of the delinquent amounts, including an
extension of maturity; and
o each mortgage loan as to which the related underlying real property
has become an REO property.
The assumed monthly debt service payment deemed due on any mortgage loan
described in the prior sentence that is delinquent as to its balloon payment,
will equal, for its stated maturity date and for each successive due date that
it remains outstanding and part of the trust, the monthly debt service payment
that would have been due on the mortgage loan on the relevant date if the
related balloon payment had not come due and the mortgage loan had, instead,
continued to amortize and accrue interest according to its terms in effect prior
to that stated maturity date. The assumed monthly debt service payment deemed
due on any mortgage loan described in the second preceding sentence as to which
the related underlying real property has become an REO property, will equal, for
each due date that the REO property remains part of the trust, the monthly debt
service payment (or, in the case of a mortgage loan delinquent in respect of its
balloon payment, the assumed monthly debt service payment) due (or deemed due)
on the last due date prior to the acquisition of that REO property. Assumed
monthly debt service payments for ARD loans do not include Post-ARD Additional
Interest or accelerated amortization payments.
S-144
<PAGE>
Reports to Certificateholders; Certain Available Information
Trustee Reports. Based solely on information provided in monthly reports
prepared by the master servicer and the special servicer and delivered to the
trustee, the trustee will prepare and make available electronically (or, upon
request, provide by first class mail) on each payment date to each series
"1999-CG3" certificateholder a reporting statement substantially in the form of,
and containing the information set forth in, Exhibit B to this prospectus
supplement, detailing the payments on that payment date and the performance,
both in the aggregate and individually to the extent available, of the mortgage
loans and the underlying real properties.
Book-Entry Certificates. If you hold your certificates in book-entry from
through DTC, you may obtain direct access to the monthly reports of the trustee
as if you were a series "1999-CG3" certificateholder, provided that you deliver
a written certification to the trustee confirming your beneficial ownership in
the offered certificates. Otherwise, until definitive certificates are issued in
respect of your certificates, the information contained in the trustee's monthly
reports will be available to you only to the extent that it is made available
through DTC and the DTC participants or is available on the trustee's internet
website. Conveyance of notices and other communications by DTC to the DTC
participants, and by the DTC participants to beneficial owners of the offered
certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. We,
the master servicer, the special servicer, the trustee and the series "1999-CG3"
certificate registrar are required to recognize as series "1999-CG3"
certificateholders only those persons in whose names the series "1999-CG3"
certificates are registered on the books and records of the series "1999-CG3"
certificate registrar.
Information Available Electronically. The trustee will make available each
month, to any interested party, the trustee's reports via the trustee's internet
website, electronic bulletin board and fax-on-demand service. In addition, the
trustee will also make certain mortgage loan information as presented in the
standard Commercial Mortgage Securities Association loan setup file and loan
periodic update file formats available to any holder or beneficial owner of an
offered certificate via the trustee's internet website. The trustee's internet
website will initially be located at "www.ctslink.com/cmbs".
The trustee's electronic bulletin board may be accessed by calling (301)
815-6620, and its fax-on-demand service may be accessed by calling (301)
815-6610. For assistance with regard to the services described above, investors
may call (301) 815-6600.
The trustee will make no representations or warranties as to the accuracy
or completeness of, and may disclaim responsibility for, any information made
available by the trustee for which it is not the original source.
The trustee may require registration and the acceptance of a disclaimer in
connection with providing access to its electronic bulletin board and internet
website. The trustee shall not be liable for the dissemination of information
made in accordance with the pooling and servicing agreement.
S-145
<PAGE>
Other Information. The pooling and servicing agreement will obligate the
trustee to make available at its offices, during normal business hours, upon
reasonable advance written notice, for review by any holder or beneficial owner
of an offered certificate or any person identified to the trustee by any such
holder or beneficial owner as a prospective transferee of an offered certificate
or any interest therein, subject to the discussion in the following paragraph,
originals or copies of, among other things, the following items:
o the pooling and servicing agreement, including exhibits, and any
amendments to the pooling and servicing agreement;
o all monthly reports of the trustee delivered to series "1999-CG3"
certificateholders since the date of initial issuance of the series
"1999-CG3" certificates;
o all officer's certificates delivered to the trustee by the master
servicer and/or the special servicer since the date of initial
issuance of the series "1999-CG3" certificates, as described under
"Servicing of the Mortgage Loans--Evidence as to Compliance" in this
prospectus supplement;
o all accountant's reports delivered to the trustee in respect of the
master servicer and/or the special servicer since the date of
initial issuance of the series "1999-CG3" certificates, as described
under "Servicing of the Mortgage Loans--Evidence as to Compliance"
in this prospectus supplement;
o the most recent inspection report in respect of each underlying real
property prepared by the master servicer or the special servicer and
delivered to the trustee as described under "Servicing of the
Mortgage Loans--Inspections; Collection of Operating Information" in
this prospectus supplement;
o the most recent appraisal, if any, with respect to each underlying
real property obtained by the master servicer or the special
servicer and delivered to the trustee (see "Servicing of the
Mortgage Loans--Required Appraisals" in this prospectus supplement);
o the most recent quarterly and annual operating statement and rent
roll for each underlying real property and financial statements of
the related borrower collected by the master servicer or the special
servicer and delivered to the trustee as described under "Servicing
of the Mortgage Loans--Inspections; Collection of Operating
Information" in this prospectus supplement; and
o the mortgage files, including all documents, such as modifications,
waivers and amendments of the mortgage loans, that are to be added
to the mortgage files from time to time.
Copies of any and all of the foregoing items will be available from the
trustee upon request. However, the trustee will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing the
copies.
S-146
<PAGE>
In connection with providing access to or copies of the items described
above, the trustee may require:
o in the case of a beneficial owner of a series "1999-CG3" certificate
held in book-entry form, a written confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the
trustee, generally to the effect that the person or entity is a
beneficial owner of offered certificates and will keep the
information confidential; and
o in the case of a prospective purchaser of series "1999-CG3"
certificates or interests therein, confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the
trustee, generally to the effect that the person or entity is a
prospective purchaser of series "1999-CG3" certificates or an
interest therein, is requesting the information for use in
evaluating a possible investment in the series "1999-CG3"
certificates and will otherwise keep the information confidential.
Series "1999-CG3" certificateholders will be deemed to have agreed to keep the
information described above confidential by the acceptance of their series
"1999-CG3" certificates. However, no holder, beneficial owner or prospective
transferee of any series "1999-CG3" certificate or interest therein will be
required to keep confidential any information that has previously been filed
with the SEC, and the trustee will not be required to obtain either of the
confirmations referred to in the second preceding sentence in connection with
providing any information that has previously been filed with the SEC.
Voting Rights
99% of the voting rights for the series "1999-CG3" certificates will be
allocated among the respective classes of series "1999-CG3" principal balance
certificates in proportion to the respective aggregate principal balances
thereof at all times during the term of the pooling and servicing agreement. 1%
of the voting rights will be allocated to the class "S" certificates. Voting
rights allocated to a class of series "1999-CG3" certificates will be allocated
among those certificates in proportion to the percentage interests in that class
evidenced by each such certificate.
Termination
The obligations created by the pooling and servicing agreement will
terminate following the earliest of--
(i) the final payment, or advance in respect thereof, or other
liquidation of the last mortgage loan or related REO property
remaining in the trust, and
(ii) the purchase of all of the mortgage loans and REO properties
remaining in the trust assets by the master servicer, the special
servicer or any single certificateholder or group of
certificateholders in the Controlling Class (in that order of
preference).
Written notice of termination of the pooling and servicing agreement will
be given to each series "1999-CG3" certificateholder. The final payment with
respect to each series "1999-CG3" certificate will be made only upon surrender
and cancellation of that certificate at the office of the series "1999-CG3"
certificate registrar or at any other location specified in the notice of
termination.
S-147
<PAGE>
Any purchase by the master servicer, the special servicer or any single
holder or group of holders of the Controlling Class of all the mortgage loans
and REO properties remaining in the trust is required to be made at a price
equal to (a) the sum of (i) the aggregate principal balance of all the mortgage
loans then included in the trust (other than any mortgage loans as to which the
related underlying real properties have become REO properties), together with
interest (other than Default Interest and Post-ARD Additional Interest) on and
unreimbursed servicing advances for those mortgage loans and (ii) the appraised
value of all REO properties then included in the trust, as determined by an
appraiser mutually agreed upon by the master servicer, the special servicer and
the trustee, minus (b) solely in the case of a purchase by the master servicer
or the special servicer, the total of all amounts payable or reimbursable to the
purchaser under the pooling and servicing agreement. The purchase will effect
early retirement of the outstanding certificates of the "1999-CG3" series, but
the right of the master servicer, the special servicer or any single holder or
group of holders of the Controlling Class to effect the termination is subject
to the requirement that the aggregate stated principal balance of the mortgage
pool be less than 1% of the initial mortgage pool balance. The termination
price, exclusive of any portion of the termination price payable or reimbursable
to any person other than the series "1999-CG3" certificateholders, will
constitute part of the available distribution amount for the final payment date.
Any person or entity effecting a purchase will be responsible for reimbursing
the parties to the pooling and servicing agreement (other than itself, if
applicable) for all reasonable out-of-pocket costs and expenses incurred by the
parties in connection with the purchase.
The Trustee
Norwest Bank Minnesota, National Association ("Norwest Bank") will act as
initial trustee pursuant to the pooling and servicing agreement. It is a direct,
wholly owned subsidiary of Wells Fargo & Company and is a national banking
association originally chartered in 1872 and is engaged in a wide range of
activities typical of a national bank. Norwest Bank maintains an office at
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0113.
Certificate transfer services are conducted at Norwest Bank's offices in
Minneapolis. Norwest Bank otherwise conducts its trustee and securities
administration services at its offices in Columbia, Maryland. Its address there
is 11000 Broken Land Parkway, Columbia, Maryland 21044-3562. In addition,
Norwest Bank maintains an office in New York located at 3 New York Plaza, New
York, New York 10004. Series "1999-CG3" certificateholders and other interested
parties should direct their inquiries to the New York Office. The telephone
number is (212) 515-5240.
The trustee is at all times required to be a corporation, bank, trust
company or association organized and doing business under the laws of the U.S.
or any State of the U.S. or the District of Columbia. In addition, the trustee
must at all times--
o be authorized under those laws to exercise trust powers,
o have a combined capital and surplus of at least $50,000,000, and
o be subject to supervision or examination by federal or state
authority.
If the corporation, bank, trust company or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then the combined capital and surplus of the
corporation, bank, trust company or association will be deemed to be its
combined capital and surplus as described in its most recent published report of
condition.
S-148
<PAGE>
We, the master servicer, the special servicer and our and their respective
affiliates, may from time to time enter into normal banking and trustee
relationships with the trustee and its affiliates. The trustee and any of its
respective affiliates may hold series "1999-CG3" certificates in their own
names. In addition, for purposes of meeting the legal requirements of certain
local jurisdictions, the master servicer and the trustee acting jointly will
have the power to appoint a co-trustee or separate trustee of all or any part of
the trust assets. All rights, powers, duties and obligations conferred or
imposed upon the trustee will be conferred or imposed upon the trustee and the
separate trustee or co-trustee jointly (or, in any jurisdiction in which the
trustee shall be incompetent or unqualified to perform certain acts, singly upon
the separate trustee or co-trustee who shall exercise and perform its rights,
powers, duties and obligations solely at the direction of the trustee).
The trustee will be entitled to a monthly fee for its services, which fee
will accrue on a 30/360 basis at 0.002% per annum on the stated principal
balance outstanding from time to time of each mortgage loan. The trustee fee is
payable out of general collections on the mortgage loans and any REO properties.
See also "Description of the Governing Documents--The Trustee", "--Duties
of the Trustee", "--Certain Matters Regarding the Trustee" and "--Resignation
and Removal of the Trustee" in the accompanying prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any offered certificate will depend on:
(a) the price at which the certificate is purchased by an investor, and
(b) the rate, timing and amount of payments on the certificate.
The rate, timing and amount of payments on any offered certificate will in
turn depend on, among other things,
o the pass-through rate for the certificate,
o the rate and timing of principal payments, including principal
prepayments, and other principal collections on the mortgage loans
and the extent to which those amounts are to be applied or otherwise
result in reduction of the principal balance or notional amount of
the certificate,
o the rate, timing and severity of Realized Losses and Additional
Trust Fund Expenses and the extent to which those losses and
expenses result in the reduction of the principal balance or
notional amount of the certificate, and
o the timing and severity of any Net Aggregate Prepayment Interest
Shortfalls and the extent to which those shortfalls result in the
reduction of the interest payments on the certificate.
S-149
<PAGE>
Pass-Through Rates. The pass-through rates applicable to the class "S",
"A-2", "A-3", "A-4", "A-5", "B-1" and "B-2" certificates will, in each case,
equal, be limited by or be calculated based on the Weighted Average Pool
Pass-Through Rate. Accordingly, the yields on the class "S", "A-2", "A-3",
"A-4", "A-5", "B-1" and "B-2" certificates will be sensitive in varying degrees
to changes in the relative composition of the mortgage pool as a result of
scheduled amortization, voluntary prepayments and liquidations of mortgage loans
following default. In addition, the pass-through rate for the class "S"
certificates will vary with changes in the relative sizes of the aggregate
principal balances of the respective classes of the series "1999-CG3" principal
balance certificates. See "Description of the Offered
Certificates--Payments--Calculation of Pass-Through Rates" and "Description of
the Mortgage Pool" in this prospectus supplement and "--Rate and Timing of
Principal Payments" below.
Rate and Timing of Principal Payments. The yield to maturity on the class
"S" certificates will be extremely sensitive to, and the yield to maturity on
any other offered certificates purchased at a discount or a premium will be
affected by, the rate and timing of principal payments made in reduction of the
certificate principal balances or certified notional amounts of the series
"1999-CG3" certificates. In turn, the rate and timing of principal payments that
are paid or otherwise result in reduction of the aggregate principal balance or
notional amount, as the case may be, of each class of offered certificates will
be directly related to the rate and timing of principal payments on or in
respect of the mortgage loans. Finally, the rate and timing of principal
payments on or in respect of the mortgage loans will be affected by their
amortization schedules, the dates on which balloon payments are due and the rate
and timing of principal prepayments and other unscheduled collections thereon,
including for this purpose, collections made in connection with liquidations of
mortgage loans due to defaults, casualties or condemnations affecting the
underlying real properties, or purchases or other removals of mortgage loans
from the trust.
Prepayments and other early liquidations of the mortgage loans will result
in payments on the series "1999-CG3" principal balance certificates of amounts
that would otherwise be paid over the remaining terms of the mortgage loans.
This will tend to shorten the weighted average lives of those certificates.
Defaults on the mortgage loans, particularly at or near their maturity dates,
may result in significant delays in payments of principal on the mortgage loans
and, accordingly, on the series "1999-CG3" principal balance certificates, while
work-outs are negotiated or foreclosures are completed. These delays will tend
to lengthen the weighted average lives of those certificates. See "Servicing of
The Mortgage Loans--Modifications, Waivers, Amendment and Consent" in this
prospectus supplement. In addition, the ability of a borrower under an ARD loan,
to repay that loan on the related anticipated repayment date will generally
depend on its ability to either refinance the mortgage loan or sell the related
underlying real property. Also, a borrower may have little incentive to repay
its mortgage loan on the related anticipated repayment date if then prevailing
interest rates are relatively high. Accordingly, there can be no assurance that
any ARD loan will be paid in full on its anticipated repayment date.
The extent to which the yield to maturity on any offered certificate may
vary from the anticipated yield will depend upon the degree to which the
certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the mortgage loans are in turn paid or otherwise result
in a reduction of the principal balance or notional amount of the certificate.
If you purchase your certificates at a discount, you should consider the risk
that a slower than anticipated rate of principal payments on the mortgage loans
could result in an actual yield to you that is lower than your anticipated
yield. If you purchase class "S" certificates, or if you purchase any other
offered certificates at a premium, you should consider the risk that a faster
than anticipated rate of principal payments on the mortgage loans could result
in an actual yield to you that is lower than your anticipated yield.
S-150
<PAGE>
If you are contemplating an investment in the class "S" certificates, you
should fully consider the risk that an extremely rapid rate of principal
payments on the mortgage loans could result in your failure to recoup fully your
initial investment.
Because the rate of principal payments on or in respect of the mortgage
loans will depend on future events and a variety of factors, as described more
fully below, no assurance can be given as to the rate or the rate of principal
prepayments in particular. We are not aware of any relevant publicly available
or authoritative statistics with respect to the historical prepayment experience
of a large group of real estate loans comparable to those in the mortgage pool.
Even if they are available and payable on your certificates, prepayment
premiums and yield maintenance charges may not be sufficient to offset fully any
loss in yield on your certificates attributable to the related prepayments of
the mortgage loans.
Delinquencies and Defaults on the Mortgage Loans. The rate and timing of
delinquencies and defaults on the mortgage loans will affect the amount of
payments on your certificates, the yield to maturity of your certificates, the
rate of principal payments on your certificates and the weighted average life of
your certificates. Delinquencies on the mortgage loans, unless covered by P&I
advances, may result in shortfalls in payments of interest and/or principal on
your certificates for the current month. Although any shortfalls in payments of
interest may be made up on future payment dates, no interest would accrue on
those shortfalls. Thus, any shortfalls in payments of interest would adversely
affect the yield to maturity of your certificates.
If--
o you calculate the anticipated yield to maturity for your
certificates based on an assumed rate of default and amount of
losses on the mortgage loans that is lower than the default rate and
amount of losses actually experienced, and
o the additional losses result in a reduction of the total payments on
or the aggregate principal balance or notional amount of your
certificates,
then your actual yield to maturity will be lower than you calculated and could,
under certain scenarios, be negative.
The timing of any loss on a liquidated mortgage loans that results in a
reduction of the total payments on or the aggregate principal balance or
notional amount of your certificates will also affect your actual yield to
maturity, even if the rate of defaults and severity of losses are consistent
with your expectations. In general, the earlier your loss occurs, the greater
the effect on your yield to maturity.
Even if losses on the mortgage loans do not result in a reduction of the
total payments on or the aggregate principal balance or certificate notional
amount of your certificates, the losses may still affect the timing of payments
on (and, accordingly, the weighted average life and yield to maturity of) your
certificates.
S-151
<PAGE>
Certain Relevant Factors. The following factors, among others, will affect
the rate and timing of principal payments and defaults and the severity of
losses on or in respect of the mortgage loans:
o prevailing interest rates;
o the terms of the mortgage loans, including provisions that require
the payment of prepayment premiums and yield maintenance charges,
provisions that impose prepayment lock-out periods and amortization
terms that require balloon payments;
o the demographics and relative economic vitality of the areas in
which the underlying real properties are located;
o the general supply and demand for commercial and multifamily rental
space of the type available at the underlying real properties in the
areas in which the underlying real properties are located;
o the quality of management of the underlying real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o other opportunities for investment.
See "Risk Factors--Risks Related to the Mortgage Loans", "Description of
the Mortgage Pool" and "Servicing of the Mortgage Loans" in this prospectus
supplement and "Description of the Governing Documents" and "Yield and Maturity
Considerations--Yield and Prepayment Considerations" in the accompanying
prospectus.
The rate of prepayment on the mortgage loans is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below the annual
rate at which a mortgage loan accrues interest, the related borrower may have an
increased incentive to refinance the mortgage loan. Conversely, to the extent
prevailing market interest rates exceed the annual rate at which a mortgage loan
accrues interest, the related borrower may be less likely to voluntarily prepay
the mortgage loan.. Assuming prevailing market interest rates exceed the revised
mortgage interest rate at which an ARD loan accrues interest following its
anticipated repayment date, the primary incentive for the related borrower to
prepay the mortgage loan on or before its anticipated repayment date is to give
the borrower access to excess cash flow, all of which, net of the minimum
required debt service, approved property expenses and any required reserves,
must be applied to pay down principal of the mortgage loan. Accordingly, there
can be no assurance that any ARD loan will be prepaid on or before its
anticipated repayment date or on any other date prior to maturity.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
underlying real properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some underlying
borrowers may be motivated by federal and state tax laws, which are subject to
change, to sell their underlying real properties prior to the exhaustion of tax
depreciation benefits.
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A number of the underlying borrowers are limited or general partnerships.
Under certain circumstances, the bankruptcy of the general partner in a
partnership may result in the dissolution of the partnership. The dissolution of
a borrower partnership, the winding-up of its affairs and the distribution of
its assets could result in an acceleration of its payment obligations under the
related mortgage loan.
We make no representation or warranty regarding:
o the particular factors that will affect the rate and timing of
prepayments and defaults on the mortgage loans;
o the relative importance of those factors;
o the percentage of the aggregate principal balance of the mortgage
loans that will be prepaid or as to which a default will have
occurred as of any particular date; or
o the overall rate of prepayment or default on the mortgage loans.
CPR Model. Prepayments on mortgage loans are commonly measured relative to
a prepayment standard or model. The prepayment model used in this prospectus
supplement is the "constant prepayment rate" model, which represents an assumed
constant rate of prepayment each month, which is expressed on a per annum basis,
relative to the then-outstanding principal balance of a pool of loans for the
life of those loans. The CPR model does not purport to be either an historical
description of the prepayment experience of any pool of loans or a prediction of
the anticipated rate of prepayment of any pool of loans, including the mortgage
pool. We do not make any representations about the appropriateness of the CPR
model.
Unpaid Interest. If the portion of the Available P&I Funds payable in
respect of interest on any class of offered certificates on any payment date is
less than the total amount of interest then payable for the class, the shortfall
will be payable to the holders of those certificates on subsequent payment
dates, subject to the Available P&I Funds on those subsequent payment dates and
the priority of payments described under "Description of the Offered
Certificates--Payments--Priority of Payments" in this prospectus supplement.
That shortfall will not bear interest, however, and will therefore negatively
affect the yield to maturity of that class of offered certificates for so long
as it is outstanding.
Weighted Average Lives of Certain Classes Offered Certificates
The tables set forth on Exhibit C to this prospectus supplement indicate
the respective weighted average lives of the class "A-1A", "A-1B", "A-1C",
"A-2", "A-3", "A-4", "A-5", "B-1" and "B-2" certificates, and set forth the
percentages of the respective initial aggregate principal balances of those
classes of offered certificates that would be outstanding after the payment
dates in each of the calendar months shown, subject, however, to the following
discussion and the maturity assumptions specified below.
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For purposes in this prospectus supplement, "weighted average life" refers
to the average amount of time that will elapse from the date of issuance of a
security until each dollar of principal of the security will be repaid to the
investor, assuming no losses. For purposes of this "Yield and Maturity
Considerations" section and Exhibit C to this prospectus supplement, the
weighted average life of a series "1999-CG3" principal balance certificate, such
as a class "A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1" or "B-2"
certificate, is determined by:
(i) multiplying the amount of each principal payment on the certificate
by the number of years from the assumed settlement date, as
discussed under "--The Maturity Assumptions" below, to the related
payment date,
(ii) summing the results, and
(iii) dividing the sum by the total amount of the reductions in the
principal balance of the certificate.
The weighted average life of any series "1999-CG3" principal balance certificate
will be influenced by, among other things, the rate at which principal of the
mortgage loans is paid, which may be in the form of scheduled amortization,
balloon payments, prepayments, liquidation proceeds, condemnation proceeds or
insurance proceeds, as described in this prospectus supplement. The weighted
average life of any series "1999-CG3" principal balance certificate may also be
affected to the extent that additional payments in reduction of the principal
balance of that certificate occur as a result of the purchase of a mortgage loan
from the trust or the optional termination of the trust as described under
"Description of the Offered Certificates--Termination" in this prospectus
supplement. The purchase of a mortgage loan from the trust will have the same
effect on payments to the series "1999-CG3" certificateholders as if the
mortgage loan had prepaid in full, except that no prepayment premium or yield
maintenance charge is collectable in respect thereof.
The actual characteristics and performance of the mortgage loans will
differ from the assumptions used in calculating the tables on Exhibit C to this
prospectus supplement,. Those tables are hypothetical in nature and are provided
only to give a general sense of how the principal cash flows might behave under
the assumed prepayment and loss scenarios. Any difference between the
assumptions used in calculating the tables on Exhibit C to this prospectus
supplement and the actual characteristics and performance of the mortgage loans,
or actual prepayment or loss experience, will affect the percentages of initial
aggregate principal balances outstanding over time and the weighted average
lives of the respective classes of the offered certificates. You must make your
own decisions as to the appropriate prepayment, liquidation and loss assumptions
to be used in deciding whether to purchase any offered certificate.
The Maturity Assumptions
The tables set forth on Exhibits C and D to this prospectus supplement
have been prepared on the basis of the following assumptions regarding the
characteristics of the series "1999-CG3" certificates and the mortgage loans and
the performance of the mortgage loans (collectively, the "Maturity
Assumptions"):
o as of the date of initial issuance of the series "1999-CG3"
certificates, the mortgage loans have the terms identified in the
table titled "Characteristics of the Mortgage Loans" in Exhibit A-1
to this prospectus supplement;
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o each ARD loan is paid in full on its anticipated repayment date, no
mortgage loan is prepaid during its prepayment lock-out period,
during any period that a yield maintenance charge is required or
during any period that defeasance thereof may be required and,
otherwise, each mortgage loan is assumed to prepay at the specified
CPR;
o no mortgage loan is repurchased or replaced as a result of a
material breach of a representation or warranty;
o none of the master servicer, the special servicer or any single
certificateholder or group of certificateholders of the Controlling
Class exercises its option to purchase the mortgage loans and
thereby cause a termination of the trust;
o there are no delinquencies or losses on the mortgage loans, and
there is no extension of the maturity date of any mortgage loan;
o payments on the series "1999-CG3" certificates will be made on the
tenth day of each month, commencing in November 1999;
o payments on the mortgage loans earn no reinvestment return;
o the only expenses payable out of the trust assets are the master
servicing fee and the trustee's fee;
o the respective classes of the series "1999-CG3" certificates will,
in each case, be issued with the initial aggregate principal balance
or notional amount described in this prospectus supplement;
o the pass-through rates for the respective classes of the series
"1999-CG3" certificates will be as described in this prospectus
supplement; and
o the series "1999-CG3" certificates will be settled with investors on
October 19, 1999.
Yield Sensitivity of the Class S Certificates
The yield to investors on the class "S" certificates will be highly
sensitive to the rate and timing of principal payments, including prepayments,
on the mortgage loans. If you are contemplating an investment in the class "S"
certificates, you should fully consider the associated risks, including the risk
that an extremely rapid rate of prepayment and/or liquidation of the mortgage
loans could result in your failure to recoup fully your initial investment.
The tables set forth on Exhibit D to this prospectus supplement show
pre-tax corporate bond equivalent yields for the class "S" certificates based on
the Maturity Assumptions and, further assuming the specified purchase prices and
the indicated prepayment scenarios. The assumed purchase prices for the class
"S" certificates are--
o expressed in 32nds (e.g., 4-08 means 4.25%) as a percentage of the
initial aggregate notional amount of the class "S" certificates, and
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o exclusive of accrued interest.
The yields set forth in the tables on Exhibit D to this prospectus
supplement were calculated by--
o determining the monthly discount rate that, when applied to the
assumed stream of cash flows to be paid on the class "S"
certificates, would cause the discounted present value of each
assumed stream of cash flows to equal--
(i) each of the assumed purchase prices for the class "S"
certificates, plus
(ii) accrued interest at the initial pass-through rate for the
class "S" certificates from and including October 1, 1999 to
but excluding the assumed settlement date, and
o converting those monthly discount rates to corporate bond equivalent
rates.
Those calculations do not take into account variations that may occur in
the interest rates at which investors may be able to reinvest funds received by
them as payments on the class "S" certificates. Consequently, they do not
purport to reflect the return on any investment on the class "S" certificates
when reinvestment rates are considered.
There can be no assurance that--
o the mortgage loans will prepay in accordance with the assumptions
used in preparing the tables on Exhibit D to this prospectus
supplement,
o the mortgage loans will prepay as assumed at any of the rates shown
in the tables,
o the mortgage loans will not experience losses,
o mortgage loans will not be liquidated during any applicable
prepayment lock-out period or during any other period that
prepayments are assumed not to occur,
o the ARD loans will be paid in full on their respective anticipated
repayment dates,
o the cash flows on the class "S" certificates will correspond to the
cash flows shown in this prospectus supplement, or
o the purchase price of the class "S" certificates will be as assumed.
It is unlikely that the mortgage loans will prepay as assumed at any of
the specified percentages of CPR until maturity or that all of the mortgage
loans will so prepay at the same rate. Actual yields to maturity for investors
in the class "S" certificates may be materially different than those indicated
on Exhibit D to this prospectus supplement. Timing of changes in rate of
prepayments and other liquidations may significantly affect the actual yield to
maturity to investors, even if the average rate of principal prepayments and
other liquidations is consistent with the expectations of investors. You must
make your own decisions as to the appropriate prepayment, liquidation and loss
assumptions to be used in deciding whether to purchase any offered certificates.
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the offered
certificates will be used by us to purchase the mortgage loans and to pay
certain expenses in connection with the issuance of the series "1999-CG3"
certificates.
FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the series "1999-CG3" certificates, Sidley & Austin,
our counsel, will deliver its opinion generally to the effect that, assuming
compliance with the pooling and servicing agreement, and subject to certain
other assumptions set forth in the opinion, REMIC I, REMIC II and REMIC III,
respectively, will each qualify as a REMIC under the Internal Revenue Code of
1986 (for purposes of this "Federal Income Tax Consequences" section, the
"Code"). The assets of REMIC I will generally include the mortgage loans, any
REO properties acquired on behalf of the series "1999-CG3" certificateholders,
the master servicer's collection account, the special servicer's REO account and
the trustee's payment account and interest reserve account, but will exclude any
collections of Post-ARD Additional Interest on the ARD loans. Each of certain
individual mortgage loans may be the sole asset of a separate REMIC, and the
"regular interest" in each of those "single mortgage loan REMICs", instead of
the related mortgage loan, will be an asset of REMIC I. For federal income tax
purposes,
o the separate non-certificated regular interests in REMIC I will be
the "regular interests" in REMIC I and will be the assets of REMIC
II,
o the class "R-I" certificates will evidence the sole class of
"residual interests" in REMIC I and in each of the "single mortgage
loan REMICs",
o the separate non-certificated regular interests in REMIC II will be
the "regular interests" in REMIC II and will be the assets of REMIC
III,
o the class "R-II" certificates will evidence the sole class of
"residual interests" in REMIC II,
o the class "A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1",
"B-2", "B-3", "B-4", "B-5", "B-6", "B-7", "B-8", "C" and "D"
certificates will evidence the "regular interests" in, and will
generally be treated as debt obligations of, REMIC III,
o the class "R-III" certificates will evidence the sole class of
"residual interests" in REMIC III, and
o the class "E" certificates will represent beneficial interests in
the portion of the trust assets consisting of any amounts applied as
Post-ARD Additional Interest on the ARD loans, which portion will be
treated as a grantor trust for federal income tax purposes.
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Discount and Premium; Prepayment Consideration
For federal income tax reporting purposes, it is anticipated that the
class "S" and class "B-2" certificates will be issued with more than a de
minimus amount of original issue discount. The class "B-1" certificates will be
issued with a de minimus amount of original issue discount. The other classes of
offered certificates will not be issued with original issue discount. When
determining the rate of accrual of market discount and premium, if any, for
federal income tax purposes the prepayment assumption used will be that
subsequent to the date of any determination:
o the ARD loans will be paid in full on their respective anticipated
repayment dates,
o no mortgage loan will otherwise be prepaid prior to maturity, and
o there will be no extension of maturity for any mortgage loan.
However, no representation is made as to the actual rate at which the mortgage
loans will prepay, if at all. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the
accompanying prospectus.
The IRS has issued regulations under Sections 1271 to 1275 of the Code
generally addressing the treatment of debt instruments issued with original
issue discount. You should be aware, however, that those regulations and Section
1272(a)(6) of the Code do not adequately address certain issues relevant to, or
are not applicable to, prepayable securities such as the offered certificates.
We recommend that you consult with your own tax advisor concerning the tax
treatment of your certificates.
If the method for computing original issue discount described in the
accompanying prospectus results in a negative amount for any period with respect
to any holder of offered certificates, the amount of original issue discount
allocable to that period would be zero. This is a possibility of particular
relevance to a holder of a class "S" certificate. The holder would be permitted
to offset the negative amount only against future original issue discount, if
any, attributable to the series "1999-CG3" certificates. Although the matter is
not free from doubt, a holder of a class "S" certificate may be permitted to
deduct a loss to the extent that his or her respective remaining basis in the
certificate exceeds the maximum amount of future payments to which the holder is
entitled, assuming no further prepayments of the mortgage loans. Any loss might
be treated as a capital loss.
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
these classes of offered certificates will be treated as holding a certificate
with amortizable bond premium will depend on the certificateholder's purchase
price and the payments remaining to be made on the certificate at the time of
its acquisition by the certificateholder. If you acquire an interest in any
class of offered certificates issued at a premium, you should consider
consulting your own tax advisor regarding the possibility of making an election
to amortize the premium. See "Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates--Premium" in the accompanying
prospectus.
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Prepayment premiums and yield maintenance charges actually collected on
the mortgage loans will be paid on the offered certificates as and to the extent
described in this prospectus supplement. It is not entirely clear under the Code
when the amount of a prepayment premium or yield maintenance charge should be
taxed to the holder of a class of offered certificates entitled to that amount.
For federal income tax reporting purposes, prepayment premiums or yield
maintenance charges will be treated as income to the holders of a class of
offered certificates entitled thereto only after the master servicer's actual
receipt thereof. The IRS may nevertheless seek to require that an assumed amount
of prepayment premiums and yield maintenance charges be included in payments
projected to be made on the offered certificates and that taxable income be
reported based on the projected constant yield to maturity of the offered
certificates. Therefore, the projected prepayment premiums and yield maintenance
charges would be included prior to their actual receipt by holders of the
offered certificates. If the projected prepayment premiums and yield maintenance
charges were not actually received, presumably the holder of an offered
certificate would be allowed to claim a deduction or reduction in gross income
at the time the unpaid prepayment premiums and yield maintenance charges had
been projected to be received. Moreover, it appears that prepayment premiums and
yield maintenance charges are to be treated as ordinary income rather than
capital gain. The correct characterization of the income is not entirely clear.
We recommend you consult your own tax advisors concerning the treatment of
prepayment premiums and yield maintenance charges.
Constructive Sales of Class S Certificates
The Taxpayer Relief Act of 1997 added a provision to the Code that
requires the recognition of gain upon the "constructive sale of an appreciated
financial position". A constructive sale of a financial position occurs if a
taxpayer enters into certain transactions or series of transactions that have
the effect of substantially eliminating the taxpayer's risk of loss and
opportunity for gain with respect to the financial instrument. Debt instruments
that:
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related party,
cannot be the subject of a constructive sale for this purpose. Accordingly, only
class "S" certificates, which do not have principal balances, could be subject
to this provision and only if a holder of those certificates engages in a
constructive sale transaction.
Characterization of Investments in Offered Certificates
Except to the extent noted below, the offered certificates will be "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code in the
same proportion that the assets of the trust would be so treated. In addition,
interest, including original issue discount, if any, on the offered certificates
will be interest described in Section 856(c)(3)(B) of the Code to the extent
that the series "1999-CG3" certificates are treated as "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code.
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Most of the mortgage loans are not secured by real estate used for
residential or certain other purposes prescribed in Section 7701(a)(19)(C) of
the Code. Consequently, the offered certificates will be treated as assets
qualifying under that section to only a limited extent. Accordingly, investment
in the offered certificates may not be suitable for a thrift institution seeking
to be treated as a "domestic building and loan association" under Section
7701(a)(19)(C) of the Code. The offered certificates will be treated as
"qualified mortgages" for another REMIC under Section 860G(a)(3)(C) of the Code
and "permitted assets" for a "financial asset securitization investment trust"
under Section 860L(c) of the Code.
To the extent an offered certificate represents ownership of an interest
in a mortgage loan that is secured in part by the related borrower's interest in
a bank account, that mortgage loan is not secured solely by real estate.
Therefore:
o a portion of that certificate may not represent ownership of "loans
secured by an interest in real property" or other assets described
in Section 7701(a)(19)(C) of the Code;
o a portion of that certificate may not represent ownership of "real
estate assets" under Section 856(c)(5)(B) of the Code; and
o the interest on that certificate may not constitute "interest on
obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code.
See "Description of the Mortgage Pool" in this prospectus supplement and
"Federal Income Tax Consequences--REMICs--Characterization of Investments in
REMIC Certificates" in the accompanying prospectus.
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" in the accompanying prospectus.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Internal Revenue Code of 1986 impose various requirements on--
o employee benefit plans, and on certain other retirement plans,
arrangements and accounts, that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Internal
Revenue Code of 1986 (each, an "ERISA Plan"), and
o persons that are fiduciaries with respect to ERISA Plans,
in connection with the investment of the assets of an ERISA Plan ("Plan
Assets"). For purposes of this discussion, ERISA Plans may include individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts, including as applicable, insurance company general
accounts, in which other ERISA Plans are invested.
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A fiduciary of any ERISA Plan should carefully review with its legal
advisors whether the purchase or holding of offered certificates could be or
give rise to a transaction that is prohibited or is not otherwise permitted
either under ERISA or Section 4975 of the Internal Revenue Code of 1986 or
whether there exists any statutory or administrative exemption applicable
thereto. Certain fiduciary and prohibited transaction issues arise only if the
assets of the trust are "plan assets" for purposes of Part 4 of Title I of ERISA
and Section 4975 of the Internal Revenue Code of 1986. Whether the assets of the
trust will be plan assets at any time will depend on a number of factors,
including the portion of any class of series "1999-CG3" certificates that is
held by "benefit plan investors" (as defined in U.S. Department of Labor
Regulation Section 2510.3-101).
The U.S. Department of Labor has issued an individual prohibited
transaction exemption to the underwriter, identified as Prohibited Transaction
Exemption 90-83 (the "Exemption"). Subject to the satisfaction of certain
conditions set forth therein, the Exemption generally exempts from the
application of the prohibited transaction provisions of Sections 406(a) and (b)
and 407(a) of ERISA, and the excise taxes imposed on these prohibited
transactions pursuant to Sections 4975(a) and (b) of the U.S. tax code, certain
transactions relating to, among other things, the servicing and operation of
pools of real estate loans, such as the mortgage pool, and the purchase, sale
and holding of mortgage pass-through certificates, such as the class "S", "A-1A"
and "A-1B" certificates, that are underwritten by one of the following parties
(each, an "Exemption-Favored Party")--
(a) the underwriter,
(b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control
with the underwriter, and
(c) any member of the underwriting syndicate or selling group of which a
person described in (a) or (b) is a manager or co-manager with
respect to those mortgage pass-through certificates.
The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of a class "S",
"A-1A" or "A-1B" certificate to be eligible for exemptive relief thereunder. The
conditions are as follows:
o first, the acquisition of the certificate by a plan must be on terms
that are at least as favorable to the ERISA Plan as they would be in
an arm's-length transaction with an unrelated party;
o second, the rights and interests evidenced by that certificate must
not be subordinated to the rights and interests evidenced by the
other certificates;
o third, at the time of its acquisition by the plan, that certificate
must be rated in one of the three highest generic rating categories
by Moody's, Fitch, Standard & Poor's or Duff & Phelps;
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o fourth, the trustee cannot be an affiliate of any other member of
the "restricted group", which (in addition to the trustee) consists
of the Exemption-Favored Parties, us, the master servicer, the
special servicer, any sub-servicers, the mortgage loan sellers, each
borrower, if any, with respect to mortgage loans constituting more
than 5.0% of the aggregate unamortized principal balance of the
mortgage pool as of the date of initial issuance of the series
"1999-CG3" certificates and any and all affiliates of any of the
aforementioned persons;
o fifth, the sum of all payments made to and retained by the
Exemption-Favored Parties must represent not more than reasonable
compensation for underwriting the relevant class of series
"1999-CG3" certificates; the sum of all payments made to and
retained by us pursuant to the assignment of the mortgage loans to
the trust must represent not more than the fair market value of the
obligations; and the sum of all payments made to and retained by the
master servicer, the special servicer and any sub-servicer must
represent not more than reasonable compensation for that person's
services under the pooling and servicing agreement and reimbursement
of that person's reasonable expenses in connection therewith; and
o sixth, the investing ERISA Plan must be an accredited investor as
defined in Rule 501(a)(1) of Regulation D under the Securities Act
of 1933, as amended.
Because the class "S", "A-1A" and "A-1B" certificates are not subordinated
to any other class of series "1999-CG3" certificates, the second general
condition set forth above is satisfied with respect to the class "S", "A-1A" and
"A-1B" certificates. It is a condition of their issuance that the class "S",
"A-1A" or "A-1B" certificates be rated not lower than "Aaa" by Moody's and "AAA"
by Fitch. In addition, the initial trustee is not an affiliate of any other
member of the restricted group. Accordingly, as of the date of initial issuance
of the series "1999-CG3" certificates, the third and fourth general conditions
set forth above will be satisfied with respect to the class "S", "A-1A" and
"A-1B" certificates. A fiduciary of an ERISA Plan contemplating purchasing a
class "S", "A-1A" or "A-1B" certificate in the secondary market must make its
own determination that, at the time of the purchase, the certificate continues
to satisfy the third and fourth general conditions set forth above. A fiduciary
of an ERISA Plan contemplating purchasing a class "S", "A-1A" or "A-1B"
certificate, whether in the initial issuance of the certificate or in the
secondary market, must make its own determination that the first and fifth
general conditions set forth above will be satisfied with respect to the
certificate as of the date of the purchase. An ERISA Plan's authorizing
fiduciary will be deemed to make a representation regarding satisfaction of the
sixth general condition set forth above in connection with the purchase of a
class "S", "A-1A" or "A-1B" certificate.
The Exemption also requires that the trust meet the following
requirements:
o the trust assets must consist solely of assets of the type that have
been included in other investment pools;
o certificates evidencing interests in those other investment pools
must have been rated in one of the three highest generic categories
of Moody's, Fitch, Standard & Poor's or Duff & Phelps for at least
one year prior to the ERISA Plan's acquisition of a class "S",
"A-1A" or "A-1B" certificate; and
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o certificates evidencing interests in those other investment pools
must have been purchased by investors other than ERISA Plans for at
least one year prior to any ERISA Plan's acquisition of a class "S",
"A-1A" or "A-1B" certificate.
We believe that these requirements have been satisfied as of the date of
this prospectus supplement.
If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b)
of the Internal Revenue Code of 1986 by reason of Sections 4975(c)(1)(A) through
(D) of the Internal Revenue Code of 1986, in connection with--
o the direct or indirect sale, exchange or transfer of class "S",
"A-1A" or "A-1B" certificates acquired by an ERISA Plan upon initial
issuance from us or an Exemption-Favored Party when we are, or a
mortgage loan seller, the trustee, the master servicer, the special
servicer or any sub-servicer, provider of credit support,
Exemption-Favored Party or mortgagor is, a Party in Interest (as
defined in the accompanying prospectus) with respect to the
investing ERISA Plan,
o the direct or indirect acquisition or disposition in the secondary
market of class "S", "A-1A" or "A-1B" certificates by an ERISA Plan,
and
o the continued holding of class "S", "A-1A" or "A-1B" certificates by
an ERISA Plan.
However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
class "S", "A-1A" or "A-1B" certificate on behalf of an Excluded ERISA Plan by
any person who has discretionary authority or renders investment advice with
respect to the assets of that ERISA Plan. For purposes of this prospectus
supplement, an "Excluded ERISA Plan" is an ERISA Plan sponsored by any member of
the restricted group referred to above.
Moreover, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
also provide an exemption from the restrictions imposed by Sections 406(b)(1)
and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of the
Internal Revenue Code of 1986 in connection with--
o the direct or indirect sale, exchange or transfer of class "S",
"A-1A" or "A-1B" certificates in the initial issuance of those
certificates between us or an Exemption-Favored Party and an ERISA
Plan when the person who has discretionary authority or renders
investment advice with respect to the investment of the assets of
the ERISA Plan in those certificates is (i) a borrower with respect
to 5.0% or less of the fair market value of the mortgage loans or
(ii) an affiliate of this person,
o the direct or indirect acquisition or disposition in the secondary
market of class "S", "A-1A" or "A-1B" certificates by an ERISA Plan,
and
o the holding of class "S", "A-1A" or "A-1B" certificates by an ERISA
Plan.
S-163
<PAGE>
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the taxes imposed by Sections 4975(a) and (b) of the
Internal Revenue Code of 1986 by reason of Section 4975(c) of the Internal
Revenue Code of 1986, for transactions in connection with the servicing,
management and operation of the trust assets.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Internal Revenue Code of 1986 by reason of Sections 4975(c)(1)(A)
through (D) of the Internal Revenue Code of 1986 if the restrictions are deemed
to otherwise apply merely because a person is deemed to be a Party in Interest
with respect to an investing plan by virtue of providing services to the ERISA
Plan (or by virtue of having certain specified relationships to this person)
solely as a result of the ERISA Plan's ownership of class "S", "A-1A" or "A-1B"
certificates.
Before purchasing a class "S", "A-1A" or "A-1B" certificate, a fiduciary
of an ERISA Plan should itself confirm that:
o the class "S", "A-1A" and "A-1B" certificates are "certificates" for
purposes of the Exemption, and
o the general and other conditions set forth in the Exemption and the
other requirements set forth in the Exemption would be satisfied at
the time of the purchase.
In addition to determining the availability of the exemptive relief
provided in the Exemption, a fiduciary of an ERISA Plan considering an
investment in class "S", "A-1A" or "A-1B" certificates should consider the
availability of any other prohibited transaction class exemptions. See "ERISA
Considerations" in the accompanying prospectus. There can be no assurance that
any such exemption will apply with respect to any particular investment by an
ERISA Plan in class "S", "A-1A" or "A-1B" certificates or, even if it were
deemed to apply, that it would apply to all prohibited transactions that may
occur in connection with the investment. A purchaser of class "S", "A-1A" or
"A-1B" certificates should be aware, however, that even if the conditions
specified in one or more class exemptions are satisfied, the scope of relief
provided by a class exemption may not cover all acts which might be construed as
prohibited transactions.
The characteristics of the class "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1"
and "B-2" certificates do not meet the requirements of the Exemption.
Accordingly, those offered certificates may not be acquired by, on behalf of or
with the assets of an ERISA Plan, except in the case of an insurance company
using funds in its general account, which may be able to rely on Section III of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), which we discuss
below.
So long as certain conditions are satisfied, Section III of PTCE 95-60
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Internal
Revenue Code of 1986 transactions in connection with the servicing, management
and operation of the trust under circumstances where an insurance company
general account has an interest in the trust as a result of its acquisition of
series "1999-CG3" certificates. If these conditions are met, insurance company
general accounts would be allowed to purchase certain classes of the series
"1999-CG3" certificates, such as the class "A-1C", "A-2", "A-3", "A-4", "A-5",
"B-1" and "B-2" certificates, that do not meet the requirements of the Exemption
solely because they (a) are subordinated to other classes of the series
S-164
<PAGE>
"1999-CG3" certificates or (b) have not received a rating at the time of the
purchase in one of the three highest rating categories from Moody's, Fitch,
Standard & Poor's or Duff & Phelps. All other conditions of the Exemption would
have to be satisfied in order for PTCE 95-60 to be available. Before purchasing
any class "A-1C", "A-2", "A-3", "A-4", "A-5", "B-1" or "B-2" certificates, an
insurance company general account seeking to rely on Section III of PTCE 95-60
should itself confirm that all applicable conditions and other requirements have
been satisfied.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986. However,
a governmental plan may be subject to a federal, state or local law which is, to
a material extent, similar to the foregoing provisions of ERISA or the Internal
Revenue Code of 1986. 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 such similar law.
Any fiduciary of an ERISA Plan considering whether to purchase an offered
certificate on behalf of that ERISA Plan should consult with its counsel
regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Internal Revenue Code of 1986 to the
investment.
The sale of offered certificates to an ERISA Plan is in no way a
representation or warranty by us or the underwriter that the investment meets
all relevant legal requirements with respect to investments by ERISA Plans
generally or by any particular ERISA Plan, or that the investment is appropriate
for ERISA Plans generally or for any particular ERISA Plan.
LEGAL INVESTMENT
The offered certificates will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the offered
certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase offered certificates, is
subject to significant interpretive uncertainties.
Neither we nor the underwriter makes any representation as to the ability
of particular investors to purchase the offered certificates under applicable
legal investment or other restrictions. All institutions whose investment
activities are subject to legal investment laws and regulations, regulatory
capital requirements or review by regulatory authorities should consult with
their own legal advisors in determining whether and to what extent the offered
certificates--
o are legal investments for them, or
o are subject to investment, capital or other restrictions.
All depository institutions considering an investment in the offered
certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
S-165
<PAGE>
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase offered certificates or to
purchase offered certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the offered certificates are legal
investments for the investors.
See "Legal Investment" in the accompanying prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions of an underwriting agreement dated
October 5, 1999 between us and the underwriter, the underwriter has agreed to
purchase from us and we have agreed to sell to the underwriter 100% of each
class of the offered certificates. It is expected that delivery of the offered
certificates will be made to the underwriter in book-entry form through the same
day funds settlement system of DTC on or about October 12, 1999 against payment
therefor in immediately available funds.
The underwriting agreement provides that the obligation of the underwriter
to pay for and accept delivery of the offered certificates is subject to, among
other things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of our registration
statement shall be in effect, and that no proceedings for the purpose of
obtaining a stop order shall be pending before or threatened by the SEC.
The distribution of the offered certificates by the underwriter may be
accomplished from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
us from the sale of the offered certificates, before deducting expenses payable
by us, will be approximately 100.75% of the aggregate principal balance of the
offered certificates, plus accrued interest on all the offered certificates from
October 1, 1999. The underwriter may accomplish the transactions by selling the
offered certificates to or through dealers, and the dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the underwriter. The underwriter may be deemed to have received
compensation from us, in connection with the sale of the offered certificates,
in the form of underwriting compensation. The underwriter and any dealers that
participate with the underwriter in the distribution of the offered certificates
may be deemed to be statutory underwriters and any profit on the resale of the
offered certificates positioned by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
The underwriting agreement provides that we will indemnify the
underwriter, and that under limited circumstances the underwriter will indemnify
us, against certain civil liabilities under the Securities Act of 1933, as
amended, or contribute to payments required to be made in respect of any such
liabilities.
S-166
<PAGE>
We have also been advised by the underwriter that it presently intends to
make a market in the offered certificates. The underwriter has no obligation to
do so, however, and any market making may be discontinued at any time. There can
be no assurance that an active public market for the offered certificates will
develop. See "Risk Factors--Risks Related to the Offered Certificates--Many
Factors, Including Lack of Liquidity, can Adversely Affect the Market Value of
Your Certificates" in this prospectus supplement and "Risk Factors--Lack of
Liquidity Will Impair Your Ability to Sell Your Certificates and May Have an
Adverse Effect on the Market Value of Your Certificates" in the accompanying
prospectus.
The underwriter also may impose a penalty bid. This occurs when a
particular broker-dealer repays to the underwriter a portion of the underwriting
discount received by it because the representatives have repurchased offered
certificates sold by or for the account of the underwriter in stabilizing or
short covering transactions.
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of the offered certificates. As a result, the price of
the offered certificates may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the underwriter at any time. These transactions may be achieved in the
over-the-counter market or otherwise.
The underwriter is an affiliate of both us and Column, one of the mortgage
loan sellers.
This prospectus supplement may only be issued or passed on in the United
Kingdom to a person who is of a kind described in article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom this prospectus supplement may otherwise lawfully be issued or
passed on.
The trust described in this prospectus supplement may only be promoted,
whether by the issuing or passing on of documents as referred to in the
foregoing restriction or otherwise, by an authorized person under Chapter III of
the Financial Services Act 1986 of the United Kingdom ("FSA") to a person in the
United Kingdom if that person is of a kind described in section 76(2) of the FSA
or as permitted by the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991 (as amended).
LEGAL MATTERS
Certain legal matters relating to the series "1999-CG3" certificates will
be passed upon for us and the underwriter by Sidley & Austin, New York, New
York.
RATINGS
It is a condition to their issuance that the respective classes of offered
certificates receive the credit ratings shown in the table on page S-4 from
Moody's and Fitch.
The ratings on the offered certificates address the likelihood of the
timely receipt by their holders of all payments of interest to which they are
entitled on each payment date and, except in the case of the class "S"
certificates, the ultimate receipt by their holders of all payments of principal
to which they are entitled on or before the rated final payment date. The
ratings take into consideration the credit quality of the
S-167
<PAGE>
mortgage pool, structural and legal aspects associated with the offered
certificates, and the extent to which the payment stream from the mortgage pool
is adequate to make payments of interest and/or principal required under the
offered certificates.
The ratings on the respective classes of offered certificates do not
represent any assessment of--
o the tax attributes of the offered certificates or of the trust,
o whether or to what extent prepayments of principal may be received
on the mortgage loans,
o the likelihood or frequency of prepayments of principal on the
mortgage loans,
o the degree to which the amount or frequency of prepayments of
principal on the mortgage loans might differ from those originally
anticipated,
o whether or to what extent the interest payable on any class of
offered certificates may be reduced in connection with Net Aggregate
Prepayment Interest Shortfalls, and
o whether and to what extent prepayment premiums, yield maintenance
charges, Default Interest or Post-ARD Additional Interest will be
received.
Also, a security rating does not represent any assessment of the yield to
maturity that investors may experience or the possibility that the class "S"
certificateholders might not fully recover their investment in the event of
rapid prepayments and/or other liquidations of the mortgage loans.
In general, the ratings address credit risk and not prepayment risk. As
described in this prospectus supplement, the amounts payable with respect to the
class "S" certificates consist primarily of interest. Even if the entire
mortgage pool were to prepay in the initial month, with the result that the
class "S" certificateholders receive only a single month's interest payment and,
accordingly, suffer a nearly complete loss of their investment, all amounts
"due" to those certificateholders will nevertheless have been paid. This result
would be consistent with the respective ratings received on the class "S"
certificates. The aggregate notional amount of the class "S" certificates is
subject to reduction in connection with each reduction in the aggregate
principal balance of a class of series "1999-CG3" principal balance
certificates, whether as a result of payments of principal or in connection with
Realized Losses and Additional Trust Fund Expenses. The ratings of the class "S"
certificates do not address the timing or magnitude of reduction of the
aggregate notional amount of those certificates, but only the obligation to pay
interest timely on that aggregate notional amount as so reduced from time to
time.
There can be no assurance as to whether any rating agency not requested to
rate the offered certificates will nonetheless issue a rating to any class of
offered certificates and, if so, what the rating would be. A rating assigned to
any class of offered certificates by a rating agency that has not been requested
by us to do so may be lower than the rating assigned thereto by Moody's or
Fitch.
The ratings on the offered certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each security
rating should be evaluated independently of any other security rating. See
"Rating" in the accompanying prospectus.
S-168
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE
MORTGAGE LOANS AND THE UNDERLYING REAL PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Underlying Real Properties
Descriptions of the Underlying Real Properties
Characteristics of the Mortgage Loans
Additional Mortgage Loan Information
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Properties
Multifamily Schedule
A-1-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Managers and Locations of the Underlying Real Properties
<TABLE>
<CAPTION>
Zip
# Property Name Manager Address City County State Code
- - ------------- ------- ------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1 45 Broadway 45 Broadway Management 45 Broadway New York New York NY 10006
Company LLC
2 Radisson South - Radisson Bloomington 7800 Normandale Boulevard Bloomington Hennepin MN 55439
Bloomington (1A) Corporation
3 Le Meridien - Dallas MHI Leasco Dallas, Inc. 650 North Pearl Street Dallas Dallas TX 75201
(1A)
4a Shadow Creek Apartments Alliance Residential 6715 Buenos Aires Drive North Richland Tarrant TX 76180
Management, LLC Hills
4b Copper Cove Apartments Alliance Residential 12903 Bran Rock Drive Houston Harris TX 77082
Management, LLC
4c Hilltop Apartments Alliance Residential 6424 Industrial Park North Richland Tarrant TX 76180
Management, LLC Boulevard Hills
4d Foxboro Apartments Alliance Residential 10411 South Drive Houston Harris TX 77099
Management, LLC
4e The Pinnacle Apartments Alliance Residential 146 Valley View Drive Lewisville Denton TX 75067
Management, LLC
5 Westin Resort - Hilton Westin Hotel Company 2 Grasslawn Avenue Hilton Head Beaufort SC 29928
Head Island Island
6 Southshore Beach & Maxim Property Management 901 Shorepoint Court Alameda Alameda CA 94501
Tennis Club
7 2 Penn Center Plaza Crown Properties, Inc. 1500-1540 John F. Kennedy Philadelphia Philadelphia PA 19102
Boulevard
8 Yonkers Shopping Center Irwin B. Ackerman 2500 Central Park Avenue Yonkers Westchester NY 10710
9 The Atrium Maxim Property Management 1900 South Norfolk Street San Mateo San Mateo CA 94403
10 Candlewyck Apartments EPT Management Company 100 East Candlewyck Drive Kalamazoo Kalamazoo MI 49001
11 Lakes at Palm Beach EPT Management Company 4070 Woods Edge Circle Riviera Beach Palm Beach FL 33410
12 Pensacola Place RMK Management Company 4334 North Hazel Street Chicago Cook IL 60613
13 West End Court Grubb & Ellis Management 1255 22nd Street Northwest Washington District of DC 20037
Services, Inc. Columbia
14a Ameriserve - Owner Managed 600 Commerce Drive Burlington Burlington NJ 08016
Burlington, NJ
14b Ameriserve - Grand Owner Managed 650 Ionia Avenue Southwest Grand Rapids Kent MI 49503
Rapids, MI
15 Rancho Verde Mobile James & Associates, Inc. 750 Rohnert Park Expressway Rohnert Park Sonoma CA 94928
Home Park
16 Commerce Centre MacKenzie & Associates, 1777 Reisterstown Road Pikesville Baltimore MD 21208
Inc.
17 Points East Shopping Coastal Property 7289-7361 Mentor Avenue Mentor Lake OH 44060
Center Management, Ltd.
18 Hidden Creek Apartments CPG Holdings, Inc. 1701 Marshall Road Vacaville Solano CA 95687
19 800 Madison Avenue The Macklowe Organization 800 Madison Avenue New York New York NY 10021
20 The 700 Building Kiniry & Company, Inc. 700 East Main Street Richmond Henrico VA 23219
21 Schaumburg Corners SIDCOR Schaumburg 16-60 East Golf Road Schaumburg Cook IL 60173
Shopping Center Associates, LLC
22 BJ's Wholesale Club Owner Managed 6825 Dublin Center Drive Dublin Franklin OH 43017
23 Holiday Inn - Oklahoma Janus American Group, Inc. 2101 South Meridian Avenue Oklahoma City Oklahoma OK 73108
City, OK
24 The Regency Apartments Floyd Construction Co., 505 Regency Drive Fayetteville Cumberland NC 28314
Inc.
25 Canyon Parke Apartments Hartex Property Partners, 2222 Graycliff Drive Dallas Dallas TX 75228
LP
26 Riverview Marketplace Rosen Associates 4077 North Main Street Fall River Bristol MA 02720
Management Corp.
27 Commons on Apache Arizona Campus 1111 Apache Boulevard Tempe Maricopa AZ 85289
Management, LLC
28 Olympic Corporate Center CPX Realty Investment 3940 Olympic Boulevard Erlanger Boone KY 41018
Building Services Corp.
29 Chaparral Village Sierra Management Group, 400 West Baseline Road Tempe Maricopa AZ 85283
LLC
30 Rolling Meadows Plaza J. Caren Real Estate, Inc. 2827-2913 Kirchoff Road Rolling Meadows Cook IL 60008
31 The Hill at Woodway JMG Realty, Inc. 10951 Laureate Drive San Antonio Bexar TX 78249
32 Shady Grove Medical Center 15001 Shady Grove Road Rockville Montgomery MD 20850
Professional Center Development Corporation
33 Oxford Square Apartments South Atlantic Management 1000 Village Greenway Cary Wake NC 27511
34 Spectrum Retail Center Watergate Marina 5888 Westheimer Road Houston Harris TX 77057
35 Country Oaks Apartments EPT Management Company 3865 Kirby Parkway Memphis Shelby TN 38115
36 Lamplighter - Chino Bessire & Casenhiser, Inc. 4400 Philadelphia Street Chino San Bernardino CA 91710
37 Park 80 East Office Owner Managed 160 Pehle Avenue Saddle Brook Bergen NJ 07663
Building
38 Centerpoint Corporate Etkin Management, LLC 2001 Centerpoint Parkway Pontiac Oakland MI 48341
Center
39 Gold Ridge Apartments FPI Management, Inc. 2929 Routier Road Sacramento Sacramento CA 95827
40 Tantara Club Apartments DMJ Management, Inc. 7784 College Circle North Richland Tarrant TX 76180
Hills
41 Moulton La Paz Shopping The Carlson Company 26550 Moulton Parkway Laguna Hills Orange CA 92653
Center
42 Arrowhead Shopping Westwood Financial Corp. 20165 North 67th Avenue Glendale Maricopa AZ 85308
Center
43 Landmark Hotel Owner Managed 920 North Rampart Street New Orleans New Orleans LA 70116
44 Legg Mason Center Mackenzie & Associates, 600 Washington Avenue Towson Baltimore MD 21204
Inc.
45 American Crossing Goodman Investment 3101 and 3035 Menaul Albuquerque Bernalillo NM 87107
Shopping Center Company, Inc. Boulevard Northeast
46 Kaiser Permanente Office JSH Rentals, LLC 4330 East Mira Loma Avenue Anaheim Orange CA 92807
Building
47 Lakeside Village Miller Multi Management 9665-9669 North Central Dallas Dallas TX 75231
Shopping Center Corp. Expressway
48 Crossroads Shopping Brekke Real Estate Group, 901 North Carpenter Road Modesto Stanislaus CA 95351
Center Inc.
49 Richmond Tower Greystar Management 3411 Richmond Avenue Houston Harris TX 77046
Services, L.P.
50 The Palm Breezes Club Owner Managed 3500 West Lantana Road Lantana Palm Beach FL 33462
Manufactured Home
Community
51 Majestic Shopping Center Majestic Property 2910, 2986 and 2990 Center Hampton Bay MI 48708
Management Corp. Road
52 West Main Place InveServe, Inc. 25-55 South Raymond Avenue, Alhambra Los Angeles CA 91801
10-88 South Palm Avenue,
2000 West Main Street
53 Oxon Run Manor Curtis Property 204-222 Wayne Place Washington District of DC 20032
Apartments Management Corporation Columbia
54 Mt. Olive Centre Plaza Associates, Inc. NC Highway 55 and US Mt. Olive Wayne NC 28365
Highway 117
55 Applegate Square Shopping Etkin Management, LLC 29649 Northwestern Highway Southfield Oakland MI 48034
Center
56 Heritage Hills Retail Westwood Financial Corp. 9227 and 9231 Lincoln Littleton Douglas CO 80124
Center Avenue
57 Waters of Winrock JMG Realty, Inc. 6403 Del Monte Drive Houston Harris TX 77057
Apartments
58 Garden Wood Apartments EPT Management Company 4787 Garden Grove Cove Memphis Shelby TN 38134
59 Lehigh Street Shopping Milelli Realty 2300 Lehigh Street Allentown Lehigh PA 18103
Center
60 Ashton Woods Apartments Ramshaw-Smith Company 2215-2319 South First Champaign Champaign IL 61820
Street
</TABLE>
<PAGE>
Managers and Locations of the Underlying Real Properties
<TABLE>
<CAPTION>
Zip
# Property Name Manager Address City County State Code
- - ------------- ------- ------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
61 Kmart Shopping Center - RD Management Corp. 120-128 Medway Street Milford Worcester MA 01757
Milford
62 Parkside Center Parkside Marketing and 13881-13901 Midway Road Farmers Branch Dallas TX 75244
Management Co.
63 Park 51 Medical Building Brackett Company, Inc. 10512 Park Road Charlotte Mecklenburg NC 28210
64 Quality Suites - Citimark Hospitality, Inc. 1010 University Drive East College Station Brazos TX 77840
College Station
65 King Arthur Mobile Home Oakland & Company 81 Gallahad Way Bozeman Gallatin MT 59718
Park
66 The Fox Glen I and II Wallace H. Campbell & 5902-5920 Cross Country Baltimore Baltimore MD 21215
Apartments Co., Inc. Boulevard, 2800-2912 Glen
Avenue &
3114-3132 Parkington Avenue
67 Lake Howard Heights Grand Court Lifestyles, 650 North Lake Howard Drive Winter Haven Polk FL 33881
Retirement Inc.
68 Stockdale Town Center Galindo Commercial 3300-3536 Stine Road and Bakersfield Kern CA 93309
Property Management 4701-4771 Planz Road
69 Batavia Palms Business Birkeland, Cooper & 2322-2328 North Batavia Orange Orange CA 92865
Center Associates Street
70 Town Center North Rich Development Company 1801, 1851, 1889 and Signal Hill Los Angeles CA 90806
1899 Willow Street
71 Creekside Apartments H.R. Lubben Company, Inc. 2939-3009 12th Avenue Cedar Rapids Linn IA 52404
(1B) Southwest
72 Brookside Apartments H.R. Lubben Company, Inc. 1040-1138 Patrick Court Waterloo Blackhawk IA 50701
(1B)
73 Glenbrook Centre H.R. Lubben Company, Inc. 4341-4353 1st Avenue Cedar Rapids Linn IA 52402
Apartments (1B) Southeast &
11 Glenbrook Drive Southeast
74 Hardwick Apartments (1B) H.R. Lubben Company, Inc. 1804-1806 Second Street Rochester Olmsted MN 55902
Southwest
75 Sequoia Bend Apartments DMJ Management, Inc. 601 Brown Trail Hurst Tarrant TX 76053
76 1264 Lexington Avenue Gold Leaf Management Corp. 1264 Lexington Avenue New York New York NY 10028
77 Tenth Street Medical Owner Managed 1450 Tenth Street Santa Monica Los Angeles CA 90401
Building
78 Storage USA - La Quinta Storage USA Franchise 46-600 Adams Street La Quinta Riverside CA 92253
Corp., Inc.
79a Action Self Storage - Westland Management, Inc. 5000 Justin Road Lewisville Denton TX 75077
Lewisville
79b Good Self Storage Westland Management, Inc. 1624 Morgan Boulevard Harlingen Cameron TX 78550
79c Action Self Storage - Westland Management, Inc. 7007 South Lake Houston Houston Harris TX 77049
Houston Parkway
80 Lincolnwood / Pinetree Charleston Apartments 2219 South 9th Street Charleston Coles IL 61920
Apartments Management Company
81 Brookside Mobile Home Alan H. Glover 8155 South 1700 West West Jordan Salt Lake UT 84088
Park
82 Villa Reanna Apartments Collegiate Property 1924 West Pensacola Street Tallahassee Leon FL 32304
Services, Inc.
83 Arbor Village Townhomes CNC Investments, Inc. 6298 Ludington Drive Houston Harris TX 77035
84 Park South Apartments Cohen-Esrey Real Estate 3711 Southwest Park South Topeka Shawnee KS 66609
Services, Inc. Court
85 Deer Park Mansion Greystar Multi-family 7329 Carrie Lane Deer Park Harris TX 77536
Services, LP
86 Holiday Inn Southeast - Janus American Group, Inc. 5120 Victory Drive Indianapolis Marion IN 46203
Indianapolis, IN
87 Lakeshore on the Hill Walldorf Property 5600 Lake Resort Terrace Chattanooga Hamilton TN 37415
Management, Inc.
88 Sandia Vista Shopping Goodman Investment 11500 Menaul Boulevard Albuquerque Bernalillo NM 87112
Center Company, Inc. Northeast
89 West Valley Place TGK Management Company 5300-5324 Doniphan Drive El Paso El Paso TX 79932
Shopping Center
90 Spring Medical Building Cornerstone Property 6226 East Spring Street Long Beach Los Angeles CA 90815
Management
91 Bingo King Warehouse P.J. Morgan Real Estate 1704 and 3211 Nebraska Council Bluffs Pottawattamie IA 51501
Avenue
92 Rite Aid - San Jacinto Pacific Investors Group 1605 South San Jacinto San Jacinto Riverside CA 92583
Avenue
93 Federal Point Station Lat Purser & Associates, 1000 North Lake Park Carolina Beach New Hanover NC 28428
Inc. Boulevard
94 Northland Medical Center Rita D. Hutchens Property 1000 East First Street Duluth St. Louis MN 55802
Management
95 Murdock Apartments Owner Managed 22210 Southwest Murdock Sherwood Washington OR 97140
Road
96 Harbour Village Owner Managed 13245 Atlantic Boulevard Jacksonville Duval FL 32225
97 Chestnut Park Apartments Benson Investments, Inc. 901-A West Silversands San Antonio Bexar TX 78216
Drive
98 Village Center Diversified Management, 1939, 1945 and 1957 West Phoenix Maricopa AZ 85021
LLC Dunlap Avenue
99 Sherwood Park Apartments Marcum Management Company 6302 Robin Hood Lane Huntsville Madison AL 35806
100 Blockbuster Video and Lawrence Realty Group, 14936 Ventura Boulevard Sherman Oaks Los Angeles CA 91403
Radio Shack Inc.
101 Northern Plaza Shopping Servicenter, Inc. 740-800 Central Street Millinocket Penobscot ME 04462
Center
102 Peconic Bay Properties Owner Managed 27-33 and 83-93 Main Street Southampton Suffolk NY 11968
103 Marketplace at Etkin Management Services 3999 Centerpoint Parkway Pontiac Oakland MI 48341
Centerpoint
104 New England Financial Owner Managed 19935 Ventura Boulevard Woodland Hills Los Angeles CA 91364
Building
105 Riverlawn Mobile Home Owner Managed 8215 Stoner Road Riverview Hillsborough FL 33569
Park
106 Lakeside Mobile Estates Owner Managed 6610 Northwest Whitney Road Vancouver Clark WA 98665
107 Signature Lake Del Development 601 Josephine Street Pass Christian Harrison MS 39571
Apartments Corporation
108 Niki's Point Apartments Katya Machado Lopez 6515-6535 West 24th Avenue Hialeah Miami-Dade FL 33016
109 Belle Terre Village Christopher Homes, Inc. 1620 Marseille LaPlace St. John the LA 70068
Apartments/Belle Pointe Drive/8875-8893 Richmond Baptist
Apartments Drive
110 Palmetto Trailer Park GLS Real Estate 301 North Federal Highway Hallandale Broward FL 33008
Management Co.
111 Palm Valley Crossing ZELL Commercial Real 319 North Litchfield Road Goodyear Maricopa AZ 85338
Estate Services, Inc.
112 Moon Glow Apartments Williams and Henley 736 Moon Road Columbus Franklin OH 43224
Management Co.
113 Manor Court Apartments Gator Realty and 13890 NE 3rd Court North Miami Dade FL 33181
Management, Inc. and
Gator Development
Corporation
114 Wickham Corners Shopping Matthew Falconer 1050-1070 Wickham Road Melbourne Brevard FL 32935
Center
115 Twinbridge Apartment Elar Property Management, 201 West Blacklidge Street Tucson Pima AZ 85705
Complex Inc.
116 Marmion Royal Apartments Paul Calvo & Company 5800 Marmion Way Los Angeles Los Angeles CA 90042
117 TYIF Park Condominiums Owner Managed 4315 South Kirkwood Houston Harris TX 77072
118 Tilbury Garden Barac Company 7806-7820 Tilbury Street Bethesda Montgomery MD 20814
Apartments
119 The Sanitas Building The Colorado Group, Inc. 3125 Sterling Circle Boulder Boulder CO 80301
120 2516-2526 North Kedzie Owner Managed 2516-2526 North Kedzie Chicago Cook IL 60647
Boulevard Boulevard
121 Old South Apartments Newport Asset Management, 812 Shaver Road Pasadena Harris TX 77506
Inc.
122 Whitfield Village Owner Managed 6509-6549 Magellan Court Sarasota Manatee FL 34243
Apartments
123 Rancocas Valley Owner Managed 220 Sunset Road Willingboro Burlington NJ 08046
Professional Arts Building
</TABLE>
<PAGE>
Managers and Locations of the Underlying Real Properties
<TABLE>
<CAPTION>
Zip
# Property Name Manager Address City County State Code
- - ------------- ------- ------- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
124 Arbor Village South First Apartment Management 1829 East 8th Street Anderson Madison IN 46012
Apartments
125 Kress Energy Center Key Management 224 East Douglas Avenue Wichita Sedgwick KS 67202
Office Building
126 11401 Industriplex Sealy and Company, Inc. 11401 Industriplex Baton Rouge East Baton LA 70809
Warehouse Boulevard Rouge
127 Quail Point Trammell Crow Central 1934 Rutland Drive Austin Travis TX 78758
Texas, Ltd.
128 Merriwood Village Owner Managed 3224 Janet Drive Amarillo Randall TX 79109
Apartments
129 85 Old Long Ridge Road Owner Managed 85 Old Long Ridge Road Stamford Fairfield CT 06903
130 Pavilion Plaza Dana Butcher Associates 2168 Diamond Hill Road Woonsocket Providence RI 02895
131 Avon Manor Apartments Bradbury Development, LLC 16840 Telegraph Road Detroit Wayne MI 48219
132 20/20 Greenville Retail 20/20 Management Company, 2100 Greenville Avenue Dallas Dallas TX 75206
Center Inc.
133 Westover Apartments Owner Managed 5705, 5711 and 5717 North Arlington Arlington VA 22205
Washington Boulevard, 111
North Kensington, 5716
North 11th Road
134 East 29th Street Owner Managed 710, 722 and 811 East 29th Norfolk Norfolk City VA 23504
Apartments (1C) Street
135 Chesapeake Drive Owner Managed 2011 Chesapeake Drive Chesapeake Chesapeake City VA 23324
Apartments (1C)
136 Sandalwood Square Case, Huff & Sanchez, Inc. 4325 North 23rd Street Phoenix Maricopa AZ 85015
137 1200 Medical Building Longley-Jones Management 1200 East Genesee Street Syracuse Onodaga NY 13210
Corp.
138 1416 Apartments (1D) Abie Label and 803 South 15th and 810 Tacoma Pierce WA 98405
Associates, Inc. South 14th Street
139 1419 Apartments (1D) Abie Label and 1405-1421 South 'J' Street Tacoma Pierce WA 98405
Associates, Inc.
140 Groton Fashion Plaza Weicorp, Inc. 970-992 Poquonnock Road Groton New London CT 06340
141 Scioto Fairway Woods RW Mangement Group, Inc. 3274 Mapleway Court Columbus Franklin OH 43204
Apartments
142 Park Garden Apartments Owner Managed 1701 Rogers Road Fort Worth Tarrant TX 76107
143 Glenrose Square Altex Development Corp. 802 Castleglen Drive Garland Dallas TX 75043
Apartments
144 Blue Gem Mobile Home Owner Managed 6560 Pyramid Lake Highway Sparks Washoe NV 89436
Park
145 Bri-Mar Building Ac'cent 6365 Carlson Drive Eden Prairie Hennepin MN 55346
146 244-256 Orange Place Owner Managed 244-256 Orange Place Plainfield Union NJ 07060
(1E)
147 249 Orange Place Owner Managed 247-253 Orange Place Plainfield Union NJ 07060
Apartments (1E)
148 Casa De Dallas Owner Managed 1712 Howard Road Madera Madera CA 93637
Apartments
149 Mooring Circle Duplexes Owner Managed 233-253 Mooring Circle Austin Travis TX 78734
150 Amherst Street Mall Owner Managed 427-429 Amherst Street Nashua Hillsborough NH 03063
151 Hollywood Video - Owner Managed 6001 South Packard Avenue Cudahy Milwaukee WI 53110
Cudahy, WI
152 Pioneer House Apartments Owner Managed 2851 West Pioneer Drive Irving Dallas TX 75061
153 St. Charles & Prytania Owner Managed 3102 St. Charles & 1818 New Orleans Orleans LA 70115
Street Apartments Prytania Street
154 Butternut Apartments Barac Company 413, 415 and 422 Butternut Washington District of DC 20012
Street Columbia
155 Clarewood Gardens Owner Managed 5801 Clarewood Houston Harris TX 77081
Apartments
156 Autumn Run Apartments BH Management Services, 505 East Alexander Lane Euless Tarrant TX 76040
Inc.
157 Whittier Gardens Barac Company 300-304 Aspen Street, Washington District of DC 20012
301-305 Whittier Street & Columbia
6718-6722 3rd Street
158 Alan Apartments Owner Managed 8508-8510 Flower Avenue Takoma Park Montgomery MD 20912
159 Airport Square Baxter Property Management 1623 White Mountain Highway North Conway Carroll NH 03860
160 Circa 1886 Building Owner Managed 201-209 Park Avenue Plainfield Union NJ 07060
</TABLE>
(1A) The Mortgage Loans secured by Radisson South - Bloomington and Le Meridien
- Dallas, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
<PAGE>
Descriptions of the Underlying Real Properties
<TABLE>
<CAPTION>
Units/
Sq.Ft./ Occupancy
Property Hotel Rooms/ Fee Simple/ Year Year Rate at
# Property Name Property Type Sub-Type Franchise Pads Leasehold Built Renovated U/W (2)
- - ------------- ------------- -------- --------- ---- --------- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 45 Broadway Office 368,471 Fee 1983 N/A 99%
2 Radisson South - Hotel Full Service Radisson 565 Fee/ 1970 1998 N/A
Bloomington (1A) Leasehold
3 Le Meridien - Dallas Hotel Full Service Le 407 Fee 1978 1995 N/A
(1A) Meridien
4a Shadow Creek Apartments Multifamily 240 Fee 1986 1996 91%
4b Copper Cove Apartments Multifamily 270 Fee 1984 N/A 96%
4c Hilltop Apartments Multifamily 238 Fee 1985 1996 91%
4d Foxboro Apartments Multifamily 220 Fee 1984 N/A 97%
4e The Pinnacle Apartments Multifamily 150 Fee 1986 1998 95%
5 Westin Resort - Hilton Hotel Full Service Westin 412 Fee 1984 1997 N/A
Head Island
6 Southshore Beach & Multifamily 450 Fee 1974 N/A 95%
Tennis Club
7 2 Penn Center Plaza Office 498,277 Fee 1957 1988 89%
8 Yonkers Shopping Center Retail Anchored 425,575 Fee/ 1950 1984 100%
Leasehold
9 The Atrium Office 162,359 Fee 1983 N/A 89%
10 Candlewyck Apartments Multifamily 487 Fee 1971 1981 92%
11 Lakes at Palm Beach Multifamily 348 Fee 1985 N/A 95%
12 Pensacola Place Multifamily 264 Fee 1980 N/A 99%
13 West End Court Office 94,278 Fee 1989 N/A 100%
14a Ameriserve - Industrial 184,819 Fee 1986 1999 100%
Burlington, NJ
14b Ameriserve - Grand Industrial 176,941 Fee 1986 1996 100%
Rapids, MI
15 Rancho Verde Mobile Manufactured 302 Fee/ 1974 N/A 100%
Home Park Housing Leasehold
16 Commerce Centre Mixed Use Office/Retail 159,938 Fee 1983 1984 92%
17 Points East Shopping Retail Anchored 194,727 Fee 1988 N/A 87%
Center
18 Hidden Creek Apartments Multifamily 240 Fee 1986 N/A 100%
19 800 Madison Avenue Multifamily 51 Fee 1926 1997 90%
20 The 700 Building Office 179,597 Fee 1966 1995 89%
21 Schaumburg Corners Retail Anchored 153,633 Fee 1972 1998 98%
Shopping Center
22 BJ's Wholesale Club Retail Anchored 109,081 Fee 1999 N/A 100%
23 Holiday Inn - Oklahoma Hotel Full Service Holiday 246 Fee 1983 1997 N/A
City, OK Inn
24 The Regency Apartments Multifamily 186 Fee 1996 1997 99%
25 Canyon Parke Apartments Multifamily 312 Fee 1975 1995 89%
26 Riverview Marketplace Retail Anchored 97,146 Fee 1989 N/A 100%
27 Commons on Apache Multifamily 112 Fee 1987 1998 94%
28 Olympic Corporate Office 90,070 Fee 1988 N/A 97%
Center Building
29 Chaparral Village Manufactured 360 Fee 1971 N/A 98%
Housing
30 Rolling Meadows Plaza Retail Anchored 128,538 Fee 1965 1989 96%
31 The Hill at Woodway Multifamily 248 Fee 1985 1986 96%
32 Shady Grove Office 51,179 Fee 1999 N/A 100%
Professional Center
33 Oxford Square Apartments Multifamily 184 Fee 1974 1997 92%
34 Spectrum Retail Center Retail Unanchored 39,766 Fee 1977 N/A 96%
35 Country Oaks Apartments Multifamily 200 Fee 1984 N/A 92%
36 Lamplighter - Chino Manufactured 260 Fee 1971 N/A 100%
Housing
37 Park 80 East Office Office 83,049 Leasehold 1968 1998 100%
Building
38 Centerpoint Corporate Office 71,723 Fee 1997 N/A 96%
Center
39 Gold Ridge Apartments Multifamily 268 Fee 1987 N/A 99%
40 Tantara Club Apartments Multifamily 286 Fee 1974 1993 93%
41 Moulton La Paz Shopping Retail Unanchored 59,119 Fee 1987 N/A 92%
Center
42 Arrowhead Shopping Retail Anchored 83,740 Fee 1990 N/A 100%
Center
43 Landmark Hotel Hotel Full Service None 102 Fee 1963 1999 N/A
44 Legg Mason Center Mixed Use Office/ 63,247 Fee/ 1989 1990 100%
Retail Leasehold
45 American Crossing Retail Anchored 72,800 Fee 1997 1999 100%
Shopping Center
46 Kaiser Permanente CTL 31,300 Fee 1999 N/A 100%
Office Building
47 Lakeside Village Retail Unanchored 45,710 Fee 1986 N/A 94%
Shopping Center
48 Crossroads Shopping Retail Shadow 46,362 Fee 1991 1995 97%
Center Anchored
49 Richmond Tower Office 88,040 Fee 1968 1996 100%
50 The Palm Breezes Club Manufactured 189 Fee 1987 1988 99%
Manufactured Home Housing
Community
51 Majestic Shopping Center Retail Anchored 136,183 Fee 1960 1996 97%
52 West Main Place Mixed Use Office/ 63,938 Fee 1984 N/A 90%
Retail
53 Oxon Run Manor Multifamily 165 Fee 1940 1988 95%
Apartments
54 Mt. Olive Centre Retail Anchored 115,425 Fee 1987 1999 100%
55 Applegate Square Retail Unanchored 53,992 Fee 1977 1998 94%
Shopping Center
56 Heritage Hills Retail Retail Shadow 34,749 Fee 1998 N/A 100%
Center Anchored
57 Waters of Winrock Multifamily 117 Fee 1970 1989 98%
Apartments
58 Garden Wood Apartments Multifamily 152 Fee 1984 N/A 95%
59 Lehigh Street Shopping Retail Unanchored 87,024 Fee 1972 1988 100%
Center
60 Ashton Woods Apartments Multifamily 156 Fee 1967 1998 97%
61 Kmart Shopping Center - Retail Anchored 140,770 Fee 1974 1977 95%
Milford
62 Parkside Center Retail Unanchored 26,605 Fee 1999 N/A 91%
63 Park 51 Medical Building Office 34,000 Fee 1988 N/A 100%
64 Quality Suites - Hotel Limited Quality 81 Fee 1998 N/A N/A
College Station Service Suites
65 King Arthur Mobile Home Manufactured 210 Fee 1971 N/A 100%
Park Housing
66 The Fox Glen I and II Multifamily 152 Fee 1964 1988 95%
Apartments
67 Lake Howard Heights Independent/ 130 Fee 1979 1988 92%
Retirement Assisted Living
68 Stockdale Town Center Retail Shadow 44,849 Fee 1985 N/A 95%
Anchored
69 Batavia Palms Business Industrial 74,685 Fee 1987 N/A 100%
Center
70 Town Center North Retail Anchored 29,633 Fee 1998 N/A 100%
71 Creekside Apartments Multifamily 77 Fee 1975 1981 100%
(1B)
72 Brookside Apartments Multifamily 61 Fee 1976 N/A 100%
(1B)
<CAPTION>
Most Recent
Date of Operating Most Most Most
Occupancy Appraised Statement Recent Recent Recent
# Rate (2) Value Date Revenue Expenses NOI U/W NOI U/W NCF(3)
- - -------- ----- ---- ------- -------- --- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 8/1/99 $67,400,000 4/30/98 $ 9,290,389 $ 5,271,785 $4,018,604 $6,103,139 $5,425,246
2 N/A 53,200,000 12/31/98 25,830,832 19,706,503 6,124,329 6,149,200 5,087,759
3 N/A 33,000,000 12/31/98 16,423,238 12,826,952 3,596,286 3,626,962 2,957,460
4a 7/1/99 11,300,000 3/31/99 1,497,625 667,937 829,688 992,085 932,085
4b 7/2/99 10,500,000 3/31/99 1,635,697 677,238 958,459 1,016,603 949,103
4c 7/9/99 10,450,000 3/31/99 1,457,815 660,294 797,521 911,994 852,494
4d 6/30/99 9,100,000 3/31/99 1,309,901 560,277 749,624 804,236 749,236
4e 7/1/99 7,700,000 3/31/99 1,090,626 502,843 587,783 682,632 645,132
5 N/A 81,700,000 4/30/99 31,777,388 22,677,909 9,099,479 8,436,400 7,626,447
6 5/25/99 48,500,000 4/30/99 6,259,529 2,262,130 3,997,399 4,135,095 4,000,095
7 5/1/99 50,000,000 4/30/99 8,758,228 4,072,096 4,686,132 4,740,504 3,684,595
8 7/6/99 46,300,000 12/31/98 7,559,406 2,895,926 4,663,480 4,315,564 4,094,335
9 5/28/99 43,000,000 4/30/99 4,727,232 1,309,188 3,418,044 3,492,816 3,134,019
10 5/30/99 23,800,000 6/30/99 3,669,054 1,678,964 1,990,090 2,201,640 2,079,890
11 5/19/99 21,700,000 4/30/99 2,914,486 1,104,887 1,809,599 1,886,012 1,799,012
12 3/29/99 23,000,000 2/28/99 3,646,011 2,028,332 1,617,679 1,704,557 1,626,390
13 5/1/99 20,100,000 4/30/99 2,434,446 920,041 1,514,405 1,845,660 1,690,129
14a 8/20/99 12,600,000 8/1/99 1,049,424 31,483 1,017,941 1,095,872 1,047,564
14b 8/20/99 10,900,000 8/1/99 979,212 29,376 949,836 949,836 904,726
15 6/25/99 19,340,000 12/31/98 2,419,125 825,081 1,594,044 1,569,735 1,562,235
16 6/24/99 17,850,000 3/31/99 2,422,738 865,492 1,557,246 1,691,529 1,524,093
17 1/1/99 17,700,000 12/31/98 2,151,784 581,292 1,570,492 1,571,890 1,472,301
18 7/1/99 15,900,000 4/30/99 2,139,173 758,956 1,380,217 1,365,519 1,305,519
19 7/1/99 17,200,000 4/30/99 1,901,100 593,211 1,307,889 1,225,855 1,212,422
20 7/7/99 13,900,000 3/31/99 2,183,526 960,490 1,223,036 1,330,373 1,114,853
21 4/1/99 12,650,000 3/31/99 1,689,831 650,859 1,038,972 1,149,465 1,067,834
22 5/5/99 11,400,000 5/31/99 1,107,180 57,954 1,049,226 986,697 970,335
23 N/A 14,000,000 5/31/99 5,251,207 3,677,232 1,573,975 1,440,123 1,240,362
24 7/20/98 10,925,000 12/31/98 1,432,587 331,162 1,101,425 1,037,126 999,926
25 8/9/99 10,500,000 5/31/99 1,739,820 849,414 890,406 1,042,804 964,804
26 5/1/99 10,500,000 4/30/99 1,214,880 330,176 884,704 920,033 862,368
27 4/8/99 10,200,000 3/31/99 1,638,663 709,740 928,923 882,314 839,754
28 3/1/99 11,800,000 5/31/99 1,387,250 503,347 883,903 1,000,230 898,682
29 3/1/99 10,040,000 12/31/98 1,643,338 802,959 840,379 870,247 853,722
30 4/1/99 10,400,000 12/31/98 1,471,623 579,427 892,196 938,709 873,449
31 4/29/99 9,275,000 5/31/99 1,581,404 730,645 850,759 837,683 775,683
32 7/26/99 9,700,000 12/31/99 1,326,157 352,617 973,540 894,915 812,353
33 6/5/99 9,975,000 3/31/99 1,262,819 435,015 827,804 811,835 753,323
34 5/11/99 9,000,000 5/31/99 1,175,173 291,333 883,840 862,994 803,538
35 5/6/99 8,900,000 4/30/99 1,301,247 534,987 766,260 773,592 723,592
36 5/1/99 9,150,000 3/31/99 1,385,735 575,185 810,550 782,443 769,443
37 8/26/99 9,000,000 12/31/98 1,541,369 766,077 775,292 860,311 760,610
38 4/1/99 8,300,000 3/31/99 1,225,173 423,322 801,851 795,482 714,286
39 12/31/98 12,520,000 4/30/99 1,712,801 708,036 1,004,765 972,010 893,101
40 6/15/99 9,550,000 5/25/99 1,816,148 990,091 826,057 811,676 740,426
41 6/30/99 8,500,000 12/31/98 946,068 210,595 735,473 793,466 717,650
42 5/1/99 7,900,000 4/30/99 1,161,143 388,001 773,142 768,105 721,598
43 N/A 11,100,000 1/31/99 3,138,727 1,662,131 1,476,596 1,203,568 1,079,749
44 6/1/99 7,400,000 3/31/98 1,436,054 549,192 886,862 752,725 678,997
45 9/8/99 7,500,000 12/31/99 866,231 128,724 737,507 704,081 671,573
46 8/26/99 5,900,000 N/A N/A N/A N/A 543,930 539,548
47 6/1/99 7,300,000 2/28/99 960,488 222,258 738,230 654,880 612,575
48 3/1/99 7,200,000 2/28/99 986,631 306,656 679,975 667,441 607,279
49 3/31/99 8,650,000 3/31/99 1,071,924 578,766 493,158 739,346 623,300
50 5/1/99 6,750,000 12/31/98 842,735 297,109 545,626 550,118 540,668
51 7/1/99 6,700,000 6/30/99 879,987 207,496 672,491 669,415 576,462
52 6/29/99 8,700,000 4/30/99 1,049,025 232,691 816,334 789,650 668,880
53 3/6/98 6,100,000 12/31/98 1,183,124 478,040 705,084 626,721 589,596
54 3/1/99 6,150,000 2/28/99 613,739 104,155 509,584 580,710 532,883
55 3/31/99 6,500,000 3/31/99 881,693 386,235 495,458 599,786 542,135
56 6/1/99 6,800,000 5/31/99 800,872 161,005 639,867 612,794 572,438
57 7/31/99 5,600,000 6/30/99 822,945 357,262 465,683 477,216 447,966
58 7/7/99 5,500,000 3/31/99 916,228 427,957 488,271 494,619 456,619
59 7/1/99 5,425,000 4/30/99 395,670 154,959 240,711 508,875 475,301
60 6/30/99 5,700,000 6/30/99 862,380 427,549 434,831 500,268 461,268
61 6/8/99 5,380,000 2/28/99 529,780 245,283 284,497 521,857 462,950
62 5/27/99 5,500,000 4/30/99 603,396 64,948 538,448 516,750 478,597
63 8/1/99 5,300,000 12/31/98 722,497 205,535 516,962 483,415 435,905
64 N/A 5,500,000 1/31/99 1,671,670 805,300 866,370 660,991 581,590
65 3/1/99 5,000,000 5/20/99 696,785 199,475 497,310 450,070 441,571
66 4/1/99 5,000,000 4/30/99 1,101,133 555,206 545,927 507,769 463,494
67 6/30/99 5,700,000 6/30/99 2,020,034 1,575,392 444,642 477,396 444,896
68 3/2/99 5,300,000 3/31/99 710,208 211,526 498,682 496,784 447,205
69 7/1/99 5,150,000 5/31/99 582,374 132,296 450,078 459,088 426,527
70 7/9/99 4,750,000 4/30/99 506,062 77,490 428,572 437,601 430,422
71 6/1/99 1,770,000 6/30/99 322,916 153,524 169,392 163,266 144,016
72 6/1/99 1,260,000 6/30/99 236,165 104,659 131,506 127,769 112,769
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Sq.Ft./ Occupancy
Property Hotel Rooms/ Fee Simple/ Year Year Rate at
# Property Name Property Type Sub-Type Franchise Pads Leasehold Built Renovated U/W (2)
- - ------------- ------------- -------- --------- ---- --------- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
73 Glenbrook Centre Multifamily 58 Fee 1967 1978 98%
Apartments (1B)
74 Hardwick Apartments (1B) Multifamily 32 Fee 1967 1996 100%
75 Sequoia Bend Apartments Multifamily 176 Fee 1968 1997 94%
76 1264 Lexington Avenue Multifamily 22 Fee 1930 1985 100%
77 Tenth Street Medical Office 26,555 Fee 1983 N/A 99%
Building
78 Storage USA - La Quinta Self Storage 74,455 Fee 1998 N/A 99%
79a Action Self Storage - Self Storage 65,700 Fee 1984 1987 98%
Lewisville
79b Good Self Storage Self Storage 50,275 Fee 1973 N/A 93%
79c Action Self Storage - Self Storage 52,050 Fee 1983 N/A 58%
Houston
80 Lincolnwood / Pinetree Multifamily 123 Fee 1973 N/A 97%
Apartments
81 Brookside Mobile Home Manufactured 170 Fee 1974 N/A 99%
Park Housing
82 Villa Reanna Apartments Multifamily 64 Fee 1969 1999 100%
83 Arbor Village Townhomes Multifamily 101 Fee 1983 N/A 93%
84 Park South Apartments Multifamily 234 Fee 1970 1998 91%
85 Deer Park Mansion Multifamily 191 Fee 1974 1998 94%
86 Holiday Inn Southeast - Hotel Full Holiday 140 Fee 1973 1997 N/A
Indianapolis, IN Service Inn
87 Lakeshore on the Hill Multifamily 121 Fee 1969 1991 95%
88 Sandia Vista Shopping Retail Shadow 53,223 Fee 1986 N/A 100%
Center Anchored
89 West Valley Place Retail Anchored 78,441 Fee 1985 1998 98%
Shopping Center
90 Spring Medical Building Office 33,370 Fee 1967 1999 92%
91 Bingo King Warehouse Industrial 160,093 Fee 1972 1991 100%
92 Rite Aid - San Jacinto Retail Anchored 16,730 Fee 1999 N/A 100%
93 Federal Point Station Retail Anchored 80,219 Fee 1984 N/A 94%
94 Northland Medical Center Office 38,254 Fee 1976 1988 100%
95 Murdock Apartments Multifamily 56 Fee 1993 N/A 96%
96 Harbour Village Retail Unanchored 21,000 Fee 1998 N/A 100%
97 Chestnut Park Apartments Multifamily 144 Fee 1977 1994 92%
98 Village Center Retail Unanchored 44,890 Fee 1987 N/A 84%
99 Sherwood Park Apartments Multifamily 132 Fee 1978 N/A 93%
100 Blockbuster Video and Retail Unanchored 9,287 Fee 1972 1990 100%
Radio Shack
101 Northern Plaza Shopping Retail Anchored 85,887 Fee 1970 1994 92%
Center
102 Peconic Bay Properties Mixed Use Office/ 13,085 Fee 1940 1998 100%
Retail/
Multifamily
103 Marketplace at Retail Unanchored 19,749 Fee 1997 N/A 91%
Centerpoint
104 New England Financial Office 18,090 Fee 1981 1999 100%
Building
105 Riverlawn Mobile Home Manufactured 138 Fee 1975 N/A 95%
Park Housing
106 Lakeside Mobile Estates Manufactured 124 Fee 1968 N/A 100%
Housing
107 Signature Lake Multifamily 116 Fee 1974 1990 93%
Apartments
108 Niki's Point Apartments Multifamily 53 Fee 1996 N/A 96%
109 Belle Terre Village Multifamily 100 Fee 1978 1986 98%
Apartments/Belle Pointe
Apartments
110 Palmetto Trailer Park Manufactured 137 Fee 1940 1960 97%
Housing
111 Palm Valley Crossing Retail Shadow 16,200 Fee 1997 N/A 100%
Anchored
112 Moon Glow Apartments Multifamily 92 Fee 1971 1997 100%
113 Manor Court Apartments Multifamily 74 Fee 1971 1993 95%
114 Wickham Corners Retail Shadow 16,775 Fee 1999 N/A 100%
Shopping Center Anchored
115 Twinbridge Apartment Multifamily 104 Fee 1983 N/A 95%
Complex
116 Marmion Royal Apartments Multifamily 60 Fee 1987 N/A 97%
117 TYIF Park Condominiums Multifamily 43 Fee 1986 1995 100%
118 Tilbury Garden Multifamily 30 Fee 1951 1985 100%
Apartments
119 The Sanitas Building Industrial 16,572 Fee 1998 N/A 100%
120 2516-2526 North Kedzie Multifamily 39 Fee 1912 1993 100%
Boulevard
121 Old South Apartments Multifamily 100 Fee 1968 1998 91%
122 Whitfield Village Multifamily 48 Fee 1988 N/A 96%
Apartments
123 Rancocas Valley Office 17,400 Fee 1981 N/A 90%
Professional Arts
Building
124 Arbor Village South Multifamily 94 Fee 1965 1996 96%
Apartments
125 Kress Energy Center Office 54,550 Fee 1920 1985 87%
Office Building
126 11401 Industriplex Industrial 42,378 Fee 1996 N/A 100%
Warehouse
127 Quail Point Mixed Use Office/ 26,340 Fee 1982 1995 100%
Retail/
Industrial
128 Merriwood Village Multifamily 56 Fee 1983 N/A 98%
Apartments
129 85 Old Long Ridge Road Office 16,693 Fee 1986 1989 100%
130 Pavilion Plaza Retail Unanchored 36,800 Fee 1986 1998 83%
131 Avon Manor Apartments Multifamily 58 Fee 1969 N/A 100%
132 20/20 Greenville Retail Retail Unanchored 12,022 Fee 1920 1998 100%
Center
133 Westover Apartments Multifamily 40 Fee 1940 1988 100%
134 East 29th Street Multifamily 52 Fee 1965 1999 96%
Apartments (1C)
135 Chesapeake Drive Multifamily 24 Fee 1965 1998 96%
Apartments (1C)
136 Sandalwood Square Multifamily 67 Fee 1967 1998 97%
137 1200 Medical Building Office 27,471 Fee 1959 1993 95%
138 1416 Apartments (1D) Multifamily 84 Fee 1972 N/A 90%
139 1419 Apartments (1D) Multifamily 61 Fee 1971 1983 92%
140 Groton Fashion Plaza Retail Unanchored 24,000 Fee 1978 1985 100%
141 Scioto Fairway Woods Multifamily 80 Fee 1977 N/A 100%
Apartments
142 Park Garden Apartments Multifamily 77 Fee 1966 1997 100%
143 Glenrose Square Multifamily 35 Fee 1984 1998 100%
Apartments
144 Blue Gem Mobile Home Manufactured 52 Fee 1980 N/A 96%
Park Housing
145 Bri-Mar Building Mixed Use Office/ 27,198 Fee 1988 N/A 100%
Light
Industrial
146 244-256 Orange Place Multifamily 23 Fee 1940 1989 100%
(1E)
147 249 Orange Place Multifamily 20 Fee 1940 1991 95%
Apartments (1E)
<CAPTION>
Most Recent
Date of Operating Most Most Most
Occupancy Appraised Statement Recent Recent Recent
# Rate (2) Value Date Revenue Expenses NOI U/W NOI U/W NCF (3)
- - -------- ----- ---- ------- -------- --- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
73 6/1/99 1,350,000 6/30/99 249,365 142,859 106,506 116,614 100,114
74 6/1/99 700,000 6/30/99 147,718 68,620 79,098 71,397 63,397
75 6/15/99 5,950,000 5/31/99 1,244,815 742,966 501,849 490,352 446,352
76 4/16/99 5,400,000 5/31/99 525,366 174,395 350,971 402,031 393,056
77 12/31/98 4,800,000 12/31/98 748,627 287,707 460,920 421,935 389,289
78 4/27/99 4,900,000 3/31/99 539,937 186,052 353,885 478,752 467,593
79a 2/28/99 2,800,000 12/31/98 384,454 117,576 266,878 251,692 241,837
79b 2/27/99 1,560,000 12/31/98 246,659 84,438 162,221 157,163 141,163
79c 2/28/99 1,280,000 12/31/98 176,144 84,314 91,830 86,163 78,355
80 7/28/99 4,200,000 5/31/99 757,828 208,440 549,388 483,058 440,008
81 6/30/99 4,510,000 5/31/99 587,499 235,711 351,788 357,002 350,202
82 8/16/99 3,800,000 5/31/99 528,134 177,605 350,529 349,152 329,952
83 4/1/99 3,850,000 6/30/99 606,445 209,212 397,233 366,900 341,400
84 6/1/99 5,650,000 6/30/99 1,061,133 560,030 501,103 479,972 414,633
85 5/25/99 4,000,000 6/30/99 965,321 625,275 340,046 374,430 326,930
86 N/A 4,720,000 4/30/99 2,265,398 1,694,719 570,679 508,442 419,784
87 8/5/99 4,475,000 6/30/99 836,937 333,334 503,603 453,081 422,831
88 1/1/99 3,500,000 12/31/98 416,036 81,644 334,392 373,972 312,882
89 6/22/99 3,725,000 5/31/99 475,307 187,386 287,921 372,035 340,024
90 6/1/99 3,600,000 12/31/98 597,877 272,906 324,971 347,213 307,439
91 4/1/99 3,600,000 4/30/99 631,812 182,035 449,777 440,197 348,432
92 8/6/99 3,500,000 7/9/99 349,806 47,892 301,914 301,770 299,260
93 5/28/99 4,135,000 12/31/98 525,297 121,969 403,328 359,781 314,263
94 5/1/99 3,900,000 12/31/98 693,003 309,248 383,755 344,319 295,671
95 5/31/99 3,300,000 5/31/99 387,684 110,353 277,331 251,677 237,468
96 6/1/99 2,950,000 5/1/99 374,612 50,853 323,759 283,765 266,333
97 6/25/99 3,075,000 3/31/99 679,706 383,794 295,912 281,315 245,065
98 8/27/99 2,900,000 4/30/99 414,317 166,085 248,232 277,791 235,399
99 6/30/99 2,650,000 12/31/98 569,490 285,183 284,307 299,666 260,066
100 11/12/98 2,900,000 12/31/98 384,563 34,048 350,515 261,691 246,223
101 5/31/99 2,700,000 5/31/99 387,247 163,373 223,874 233,483 212,903
102 6/29/99 3,365,000 12/31/98 354,793 76,392 278,401 262,153 248,555
103 3/31/99 2,640,000 3/31/99 305,856 107,508 198,348 257,432 234,603
104 8/13/99 2,800,000 4/30/99 391,960 127,235 264,725 257,535 232,631
105 5/12/99 2,480,000 3/31/99 455,268 148,701 306,567 220,706 213,806
106 3/1/99 3,150,000 3/31/99 400,837 199,219 201,618 211,569 205,369
107 5/27/99 2,550,000 12/31/98 501,445 239,486 261,959 262,532 233,532
108 5/1/99 2,650,000 4/30/99 357,266 123,668 233,598 249,683 239,083
109 3/31/99 2,565,000 1/31/99 540,771 245,134 295,637 274,951 244,951
110 7/1/99 2,300,000 2/28/99 369,899 149,945 219,954 222,172 215,672
111 6/21/99 2,430,000 4/30/99 292,608 37,410 255,198 215,201 204,677
112 4/16/99 2,250,000 5/31/99 381,170 146,758 234,412 216,321 191,941
113 6/4/99 2,440,000 12/31/98 469,364 280,420 188,944 211,813 186,275
114 6/11/99 2,280,000 3/19/99 266,576 53,421 213,155 215,421 202,788
115 6/1/99 2,175,000 6/25/99 461,104 239,904 221,200 215,900 189,900
116 6/1/99 2,480,000 4/30/99 373,308 149,232 224,076 220,577 202,942
117 8/1/99 2,250,000 4/30/99 330,056 149,339 180,717 194,294 183,544
118 3/31/99 2,100,000 12/31/98 276,260 78,637 197,623 192,486 184,986
119 4/12/99 2,200,000 6/30/99 247,809 50,918 196,891 198,016 185,256
120 3/1/99 2,100,000 12/31/98 290,785 115,450 175,335 182,940 173,190
121 6/1/99 1,910,000 3/31/99 501,937 286,698 215,239 196,119 171,119
122 4/1/99 2,000,000 12/31/98 324,345 128,265 196,080 203,122 191,122
123 5/1/99 2,030,000 5/31/99 301,574 83,482 218,092 215,501 190,988
124 7/19/99 1,900,000 5/31/99 457,299 261,191 196,108 185,197 161,697
125 6/1/99 2,400,000 5/31/99 491,804 276,341 215,463 217,105 160,457
126 6/29/99 1,750,000 1/31/99 198,847 37,934 160,913 181,890 167,985
127 4/1/99 1,825,000 3/31/99 231,712 49,947 181,765 179,102 159,076
128 7/21/99 1,700,000 5/31/99 322,280 143,373 178,907 170,259 156,259
129 4/13/99 1,800,000 12/31/98 277,302 67,907 209,395 171,950 152,094
130 5/1/99 1,860,000 12/31/98 267,201 67,747 199,454 206,917 169,537
131 4/1/99 1,700,000 4/30/99 298,298 124,490 173,808 170,035 155,535
132 6/29/99 2,000,000 12/31/98 257,086 37,612 219,474 195,020 177,378
133 5/1/99 1,625,000 12/31/98 280,419 122,953 157,466 169,683 158,305
134 6/1/99 1,100,000 5/31/99 229,226 93,401 135,825 111,593 98,593
135 6/1/99 580,000 5/31/99 113,832 42,773 71,059 52,748 46,748
136 6/1/99 1,875,000 5/31/99 326,808 204,630 122,178 156,230 139,480
137 4/1/99 1,900,000 12/31/98 471,975 233,678 238,297 182,543 148,204
138 3/1/99 1,850,000 4/30/99 342,887 239,689 103,198 102,551 81,551
139 3/1/99 1,275,000 4/30/99 263,966 140,098 123,868 92,309 77,059
140 7/6/99 1,700,000 12/31/98 241,204 59,449 181,755 166,003 141,085
141 5/1/99 2,400,000 12/31/98 400,942 155,602 245,340 239,872 219,872
142 4/1/99 1,400,000 12/31/98 369,771 220,908 148,863 156,411 137,161
143 7/1/99 1,425,000 6/30/99 233,606 127,227 106,379 120,071 111,321
144 6/1/99 1,720,000 5/31/99 213,360 59,239 154,121 142,428 139,828
145 6/1/99 1,650,000 3/31/99 275,888 103,105 172,783 152,306 129,874
146 7/26/99 800,000 5/31/99 156,712 48,882 107,830 78,416 70,554
147 7/26/99 800,000 5/31/99 144,523 48,436 96,087 70,039 63,539
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Units/
Sq.Ft./ Occupancy
Property Hotel Rooms/ Fee Simple/ Year Year Rate at
# Property Name Property Type Sub-Type Franchise Pads Leasehold Built Renovated U/W (2)
- - ------------- ------------- -------- --------- ---- --------- ----- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
148 Casa De Dallas Multifamily 32 Fee 1972 N/A 100%
Apartments
149 Mooring Circle Duplexes Multifamily 16 Fee 1984 1997 100%
150 Amherst Street Mall Mixed Use Office/ 22,713 Fee 1980 1998 100%
Retail
151 Hollywood Video - Retail Unanchored 6,656 Fee 1999 N/A 100%
Cudahy, WI
152 Pioneer House Apartments Multifamily 65 Fee 1969 1997 95%
153 St. Charles & Prytania Multifamily 19 Fee 1880 1998 100%
Street Apartments
154 Butternut Apartments Multifamily 53 Fee 1922 1991 98%
155 Clarewood Gardens Multifamily 64 Fee 1972 1998 94%
Apartments
156 Autumn Run Apartments Multifamily 38 Fee 1964 1998 97%
157 Whittier Gardens Multifamily 42 Fee 1940 1998 95%
158 Alan Apartments Multifamily 22 Fee 1940 1995 100%
159 Airport Square Retail Unanchored 5,998 Fee 1955 1999 100%
160 Circa 1886 Building Mixed Use Office/ 14,196 Fee 1886 1991 91%
Retail
--------------------
Total/Weighted Average: 1977 1993 96%
====================
Maximum: 1999 1999 100%
Minimum: 1880 1960 58%
<CAPTION>
Most Recent
Date of Operating Most Most Most
Occupancy Appraised Statement Recent Recent Recent
# Rate (2) Value Date Revenue Expenses NOI U/W NOI U/W NCF (3)
- - -------- ----- ---- ------- -------- --- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
148 8/1/99 1,350,000 5/31/99 190,872 61,229 129,643 114,141 106,138
149 8/15/99 1,200,000 4/30/99 170,853 47,176 123,677 108,319 104,319
150 6/7/99 1,575,000 12/31/98 241,838 110,921 130,917 138,868 118,426
151 7/19/99 1,150,000 6/30/99 115,282 N/A 115,282 106,232 105,566
152 4/30/99 1,100,000 4/30/99 345,504 231,030 114,474 114,734 98,484
153 6/10/99 1,050,000 4/30/99 127,310 35,119 92,191 95,347 90,597
154 3/12/99 1,120,000 12/31/98 254,086 154,766 99,320 102,791 89,541
155 1/1/99 1,000,000 5/31/99 274,966 169,835 105,131 102,146 86,146
156 3/1/99 800,000 12/31/98 237,298 139,571 97,727 85,792 76,292
157 3/12/99 1,050,000 12/31/98 227,130 163,417 63,713 70,141 59,641
158 6/2/99 630,000 12/31/98 131,247 59,557 71,690 67,703 62,203
159 3/4/99 675,000 5/31/99 93,255 26,147 67,108 62,329 55,431
160 7/16/99 1,000,000 5/31/99 121,924 27,465 94,459 76,593 56,392
-----------------------------------------------------------------------------------------------------
Total/Weighted Average: $1,307,170,000 $244,303,115 $126,119,765 $118,183,350 $121,145,936 $109,928,780
=====================================================================================================
Maximum: $81,700,000 $31,777,388 $22,677,909 $9,099,479 $8,436,400 $7,626,447
Minimum: $580,000 $93,255 $26,147 $63,713 $52,748 $46,748
</TABLE>
(1A) The Mortgage Loans secured by Radisson South - Bloomington and Le Meridien
- Dallas, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) Does not include any hotel properties.
(3) Underwritten NCF reflects the Net Cash Flow after U/W Replacement
Reserves, U/W LC's and TI's and U/W FF&E.
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
10/1/99 Origination Remaining Original
Original Scheduled Percentage of Amortization Amortization Term to
Principal Principal Mortgage Term Term Maturity
# Loan Name Balance Balance Pool Balance (months) (months) (months) (3)
- - --------- ------- ------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 45 Broadway $ 49,000,000 $ 48,969,762 5.4% 360 359 120
2 Radisson South - Bloomington (1A) 30,300,000 30,237,096 3.4% 300 298 120
3 Le Meridien - Dallas (1A) 16,200,000 16,166,368 1.8% 300 298 120
4 The Alliance Loan 38,400,000 38,336,336 4.3% 360 357 120
5 Westin Resort - Hilton Head Island 35,000,000 34,953,502 3.9% 336 334 120
6 Southshore Beach & Tennis Club 35,000,000 34,941,132 3.9% 360 357 120
7 2 Penn Center Plaza 33,500,000 33,478,985 3.7% 360 359 120
8 Yonkers Shopping Center 30,000,000 29,561,900 3.3% 300 288 120
9 The Atrium 27,500,000 27,468,959 3.1% 360 358 120
10 Candlewyck Apartments 19,000,000 18,988,057 2.1% 360 359 120
11 Lakes at Palm Beach 17,000,000 16,971,978 1.9% 360 357 120
12 Pensacola Place 15,350,000 15,339,574 1.7% 360 359 120
13 West End Court 15,300,000 15,289,713 1.7% 360 359 120
14 The Ameriserve Loan 15,100,000 15,090,871 1.7% 360 359 120
15 Rancho Verde Mobile Home Park 14,750,000 14,739,982 1.6% 360 359 120
16 Commerce Centre 13,779,000 13,758,528 1.5% 360 357 120
17 Points East Shopping Center 13,500,000 13,478,068 1.5% 360 357 120
18 Hidden Creek Apartments 12,350,000 12,328,507 1.4% 360 357 120
19 800 Madison Avenue 11,400,000 11,381,263 1.3% 360 357 120
20 The 700 Building 10,000,000 9,988,743 1.1% 360 358 120
21 Schaumburg Corners Shopping Center 9,500,000 9,494,101 1.1% 360 359 120
22 BJ's Wholesale Club 8,789,000 8,779,602 1.0% 360 358 120
23 Holiday Inn - Oklahoma City, OK 8,700,000 8,691,817 1.0% 300 299 120
24 The Regency Apartments 8,740,000 8,650,061 1.0% 360 347 240
25 Canyon Parke Apartments 8,400,000 8,394,611 0.9% 360 359 84
26 Riverview Marketplace 8,250,000 8,243,791 0.9% 360 359 120
27 Commons on Apache 8,080,000 8,060,016 0.9% 360 356 120
28 Olympic Corporate Center Building 8,000,000 7,991,375 0.9% 360 358 120
29 Chaparral Village 7,999,000 7,979,972 0.9% 360 356 120
30 Rolling Meadows Plaza 7,800,000 7,794,903 0.9% 360 359 120
31 The Hill at Woodway 7,343,000 7,322,860 0.8% 360 356 120
32 Shady Grove Professional Center 7,200,000 7,195,390 0.8% 360 359 120
33 Oxford Square Apartments 7,200,000 7,187,994 0.8% 360 357 120
34 Spectrum Retail Center 7,100,000 7,091,921 0.8% 360 358 120
35 Country Oaks Apartments 7,100,000 7,081,893 0.8% 360 356 120
36 Lamplighter - Chino 7,000,000 6,995,463 0.8% 360 359 60
37 Park 80 East Office Building 6,825,000 6,817,130 0.8% 360 358 120
38 Centerpoint Corporate Center 6,600,000 6,593,019 0.7% 360 358 120
39 Gold Ridge Apartments 6,600,000 6,493,812 0.7% 300 287 300
40 Tantara Club Apartments 6,400,000 6,395,843 0.7% 360 359 84
41 Moulton La Paz Shopping Center 6,400,000 6,385,636 0.7% 360 356 120
42 Arrowhead Shopping Center 6,300,000 6,290,411 0.7% 360 357 120
43 Landmark Hotel 6,000,000 5,954,361 0.7% 180 177 120
44 Legg Mason Center 5,918,000 5,909,473 0.7% 360 357 120
45 American Crossing Shopping Center 5,800,000 5,796,241 0.6% 360 359 120
46 Kaiser Permanente Office 5,400,000 5,389,861 0.6% 177 176 177
Building (2)
47 Lakeside Village Shopping Center 5,387,000 5,381,427 0.6% 360 358 120
48 Crossroads Shopping Center 5,200,000 5,196,882 0.6% 360 359 120
49 Richmond Tower 5,119,000 5,116,061 0.6% 360 359 84
50 The Palm Breezes Club 5,100,000 5,091,471 0.6% 360 357 120
Manufactured Home Community
51 Majestic Shopping Center 5,000,000 4,994,798 0.6% 360 358 120
52 West Main Place 4,900,000 4,892,918 0.5% 360 357 120
53 Oxon Run Manor Apartments 4,880,000 4,826,748 0.5% 360 346 144
54 Mt. Olive Centre 4,800,000 4,794,811 0.5% 360 358 120
55 Applegate Square Shopping Center 4,700,000 4,695,468 0.5% 360 358 120
56 Heritage Hills Retail Center 4,614,000 4,606,438 0.5% 360 357 120
57 Waters of Winrock Apartments 4,472,127 4,468,603 0.5% 360 359 120
58 Garden Wood Apartments 4,350,000 4,342,451 0.5% 360 357 120
59 Lehigh Street Shopping Center 4,340,000 4,337,022 0.5% 360 359 120
60 Ashton Woods Apartments 4,300,000 4,297,091 0.5% 360 359 120
61 Kmart Shopping Center - Milford 4,300,000 4,293,445 0.5% 360 357 120
62 Parkside Center 4,245,000 4,240,473 0.5% 360 358 120
63 Park 51 Medical Building 4,000,000 3,997,300 0.4% 360 359 120
64 Quality Suites - College Station 3,994,000 3,990,280 0.4% 300 299 120
<CAPTION>
Remaining
Term to Mortgage First
Maturity Interest Monthly Payment Maturity Prepayment Provision Defeasance
# (months) (3) Rate Payment Date Date ARD (4) as of Origination (5) Option (6)
- - ------------ ---- ------- ---- ---- ------- --------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 119 8.410% $ 373,646.67 10/1/99 9/1/29 9/1/09 L (9.75), O (0.25) Yes
2 118 8.100% 235,871.08 9/1/99 8/1/24 8/1/09 L (9.5), O (0.5) Yes
3 118 8.100% 126,109.29 9/1/99 8/1/24 8/1/09 L (9.5), O (0.5) Yes
4 117 7.830% 277,228.19 8/1/99 7/1/09 L (9.5), O (0.5) Yes
5 118 8.170% 265,446.82 9/1/99 8/1/27 8/1/09 L (9.75). O (0.25) Yes
6 117 7.780% 251,470.26 8/1/99 7/1/09 L (9.75), O (0.25) Yes
7 119 8.330% 253,560.86 10/1/99 9/1/09 L (9.5), O (0.5) Yes
8 108 6.880% 209,742.76 11/1/98 10/1/23 10/1/08 L (9.75), O (0.25) Yes
9 118 7.980% 201,401.97 9/1/99 8/1/09 L (9.75), O (0.25) Yes
10 119 8.320% 143,676.73 10/1/99 9/1/09 L (9.5), O (0.5) Yes
11 117 7.850% 122,966.93 8/1/99 7/1/09 L (9.5), O (0.5) Yes
12 119 7.940% 111,991.48 10/1/99 9/1/09 L (9.5), O (0.5) Yes
13 119 7.990% 112,159.34 10/1/99 9/1/09 L (9.5), O (0.5) Yes
14 119 8.510% 116,212.97 10/1/99 9/1/09 L (9.75), O (0.25) Yes
15 119 7.940% 107,613.96 10/1/99 9/1/09 L (9.75), O (0.25) Yes
16 117 8.200% 103,033.09 8/1/99 7/1/09 L (9.67), O (0.33) Yes
17 117 7.900% 98,118.73 8/1/99 7/1/09 L (9.5), O (0.5) Yes
18 117 7.660% 87,710.07 8/1/99 7/1/09 L (9.5), O (0.5) Yes
19 117 7.860% 82,539.25 8/1/99 7/1/09 L (9.5), O (0.5) Yes
20 118 7.990% 73,306.76 9/1/99 8/1/09 L (9.75), O (0.25) Yes
21 119 8.380% 72,240.39 10/1/99 9/1/09 L (9.5), O (0.5) Yes
22 118 8.180% 65,596.81 9/1/99 8/1/09 L (9.67), O (0.33) Yes
23 119 8.680% 71,113.20 10/1/99 9/1/09 L (9.5), O (0.5) Yes
24 227 6.890% 57,503.20 10/1/98 9/1/28 9/1/18 L (19.75), O (0.25) Yes
25 83 8.220% 62,929.32 10/1/99 9/1/06 L (6.75), O (0.25) Yes
26 119 7.430% 57,290.27 10/1/99 9/1/09 L (9.5), O (0.5) Yes
27 116 7.660% 57,384.40 7/1/99 6/1/09 L (9.67), O (0.33) Yes
28 118 8.150% 59,539.85 9/1/99 8/1/09 L (9.75), O (0.25) Yes
29 116 7.810% 57,637.83 7/1/99 6/1/09 L (9.75), O (0.25) Yes
30 119 8.130% 57,942.09 10/1/99 9/1/09 L (9.5), O (0.5) Yes
31 116 7.250% 50,092.20 7/1/99 6/1/09 L (9.5), O (0.5) Yes
32 119 8.230% 53,990.00 10/1/99 9/1/09 L (9.5), O (0.5) Yes
33 117 7.810% 51,880.53 8/1/99 7/1/09 L (9.75), O (0.25) Yes
34 118 7.950% 51,850.02 9/1/99 8/1/09 L (9.75), O (0.25) Yes
35 116 7.540% 49,838.84 7/1/99 6/1/09 L (9.5), O (0.5) Yes
36 59 8.170% 52,195.50 10/1/99 9/1/04 L (4.75), O (0.25) Yes
37 118 7.900% 49,604.47 9/1/99 8/1/09 L (9.75), O (0.25) Yes
38 118 8.220% 49,444.47 9/1/99 8/1/09 L (9.5), O (0.5) Yes
39 287 6.830% 45,934.12 10/1/98 9/1/23 L (24.75), O (0.25) Yes
40 83 8.160% 47,676.73 10/1/99 9/1/06 L (6.5), O (0.5) Yes
41 116 8.030% 47,094.85 7/1/99 6/1/09 L (9.75), O (0.25) Yes
42 117 8.120% 46,755.27 8/1/99 7/1/09 L (9.5), O (0.5) Yes
43 117 8.840% 60,286.24 8/1/99 7/1/09 L (9.75), O (0.25) Yes
44 117 8.300% 44,668.15 8/1/99 7/1/09 L (9.67), O (0.33) Yes
45 119 8.170% 43,247.70 10/1/99 9/1/09 L (9.5), O (0.5) Yes
46 176 7.680% 44,699.39 10/1/99 6/1/14 L (14.25), O (0.5) Yes
47 118 8.300% 40,660.24 9/1/99 8/1/09 L (9.67), O (0.33) Yes
48 119 8.550% 40,167.91 10/1/99 9/1/09 L (9.5), O (0.5) Yes
49 83 8.760% 40,307.76 10/1/99 9/1/06 L (5), O (2) Yes
50 117 7.800% 36,713.40 8/1/99 7/1/09 L (9.5), O (0.5) Yes
51 118 8.280% 37,668.83 9/1/99 8/1/09 L (9.5), O (0.5) Yes
52 117 8.290% 36,949.94 8/1/99 7/1/09 L (9.75), O (0.25) Yes
53 130 6.920% 32,204.99 9/1/98 8/1/28 8/1/10 L (11.75), O (0.25) Yes
54 118 8.140% 35,690.28 9/1/99 8/1/09 L (9.5), O (0.5) Yes
55 118 8.550% 36,305.61 9/1/99 8/1/09 L (9.5), O (0.5) Yes
56 117 7.870% 33,438.69 8/1/99 7/1/09 L (9.75), O (0.25) Yes
57 119 7.200% 30,356.27 10/1/99 9/1/09 L (9.5), O (0.5) Yes
58 117 7.670% 30,923.80 8/1/99 7/1/09 L (9.5), O (0.5) Yes
59 119 7.890% 31,513.21 10/1/99 9/1/09 L (9.75), O (0.25) Yes
60 119 7.960% 31,432.05 10/1/99 9/1/09 L (9.5), O (0.5) Yes
61 117 8.115% 31,897.28 8/1/99 7/1/09 L (9.5), O (0.5) Yes
62 118 8.190% 31,712.39 9/1/99 8/1/09 L (9.75), O (0.25) Yes
63 119 7.970% 29,266.97 10/1/99 9/1/09 L (9.75), O (0.25) Yes
64 119 8.740% 32,809.29 10/1/99 9/1/09 L (9.75), O (0.25) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
10/1/99 Origination Remaining Original
Original Scheduled Percentage of Amortization Amortization Term to
Principal Principal Mortgage Term Term Maturity
# Loan Name Balance Balance Pool Balance (months) (months) (months) (3)
- - --------- ------- ------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
65 King Arthur Mobile Home Park 3,959,000 3,956,496 0.4% 360 359 120
66 The Fox Glen I and II Apartments 3,900,000 3,897,588 0.4% 360 359 120
67 Lake Howard Heights Retirement 3,830,000 3,827,680 0.4% 360 359 93
68 Stockdale Town Center 3,791,000 3,788,617 0.4% 360 359 120
69 Batavia Palms Business Center 3,770,000 3,767,470 0.4% 360 359 120
70 Town Center North 3,755,000 3,752,610 0.4% 360 359 120
71 Creekside Apartments (1B) 1,300,000 1,299,173 0.1% 360 359 120
72 Brookside Apartments (1B) 1,005,000 1,004,360 0.1% 360 359 120
73 Glenbrook Centre Apartments (1B) 885,000 884,437 0.1% 360 359 120
74 Hardwick Apartments (1B) 560,000 559,644 0.1% 360 359 120
75 Sequoia Bend Apartments 3,720,000 3,716,189 0.4% 300 299 84
76 1264 Lexington Avenue 3,652,000 3,649,623 0.4% 360 359 120
77 Tenth Street Medical Building 3,600,000 3,594,700 0.4% 360 357 120
78 Storage USA - La Quinta 3,440,000 3,431,045 0.4% 300 297 120
79 Storage Loan 3,400,000 3,388,112 0.4% 300 296 120
80 Lincolnwood / Pinetree Apartments 3,312,000 3,308,779 0.4% 360 358 120
81 Brookside Mobile Home Park 3,292,000 3,288,373 0.4% 360 358 120
82 Villa Reanna Apartments 3,040,000 3,037,944 0.3% 360 359 120
83 Arbor Village Townhomes 3,040,000 3,036,687 0.3% 360 358 120
84 Park South Apartments 3,030,000 3,027,197 0.3% 300 299 300
85 Deer Park Mansion 2,900,000 2,868,396 0.3% 360 344 120
86 Holiday Inn Southeast - 2,850,000 2,847,394 0.3% 300 299 120
Indianapolis, IN
87 Lakeshore on the Hill 2,800,000 2,794,974 0.3% 240 239 120
88 Sandia Vista Shopping Center 2,750,000 2,746,038 0.3% 360 357 120
89 West Valley Place Shopping Center 2,732,000 2,728,112 0.3% 360 357 120
90 Spring Medical Building 2,700,000 2,698,264 0.3% 360 359 120
91 Bingo King Warehouse 2,700,000 2,695,531 0.3% 300 298 120
92 Rite Aid - San Jacinto 2,682,000 2,680,208 0.3% 360 359 120
93 Federal Point Station 2,599,000 2,595,381 0.3% 360 357 120
94 Northland Medical Center 2,425,000 2,418,243 0.3% 324 320 120
95 Murdock Apartments 2,250,000 2,248,487 0.3% 360 359 120
96 Harbour Village 2,200,000 2,198,518 0.2% 360 359 120
97 Chestnut Park Apartments 2,150,000 2,147,625 0.2% 360 358 120
98 Village Center 2,109,000 2,107,625 0.2% 360 359 120
99 Sherwood Park Apartments 2,025,000 2,020,069 0.2% 360 356 120
100 Blockbuster Video and Radio Shack 2,003,000 2,000,051 0.2% 360 357 120
101 Northern Plaza Shopping Center 2,000,000 1,998,361 0.2% 360 359 109
102 Peconic Bay Properties 2,000,000 1,995,206 0.2% 300 297 120
103 Marketplace at Centerpoint 1,950,000 1,948,104 0.2% 360 358 120
104 New England Financial Building 1,925,000 1,923,162 0.2% 300 299 120
105 Riverlawn Mobile Home Park 1,920,000 1,917,042 0.2% 360 357 120
106 Lakeside Mobile Estates 1,900,000 1,898,779 0.2% 360 359 120
107 Signature Lake Apartments 1,900,000 1,896,804 0.2% 360 357 120
108 Niki's Point Apartments 1,860,000 1,857,169 0.2% 360 357 120
109 Belle Terre Village 1,830,000 1,825,497 0.2% 360 356 120
Apartments/Belle Pointe Apartments
110 Palmetto Trailer Park 1,800,000 1,798,127 0.2% 360 358 120
111 Palm Valley Crossing 1,800,000 1,797,891 0.2% 360 358 120
112 Moon Glow Apartments 1,800,000 1,772,211 0.2% 300 287 180
113 Manor Court Apartments 1,800,000 1,771,046 0.2% 300 286 300
114 Wickham Corners Shopping Center 1,741,000 1,739,092 0.2% 360 358 120
115 Twinbridge Apartment Complex 1,740,000 1,737,222 0.2% 360 357 120
116 Marmion Royal Apartments 1,730,000 1,727,507 0.2% 360 357 120
117 TYIF Park Condominiums 1,690,000 1,687,357 0.2% 360 357 120
118 Tilbury Garden Apartments 1,610,000 1,608,297 0.2% 360 358 120
119 The Sanitas Building 1,600,000 1,597,468 0.2% 360 357 120
120 2516-2526 North Kedzie Boulevard 1,575,000 1,572,773 0.2% 360 357 120
121 Old South Apartments 1,500,000 1,497,345 0.2% 360 357 120
122 Whitfield Village Apartments 1,500,000 1,493,566 0.2% 240 237 240
123 Rancocas Valley Professional Arts 1,470,000 1,468,676 0.2% 300 299 120
Building
124 Arbor Village South Apartments 1,450,000 1,449,105 0.2% 360 359 120
125 Kress Energy Center Office 1,451,000 1,446,211 0.2% 360 354 120
Building
126 11401 Industriplex Warehouse 1,400,000 1,397,952 0.2% 360 357 120
127 Quail Point 1,365,000 1,363,123 0.2% 360 357 120
128 Merriwood Village Apartments 1,350,000 1,348,592 0.1% 360 358 120
<CAPTION>
Remaining
Term to Mortgage First
Maturity Interest Monthly Payment Maturity Prepayment Provision Defeasance
# (months) (3) Rate Payment Date Date ARD (4) as of Origination (5) Option (6)
- - ------------ ---- ------- ---- ---- ------- --------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
65 119 8.290% 29,854.05 10/1/99 9/1/09 L (9.5), O (0.5) Yes
66 119 8.400% 29,711.67 10/1/99 9/1/09 L (9.5), O (0.5) Yes
67 92 8.500% 29,449.39 10/1/99 6/1/07 L (7.25), O (0.5) Yes
68 119 8.320% 28,667.29 10/1/99 9/1/09 L (9.75), O (0.25) Yes
69 119 8.000% 27,662.92 10/1/99 9/1/09 L (9.5), O (0.5) Yes
70 119 8.260% 28,236.46 10/1/99 9/1/09 L (9.75), O (0.25) Yes
71 119 8.260% 9,775.61 10/1/99 9/1/09 L (9.5), O (0.5) Yes
72 119 8.260% 7,557.30 10/1/99 9/1/09 L (9.5), O (0.5) Yes
73 119 8.260% 6,654.93 10/1/99 9/1/09 L (9.5), O (0.5) Yes
74 119 8.260% 4,211.03 10/1/99 9/1/09 L (9.5), O (0.5) Yes
75 83 8.160% 29,106.96 10/1/99 9/1/06 L (6.5), O (0.5) Yes
76 119 8.150% 27,179.94 10/1/99 9/1/09 L (9.75), O (0.25) Yes
77 117 8.230% 26,995.00 8/1/99 7/1/09 L (9.5), O (0.5) Yes
78 117 8.220% 27,053.76 8/1/99 7/1/09 L (9.75), O (0.25) Yes
79 116 8.420% 27,194.67 7/1/99 6/1/09 L (9.75), O (0.25) Yes
80 118 8.520% 25,513.37 9/1/99 8/1/09 L (9.75), O (0.25) Yes
81 118 8.070% 24,316.37 9/1/99 8/1/09 L (9.75), O (0.25) Yes
82 119 7.960% 22,221.73 10/1/99 9/1/09 L (9.5), O (0.5) Yes
83 118 8.110% 22,540.00 9/1/99 8/1/09 L (9.5), O (0.5) Yes
84 299 8.780% 24,972.74 10/1/99 9/1/24 L (24.5), O (0.5) Yes
85 104 7.510% 20,297.08 7/1/98 6/1/08 L (9.5), O (0.5) Yes
86 119 8.850% 23,625.03 10/1/99 9/1/09 L (9.5), O (0.5) Yes
87 119 7.550% 22,642.29 10/1/99 9/1/09 L (9.5), O (0.5) Yes
88 117 8.300% 20,756.58 8/1/99 7/1/09 L (9.5), O (0.5) Yes
89 117 8.340% 20,697.72 8/1/99 7/1/09 L (9.75), O (0.25) Yes
90 119 8.210% 20,208.32 10/1/99 9/1/09 L (9.5), O (0.5) Yes
91 118 8.650% 22,014.73 9/1/99 8/1/09 L (9.5), O (0.5) Yes
92 119 8.020% 19,716.97 10/1/99 9/1/09 L (9.75), O (0.25) Yes
93 117 8.410% 19,818.52 8/1/99 7/1/09 L (9.75), O (0.25) Yes
94 116 8.460% 19,052.46 7/1/99 6/1/09 L (9.5), O (0.5) Yes
95 119 7.990% 16,494.02 10/1/99 9/1/09 L (9.5), O (0.5) Yes
96 119 7.980% 16,112.16 10/1/99 9/1/09 L (9.75), O (0.25) Yes
97 118 8.060% 15,865.96 9/1/99 8/1/09 L (9.5), O (0.5) Yes
98 119 8.140% 15,681.42 10/1/99 9/1/09 L (9.75), O (0.25) Yes
99 116 7.720% 14,465.39 7/1/99 6/1/09 L (9.75), O (0.25) Yes
100 117 8.230% 15,019.72 8/1/99 7/1/09 L (9.58), O (0.42) Yes
101 108 7.000% 13,306.05 10/1/99 10/1/08 L (8.58), O (0.5) Yes
102 117 8.600% 16,239.54 8/1/99 7/1/09 L (9.5), O (0.5) Yes
103 118 8.520% 15,021.46 9/1/99 8/1/09 L (9.5), O (0.5) Yes
104 119 8.590% 15,617.55 10/1/99 9/1/09 L (9.5), O (0.5) Yes
105 117 8.080% 14,195.50 8/1/99 7/1/09 L (9.5), O (0.5) Yes
106 119 8.210% 14,220.67 10/1/99 9/1/09 L (9.5), O (0.5) Yes
107 117 7.780% 13,651.24 8/1/99 7/1/09 L (9.5), O (0.5) Yes
108 117 8.120% 13,803.94 8/1/99 7/1/09 L (9.75), O (0.25) Yes
109 116 7.680% 13,021.93 7/1/99 6/1/09 L (9.75), O (0.25) Yes
110 118 8.280% 13,560.78 9/1/99 8/1/09 L (9.5), O (0.5) Yes
111 118 7.840% 13,007.55 9/1/99 8/1/09 L (9.75), O (0.25) Yes
112 167 7.070% 12,802.52 10/1/98 9/1/23 9/1/13 L (14.75), O (0.25) Yes
113 286 7.230% 12,987.34 9/1/98 8/1/23 L (15), YM 1% (9.75), O (0.25) No
114 118 8.090% 12,884.24 9/1/99 8/1/09 L (9.75), O (0.25) Yes
115 117 7.960% 12,719.02 8/1/99 7/1/09 L (9.5), O (0.5) Yes
116 117 8.300% 13,057.77 8/1/99 7/1/09 L (9.5), O (0.5) Yes
117 117 8.030% 12,435.98 8/1/99 7/1/09 L (9.5), O (0.5) Yes
118 118 8.220% 12,061.45 9/1/99 8/1/09 L (9.5), O (0.5) Yes
119 117 7.990% 11,729.08 8/1/99 7/1/09 L (9.5), O (0.5) Yes
120 117 8.360% 11,954.47 8/1/99 7/1/09 L (9.5), O (0.5) Yes
121 117 7.600% 10,591.12 8/1/99 7/1/09 L (9.5), O (0.5) Yes
122 237 8.580% 13,093.40 8/1/99 7/1/19 L (19.5), O (0.5) Yes
123 119 8.940% 12,275.84 10/1/99 9/1/09 L (9.5), O (0.5) Yes
124 119 8.410% 11,056.89 10/1/99 9/1/09 L (9.5), O (0.5) Yes
125 114 8.130% 10,778.71 5/1/99 4/1/09 L (9.75), O (0.25) Yes
126 117 8.250% 10,517.73 8/1/99 7/1/09 L (9.75), O (0.25) Yes
127 117 8.450% 10,447.34 8/1/99 7/1/09 L (9.5), O (0.5) Yes
128 118 8.270% 10,161.09 9/1/99 8/1/09 L (9.5), O (0.5) Yes
</TABLE>
<PAGE>
Characteristics of the Mortgage Loans
<TABLE>
<CAPTION>
10/1/99 Origination Remaining Original
Original Scheduled Percentage of Amortization Amortization Term to
Principal Principal Mortgage Term Term Maturity
# Loan Name Balance Balance Pool Balance (months) (months) (months) (3)
- - --------- ------- ------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
129 85 Old Long Ridge Road 1,350,000 1,347,976 0.1% 360 357 120
130 Pavilion Plaza 1,350,000 1,347,747 0.1% 300 298 120
131 Avon Manor Apartments 1,350,000 1,347,246 0.1% 360 356 120
132 20/20 Greenville Retail Center 1,345,000 1,343,824 0.1% 300 299 120
133 Westover Apartments 1,300,000 1,298,302 0.1% 360 357 120
134 East 29th Street Apartments (1C) 851,000 850,200 0.1% 360 358 120
135 Chesapeake Drive Apartments (1C) 414,000 413,611 0.0% 360 358 120
136 Sandalwood Square 1,250,000 1,248,760 0.1% 360 358 120
137 1200 Medical Building 1,200,000 1,198,912 0.1% 300 299 120
138 1416 Apartments (1D) 630,000 629,428 0.1% 300 299 120
139 1419 Apartments (1D) 530,000 529,519 0.1% 300 299 120
140 Groton Fashion Plaza 1,050,000 1,048,219 0.1% 300 298 120
141 Scioto Fairway Woods Apartments 1,050,000 1,043,928 0.1% 180 178 180
142 Park Garden Apartments 1,025,000 1,022,019 0.1% 240 238 240
143 Glenrose Square Apartments 1,010,000 1,009,374 0.1% 360 359 120
144 Blue Gem Mobile Home Park 1,000,000 998,838 0.1% 360 358 120
145 Bri-Mar Building 992,000 989,128 0.1% 240 238 120
146 244-256 Orange Place (1E) 500,000 499,253 0.1% 240 239 120
147 249 Orange Place Apartments (1E) 475,000 474,291 0.1% 240 239 120
148 Casa De Dallas Apartments 960,000 959,387 0.1% 360 359 120
149 Mooring Circle Duplexes 925,000 923,811 0.1% 360 357 120
150 Amherst Street Mall 925,000 922,974 0.1% 300 297 120
151 Hollywood Video - Cudahy, WI 800,000 798,832 0.1% 324 322 120
152 Pioneer House Apartments 800,000 798,766 0.1% 300 298 120
153 St. Charles & Prytania Street 785,000 784,558 0.1% 360 359 120
Apartments
154 Butternut Apartments 775,000 773,600 0.1% 300 298 120
155 Clarewood Gardens Apartments 650,000 648,469 0.1% 300 297 120
156 Autumn Run Apartments 640,000 639,600 0.1% 360 359 120
157 Whittier Gardens 515,000 514,070 0.1% 300 298 120
158 Alan Apartments 500,000 498,892 0.1% 300 297 120
159 Airport Square 425,000 424,364 0.0% 300 298 120
160 Circa 1886 Building 402,000 401,415 0.0% 240 239 120
-------------------------------------------------------------------------------------
Total/Weighted Average: $901,161,127 $899,289,205 100.0% 346 344 123
=====================================================================================
Maximum: $49,000,000 $48,969,762 5.4% 360 359 300
Minimum: $402,000 $401,415 0.0% 177 176 60
<CAPTION>
Remaining
Term to Mortgage First
Maturity Interest Monthly Payment Maturity Prepayment Provision Defeasance
# (months) (3) Rate Payment Date Date ARD (4) as of Origination (5) Option (6)
- - ------------ ---- ------- ---- ---- ------- --------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
129 117 8.170% 10,066.27 8/1/99 7/1/09 L (9.5), O (0.5) Yes
130 118 8.610% 10,970.82 9/1/99 8/1/09 L (9.5), O (0.5) Yes
131 116 8.380% 10,265.74 7/1/99 6/1/09 L (9.5), O (0.5) Yes
132 119 9.120% 11,397.92 10/1/99 9/1/09 L (9.5), O (0.5) Yes
133 117 8.610% 10,097.40 8/1/99 7/1/09 L (9.5), O (0.5) Yes
134 118 8.640% 6,628.07 9/1/99 8/1/09 L (9.5), O (0.5) Yes
135 118 8.640% 3,224.47 9/1/99 8/1/09 L (9.5), O (0.5) Yes
136 118 8.450% 9,567.16 9/1/99 8/1/09 L (9.5), O (0.5) Yes
137 119 8.900% 9,988.31 10/1/99 9/1/09 L (9.5), O (0.5) Yes
138 119 8.890% 5,239.56 10/1/99 9/1/09 L (9.5), O (0.5) Yes
139 119 8.890% 4,407.89 10/1/99 9/1/09 L (9.5), O (0.5) Yes
140 118 8.530% 8,476.12 9/1/99 8/1/09 L (9.5), O (0.5) Yes
141 178 7.620% 9,805.37 9/1/99 8/1/14 L (14.5), O (0.5) Yes
142 238 8.630% 8,979.70 9/1/99 8/1/19 L (19.5), O (0.5) Yes
143 119 8.390% 7,687.43 10/1/99 9/1/09 L (9.5), O (0.5) Yes
144 118 7.870% 7,247.22 9/1/99 8/1/09 L (9.5), O (0.5) Yes
145 118 8.660% 8,709.53 9/1/99 8/1/09 L (9.5), O (0.5) Yes
146 119 9.020% 4,505.06 10/1/99 9/1/09 L (9.5), O (0.5) Yes
147 119 9.020% 4,279.81 10/1/99 9/1/09 L (9.5), O (0.5) Yes
148 119 8.240% 7,205.41 10/1/99 9/1/09 L (9.5), O (0.5) Yes
149 117 8.660% 7,217.60 8/1/99 7/1/09 L (9.5), O (0.5) Yes
150 117 9.000% 7,762.57 8/1/99 7/1/09 L (9.5), O (0.5) Yes
151 118 8.220% 6,153.84 9/1/99 8/1/09 L (9.5), O (0.5) Yes
152 118 8.990% 6,708.09 9/1/99 8/1/09 L (9.5), O (0.5) Yes
153 119 8.850% 6,231.75 10/1/99 9/1/09 L (9.5), O (0.5) Yes
154 118 8.220% 6,094.96 9/1/99 8/1/09 L (9.5), O (0.5) Yes
155 117 8.680% 5,313.06 8/1/99 7/1/09 L (9.5), O (0.5) Yes
156 119 8.350% 4,853.17 10/1/99 9/1/09 L (9.5), O (0.5) Yes
157 118 8.220% 4,050.20 9/1/99 8/1/09 L (9.5), O (0.5) Yes
158 117 8.950% 4,178.88 8/1/99 7/1/09 L (9.5), O (0.5) Yes
159 118 9.130% 3,604.49 9/1/99 8/1/09 L (9.5), O (0.5) Yes
160 119 9.220% 3,673.97 10/1/99 9/1/09 L (9.5), O (0.5) Yes
---------------------------------------------------------
Total/Weighted Average: 120 8.041% $6,725,397.56 8/11/99 1/12/13
=========================================================
Maximum: 299 9.220% $373,646.67 10/1/99 9/1/29
Minimum: 59 6.830% $3,224.47 7/1/98 9/1/04
</TABLE>
(1A) The Mortgage Loans secured by Radisson South - Bloomington and Le Meridien
- Dallas, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) The Mortgage Loan secured by Kaiser Permanente Office Building provides
for the increase in monthly payment as follows: $48,788.33 in January
2002, $51,499.38 in July 2004, $54,413.24 in January 2007, $57,544.82 in
July 2009 and $60,912.01 in January 2012.
(3) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
(4) Anticipated Repayment Date.
(5) Prepayment Provision as of Origination:
L (x) = Lockout or Defeasance for x years
YM A% (x) = Greater of Yield Maintenance Premium and
A% Prepayment for x years
O (x) = Prepayable at par for x years
(6) "Yes" means that defeasance is permitted notwithstanding the Lockout
Period.
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
10/1/99
Scheduled
Principal Appraised 10/1/99 Maturity/ARD Maturity/ARD
# Loan Name Balance Value LTV Ratio (3) Balance LTV Ratio (3)(4)
- - --------- ------- ----- ------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
1 45 Broadway $ 48,969,762 $ 67,400,000 72.7% $ 44,248,860 65.7%
2 Radisson South - Bloomington (1A) 30,237,096 53,200,000 53.8% 24,533,257 43.7%
3 Le Meridien - Dallas (1A) 16,166,368 33,000,000 53.8% 13,116,791 43.7%
4 The Alliance Loan 38,336,336 49,050,000 78.2% 34,218,102 69.8%
5 Westin Resort - Hilton Head Island 34,953,502 81,700,000 42.8% 30,606,397 37.5%
6 Southshore Beach & Tennis Club 34,941,132 48,500,000 72.0% 31,150,276 64.2%
7 2 Penn Center Plaza 33,478,985 50,000,000 67.0% 30,196,271 60.4%
8 Yonkers Shopping Center 29,561,900 46,300,000 63.8% 23,910,945 51.6%
9 The Atrium 27,468,959 43,000,000 63.9% 24,589,704 57.2%
10 Candlewyck Apartments 18,988,057 23,800,000 79.8% 17,122,295 71.9%
11 Lakes at Palm Beach 16,971,978 21,700,000 78.2% 15,156,021 69.8%
12 Pensacola Place 15,339,574 23,000,000 66.7% 13,709,828 59.6%
13 West End Court 15,289,713 20,100,000 76.1% 13,681,544 68.1%
14 The Ameriserve Loan 15,090,871 23,500,000 64.2% 13,666,915 58.2%
15 Rancho Verde Mobile Home Park 14,739,982 19,340,000 76.2% 13,173,940 68.1%
16 Commerce Centre 13,758,528 17,850,000 77.1% 12,387,564 69.4%
17 Points East Shopping Center 13,478,068 17,700,000 76.1% 12,050,276 68.1%
18 Hidden Creek Apartments 12,328,507 15,900,000 77.5% 10,959,114 68.9%
19 800 Madison Avenue 11,381,263 17,200,000 66.2% 10,165,921 59.1%
20 The 700 Building 9,988,743 13,900,000 71.9% 8,943,851 64.3%
21 Schaumburg Corners Shopping Center 9,494,101 12,650,000 75.1% 8,572,971 67.8%
22 BJ's Wholesale Club 8,779,602 11,400,000 77.0% 7,896,224 69.3%
23 Holiday Inn - Oklahoma City, OK 8,691,817 14,000,000 62.1% 7,310,022 52.2%
24 The Regency Apartments 8,650,061 10,925,000 79.2% 5,309,559 48.6%
25 Canyon Parke Apartments 8,394,611 10,500,000 79.9% 7,883,683 75.1%
26 Riverview Marketplace 8,243,791 10,500,000 78.5% 7,276,351 69.3%
27 Commons on Apache 8,060,016 10,200,000 79.0% 7,169,032 70.3%
28 Olympic Corporate Center Building 7,991,375 11,800,000 67.7% 7,182,304 60.9%
29 Chaparral Village 7,979,972 10,040,000 79.5% 7,123,389 71.0%
30 Rolling Meadows Plaza 7,794,903 10,400,000 75.0% 6,998,096 67.3%
31 The Hill at Woodway 7,322,860 9,275,000 79.0% 6,447,826 69.5%
32 Shady Grove Professional Center 7,195,390 9,700,000 74.2% 6,474,924 66.8%
33 Oxford Square Apartments 7,187,994 9,975,000 72.1% 6,412,763 64.3%
34 Spectrum Retail Center 7,091,921 9,000,000 78.8% 6,344,046 70.5%
35 Country Oaks Apartments 7,081,893 8,900,000 79.6% 6,280,695 70.6%
36 Lamplighter - Chino 6,995,463 9,150,000 76.5% 6,716,638 73.4%
37 Park 80 East Office Building 6,817,130 9,000,000 75.7% 6,090,983 67.7%
38 Centerpoint Corporate Center 6,593,019 8,300,000 79.4% 5,935,136 71.5%
39 Gold Ridge Apartments 6,493,812 12,520,000 51.9% 331,967 2.7%
40 Tantara Club Apartments 6,395,843 9,550,000 67.0% 6,001,256 62.8%
41 Moulton La Paz Shopping Center 6,385,636 8,500,000 75.1% 5,729,745 67.4%
42 Arrowhead Shopping Center 6,290,411 7,900,000 79.6% 5,653,147 71.6%
43 Landmark Hotel 5,954,361 11,100,000 53.6% 3,020,476 27.2%
44 Legg Mason Center 5,909,473 7,400,000 79.9% 5,332,819 72.1%
45 American Crossing Shopping Center 5,796,241 7,500,000 77.3% 5,208,604 69.4%
46 Kaiser Permanente Office Building (2) 5,389,861 5,900,000 91.4% - 0.0%
47 Lakeside Village Shopping Center 5,381,427 7,300,000 73.7% 4,853,356 66.5%
48 Crossroads Shopping Center 5,196,882 7,200,000 72.2% 4,710,739 65.4%
49 Richmond Tower 5,116,061 8,650,000 59.1% 4,841,697 56.0%
50 The Palm Breezes Club Manufactured Home 5,091,471 6,750,000 75.4% 4,541,263 67.3%
Community
51 Majestic Shopping Center 4,994,798 6,700,000 74.5% 4,502,604 67.2%
52 West Main Place 4,892,918 8,700,000 56.2% 4,414,456 50.7%
53 Oxon Run Manor Apartments 4,826,748 6,100,000 79.1% 4,058,287 66.5%
54 Mt. Olive Centre 4,794,811 6,150,000 78.0% 4,308,369 70.1%
55 Applegate Square Shopping Center 4,695,468 6,500,000 72.2% 4,258,695 65.5%
56 Heritage Hills Retail Center 4,606,438 6,800,000 67.7% 4,115,523 60.5%
57 Waters of Winrock Apartments 4,468,603 5,600,000 79.8% 3,921,134 70.0%
58 Garden Wood Apartments 4,342,451 5,500,000 79.0% 3,861,050 70.2%
59 Lehigh Street Shopping Center 4,337,022 5,425,000 79.9% 3,871,601 71.4%
60 Ashton Woods Apartments 4,297,091 5,700,000 75.4% 3,842,382 67.4%
61 Kmart Shopping Center - Milford 4,293,445 5,380,000 79.8% 3,858,040 71.7%
62 Parkside Center 4,240,473 5,500,000 77.1% 3,814,692 69.4%
63 Park 51 Medical Building 3,997,300 5,300,000 75.4% 3,575,165 67.5%
64 Quality Suites - College Station 3,990,280 5,500,000 72.6% 3,361,378 61.1%
<CAPTION>
Most Recent Most Recent U/W U/W U/W
# NOI DSCR (5) NOI NCF (6) DSCR (5)
- - --- -------- --- ------- --------
<S> <C> <C> <C> <C> <C>
1 $ 4,018,604 0.90x $ 6,103,139 $ 5,425,246 1.21x
2 6,124,329 2.24 6,149,200 5,087,759 1.85
3 3,596,286 2.24 3,626,962 2,957,460 1.85
4 3,923,075 1.18 4,407,550 4,128,050 1.24
5 9,099,479 2.86 8,436,400 7,626,447 2.39
6 3,997,399 1.32 4,135,095 4,000,095 1.33
7 4,686,132 1.54 4,740,504 3,684,595 1.21
8 4,663,480 1.85 4,315,564 4,094,335 1.63
9 3,418,044 1.41 3,492,816 3,134,019 1.30
10 1,990,090 1.15 2,201,640 2,079,890 1.21
11 1,809,599 1.23 1,886,012 1,799,012 1.22
12 1,617,679 1.20 1,704,557 1,626,390 1.21
13 1,514,405 1.13 1,845,660 1,690,129 1.26
14 1,967,777 1.41 2,045,708 1,952,290 1.40
15 1,594,044 1.23 1,569,735 1,562,235 1.21
16 1,557,246 1.26 1,691,529 1,524,093 1.23
17 1,570,492 1.33 1,571,890 1,472,301 1.25
18 1,380,217 1.31 1,365,519 1,305,519 1.24
19 1,307,889 1.32 1,225,855 1,212,422 1.22
20 1,223,036 1.39 1,330,373 1,114,853 1.27
21 1,038,972 1.20 1,149,465 1,067,834 1.23
22 1,049,226 1.33 986,697 970,335 1.23
23 1,573,975 1.84 1,440,123 1,240,362 1.45
24 1,101,425 1.60 1,037,126 999,926 1.45
25 890,406 1.18 1,042,804 964,804 1.28
26 884,704 1.29 920,033 862,368 1.25
27 928,923 1.35 882,314 839,754 1.22
28 883,903 1.24 1,000,230 898,682 1.26
29 840,379 1.22 870,247 853,722 1.23
30 892,196 1.28 938,709 873,449 1.26
31 850,759 1.42 837,683 775,683 1.29
32 973,540 1.50 894,915 812,353 1.25
33 827,804 1.33 811,835 753,323 1.21
34 883,840 1.42 862,994 803,538 1.29
35 766,260 1.28 773,592 723,592 1.21
36 810,550 1.29 782,443 769,443 1.23
37 775,292 1.30 860,311 760,610 1.28
38 801,851 1.35 795,482 714,286 1.20
39 1,004,765 1.82 972,010 893,101 1.62
40 826,057 1.44 811,676 740,426 1.29
41 735,473 1.30 793,466 717,650 1.27
42 773,142 1.38 768,105 721,598 1.29
43 1,476,596 2.04 1,203,568 1,079,749 1.49
44 886,862 1.65 752,725 678,997 1.27
45 737,507 1.42 704,081 671,573 1.29
46 N/A N/A 543,930 539,548 1.01
47 738,230 1.51 654,880 612,575 1.26
48 679,975 1.41 667,441 607,279 1.26
49 493,158 1.02 739,346 623,300 1.29
50 545,626 1.24 550,118 540,668 1.23
51 672,491 1.49 669,415 576,462 1.28
52 816,334 1.84 789,650 668,880 1.51
53 705,084 1.82 626,721 589,596 1.53
54 509,584 1.19 580,710 532,883 1.24
55 495,458 1.14 599,786 542,135 1.24
56 639,867 1.59 612,794 572,438 1.43
57 465,683 1.28 477,216 447,966 1.23
58 488,271 1.32 494,619 456,619 1.23
59 240,711 0.64 508,875 475,301 1.26
60 434,831 1.15 500,268 461,268 1.22
61 284,497 0.74 521,857 462,950 1.21
62 538,448 1.41 516,750 478,597 1.26
63 516,962 1.47 483,415 435,905 1.24
64 866,370 2.20 660,991 581,590 1.48
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
10/1/99
Scheduled
Principal Appraised 10/1/99 Maturity/ARD Maturity/ARD
# Loan Name Balance Value LTV Ratio (3) Balance LTV Ratio (3)(4)
- - --------- ------- ----- ------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
65 King Arthur Mobile Home Park 3,956,496 5,000,000 79.1% 3,565,272 71.3%
66 The Fox Glen I and II Apartments 3,897,588 5,000,000 78.0% 3,521,042 70.4%
67 Lake Howard Heights Retirement 3,827,680 5,700,000 67.2% 3,526,058 61.9%
68 Stockdale Town Center 3,788,617 5,300,000 71.5% 3,416,348 64.5%
69 Batavia Palms Business Center 3,767,470 5,150,000 73.2% 3,372,010 65.5%
70 Town Center North 3,752,610 4,750,000 79.0% 3,379,211 71.1%
71 Creekside Apartments (1B) 1,299,173 1,770,000 73.8% 1,169,899 66.4%
72 Brookside Apartments (1B) 1,004,360 1,260,000 73.8% 904,422 66.4%
73 Glenbrook Centre Apartments (1B) 884,437 1,350,000 73.8% 796,432 66.4%
74 Hardwick Apartments (1B) 559,644 700,000 73.8% 503,957 66.4%
75 Sequoia Bend Apartments 3,716,189 5,950,000 62.5% 3,330,188 56.0%
76 1264 Lexington Avenue 3,649,623 5,400,000 67.6% 3,278,087 60.7%
77 Tenth Street Medical Building 3,594,700 4,800,000 74.9% 3,238,738 67.5%
78 Storage USA - La Quinta 3,431,045 4,900,000 70.0% 2,854,935 58.3%
79 Storage Loan 3,388,112 5,640,000 60.1% 2,837,165 50.3%
80 Lincolnwood / Pinetree Apartments 3,308,779 4,200,000 78.8% 2,998,986 71.4%
81 Brookside Mobile Home Park 3,288,373 4,510,000 72.9% 2,949,935 65.4%
82 Villa Reanna Apartments 3,037,944 3,800,000 79.9% 2,716,474 71.5%
83 Arbor Village Townhomes 3,036,687 3,850,000 78.9% 2,726,702 70.8%
84 Park South Apartments 3,027,197 5,650,000 53.6% 291,539 5.2%
85 Deer Park Mansion 2,868,396 4,000,000 71.7% 2,563,196 64.1%
86 Holiday Inn Southeast - 2,847,394 4,720,000 60.3% 2,405,733 51.0%
Indianapolis, IN
87 Lakeshore on the Hill 2,794,974 4,475,000 62.5% 1,944,096 43.4%
88 Sandia Vista Shopping Center 2,746,038 3,500,000 78.5% 2,478,075 70.8%
89 West Valley Place Shopping Center 2,728,112 3,725,000 73.2% 2,464,138 66.2%
90 Spring Medical Building 2,698,264 3,600,000 75.0% 2,426,965 67.4%
91 Bingo King Warehouse 2,695,531 3,600,000 74.9% 2,267,330 63.0%
92 Rite Aid - San Jacinto 2,680,208 3,500,000 76.6% 2,400,011 68.6%
93 Federal Point Station 2,595,381 4,135,000 62.8% 2,347,964 56.8%
94 Northland Medical Center 2,418,243 3,900,000 62.0% 2,103,128 53.9%
95 Murdock Apartments 2,248,487 3,300,000 68.1% 2,011,992 61.0%
96 Harbour Village 2,198,518 2,950,000 74.5% 1,966,810 66.7%
97 Chestnut Park Apartments 2,147,625 3,075,000 69.8% 1,926,140 62.6%
98 Village Center 2,107,625 2,900,000 72.7% 1,892,623 65.3%
99 Sherwood Park Apartments 2,020,069 2,650,000 76.2% 1,799,360 67.9%
100 Blockbuster Video and Radio Shack 2,000,051 2,900,000 69.0% 1,801,998 62.1%
101 Northern Plaza Shopping Center 1,998,361 2,700,000 74.0% 1,776,021 65.8%
102 Peconic Bay Properties 1,995,206 3,365,000 59.3% 1,677,605 49.9%
103 Marketplace at Centerpoint 1,948,104 2,640,000 73.8% 1,765,707 66.9%
104 New England Financial Building 1,923,162 2,800,000 68.7% 1,613,462 57.6%
105 Riverlawn Mobile Home Park 1,917,042 2,480,000 77.3% 1,721,231 69.4%
106 Lakeside Mobile Estates 1,898,779 3,150,000 60.3% 1,707,865 54.2%
107 Signature Lake Apartments 1,896,804 2,550,000 74.4% 1,691,016 66.3%
108 Niki's Point Apartments 1,857,169 2,650,000 70.1% 1,669,024 63.0%
109 Belle Terre Village Apartments/ 1,825,497 2,565,000 71.2% 1,624,484 63.3%
Belle Pointe Apartments
110 Palmetto Trailer Park 1,798,127 2,300,000 78.2% 1,620,937 70.5%
111 Palm Valley Crossing 1,797,891 2,430,000 74.0% 1,604,078 66.0%
112 Moon Glow Apartments 1,772,211 2,250,000 78.8% 1,142,442 50.8%
113 Manor Court Apartments 1,771,046 2,440,000 72.6% 105,105 4.3%
114 Wickham Corners Shopping Center 1,739,092 2,280,000 76.3% 1,560,837 68.5%
115 Twinbridge Apartment Complex 1,737,222 2,175,000 79.9% 1,555,396 71.5%
116 Marmion Royal Apartments 1,727,507 2,480,000 69.7% 1,558,936 62.9%
117 TYIF Park Condominiums 1,687,357 2,250,000 75.0% 1,513,239 67.3%
118 Tilbury Garden Apartments 1,608,297 2,100,000 76.6% 1,447,814 68.9%
119 The Sanitas Building 1,597,468 2,200,000 72.6% 1,431,281 65.1%
120 2516-2526 North Kedzie Boulevard 1,572,773 2,100,000 74.9% 1,421,233 67.7%
121 Old South Apartments 1,497,345 1,910,000 78.4% 1,329,080 69.6%
122 Whitfield Village Apartments 1,493,566 2,000,000 74.7% 78,898 3.9%
123 Rancocas Valley Professional Arts Building 1,468,676 2,030,000 72.3% 1,243,855 61.3%
124 Arbor Village South Apartments 1,449,105 1,900,000 76.3% 1,309,405 68.9%
125 Kress Energy Center Office Building 1,446,211 2,400,000 60.3% 1,302,174 54.3%
126 11401 Industriplex Warehouse 1,397,952 1,750,000 79.9% 1,260,099 72.0%
127 Quail Point 1,363,123 1,825,000 74.7% 1,234,285 67.6%
128 Merriwood Village Apartments 1,348,592 1,700,000 79.3% 1,215,420 71.5%
<CAPTION>
Most Recent Most Recent U/W U/W U/W
# NOI DSCR (5) NOI NCF (6) DSCR (5)
- - --- -------- --- ------- --------
<S> <C> <C> <C> <C> <C>
65 497,310 1.39 450,070 441,571 1.23
66 545,927 1.53 507,769 463,494 1.30
67 444,642 1.26 477,396 444,896 1.26
68 498,682 1.45 496,784 447,205 1.30
69 450,078 1.36 459,088 426,527 1.28
70 428,572 1.26 437,601 430,422 1.27
71 169,392 1.44 163,266 144,016 1.24
72 131,506 1.44 127,769 112,769 1.24
73 106,506 1.44 116,614 100,114 1.24
74 79,098 1.44 71,397 63,397 1.24
75 501,849 1.44 490,352 446,352 1.28
76 350,971 1.08 402,031 393,056 1.21
77 460,920 1.42 421,935 389,289 1.20
78 353,885 1.09 478,752 467,593 1.44
79 520,929 1.60 495,018 461,355 1.41
80 549,388 1.79 483,058 440,008 1.44
81 351,788 1.21 357,002 350,202 1.20
82 350,529 1.31 349,152 329,952 1.24
83 397,233 1.47 366,900 341,400 1.26
84 501,103 1.67 479,972 414,633 1.38
85 340,046 1.40 374,430 326,930 1.34
86 570,679 2.01 508,442 419,784 1.48
87 503,603 1.85 453,081 422,831 1.56
88 334,392 1.34 373,972 312,882 1.26
89 287,921 1.16 372,035 340,024 1.37
90 324,971 1.34 347,213 307,439 1.27
91 449,777 1.70 440,197 348,432 1.32
92 301,914 1.28 301,770 299,260 1.26
93 403,328 1.70 359,781 314,263 1.32
94 383,755 1.68 344,319 295,671 1.29
95 277,331 1.40 251,677 237,468 1.20
96 323,759 1.67 283,765 266,333 1.38
97 295,912 1.55 281,315 245,065 1.29
98 248,232 1.32 277,791 235,399 1.25
99 284,307 1.64 299,666 260,066 1.50
100 350,515 1.94 261,691 246,223 1.37
101 223,874 1.40 233,483 212,903 1.33
102 278,401 1.43 262,153 248,555 1.28
103 198,348 1.10 257,432 234,603 1.30
104 264,725 1.41 257,535 232,631 1.24
105 306,567 1.80 220,706 213,806 1.26
106 201,618 1.18 211,569 205,369 1.20
107 261,959 1.60 262,532 233,532 1.43
108 233,598 1.41 249,683 239,083 1.44
109 295,637 1.89 274,951 244,951 1.57
110 219,954 1.35 222,172 215,672 1.33
111 255,198 1.63 215,201 204,677 1.31
112 234,412 1.53 216,321 191,941 1.25
113 188,944 1.21 211,813 186,275 1.20
114 213,155 1.38 215,421 202,788 1.31
115 221,200 1.45 215,900 189,900 1.24
116 224,076 1.43 220,577 202,942 1.30
117 180,717 1.21 194,294 183,544 1.23
118 197,623 1.37 192,486 184,986 1.28
119 196,891 1.40 198,016 185,256 1.32
120 175,335 1.22 182,940 173,190 1.21
121 215,239 1.69 196,119 171,119 1.35
122 196,080 1.25 203,122 191,122 1.22
123 218,092 1.48 215,501 190,988 1.30
124 196,108 1.48 185,197 161,697 1.22
125 215,463 1.67 217,105 160,457 1.24
126 160,913 1.27 181,890 167,985 1.33
127 181,765 1.45 179,102 159,076 1.27
128 178,907 1.47 170,259 156,259 1.28
</TABLE>
<PAGE>
Additional Mortgage Loan Information
<TABLE>
<CAPTION>
10/1/99
Scheduled
Principal Appraised 10/1/99 Maturity/ARD Maturity/ARD
# Loan Name Balance Value LTV Ratio (3) Balance LTV Ratio (3)(4)
- - --------- ------- ----- ------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
129 85 Old Long Ridge Road 1,347,976 1,800,000 74.9% 1,212,819 67.4%
130 Pavilion Plaza 1,347,747 1,860,000 72.5% 1,132,420 60.9%
131 Avon Manor Apartments 1,347,246 1,700,000 79.2% 1,218,563 71.7%
132 20/20 Greenville Retail Center 1,343,824 2,000,000 67.2% 1,143,541 57.2%
133 Westover Apartments 1,298,302 1,625,000 79.9% 1,179,782 72.6%
134 East 29th Street Apartments (1C) 850,200 1,100,000 75.2% 772,658 68.4%
135 Chesapeake Drive Apartments (1C) 413,611 580,000 75.2% 375,887 68.4%
136 Sandalwood Square 1,248,760 1,875,000 66.6% 1,130,064 60.3%
137 1200 Medical Building 1,198,912 1,900,000 63.1% 1,014,303 53.4%
138 1416 Apartments (1D) 629,428 1,850,000 37.1% 532,366 31.4%
139 1419 Apartments (1D) 529,519 1,275,000 37.1% 447,863 31.4%
140 Groton Fashion Plaza 1,048,219 1,700,000 61.7% 878,828 51.7%
141 Scioto Fairway Woods Apartments 1,043,928 2,400,000 43.5% 22,887 1.0%
142 Park Garden Apartments 1,022,019 1,400,000 73.0% 53,898 3.8%
143 Glenrose Square Apartments 1,009,374 1,425,000 70.8% 911,650 64.0%
144 Blue Gem Mobile Home Park 998,838 1,720,000 58.1% 891,805 51.8%
145 Bri-Mar Building 989,128 1,650,000 59.9% 715,787 43.4%
146 244-256 Orange Place (1E) 499,253 800,000 60.8% 364,986 44.5%
147 249 Orange Place Apartments (1E) 474,291 800,000 60.8% 346,737 44.5%
148 Casa De Dallas Apartments 959,387 1,350,000 71.1% 863,525 64.0%
149 Mooring Circle Duplexes 923,811 1,200,000 77.0% 840,403 70.0%
150 Amherst Street Mall 922,974 1,575,000 58.6% 784,370 49.8%
151 Hollywood Video - Cudahy, WI 798,832 1,150,000 69.5% 689,471 60.0%
152 Pioneer House Apartments 798,766 1,100,000 72.6% 678,014 61.6%
153 St. Charles & Prytania Street Apartments 784,558 1,050,000 74.7% 715,888 68.2%
154 Butternut Apartments 773,600 1,120,000 69.1% 643,047 57.4%
155 Clarewood Gardens Apartments 648,469 1,000,000 64.8% 546,422 54.6%
156 Autumn Run Apartments 639,600 800,000 80.0% 577,150 72.1%
157 Whittier Gardens 514,070 1,050,000 49.0% 427,315 40.7%
158 Alan Apartments 498,892 630,000 79.2% 423,415 67.2%
159 Airport Square 424,364 675,000 62.9% 361,538 53.6%
160 Circa 1886 Building 401,415 1,000,000 40.1% 295,367 29.5%
--------------------------------------------------------------------------
Total/Weighted Average (7): $899,289,205 $1,307,170,000 70.3% $774,551,612 62.2%
==========================================================================
Maximum: $ 48,969,762 $ 81,700,000 80.0% $ 44,248,860 75.1%
Minimum: $ 401,415 $ 580,000 37.1% $ -- 27.2%
<CAPTION>
Most Recent Most Recent U/W U/W U/W
# NOI DSCR (5) NOI NCF (6) DSCR (5)
- - --- -------- --- ------- --------
<S> <C> <C> <C> <C> <C>
129 209,395 1.73 171,950 152,094 1.26
130 199,454 1.52 206,917 169,537 1.29
131 173,808 1.41 170,035 155,535 1.26
132 219,474 1.60 195,020 177,378 1.30
133 157,466 1.30 169,683 158,305 1.31
134 135,825 1.75 111,593 98,593 1.23
135 71,059 1.75 52,748 46,748 1.23
136 122,178 1.06 156,230 139,480 1.21
137 238,297 1.99 182,543 148,204 1.24
138 103,198 1.96 102,551 81,551 1.37
139 123,868 1.96 92,309 77,059 1.37
140 181,755 1.79 166,003 141,085 1.39
141 245,340 2.09 239,872 219,872 1.87
142 148,863 1.38 156,411 137,161 1.27
143 106,379 1.15 120,071 111,321 1.21
144 154,121 1.77 142,428 139,828 1.61
145 172,783 1.65 152,306 129,874 1.24
146 107,830 1.93 78,416 70,554 1.27
147 96,087 1.93 70,039 63,539 1.27
148 129,643 1.50 114,141 106,138 1.23
149 123,677 1.43 108,319 104,319 1.20
150 130,917 1.41 138,868 118,426 1.27
151 115,282 1.56 106,232 105,566 1.43
152 114,474 1.42 114,734 98,484 1.22
153 92,191 1.23 95,347 90,597 1.21
154 99,320 1.36 102,791 89,541 1.22
155 105,131 1.65 102,146 86,146 1.35
156 97,727 1.68 85,792 76,292 1.31
157 63,713 1.31 70,141 59,641 1.23
158 71,690 1.43 67,703 62,203 1.24
159 67,108 1.55 62,329 55,431 1.28
160 94,459 2.14 76,593 56,392 1.28
-------------------------------------------------------------
Total/Weighted Average (7): $118,183,350 1.47x $121,145,936 $109,928,780 1.36x
=============================================================
Maximum: $ 9,099,479 2.86x $ 8,436,400 $ 7,626,447 2.39x
Minimum: $ 63,713 0.64x $ 52,748 $ 46,748 1.20x
</TABLE>
(1A) The Mortgage Loans secured by Radisson South - Bloomington and Le Meridien
- Dallas, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
(2) The Mortgage Loan secured by Kaiser Permanente Office Building provides
for the increase in monthly payment as follows: $48,788.33 in January
2002, $51,499.38 in July 2004, $54,413.24 in January 2007, $57,544.82 in
July 2009 and $60,912.01 in January 2012.
(3) In the case of cross-collateralized and cross-defaulted Mortgage Loans,
the combined LTV is presented for each and every related Mortgage Loan.
(4) At maturity with respect to Balloon Loans and Fully Amortizing Loans or at
the ARD in the case of ARD Loans. There can be no assurance that the value
of any particular Mortgaged Property will not have declined from the
original appraisal value. Weighted Average, Maximum and Minimum presented
are calculated without regard to any Fully Amortizing Loans.
(5) DSCR is based on the amount of the monthly payments presented. In the case
of cross-collateralized and cross-defaulted Mortgage Loans the combined
DSCR is presented for each and every Mortgage Loan.
(6) Underwritten NCF reflects the Net Cash Flow after U/W Replacement
Reserves, U/W LC's and TI's and U/W FF&E.
(7) For the purposes of Weighted Average, Minimum and Maximum, as it relates
to DSCR and LTV, the CTL Loan has been excluded.
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual U/W
Engineering Recurring Recurring Contractual Tax &
Reserve at Replacement Replacement Recurring U/W Insurance
# Loan Name Origination Reserve Reserve LC & TI LC & TI Escrows
- - --------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 45 Broadway N/A $73,694 $55,271 $780,000 $622,622 Both
2 Radisson South - Bloomington (1A) $17,500 N/A 4.00% N/A N/A Both
3 Le Meridien - Dallas (1A) N/A N/A 4.00% N/A N/A Both
4 The Alliance Loan $264,157 $279,500 $279,500 N/A N/A Both
5 Westin Resort - Hilton Head Island $81,250 4.00% 2.60% N/A N/A Both
6 Southshore Beach & Tennis Club $76,625 N/A $135,000 N/A N/A Tax
7 2 Penn Center Plaza N/A $74,584 $99,655 N/A $956,254 Both
8 Yonkers Shopping Center N/A $63,750 $63,859 $150,000 $157,370 Both
9 The Atrium $23,125 N/A $24,354 N/A $334,443 Tax
10 Candlewyck Apartments $87,500 $121,750 $121,750 N/A N/A Both
11 Lakes at Palm Beach $10,313 $86,986 $87,000 N/A N/A Both
12 Pensacola Place $530,188 $66,007 $78,167 N/A N/A Both
13 West End Court $500 $18,940 $14,142 $120,000 $141,389 Both
14 The Ameriserve Loan $19,125 N/A $35,762 N/A $57,656 None
15 Rancho Verde Mobile Home Park $110,769 $9,000 $7,500 N/A N/A Both
16 Commerce Centre $44,608 $23,880 $23,856 $159,960 $143,580 Both
17 Points East Shopping Center N/A N/A $29,209 $24,000 $70,380 Both
18 Hidden Creek Apartments $27,776 $60,000 $60,000 N/A N/A Both
19 800 Madison Avenue $1,938 $13,428 $13,433 N/A N/A Both
20 The 700 Building $8,415 $35,940 $35,920 N/A $179,600 Both
21 Schaumburg Corners Shopping Center $50,250 N/A $23,045 N/A $58,586 Both
22 BJ's Wholesale Club N/A $16,380 $16,362 N/A N/A None
23 Holiday Inn - Oklahoma City, OK N/A 4.00% 4.00% N/A N/A Both
24 The Regency Apartments N/A $37,200 $37,200 N/A N/A Both
25 Canyon Parke Apartments $19,688 $78,000 $78,000 N/A N/A Both
26 Riverview Marketplace $10,625 $14,633 $14,572 $5,724 $43,093 Tax
27 Commons on Apache $47,994 $42,600 $42,560 N/A N/A Both
28 Olympic Corporate Center Building $9,130 $18,000 $18,014 $100,020 $83,534 Both
29 Chaparral Village $41,375 $16,524 $16,525 N/A N/A Both
30 Rolling Meadows Plaza $37,750 N/A $19,281 N/A $45,979 Both
31 The Hill at Woodway $1,200 $62,004 $62,000 N/A N/A Both
32 Shady Grove Professional Center N/A N/A $7,677 N/A $74,885 Both
33 Oxford Square Apartments $54,138 $58,500 $58,512 N/A N/A Both
34 Spectrum Retail Center $35,409 $11,928 $11,932 N/A $47,524 Both
35 Country Oaks Apartments $73,125 $50,000 $50,000 N/A N/A Both
36 Lamplighter - Chino $6,250 N/A $13,000 N/A N/A Both
37 Park 80 East Office Building N/A $16,440 $16,400 $80,040 $83,301 Both
38 Centerpoint Corporate Center N/A N/A $10,758 N/A $70,438 Both
39 Gold Ridge Apartments $7,050 $78,900 $78,910 N/A N/A Both
40 Tantara Club Apartments $500,000 $71,500 $71,250 N/A N/A Both
41 Moulton La Paz Shopping Center $6,750 $16,500 $16,553 N/A $59,263 Both
42 Arrowhead Shopping Center $1,250 $12,561 $12,561 N/A $33,946 Both
43 Landmark Hotel $150,000 N/A 4.00% N/A N/A Both
44 Legg Mason Center $13,488 $12,360 $12,325 $69,840 $61,403 Both
45 American Crossing Shopping Center $750 $10,920 $10,920 N/A $21,588 Both
46 Kaiser Permanente Office Building N/A N/A $4,382 N/A N/A None
47 Lakeside Village Shopping Center $20,013 $9,180 $9,142 $41,592 $33,163 Both
48 Crossroads Shopping Center N/A N/A $10,200 N/A $49,962 Both
49 Richmond Tower N/A $17,976 $17,981 N/A $98,064 Both
50 The Palm Breezes Club Manufactured
Home Community N/A N/A $9,450 N/A N/A Both
51 Majestic Shopping Center N/A N/A $20,427 N/A $72,526 Both
52 West Main Place $22,750 $33,780 $34,075 N/A $86,695 Both
53 Oxon Run Manor Apartments $15,525 $24,780 $37,125 N/A N/A Both
54 Mt. Olive Centre $64,250 N/A $22,508 $25,200 $25,319 Both
55 Applegate Square Shopping Center $8,030 N/A $9,179 N/A $48,472 Both
56 Heritage Hills Retail Center $1,100 $5,220 $5,203 N/A $35,153 Both
57 Waters of Winrock Apartments $10,463 $29,256 $29,250 N/A N/A Both
58 Garden Wood Apartments $65,000 $38,012 $38,000 N/A N/A Both
59 Lehigh Street Shopping Center N/A $13,080 $13,054 $20,520 $20,520 Both
60 Ashton Woods Apartments $135,500 $42,240 $39,000 N/A N/A Both
61 Kmart Shopping Center - Milford $2,063 $21,116 $21,116 N/A $37,791 Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual U/W
Engineering Recurring Recurring Contractual Tax &
Reserve at Replacement Replacement Recurring U/W Insurance
# Loan Name Origination Reserve Reserve LC & TI LC & TI Escrows
- - --------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
62 Parkside Center N/A $4,020 $3,991 $34,200 $34,161 Both
63 Park 51 Medical Building $15,594 $6,840 $6,800 $34,020 $40,710 Both
64 Quality Suites - College Station N/A 4.00% 5.00% N/A N/A Both
65 King Arthur Mobile Home Park $24,375 $10,164 $8,499 N/A N/A Both
66 The Fox Glen I and II Apartments $223,181 $44,352 $44,275 N/A N/A Both
67 Lake Howard Heights Retirement $124,375 $33,250 $32,500 N/A N/A Both
68 Stockdale Town Center $68,750 $9,840 $9,862 $39,720 $39,718 Both
69 Batavia Palms Business Center N/A N/A $11,950 N/A $20,611 Both
70 Town Center North $2,500 $4,500 $4,500 N/A $2,679 Tax
71 Creekside Apartments (1B) $29,375 $19,250 $19,250 N/A N/A Both
72 Brookside Apartments (1B) $8,750 $15,000 $15,000 N/A N/A Both
73 Glenbrook Centre Apartments (1B) $6,250 $16,500 $16,500 N/A N/A Both
74 Hardwick Apartments (1B) $4,125 $8,012 $8,000 N/A N/A Both
75 Sequoia Bend Apartments $250,000 $44,000 $44,000 N/A N/A Both
76 1264 Lexington Avenue $3,750 $7,680 $7,675 N/A $1,300 Both
77 Tenth Street Medical Building N/A $4,768 $5,311 $18,000 $27,335 Both
78 Storage USA - La Quinta N/A $11,160 $11,159 N/A N/A Tax
79 Storage Loan $91,969 $33,672 $33,663 N/A N/A Both
80 Lincolnwood / Pinetree Apartments $77,633 $42,480 $43,050 N/A N/A Both
81 Brookside Mobile Home Park $63,188 N/A $6,800 N/A N/A Both
82 Villa Reanna Apartments N/A $16,000 $19,200 N/A N/A Both
83 Arbor Village Townhomes $10,000 $25,500 $25,500 N/A N/A Both
84 Park South Apartments N/A $65,286 $65,339 N/A N/A Both
85 Deer Park Mansion $401,800 $47,500 $47,500 N/A N/A Both
86 Holiday Inn Southeast -
Indianapolis, IN $47,563 4.00% 4.00% N/A N/A Both
87 Lakeshore on the Hill $1,500 $30,250 $30,250 N/A N/A Both
88 Sandia Vista Shopping Center $2,625 $8,001 $8,000 $75,000 $53,090 Both
89 West Valley Place Shopping Center $20,689 $11,760 $11,767 $37,560 $20,244 Both
90 Spring Medical Building $22,656 N/A $6,740 $24,000 $33,034 Both
91 Bingo King Warehouse $17,750 $24,000 $24,014 $92,400 $67,751 Both
92 Rite Aid - San Jacinto N/A N/A $2,510 N/A N/A Both
93 Federal Point Station $2,969 $26,520 $20,055 N/A $25,463 Both
94 Northland Medical Center $45,423 N/A $10,326 $24,000 $38,322 Both
95 Murdock Apartments $4,025 $8,400 $14,209 N/A N/A Both
96 Harbour Village N/A $3,156 $3,150 N/A $14,282 Both
97 Chestnut Park Apartments $42,500 $36,250 $36,250 N/A N/A Both
98 Village Center $12,500 $10,800 $10,774 N/A $31,619 Both
99 Sherwood Park Apartments $69,013 $39,600 $39,600 N/A N/A Both
100 Blockbuster Video and Radio Shack N/A $3,840 $3,808 N/A $11,660 Both
101 Northern Plaza Shopping Center N/A $12,883 $13,183 N/A $7,397 Both
102 Peconic Bay Properties N/A $3,512 $3,513 N/A $10,085 Both
103 Marketplace at Centerpoint N/A N/A $2,922 N/A $19,907 Both
104 New England Financial Building N/A N/A $2,904 $27,135 $22,000 Both
105 Riverlawn Mobile Home Park $5,406 N/A $6,900 N/A N/A Both
106 Lakeside Mobile Estates N/A N/A $6,200 N/A N/A Both
107 Signature Lake Apartments $14,875 $23,200 $29,000 N/A N/A Both
108 Niki's Point Apartments $3,793 $10,620 $10,600 N/A N/A Both
109 Belle Terre Village Apartments/
Belle Pointe Apartments N/A $35,040 $30,000 N/A N/A Both
110 Palmetto Trailer Park $5,375 $6,500 $6,500 N/A N/A Both
111 Palm Valley Crossing N/A $2,400 $2,430 N/A $8,094 Both
112 Moon Glow Apartments $4,313 $24,420 $24,380 N/A N/A Both
113 Manor Court Apartments N/A $28,800 $25,538 N/A N/A Both
114 Wickham Corners Shopping Center N/A $2,520 $2,516 $12,600 $10,117 Both
115 Twinbridge Apartment Complex $10,498 $26,000 $26,000 N/A N/A Both
116 Marmion Royal Apartments N/A $17,640 $17,635 N/A N/A Both
117 TYIF Park Condominiums $3,438 $10,750 $10,750 N/A N/A Both
118 Tilbury Garden Apartments $5,000 $7,500 $7,500 N/A N/A Both
119 The Sanitas Building N/A N/A $1,657 N/A $11,103 Both
120 2516-2526 North Kedzie Boulevard N/A $9,750 $9,750 N/A N/A Both
121 Old South Apartments N/A $25,000 $25,000 N/A N/A Both
122 Whitfield Village Apartments N/A $12,000 $12,000 N/A N/A Both
</TABLE>
<PAGE>
Engineering Reserves and Recurring Replacement Reserves
<TABLE>
<CAPTION>
Contractual U/W
Engineering Recurring Recurring Contractual Tax &
Reserve at Replacement Replacement Recurring U/W Insurance
# Loan Name Origination Reserve Reserve LC & TI LC & TI Escrows
- - --------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
123 Rancocas Valley Professional
Arts Building $7,688 $3,602 $4,503 $45,333 $20,010 Both
124 Arbor Village South Apartments $56,219 $23,500 $23,500 N/A N/A Both
125 Kress Energy Center Office Building $41,634 $14,040 $13,965 $43,860 $42,683 Both
126 11401 Industriplex Warehouse $3,719 $6,360 $6,357 $7,560 $7,548 Both
127 Quail Point $1,600 N/A $3,951 N/A $16,075 Both
128 Merriwood Village Apartments $938 $14,012 $14,000 N/A N/A Both
129 85 Old Long Ridge Road N/A N/A $3,184 $16,693 $16,672 Both
130 Pavilion Plaza $7,500 N/A $5,760 N/A $31,620 Both
131 Avon Manor Apartments $80,688 $14,500 $14,500 N/A N/A Both
132 20/20 Greenville Retail Center $375 $5,620 $5,620 $24,375 $12,022 Both
133 Westover Apartments N/A $11,644 $11,378 N/A N/A Both
134 East 29th Street Apartments (1C) $11,156 $13,000 $13,000 N/A N/A Both
135 Chesapeake Drive Apartments (1C) $24,235 $6,000 $6,000 N/A N/A Both
136 Sandalwood Square $6,250 $16,750 $16,750 N/A N/A Both
137 1200 Medical Building N/A $5,850 $6,868 N/A $27,471 Both
138 1416 Apartments (1D) $625 $21,000 $21,000 N/A N/A Both
139 1419 Apartments (1D) $625 $15,250 $15,250 N/A N/A Both
140 Groton Fashion Plaza $11,250 N/A $3,654 N/A $21,264 Both
141 Scioto Fairway Woods Apartments N/A N/A $20,000 N/A N/A Both
142 Park Garden Apartments $2,188 $15,400 $19,250 N/A N/A Both
143 Glenrose Square Apartments $1,313 $8,750 $8,750 N/A N/A Both
144 Blue Gem Mobile Home Park $143,900 N/A $2,600 N/A N/A Both
145 Bri-Mar Building N/A N/A $4,080 N/A $18,352 Both
146 244-256 Orange Place (1E) $6,750 $7,866 $7,862 N/A N/A Both
147 249 Orange Place Apartments (1E) $8,125 $6,500 $6,500 N/A N/A Both
148 Casa De Dallas Apartments N/A N/A $8,003 N/A N/A Both
149 Mooring Circle Duplexes N/A $4,000 $4,000 N/A N/A Both
150 Amherst Street Mall $21,875 N/A $3,407 N/A $17,035 Both
151 Hollywood Video - Cudahy, WI N/A N/A $666 N/A N/A Both
152 Pioneer House Apartments N/A $16,250 $16,250 N/A N/A Both
153 St. Charles & Prytania Street
Apartments $7,688 $4,750 $4,750 N/A N/A Both
154 Butternut Apartments $2,500 $13,250 $13,250 N/A N/A Both
155 Clarewood Gardens Apartments N/A $17,216 $16,000 N/A N/A Both
156 Autumn Run Apartments $12,500 $9,500 $9,500 N/A N/A Both
157 Whittier Gardens $5,625 $10,500 $10,500 N/A N/A Both
158 Alan Apartments N/A $5,500 $5,500 N/A N/A Both
159 Airport Square N/A $900 $900 $15,333 $5,998 Both
160 Circa 1886 Building $17,438 $3,625 $3,625 $16,575 $16,576 Both
</TABLE>
(1A) The Mortgage Loans secured by Radisson South - Bloomington and Le Meridien
- Dallas, respectively, are cross-collateralized and cross-defaulted.
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
<PAGE>
Major Tenants of the Commercial Properties (1)
<TABLE>
<CAPTION>
Major
Major Major Tenant # 1
Property Tenant # 1 Tenant # 1 Lease
# Property Name Type Sq. Ft. Name Sq. Ft. Expiration Date
- - ------------- ---- ------- ---- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 45 Broadway Office 368,471 N/A N/A N/A
7 2 Penn Center Plaza Office 498,277 N/A N/A N/A
8 Yonkers Shopping Center Retail 425,575 Bradlees 196,000 3/31/09
9 The Atrium Office 162,359 Inktomi Corporation 36,275 10/31/03
13 West End Court Office 94,278 CGX Communications 39,018 2/1/09
14a Ameriserve - Burlington, NJ Industrial 184,819 Ameriserve Food 184,819 7/31/19
Distribution, Inc.
14b Ameriserve - Grand Rapids, MI Industrial 176,941 Ameriserve Food 176,941 7/31/19
Distribution, Inc.
16 Commerce Centre Mixed Use 159,938 T/A Loco Hombre 17,200 6/1/06
17 Points East Shopping Center Retail 194,727 Marc Glassman 35,480 5/31/13
20 The 700 Building Office 179,597 N/A N/A N/A
21 Schaumburg Corners Shopping Retail 153,633 Babies "R" Us 43,105 3/1/06
Center
22 BJ's Wholesale Club Retail 109,081 BJ's Wholesale Club 109,081 1/31/19
26 Riverview Marketplace Retail 97,146 Shaws Supermarket 54,200 12/31/09
28 Olympic Corporate Center Office 90,070 Prime Succession 20,524 12/31/07
Building
30 Rolling Meadows Plaza Retail 128,538 Dominick's Finer Foods 71,987 6/1/09
32 Shady Grove Professional Center Office 51,179 Integramed 19,712 6/5/09
34 Spectrum Retail Center Retail 39,766 Houston's Restaurant, Inc. 6,014 12/31/10
37 Park 80 East Office Building Office 83,049 Liberty Mutual 22,547 10/31/04
38 Centerpoint Corporate Center Office 71,723 Lear Seating Corporation 26,100 6/1/03
41 Moulton La Paz Shopping Center Retail 59,119 Planet Kids 12,200 6/30/05
42 Arrowhead Shopping Center Retail 83,740 Abco Foods 41,072 11/1/09
44 Legg Mason Center Mixed Use 63,247 WMIX 15,340 5/1/06
45 American Crossing Shopping Retail 72,800 JC Penney 50,000 9/28/07
Center
46 Kaiser Permanente Office CTL 31,300 Kaiser Foundation Health 31,300 6/30/14
Building Plan, Inc.
47 Lakeside Village Shopping Center Retail 45,710 Larry's Shoes 10,000 11/30/03
48 Crossroads Shopping Center Retail 46,362 N/A N/A N/A
49 Richmond Tower Office 88,040 AmeriHealth HMO of Texas, 34,496 10/31/02
Inc.
51 Majestic Shopping Center Retail 136,183 Kroger Company 64,562 11/30/14
52 West Main Place Mixed Use 63,938 Healthcare Partners, Inc. 9,072 12/31/00
54 Mt. Olive Centre Retail 115,425 Roses Stores, Inc. 45,495 7/1/08
55 Applegate Square Shopping Center Retail 53,992 N/A N/A N/A
56 Heritage Hills Retail Center Retail 34,749 B&B Retail Liquors, Inc. 5,336 5/31/04
59 Lehigh Street Shopping Center Retail 87,024 Redner's Market 53,577 7/1/18
61 Kmart Shopping Center - Milford Retail 140,770 Kmart Corporation 100,678 2/28/04
62 Parkside Center Retail 26,605 Leather Country 3,633 5/31/04
63 Park 51 Medical Building Office 34,000 Mecklenburg Medical 9,469 2/25/04
68 Stockdale Town Center Retail 44,849 Carrows 5,575 4/1/01
69 Batavia Palms Business Center Industrial 74,685 Demo Deluxe 8,400 1/1/00
70 Town Center North Retail 29,633 OfficeMax 23,633 11/30/18
77 Tenth Street Medical Building Office 26,555 Parker/Rosenman/Rodi 4,480 7/1/02
88 Sandia Vista Shopping Center Retail 53,223 Tuesday Morning 11,460 1/15/08
89 West Valley Place Shopping Retail 78,441 Southwest Supermarkets 26,250 1/18/10
Center
90 Spring Medical Building Office 33,370 Memorial Medical Group 8,767 8/31/04
91 Bingo King Warehouse Industrial 160,093 First Data Resources 53,884 3/31/02
92 Rite Aid - San Jacinto Retail 16,730 Rite Aid 16,730 5/29/18
93 Federal Point Station Retail 80,219 Food Lion 28,603 10/25/12
94 Northland Medical Center Office 38,254 St. Luke's Hospital 8,986 12/31/08
96 Harbour Village Retail 21,000 Durango Steak House 5,600 3/31/05
98 Village Center Retail 44,890 Bio-Medical Application 10,350 11/30/03
of AZ
100 Blockbuster Video and Radio Retail 9,287 Blockbuster 6,650 4/30/01
Shack
101 Northern Plaza Shopping Center Retail 85,887 Ames 49,920 1/1/04
102 Peconic Bay Properties Mixed Use 13,085 Edward Archer 1,464 1/1/02
103 Marketplace at Centerpoint Retail 19,749 L & T Coney Island 3,350 7/31/07
104 New England Financial Building Office 18,090 New England Life 12,105 10/31/05
Insurance Company
111 Palm Valley Crossing Retail 16,200 Hollywood Video 7,000 9/19/12
114 Wickham Corners Shopping Center Retail 16,775 Hollywood Video 6,656 1/14/14
119 The Sanitas Building Industrial 16,572 Worldprints.com 5,995 4/30/04
123 Rancocas Valley Professional Office 17,400 Rancocas Orthopedic 4,932 3/31/01
Arts Building Association
125 Kress Energy Center Office Office 54,550 Coulter Enterprises Inc. 39,163 12/31/00
Building
126 11401 Industriplex Warehouse Industrial 42,378 Morgan Products, Inc. 22,596 8/31/02
127 Quail Point Mixed Use 26,340 Austin Radiologic 18,812 2/1/07
129 85 Old Long Ridge Road Office 16,693 Horizon Systems Inc 12,066 12/31/00
130 Pavilion Plaza Retail 36,800 Cherry & Webb 9,600 1/31/02
132 20/20 Greenville Retail Center Retail 12,022 Simply Fondue 2,900 6/30/02
137 1200 Medical Building Office 27,471 Cohen, Paul S., M.D., P.C. 4,681 8/31/03
140 Groton Fashion Plaza Retail 24,000 Easter Seal Goodwill 9,950 6/30/05
145 Bri-Mar Building Mixed Use 27,198 Protoserv, Inc. 13,186 3/31/04
150 Amherst Street Mall Mixed Use 22,713 N/A N/A N/A
151 Hollywood Video - Cudahy, WI Retail 6,656 Hollywood Entertainment 6,656 5/6/14
Corporation
159 Airport Square Retail 5,998 Bootleggers 3,726 5/31/03
160 Circa 1886 Building Mixed Use 14,196 Dr. Jay Gordon 4,000 9/30/01
<CAPTION>
Major Major Major Major Major Major
Tenant #2 Tenant # 2 Tenant # 2 Tenant # 3 Tenant # 3 Tenant # 3
# Name Sq. Ft. Lease Expiration Date Name Sq. Ft. Expiration Date
- - ---- ---------- --------------------- ---- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 N/A N/A N/A N/A N/A N/A
7 N/A N/A N/A N/A N/A N/A
8 Pathmark 50,085 3/31/05 N/A N/A N/A
9 Netgravity, Inc. 26,520 10/11/05 Macromedia/ 16,402 2/29/00
Inktomi
13 Department of 19,916 3/1/03 United Arab Emirates 14,892 6/1/02
Agriculture
14a N/A N/A N/A N/A N/A N/A
14b N/A N/A N/A N/A N/A N/A
16 N/A N/A N/A N/A N/A N/A
17 Office Depot 28,497 12/31/12 Marshalls Department 22,500 1/31/04
Store
20 N/A N/A N/A N/A N/A N/A
21 Office Depot 31,093 12/1/06 Hancock Fabrics 19,190 7/1/08
22 N/A N/A N/A N/A N/A N/A
26 N/A N/A N/A N/A N/A N/A
28 Blue Chip Tech 19,903 5/31/08 Toyota Motor Mfg. 13,592 4/30/03
North America
30 N/A N/A N/A N/A N/A N/A
32 National Fitness 10,017 6/20/09 N/A N/A N/A
Institution
34 Jason's Deli 4,450 3/31/03 N/A N/A N/A
37 Sealed Air Corporation 21,182 8/31/08 GSA 18,844 9/14/01
38 Aerotek, Inc. 9,300 6/1/06 RCO Engineering, Inc. 9,200 4/1/01
41 Sav-On Express #3827 8,000 1/31/03 Kragen Autoworks # 715 7,922 7/31/03
42 Revco Drug Store 8,450 12/1/04 N/A N/A N/A
44 Miles & Stockbridge 11,490 4/1/05 Legg Mason 8,569 3/1/00
45 David's Bridal 10,200 3/7/04 N/A N/A N/A
46 N/A N/A N/A N/A N/A N/A
47 Special Occasions Dresses 8,715 4/30/02 Pockets Menswear 5,941 4/30/05
48 N/A N/A N/A N/A N/A N/A
49 American Tower Corp. 12,924 9/30/03 Greystar Multi Family 12,376 12/31/04
Services
51 Odd Lots 19,794 1/31/04 Fabri Centers of 14,672 1/31/07
America
52 Sea Star Restaurant 7,000 1/31/01 N/A N/A N/A
54 Food Lion, Inc. 35,032 7/1/13 N/A N/A N/A
55 N/A N/A N/A N/A N/A N/A
56 Blockbuster 4,060 3/1/09 N/A N/A N/A
59 Big Lots 28,272 1/30/04 N/A N/A N/A
61 Perfect Shape Gym and 21,900 11/30/08 N/A N/A N/A
Fitness Center
62 Mattress Firm 3,575 1/21/04 Schlotzsky's 2,730 2/22/09
63 Pineville OBGYN 4,373 4/30/00 Charlotte Orthopaedic 3,844 2/28/04
68 N/A N/A N/A N/A N/A N/A
69 N/A N/A N/A N/A N/A N/A
70 Del Taco 3,700 1/1/19 N/A N/A N/A
77 Gurfield/Varga/Wasson 4,098 7/1/02 Ross/Miyakawa/Sorotzkin 3,741 7/1/02
88 Family Dollar 8,450 12/31/00 Consignment 7,120 5/31/00
Furnishings
89 Goodwill Industries 12,000 4/30/06 Family Dollar Store 8,050 12/31/08
90 N/A N/A N/A N/A N/A N/A
91 American Clothing 41,277 7/31/05 Warren 40,032 3/31/01
Distribution-Warehouse
92 N/A N/A N/A N/A N/A N/A
93 Maxway 22,100 6/14/04 CVS/Pharmacy 8,450 5/31/04
94 Duluth OB/GYN 5,754 8/31/10 Orthopedics 5,677 2/28/00
96 Coals' Brick Oven Pizza 2,100 5/31/03 Royal Dry Cleaners 2,100 5/31/03
98 Tuscan Sporting Goods, 5,000 11/30/00 N/A N/A N/A
Inc.
100 Radio Shack 2,637 5/4/01 N/A N/A N/A
101 IGA 15,067 6/1/01 N/A N/A N/A
102 Laura Ashley 1,464 1/1/03 N/A N/A N/A
103 Coffee Beanery Ltd. 3,030 10/31/08 N/A N/A N/A
104 Russon Financial 5,985 1/31/04 N/A N/A N/A
Services, Inc.
111 Rent-A-Center 3,540 4/1/04 N/A N/A N/A
114 Dollar Tree 4,048 5/31/04 N/A N/A N/A
119 Mail Solutions, Inc. 5,454 11/30/03 Applied Technology 5,123 11/30/05
123 Rancocas Hospital 3,768 11/30/01 Radiation Facilities 3,288 12/31/03
Group
125 N/A N/A N/A N/A N/A N/A
126 21st Century/Vr Tch, Inc. 10,282 4/30/03 President Baking 9,500 7/1/01
Company
127 N/A N/A N/A N/A N/A N/A
129 Business Dev. Resources 2,458 6/30/03 N/A N/A N/A
130 Knapp Video 9,600 12/31/02 Women & Infants' 4,600 7/14/02
132 Crazy Charlie's 2,682 11/30/03 Nero's Italian 2,440 5/31/02
137 Sheenan, Richard, M.D. 2,957 11/30/00 N/A N/A N/A
140 TCMB & T 2,800 1/31/02 Kirk's Floorcovering 2,700 3/31/02
145 K-Knife 6,967 5/31/03 Distribution Dynamics 5,278 1/31/05
150 N/A N/A N/A N/A N/A N/A
151 N/A N/A N/A N/A N/A N/A
159 Sound Resort 2,272 4/30/04 N/A N/A N/A
160 Beverly Jones 1,500 8/31/01 Christ Holy Tabernacle 1,456 2/28/01
</TABLE>
(1) Only those tenants which occupy 10% or more of the property area.
<PAGE>
Multifamily Schedule
<TABLE>
<CAPTION>
Utilities Subject Subject Subject Subject Subject
Tenant # Studio Studio Studio 1 BR 1 BR
# Property Name Pays Elevators Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------- ---- --------- ----- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4a Shadow Creek Apartments Electric/Water 0 N/A N/A N/A 120 $527
4b Copper Cove Apartments Electric 0 N/A N/A N/A 192 $470
4c Hilltop Apartments Electric/Water 0 N/A N/A N/A 150 $500
4d Foxboro Apartments Electric 0 N/A N/A N/A 172 $472
4e The Pinnacle Apartments Electric/Water/ 0 N/A N/A N/A 86 $590
Sewer
6 Southshore Beach & Tennis Club Electric/Gas 15 93 $890 $1,015 191 $1,093
10 Candlewyck Apartments Electric/Gas/ 0 2 $430 $430 137 $515
Water/Sewer
11 Lakes at Palm Beach Electric/Water/ 0 N/A N/A N/A 51 $660
Sewer
12 Pensacola Place Electric 5 56 $657 $740 112 $849
18 Hidden Creek Apartments Electric/Gas 0 N/A N/A N/A 96 $698
19 800 Madison Avenue None 2 14 $1,686 $2,200 28 $1,441
24 The Regency Apartments Electric/Gas/ 0 N/A N/A N/A 54 $578
Water/Sewer
25 Canyon Parke Apartments Electric 0 16 $423 $435 138 $475
27 Commons on Apache None 0 N/A N/A N/A N/A N/A
31 The Hill at Woodway Electric 0 N/A N/A N/A 160 $498
33 Oxford Square Apartments Electric 0 N/A N/A N/A 40 $566
35 Country Oaks Apartments Electric 0 N/A N/A N/A 116 $592
39 Gold Ridge Apartments Electric/Gas 0 N/A N/A N/A 100 $497
40 Tantara Club Apartments Electric 0 1 $520 $520 129 $463
53 Oxon Run Manor Apartments Electric 0 1 $500 $500 80 $556
57 Waters of Winrock Apartments Electric/Gas/ 0 N/A N/A N/A 84 $602
Water/Sewer
58 Garden Wood Apartments Electric 0 N/A N/A N/A 55 $459
60 Ashton Woods Apartments Electric 0 N/A N/A N/A N/A N/A
66 The Fox Glen I and II Apartments Electric/Gas 0 N/A N/A N/A 30 $561
71 Creekside Apartments (1B) Electric/Gas 0 17 $294 $375 56 $369
72 Brookside Apartments (1B) Electric 0 9 $266 $275 44 $333
73 Glenbrook Centre Apartments (1B) Electric 0 1 $295 $295 52 $356
74 Hardwick Apartments (1B) Electric/Gas 0 N/A N/A N/A 32 $376
75 Sequoia Bend Apartments Electric 0 N/A N/A N/A 54 $473
76 1264 Lexington Avenue Electric/Gas 1 1 $1,350 $1,350 8 $1,591
80 Lincolnwood / Pinetree Apartments Electric/Gas 0 6 $340 $340 8 $366
82 Villa Reanna Apartments Electric/Water/ 0 N/A N/A N/A 32 $553
Sewer
83 Arbor Village Townhomes Electric/Water 0 N/A N/A N/A N/A N/A
84 Park South Apartments Electric 0 8 $296 $300 120 $402
85 Deer Park Mansion Electric 0 N/A N/A N/A 86 $389
87 Lakeshore on the Hill Electric/Gas 0 1 $420 $420 41 $470
95 Murdock Apartments Electric 0 N/A N/A N/A N/A N/A
97 Chestnut Park Apartments None 0 48 $366 $375 64 $430
99 Sherwood Park Apartments Electric 0 N/A N/A N/A 40 $350
107 Signature Lake Apartments Electric 0 N/A N/A N/A 10 $362
108 Niki's Point Apartments Electric/Water/ 0 N/A N/A N/A 10 $557
Sewer
109 Belle Terre Village Apartments/ Electric 0 N/A N/A N/A N/A N/A
Belle Pointe Apartments
112 Moon Glow Apartments Electric/Gas/ 0 N/A N/A N/A 76 $355
Water/Sewer
113 Manor Court Apartments Electric 1 N/A N/A N/A 26 $510
115 Twinbridge Apartment Complex None 0 N/A N/A N/A 80 $389
116 Marmion Royal Apartments Electric/Gas 0 2 $350 $350 26 $501
117 TYIF Park Condominiums Electric 0 N/A N/A N/A 6 $371
118 Tilbury Garden Apartments Electric/Gas 0 N/A N/A N/A 30 $783
120 2516-2526 North Kedzie Boulevard Electric/Gas 0 N/A N/A N/A 13 $596
121 Old South Apartments None 0 N/A N/A N/A 40 $400
122 Whitfield Village Apartments Electric/Gas 0 N/A N/A N/A N/A N/A
124 Arbor Village South Apartments Electric 0 4 $285 $285 19 $411
128 Merriwood Village Apartments Electric/Gas/ 0 N/A N/A N/A 32 $406
Water/Sewer
131 Avon Manor Apartments Electric 0 5 $372 $385 53 $452
133 Westover Apartments Electric 0 N/A N/A N/A 37 $591
134 East 29th Street Apartments (1C) Electric/Gas 0 N/A N/A N/A N/A N/A
135 Chesapeake Drive Apartments (1C) Electric/Gas 0 N/A N/A N/A N/A N/A
136 Sandalwood Square Electric 0 2 $300 $300 21 $365
138 1416 Apartments (1D) None 0 N/A N/A N/A 84 $178
139 1419 Apartments (1D) Electric/Gas 0 10 $132 $207 51 $167
141 Scioto Fairway Woods Apartments Electric/Gas 0 16 $380 $389 53 $431
142 Park Garden Apartments None 0 N/A N/A N/A 53 $396
143 Glenrose Square Apartments Electric 0 N/A N/A N/A 18 $551
146 244-256 Orange Place (1E) Electric/Gas 0 3 $525 $550 13 $580
147 249 Orange Place Apartments (1E) Electric/Gas 0 N/A N/A N/A 13 $611
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject Subject Subject Subject
1 BR 2 BR 2 BR 2 BR 3 BR 3 BR 3 BR 4 BR 4 BR 4 BR
# Max. Rent Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - --------- ----- --------- --------- ----- --------- --------- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4a $620 120 $629 $745 N/A N/A N/A N/A N/A N/A
4b $605 78 $645 $765 N/A N/A N/A N/A N/A N/A
4c $605 88 $616 $705 N/A N/A N/A N/A N/A N/A
4d $650 48 $652 $780 N/A N/A N/A N/A N/A N/A
4e $669 64 $713 $775 N/A N/A N/A N/A N/A N/A
6 $1,355 165 $1,477 $1,680 1 $2,430 $2,430 N/A N/A N/A
10 $565 223 $603 $655 65 $743 $805 60 $823 $850
11 $690 272 $730 $800 25 $918 $935 N/A N/A N/A
12 $895 96 $1,015 $1,070 N/A N/A N/A N/A N/A N/A
18 $760 144 $849 $1,000 N/A N/A N/A N/A N/A N/A
19 $3,295 9 $1,243 $1,500 N/A N/A N/A N/A N/A N/A
24 $598 108 $680 $685 24 $767 $775 N/A N/A N/A
25 $525 158 $641 $695 N/A N/A N/A N/A N/A N/A
27 N/A 112 $1,205 $1,516 N/A N/A N/A N/A N/A N/A
31 $600 88 $632 $685 N/A N/A N/A N/A N/A N/A
33 $574 120 $622 $655 24 $751 $825 N/A N/A N/A
35 $695 84 $632 $665 N/A N/A N/A N/A N/A N/A
39 $540 168 $580 $640 N/A N/A N/A N/A N/A N/A
40 $545 124 $600 $705 32 $793 $835 N/A N/A N/A
53 $695 84 $687 $757 N/A N/A N/A N/A N/A N/A
57 $700 33 $741 $785 N/A N/A N/A N/A N/A N/A
58 $590 73 $555 $635 24 $648 $690 N/A N/A N/A
60 N/A 156 $482 $1,000 N/A N/A N/A N/A N/A N/A
66 $575 110 $642 $680 12 $730 $820 N/A N/A N/A
71 $380 4 $458 $460 N/A N/A N/A N/A N/A N/A
72 $340 8 $392 $410 N/A N/A N/A N/A N/A N/A
73 $444 5 $480 $560 N/A N/A N/A N/A N/A N/A
74 $380 N/A N/A N/A N/A N/A N/A N/A N/A N/A
75 $675 109 $606 $740 13 $908 $1,018 N/A N/A N/A
76 $1,950 6 $1,822 $2,350 7 $404 $708 N/A N/A N/A
80 $370 74 $578 $600 35 $700 $860 N/A N/A N/A
82 $640 32 $732 $800 N/A N/A N/A N/A N/A N/A
83 N/A 101 $545 $600 N/A N/A N/A N/A N/A N/A
84 $470 106 $459 $520 N/A N/A N/A N/A N/A N/A
85 $440 99 $475 $515 6 $549 $625 N/A N/A N/A
87 $550 61 $599 $931 18 $824 $1,030 N/A N/A N/A
95 N/A 56 $600 $625 N/A N/A N/A N/A N/A N/A
97 $430 32 $575 $575 N/A N/A N/A N/A N/A N/A
99 $350 80 $429 $455 12 $502 $510 N/A N/A N/A
107 $370 100 $400 $813 6 $493 $595 N/A N/A N/A
108 $585 37 $645 $700 6 $758 $785 N/A N/A N/A
109 N/A 100 $433 $525 N/A N/A N/A N/A N/A N/A
112 $379 16 $415 $449 N/A N/A N/A N/A N/A N/A
113 $550 48 $611 $635 N/A N/A N/A N/A N/A N/A
115 $520 24 $522 $790 N/A N/A N/A N/A N/A N/A
116 $525 32 $610 $665 N/A N/A N/A N/A N/A N/A
117 $425 28 $686 $750 9 $719 $750 N/A N/A N/A
118 $810 N/A N/A N/A N/A N/A N/A N/A N/A N/A
120 $695 26 $737 $870 N/A N/A N/A N/A N/A N/A
121 $400 60 $495 $500 N/A N/A N/A N/A N/A N/A
122 N/A 32 $595 $620 16 $634 $675 N/A N/A N/A
124 $435 71 $440 $506 N/A N/A N/A N/A N/A N/A
128 $425 24 $549 $575 N/A N/A N/A N/A N/A N/A
131 $470 N/A N/A N/A N/A N/A N/A N/A N/A N/A
133 $645 1 $850 $850 2 $950 $975 N/A N/A N/A
134 N/A 52 $387 $395 N/A N/A N/A N/A N/A N/A
135 N/A 24 $400 $425 N/A N/A N/A N/A N/A N/A
136 $375 44 $528 $650 N/A N/A N/A N/A N/A N/A
138 $400 N/A N/A N/A N/A N/A N/A N/A N/A N/A
139 $389 N/A N/A N/A N/A N/A N/A N/A N/A N/A
141 $529 11 $545 $545 N/A N/A N/A N/A N/A N/A
142 $475 24 $498 $550 N/A N/A N/A N/A N/A N/A
143 $595 17 $695 $725 N/A N/A N/A N/A N/A N/A
146 $625 7 $780 $825 N/A N/A N/A N/A N/A N/A
147 $716 4 $849 $900 3 $900 $925 N/A N/A N/A
</TABLE>
<PAGE>
Multifamily Schedule
<TABLE>
<CAPTION>
Utilities Subject Subject Subject Subject Subject
Tenant # Studio Studio Studio 1 BR 1 BR
# Property Name Pays Elevators Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------- ---- --------- ----- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
148 Casa De Dallas Apartments Electric/Gas 0 N/A N/A N/A N/A N/A
149 Mooring Circle Duplexes Electric/Gas/ 0 N/A N/A N/A N/A N/A
Water/Sewer
152 Pioneer House Apartments Electric 0 N/A N/A N/A 17 $418
153 St. Charles & Prytania Street
Apartments Electric 0 10 $795 $1,400 4 $606
154 Butternut Apartments Electric 0 33 $401 $485 18 $471
155 Clarewood Gardens Apartments Electric 0 N/A N/A N/A 52 $354
156 Autumn Run Apartments None 0 N/A N/A N/A 16 $405
157 Whittier Gardens Electric 0 3 $295 $385 39 $523
158 Alan Apartments None 0 1 $275 $275 9 $506
<CAPTION>
Subject Subject Subject Subject Subject Subject Subject Subject Subject Subject
1 BR 2 BR 2 BR 2 BR 3 BR 3 BR 3 BR 4 BR 4 BR 4 BR
# Max. Rent Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - --------- ----- --------- --------- ----- --------- --------- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
148 N/A 27 $485 $525 5 $546 $610 N/A N/A N/A
149 N/A 8 $888 $1,105 8 $932 $975 N/A N/A N/A
152 $500 48 $504 $610 N/A N/A N/A N/A N/A N/A
153 $800 5 $745 $1,100 N/A N/A N/A N/A N/A N/A
154 $489 2 $605 $605 N/A N/A N/A N/A N/A N/A
155 $375 12 $375 $395 N/A N/A N/A N/A N/A N/A
156 $455 22 $680 $693 N/A N/A N/A N/A N/A N/A
157 $549 N/A N/A N/A N/A N/A N/A N/A N/A N/A
158 $525 12 $543 $610 N/A N/A N/A N/A N/A N/A
</TABLE>
(1B) The Mortgage Loans secured by Creekside Apartments, Brookside Apartments,
Glenbrook Centre Apartments and Hardwick Apartments, respectively, are
cross-collateralized and cross-defaulted.
(1C) The Mortgage Loans secured by East 29th Street Apartments and Chesapeake
Drive Apartments, respectively, are cross-collateralized and
cross-defaulted.
(1D) The Mortgage Loans secured by 1416 Apartments and 1419 Apartments,
respectively, are cross-collateralized and cross-defaulted.
(1E) The Mortgage Loans secured by 244-256 Orange Place and 249 Orange Place
Apartments, respectively, are cross-collateralized and cross-defaulted.
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Interest Rates
10/1/99 Scheduled Principal Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Year Built/Year Renovated
Occupancy Rates at Underwriting
Underwritten Debt Service Coverage Ratios
10/1/99 Loan-to-Value Ratios
Underlying Real Properties by State
Mortgage Loans by Amortization Type
Underlying Real Properties by Property Type
Mortgage Loans by Property Sub-Type
Prepayment Provision as of 10/1/99
Prepayment Option
Mortgage Pool Prepayment Profile
A-2-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
Mortgage Interest Rates Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.830% - 7.000% 5 $ 51,530,881 5.7% 6.884% 1.58x 66.7%
7.001% - 7.250% 4 15,334,720 1.7% 7.212% 1.26 78.5%
7.251% - 7.500% 1 8,243,791 0.9% 7.430% 1.25 78.5%
7.501% - 7.750% 11 49,252,937 5.5% 7.631% 1.30 75.8%
7.751% - 8.000% 28 268,622,732 29.9% 7.889% 1.26 73.4%
8.001% - 8.250% 42 237,352,870 26.4% 8.151% 1.54 65.8%
8.251% - 8.500% 32 182,460,220 20.3% 8.356% 1.24 72.4%
8.501% - 8.750% 20 59,571,173 6.6% 8.588% 1.35 68.6%
8.751% - 9.000% 12 23,776,735 2.6% 8.842% 1.37 58.5%
9.001% - 9.220% 5 3,143,147 0.3% 9.103% 1.29 61.2%
------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $899,289,205 100.0% 8.041% 1.36x 70.3%
==========================================================================================
Maximum Mortgage Interest Rate: 9.220%
Minimum Mortgage Interest Rate: 6.830%
Weighted Average Mortgage Interest Rate: 8.041%
</TABLE>
(1) Excluding the CTL Loan.
10/1/99 Scheduled Principal Balances
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
10/1/99 Scheduled Principal Balances Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 401,415 - 500,000 6 $ 2,711,826 0.3% 8.996% 1.26x 63.6%
500,001 - 750,000 6 3,520,729 0.4% 8.555% 1.31 57.6%
750,001 - 1,000,000 11 9,684,531 1.1% 8.502% 1.29 68.7%
1,000,001 - 1,250,000 7 7,575,572 0.8% 8.409% 1.34 64.6%
1,250,001 - 1,500,000 14 19,448,837 2.2% 8.409% 1.28 74.5%
1,500,001 - 1,750,000 7 11,669,717 1.3% 8.134% 1.27 75.0%
1,750,001 - 2,000,000 13 24,399,399 2.7% 7.931% 1.32 71.6%
2,000,001 - 3,000,000 16 39,794,915 4.4% 8.159% 1.34 70.4%
3,000,001 - 4,000,000 18 64,456,690 7.2% 8.284% 1.30 72.1%
4,000,001 - 5,000,000 12 54,790,267 6.1% 7.925% 1.31 74.7%
5,000,001 - 6,000,000 8 43,835,776 4.9% 8.305% 1.30 70.2%
6,000,001 - 7,000,000 7 45,971,315 5.1% 7.920% 1.31 72.2%
7,000,001 - 8,000,000 8 59,646,308 6.6% 7.864% 1.25 75.7%
8,000,001 - 9,000,000 6 50,819,897 5.7% 7.848% 1.31 75.9%
9,000,001 - 11,500,000 3 30,864,107 3.4% 8.062% 1.24 70.8%
11,500,001 - 15,500,000 7 100,025,244 11.1% 8.030% 1.26 73.2%
15,500,001 - 19,500,000 3 52,126,403 5.8% 8.099% 1.41 71.2%
19,500,001 - 34,500,000 4 120,746,941 13.4% 7.838% 1.49 62.2%
34,500,001 - $48,969,762 4 157,200,732 17.5% 8.075% 1.51 67.2%
-------------------------------------------------------------------------------------
Total/Weighted Average: 160 $899,289,205 100.0% 8.041% 1.36x 70.3%
=====================================================================================
Maximum 10/1/99 Scheduled Principal Balance: $ 48,969,762
Minimum 10/1/99 Scheduled Principal Balance: $ 401,415
Average 10/1/99 Scheduled Principal Balance: $ 5,620,558
</TABLE>
(1) Excluding the CTL Loan.
<PAGE>
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average 10/1/99
Terms (Months) Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
177 - 239 3 $ 12,388,149 1.4% 8.232% 1.55x 52.1%
240 - 299 7 7,674,646 0.9% 8.311% 1.36 64.6%
300 - 313 30 133,855,825 14.9% 7.934% 1.60 60.2%
314 - 360 120 745,370,585 82.9% 8.055% 1.32 72.3%
--------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
============================================================================================
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 177
Wtd. Avg. Original Amortization Term (Months): 346
</TABLE>
(1) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Original Terms Mortgage Principal Mortgage Pool Interest Average 10/1/99
to Stated Maturity (Months) Loans Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
60 - 115 7 $ 36,444,207 4.1% 8.232% 1.27x 70.6%
116 - 120 143 827,354,550 92.0% 8.063% 1.36 70.3%
121 - 200 4 13,032,747 1.4% 7.311% 1.51 74.2%
201 - 300 6 22,457,701 2.5% 7.346% 1.45 66.8%
--------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
============================================================================================
Maximum Original Term to Stated Maturity (Months): 300
Minimum Original Term to Stated Maturity (Months): 60
Wtd. Avg. Original Term to Stated Maturity (Months): 123
</TABLE>
(1) In the case of Anticipated Repayment Date loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the table.
(2) Excluding the CTL Loan.
<PAGE>
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average 10/1/99
Terms (Months) Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
176 - 238 6 $ 15,892,863 1.8% 8.317% 1.44x 58.1%
239 - 298 23 108,659,361 12.1% 7.734% 1.65 59.5%
299 - 312 11 29,366,397 3.3% 8.694% 1.39 62.8%
313 - 359 120 745,370,585 82.9% 8.055% 1.32 72.3%
-------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===========================================================================================
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 176
Wtd. Avg. Remaining Amortization Term (Months): 344
</TABLE>
(1) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average 10/1/99
to Stated Maturity (Months) Loans Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
59 - 114 10 $ 70,320,714 7.8% 7.632% 1.43x 67.6%
115 - 119 140 793,478,043 88.2% 8.109% 1.35 70.6%
120 - 199 4 13,032,747 1.4% 7.311% 1.51 74.2%
200 - 299 6 22,457,701 2.5% 7.346% 1.45 66.8%
-------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===========================================================================================
Maximum Remaining Term to Stated Maturity (Months): 299
Minimum Remaining Term to Stated Maturity (Months): 59
Wtd. Avg. Remaining Term to Stated Maturity (Months): 120
</TABLE>
(1) In the case of Anticipated Repayment Date loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the table.
(2) Excluding the CTL Loan.
<PAGE>
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Range of Years Real Principal Mortgage Pool Interest Average 10/1/99
Built/Renovated Properties Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1960 - 1970 3 $ 5,044,152 0.6% 8.280% 1.26x 71.7%
1971 - 1980 19 112,329,763 12.5% 7.948% 1.28 73.3%
1981 - 1990 59 407,975,542 45.4% 7.970% 1.29 72.4%
1991 - 1999 86 373,939,749 41.6% 8.144% 1.47 66.9%
-------------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===========================================================================================
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1960
Wtd. Avg. Year Built/Renovated: 1989
</TABLE>
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Range of Real Principal Mortgage Pool Interest Average 10/1/99
Occupancy Rates at U/W Properties (1) Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
58.0% - 79.9% 1 $ 768,933 0.1% 8.420% 1.41x 60.1%
80.0% - 89.9% 8 97,710,948 10.9% 8.125% 1.26 69.1%
90.0% - 94.9% 33 153,144,437 17.0% 8.074% 1.26 73.1%
95.0% - 97.4% 38 175,119,043 19.5% 7.945% 1.28 74.9%
97.5% - 100.0% 80 369,705,027 41.1% 7.989% 1.30 72.5%
-------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 796,448,388 88.6% 8.013% 1.29x 72.7%
===========================================================================================
Maximum Occupancy Rate at U/W (1): 100.0%
Minimum Occupancy Rate at U/W (1): 58.0%
Wtd. Avg. Occupancy Rate at U/W (1): 95.9%
</TABLE>
(1) Does not include any hotel properties.
(2) Excluding the CTL Loan.
<PAGE>
Underwritten Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
U/W DSCRs Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CTL 1 $ 5,389,861 0.6% 7.680% N/A N/A
1.20x - 1.21 20 178,662,994 19.9% 8.202% 1.21x 72.6%
1.22 - 1.24 38 193,248,205 21.5% 7.980% 1.23 76.2%
1.25 - 1.29 48 210,343,166 23.4% 8.098% 1.27 74.3%
1.30 - 1.34 19 97,010,509 10.8% 8.001% 1.32 70.2%
1.35 - 1.39 9 14,306,857 1.6% 8.359% 1.37 65.1%
1.40 - 2.39x 25 200,327,613 22.3% 7.904% 1.74 58.7%
-------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=====================================================================================
Maximum Underwritten DSCR (1): 2.39x
Minimum Underwritten DSCR (1): 1.20x
Wtd. Avg. Underwritten DSCR (1): 1.36x
</TABLE>
(1) Excluding the CTL Loan.
10/1/99 Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of 10/1/99 Mortgage Principal Mortgage Pool Interest Average 10/1/99
Loan-to-Value Ratios Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CTL 1 $ 5,389,861 0.6% 7.680% N/A N/A
37.10% - 55.00% 11 99,950,695 11.1% 8.116% 1.98x 49.4%
55.10% - 65.00% 24 121,127,462 13.5% 7.978% 1.42 62.6%
65.10% - 67.50% 7 73,015,929 8.1% 8.185% 1.22 66.8%
67.60% - 70.00% 11 31,297,747 3.5% 8.143% 1.31 68.4%
70.10% - 72.50% 13 77,135,081 8.6% 7.981% 1.30 71.9%
72.60% - 75.00% 32 126,232,580 14.0% 8.282% 1.25 73.5%
75.10% - 77.50% 24 145,090,742 16.1% 8.032% 1.25 76.3%
77.60% - 78.50% 8 78,286,014 8.7% 7.862% 1.24 78.2%
78.60% - 79.50% 16 73,888,561 8.2% 7.716% 1.30 79.1%
79.60% - 80.00% 13 67,874,534 7.5% 8.071% 1.24 79.8%
-------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,305 100.0% 8.041% 1.36x 70.3%
=====================================================================================
Maximum 10/1/99 LTV Ratio (1): 80.0%
Minimum 10/1/99 Date LTV Ratio (1): 37.1%
Wtd. Avg. 10/1/99 LTV Ratio (1): 70.3%
</TABLE>
(1) Excluding the CTL Loan.
<PAGE>
Underlying Real Properties by State
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
State Properties Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California 21 $ 155,156,174 17.3% 7.934% 1.31x 70.6%
Texas 34 137,072,187 15.2% 8.035% 1.35 72.4%
New York 6 96,756,666 10.8% 7.878% 1.34 68.6%
Michigan 7 45,560,071 5.1% 8.364% 1.25 75.7%
Illinois 6 41,807,221 4.6% 8.139% 1.24 72.3%
Florida 11 41,703,633 4.6% 7.969% 1.25 75.9%
Pennsylvania 2 37,816,007 4.2% 8.280% 1.22 68.5%
South Carolina 1 34,953,502 3.9% 8.170% 2.39 42.8%
Minnesota 4 34,204,110 3.8% 8.144% 1.78 54.9%
Maryland 6 32,868,169 3.7% 8.261% 1.25 77.1%
Arizona 7 29,221,897 3.2% 7.897% 1.25 78.0%
North Carolina 5 27,225,547 3.0% 7.657% 1.31 75.0%
Ohio 4 25,073,809 2.8% 7.928% 1.27 75.2%
District of Columbia 4 21,404,131 2.4% 7.763% 1.32 75.9%
New Jersey 6 17,758,257 2.0% 8.355% 1.34 68.6%
Tennessee 3 14,219,318 1.6% 7.582% 1.28 76.1%
Virginia 4 12,550,856 1.4% 8.120% 1.27 73.1%
Massachusetts 2 12,537,236 1.4% 7.665% 1.24 78.9%
Louisiana 4 9,962,367 1.1% 8.545% 1.46 62.2%
Oklahoma 1 8,691,817 1.0% 8.680% 1.45 62.1%
New Mexico 2 8,542,278 0.9% 8.212% 1.28 77.7%
Kentucky 1 7,991,375 0.9% 8.150% 1.26 67.7%
Colorado 2 6,203,907 0.7% 7.901% 1.40 69.0%
Iowa 4 5,883,501 0.7% 8.439% 1.28 74.3%
Kansas 2 4,473,408 0.5% 8.570% 1.33 55.8%
Indiana 2 4,296,499 0.5% 8.702% 1.39 65.7%
Montana 1 3,956,496 0.4% 8.290% 1.23 79.1%
Utah 1 3,288,373 0.4% 8.070% 1.20 72.9%
Washington 3 3,057,725 0.3% 8.468% 1.26 51.5%
Connecticut 2 2,396,195 0.3% 8.327% 1.32 69.1%
Oregon 1 2,248,487 0.3% 7.990% 1.20 68.1%
Alabama 1 2,020,069 0.2% 7.720% 1.50 76.2%
Maine 1 1,998,361 0.2% 7.000% 1.33 74.0%
Mississippi 1 1,896,804 0.2% 7.780% 1.43 74.4%
Rhode Island 1 1,347,747 0.1% 8.610% 1.29 72.5%
New Hampshire 2 1,347,338 0.1% 9.041% 1.27 60.0%
Nevada 1 998,838 0.1% 7.870% 1.61 58.1%
Wisconsin 1 798,832 0.1% 8.220% 1.43 69.5%
-------------------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=================================================================================================
</TABLE>
(1) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average 10/1/99
Loan Type Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balloon 145 $ 703,910,129 78.3% 8.090% 1.27x 72.9%
ARD 8 175,137,648 19.5% 7.892% 1.71 60.8%
Fully Amortizing 7 20,241,429 2.3% 7.644% 1.47 57.9%
-------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=================================================================================================
</TABLE>
(1) Excluding the CTL Loan.
<PAGE>
Underlying Real Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
Property Type Properties Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 74 $ 305,461,578 34.0% 7.862% 1.28x 74.0%
Office 19 189,002,580 21.0% 8.234% 1.24 70.3%
Retail 37 182,500,932 20.3% 7.924% 1.33 73.4%
Hotel 7 102,840,818 11.4% 8.261% 1.95 51.7%
Manufactured Housing 10 48,664,543 5.4% 8.002% 1.23 75.8%
Mixed Use 8 30,232,765 3.4% 8.325% 1.29 71.4%
Industrial 6 24,549,292 2.7% 8.398% 1.36 68.2%
Self Storage 4 6,819,157 0.8% 8.319% 1.43 65.1%
CTL 1 5,389,861 0.6% 7.680% N/A N/A
Independent/Assisted Living 1 3,827,680 0.4% 8.500% 1.26 67.2%
-------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=====================================================================================
</TABLE>
(1) Excluding the CTL Loan.
Mortgage Loans by Property Sub-Type
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
Property Type Property Sub-Type Properties Balance Balance Rates U/W DSCR LTV Ratio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Retail
Anchored (1) 22 $137,151,702 15.3% 7.829% 1.35x 73.1%
Unanchored 15 45,349,230 5.0% 8.212% 1.28 74.6%
------------------------------------------------------------------------------------
Total/Weighted Average: 37 $182,500,932 20.3% 7.924% 1.33x 73.4%
====================================================================================
</TABLE>
(1) Includes shadow anchored properties.
<PAGE>
Prepayment Provision as of 10/1/99
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
10/1/99 Percentage of Remaining Remaining Weighted
Range of Number of Scheduled Initial Lockout Lockout Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Maturity
Stated Maturity (Years) (1) Loans Balance Balance (Years) (Years) (Years) (1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4.0 - 4.9 1 $ 6,995,463 0.8% 4.7 4.7 4.9
6.0 - 6.9 4 23,622,704 2.6% 6.2 6.2 6.9
7.0 - 7.9 1 3,827,680 0.4% 7.2 7.2 7.7
8.0 - 8.9 1 2,868,396 0.3% 8.2 8.2 8.7
9.0 - 9.9 143 826,484,515 91.9% 9.4 9.4 9.8
10.0 - 10.9 1 4,826,748 0.5% 10.6 10.6 10.8
13.0 - 13.9 1 1,772,211 0.2% 13.7 13.7 13.9
14.0 - 14.9 2 6,433,789 0.7% 14.2 14.2 14.7
18.0 - 18.9 1 8,650,061 1.0% 18.7 18.7 18.9
19.0 - 19.9 2 2,515,586 0.3% 19.3 19.3 19.8
23.0 - 23.9 2 8,264,858 0.9% 21.6 23.6 23.9
24.0 - 24.9 1 3,027,197 0.3% 24.4 24.4 24.9
--------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 9.6 9.6 10.0
======================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
10/1/99 Percentage of Remaining Remaining Weighted
Number of Scheduled Initial Lockout Lockout Average
Mortgage Principal Mortgage Pool Period Plus YM Period Maturity
Prepayment Option Loans Balance Balance (Years) (Years) (Years) (1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 159 $ 897,518,159 99.8% 9.6 9.6 10.0
Lockout / Yield Maintenance 1 1,771,046 0.2% 13.8 23.6 23.8
-----------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 9.6 9.6 10.0
=========================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
<PAGE>
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield % of Pool
Date 10/1/99 Loans Balance (mm) Lockout Maintenance Open Total
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oct-99 0 160 $ 899.3 100.00% 0.00% 0.00% 100.0%
Oct-00 12 160 $ 891.8 100.00% 0.00% 0.00% 100.0%
Oct-01 24 160 $ 883.4 100.00% 0.00% 0.00% 100.0%
Oct-02 36 160 $ 874.3 100.00% 0.00% 0.00% 100.0%
Oct-03 48 160 $ 864.4 100.00% 0.00% 0.00% 100.0%
Oct-04 60 159 $ 847.2 99.42% 0.00% 0.58% 100.0%
Oct-05 72 159 $ 835.6 99.42% 0.00% 0.58% 100.0%
Oct-06 84 155 $ 801.1 100.00% 0.00% 0.00% 100.0%
Oct-07 96 154 $ 784.3 100.00% 0.00% 0.00% 100.0%
Oct-08 108 151 $ 741.8 100.00% 0.00% 0.00% 100.0%
Oct-09 120 10 $ 27.0 100.00% 0.00% 0.00% 100.0%
Oct-10 132 9 $ 21.6 100.00% 0.00% 0.00% 100.0%
Oct-11 144 9 $ 20.2 100.00% 0.00% 0.00% 100.0%
Oct-12 156 9 $ 18.7 100.00% 0.00% 0.00% 100.0%
Oct-13 168 8 $ 16.0 92.85% 7.15% 0.00% 100.0%
Oct-14 180 6 $ 14.5 92.65% 7.35% 0.00% 100.0%
Oct-15 192 6 $ 13.6 92.75% 7.25% 0.00% 100.0%
Oct-16 204 6 $ 12.6 92.87% 7.13% 0.00% 100.0%
Oct-17 216 6 $ 11.5 93.01% 6.99% 0.00% 100.0%
Oct-18 228 5 $ 5.1 86.16% 13.84% 0.00% 100.0%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the ARD Loans are
assumed to pay in full on their respective Anticipated Repayment Dates.
Otherwise calculated based on Maturity Assumptions to be set forth in the
final prospectus supplement.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
B-1
<PAGE>
[This page intentionally left blank]
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
DISTRIBUTION DATE STATEMENT
Table of Contents
STATEMENT SECTIONS PAGE(s)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
<TABLE>
<CAPTION>
Underwriter Servicer Special Servicer
----------- -------- ----------------
<S> <C> <C>
Donaldson, Lufkin & Jenrette GE Capital Loan Services Inc. GMAC Commercial Mortgage Corporation
Securities Corporation 363 North Sam Houston Parkway, East 650 Dresher Road
277 Park Avenue Suite 1200 Horsham, PA 10944-8015
New York, NY 10172 Houston, TX 77060
Contact: N. Dante LaRocca Contact: Shelly Shrimpton Contact: Coral I. Horstmeyer
Phone Number: (212) 892-3000 Phone Number: (281) 405-7087 Phone Number: (215) 328-1790
</TABLE>
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Certificate Distribution Detail
<TABLE>
<CAPTION>
Realized Loss/
Pass-Through Original Beginning Principal Interest Prepayment Additional Trust
Class CUSIP Rate Balance Balance Distribution Distribution Penalties Fund Expenses
----- ----- --------- ------- ------- ------------ ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-1C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-5 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
====== ==== ==== ==== ==== ==== ====
Totals 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
Current
Total Ending Subordination
Class Distribution Balance Level (1)
----- ------------ ------- ---------
<S> <C> <C> <C>
A-1A 0.00 0.00 0.00%
A-1B 0.00 0.00 0.00%
A-1C 0.00 0.00 0.00%
A-2 0.00 0.00 0.00%
A-3 0.00 0.00 0.00%
A-4 0.00 0.00 0.00%
A-5 0.00 0.00 0.00%
B-1 0.00 0.00 0.00%
B-2 0.00 0.00 0.00%
B-3 0.00 0.00 0.00%
B-4 0.00 0.00 0.00%
B-5 0.00 0.00 0.00%
B-6 0.00 0.00 0.00%
B-7 0.00 0.00 0.00%
B-8 0.00 0.00 0.00%
C 0.00 0.00 0.00%
D 0.00 0.00 0.00%
====== ==== ====
Totals 0.00 0.00
<CAPTION>
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
----- ----- --------- -------- -------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
- - ----------
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the
designated class and (ii) the ending certificate balance of all classes
which are not subordinate to the designated class and dividing the result
by (A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
----- ----- ------- ------------ ------------ --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-5 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-5 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-6 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-7 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-8 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
<CAPTION>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Balance Distribution Penalties Amount
----- ----- ------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
S 0.00000000 0.00000000 0.00000000 0.00000000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Reconciliation Detail
</TABLE>
<TABLE>
<CAPTION>
Advance Summary Servicing Fee Breakdowns
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Master Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Master Servicing Fees 0.00
Less Reductions to Master Servicing Fees 0.00
Plus Master Servicing Fees for Delinquent Payments Received 0.00
Reimbursement for Interest on Advances 0.00
paid from general collections Plus Adjustments for Prior Master Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
<CAPTION>
Certificate Interest Reconciliation
- - -----------------------------------
Remaining
Net Aggregate Distributable Unpaid
Accrued Prepayment Distributable Certificate Additional Distributable
Certificate Interest Certificate Interest Trust Fund Interest Certificate
Class Interest Shortfall Interest Adjustment Expenses Distribution Interest
- - ----- ----------- -------- ----------- ---------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
S 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- - ----- ---- ---- ---- ---- ---- ---- ----
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Other Required Information
--------------------------
Available Distribution Amount 0.00
Original Number of Outstanding Loans 0
Aggregate Number of Outstanding Loans 0
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
Interest Reserve Deposit 0.00
Interest Reserve Withdrawal 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Cumulative Realized Losses
Class A-1A 0.00
Class A-1B 0.00
Class A-1C 0.00
Class A-2 0.00
Class A-3 0.00
Class A-4 0.00
Class A-5 0.00
Class B-1 0.00
Class B-2 0.00
Class B-3 0.00
Class B-4 0.00
Class B-5 0.00
Class B-6 0.00
Class B-7 0.00
Class B-8 0.00
Class C 0.00
Class D 0.00
Appraisal Reduction Amount
--------------------------
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
------ --------- --------
-----
Total
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Ratings Detail
<TABLE>
<CAPTION>
Original Ratings Current Ratings (1)
----------------------------------- ---------------------------------
Class CUSIP DCR Fitch Moody's S & P DCR Fitch Moody's S & P
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain
rating information, if any, from such rating agency. The current ratings
were obtained directly from the applicable rating agency within 30 days of
the payment date listed above. The ratings may have changed since they were
obtained. Because the ratings may have changed, you may want to obtain
current ratings directly from the rating agencies.
<TABLE>
<S> <C> <C> <C>
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc. Moodys Investors Service Standard & Poors Rating Services
55 East Monroe Street One State Street Plaza 99 Church Street 26 Broadway
Chicago, Illinois 60603 New York, New York 10004 New York, New York 10007 New York, New York 10004
(312) 368-3100 (212) 908-0500 (212) 553-0300 (212) 208-8000
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
-----------------
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
------- ----- ------- ----- --- --- -----------
======
Totals
State (3)
---------
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR (1)
----- ------ ------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Current Mortgage Loan and Property Stratification Tables
Debt Service Coverage Ratio
---------------------------
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------- ----- ------- ----- --- --- -----------
======
Totals
Property Type (3)
-----------------
% of
Property # of Scheduled Agg. WAM Weighted
Type Props. Balance Bal. (2) WAC Avg DSCR (1)
---- ------ ------- ----- --- --- ------------
======
Totals
Note Rate
---------
% of
Note # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR(1)
---- ----- ------- ----- --- --- -----------
======
Totals
Seasoning
---------
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ -------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
--------------------------------------------------
Anticipated % of
Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
- ------------ ----- ------- ----- --- --- -----------
======
Totals
Remaining Stated Term (Fully Amortizing Loans)
----------------------------------------------
Remaining % of
Stated # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
---- ------ -------- ----- --- --- ------------
======
Totals
Remaining Amortization Term (ARD and Balloon Loans)
---------------------------------------------------
Remaining % of
Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR(1)
---- ----- ------- ----- --- --- -----------
======
Totals
Age of Most Recent NOI
----------------------
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ ------- ----- --- --- ------------
======
Totals
- - ----------
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most
current DSCR provided by the Servicer is used. To the extent that no DSCR
is provided by the Servicer, information from the offering document is
used. The Trustee makes no representations as to the accuracy of the data
provided by the borrower for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date,
if applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the
related mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CSSA
Standard Information Package.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Mortgage Loan Detail
--------------------
<TABLE>
<CAPTION>
Anticipated Neg. Beginning Ending
Loan Property Interest Principal Gross Repayment Maturity Amort Scheduled Scheduled
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N) Balance Balance
- - ------ ---- -------- ---- ----- ------- ------- ------ ---- ---- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
Paid Appraisal Appraisal Res. Mod.
Loan Thru Reduction Reduction Strat. Code
Number Date Date Amount (2) (3)
- - ------ ---- ---- ------ --- ---
<S> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code
---------------------- ----------------------------
<S> <C> <C> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 6 - DPO 10 - Deed In Lieu Of
RT - Retail MU - Mixed Use 2 - Foreclosure 7 - REO Foreclosure
HC - Health Care LO - Lodging 3 - Bankruptcy 8 - Resolved 11 - Full Payoff
IN - Industrial SS - Self Storage 4 - Extension 9 - Pending Return 12 - Reps and Warranties
WH - Warehouse OT - Other 5 - Note Sale to Master Servicer 13 - Other or TBD
MH - Mobile Home Park
<CAPTION>
(3) Modification Code
---------------------
<S> <C>
MF - Multi-Family 1 - Maturity Date Extension
RT - Retail 2 - Amortization Change
HC - Health Care 3 - Principal Write-Off
IN - Industrial 4 - Combination
WH - Warehouse
MH - Mobile Home Park
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
Offering Document ------------------------------------ ----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
----------- --------------- ------------- ------------------ ------------------ -------------------------
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Historical Detail
<TABLE>
<CAPTION>
Delinquencies Prepayments
---------------------------------------------------------------------------------------------------- -------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount
---- ---------- ---------- ------------- ----------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Rate and Maturities
---------------------------------------
Distribution Next Weighted Avg.
Date Coupon Remit WAM
---- ------ ----- ---
<S> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P & I P & I Mortgage Strategy Servicing
Loan Number Cross-Reference Delinq. Date Advances Advances(**) Loan (1) Code (2) Transfer Date
- - ----------- --------------- ------- ---- -------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Current Outstanding
Foreclosure Servicing Servicing REO
Loan Number Date Advances Advances Bankruptcy Date Date
- - ----------- ---- -------- -------- --------------- ----
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
(1) Status of Mortgage Loan
---------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(**) Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest Actual
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate Balance
---- ------ --------------- ---- -------- ------- -------- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Net Remaining
Distribution Operating NOI Note Maturity Amortization
Date Income Date DSCR Date Date Term
---- ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(2) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Specially Serviced Loan Detail - Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
---- ------ --------------- -------- ---- ------------ ---- ----- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Modified Loan Detail
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
- - ------ --------------- ------- ----------------- ------------------------
<S> <C> <C> <C> <C>
Total
=====
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
[LOGO] Norwest Banks
DLJ Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-CG3
------------------------------------------
For Additional Information, please contact
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 11/10/1999
New York, NY 10004 Record Date: 10/29/1999
Liquidated Loan Detail
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
- - ---------------- ---- --------------- ---- ----- ------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses (*) Proceeds Actual Balance Loss (Y/N)
- - ---------------- ------------ -------- -------------- ---- -----
<S> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
- - ----------
(*) Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
EXHIBIT C
DECREMENT TABLES FOR CLASS A-1A, CLASS A-1B, CLASS A-1C,
CLASS A-2, CLASS A-3, CLASS A-4, CLASS A-5, CLASS B-1
AND CLASS B-2 CERTIFICATES
Percentage of Initial Principal Balance Outstanding For:
</TABLE>
<TABLE>
<CAPTION>
Class A-1A Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date............................... 100% 100% 100% 100% 100%
October 2000............................... 95% 95% 95% 95% 95%
October 2001............................... 89% 89% 89% 89% 89%
October 2002............................... 82% 82% 82% 82% 82%
October 2003............................... 75% 75% 75% 75% 75%
October 2004............................... 63% 63% 63% 63% 59%
October 2005............................... 55% 54% 53% 52% 51%
October 2006............................... 30% 30% 30% 30% 30%
October 2007............................... 18% 18% 18% 18% 18%
October 2008 and thereafter................ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):...................... 5.7 5.7 5.7 5.6 5.6
<CAPTION>
Class A-1B Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date............................... 100% 100% 100% 100% 100%
October 2000............................... 100% 100% 100% 100% 100%
October 2001............................... 100% 100% 100% 100% 100%
October 2002............................... 100% 100% 100% 100% 100%
October 2003............................... 100% 100% 100% 100% 100%
October 2004............................... 100% 100% 100% 100% 100%
October 2005............................... 100% 100% 100% 100% 100%
October 2006............................... 100% 100% 100% 100% 100%
October 2007............................... 100% 100% 100% 100% 100%
October 2008............................... 97% 97% 97% 97% 97%
October 2009 and thereafter................ 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):...................... 9.7 9.7 9.7 9.6 9.4
</TABLE>
C-1
<PAGE>
Percentage of Initial Principal Balance Outstanding For:
<TABLE>
<CAPTION>
Class A-1C Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.8 9.8 9.6
<CAPTION>
Class A-2 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.8 9.6
</TABLE>
C-2
<PAGE>
Percentage of Initial Principal Balance Outstanding For:
<TABLE>
<CAPTION>
Class A-3 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.9 9.6
<CAPTION>
Class A-4 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.9 9.6
</TABLE>
C-3
<PAGE>
Percentage of Initial Principal Balance Outstanding For:
<TABLE>
<CAPTION>
Class A-5 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.9 9.6
<CAPTION>
Class B-1 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.9 9.7
</TABLE>
C-4
<PAGE>
Percentage of Initial Principal Balance Outstanding For:
<TABLE>
<CAPTION>
Class B-2 Certificates
Following Payment Date in-- 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Closing Date.............................. 100% 100% 100% 100% 100%
October 2000.............................. 100% 100% 100% 100% 100%
October 2001.............................. 100% 100% 100% 100% 100%
October 2002.............................. 100% 100% 100% 100% 100%
October 2003.............................. 100% 100% 100% 100% 100%
October 2004.............................. 100% 100% 100% 100% 100%
October 2005.............................. 100% 100% 100% 100% 100%
October 2006.............................. 100% 100% 100% 100% 100%
October 2007.............................. 100% 100% 100% 100% 100%
October 2008.............................. 100% 100% 100% 100% 100%
October 2009 and thereafter............... 0% 0% 0% 0% 0%
Wtd. Avg. Life (yrs):..................... 9.9 9.9 9.9 9.9 9.7
</TABLE>
C-5
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
EXHIBIT D
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent (CBE) Yield of the
Class S Certificates at Various CPRs
0.8943% Initial Pass-Through Rate
$899,289,205 Initial Aggregate Notional Amount
0.00% CPR 25.00% CPR 50.00% CPR 75.00% CPR 100.00% CPR
Price (32nds)* ----------- ----------- ----------- ----------- -----------
- -------------- CBE Yield % CBE Yield % CBE Yield % CBE Yield % CBE Yield %
----------- ----------- ----------- ----------- -----------
4-08 11.22% 11.18% 11.13% 11.07% 10.72%
4-10 10.84% 10.80% 10.75% 10.68% 10.33%
4-12 10.46% 10.42% 10.37% 10.30% 9.95%
4-14 10.09% 10.05% 10.00% 9.93% 9.57%
4-16 9.73% 9.69% 9.64% 9.57% 9.21%
4-18 9.38% 9.34% 9.29% 9.22% 8.85%
4-20 9.04% 8.99% 8.94% 8.87% 8.50%
4-22 8.70% 8.66% 8.60% 8.54% 8.16%
4-24 8.37% 8.33% 8.27% 8.20% 7.83%
- ----------
* Exclusive of accrued interest.
D-1
<PAGE>
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<PAGE>
EXHIBIT E
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered DLJ
Commercial Mortgage Corp., Commercial Mortgage Pass-Through Certificates, Series
1999-CG3, Class S, Class A-1A, Class A-1B, Class A-1C, Class A-2, Class A-3,
Class A-4, Class A-5, Class B-1 and Class B-2, will be available only in
book-entry form.
The book-entry certificates will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding book-entry certificates
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional Eurobond practice, which is seven calendar days' settlement.
Secondary market trading between investors holding book-entry certificates
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
participants holding book-entry certificates will be accomplished on a delivery
against payment basis through the respective depositaries of Cedel and
Euroclear, in such capacity, as DTC participants.
Non-U.S. holders (as described below) of book-entry certificates will be
subject to U.S. withholding taxes unless those holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations of their participants.
Initial Settlement
All certificates of each class of offered certificates will be held in
book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors'
interests in the book-entry certificates will be represented through financial
institutions acting on their behalf as direct and indirect DTC participants. As
a result, Cedel and Euroclear will hold positions on behalf of their member
organizations through their respective depositaries, which in turn will hold
such positions in accounts as DTC participants.
Investors' securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their book-entry certificates through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional Eurobonds, except that there will be no temporary global security
and no "lock up" or restricted period. Global securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
E-1
<PAGE>
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between member organizations of Cedel or Euroclear will be settled using
the procedures applicable to conventional Eurobonds in same-day funds.
Trading between DTC Seller and Cedel or Euroclear Purchaser. When
book-entry certificates are to be transferred from the account of a DTC
participant to the account of a member organization of Cedel or Euroclear, the
purchaser will send instructions to Cedel or Euroclear through that member
organization at least one business day prior to settlement. Cedel or Euroclear,
as the case may be, will instruct the respective depositary to receive the
book-entry certificates against payment. Payment will include interest accrued
on the book-entry certificates from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days consisting of 12 30-day months. Payment will then be made by the respective
depositary to the DTC participant's account against delivery of the book-entry
certificates. After settlement has been completed, the book-entry certificates
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the account of the member
organization of Cedel or Euroclear, as the case may be. The securities credit
will appear the next day (European time) and the cash debit will be back-valued
to, and the interest on the book-entry certificates will accrue from, the value
date, which would be the preceding day when settlement occurred in New York. If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debit will be valued instead as of the actual
settlement date.
Member organizations of Cedel and Euroclear will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the book-entry
certificates are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, member organizations of Cedel or Euroclear can elect not to pre-position
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, such member organizations purchasing book-entry certificates
would incur overdraft charges for one day, assuming they cleared the overdraft
when the book-entry certificates were credited to their accounts. However,
interest on the book-entry certificates would accrue from the value date.
Therefore, in many cases the investment income on the book-entry certificates
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on the cost of funds
of the respective member organization of Cedel or Euroclear.
E-2
<PAGE>
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending book-entry
certificates to the respective depositary for the benefit of member
organizations of Cedel or Euroclear. The sale proceeds will be available to the
DTC seller on the settlement date. Thus, to the DTC participant a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, member organizations of Cedel or Euroclear may
employ their customary procedures for transactions in which book-entry
certificates are to be transferred by the respective clearing system, through
the respective depositary, to a DTC participant. The seller will send
instructions to Cedel or Euroclear through a member organization of Cedel or
Euroclear at least one business day prior to settlement. In these cases, Cedel
or Euroclear, as appropriate, will instruct the respective depositary to deliver
the book-entry certificates to the DTC participant's account against payment.
Payment will include interest accrued on the book-entry certificates from and
including the last coupon payment date to and excluding the settlement date,
calculated on the basis of a year of 360 days consisting of 12 30-day months.
The payment will then be reflected in the account of the member organization of
Cedel or Euroclear the following day, and receipt of the cash proceeds in the
account of that member organization of Cedel or Euroclear would be back-valued
to the value date, which would be the preceding day, when settlement occurred in
New York. Should the member organization of Cedel or Euroclear have a line of
credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft charges incurred over the one-day period. If
settlement is not completed on the intended value date, which means the trade
fails, receipt of the cash proceeds in the account of the member organization of
Cedel or Euroclear would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
book-entry certificates from DTC participants for delivery to member
organizations of Cedel or Euroclear should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through Cedel or Euroclear for one day, until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts, in
accordance with the clearing system's customary procedures;
(b) borrowing the book-entry certificates in the United States from a DTC
participant no later than one day prior to settlement, which would allow
sufficient time for the book-entry certificates to be reflected in their Cedel
or Euroclear accounts in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least one
day prior to the value date for the sale to the member organization of Cedel or
Euroclear.
Certain U.S. Federal Income Tax Documentation Requirements
A holder holding a book-entry certificate through Cedel, Euroclear or DTC
may be subject to U.S. withholding tax at a rate of 30% unless:
o the U.S. entity required to withhold tax (the "U.S. withholding
agent") receives a statement--
E-3
<PAGE>
(a) from the certificateholder on IRS Form W-8 (or any successor
or substitute form) that--
(i) is signed by the certificateholder under penalty of
perjury,
(ii) certifies that such owner is not a United States Person,
and
(iii) provides the name and address of the certificateholder,
or
(b) from a securities clearing organization, a bank or another
financial institution that holds customers' securities in the
ordinary course of its trade or business that--
(i) is signed under penalties of perjury by an authorized
representative of the financial institution,
(ii) states that the financial institution has received IRS
Form W-8 (or any successor or substitute form) from the
certificateholder or that another financial institution
acting on behalf of the certificateholder has received
such IRS Form W-8 (or any successor or substitute form),
(iii) provides the name and address of the certificateholder,
and
(iv) attaches IRS Form W-8 (or any successor or substitute
form) provided by the certificateholder;
o the certificateholder provides a properly executed IRS Form 1001 (or
any successor or substitute form) to the U.S. withholding agent;
o the certificateholder provides a properly executed IRS Form 4224 (or
any successor or substitute form) to the U.S. withholding agent;
o interest is paid or collected on behalf of the certificateholder at
an address inside the United States and the certificateholder is a
United States Person that is exempt from withholding and complies
with the appropriate certification requirements, if any; or
o interest is paid at an address inside the United States and backup
withholding is required.
A holder holding book-entry certificates through Cedel, Euroclear or DTC
may be subject to backup withholding at a rate of 31% unless the
certificateholder:
o provides a properly executed IRS Form W-8 (or any successor or
substitute form) or IRS Form W-9 (or any substitute form); or
o is a corporation, within the meaning of Section 7701(a) of the
Internal Revenue Code of 1986, or otherwise establishes that it is a
recipient exempt from United States backup withholding.
E-4
<PAGE>
A holder holding book-entry certificates through Cedel or Euroclear, or in
the case of an IRS Form 1001 or an IRS Form 4224, the holder's agent, provides
the forms and statements referred to above by submitting them to the person
through which he holds an interest in the book-entry certificates, which is the
clearing agency, in the case of persons holding directly on the books of the
clearing agency. Subject to the transition rules governing the introduction of
the series of new IRS Forms W-8 (as discussed below), IRS Form W-8 and IRS Form
1001 are effective after the issuance of the book-entry certificate in the
calendar year of its issuance and the two immediately succeeding calendar years,
and IRS Form 4224 is effective for one calendar year. If the information on the
form changes, the beneficial owner must inform the person through which he holds
within 30 days of such change.
The new regulations affect the documentation required from non-U.S.
certificateholders having validly existing IRS Forms, such as IRS Forms W-8,
1001 or 4224. The new regulations replace a number of current tax certification
forms (including IRS Forms W-8, 1001 and 4224, as discussed above) with a new
series of IRS Forms W-8 and generally standardize the period of time for which
withholding agents can rely on those forms, although certain of the new forms
may remain valid indefinitely if the certificateholder provides a United States
taxpayer identification number and the information on the form does not change.
Existing forms and statements will remain valid for the following periods:
(a) a withholding agent holding an existing form or statement that is
valid on or after January 1, 1999, may treat that form or statement
as valid until the earlier of its expiration or December 31, 2000;
(b) no existing forms or statements will be effective after December 31,
2000; and
(c) existing forms and statements that expire in 1999 will not be
effective after expiration.
The new regulations are generally effective for payments after December
31, 1999. However, the IRS recently issued IRS Notice 99-25 in which it
announced its intention to delay the effective date of the new regulations, so
that they will be effective for payments made after December 31, 2000.
Prospective investors are urged to consult their tax advisors with respect to
the effect of the new regulations.
This summary does not deal with all aspects of federal income tax
withholding that may be relevant to certificateholders that are not United
States Persons. Such investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the offered
certificates.
E-5
<PAGE>
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<PAGE>
EXHIBIT F
SUMMARY TERM SHEET
F-1
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
DLJ Commercial Mortgage Corp.
Commercial Mortgage Pass-Through Certificates,
Series 1999-CG3
$804,863,000
(Approximate)
Offered Certificates
--------------------------------------
[LOGO] COLUMN
FINANCIAL
--------------------------------------
A DONALDSON, LUFKIN & JENRETTE COMPANY
GE Capital Access, Inc.
Donaldson, Lufkin & Jenrette
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Transaction Offering:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage
Initial of Initial Initial Pass-
Aggregate Mortgage Pass- Through Wtd.
Principal Pool Credit Through Rate Avg. Principal
Class Ratings(1) Balance Balance Support Rate Description Life(3) Maturity(3) Window(3) Legal Status ERISA(4)
- ----- ---------- ------- ------- ------- ---- ----------- ------- ----------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Publicly Offered Certificates:
S Aaa/AAA $899,289,205(2) -- -- 0.8943% -- 9.3 -- -- Public Yes
A-1A Aaa/AAA 140,618,000 15.64% 27.75% 7.1200% Fixed 5.7 10/10/08 11/99-10/08 Public Yes
A-1B Aaa/AAA 509,118,000 56.61% 27.75% 7.3400% Fixed 9.7 9/10/09 10/08-9/09 Public Yes
A-1C Aa1/AAA 17,716,000 1.97% 25.78% 7.4400% Fixed 9.9 9/10/09 9/09-9/09 Public No
A-2 Aa2/AA 25,000,000 2.78% 23.00% 7.5400% WAC Cap 9.9 9/10/09 9/09-9/09 Public No
A-3 A2/A 49,461,000 5.50% 17.50% 7.7300% WAC Cap 9.9 9/10/09 9/09-9/09 Public No
A-4 A3/A 13,489,000 1.50% 16.00% 7.8300% WAC Cap 9.9 9/10/09 9/09-9/09 Public No
A-5 Baa1/A- 15,738,000 1.75% 14.25% 8.1200% WAC Cap 9.9 9/10/09 9/09-9/09 Public No
B-1 Baa2/BBB 17,986,000 2.00% 12.25% 8.2400% WAC 9.9 9/10/09 9/09-9/09 Public No
B-2 Baa3/BBB- 15,737,000 1.75% 10.50% 8.2400% WAC 9.9 9/10/09 9/09-9/09 Public No
Privately Offered Certificates(5):
B-3 -- -- -- -- -- -- -- -- -- Private-144A --
B-4 -- -- -- -- -- -- -- -- -- Private-144A --
B-5 -- -- -- -- -- -- -- -- -- Private-144A --
B-6 -- -- -- -- -- -- -- -- -- Private-144A --
B-7 -- -- -- -- -- -- -- -- -- Private-144A --
B-8 -- -- -- -- -- -- -- -- -- Private-144A --
C -- -- -- -- -- -- -- -- -- Private-144A --
D -- -- -- -- -- -- -- -- -- Private-144A --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Moody's Investors Service, Inc. / Fitch IBCA, Inc.
(2) Notional amount. The Class S certificates will be interest only and not be
entitled to distributions of principal.
(3) Assumes 0% CPR, no defaults, no extensions and ARD Loans pay in full on
their Anticipated Repayment Dates. Otherwise based on "Maturity
Assumptions" set forth in the Prospectus Supplement.
(4) Expected to be eligible for the underwriter's individual prohibited
transaction exemption under ERISA.
(5) Not offered herein.
- --------------------------------------------------------------------------------
Originator Profile:
The mortgage loans were originated or acquired primarily by (i) an affiliate of
GE Capital Access, Inc. (GECA) and (ii) Column Financial, Inc. (Column).
Approximately 50.6% of the mortgage loans by balance are being contributed by
GECA and 49.4% are being contributed by Column. All of the mortgage loans were
originated between 1998 and 1999.
GECA is a wholly owned subsidiary of General Electric Capital Corporation
(GECC). Since 1996, GECA and its affiliates have originated or acquired
approximately $7.8 billion of commercial mortgage loans in connection with its
capital markets programs. Through its GE Capital Real Estate division, GECC has
been lending and investing in the commercial real estate industry for over 25
years and has a portfolio of approximately $16.9 billion of assets. GE Capital
Real Estate originates and acquires commercial mortgage loans through
approximately 20 offices located throughout North America.
Column, an indirect wholly owned subsidiary of Donaldson, Lufkin & Jenrette,
Inc., was established in August 1993. Column has originated over 1,900
commercial mortgage loans totaling $8.0 billion since its inception. Column
sources, underwrites and closes various mortgage loan products through 17
production offices located throughout the country.
- --------------------------------------------------------------------------------
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 2
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Collateral Overview:
o Total Collateral Balance: $899,289,205
o Avg. 10/1/99 Scheduled
Principal Balance: $5,620,558
o Loans/Properties: 160 loans / 167 properties
o Property Type: Multifamily (34.0%), Office
(21.0%), Retail (20.3%), Other
(24.7%)
o Geographic Distribution: 37 States and DC. CA (17.3%), TX
(15.2%), NY (10.8%), Other (56.7%)
o Amortization Types: Balloon (78.3%), ARD (19.5%), Fully
Amortizing (2.3%)
o Wtd. Avg. U/W DSCR(1): 1.36x
o Wtd. Avg. 10/1/99
LTV Ratio(1): 70.3%
o Appraisals: 100% of the appraisals state that
they follow the guidelines set
forth in Title XI of FIRREA.
o Largest Loan: 5.4%
o Five Largest Loans: 22.6%
o Ten Largest Loans: 36.7%
o Wtd. Avg. Remaining
Term to Maturity: 120 months
o Wtd. Avg. Seasoning: 3 months
o Gross WAC: 8.041%
o Call Protection: All of the Mortgage Loans provide
for either a prepayment lockout
period ("Lockout") and a defeasance
period ("Defeasance") or a yield
maintenance premium ("YMP") period.
All of the Mortgage Loans provide
for initial lockout periods. The
remaining weighted average lockout
and defeasance period for all loans
is 9.6 years. The yield maintenance
charge is calculated at
flat-to-treasuries.
o Defeasance: 99.8%
o Credit Tenant Lease: 0.6%
(1) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 3
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Collateral Overview (continued):
o Participation Loans: None
o Secured Subordinate Debt: 1.9%
o Leasehold: 0.8%
o Delinquency: No loan delinquent 30 days or more
as of the 10/1/99.
Transaction Overview:
o Structure: Senior/subordinated, sequential pay
pass-through bonds.
o Lead Manager: Donaldson, Lufkin & Jenrette, Sole
o Mortgage Loan Sellers: GE Capital Access, Inc. and Column
Financial, Inc.
o Rating Agencies: Moody's Investors Service, Inc. /
Fitch IBCA, Inc.
o Master Servicer: GE Capital Loan Services, Inc.
o Special Servicer: GMAC Commercial Mortgage
Corporation
o Trustee: Norwest Bank Minnesota, National
Association
o Insurance: An Environmental Insurance policy
has been obtained for the benefit
of the trust. The policy insures
the trust from losses in the event
a defaulted loan has an actionable
environmental condition subject to
the policy limits. The policy is
provided by Commerce & Industry
Insurance Co., a member company of
the American International Group,
Inc.(AIG). AIG is rated AAA by
Standard & Poor's, Aaa by Moody's
and A++ by A.M. Best Company.
o Cut-off Date: October 1, 1999
o Settlement Date: October 19, 1999
o Payment Date: The 10th day of the month, or if
such day is not a business day, the
following business day, but no
sooner than the 4th business day
after the 4th day of the month.
o Delivery: The Depository Trust Company
("DTC") through Cede & Co. (in the
United States) or Cedel Bank,
Societe Anonyme ("Cedel") or The
Euroclear System ("Euroclear") (in
Europe).
o ERISA: Classes A-1A, A-1B and S are
expected to be eligible for the
underwriter's individual prohibited
transaction exemption with respect
to ERISA, subject to certain
conditions of eligibility.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 4
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Transaction Overview (continued):
o SMMEA: None of the Offered Securities are
SMMEA eligible.
o Tax Treatment: REMIC
o Servicer Option to Terminate
Trust: 1%
o Analytics: Cashflows are available through
Bloomberg, the Trepp Group, Intex
Solutions and Charter Research.
o Extensions: The Special Servicer will be
responsible for performing certain
servicing functions with respect to
Mortgage Loans that, in general,
are in default or as to which
default is imminent, and for
administering any REO properties.
The Pooling and Servicing Agreement
will generally permit the Special
Servicer to modify, waive or amend
any term of any Mortgage Loan if it
determines, in accordance with the
servicing standard, that it is
appropriate to do so. The Special
Servicer will not be permitted to
grant any extension of the maturity
of a Mortgage Loan beyond 60 months
after its stated maturity date.
o Controlling Class: The Controlling Class of
Certificateholders may advise and
appoint a Special Servicer and
replace the existing Special
Servicer. The Controlling Class
will be the most subordinate Class
of Certificates which has a current
aggregate certificate principal
amount no less than 25% of its
original aggregate certificate
principal balance.
o Advances: The Master Servicer will be
obligated to make advances of
scheduled principal and interest
payments, excluding balloon
payments, subject to recoverability
determination and appraisal
reductions. If the Master Servicer
fails to make a required P & I
Advance and the Trustee is aware of
the failure, the Trustee will be
obligated to make that Advance.
o Appraisal Reductions: An appraisal reduction generally
will be created in the amount, if
any, by which the Stated Principal
Balance of a Specially Serviced
Mortgage Loan (plus other amounts
overdue in connection with such
loan) exceeds 90% of the appraised
value of the related Mortgaged
Property. The Appraisal Reduction
Amount will reduce proportionately
the interest portion (but not the
principal portion) of any amount of
P&I Advances for the loan, which
reduction will result, in general,
in a reduction of interest
distributable to the most
subordinate Class of Principal
Balance Certificates outstanding.
An appraisal reduction will be
reduced to zero as of the date the
related Mortgage Loan has been
brought current for at least three
consecutive months, paid in full,
liquidated, repurchased, or
otherwise disposed of. Appraisal
reductions will not effect class
sizes for the purposes of
determining the Controlling Class.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 5
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Structure Description
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 6
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Interest Distributions:
Each Class of Certificates will be entitled on each payment date to interest
accrued at its Pass-Through Rate on the aggregate principal balance of that
Class outstanding immediately prior to the related payment date. The Class S
Certificates will be entitled on each payment date to the aggregate interest
accrued at the difference between the weighted average coupon of the collateral
and the weighted average coupon of the Principal Balance Certificates. All
Classes will pay interest on a 30/360 basis.
Principal Distributions:
Available principal will be paid on each payment date to the outstanding Classes
of Principal Balance Certificates in the following sequential order: Class A-1A,
A-1B, A-1C, A-2, A-3, A-4, A-5, B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, C and D
(the "Principal Balance Certificates"). However, if Classes A-1C through D have
been retired as a result of losses and additional trust fund expenses, Classes
A-1A and A-1B will receive principal on a pro-rata basis.
Realized Losses and Expense(s):
Realized losses from any Mortgage Loan and additional trust fund expenses will
be allocated to the outstanding classes of Principal Balance Certificates in the
following sequential order: Class D, C, B-8, B-7, B-6, B-5, B-4, B-3, B-2, B-1,
A-5, A-4, A-3, A-2 and A-1C. If Classes A-1C through D have been reduced to $0
by losses and additional trust fund expenses, future losses and additional trust
fund expenses shall be applied to Classes A-1A and A-1B pro-rata.
Credit Enhancements:
Credit enhancement for each Class of publicly registered Certificates will be
provided by the Classes of Certificates which are subordinate in priority with
respect to payments of interest and principal.
Allocation of Yield Maintenance and Prepayment Premiums:
The certificate yield maintenance amount ("CYMA") for the Class A-1A, A-1B,
A-1C, A-2, A-3, A-4, A-5, B-1 and B-2 Certificates (collectively, the "Yield
Maintenance Certificates") equals the total yield maintenance premium collected,
multiplied by a fraction (not greater than one or less than zero) which is based
upon a formula involving the relationship between the Pass-Through Rate for the
Classes currently receiving principal, the mortgage rate of the Mortgage Loan
that has prepaid, and current interest rates. In general, the CYMA for any
payment date will be calculated in respect of and payable to the Class(es) of
Yield Maintenance Certificates entitled to receive payments of principal on such
Distribution Date.
------------------------------------------------------------------------
CYM = (Pass-Through Rate - Discount Rate)
Allocation -----------------------------------
to Yield Maintenance Certificates (Mortgage Rate - Discount Rate)
------------------------------------------------------------------------
The yield maintenance amount payable to the Class S (interest only)
Certificates, will equal the total yield maintenance premium less the CYMA for
the Yield Maintenance Certificates as defined above.
All prepayment premiums collected on the Mortgage Loans and calculated as a
percentage of the amount prepaid, will be paid to the Class S (interest only)
Certificates.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 7
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Allocation of Yield Maintenance and Prepayment Premiums (continued):
In general, this formula provides for an increase in the allocation of yield
maintenance premiums to the Yield Maintenance Certificates as interest rates
decrease and a decrease in the allocation to such Classes as interest rates
rise.
Allocation of Yield Maintenance Premiums Example:
Discount Rate Fraction Methodology:
Mortgage Rate = 8%
P & I Class Coupon = 6%
Discount Rate (Based on a Treasury Rate) = 5%
% of Principal Distributed to Class = 100%
P & I Class Allocation: Class S Allocation:
- ----------------------- -------------------
6% - 5% x 100% = 33 1/3% 100% - P & I Class(es) Allocation = 66 2/3%
- -------
8% - 5%
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 8
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Stratification:
[The following table was depicted as a map graph in the printed material.]
WA 0.3% MT 0.4% NM 0.9% MN 3.8% IL 4.6%
OR 0.3% UT 0.4% KS 0.5% IA 0.7% MS 0.2%
NV 0.1% AZ 3.2% OK 1.0% LA 1.1% MI 5.1%
CA 17.3% CO 0.7% TX 15.2% WI 0.1% IN 0.5%
TN 1.6% PA 4.2% SC 3.9% MD 3.7% RI 0.1%
AL 0.2% DC 2.4% FL 4.6% NH 0.1% CT 0.3%
OH 2.8% VA 1.4% NY 10.8% MA 1.4%
KY 0.9% NC 3.0% NJ 2.0% ME 0.2%
Underlying Real Properties by State
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
State Properties Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California 21 $ 155,156,174 17.3% 7.934% 1.31x 70.6%
Texas 34 137,072,187 15.2% 8.035% 1.35 72.4%
New York 6 96,756,666 10.8% 7.878% 1.34 68.6%
Michigan 7 45,560,071 5.1% 8.364% 1.25 75.7%
Illinois 6 41,807,221 4.6% 8.139% 1.24 72.3%
Florida 11 41,703,633 4.6% 7.969% 1.25 75.9%
Pennsylvania 2 37,816,007 4.2% 8.280% 1.22 68.5%
South Carolina 1 34,953,502 3.9% 8.170% 2.39 42.8%
Minnesota 4 34,204,110 3.8% 8.144% 1.78 54.9%
Maryland 6 32,868,169 3.7% 8.261% 1.25 77.1%
Arizona 7 29,221,897 3.2% 7.897% 1.25 78.0%
North Carolina 5 27,225,547 3.0% 7.657% 1.31 75.0%
Ohio 4 25,073,809 2.8% 7.928% 1.27 75.2%
District of Columbia 4 21,404,131 2.4% 7.763% 1.32 75.9%
New Jersey 6 17,758,257 2.0% 8.355% 1.34 68.6%
Tennessee 3 14,219,318 1.6% 7.582% 1.28 76.1%
Virginia 4 12,550,856 1.4% 8.120% 1.27 73.1%
Massachusetts 2 12,537,236 1.4% 7.665% 1.24 78.9%
Louisiana 4 9,962,367 1.1% 8.545% 1.46 62.2%
Oklahoma 1 8,691,817 1.0% 8.680% 1.45 62.1%
New Mexico 2 8,542,278 0.9% 8.212% 1.28 77.7%
Kentucky 1 7,991,375 0.9% 8.150% 1.26 67.7%
Colorado 2 6,203,907 0.7% 7.901% 1.40 69.0%
Iowa 4 5,883,501 0.7% 8.439% 1.28 74.3%
Kansas 2 4,473,408 0.5% 8.570% 1.33 55.8%
Indiana 2 4,296,499 0.5% 8.702% 1.39 65.7%
Montana 1 3,956,496 0.4% 8.290% 1.23 79.1%
Utah 1 3,288,373 0.4% 8.070% 1.20 72.9%
Washington 3 3,057,725 0.3% 8.468% 1.26 51.5%
Connecticut 2 2,396,195 0.3% 8.327% 1.32 69.1%
Oregon 1 2,248,487 0.3% 7.990% 1.20 68.1%
Alabama 1 2,020,069 0.2% 7.720% 1.50 76.2%
Maine 1 1,998,361 0.2% 7.000% 1.33 74.0%
Mississippi 1 1,896,804 0.2% 7.780% 1.43 74.4%
Rhode Island 1 1,347,747 0.1% 8.610% 1.29 72.5%
New Hampshire 2 1,347,338 0.1% 9.041% 1.27 60.0%
Nevada 1 998,838 0.1% 7.870% 1.61 58.1%
Wisconsin 1 798,832 0.1% 8.220% 1.43 69.5%
-----------------------------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===========================================================================================================
</TABLE>
(1) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 9
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
[The following table was depicted as a pie chart in the printed material.]
Other 1.0%
Mixed Use 3.4%
Multifamily 34.0%
Retail 20.3%
Industrial 2.7%
Hotel 11.4%
Manufactured Housing 5.4%
Self Storage 0.8%
Office 21.0%
Underlying Real Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
Property Type Properties Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 74 $ 305,461,578 34.0% 7.862% 1.28x 74.0%
Office 19 189,002,580 21.0% 8.234% 1.24 70.3%
Retail 37 182,500,932 20.3% 7.924% 1.33 73.4%
Hotel 7 102,840,818 11.4% 8.261% 1.95 51.7%
Manufactured Housing 10 48,664,543 5.4% 8.002% 1.23 75.8%
Mixed Use 8 30,232,765 3.4% 8.325% 1.29 71.4%
Industrial 6 24,549,292 2.7% 8.398% 1.36 68.2%
Self Storage 4 6,819,157 0.8% 8.319% 1.43 65.1%
CTL 1 5,389,861 0.6% 7.680% N/A N/A
Independent/Assisted Living 1 3,827,680 0.4% 8.500% 1.26 67.2%
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===============================================================================================
</TABLE>
(1) Excluding the CTL Loan.
Mortgage Loans by Property Sub-Type
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Real Principal Mortgage Pool Interest Average 10/1/99
Property Type Property Sub-Type Properties Balance Balance Rates U/W DSCR LTV Ratio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail
Anchored (1) 22 $137,151,702 15.3% 7.829% 1.35x 73.1%
Unanchored 15 45,349,230 5.0% 8.212% 1.28 74.6%
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 37 $182,500,932 20.3% 7.924% 1.33x 73.4%
===============================================================================================
</TABLE>
(1) Includes shadow anchored properties.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 10
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average 10/1/99
Terms (Months) Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
177 - 239 3 $ 12,388,149 1.4% 8.232% 1.55x 52.1%
240 - 299 7 7,674,646 0.9% 8.311% 1.36 64.6%
300 - 313 30 133,855,825 14.9% 7.934% 1.60 60.2%
314 - 360 120 745,370,585 82.9% 8.055% 1.32 72.3%
---------------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=========================================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 177
Wtd. Avg. Original Amortization Term (Months): 346
(1) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Original Terms to Mortgage Principal Mortgage Pool Interest Average 10/1/99
Maturity (Months) Loans Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
60 - 115 7 $ 36,444,207 4.1% 8.232% 1.27x 70.6%
116 - 120 143 827,354,550 92.0% 8.063% 1.36 70.3%
121 - 200 4 13,032,747 1.4% 7.311% 1.51 74.2%
201 - 300 6 22,457,701 2.5% 7.346% 1.45 66.8%
---------------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=========================================================================================================
</TABLE>
Maximum Original Term to Maturity (Months): 300
Minimum Original Term to Maturity (Months): 60
Wtd. Avg. Original Term to Maturity (Months): 123
(1) In the case of Anticipated Repayment Date loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the table.
(2) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 11
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Remaining Amortization Mortgage Principal Mortgage Pool Interest Average 10/1/99
Terms (Months) Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
176 - 238 6 $ 15,892,863 1.8% 8.317% 1.44x 58.1%
239 - 298 23 108,659,361 12.1% 7.734% 1.65 59.5%
299 - 312 11 29,366,397 3.3% 8.694% 1.39 62.8%
313 - 359 120 745,370,585 82.9% 8.055% 1.32 72.3%
-------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=================================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 176
Wtd. Avg. Remaining Amortization Term (Months): 344
(1) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Range of Number of Scheduled Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average 10/1/99
to Maturity (Months) Loans Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
59 - 114 10 $ 70,320,714 7.8% 7.632% 1.43x 67.6%
115 - 119 140 793,478,043 88.2% 8.109% 1.35 70.6%
120 - 199 4 13,032,747 1.4% 7.311% 1.51 74.2%
200 - 299 6 22,457,701 2.5% 7.346% 1.45 66.8%
-------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
=================================================================================================
</TABLE>
Maximum Remaining Term to Maturity (Months): 299
Minimum Remaining Term to Maturity (Months): 59
Wtd. Avg. Remaining Term to Maturity (Months): 120
(1) In the case of Anticipated Repayment Date loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the table.
(2) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 12
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Underwritten Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
U/W DSCRs Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CTL 1 $ 5,389,861 0.6% 7.680% N/A N/A
1.20x - 1.21 20 178,662,994 19.9% 8.202% 1.21x 72.6%
1.22 - 1.24 38 193,248,205 21.5% 7.980% 1.23 76.2%
1.25 - 1.29 48 210,343,166 23.4% 8.098% 1.27 74.3%
1.30 - 1.34 19 97,010,509 10.8% 8.001% 1.32 70.2%
1.35 - 1.39 9 14,306,857 1.6% 8.359% 1.37 65.1%
1.40 - 2.39x 25 200,327,613 22.3% 7.904% 1.74 58.7%
------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
==========================================================================================
</TABLE>
Maximum Underwritten DSCR (1): 2.39x
Minimum Underwritten DSCR (1): 1.20x
Wtd. Avg. Underwritten DSCR (1): 1.36x
(1) Excluding the CTL Loan.
10/1/99 Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of 10/1/99 Mortgage Principal Mortgage Pool Interest Average 10/1/99
Loan-to-Value Ratios Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CTL 1 $ 5,389,861 0.6% 7.680% N/A N/A
37.10% - 55.00% 11 99,950,694 11.1% 8.116% 1.98x 49.4%
55.10% - 65.00% 24 121,127,462 13.5% 7.978% 1.42 62.6%
65.10% - 67.50% 7 73,015,929 8.1% 8.185% 1.22 66.8%
67.60% - 70.00% 11 31,297,747 3.5% 8.143% 1.31 68.4%
70.10% - 72.50% 13 77,135,081 8.6% 7.981% 1.30 71.9%
72.60% - 75.00% 32 126,232,580 14.0% 8.282% 1.25 73.5%
75.10% - 77.50% 24 145,090,742 16.1% 8.032% 1.25 76.3%
77.60% - 78.50% 8 78,286,014 8.7% 7.862% 1.24 78.2%
78.60% - 79.50% 16 73,888,561 8.2% 7.716% 1.30 79.1%
79.60% - 80.00% 13 67,874,534 7.5% 8.071% 1.24 79.8%
------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
==========================================================================================
</TABLE>
Maximum 10/1/99 LTV Ratio (1): 80.0%
Minimum 10/1/99 LTV Ratio (1): 37.1%
Wtd. Avg. 10/1/99 LTV Ratio (1): 70.3%
(1) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 13
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
10/1/99 Scheduled Principal Balances
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
10/1/99 Scheduled Principal Balances Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 401,415 - 500,000 6 $ 2,711,826 0.3% 8.996% 1.26x 63.6%
500,001 - 750,000 6 3,520,729 0.4% 8.555% 1.31 57.6%
750,001 - 1,000,000 11 9,684,531 1.1% 8.502% 1.29 68.7%
1,000,001 - 1,250,000 7 7,575,572 0.8% 8.409% 1.34 64.6%
1,250,001 - 1,500,000 14 19,448,837 2.2% 8.409% 1.28 74.5%
1,500,001 - 1,750,000 7 11,669,717 1.3% 8.134% 1.27 75.0%
1,750,001 - 2,000,000 13 24,399,399 2.7% 7.931% 1.32 71.6%
2,000,001 - 3,000,000 16 39,794,915 4.4% 8.159% 1.34 70.4%
3,000,001 - 4,000,000 18 64,456,690 7.2% 8.284% 1.30 72.1%
4,000,001 - 5,000,000 12 54,790,267 6.1% 7.925% 1.31 74.7%
5,000,001 - 6,000,000 8 43,835,776 4.9% 8.305% 1.30 70.2%
6,000,001 - 7,000,000 7 45,971,315 5.1% 7.920% 1.31 72.2%
7,000,001 - 8,000,000 8 59,646,308 6.6% 7.864% 1.25 75.7%
8,000,001 - 9,000,000 6 50,819,897 5.7% 7.848% 1.31 75.9%
9,000,001 - 11,500,000 3 30,864,107 3.4% 8.062% 1.24 70.8%
11,500,001 - 15,500,000 7 100,025,244 11.1% 8.030% 1.26 73.2%
15,500,001 - 19,500,000 3 52,126,403 5.8% 8.099% 1.41 71.2%
19,500,001 - 34,500,000 4 120,746,941 13.4% 7.838% 1.49 62.2%
34,500,001 - $ 48,969,762 4 157,200,732 17.5% 8.075% 1.51 67.2%
-------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===========================================================================================
</TABLE>
Maximum 10/1/99 Scheduled Principal Balance: $ 48,969,762
Minimum 10/1/99 Scheduled Principal Balance: $ 401,415
Average 10/1/99 Scheduled Principal Balance: $ 5,620,558
(1) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average 10/1/99
Loan Type Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balloon 145 $ 703,910,129 78.3% 8.090% 1.27x 72.9%
ARD 8 175,137,648 19.5% 7.892% 1.71 60.8%
Fully Amortizing 7 20,241,429 2.3% 7.644% 1.47 57.9%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
===================================================================================================
</TABLE>
(1) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 14
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
10/1/99 Percentage of Average Weighted
Number of Scheduled Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average 10/1/99
Mortgage Interest Rates Loans Balance Balance Rates U/W DSCR (1) LTV Ratio (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.830% - 7.000% 5 $ 51,530,881 5.7% 6.884% 1.58x 66.7%
7.001% - 7.250% 4 15,334,720 1.7% 7.212% 1.26 78.5%
7.251% - 7.500% 1 8,243,791 0.9% 7.430% 1.25 78.5%
7.501% - 7.750% 11 49,252,937 5.5% 7.631% 1.30 75.8%
7.751% - 8.000% 28 268,622,732 29.9% 7.889% 1.26 73.4%
8.001% - 8.250% 42 237,352,870 26.4% 8.151% 1.54 65.8%
8.251% - 8.500% 32 182,460,220 20.3% 8.356% 1.24 72.4%
8.501% - 8.750% 20 59,571,173 6.6% 8.588% 1.35 68.6%
8.751% - 9.000% 12 23,776,735 2.6% 8.842% 1.37 58.5%
9.001% - 9.220% 5 3,143,147 0.3% 9.103% 1.29 61.2%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
==============================================================================================
</TABLE>
Maximum Mortgage Interest Rate: 9.220%
Minimum Mortgage Interest Rate: 6.830%
Weighted Average Mortgage Interest Rate: 8.041%
(1) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Range of Real Principal Mortgage Pool Interest Average 10/1/99
Occupancy Rates at U/W Properties (1) Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
58.0% - 79.9% 1 $ 768,933 0.1% 8.420% 1.41x 60.1%
80.0% - 89.9% 8 97,710,948 10.9% 8.125% 1.26 69.1%
90.0% - 94.9% 33 153,144,437 17.0% 8.074% 1.26 73.1%
95.0% - 97.4% 38 175,119,043 19.5% 7.945% 1.28 74.9%
97.5% - 100.0% 80 369,705,026 41.1% 7.989% 1.30 72.5%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 796,448,387 88.6% 8.013% 1.29x 72.7%
==============================================================================================
</TABLE>
Maximum Occupancy Rate at U/W: 100.0%
Minimum Occupancy Rate at U/W: 58.0%
Wtd. Avg. Occupancy Rate at U/W: 95.9%
(1) Does not include any hotel properties.
(2) Excluding the CTL Loan.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 15
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Year Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Number of 10/1/99 Percentage of Average Weighted
Underlying Scheduled Initial Mortgage Weighted Average
Range of Years Real Principal Mortgage Pool Interest Average 10/1/99
Built/Renovated Properties Balance Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1960 - 1970 3 $ 5,044,152 0.6% 8.280% 1.26x 71.7%
1971 - 1980 19 112,329,763 12.5% 7.948% 1.28 73.3%
1981 - 1990 59 407,975,542 45.4% 7.970% 1.29 72.4%
1991 - 1999 86 373,939,748 41.6% 8.144% 1.47 66.9%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 167 $ 899,289,205 100.0% 8.041% 1.36x 70.3%
==============================================================================================
</TABLE>
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1960
Wtd. Avg. Year Built/Renovated: 1989
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Excluding the CTL Loan.
Mortgage Pool Prepayment Profile
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield % of Pool
Date 10/1/99 Loans Balance (mm) Lockout Maintenance Open Total
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oct-99 0 160 $ 899.3 100.00% 0.00% 0.00% 100.0%
Oct-00 12 160 $ 891.8 100.00% 0.00% 0.00% 100.0%
Oct-01 24 160 $ 883.4 100.00% 0.00% 0.00% 100.0%
Oct-02 36 160 $ 874.3 100.00% 0.00% 0.00% 100.0%
Oct-03 48 160 $ 864.4 100.00% 0.00% 0.00% 100.0%
Oct-04 60 159 $ 847.2 99.42% 0.00% 0.58% 100.0%
Oct-05 72 159 $ 835.6 99.42% 0.00% 0.58% 100.0%
Oct-06 84 155 $ 801.1 100.00% 0.00% 0.00% 100.0%
Oct-07 96 154 $ 784.3 100.00% 0.00% 0.00% 100.0%
Oct-08 108 151 $ 741.8 100.00% 0.00% 0.00% 100.0%
Oct-09 120 10 $ 27.0 100.00% 0.00% 0.00% 100.0%
Oct-10 132 9 $ 21.6 100.00% 0.00% 0.00% 100.0%
Oct-11 144 9 $ 20.2 100.00% 0.00% 0.00% 100.0%
Oct-12 156 9 $ 18.7 100.00% 0.00% 0.00% 100.0%
Oct-13 168 8 $ 16.0 92.85% 7.15% 0.00% 100.0%
Oct-14 180 6 $ 14.5 92.65% 7.35% 0.00% 100.0%
Oct-15 192 6 $ 13.6 92.75% 7.25% 0.00% 100.0%
Oct-16 204 6 $ 12.6 92.87% 7.13% 0.00% 100.0%
Oct-17 216 6 $ 11.5 93.01% 6.99% 0.00% 100.0%
Oct-18 228 5 $ 5.1 86.16% 13.84% 0.00% 100.0%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the ARD Loans are
assumed to pay in full on their respective Anticipated Repayment dates.
Otherwise calculated based on Maturity Assumptions to be set forth in the
final prospectus supplement.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 16
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Prepayment Provision as of 10/1/99
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
10/1/99 Percentage of Remaining Remaining Weighted
Range of Number of Scheduled Initial Lockout Lockout Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Maturity
Stated Maturity (Years) (1) Loans Balance Balance (Years) (Years) (Years) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4.0 - 4.9 1 $ 6,995,463 0.8% 4.7 4.7 4.9
6.0 - 6.9 4 23,622,704 2.6% 6.2 6.2 6.9
7.0 - 7.9 1 3,827,680 0.4% 7.2 7.2 7.7
8.0 - 8.9 1 2,868,396 0.3% 8.2 8.2 8.7
9.0 - 9.9 143 826,484,514 91.9% 9.4 9.4 9.8
10.0 - 10.9 1 4,826,748 0.5% 10.6 10.6 10.8
13.0 - 13.9 1 1,772,211 0.2% 13.7 13.7 13.9
14.0 - 14.9 2 6,433,789 0.7% 14.2 14.2 14.7
18.0 - 18.9 1 8,650,061 1.0% 18.7 18.7 18.9
19.0 - 19.9 2 2,515,586 0.3% 19.3 19.3 19.8
23.0 - 23.9 2 8,264,858 0.9% 21.6 23.6 23.9
24.0 - 24.9 1 3,027,197 0.3% 24.4 24.4 24.9
--------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 9.6 9.6 10.0
==================================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
10/1/99 Percentage of Remaining Remaining Weighted
Number of Scheduled Initial Lockout Lockout Average
Mortgage Principal Mortgage Pool Period Plus YM Period Maturity
Prepayment Option Loans Balance Balance (Years) (Years) (Years) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 159 $ 897,518,159 99.8% 9.6 9.6 10.0
Lockout / Yield Maintenance 1 1,771,046 0.2% 13.8 23.6 23.8
--------------------------------------------------------------------------------------------------
Total/Weighted Average: 160 $ 899,289,205 100.0% 9.6 9.6 10.0
==================================================================================================
</TABLE>
(1) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 17
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Significant Mortgage Loans
<TABLE>
<CAPTION>
10/1/99 Percentage of
Scheduled Initial Mortgage
Property Units/Rooms/ Principal Mortage Pool Appraised Interest
# Property Name Type Square Feet Balance Balance Value Rates
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 45 Broadway (1) Office 368,471 $ 48,969,762 5.4% $ 67,400,000 8.410%
- ------------------------------------------------------------------------------------------------------------------------------------
2 The LaSalle Hotel Property Loans (2) Hotel 972 46,403,465 5.2% 86,200,000 8.100%
- ------------------------------------------------------------------------------------------------------------------------------------
3 The Alliance Portfolio Multifamily 1,118 38,336,336 4.3% 49,050,000 7.830%
- ------------------------------------------------------------------------------------------------------------------------------------
4 Westin Resort Hilton Head Hotel 412 34,953,502 3.9% 81,700,000 8.170%
- ------------------------------------------------------------------------------------------------------------------------------------
5 Southshore Beach & Tennis Club Multifamily 450 34,941,132 3.9% 48,500,000 7.780%
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted Average: $ 203,604,197 22.6% $ 332,850,000 8.081%
============= ==== ============= =====
<CAPTION>
10/1/99
# Property Name U/W DSCR LTV Ratio
- ------------------------------------------------------------------------------------
<S> <C> <C>
1 45 Broadway (1) 1.21x 72.7%
- ------------------------------------------------------------------------------------
2 The LaSalle Hotel Property Loans (2) 1.85 53.8%
- ------------------------------------------------------------------------------------
3 The Alliance Portfolio 1.24 78.2%
- ------------------------------------------------------------------------------------
4 Westin Resort Hilton Head 2.39 42.8%
- ------------------------------------------------------------------------------------
5 Southshore Beach & Tennis Club 1.33 72.0%
- ------------------------------------------------------------------------------------
Total/Weighted Average: 1.58x 64.2%
==== ====
</TABLE>
(1) The 45 Broadway Loan includes a $2,000,000 letter of credit as additional
collateral.
(2) The LaSalle Hotel Property Loans consists of two Mortgage Loans, the
Radisson South - Bloomington and Le Meridien - Dallas, respectively, that
are cross-collateralized and cross-defaulted.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 18
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
45 Broadway
LOAN INFORMATION
- --------------------------------------------------------------------------------
10/1/99 Scheduled Principal Balance: $48,969,762
% of Initial Mortgage Pool Balance: 5.4%
Mortgage Loan Seller: GE Capital Access, Inc.
Mortgage Interest Rate: 8.410%
Term to ARD: 10 years
Amortization Term: 30 years
Call Protection: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of the Closing Date.
10/1/99 LTV: 72.7%
Maturity/ARD LTV: 65.7%
U/W DSCR: 1.21x
Cross Collateralization/Default: No/No
Special Provisions: ARD Loan, Hard Lockbox
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Office
Location: New York, New York
Years Built/Renovated: 1983
Collateral: 368,471 square foot Class A,
multi-tenanted office building
located in New York City
Property Manager: 45 Broadway Management Company LLC
U/W Net Cash Flow: $5,425,246
Appraised Value: $67,400,000
Appraisal Date: June 3, 1999
Occupancy Rate at U/W: 99%
- --------------------------------------------------------------------------------
Additional Information:
The subject property is a 32-story, 368,471 SF Class A multi-tenanted (with a
diversified tenant mix) office building located in the Downtown Financial
District of Manhattan. The subject property, built in 1983, features a six-story
atrium with an 80-foot waterfall, and a saw-tooth floor-plate design that allows
for up to nine corner offices on the upper floors. The property is located two
blocks from the NYSE, one block from AMEX, and within five blocks of the major
subway lines serving Downtown Manhattan.
The borrower is required to provide the lender with a $2MM Letter of Credit,
which is to remain outstanding until the loan has a 1.35x DSCR (and the ratio of
the property's net cash flow to the original principal balance of $49,000,000
equals 13.5%) and may be reduced to $1MM when the loan achieves a 1.30x DSCR
(and the ratio of the property's net cash flow to the original principal balance
of $49,000,000 equals 12.5%). After five years, the borrower is required to
prepay an amount equal to any outstanding L.O.C. to reduce the loan balance
(without prepayment penalty). The Borrower deposited $1,356,000 at closing into
a rollover reserve for tenant improvements and leasing commissions. In addition,
Borrower is obligated to deposit $65,000 into the TI/LC reserve monthly until
the balance, excluding the initial deposit, exceeds $1,250,000. In addition, the
loan features both tax and insurance escrows.
The borrower is a special purpose entity. Principals of the borrower, 45
Broadway, LLC, (which include Rubin Schron, Abraham Fruchthandler, Ulo Barad and
Sam Domb) have significant experience in this market.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 19
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
The LaSalle Hotel Property Loans
LOAN INFORMATION
- --------------------------------------------------------------------------------
10/1/99 Scheduled Principal Balance: $46,403,465
% of Initial Mortgage Pool Balance: 5.2%
Mortgage Loan Seller: GE Capital Access, Inc.
Mortgage Interest Rate: 8.100%
Term to ARD: 10 years
Amortization Term: 25 years
Call Protection: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of the Closing Date.
10/1/99 LTV: 53.8%
Maturity/ARD LTV: 43.7%
U/W DSCR: 1.85
Cross Collateralization/ Default: Yes/Yes
Special Provisions: ARD Loan; Springing Lock Box
(1.40x DSCR)
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Two Single Assets
Property Type: Hotel
Location: Minnesota and Texas
Years Built/Renovated: 1970/1998 and 1978/1995
Collateral: Full Service Hotel with 565 rooms and
Full Service Hotel with 407 rooms
Property Operators: Radisson Bloomington Corp. and MHI
Leasco Dallas, Inc.
U/W Net Cash Flow: $8,045,219
Appraised Value: $86,200,000
Appraisal Date: March 2, 1999 and March 3, 1999
Occupancy Rate at U/W: 68% and 65%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Built/ Appraised
Property Name City State Number Renovated 10/1/99 Balance Value U/W NCF
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Radisson South - Bloomington Bloomington MN 565 1970/1998 $ 30,237,096 $ 53,200,000 $ 5,087,759
Le Meridien Hotel Dallas TX 407 1978/1995 16,166,368 33,000,000 2,957,460
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Additional Information:
The Radisson South property is a 565 room full service hotel consisting of two
towers and is located in Bloomington, MN. The South tower is 21 stories and was
constructed in 1970 and the seven story Plaza Tower was added in 1980 adjacent
to the South Tower. Additional property facilities include 65,600 SF of meeting
space and two restaurants totaling 274 seats. Since its acquisition in December
1995, the property underwent over $9 MM of capital improvements. The property is
operated by Radisson Bloomington Corporation, a subsidiary of Radisson, pursuant
to a lease which expires 4/30/2009.
The Le Meridien property is a 407 room full service hotel located in downtown
Dallas. The 4-star design includes 15 stories with 23,214 SF of meeting space
and a 110 seat restaurant. Le Meridien received a 3 Diamond Award from AAA.
Since 1995, over $6 million has been invested in capital improvements. The
property is operated by MHI Leasco Dallas, Inc., a subsidiary of Le Meridien,
pursuant to a lease which expires 4/30/2008.
The Borrower is a special purpose entity. Principals of the borrower include La
Salle Hotel Properties, a public REIT traded on the NYSE. In lieu of making
monthly deposits into Tax and Insurance Escrows, the Borrower is permitted to
post cash totaling six months Tax and Insurance billings.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 20
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
The Alliance Portfolio
LOAN INFORMATION
- --------------------------------------------------------------------------------
10/1/99 Scheduled Principal Balance: $38,336,336
% of Initial Mortgage Pool Balance: 4.3%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 7.830%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of the Closing Date
10/1/99 LTV: 78.2%
Maturity LTV: 69.8%
U/W DSCR: 1.24x
Cross Collateralization/ Default: Yes/Yes
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Portfolio
Property Type: Multifamily
Location: Texas
Years Built/Renovated: 1984 to 1998
Collateral: 5 Multifamily properties with 1,118
total units
Property Management: Alliance Residential Management, LLC
U/W Net Cash Flow: $4,128,050
Appraised Value: $49,050,000
Appraisal Date: June 7, 1999 to July 1, 1999
Wtd. Avg. Occupancy Rate at U/W: 94%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Year Built/
Property Name City State of Units Occupancy Renovated Appraised Value U/W NCF
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shadow Creek Apartments North Richland Hills TX 240 91% 1986/1996 $ 11,300,000 $ 932,085
Copper Cove Apartments Houston TX 270 96% 1984 $ 10,500,000 $ 949,103
Hilltop Apartments North Richland Hills TX 238 91% 1985/1996 $ 10,450,000 $ 852,494
Foxboro Apartments Houston TX 220 97% 1984 $ 9,100,000 $ 749,236
The Pinnacle Apartments Lewisville TX 150 95% 1986/1998 $ 7,700,000 $ 645,132
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Additional Information:
The subject multifamily properties' amenities include swimming pools, jacuzzis,
fitness centers, business centers, laundry facilities, surface and covered
parking and extensive landscaping. In general, the properties are 94% occupied.
The subject multifamily properties secure a single Mortgage Note. The borrower
is a special purpose entity. Principals of the borrower, Alliance PK Portfolio,
L.L.C., include Andrew Schor and Steven Ivankovich. The borrower is affiliated
with Alliance Holdings, Inc. ("Alliance"), a privately owned real estate
investment, development, and finance firm concentrated in the multifamily
housing business. Alliance and its affiliates own interests in and manage more
than 31,000 units throughout Texas, in the Midwest and along the eastern
seaboard from Virginia to Florida.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 21
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Westin Resort - Hilton Head
LOAN INFORMATION
- --------------------------------------------------------------------------------
10/1/99 Scheduled Principal Balance: $34,953,502
% of Initial Mortgage Pool Balance: 3.9%
Mortgage Loan Seller: GE Capital Access, Inc.
Mortgage Interest Rate: 8.170%
Term to ARD: 10 years
Amortization Term: 28 years
Call Protection: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of the Closing Date.
10/1/99 LTV: 42.8%
Maturity/ARD LTV: 37.5%
U/W DSCR: 2.39x
Cross Collateralization/ Default: No/No
Special Provisions: ARD Loan; Springing Lockbox
(1.40x DSCR)
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Hotel
Location: Hilton Head, South Carolina
Years Built/Renovated: 1984/1997
Collateral: Full Service Hotel with 412 rooms
located in South Carolina
Property Management: Westin Hotel Company
U/W Net Cash Flow: $7,626,447
Appraised Value: $81,700,000
Appraisal Date: January 1, 1999
Occupancy Rate at U/W: 64%
- --------------------------------------------------------------------------------
Additional Information:
The subject property is a five story full service hotel containing 412 rooms and
25,000 SF of meeting space that is part of a 24-acre beachfront site overlooking
the Atlantic Ocean in Hilton Head, South Carolina. Additional property
facilities include three restaurants, two outdoor pools, one indoor pool and a
fitness center. Adjacent to the property is Port Royal Golf and Racquet
featuring 54 holes of PGA championship golf and 16 tennis courts. Room mix at
the subject includes 154 double/double, 229 king and 29 suites. The Westin
Resort Hilton Head has received a 4 Diamond award from AAA.
The borrower is a single purpose entity controlled by Caesar Park Hotels &
Resorts Inc. ("Caesar"). Caesar owned Westin Hotel Company, from 1987-1995 and
currently owns nine Westin-flagged hotels in North America.
The subject property is managed by Westin Hotel Co., which was founded in 1930
and is a subsidiary of Starwood Hotels & Resorts, Inc., a major hotel operator.
The subject management agreement runs through 12/31/2019 and is subordinate to
the mortgage loan. Borrower maintains a 4% FF&E Reserve and a Tax and Insurance
Escrow.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 22
<PAGE>
DLJCMC Series 1999-CG3 Collateral and Structural Term Sheet October 5, 1999
Southshore Beach & Tennis Club
LOAN INFORMATION
- --------------------------------------------------------------------------------
10/1/99 Scheduled Principal Balance: $34,941,132
% of Initial Mortgage Pool Balance: 3.9%
Mortgage Loan Seller: GE Capital Access, Inc.
Mortgage Interest Rate: 7.780%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of the Closing Date.
10/1/99 LTV: 72.0%
Maturity LTV: 64.2%
U/W DSCR: 1.33x
Cross Collateralization/ Default: No/No
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Multifamily
Location: Alameda, California
Years Built/Renovated: 1974
Collateral: Multifamily property with 450 units
located in California
Property Management: Maxim Property Management
U/W Net Cash Flow: $4,000,095
Appraised Value: $48,500,000
Appraisal Date: May 6, 1999
Occupancy Rate at U/W: 95%
- --------------------------------------------------------------------------------
Additional Information:
The Subject is a 450 unit multifamily complex located on the San Francisco Bay.
Amenities include four community pools with heated spas, five tennis courts, a
basketball court, exercise/fitness room, laundry facilities and a combination
leasing/management office.
The Borrower is a single-purpose bankruptcy-remote entity, which is controlled
by Mr. Sanford N. Diller. Mr. Diller is the founder of Maxim Property
Management. Since inception, Maxim Property Management has been responsible for
the design and development of over 8,000 class A apartment units and close to
2.7 million square feet of office and retail space in five western states.
The investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation personnel to assist them in determining whether potential investors
wish to proceed with an in-depth investigation of the proposed offering. While
the information contained herein is from sources believed to be reliable, it has
not been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation or any of its affiliates, and such entities make no representations
or warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in the information and is
subject to modification or withdrawal at any time with or without notice. The
contents herein are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The information contained
herein supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements.
Donaldson, Lufkin & Jenrette Securities Corporation expressly reserves the
right, at its sole discretion, to reject any or all proposals or expressions of
interest in the subject proposed offering and to terminate discussions with any
party at any time with or without notice.
Page 23
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Prospectus
DLJ Commercial Mortgage Corp., the Depositor
Mortgage Pass-Through Certificates (issuable in series)
Our name is DLJ Commercial Mortgage Corp. We intend to offer commercial
mortgage pass-through certificates from time to time. These offers may be made
through one or more different methods, including offerings through underwriters.
See "Method of Distribution."
The Offered Certificates:
The offered certificates will be issuable in series. Each series of offered
certificates will--
o have its own series designation,
o consist of one or more classes with various payment characteristics,
o evidence beneficial ownership interests in a trust established by us, and
o be payable solely out of trust assets.
No governmental agency or instrumentality will insure or guarantee payment on
the offered certificates. Neither we nor any of our affiliates are responsible
for making payments on the offered certificates if collections on the related
trust assets are insufficient. We do not currently intend to list the offered
certificates of any series on any national securities exchange or the NASDAQ
stock market.
The Trust Assets:
The assets of each trust will include--
o mortgage loans secured by first and junior liens on, or security interests
in, various interests in commercial and multifamily real properties,
o mortgage-backed securities that directly or indirectly evidence interests
in, or are directly or indirectly secured by, such types of mortgage
loans, or
o some combination of such types of mortgage loans and mortgage-backed
securities.
Trust assets may also include letters of credit, surety bonds, insurance
policies, guarantees, reserve funds, guaranteed investment contracts, interest
rate exchange agreements, interest rate cap or floor agreements, or other
similar instruments and agreements.
In connection with each offering, we will prepare a supplement to this
prospectus in order to describe in more detail the particular certificates being
offered and the related trust assets. In that document, we will also state the
price to public for each class of offered certificates or explain the method for
determining such price. In addition, in that document, we will identify the
applicable lead or managing underwriter(s), if any, and the relevant
underwriting arrangements. You may not purchase the offered certificates of any
series unless you have also received the prospectus supplement for that series.
You should carefully consider the risk factors beginning on page 13 in this
prospectus, as well as those set forth in the related prospectus supplement,
prior to investing.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
- --------------------------------------------------------------------------------
The date of this Prospectus is October 5, 1999.
<PAGE>
TABLE OF CONTENTS
Page
----
Important Notice about the Information Presented in this Prospectus............3
Available Information; Incorporation by Reference..............................3
Summary of Prospectus..........................................................4
Risk Factors..................................................................13
Description of the Trust Assets...............................................32
Yield and Maturity Considerations.............................................56
DLJ Commercial Mortgage Corp..................................................62
Description of the Certificates...............................................63
Description of the Governing Documents........................................71
Description of Credit Support.................................................81
Certain Legal Aspects of Mortgage Loans.......................................83
Federal Income Tax Consequences...............................................98
State and Other Tax Consequences.............................................139
ERISA Considerations.........................................................139
Legal Investment.............................................................145
Use of Proceeds..............................................................147
Method of Distribution.......................................................147
Legal Matters................................................................148
Financial Information........................................................149
Rating.......................................................................149
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<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION PRESENTED IN THIS PROSPECTUS
When deciding whether to invest in any of the offered certificates, you
should only rely on the information contained in this prospectus and the related
prospectus supplement. We have not authorized any dealer, salesman or other
person to give any information or to make any representation that is different.
In addition, information in this prospectus or any related prospectus supplement
is current only as of the date on its cover. By delivery of this prospectus and
any related prospectus supplement, we are not offering to sell any securities,
and are not soliciting an offer to buy any securities, in any state where the
offer and sale is not permitted.
AVAILABLE INFORMATION; INCORPORATION BY REFERENCE
We have filed with the SEC a registration statement under the Securities
Act of 1933, as amended, with respect to the certificates offered by this
prospectus. This prospectus forms a part of the registration statement. This
prospectus and the related prospectus supplement do not contain all of the
information with respect to an offering that is contained in the registration
statement. For further information regarding the documents referred to in this
prospectus and the related prospectus supplement, you should refer to the
registration statement and its exhibits. You can inspect the registration
statement and its exhibits, and make copies of these documents at prescribed
rates, at the public reference facilities maintained by the SEC at its Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located as follows: Chicago Regional Office, 500 West Madison,
14th Floor, Chicago, Illinois 60661; and New York Regional Office, Seven World
Trade Center, New York, New York 10048. You can also obtain copies of such
materials electronically through the SEC's Web site (http://www.sec.gov).
In connection with each series of offered certificates, we will file or
arrange to have filed with the SEC with respect to the related trust any
periodic reports that are required under the Securities Exchange Act of 1934, as
amended. All documents and reports that are so filed for any particular trust
prior to the termination of an offering of certificates are incorporated by
reference into, and should be considered a part of, this prospectus. Upon
request, we will provide without charge to each person receiving this prospectus
in connection with an offering, a copy of any or all documents or reports that
are so incorporated by reference. All requests should be directed to us in
writing at 277 Park Avenue, 9th Floor, New York, New York 10172, attention: N.
Dante LaRocca, or by telephone at (212) 892-3000.
-3-
<PAGE>
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SUMMARY OF PROSPECTUS
This summary contains selected information from this prospectus. It does
not contain all of the information you need to consider in making your
investment decision. To understand all of the terms of a particular offering of
certificates, you should read carefully this prospectus and the related
prospectus supplement in full.
Who We Are............................ DLJ Commercial Mortgage Corp. is a
Delaware corporation. Our principal
offices are located at 277 Park
Avenue, New York, New York 10172. Our
main telephone number is (212)
892-3000. See "DLJ Commercial Mortgage
Corp."
The Securities Being Offered.......... The securities that will be offered
pursuant to this prospectus and the
related prospectus supplements consist
of mortgage pass-through certificates.
These certificates will be issued in
series, and each series will, in turn,
consist of one or more classes. Each
class of offered certificates must, at
the time of issuance, be assigned an
investment grade rating by at least
one nationally recognized statistical
rating organization. Typically, the
four highest rating categories, within
which there may be sub-categories or
gradations to indicate relative
standing, signify investment grade.
See "Rating."
Each series of offered certificates
will evidence beneficial ownership
interests in a trust established by us
and containing the assets described in
this prospectus and the related
prospectus supplement.
The Offered Certificates may be
Issued with Other Certificates... We may not publicly offer all the
mortgage pass-through certificates
evidencing interests in a particular
trust. We may elect to retain some of
those certificates, to place some
privately with institutional investors
or to deliver some to the applicable
seller as partial consideration for
the related mortgage assets. In
addition, some of those certificates
may not satisfy the rating requirement
described above for offered
certificates.
The Governing Documents............... In general, a pooling and servicing
agreement or other similar agreement
or collection of agreements will
govern--
- --------------------------------------------------------------------------------
-4-
<PAGE>
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o the creation of and transfer of
assets to each trust,
o the issuance of the related
series of certificates, and
o the servicing and administration
of the trust assets.
The parties to the governing
document(s) will always include us and
a trustee. We will be responsible for
establishing the trust relating to
each series of offered certificates.
In addition, we will transfer or
arrange for the transfer of the
initial trust assets to that trust. In
general, the trustee will be
responsible for, among other things,
making payments and preparing and
disseminating certain reports to the
holders of the offered and non-offered
certificates.
If the trust assets include mortgage
loans, the parties to the governing
document(s) will also include--
o a master servicer that will
generally be responsible for
performing customary servicing
duties with respect to those
mortgage loans that are not
defaulted, nonperforming or
otherwise problematic in any
material respect, and
o a special servicer that will
generally be responsible for
servicing and administering
mortgage loans that are
defaulted, nonperforming or
otherwise problematic in any
material respect and real estate
assets acquired in respect of
defaulted mortgage loans.
The same person or entity, or
affiliated entities, may act as both
master servicer and special servicer
for any trust.
If the trust assets include
mortgage-backed securities, the
parties to the governing document(s)
may also include a manager that will
be responsible for performing various
administrative duties with respect to
such mortgage-backed securities. If
the related trustee assumes such
duties, however, there will be no
manager.
In the related prospectus supplement,
we will identify the trustee and any
master servicer, special servicer or
manager for each trust and will
describe their respective duties in
further detail. See "Description of
the Governing Documents."
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<PAGE>
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Certain Characteristics of
the Mortgage Assets.............. The trust assets with respect to any
series of offered certificates will,
in general, include mortgage loans.
Each mortgage loan to be included in a
trust will constitute the obligation
of one or more persons to repay a
debt, and the performance of that
obligation will be secured by a first
or junior lien on, or security
interest in, the ownership, leasehold
or other interest(s) of the related
borrower or another person in or with
respect to one or more commercial or
multifamily real properties. In
particular, the those properties may
include:
o rental or cooperatively-owned
buildings with multiple dwelling
units;
o retail properties related to the
sale of consumer goods and other
products, or related to
providing entertainment,
recreational or personal
services, to the general public;
o office buildings;
o hospitality properties;
o casino properties;
o health care-related facilities;
o industrial facilities;
o warehouse facilities,
mini-warehouse facilities and
self-storage facilities;
o restaurants, taverns and other
establishments involved in the
food and beverage industry;
o manufactured housing
communities, mobile home parks
and recreational vehicle parks;
o recreational and resort
properties;
o arenas and stadiums;
o churches and other religious
facilities;
o parking lots and garages;
- --------------------------------------------------------------------------------
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<PAGE>
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o mixed use properties;
o other income-producing
properties; and
o unimproved land that is zoned
for multifamily residential or
commercial use.
The mortgage loans to be included by
us in a trust will have a variety of
payment terms. For example, a mortgage
loan--
o may provide for the accrual of
interest at a mortgage interest
rate that is fixed over its
term, that resets on one or more
specified dates or that
otherwise adjusts from time to
time;
o may provide for the accrual of
interest at a mortgage interest
rate that may be converted at
the borrower's election from an
adjustable to a fixed interest
rate or from a fixed to an
adjustable interest rate;
o may provide for no accrual of
interest;
o may provide for level payments
to stated maturity, for payments
that reset in amount on one or
more specified dates or for
payments that otherwise adjust
from time to time to accommodate
changes in the coupon rate or to
reflect the occurrence of
certain events;
o may be fully amortizing or,
alternatively, may be partially
amortizing or nonamortizing,
with a substantial payment of
principal due on its stated
maturity date;
o may permit the negative
amortization or deferral of
accrued interest;
o may prohibit some or all
voluntary prepayments or require
payment of a premium, fee or
charge in connection with those
prepayments; and/or
o may provide for payments of
principal, interest or both, on
due dates that occur monthly,
bi-monthly, quarterly,
semi-annually, annually or at
some other interval.
- --------------------------------------------------------------------------------
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<PAGE>
- --------------------------------------------------------------------------------
Any mortgage loan may have two or more
component parts, each having
characteristics that are otherwise
described in this prospectus as being
attributable to separate and distinct
mortgage loans.
We do not originate mortgage loans.
However, some of the mortgage loans
underlying the offered certificates
may be originated by our affiliates.
Neither we nor any of our affiliates
will guarantee or insure repayment of
any of the mortgage loans to be
included in a trust. Unless we
expressly state otherwise in the
related prospectus supplement, no
governmental agency or instrumentality
will guarantee or insure repayment of
any of the mortgage loans to be
included in a trust. See "Description
of the Trust Assets--Mortgage Loans."
The trust assets with respect to any
series of offered certificates may
also include mortgage participations,
mortgage pass-through certificates,
collateralized mortgage obligations
and other mortgage-backed securities,
that evidence an interest in, or are
secured by a pledge of, one or more
mortgage loans of the type described
above. We will not include a
mortgage-backed security among the
trust assets with respect to any
series of offered certificates unless
we would be free to publicly resell
the security without registration. See
"Description of the Trust
Assets--Mortgage-Backed Securities."
We will describe the specific
characteristics of the mortgage assets
underlying a series of offered
certificates in the related prospectus
supplement.
In general, the aggregate outstanding
principal balance of the mortgage
assets transferred by us to any
particular trust will equal or exceed
the initial aggregate outstanding
principal balance of the related
series of certificates. In the event
that the aggregate outstanding
principal balance of the related
mortgage assets initially delivered by
us to the related trustee is less than
the initial aggregate outstanding
principal balance of any series of
certificates, we may deposit or
arrange for the deposit of cash or
liquid investments on an interim basis
with the related trustee to cover the
shortfall. For 90 days following the
date of initial issuance of that
series of certificates, we will be
entitled to obtain a release of the
deposited cash or
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<PAGE>
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investments if we deliver or arrange
for delivery of a corresponding amount
of mortgage assets. If we fail,
however, to deliver mortgage assets
sufficient to make up the entire
shortfall, any of the cash or,
following liquidation, investments
remaining on deposit with the related
trustee will be used by the related
trustee to pay down the aggregate
principal balance of the related
series of certificates, as described
in the related prospectus supplement.
Certain Characteristics of
the Offered Certificates......... An offered certificate may entitle the
holder to receive:
o a stated principal amount;
o interest on a principal
balance or notional
amount, at a fixed,
variable or adjustable
pass-through rate;
o specified, fixed or
variable portions of the
interest, principal or
other amounts received on
the related mortgage
assets;
o payments of principal,
with disproportionate,
nominal or no payments of
interest;
o payments of interest, with
disproportionate, nominal
or no payments of
principal;
o payments of interest or
principal that commence
only as of a specified
date or only after the
occurrence of certain
events, such as the
payment in full of the
interest and principal
outstanding on one or more
other classes of
certificates of the same
series;
o payments of principal to
be made, from time to time
or for designated periods,
at a rate that is faster
(and, in some cases,
substantially faster) or
slower (and, in some
cases, substantially
slower) than the rate at
which payments or other
collections of principal
are received on the
related mortgage assets;
o payments of principal to
be made, subject to
available funds, based on
a specified principal
payment schedule or other
methodology; or
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<PAGE>
- --------------------------------------------------------------------------------
o payments of all or part of
the prepayment or
repayment premiums, fees
and charges, equity
participations payments or
other similar items
received on the related
mortgage assets.
Any class of offered certificates may
be senior or subordinate to one or
more other classes of certificates of
the same series, including a
non-offered class of certificates of
that series, for purposes of some or
all payments and/or allocations of
losses.
A class of offered certificates may
have two or more component parts, each
having characteristics that are
otherwise described in this prospectus
as being attributable to separate and
distinct classes.
We will describe the specific
characteristics of each class of
offered certificates in the related
prospectus supplement. See
"Description of the Certificates."
Credit Support and
Interest Rate Protection for
the Offered Certificates......... Some classes of offered certificates
may be protected in full or in part
against certain defaults and losses on
the related mortgage assets through
the subordination of one or more other
classes of certificates of the same
series or by other types of credit
support. The other types of credit
support may include a letter of
credit, a surety bond, an insurance
policy, a guarantee or a reserve fund.
We will describe the credit support,
if any, for each class of offered
certificates in the related prospectus
supplement.
The assets of any particular trust may
also include any of the following
agreements:
o guaranteed investment
contracts pursuant to
which moneys held in the
funds and accounts
established for the
related series of
certificates will be
invested at a specified
rate; or
o interest rate exchange
agreements, interest rate
cap or floor agreements,
or other agreements and
arrangements designed to
reduce the effects of
interest rate fluctuations
on the related mortgage
assets or on one or more
classes of offered
certificates of the
related series.
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<PAGE>
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We will describe the types of
reinvestment and interest rate
protection, if any, for each class of
offered certificates in the related
prospectus supplement.
See "Risk Factors," "Description of
the Trust Funds" and "Description of
Credit Support."
Advances to Cover Delinquent
Payments of Principal and
Interest on the Mortgage Assets.. If the related trust assets include
mortgage loans, the master servicer,
the special servicer, the trustee, any
provider of credit support and/or any
other specified person may be
obligated to make, or may have the
option of making, certain advances
with respect to delinquent scheduled
payments of principal and/or interest
on such mortgage loans. Any party
making advances will be entitled to
reimbursement from subsequent
recoveries on the related mortgage
loan and as otherwise described in
this prospectus or the related
prospectus supplement. That party may
also be entitled to receive interest
on its advances for a specified
period. See "Description of the
Certificates--Advances in Respect of
Delinquencies."
If the related trust assets include
mortgage-backed securities, we will
describe in the related prospectus
supplement any comparable advancing
obligation in respect of such
mortgage-backed securities or the
underlying mortgage loans.
Optional Termination.................. We will describe in the related
prospectus supplement any
circumstances in which a specified
party is permitted or obligated to
purchase or sell any of the mortgage
assets underlying a series of offered
certificates. In particular, a master
servicer, special servicer or other
designated party may be permitted or
obligated to purchase or sell--
o all the mortgage assets in
any particular trust,
thereby resulting in a
termination of the trust,
or
o that portion of the
mortgage assets in any
particular trust as is
necessary or sufficient to
retire one or more classes
of offered certificates of
the related series.
See "Description of the
Certificates--Termination."
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<PAGE>
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Federal Income Tax Consequences....... Any class of offered certificates will
constitute or evidence ownership of
either:
o "regular interests" or
"residual interests" in a
"real estate mortgage
investment conduit" under
Sections 860A through 860G
of the Internal Revenue
Code of 1986, or
o interests in a grantor
trust under Subpart E of
Part I of Subchapter J of
the Internal Revenue Code
of 1986.
See "Federal Income Tax Consequences."
ERISA Considerations.................. If you are a fiduciary of an employee
benefit plan or other retirement plan
or arrangement, you should review with
your legal advisor whether the
purchase or holding of offered
certificates could give rise to a
transaction that is prohibited or is
not otherwise permissible under
applicable law. See "ERISA
Considerations."
Legal Investment...................... If your investment authority is
subject to legal restrictions, you
should consult your legal advisor to
determine whether and to what extent
the offered certificates constitute a
legal investment for you. We will
specify in the related prospectus
supplement which classes of the
offered certificates will constitute
"mortgage related securities" for
purposes of the Secondary Mortgage
Market Enhancement Act of 1984, as
amended. See "Legal Investment."
- --------------------------------------------------------------------------------
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RISK FACTORS
You should consider the following factors (as well as the factors set
forth under "Risk Factors" in the related prospectus supplement) in deciding
whether to purchase offered certificates.
Lack of Liquidity Will Impair Your Ability to Sell Your Certificates and may
Have an Adverse Effect on the Market Value of Your Certificates
The offered certificates may have limited or no liquidity. We cannot
assure you that a secondary market for your certificates will develop. There
will be no obligation on the part of anyone to establish a secondary market.
Even if a secondary market does develop for your certificates, it may provide
you with less liquidity than you anticipated and it may not continue for the
life of your certificates.
We will describe in the related prospectus supplement the information that
will be available to you with respect to your certificates. The limited nature
of such information may adversely affect the liquidity of your certificates.
We do not currently intend to list the offered certificates on any
national securities exchange or the NASDAQ stock market.
Lack of liquidity will impair your ability to sell your certificates and
may prevent you from doing so at a time when you may want or need to. Lack of
liquidity could adversely affect the market value of your certificates. We do
not expect that you will have any redemption rights with respect to your
certificates.
If you decide to sell your certificates, you may have to sell at discount
from the price you paid for reasons unrelated to the performance of your
certificates or the related mortgage assets. Pricing information regarding your
certificates may not be generally available on an ongoing basis.
The Market Value of Offered Certificates Will be Sensitive to Fluctuations in
Prevailing Interest Rates and Spreads
The market value of your certificates will be sensitive to fluctuations in
current interest rates. However, a change in the market value of your
certificates as a result of an upward or downward movement in current interest
rates may not equal the change in the market value of your certificates as a
result of an equal but opposite movement in interest rates.
Investor perceptions regarding the quality of commercial mortgage-backed
securities generally as an investment relative to alternative investments such
as U.S. treasury securities will affect the market value of your certificates.
That market value will decline if potential investors prefer the safety of
investments such as U.S. treasury securities. This may occur regardless of the
performance of your certificates or the related mortgage assets.
If you decide to sell your certificates, you may have to sell at discount
from the price you paid for reasons unrelated to the performance of your
certificates or the related mortgage assets. Pricing information regarding your
certificates may not be generally available on an ongoing basis.
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<PAGE>
Payments on the Offered Certificates Will be Made Solely From the Limited Assets
of the Related Trust
The offered certificates do not represent obligations of any person or
entity and do not represent a claim against any assets other than those of the
related trust. No governmental agency or instrumentality will guarantee or
insure payment on the offered certificates. In addition, neither we nor our
affiliates are responsible for making payments on the offered certificates if
collections on the related trust assets are insufficient. If the related trust
assets are insufficient to make payments on your certificates, no other assets
will be available to you for payment of the deficiency, and you will bear the
resulting loss. Any advances made by a master servicer or other party with
respect to the mortgage assets underlying your certificates are intended solely
to provide liquidity and not credit support. The party making those advances
will have a right to reimbursement, probably with interest, which is senior to
your right to receive payment on your certificates.
Any Credit Support for Your Certificates may be Insufficient to Protect you
Against all Potential Losses
The Amount of Credit Support Will Be Limited. The rating agencies that
assign ratings to your certificates will establish the amount of credit support,
if any, for your certificates based on, among other things, an assumed level of
defaults, delinquencies and losses with respect to the related mortgage assets.
Actual losses may, however, exceed the assumed levels. See "Description of the
Certificates--Allocation of Losses and Shortfalls" and "Description of Credit
Support." If actual losses on the related mortgage assets exceed the assumed
levels, you may be required to bear the additional losses.
Credit Support May Not Cover All Types of Losses. The credit support, if
any, for your certificates may not cover all of your potential losses. For
example, certain forms of credit support may not cover or may provide limited
protection against losses that you may suffer by reason of fraud or negligence
or as a result of certain uninsured casualties at the real properties securing
the related mortgage loans. You may be required to bear any losses which are not
covered by the credit support.
Disproportionate Benefits to Certain Classes and Series. If a form of
credit support covers multiple classes or series and losses exceed the amount of
such credit support, it is possible that the holders of offered certificates of
another series or class will be disproportionately benefited by such credit
support to your detriment.
The Investment Performance of Your Certificates Will Depend Upon Payments,
Defaults and Losses on the Underlying Mortgage Loans
The Terms of the Underlying Mortgage Loans Will Affect Payments on Your
Certificates. Each of the mortgage loans underlying the offered certificates
will specify the terms on which the related borrower must repay the outstanding
principal amount of the loan. The rate, timing and amount of scheduled payments
of principal may vary, and may vary significantly, from mortgage loan to
mortgage loan. The rate at which the underlying mortgage loans amortize will
directly affect the rate at which the principal balance or notional amount of
your certificates is paid down or otherwise reduced.
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<PAGE>
In addition, any mortgage loan underlying the offered certificates may
permit the related borrower during some or all of the loan term to prepay the
loan. In general, a borrower will be more likely to prepay its mortgage loan
when it has an economic incentive to do so, such as obtaining a larger loan on
the same underlying real property or a lower or otherwise more advantageous
interest rate through refinancing. If a mortgage loan includes some form of
prepayment restriction, the likelihood of prepayment should decline. These
restrictions may include--
o an absolute or partial prohibition against voluntary prepayments
during some or all of the loan term, or
o a requirement that voluntary prepayments be accompanied by some form
of prepayment premium, fee or charge during some or all of the loan
term.
In many cases, there will be no restriction associated with the application of
insurance proceeds or condemnation proceeds as a prepayment of principal.
Notwithstanding the terms of the mortgage loans, the amount, rate and
timing of payments and other collections thereon will, to some degree, be
unpredictable because of borrower defaults and because of casualties and
condemnations with respect to the underlying real properties.
The investment performance of your certificates may vary materially and
adversely from your expectations due to--
o the rate of prepayments and other unscheduled collections of
principal on the underlying mortgage loans being faster or slower
than you anticipated, or
o the rate of defaults on the underlying mortgage loans being faster,
or the severity of losses on the underlying mortgage loans being
greater, than your anticipated.
The actual yield to you, as a holder of an offered certificate, may not
equal the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any offered certificates, you should make an independent decision as
to the appropriate prepayment, default and loss assumptions to be used. If the
trust assets underlying your certificates include mortgage-backed securities,
the terms of those securities may soften or enhance the effects to you that may
result from prepayments, defaults and losses on the mortgage loans that
ultimately back those securities.
Prepayments on the Underlying Mortgage Loans Will Affect the Average Life
of Your Certificates. Payments of principal and/or interest on your certificates
will depend upon, among other things, the rate and timing of payments on the
related mortgage assets. Prepayments on the underlying mortgage loans may result
in a faster rate of principal payments on your certificates, thereby resulting
in a shorter average life for your certificates than if such prepayments had not
occurred. The rate and timing of principal prepayments on pools of mortgage
loans varies among pools and is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. Accordingly, neither you
nor we can predict the rate and timing of principal prepayments on the mortgage
loans directly or indirectly underlying your certificates. As a result,
repayment of your certificates could occur significantly earlier or later, and
the average life of your certificates could be significantly shorter or longer,
than you expected.
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<PAGE>
The extent to which prepayments on the underlying mortgage loans
ultimately affect the average life of your certificates depends on the terms and
provisions of your certificates. A class of offered certificates may entitle the
holders to a pro rata share of any prepayments on the related mortgage loans, to
all or a disproportionately large share of those prepayments, or to none or a
disproportionately small share of those prepayments. If you are entitled to a
disproportionately large share of any prepayments on the underlying mortgage
loans, your certificates may be retired at an earlier date. If, however, you are
only entitled to a small share of the prepayments on the underlying mortgage
loans, the average life of your certificates may be extended. Your entitlement
to receive payments, including prepayments, of principal of the underlying
mortgage loans may--
o vary based on the occurrence of certain events, such as the
retirement of one or more other classes of certificates of the same
series, or
o be subject to certain contingencies, such as prepayment and default
rates with respect to the underlying mortgage loans.
We will describe the terms and provisions of your certificates more fully
in the related prospectus supplement.
Prepayments on the Underlying Mortgage Loans Will Affect the Yield on Your
Certificates. If you purchase your certificates at a discount or premium, the
yield on your certificates will be sensitive to prepayments on the mortgage
loans. If you purchase your certificates at a discount, you should consider the
risk that a slower than anticipated rate of principal payments on the underlying
mortgage loans could result in your actual yield being lower than your
anticipated yield. Alternatively, if you purchase your certificates at a
premium, you should consider the risk that a faster than anticipated rate of
principal payments on the underlying mortgage loans could result in your actual
yield being lower than your anticipated yield. The potential effect that
prepayments may have on the yield of your certificates will increase as the
discount deepens or the premium increases. If the amount of interest payable on
your certificates is disproportionately large, as compared to the amount of
principal payable on your certificates, you may fail to recover your original
investment under some prepayment scenarios.
Delinquencies, Defaults and Losses on the Underlying Mortgage Loans may
Affect the Amount and Timing of Payments on Your Certificates. The rate and
timing of delinquencies and defaults, and the severity of losses, on the
underlying mortgage loans will impact the amount and timing of payments on the
related series of offered certificates to the extent that their effects are not
offset by delinquency advances or some form of credit support.
Unless otherwise covered by delinquency advances or some form of credit
support, defaults on the underlying mortgage loans may delay payments on the
related series of offered certificates while the defaulted mortgage loans are
worked-out or liquidated. However, liquidations of defaulted mortgage loans
prior to maturity could affect the yield and average life of an offered
certificate in a manner similar to a voluntary prepayment.
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<PAGE>
If you calculate your anticipated yield to maturity based on an assumed
rate of default and amount of losses on the underlying mortgage loans that is
lower than the default rate and amount of losses actually experienced, then, to
the extent that you are required to bear the additional losses, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. Furthermore, the timing of losses on the underlying
mortgage loans can affect your yield. In general, the earlier you bear any loss
on an underlying mortgage loan, the greater the negative effect on your yield.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property below."
There is an Increased Risk of Default Associated With Balloon Payments.
Any of the mortgage loans underlying your certificates may be nonamortizing or
only partially amortizing. The borrower under that mortgage loan is required to
make substantial payments of principal and interest (that is, balloon payments)
on the maturity date of the loan. The ability of the borrower to make a balloon
payment depends upon the borrower's ability to refinance or sell the real
property securing the loan. The ability of the borrower to refinance or sell the
property will be affected by a number of factors, including:
o the fair market value and condition of the underlying real property;
o the level of interest rates;
o the borrower's equity in the underlying real property;
o the borrower's financial condition;
o the operating history of the underlying real property;
o changes in zoning and tax laws;
o changes in competition in the relevant area;
o changes in rental rates in the relevant area;
o changes in governmental regulation and fiscal policy;
o prevailing general and regional economic conditions;
o the state of the fixed income and mortgage markets; and
o the availability of credit for multifamily rental or commercial
properties.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
Neither we nor any of our affiliates will be required to refinance any
mortgage loan underlying your certificates.
The related master servicer or special servicer may (within prescribed
limits) extend and modify mortgage loans underlying your certificates that are
in default or as to which a payment default is imminent in order to maximize
recoveries on the defaulted loans. The related master servicer or special
servicer is only required to determine that any such extension or modification
is reasonably likely to produce a greater recovery than a liquidation of the
real property securing the defaulted loan. There is a risk that the decision of
the master servicer or special servicer to extend or modify a mortgage loan may
not in fact produce a greater recovery.
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<PAGE>
Repayment of a Commercial or Multifamily Mortgage Loan Depends upon the
Performance and Value of the Underlying Real Property and the Related Borrower's
Ability to Refinance the Property
Most of the Mortgage Loans Underlying Your Certificates Will be
Nonrecourse. You should consider all of the mortgage loans underlying your
certificates to be nonrecourse loans. This means that, in the event of a
default, recourse will be limited to the related real property or properties
securing the defaulted mortgage loan. In those cases where recourse to a
borrower or guarantor is permitted by the loan documents, we generally will not
undertake any evaluation of the financial condition of such borrower or
guarantor. Consequently, full and timely payment on each mortgage loan
underlying your certificates will depend on one or more of the following:
o the sufficiency of the net operating income of the applicable real
property;
o the market value of the applicable real property at or prior to
maturity; and
o the ability of the related borrower to refinance or sell the
applicable real property.
In general, the value of a multifamily or commercial property will depend on its
ability to generate net operating income. The ability of an owner to finance a
multifamily or commercial property will depend, in large part, on the property's
value and ability to generate net operating income.
Unless we state otherwise in the related prospectus supplement, none of
the mortgage loans underlying your certificates will be insured or guaranteed by
any governmental entity or private mortgage insurer.
The risks associated with lending on multifamily and commercial properties
are inherently different from those associated with lending on the security of
single-family residential properties. This is because multifamily rental and
commercial real estate lending involves larger loans and, as described above,
repayment is dependent upon the successful operation and value of the related
real estate project.
Many Risk Factors are Common to Most or all Multifamily and Commercial
Properties. The following factors, among others, will affect the ability of a
multifamily or commercial property to generate net operating income and,
accordingly, its value:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o the characteristics of the neighborhood where the property is
located;
o the proximity and attractiveness of competing properties;
o the existence and construction of competing properties;
o the adequacy of the property's management and maintenance;
o national, regional or local economic conditions, including plant
closings, industry slowdowns and unemployment rates;
o local real estate conditions, including an increase in or oversupply
of comparable commercial or residential space;
o demographic factors;
o customer tastes and preferences;
o retroactive changes in building codes; and
o changes in governmental rules, regulations and fiscal policies,
including environmental legislation.
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<PAGE>
Particular factors that may adversely affect the ability of a
multifamily or commercial property to generate net operating income include:
o an increase in interest rates, real estate taxes and other operating
expenses;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o a decline in the financial condition of a major tenant and, in
particular, a sole tenant or anchor tenant;
o an increase in vacancy rates;
o a decline in rental rates as leases are renewed or replaced; and
o natural disasters and civil disturbances such as earthquakes,
hurricanes, floods, eruptions or riots.
The volatility of net operating income generated by a multifamily or
commercial property over time will be influenced by many of the foregoing
factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the rental rates at which leases are renewed or replaced;
o the percentage of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with
revenues; and
o the level of capital expenditures required to maintain the property
and to maintain or replace tenants.
Therefore, commercial and multifamily properties with short-term or less
creditworthy sources of revenue and/or relatively high operating costs, such as
those operated as hospitality and self-storage properties, can be expected to
have more volatile cash flows than commercial and multifamily properties with
medium- to long-term leases from creditworthy tenants and/or relatively low
operating costs. A decline in the real estate market will tend to have a more
immediate effect on the net operating income of commercial and multifamily
properties with short-term revenue sources and may lead to higher rates of
delinquency or defaults on the mortgage loans secured by those properties.
The Successful Operation of a Multifamily or Commercial Property Depends
on Tenants. Generally, multifamily and commercial properties are subject to
leases. The owner of a multifamily or commercial property typically uses lease
or rental payments for the following purposes:
o to pay for maintenance and other operating expenses associated with
the property;
o to fund repairs, replacements and capital improvements at the
property; and
o to service mortgage loans secured by, and any other debt obligations
associated with operating, the property.
Factors that may adversely affect the ability of a multifamily or
commercial property to generate net operating income from lease and rental
payments include:
o an increase in vacancy rates, which may result from tenants deciding
not to renew an existing lease or discontinuing operations;
o an increase in tenant payment defaults;
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<PAGE>
o a decline in rental rates as leases are entered into, renewed or
extended at lower rates;
o an increase in the capital expenditures needed to maintain the
property or to make improvements; and
o a decline in the financial condition of a major or sole tenant.
Various factors that will affect the operation and value of a commercial
property include:
o the business operated by the tenants;
o the creditworthiness of the tenants; and
o the number of tenants.
Dependence on a Single Tenant or a Small Number of Tenants Makes a
Property Riskier Collateral. In those cases where an income-producing property
is leased to a single tenant or is primarily leased to one or a small number of
major tenants, a deterioration in the financial condition or a change in the
plan of operations of any such tenant can have particularly significant effects
on the net operating income generated by the property. If any such tenant
defaults under or fails to renew its lease, the resulting adverse financial
effect on the operation of the property will be substantially more severe than
would be the case with respect to a property occupied by a large number of less
significant tenants.
An income-producing property operated for retail, office or industrial
purposes also may be adversely affected by a decline in a particular business or
industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy Adversely Affects Property Performance. The bankruptcy
or insolvency of a major tenant, or a number of smaller tenants, at a commercial
property may adversely affect the income produced by the property. Under the
U.S. Bankruptcy Code, a tenant has the option of assuming or rejecting any
unexpired lease. If the tenant rejects the lease, the landlord's claim for
breach of the lease would be a general unsecured claim against the tenant unless
there is collateral securing the claim. The claim would be limited to:
(i) the unpaid rent reserved under the lease for the periods prior to
the bankruptcy petition or any earlier surrender of the leased
premises, plus
(ii) an amount, not to exceed three years' rent, equal to the greater of
one year's rent and 15% of the remaining reserved rent.
The Success of an Income-Producing Property Depends on Reletting Vacant
Spaces. The operations at an income-producing property will be adversely
affected if the owner or property manager is unable to renew leases or relet
space on comparable terms when existing leases expire and/or become defaulted.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions in the case of
income-producing properties operated for retail, office or industrial purposes,
can be substantial and could reduce cash flow from the income-producing
properties. Moreover, if a tenant at a income-producing property defaults in its
lease obligations, the landlord may incur substantial costs and experience
significant delays associated with enforcing its rights and protecting its
investment, including costs incurred in renovating and reletting the property.
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<PAGE>
If an income-producing property has multiple tenants, re-leasing
expenditures may be more frequent than in the case of a property with fewer
tenants, thereby reducing the cash flow generated by the multi-tenanted
property. Multi-tenanted properties may also experience higher continuing
vacancy rates and greater volatility in rental income and expenses.
Property Value may be Adversely Affected Even When Current Operating
Income is not. Various factors may affect the value of multifamily and
commercial properties without affecting their current net operating income,
including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations, licensing or fiscal policy;
o changes in zoning or tax laws; and
o potential environmental or other legal liabilities.
Property Management may Affect Property Operations and Value. The
operation of an income-producing property will depend upon the property
manager's performance and viability. The property manager generally is
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure, including staggering
durations of leases and establishing levels of rent payments;
o operating the property and providing building services;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are carried out
in a timely fashion.
Income-producing properties that derive revenues primarily from short-term
rental commitments, such as hospitality or self-storage properties, generally
require more intensive management than properties leased to tenants under
long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can
maintain or improve occupancy rates, business and cash flow, reduce operating
and repair costs and preserve building value. On the other hand, management
errors can, in some cases, impair the long term viability of an income-producing
property.
Maintaining a Property in Good Condition is Expensive. The owner may
expend a substantial amount to maintain, renovate or refurbish a commercial or
multifamily property. The effects of poor construction quality will increase
over time in the form of increased maintenance and capital improvements. Even
superior construction will deteriorate over time if management does not schedule
and perform adequate maintenance in a timely fashion.
Competition Will Adversely Affect the Profitability and Value of an
Income-Producing Property. Some income-producing properties are located in
highly competitive areas. Comparable income-producing properties located in the
same area compete on the basis of a number of factors including:
o rental rates;
o location;
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<PAGE>
o type of business or services and amenities offered; and
o nature and condition of the particular property.
The profitability and value of an income-producing property may be
adversely affected by a comparable property that:
o offers lower rents;
o has lower operating costs;
o offers a more favorable location; or
o offers better facilities.
Costs of renovating, refurbishing or expanding an income-producing
property in order to remain competitive can be substantial.
Various Types of Income-Producing Properties may Present Special Risks.
The relative importance of any factor affecting the value or operation of an
income-producing property will depend on the type and use of the property. In
addition, the type and use of a particular income-producing property may present
special risks. For example--
o Health care-related facilities and casinos are subject to
significant governmental regulation of the ownership, operation,
maintenance and/or financing of such properties.
o Multifamily rental properties, manufactured housing communities and
mobile home parks may be subject to rent control or rent
stabilization laws and laws governing landlord/tenant relationships.
o Hospitality and restaurant properties are often operated pursuant to
franchise, management or operating agreements, which may be
terminable by the franchisor or operator. Moreover, the
transferability of a hotel's or restaurant's operating, liquor and
other licenses upon a transfer of the hotel or restaurant is subject
to local law requirements.
o Recreational and resort properties, properties that provide
entertainment services, hospitality properties, restaurants and
taverns, mini-warehouses and self-storage facilities tend to be
adversely affected more quickly by a general economic downturn than
other types of commercial properties.
o Marinas will be affected by various statutes and government
regulations that govern the use of, and construction on, rivers,
lakes and other waterways.
o Certain recreational and hospitality properties may have seasonal
fluctuations and/or may be adversely affected by prolonged
unfavorable weather conditions.
o Churches and other religious facilities may be highly dependent on
donations which are likely to decline as economic conditions
decline.
o Properties used as gas stations, automotive sales and service
centers, dry cleaners, warehouses and industrial facilities may be
more likely to have environmental issues.
Additionally, many types of commercial properties are not readily
convertible to alternative uses if the original use is not successful or may
require significant capital expenditures to effect any conversion to an
alternative use. As a result, the liquidation value of any of those types of
property would be substantially less than would otherwise be the case. See
"Description of the Trust Assets--Mortgage Loans--A Discussion of the Various
Type of Multifamily and Commercial Properties that may Secure Mortgage Loans
Underlying a Series of Offered Certificates."
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Borrower Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
A particular borrower or group of related borrowers may be associated with
multiple real properties securing the mortgage loans in any of our trusts. The
bankruptcy or insolvency of, or other financial problems with respect to, that
borrower or group of borrowers could have an adverse effect on the operation of
all of the related real properties and on the ability of those properties to
produce sufficient cash flow to make required payments on the related mortgage
loans. For example, if a borrower or group of related borrowers that owns or
controls several real properties experiences financial difficulty at one of
those properties, it could defer maintenance at another of those properties in
order to satisfy current expenses with respect to the first property. That
borrower or group of related borrowers could also attempt to avert foreclosure
by filing a bankruptcy petition that might have the effect of interrupting debt
service payments on all the related mortgage loans for an indefinite period. In
addition, multiple real properties owned by the same borrower or related
borrowers are likely to have common management. This would increase the risk
that financial or other difficulties experienced by the property manager could
have a greater impact on the lender, including one of our trusts, holding the
related loans.
Loan Concentration Within a Trust Exposes Investors to Greater Risk of Default
and Loss
Any of the mortgage loans in one of our trusts may be substantially larger
than the other loans in that trust. In general, the inclusion in a trust of one
or more mortgage loans that have outstanding principal balances that are
substantially larger than the other mortgage loans in the trust can result in
losses that are more severe, relative to the size of the related mortgage pool,
than would be the case if the aggregate balance of that pool were distributed
more evenly.
Geographic Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
If a concentration of mortgage loans in any of our trusts is secured by
real properties in a particular locale, state or region, the holders of the
related offered certificates will have a greater exposure to:
o any adverse economic developments that occur in the locale, state or
region where the properties are located;
o changes in the real estate market where the properties are located;
o changes in governmental rules and fiscal policies in the
governmental jurisdiction where the properties are located; and
o acts of nature, including floods, tornadoes and earthquakes, in the
areas where properties are located.
Changes in Pool Composition Will Change the Nature of Your Investment
The mortgage loans underlying any series of offered certificates will
amortize at different rates and mature on different dates. In addition, some of
those mortgage loans may be prepaid or liquidated. As a result, the relative
composition of the mortgage pool will change over time.
If you purchase certificates with a pass-through rate that is equal to or
calculated based upon a weighted average of interest rates on the underlying
mortgage loans, your pass-through rate will be affected, and may decline, as the
relative composition of the mortgage pool changes.
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<PAGE>
In addition, as payments and other collections of principal are received
with respect to the underlying mortgage loans, the remaining mortgage pool
backing your certificates may exhibit an increased concentration with respect to
property type, number and affiliation of borrowers and geographic location.
Subordinate Debt Increases the Likelihood That a Borrower Will Default on a
Mortgage Loan Backing Your Certificates
Most mortgage loans included in one of our trusts will either (i) prohibit
the related borrower from encumbering the related real property with additional
secured debt or (ii) require the consent of the holder of the mortgage loan
prior to so encumbering such property. However, a violation of this prohibition
may not become evident until the related mortgage loan otherwise defaults, and a
lender, such as one of our trusts, may not realistically be able to prevent a
borrower from incurring subordinate debt.
The existence of any secured subordinated indebtedness increases the
difficulty of refinancing a mortgage loan backing your certificates at the
loan's maturity. In addition, the related borrower may have difficulty repaying
multiple loans. Moreover, the filing of a petition in bankruptcy by, or on
behalf of, a junior lienholder may stay the senior lienholder from taking action
to foreclose out the junior lien. See "Certain Legal Aspects of Mortgage
Loans--Subordinate Financing."
Borrower Bankruptcy Proceedings can Delay and Impair Recovery on a Mortgage Loan
Backing Your Certificates
Under the U.S. Bankruptcy Code, the filing of a petition in bankruptcy by
or against a borrower will stay the sale of a real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of a real property is less
than the principal balance of the mortgage loan it secures, the court may reduce
the amount of secured indebtedness to the then-value of the property. Such an
action would make the lender a general unsecured creditor for the difference
between the then-value of the property and the amount of its outstanding
mortgage indebtedness. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a
mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter the mortgage loan's repayment schedule.
Additionally, the borrower, as debtor-in-possession, or its bankruptcy
trustee has certain special powers to avoid, subordinate or disallow debts. In
certain circumstances, the claims of a secured lender, such as one of our
trusts, may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
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Under the U.S. Bankruptcy Code, a lender will be stayed from enforcing a
borrower's assignment of rents and leases. The U.S. Bankruptcy Code also may
interfere with a lender's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by borrower to maintain its property or for other court
authorized expenses.
As a result of the foregoing, the related trust's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
Taxes on Foreclosure Property Will Reduce Amounts Available to Make Payments on
the Offered Certificates
If one of our trusts that is designated as a "real estate mortgage
investment conduit," were to acquire a mortgaged property pursuant to a
foreclosure or deed in lieu of foreclosure, the related special servicer would
be required to retain an independent contractor to operate and manage the
property. Any net income from that operation and management, other than
qualifying "rents from real property" within the meaning of section 856(d) of
the Internal Revenue Code of 1986, as well as any rental income based on the net
profits of a tenant or sub-tenant or allocable to a service that is
non-customary in the area and for the type of building involved, will subject
the trust to federal, and possibly state or local, tax on that income at the
highest marginal corporate tax rate. This would reduce the net proceeds
available for payment with respect to the related offered certificates.
Environmental Liabilities Will Adversely Affect the Value and Operation of the
Contaminated Property and May Deter a Lender from Foreclosing
There can be no assurance--
o as to the degree of environmental testing conducted at the related
real properties in connection with the origination of the mortgage
loans underlying your certificates;
o that the environmental testing conducted by or on behalf of the
applicable originators in connection with the origination of those
mortgage loans identified all adverse environmental conditions and
risks at the related real properties;
o that the results of the environmental testing were accurately
evaluated in all cases;
o that the related borrowers have implemented or will implement all
operations and maintenance plans and other remedial actions
recommended by any environmental consultant that may have conducted
testing at the related real properties; or
o that the recommended action will fully remediate or otherwise
address all the identified adverse environmental conditions and
risks.
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In addition, the current environmental condition of a real property
securing a mortgage loan underlying your certificates could be adversely
affected by tenants, such as gasoline stations or dry cleaners, or by the
conditions or operations in the vicinity of the properties, such as leaking
underground storage tanks at another property nearby.
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
hazardous or toxic substances on, under or adjacent to the property. Those laws
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos containing materials into
the air or require the removal or containment of the materials. The owner's
liability for any required remediation generally is unlimited and could exceed
the value of the property and/or the aggregate assets of the owner. In addition,
the presence of hazardous or toxic substances, or the failure to remediate the
adverse environmental condition, may adversely affect the owner's or operator's
ability to use the affected property. In certain states, contamination of a
property may give rise to a lien on the property to ensure the costs of cleanup.
In some of those states, this lien has priority over the lien of an existing
mortgage. In addition, third parties may seek recovery from owners or operators
of real property for personal injury associated with exposure to hazardous
substances, including asbestos and lead-based paint. Persons who arrange for the
disposal or treatment of hazardous or toxic substances may be liable for the
costs of removal or remediation of the substances at the disposal or treatment
facility.
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly referred to as "CERCLA," together
with certain other federal and state laws, provide that a secured lender, such
as one of our trusts, may be liable as an "owner" or "operator" of the real
property, regardless of whether the borrower or a previous owner caused the
environmental damage, if--
o agents or employees of the lender are deemed to have participated in
the management of the borrower, or
o under certain conditions, the lender actually takes possession of a
borrower's property or control of its day-to-day operations,
including through the appointment of a receiver or foreclosure.
Although recently enacted legislation clarifies the activities in which a lender
may engage without becoming subject to liability under CERCLA and similar
federal laws, that legislation has no applicability to state environmental laws.
Moreover, future laws, ordinances or regulations could impose material
environmental liability.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers--
o any condition on the property that causes exposure to lead-based
paint, and
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o the potential hazards to pregnant women and young children,
including that the ingestion of lead-based paint chips and/or the
inhalation of dust particles from lead-based paint by children can
cause permanent injury, even at low levels of exposure.
Property owners may be liable for injuries to their tenants resulting from
exposure under various laws that impose affirmative obligations on property
owners of residential housing containing lead-based paint.
Some Provisions in the Mortgage Loans Underlying Your Certificates May Be
Challenged as Being Unenforceable
Cross-Collateralization Arrangements. It may be possible to challenge
cross-collateralization arrangements involving more than one borrower as a
fraudulent conveyance, even if the borrowers are related. If one of those
borrowers were to become a debtor in a bankruptcy case, creditors of the
bankrupt party or the representative of the bankruptcy estate of the bankrupt
party could seek to have the bankruptcy court avoid any lien granted by the
bankrupt party to secure repayment of another borrower's loan. In order to do
so, the court would have to determine that--
o the bankrupt party was insolvent at the time of granting the lien,
was rendered insolvent by the granting of the lien, was left with
inadequate capital, or was not able to pay its debts as they
matured; and
o the bankrupt party did not, when it allowed its property to be
encumbered by a lien securing the other borrower's loan, receive
fair consideration or reasonably equivalent value for pledging its
property for the equal benefit of the other borrower.
If the court were to conclude that the granting of the lien was an avoidable
fraudulent conveyance, it could nullify the lien or mortgage effecting the
cross-collateralization. The court could also allow the bankrupt party to
recover payments it made pursuant to the avoided cross-collateralization.
Prepayment Premiums, Fees and Charges. Under the laws of a number of
states, the enforceability of any mortgage loan provisions that require payment
of a prepayment premium, fee or charge upon an involuntary prepayment, is
unclear. If those provisions were unenforceable, borrowers would have an
incentive to default in order to prepay their loans.
Due-on-Sale and Debt Acceleration Clauses. Many of the mortgage loans
underlying the offered certificates will contain a due-on-sale clause, which
permits the lender, with some exceptions, to accelerate the maturity of the
mortgage loan upon the sale, transfer or conveyance of (i) the related real
property or (ii) a majority ownership interest in the related borrower. All of
the mortgage loans will include some form of debt-acceleration clause, which
permits the lender to accelerate the debt upon specified monetary or
non-monetary defaults by the related borrower. The courts of all states will
enforce acceleration clauses in the event of a material payment default. The
equity courts of any state, however, may refuse to allow the foreclosure of a
mortgage or deed of trust or to permit the acceleration of the indebtedness if:
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o the default is deemed to be immaterial,
o the exercise of such remedies would be inequitable or unjust, or
o the circumstances would render the acceleration unconscionable.
Assignments of Leases. Many of the mortgage loans underlying the offered
certificates will be secured by, among other things, an assignment of leases and
rents. Pursuant to that document, the related borrower will assign its right,
title and interest as landlord under the leases on the related real property and
the income derived therefrom to the lender as further security for the related
mortgage loan, while retaining a license to collect rents for so long as there
is no default. In the event the borrower defaults, the license terminates and
the lender is entitled to collect rents. In some cases, those assignments may
not be perfected as security interests prior to actual possession of the cash
flow. Accordingly, state law may require that the lender take possession of the
property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, the commencement of bankruptcy or
similar proceedings by or in respect of the borrower will adversely affect the
lender's ability to collect the rents. See "Certain Legal Aspects of Mortgage
Loans--Bankruptcy Laws."
Defeasance. A mortgage loan underlying a series of offered certificates
may, during specified periods and subject to certain conditions, permit the
related borrower to pledge to the holder of the mortgage loan a specified amount
of direct, non-callable United States government securities and thereby obtain a
release of the related Mortgaged Property. The cash amount which a Borrower must
expend to purchase, or must deliver to a master servicer in order for the master
servicer to purchase, the required United States government securities may be in
excess of the principal balance of the mortgage loan. There can be no assurance
that a court would not interpret that excess amount as a form of prepayment
premium or would not take it into account for usury purposes. In some states,
some forms of prepayment premiums are unenforceable. If the payment of that
excess amount were held to be unenforceable, the remaining portion of the cash
amount to be delivered may be insufficient to purchase the requisite amount of
United States government securities.
Lack of Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard
Losses
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of a property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in the related
policy. Most insurance policies typically do not cover any physical damage
resulting from:
o war,
o revolution,
o governmental actions,
o floods and other water-related causes,
o earth movement, including earthquakes, landslides and mudflows,
o wet or dry rot,
o vermin,
o domestic animals, and
o certain other kinds of risks.
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Unless the related mortgage loan documents specifically require the
borrower to insure against physical damage arising from such causes, then the
resulting losses may be borne by you as a holder of offered certificates.
Ground Leases Create Risks for Lenders That are not Present When Lending on an
Actual Ownership Interest in a Real Property
In order to secure a mortgage loan, a borrower may grant a lien on its
leasehold interest in a real property as tenant under a ground lease. If the
ground base does not provide for notice to a lender of a default thereunder on
the part of the borrower, together with a reasonable opportunity for the lender
to cure the default, the lender may be unable to prevent termination of the
lease and may lose its collateral.
In addition, upon the bankruptcy of a landlord or a tenant under a ground
lease, the debtor entity has the right to assume or reject the ground lease. If
a debtor landlord rejects the lease, the tenant has the right to remain in
possession of its leased premises at the rent reserved in the lease for the
term, including renewals. If a debtor tenant rejects any or all of its leases,
the tenant's lender may not be able to succeed to the tenant's position under
the lease unless the landlord has specifically granted the lender that right. If
both the landlord and the tenant are involved in bankruptcy proceedings, the
trustee for your certificates may be unable to enforce the bankrupt tenant's
obligation to refuse to treat as terminated a ground lease rejected by a
bankrupt landlord. In those circumstances, it is possible that the trustee could
be deprived of its security interest in the leasehold estate, notwithstanding
lender protection provisions contained in the lease or mortgage loan documents.
Changes in Zoning Laws may Adversely Affect the Use or Value of a Real Property
Due to changes in zoning requirements since the construction thereof, an
income-producing property may not comply with current zoning laws, including
density, use, parking and set back requirements. Accordingly, the property may
be a "permitted non-conforming structure" or the operation of the property may
be a "permitted non-conforming use." This means that the owner is not required
to alter the property's structure or use to comply with the new law, but the
owner may be limited in its ability to rebuild the premises "as is" in the event
of a substantial casualty loss. This may adversely affect the cash flow
available following the casualty. If a substantial casualty were to occur,
insurance proceeds may not be sufficient to pay a mortgage loan secured by the
property in full. In addition, if the property were repaired or restored in
conformity with the current law, its value or revenue-producing potential may be
less than that which existed before the casualty.
Compliance with the Americans with Disabilities Act of 1990 May Be Expensive
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. If a property does not currently comply with
that Act, the owner thereof may be required to incur significant costs in order
to effect such compliance. In addition, noncompliance could result in the
imposition of fines by the federal government or an award or damages to private
litigants.
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Litigation May Adversely Affect a Borrower's Ability to Repay its Mortgage Loan
The owner of a multifamily or commercial property may be a defendant in a
litigation arising out of, among other things, the following:
o breach of contract involving a tenant, a supplier or other party;
o negligence resulting in a personal injury, or
o responsibility for an environmental problem.
Litigation will divert the owner's attention from operating its property.
If the litigation were decided adversely to the owner, the award to the
plaintiff may adversely affect the owner's ability to repay a mortgage loan
secured by the property.
"Residual Interests" in a "Real Estate Mortgage Investment Conduit" Have Adverse
Tax Consequences
Inclusion of Taxable Income in Excess of Cash Received. If you own a
certificate which is a "residual interest" in a "real estate mortgage investment
conduit," or "REMIC," you will have to report on your income tax return as
ordinary income your pro rata share of the taxable income of the REMIC,
regardless of the amount or timing of your possible receipt of any cash on the
certificate. As a result, your certificate may have "phantom income" early in
the term of the REMIC because the taxable income from the certificate may exceed
the amount of cash you actually receive. While you will have a corresponding
amount of tax losses later in the term of the REMIC, the present value of the
"phantom income" may significantly exceed the present value of the tax losses.
Therefore, the after-tax yield on any "residual interest" certificate may be
significantly less than that of a corporate bond or other instrument having
similar cash flow characteristics. In fact, certain offered certificates which
are "residual interests" may have a negative value.
You have to report your share of the taxable income and net loss of the
REMIC until all the certificates in the related series have a principal balance
of zero. See "Federal Income Tax Consequences--REMICs."
Some Taxable Income of a "Residual Interest" can not be Offset under the
Internal Revenue Code of 1986. A portion of the taxable income from a "residual
interest" certificate may be treated as "excess inclusions" under the Internal
Revenue Code of 1986. You will have to pay tax on the "excess inclusions"
regardless of whether you have other credits, deductions or losses. In
particular, the tax on "excess inclusion":
o generally will not be reduced by losses from other activities,
o for a tax-exempt holder, will be treated as unrelated business
taxable income, and
o for a foreign holder, will not qualify for any exemption from
withholding tax.
Certain Entities Should not Invest in Certificates which are "Residual
Interests." The fees and non-interest expenses of a REMIC will be allocated pro
rata to certificates which are "residual interests" of the REMIC. However,
individuals will only be able to deduct these expenses as miscellaneous itemized
deductions, which are subject to numerous restrictions and limitations under the
Internal Revenue Code of 1986. Therefore, the certificates which are "residual
interests" generally are not appropriate investments for:
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o individuals,
o estates,
o trusts beneficially owned by any individual or estate, and
o pass-through entities having any individual, estate or trust as a
shareholder, member or partner.
In addition, the "residual interest" certificates are subject to numerous
transfer restrictions. These restrictions reduce your ability to liquidate a
"residual interest" certificate. For example, unless we indicate otherwise in
the related prospectus supplement, you will not be able to transfer a "residual
interest" certificate to a foreign person under the Internal Revenue Code of
1986.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates."
Problems With Book-Entry Registration
Your certificates may be issued in book-entry form through the facilities
of the Depository Trust Company. As a result--
o you will be able to exercise your rights as a certificateholder only
indirectly through the Depository Trust Company and its
participating organizations;
o you may have only limited access to information regarding your
certificates;
o you may suffer delays in the receipt of payments on your
certificates; and
o your ability to pledge or otherwise take action with respect to your
certificates may be limited due to the lack of a physical
certificate evidencing your ownership of those certificates.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates."
Potential Conflicts of Interest Can Affect a Person's Performance
The master servicer or special servicer for one of our trusts, or any of
their respective affiliates, may purchase certificates evidencing interests in
that trust.
In addition, the master servicer or special servicer for one of our
trusts, or any of their respective affiliates, may have interests in, or other
financial relationships with, borrowers under the related mortgage loans.
In servicing the mortgage loans in any of our trusts, the related master
servicer and special servicer will each be required to observe the terms of the
governing document(s) for the related series of offered certificates and, in
particular, to act in accordance with the servicing standard described in the
related prospectus supplement. You should consider, however, that either of
these parties, if it or an affiliate owns certificates, or has financial
interests in or other financial dealings with any of the related borrowers, may
have interests when dealing with the mortgage loans that are in conflict with
your interests. For example, if the related special servicer owns any
certificates, it could seek to mitigate the potential loss on its certificates
from a troubled mortgage loan by delaying enforcement in the hope of realizing
greater proceeds in the future. However, this action by a special servicer could
result a lower recovery to the related trust than would have been the case if
the special servicer had not delayed in taking enforcement action.
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Furthermore, the master servicer or special servicer for any of our trusts
may service existing and new loans for third parties, including portfolios of
loans similar to the mortgage loans included in that trust. The properties
securing these other loans may be in the same markets as and compete with the
properties securing mortgage loans in our trust. Accordingly, that master
servicer or special servicer may be acting on behalf of parties with conflicting
interests.
The Transition from the Year 1999 to the Year 2000 May Disrupt the Ability of
Computerized Systems to Process Information
The collection of payments on the mortgage loans backing your
certificates, the servicing of those mortgage loans and the payments on your
certificates are highly dependent upon computer systems of the related master
servicer, special servicer, trustee, borrowers and other third parties.
We will inquire into the year 2000 readiness of the parties to the
governing documents for a series of offered certificates and will obtain
assurances from these parties that they will take the necessary steps to cure
any problems their computer systems may have with the manipulation or
calculation of dates after December 31, 1999.
The Depository Trust Company has informed members of the financial
community that it has developed and is implementing a program so that its
systems, as these systems relate to the timely payment of distributions,
including principal and interest payments to security holders, book-entry
deliveries, and settlement of trades within the Depository Trust Company,
continue to function appropriately on and after January 1, 2000. This program
includes a technical assessment and a remediation plan, which the Depository
Trust Company has completed. Additionally, the Depository Trust Company's plan
includes a testing phase, which it expects to complete within appropriate time
frames.
However, the Depository Trust Company's ability to perform properly its
services is also dependent upon other parties, including, its participating
organizations, as well as the computer systems of third-party service providers.
The Depository Trust Company has informed the financial community that it is
contacting and will continue to contact third-party vendors from whom it
acquires services, in order to: (i) impress upon them the importance of these
services being year 2000 compliant, and (ii) determine the extent of their
efforts with respect to remediation of year 2000 problems with their services.
In addition, the Depository Trust Company has stated that it is in the process
of developing contingency plans as it considers appropriate.
If problems associated with the year 2000 issue were to occur with respect
to the Depository Trust Company and the services provided by it, payments on
offered certificates held in book-entry form could be delayed or otherwise
adversely affected.
DESCRIPTION OF THE TRUST ASSETS
General
We will be responsible for establishing the trust underlying each series
of offered certificates. The assets of the trust will primarily consist of:
o various types of multifamily and/or commercial mortgage loans;
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o mortgage participations, pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities that
directly or indirectly evidence interests in, or are secured by
pledges of, one or more of various types of multifamily and/or
commercial mortgage loans; or
o a combination of mortgage loans and mortgage-backed securities of
the types described above.
We do not originate mortgage loans. Accordingly, we must acquire each of
the mortgage loans to be included in one of our trusts from the originator or a
subsequent assignee. In some cases, that originator or subsequent assignee will
be one of our affiliates.
We will acquire, directly or through one of our affiliates, in the
secondary market, any mortgage-backed security to be included in one of our
trusts.
Neither we nor any of our affiliates will guarantee any of the mortgage
assets included in one of our trusts. Furthermore, unless we indicate otherwise
in the related prospectus supplement, no governmental agency or instrumentality
will guarantee or insure any of those mortgage assets.
Mortgage Loans
General. Each mortgage loan underlying the offered certificates will
constitute the obligation of one or more persons to repay a debt. That
obligation will be evidenced by a promissory note or bond. In addition, that
obligation will be secured by a mortgage, deed of trust or other security
instrument that creates a first or junior lien on, or security interest in, an
interest in one or more of the following types of real property:
o rental or cooperatively-owned buildings with multiple dwelling
units;
o retail properties related to the sale of consumer goods and other
products to the general public, such as shopping centers, malls,
factory outlet centers, automotive sales centers, department stores
and other retail stores, grocery stores, specialty shops,
convenience stores and gas stations;
o retail properties related to providing entertainment, recreational
and personal services to the general public, such as movie theaters,
fitness centers, bowling alleys, salons, dry cleaners and automotive
service centers;
o office properties;
o hospitality properties, such as hotels, motels and other lodging
facilities;
o casino properties;
o health care-related properties, such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and, in some
cases, assisted living centers and senior housing;
o industrial properties;
o warehouse facilities, mini-warehouse facilities and self-storage
facilities;
o restaurants, taverns and other establishments involved in the food
and beverage industry;
o manufactured housing communities, mobile home parks and recreational
vehicle parks;
o recreational and resort properties, such as recreational vehicle
parks, golf courses, marinas, ski resorts and amusement parks;
o arenas and stadiums;
o churches and other religious facilities;
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o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land zoned for multifamily residential or commercial
use.
The real property interests that may be encumbered in order to secure a
mortgage loan underlying your certificates, include--
o a fee interest or estate, which consists of ownership of the
property for an indefinite period,
o an estate for years, which consists of ownership of the property for
a specified period of years,
o a leasehold interest or estate, which consists of a right to occupy
and use the property for a specified period of years, subject to the
terms and conditions of a lease,
o shares in a cooperative corporation which owns the property, or
o any other real estate interest under applicable local law.
Any of these real property interests may be subject to deed restrictions,
easements, rights of way and other matters of public record with respect to the
related property. In addition, the use of, and improvements that may be
constructed on, any particular real property may be subject to zoning laws and
other legal restrictions.
If we so indicate in the related prospectus supplement, one or more of the
mortgage loans underlying a series of offered certificates may be secured by a
junior lien on the related real property. However, the loan or loans secured by
the more senior liens on that property may not be included in the related trust.
The primary risk to the holder of a mortgage loan secured by a junior lien on a
real property is the possibility that the foreclosure proceeds remaining after
payment of the loans secured by more senior liens on that property will be
insufficient to pay the junior loan in full. In a foreclosure proceeding, the
sale proceeds are applied first to the payment of court costs and fees in
connection with the foreclosure, second to the payment of real estate taxes, and
third to the payment of all principal, interest, prepayment or acceleration
penalties, if any, and all other amounts owing to the holder of the senior
loans. The claims of the holders of the senior loans must be satisfied in full
before the holder of the junior loan receives any payments in respect of the
junior loan. If a lender forecloses on a junior loan, it does so subject to any
related senior loans.
If we so indicate in the related prospectus supplement, the mortgage loans
underlying a series of offered certificates may be delinquent as of the date the
certificates are initially issued. In those cases, we will describe in the
related prospectus supplement the period of the delinquency, any forbearance
arrangement then in effect, the condition of the related real property and the
ability of the related real property to generate income to service the mortgage
debt. We will not, however, transfer any mortgage loan to a trust if we know
that the mortgage loan is, at the time of transfer, more than 90 days delinquent
in respect of any scheduled payment of principal or interest or in foreclosure.
A Discussion of the Various Types of Multifamily and Commercial Properties
that may Secure Mortgage Loans Underlying a Series of Offered Certificates. The
mortgage loans underlying a series of offered certificates may be secured by
numerous types of multifamily and commercial properties. As we discuss below
under "--Mortgage Loans--Default and Loss Considerations with Respect to the
Mortgage Loans," the adequacy of an income-producing property as security for a
mortgage loan depends in large part
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on its value and ability to generate net operating income. Set forth below is a
discussion of some of the various factors that may affect the value and
operations of the indicated types of multifamily and commercial properties.
Multifamily Rental Properties. Factors affecting the value and operation
of a multifamily rental property include:
o the physical attributes of the property, such as its age,
appearance, amenities and construction quality;
o the types of services offered at the property;
o the location of the property;
o the characteristics of the surrounding neighborhood, which may
change over time;
o the rents charged for dwelling units at the property relative to the
rents charged for comparable units at competing properties;
o the ability of management to provide adequate maintenance and
insurance;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than lease housing;
o the existence or construction of competing or alternative
residential properties, including other apartment buildings and
complexes, manufactured housing communities, mobile home parks and
single-family housing;
o the ability of management to respond to competition;
o the tenant mix and whether the property is primarily occupied by
workers from a particular company or type of business, personnel
from a local military base or students;
o adverse local, regional or national economic conditions, which may
limit the amount that may be charged for rents and may result in a
reduction in timely rent payments or a reduction in occupancy
levels;
o state and local regulations, which may affect the property owner's
ability to increase rent to the market rent for an equivalent
apartment;
o the extent to which the property is subject to land use restrictive
covenants or contractual covenants that require that units be rented
to low income tenants;
o the extent to which the cost of operating the property, including
the cost of utilities and the cost of required capital expenditures,
may increase; and
o the extent to which increases in operating costs may be passed
through to tenants.
Because units in a multifamily rental property are leased to individuals,
usually for no more than a year, the property is likely to respond relatively
quickly to a downturn in the local economy or to the closing of a major employer
in the area.
Certain states regulate the relationship of an owner and its tenants at a
multifamily rental property. Among other things, these states may--
o require written leases;
o require good cause for eviction;
o require disclosure of fees;
o prohibit unreasonable rules;
o prohibit retaliatory evictions;
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o prohibit restrictions on a resident's choice of unit vendors;
o limit the bases on which a landlord may increase rent; or
o prohibit a landlord from terminating a tenancy solely by reason of
the sale of the owner's building.
Apartment building owners have been the subject of suits under state
"Unfair and Deceptive Practices Acts" and other general consumer protection
statutes for coercive, abusive or unconscionable leasing and sales practices.
Some counties and municipalities also impose rent control regulations on
apartment buildings. These regulations may limit rent increases to--
o fixed percentages,
o percentages of increases in the consumer price index,
o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws do not provide for decontrol of
rental rates upon vacancy of individual units. Any limitations on a landlord's
ability to raise rents at a multifamily rental property may impair the
landlord's ability to repay a mortgage loan secured by the property or to meet
operating costs.
Some multifamily rental properties are subject to land use restrictive
covenants or contractual covenants in favor of federal or state housing
agencies. These covenants generally require that a minimum number or percentage
of units be rented to tenants who have incomes that are substantially lower than
median incomes in the area or region. These covenants may limit the potential
rental rates that may be charged at a multifamily rental property, the potential
tenant base for the property or both. An owner may subject a multifamily rental
property to these covenants in exchange for tax credits or rent subsidies. When
the credits or subsidies cease, net operating income will decline.
Some mortgage loans underlying the offered certificates will be secured by
the related borrower's interest in multiple units in a residential condominium
project and the related voting rights in the owners' association for such
project. Due to the nature of condominiums, a default on any of those mortgage
loans will not allow the holder of the mortgage loan the same flexibility in
realizing on its real property collateral as is generally available with respect
to multifamily rental properties that are not condominiums. The rights of other
unit owners, the governing documents of the owners' association and the state
and local laws applicable to condominiums must be considered and respected.
Consequently, servicing and realizing upon the collateral for those mortgage
loans could subject the lender to greater delay, expense and risk than a loan
secured by a multifamily rental property that is not a condominium.
Cooperatively-Owned Apartment Buildings. Some multifamily properties are
owned or leased by cooperative corporations. In general, each shareholder in the
corporation is entitled to occupy a particular apartment unit pursuant to a
long-term proprietary lease or occupancy agreement.
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A tenant/shareholder of a cooperative corporation must make a monthly
maintenance payment to the corporation. The monthly maintenance payment
represents a tenant/shareholder's pro rata share of the corporation's mortgage
loan payments, real property taxes, maintenance expenses and other capital and
ordinary expenses of the property. These monthly maintenance payments are in
addition to any payments of principal and interest the tenant/shareholder must
make on any loans of the tenant/shareholder secured by its shares in the
corporation.
A cooperative corporation is directly responsible for building maintenance
and payment of real estate taxes and hazard and liability insurance premiums. A
cooperative corporation's ability to meet debt service obligations on a mortgage
loan secured by, and to pay all other operating expenses of, the cooperatively
owned property depends primarily upon the receipt of--
o maintenance payments from the tenant/shareholders, and
o any rental income from units or commercial space that the
cooperative corporation might control.
A cooperative corporation may have to impose special assessments on the
tenant/shareholders in order to pay unanticipated expenditures. Accordingly, a
cooperative corporation is highly dependent on the financial well being of its
tenant/shareholders. A cooperative corporation's ability to pay the amount of
any balloon payment due at the maturity of a mortgage loan secured by the
cooperatively owned property depends primarily on its ability to refinance the
property.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by the owner or
sponsor, and the current tenants have a certain period to subscribe at prices
discounted from the prices to be offered to the public after such period. As
part of the consideration for the sale, the owner or sponsor receives all the
unsold shares of the cooperative corporation. In general the sponsor controls
the corporation's board of directors and management for a limited period of
time. If the sponsor holds the shares allocated to a large number of apartment
units, the lender on a mortgage loan secured by a cooperatively owned property
may be adversely affected by a decline in the creditworthiness of the sponsor.
Many cooperative conversion plans are "non-eviction" plans. Under a
non-eviction plan, a tenant at the time of conversion who chooses not to
purchase shares is entitled to reside in the unit as a subtenant from the owner
of the shares allocated to such apartment unit. Any applicable rent control or
rent stabilization laws would continue to be applicable to such subtenancy. In
addition, the subtenant may be entitled to renew its lease for an indefinite
number of years with continued protection from rent increases above those
permitted by any applicable rent control and rent stabilization laws. The
owner/shareholder is responsible for the maintenance payments to the cooperative
corporation without regard to whether it receives rent from the subtenant or
whether the rent payments are lower than maintenance payments on the unit.
Newly-formed cooperative corporations typically have the greatest concentration
of non-tenant/shareholders.
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Retail Properties. The term "retail property" encompasses a broad range of
properties at which businesses sell consumer goods and other products and
provide various entertainment, recreational or personal services to the general
public. Some examples of retail properties include:
o shopping centers
o factory outlet centers
o malls
o automotive sales and service centers
o consumer oriented businesses
o department stores
o grocery stores
o convenience stores
o specialty shops
o gas stations
o movie theaters
o fitness centers
o bowling alleys
o salons
o dry cleaners
Unless owner occupied, retail properties generally derive all or a
substantial percentage of their income from lease payments from commercial
tenants. Therefore, it is important for the owner of a retail property to
attract and keep tenants, particularly significant tenants, that are able to
meet their lease obligations. In order to attract tenants, the owner of a retail
property may be required--
o to lower rents;
o to grant a potential tenant a "free rent" or reduced rent period;
o to improve the condition of the property generally; or
o to make at its own expense, or grant a rent abatement to cover,
tenant improvements for a potential tenant.
A prospective tenant will also be interested in the number and type of
customers that it will be able to attract at a particular retail property. The
ability of a tenant at a particular retail property to attract customers will be
affected by a number of factors related to the property and the surrounding
area, including--
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o perceptions regarding the safety of the surrounding area;
o demographics of the surrounding area;
o the strength and stability of the local, regional and national
economies;
o traffic patterns and access to major thoroughfares;
o the visibility of the property;
o availability of parking;
o the particular mixture of the goods and services offered at the
property;
o customer tastes, preferences and spending patterns; and
o the drawing power of other tenants.
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The success of a retail property is often dependent on the success of its
tenants' businesses. A significant component of the total rent paid by tenants
of retail properties is often tied to a percentage of gross sales or revenues.
Declines in sales or revenues of the tenants will likely cause a corresponding
decline in percentage rents and/or impair the tenants' ability to pay their rent
or other occupancy costs. A default by a tenant under its lease could result in
delays and costs in enforcing the landlord's rights. Retail properties would be
directly and adversely affected by a decline in the local economy and reduced
consumer spending.
Repayment of a mortgage loan secured by a retail property will be affected
by the expiration of space leases at the property and the ability of the
borrower to renew or relet the space on comparable terms. Even if vacant space
is successfully relet, the costs associated with reletting, including tenant
improvements, leasing commissions and free rent, may be substantial and could
reduce cash flow from a retail property.
The presence or absence of an anchor tenant in a multi-tenanted retail
property can be important. Anchor tenants play a key role in generating customer
traffic and making the center desirable for other tenants. An "anchor tenant"
is, in general, a retail tenant whose space is substantially larger in size than
that of other tenants at the same retail property and whose operation is vital
in attracting customers to the property. At some retail properties, the anchor
tenant owns the space it occupies. In those cases where the property owner does
not control the space occupied by the anchor tenant, the property owner may not
be able to take actions with respect to the space that it otherwise typically
would, such as granting concessions to retain an anchor tenant or removing an
ineffective anchor tenant. In some cases, an anchor tenant may cease to operate
at the property, thereby leaving its space unoccupied even though it continues
to own or pay rent on the vacant space. If an anchor tenant ceases operations at
a retail property, other tenants at the property may be entitled to terminate
their leases prior to the scheduled termination date or to pay rent at a reduced
rate for the remaining term of the lease.
Various factors will adversely affect the economic performance of an
"anchored" retail property, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or a
self-owned anchor;
o the cessation of the business of a self-owned anchor or of an anchor
tenant, notwithstanding its continued ownership of the previously
occupied space or its continued payment of rent, as the case may be;
or
o a loss of an anchor tenant's ability to attract shoppers.
Retail properties may also face competition from sources outside a given
real estate market or with lower operating costs. For example, all of the
following compete with more traditional department stores and specialty shops
for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o television shopping networks and programs;
o internet web sites; and
o telemarketing.
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Similarly, home movie rentals and pay-per-view movies provide alternate sources
of entertainment to movie theaters. Continued growth of these alternative retail
outlets (which are often characterized by lower operating costs) and
entertainment sources could adversely affect the rents collectible at retail
properties.
Gas stations, automotive sales and service centers and dry cleaners also
pose unique environmental risks because of the nature of their businesses.
Office Properties. Factors affecting the value and operation of an office
property include:
o the number and quality of the tenants, particularly significant
tenants, at the property;
o the physical attributes of the building in relation to competing
buildings;
o the location of the property with respect to the central business
district or population centers;
o demographic trends within the metropolitan area to move away from or
towards the central business district;
o social trends combined with space management trends, which may
change towards options such as telecommuting or hoteling to satisfy
space needs;
o tax incentives offered to businesses or property owners by cities or
suburbs adjacent to or near where the building is located;
o local competitive conditions, such as the supply of office space or
the existence or construction of new competitive office buildings;
o the quality and philosophy of building management;
o access to mass transportation; and
o changes in zoning laws.
Office properties may be adversely affected by an economic decline in the
business operated by their tenants. The risk of such an economic decline is
increased if revenue is dependent on a single tenant or if there is a
significant concentration of tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competitive factors affecting an office property
include:
o rental rates;
o the building's age, condition and design, including floor sizes and
layout;
o access to public transportation and availability of parking; and
o amenities offered to its tenants, including sophisticated building
systems, such as fiber optic cables, satellite communications or
other base building technological features.
The cost of refitting office space for a new tenant is often higher than
for other property types.
The success of an office property also depends on the local economy.
Factors influencing a company's decision to locate in a given area include:
o the cost and quality of labor;
o tax incentives; and
o quality of life matters, such as schools and cultural amenities.
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The strength and stability of the local or regional economy will affect an
office property's ability to attract stable tenants on a consistent basis. A
central business district may have a substantially different economy from that
of a suburb.
Hospitality Properties. Hospitality properties may involve different types
of hotels and motels, including:
o full service hotels;
o resort hotels with many amenities;
o limited service hotels;
o hotels and motels associated with national or regional franchise
chains;
o hotels that are not affiliated with any franchise chain but may have
their own brand identity; and
o other lodging facilities.
Factors affecting the economic performance of a hospitality property
include:
o the location of the property and its proximity to major population
centers or attractions;
o the seasonal nature of business at the property;
o the level of room rates relative to those charged by competitors;
o quality and perception of the franchise affiliation;
o economic conditions, either local, regional or national, which may
limit the amount that can be charged for a room and may result in a
reduction in occupancy levels;
o the existence or construction of competing hospitality properties;
o nature and quality of the services and facilities;
o financial strength and capabilities of the owner and operator;
o the need for continuing expenditures for modernizing, refurbishing
and maintaining existing facilities;
o increases in operating costs, which may not be offset by increased
room rates;
o the property's dependence on business and commercial travelers and
tourism; and
o changes in travel patterns caused by changes in access, energy
prices, labor strikes, relocation of highways, the reconstruction of
additional highways or other factors.
Because limited service hotels and motels are relatively quick and
inexpensive to construct and may quickly reflect a positive value, an
over-building of these hotels and motels could occur in any given region, which
would likely adversely affect occupancy and daily room rates. Further, because
rooms at hospitality properties are generally rented for short periods of time,
hospitality properties tend to be more sensitive to adverse economic conditions
and competition than many other types of commercial properties. Additionally,
the revenues of certain hospitality properties, particularly those located in
regions whose economies depend upon tourism, may be highly seasonal in nature.
Hospitality properties may be operated pursuant to franchise agreements.
The continuation of a franchise is typically subject to specified operating
standards and other terms and conditions. The franchisor periodically inspects
its licensed properties to confirm adherence to its operating standards. The
failure of the hospitality property to maintain those standards or adhere to
those other terms and conditions could result in the loss or cancellation of the
franchise license. It is possible that the franchisor could condition the
continuation of a franchise license on the completion of capital improvements or
the making of certain capital
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expenditures that the owner of the hospitality property determines are too
expensive or are otherwise unwarranted in light of the operating results or
prospects of the property. In that event, the owner of the hospitality property
may elect to allow the franchise license to lapse. In any case, if the franchise
is terminated, the owner of the hospitality property may seek to obtain a
suitable replacement franchise or to operate property independently of a
franchise license. The loss of a franchise license could have a material adverse
effect upon the operations or value of the hospitality property because of the
loss of associated name recognition, marketing support and centralized
reservation systems provided by the franchisor.
The viability of any hospitality property that is a franchise of a
national or a regional hotel or motel chain is dependent upon:
o the continued existence and financial strength of the franchisor;
o the public perception of the franchise service mark; and
o the duration of the franchise licensing agreement.
The transferability of franchise license agreements may be restricted. The
consent of the franchisor would be required for the continued use of the
franchise license by the hospitality property following a foreclosure.
Conversely, a lender may be unable to remove a franchisor that it desires to
replace following a foreclosure. Further, in the event of a foreclosure on a
hospitality property, the lender or other purchaser of the hospitality property
may not be entitled to the rights under any associated liquor license. That
party would be required to apply in its own right for a new liquor license.
There can be no assurance that a new license could be obtained or that it could
be obtained promptly.
Casino Properties. Factors affecting the economic performance of a casino
property include:
o location, including proximity to or easy access from major
population centers;
o appearance;
o economic conditions, either local, regional or national, which may
limit the amount of disposable income that potential patrons may
have for gambling;
o the existence or construction of competing casinos;
o dependence on tourism; and
o local or state governmental regulation.
Competition among major casinos may involve attracting patrons by
providing alternate forms of entertainment, such as performers and sporting
events, and offering low-priced or free food and lodging. In addition, casino
owners may expend substantial sums to modernize, refurbish and maintain existing
facilities.
Because of their dependence on disposable income of patrons, casino
properties are likely to respond quickly to a downturn in the economy.
To avoid criminal influence, the ownership and operation of casino
properties is often subject to local or state governmental regulation. A
government agency or authority may have jurisdiction over or influence with
respect to the foreclosure of a casino property and/or the bankruptcy of its
owner or operator. In some jurisdictions, it may be necessary to receive
governmental approval before foreclosing, thereby resulting in substantial
delays to a lender. Gaming licenses are not transferable, including in
connection with a foreclosure. There can be no assurance that a lender or
another purchaser in foreclosure or otherwise will be able to obtain the
requisite approvals to continue operating the foreclosed property as a casino.
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Any given state or municipality that currently allows legalized gambling
could pass legislation banning it.
The loss of a gaming license for any reason would have a material adverse
effect on the value of a casino property.
Health Care-Related Properties. Health-care related properties include
o hospitals;
o skilled nursing facilities;
o nursing homes;
o congregate care facilities; and
o in some cases, assisted living centers and housing for seniors.
Health care-related facilities, particularly nursing homes, may receive a
substantial portion of their revenues from government reimbursement programs,
primarily Medicaid and Medicare. Medicaid and Medicare are subject to
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
All of the foregoing can adversely affect revenues from the operation a health
care-related facility. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers. In
addition, there are currently under consideration various proposals for national
health care relief that could further limit these payments.
Providers of long-term nursing care and other medical services are highly
regulated by federal, state and local law. They are subject to numerous factors
which can increase the cost of operation, limit growth and, in extreme cases,
require or result in suspension or cessation of operations, including:
o federal and state licensing requirements;
o facility inspections;
o rate setting;
o reimbursement policies; and
o laws relating to the adequacy of medical care, distribution of
pharmaceuticals, use of equipment, personnel operating policies and
maintenance of and additions to facilities and services.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements generally may not be made to any person other than the
provider who actually furnished the related material goods and services.
Accordingly, in the event of foreclosure on a health care-related facility,
neither a lender nor other subsequent lessee or operator of the property would
generally be entitled to obtain from federal or state governments any
outstanding reimbursement payments relating to services furnished at the
property
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prior to such foreclosure. Furthermore, in the event of foreclosure, there can
be no assurance that a lender or other purchaser in a foreclosure sale would be
entitled to the rights under any required licenses and regulatory approvals. The
lender or other purchaser may have to apply in its own right for such licenses
and approvals. There can be no assurance that a new license could be obtained or
that a new approval would be granted.
Health care-related facilities are generally "special purpose" properties
that could not be readily converted to general residential, retail or office
use. This will adversely affect their liquidation value. Furthermore, transfers
of health care-related facilities are subject to regulatory approvals under
state, and in some cases federal, law not required for transfers of most other
types of commercial properties.
Industrial Properties. Industrial properties may be adversely affected by
reduced demand for industrial space occasioned by a decline in a particular
industry segment and/or by a general slowdown in the economy. In addition, an
industrial property that suited the particular needs of its original tenant may
be difficult to relet to another tenant or may become functionally obsolete
relative to newer properties.
The value and operation of an industrial property depends on:
o location of the property, the desirability of which in a particular
instance may depend on--
(i) availability of labor services,
(ii) proximity to supply sources and customers, and
(iii) accessability to various modes of transportation and shipping,
including railways, roadways, airline terminals and ports;
o building design of the property, the desirability of which in a
particular instance may depend on--
(i) ceiling heights,
(ii) column spacing,
(iii) number and depth of loading bays,
(iv) divisibility,
(v) floor loading capacities,
(vi) truck turning radius,
(vii) overall functionality, and
(viii) adaptability of the property, because industrial tenants
often need space that is acceptable for highly specialized
activities; and
o the quality and creditworthiness of individual tenants, because
industrial properties frequently have higher tenant concentrations.
Industrial properties are generally "special purpose" properties that
could not be readily converted to general residential, retail or office use.
This will adversely affect their liquidation value.
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Warehouse, Mini-Warehouse and Self-Storage Facilities. Warehouse,
mini-warehouse and self-storage properties are considered vulnerable to
competition because both acquisition costs and break-even occupancy are
relatively low. In addition, it would require substantial capital expenditures
to convert a warehouse, mini-warehouse or self-storage property to an
alternative use. This will materially impair the liquidation value of the
property if its operation for storage purposes becomes unprofitable due to
decreased demand, competition, age of improvements or other factors.
Successful operation of a warehouse, mini-warehouse or self-store property
depends on--
o building design;
o location and visibility;
o tenant privacy;
o efficient access to the property;
o proximity to potential users, including apartment complexes or
commercial users;
o services provided at the property, such as security;
o age and appearance of the improvements; and
o quality of management.
Restaurants and Taverns. Factors affecting the economic viability of
individual restaurants, taverns and other establishments that are part of the
food and beverage service industry include:
o competition from facilities having businesses similar to a
particular restaurant or tavern;
o perceptions by prospective customers of safety, convenience,
services and attractiveness;
o the cost, quality and availability of food and beverage products;
o negative publicity, resulting from instances of food contamination,
food-borne illness and similar events;
o changes in demographics, consumer habits and traffic patterns;
o the ability to provide or contract for capable management; and
o retroactive changes to building codes, similar ordinances and other
legal requirements.
Adverse economic conditions, whether local, regional or national, may
limit the amount that may be charged for food and beverages and the extent to
which potential customers dine out. Because of the nature of the business,
restaurants and taverns tend to respond to adverse economic conditions more
quickly than do many other types of commercial properties. Furthermore, the
transferability of any operating, liquor and other licenses to an entity
acquiring a bar or restaurant, either through purchase or foreclosure, is
subject to local law requirements.
The food and beverage service industry is highly competitive. The
principal means of competition are--
o segment,
o product,
o price,
o value,
o quality,
o service,
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o convenience,
o location, and
o the nature and condition of the restaurant facility.
A restaurant or tavern operator competes with the operators of comparable
establishments in the area in which its restaurant or tavern is located. Other
restaurants could have--
o lower operating costs,
o more favorable locations,
o more effective marketing,
o more efficient operations, or
o better facilities.
The location and condition of a particular restaurant or tavern will
affect the number of customers and, to a certain extent, the prices that may be
charged. The characteristics of an area or neighborhood in which a restaurant or
tavern is located may change over time or in relation to competing facilities.
Also, the cleanliness and maintenance at a restaurant or tavern will affect its
appeal to customers. In the case of a regionally- or nationally-known chain
restaurant, there may be costly expenditures for renovation, refurbishment or
expansion, regardless of its condition.
Factors affecting the success of a regionally- or nationally-known chain
restaurant include:
o actions and omissions of any franchisor, including management
practices that adversely affect the nature of the business or that
require renovation, refurbishment, expansion or other expenditures;
o the degree of support provided or arranged by the franchisor,
including its franchisee organizations and third-party providers of
products or services; and
o the bankruptcy or business discontinuation of the franchisor or any
of its franchisee organizations or third-party providers.
Chain restaurants may be operated under franchise agreements, and such
agreements typically do not contain provisions protective of lenders. A
borrower's rights as franchisee typically may be terminated without informing
the lender, and the borrower may be precluded from competing with the franchisor
upon such termination. In addition, a lender that acquires title to a restaurant
site through foreclosure or similar proceedings may be restricted in the use of
such site or may be unable to succeed to the rights of the franchisee under the
related franchise agreement. The transferability of a franchise may be subject
to other restrictions. Also, federal and state franchise regulations may impose
additional risk, including the risk that the transfer of a franchise acquired
through foreclosure or similar proceedings may require registration with
governmental authorities or disclosure to prospective transferees.
Manufactured Housing Communities, Mobile Home Parks and Recreational
Vehicle Parks. Manufactured housing communities and mobile home parks consist of
land that is divided into "spaces" or "home sites" that are primarily leased to
owners of the individual mobile homes or other housing units. The home owner
often invests in site-specific improvements such as carports, steps, fencing,
skirts around the base of the home, and landscaping. The land owner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Due to relocation costs and, in some cases, demand for homesites, the
value of a mobile home or other housing unit in place in a manufactured housing
community or mobile home
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park is generally higher, and can be significantly higher, than the value of the
same unit not placed in a manufactured housing community or mobile home park. As
a result, a well-operated manufactured housing community or mobile home park
that has achieved stabilized occupancy is typically able to maintain occupancy
at or near that level. For the same reason, a lender that provided financing for
the home of a tenant who defaulted in his or her space rent generally has an
incentive to keep rental payments current until the home can be resold in place,
rather than to allow the unit to be removed from the park. In general, the
individual mobile homes and other housing units will not constitute collateral
for a mortgage loan underlying a series of certificates.
Recreational vehicle parks lease spaces primarily or exclusively for motor
homes, travel trailers and portable truck campers, primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces can be viewed as having a less stable tenant population than
parks occupied predominantly by mobile homes. However, it is not unusual for the
owner of a recreational vehicle to leave the vehicle at the park on a year-round
basis or to use the vehicle as low cost housing and reside in the park
indefinitely.
Factors affecting the successful operation of a manufactured housing
community, mobile home park or recreational vehicle park include:
o the number of comparable competing properties in the local market;
o the age, appearance and reputation of the property;
o the quality of management, and
o the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete
against alternative forms of residential housing, including multifamily rental
properties, cooperatively-owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging, such as staying
at a hotel at the beach.
Manufactured housing communities, mobile home parks and recreational
vehicle parks are "special purpose" properties that could not be readily
converted to general residential, retail or office use. This will adversely
affect the liquidation value of the property if its operation as a manufactured
housing community, mobile home park or recreational vehicle park, as the case
may be, becomes unprofitable due to competition, age of the improvements or
other factors.
Certain states regulate the relationship of an owner of a manufactured
housing community or mobile home park and its tenants in a manner similar to the
way they regulate the relationship between a landlord and tenant at a
multifamily rental property. In addition, some states also regulate changes in
the use of a manufactured housing community or mobile home park and require that
the owner give written notice to its tenants a substantial period of time prior
to the projected change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities and mobile home parks. These ordinances may limit rent increases to:
o fixed percentages,
o percentages of increases in the consumer price index,
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o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws either do not permit vacancy decontrol or
permit vacancy decontrol only in the relatively rare event that the mobile home
or manufactured housing unit is removed from the homesite. Local authority to
impose rent control on manufactured housing communities and mobile home parks is
preempted by state law in certain states and rent control is not imposed at the
state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to-month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants.
Recreational and Resort Properties. Any mortgage loan underlying a series
of offered certificates may be secured by a golf course, marina, ski resort,
amusement park or other property used for recreational purposes or as a resort.
Factors affecting the economic performance of a property of this type include:
o the location and appearance of the property;
o the appeal of the recreational activities offered;
o the existence or construction of competing properties, whether are
not they offer the same activities;
o the need to make capital expenditures to maintain, refurbish,
improve and/or expand facilities in order to attract potential
patrons;
o geographic location and dependence on tourism;
o changes in travel patterns caused by changes in energy prices,
strikes, location of highways, construction of additional highways
and similar factors;
o seasonality of the business, which may cause periodic fluctuations
in operating revenues and expenses;
o sensitivity to weather and climate changes; and
o local, regional and national economic conditions.
A marina or other recreational or resort property located next to water
will also be affected by various statutes and government regulations that govern
the use of, and construction on, rivers, lakes and other waterways.
Because of the nature of the business, recreational and resort properties
tend to respond to adverse economic conditions more quickly than do many other
types of commercial properties.
Recreational and resort properties are generally "special purpose"
properties that are not readily convertible to alternative uses. This will
adversely affect their liquidation value.
Arenas and Stadiums. The success of an arena or stadium generally depends
on its ability to attract patrons to a variety of events, including:
o sporting events;
o musical events;
o theatrical events;
o animal shows; and/or
o circuses.
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The ability to attract patrons is dependent on such factors as:
o the appeal of the particular event;
o the cost of admission;
o perceptions by prospective patrons of the safety, convenience,
services and attractiveness of the arena or stadium;
o perceptions by prospective patrons of the safety of the surrounding
area; and
o the alternative forms of entertainment available in the particular
locale.
In some cases, an arena's or stadium's success will depend on its ability
to attract and keep a sporting team as a tenant. An arena or stadium may become
unprofitable, or unacceptable to such a tenant, due to decreased attendance,
competition and age of improvements. Often, substantial expenditures must be
made to modernize, refurbish and/or maintain existing facilities.
Arenas and stadiums are "special purpose" properties which cannot be
readily convertible to alternative uses. This will adversely affect their
liquidation value.
Churches and Other Religious Facilities. Churches and other religious
facilities generally depend on charitable donations to meet expenses and pay for
maintenance and capital expenditures. The extent of such donations is dependent
on the attendance at any particular Religious Facility and the extent to which
attendees are prepared to make donations, which is influenced by a variety of
social, political and economic factors. Donations may be adversely affected by
economic conditions, whether local, regional or national. Religious facilities
are "special purpose" properties that are not readily convertible to alternative
uses. This will adversely affect their liquidation value.
Parking Lots and Garages. The primary source of income for parking lots
and garages is the rental fees charged for parking spaces. Factors affecting the
success of a parking lot or garage include:
o the number of rentable parking spaces and rates charged;
o the location of the lot or garage and, in particular, its proximity
to places where large numbers of people work, shop or live;
o the amount of alternative parking spaces in the area;
o the availability of mass transit; and
o the perceptions of the safety, convenience and services of the lot
or garage.
Unimproved Land. The value of unimproved land is largely a function of its
potential use. This may depend on--
o its location,
o its size,
o the surrounding neighborhood, and
o local zoning laws.
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Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from mortgage loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of the property and its ability to generate income sufficient to make payments
on the loan. This is particularly true because most or all of the mortgage loans
underlying the offered certificates will be nonrecourse loans.
The debt service coverage ratio of a multifamily or commercial mortgage
loan is an important measure of the likelihood of default on the loan. In
general, the "debt service coverage ratio" of a multifamily or commercial
mortgage loan at any given time is the ratio of--
(a) the amount of income derived or expected to be derived from the
related real property for a twelve-month period that is available to
pay debt service, to
(b) the annualized scheduled payments of principal and/or interest on
the mortgage loan and any other senior loans that are secured by the
related real property.
The amount described in clause (a) of the preceding sentence is often a
highly subjective number based on a variety of assumptions regarding, and
adjustments to revenues and expenses in respect of the related real property. We
will provide a more detailed discussion of its calculation in the related
prospectus supplement.
The cash flow generated by a multifamily or commercial property will
generally fluctuate over time and may or may not be sufficient to make the loan
payments on the related mortgage loan, cover operating expenses and fund capital
improvements at any given time. Operating revenues of a nonowner occupied,
income-producing property may be affected by the condition of the applicable
real estate market and/or area economy. Properties leased, occupied or used on a
short-term basis (such as certain health care-related facilities, hotels and
motels, recreational vehicle parks, and mini-warehouse and self-storage
facilities) tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods (such as
warehouses, retail stores, office buildings and industrial facilities).
Some commercial properties may be owner-occupied or leased to a small
number of tenants. Accordingly, the operating revenues may depend substantially
on the financial condition of the borrower or one or a few tenants. Mortgage
loans secured by liens on owner-occupied and single tenant properties may pose a
greater likelihood of default and loss than loans secured by liens on
multifamily properties or on multi-tenant commercial properties.
Increases in property operating expenses can increase the likelihood of a
borrower default on a multifamily or commercial mortgage loan secured by the
property. Increases in property operating expenses may result from:
o increases in energy costs and labor costs;
o increases in interest rates and real estate tax rates; and
o changes in governmental rules, regulations and fiscal policies.
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Some "net leases" of commercial properties may provide that the lessee,
rather than the borrower/landlord, is responsible for payment of operating
expenses. However, a net lease will result in stable net operating income to the
borrower/landlord only if the lessee is able to pay the increased operating
expense while also continuing to make rent payments.
Lenders also look to the loan-to-value ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property is liquidated
following a default. In general, the "loan-to-value ratio" of a multifamily or
commercial mortgage loan at any given time is the ratio, expressed as a
percentage, of--
(a) the then outstanding principal balance of the mortgage loan and any
other senior loans that are secured by the related real property, to
(b) the estimated value of the related real property based on an
appraisal, a cash flow analysis, a recent sales price or another
method.
A low loan-to-value ratio means the borrower has a large amount of its own
equity in the multifamily or commercial property that secures its loan. In these
circumstances--
(x) the borrower has a greater incentive to perform under the terms of
the related mortgage loan in order to protect such equity, and
(y) the lender has greater protection against loss on liquidation
following a borrower default.
Loan-to-value ratios are not necessarily an accurate measure of the
likelihood of liquidation loss in a pool of multifamily and commercial mortgage
loans. For example, the value of a multifamily or commercial property as of the
date of initial issuance of a series of offered certificates may be less than
the estimated value determined at loan origination. The value of any real
property, in particular a multifamily or commercial property, will likely
fluctuate from time to time. Moreover, even a current appraisal is not
necessarily a reliable estimate of value. Appraised values of income-producing
properties are generally based on--
o the market comparison method, which takes into account the recent
resale value of comparable properties at the date of the appraisal;
o the cost replacement method, which takes into account the cost of
replacing the property at such date;
o the income capitalization method, which takes into account the
property's projected net cash flow; or
o a selection from the values derived from the foregoing methods.
Each of these appraisal methods presents analytical difficulties:
o it is often difficult to find truly comparable properties that have
recently been sold;
o the replacement cost of a property may have little to do with its
current market value; and
o income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate
capitalization rate and discount rate.
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If more than one appraisal method is used and significantly different results
are produced, an accurate determination of value and, correspondingly, a
reliable analysis of the likelihood of default and loss, is even more difficult.
The value of a multifamily or commercial property will be affected by
property performance. As a result, if a multifamily or commercial mortgage loan
defaults because the income generated by the related property is insufficient to
pay operating costs and expenses as well as debt service), then the value of the
property will decline and a liquidation loss may occur.
We believe that the foregoing considerations are important factors that
generally distinguish mortgage loans secured by liens on income-producing real
estate from single-family mortgage loans. However, the originators of the
mortgage loans underlying the offered certificates may not have considered all
of such factors for all or any of such loans.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real Property and the
Related Borrower's Ability to Refinance the Property."
Payment Provisions of the Mortgage Loans. Each of the mortgage loans
included in one of our trusts will have the following features:
o an original term to maturity of not more than approximately 40
years; and
o scheduled payments of principal, interest or both, to be made on
specified dates, that occur monthly, bi-monthly, quarterly,
semi-annually, annually or at some other interval.
A mortgage loan included in one of our trusts may also include terms that:
o provide for the accrual of interest at a mortgage interest rate that
is fixed over its term, that resets on one or more specified dates
or that otherwise adjusts from time to time;
o provide for the accrual of interest at a mortgage interest rate that
may be converted at the borrower's election from an adjustable to a
fixed interest rate or from a fixed to an adjustable interest rate;
o provide for no accrual of interest;
o provide for level payments to stated maturity, for payments that
reset in amount on one or more specified dates or for payments that
otherwise adjust from time to time to accommodate changes in the
coupon rate or to reflect the occurrence of certain events;
o be fully amortizing or, alternatively, may be partially amortizing
or nonamortizing, with a substantial payment of principal due on its
stated maturity date;
o permit the negative amortization or deferral of accrued interest;
and/or
o prohibit some or all voluntary prepayments or require payment of a
premium, fee or charge in connection with those prepayments.
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Mortgage Loan Information in Prospectus Supplements. We will describe in
the related prospectus supplement the characteristics of the mortgage loans that
we will include in any of our trusts. In general, we will provide in the related
prospectus supplement, among other items, the following information on the
particular mortgage loans in one of our trusts:
o the aggregate outstanding principal balance and the largest,
smallest and average outstanding principal balance of the mortgage
loans;
o the type or types of property that provide security for repayment of
the mortgage loans;
o the earliest and latest origination date and maturity date of the
mortgage loans;
o the original and remaining terms to maturity of the mortgage loans,
or the range thereof, and the weighted average original and
remaining terms to maturity of the mortgage loans;
o loan-to-value ratios of the mortgage loans either at origination or
as of a more recent date, or the range thereof, and the weighted
average of those loan-to-value ratios;
o the mortgage interest rates of the mortgage loans, or the range
thereof, and the weighted average mortgage interest rate of the
mortgage loans;
o if any mortgage loans have adjustable mortgage interest rates, the
index or indices upon which the adjustments are based, the
adjustment dates, the range of gross margins and the weighted
average gross margin, and any limits on mortgage interest rate
adjustments at the time of any adjustment and over the life of the
loan;
o information on the payment characteristics of the mortgage loans,
including applicable prepayment restrictions;
o debt service coverage ratios of the mortgage loans either at
origination or as of a more recent date, or the range thereof, and
the weighted average of those debt service coverage ratios; and
o the geographic distribution of the properties securing the mortgage
loans on a state-by-state basis.
If we are unable to provide the specific information described above at
the time a series of offered certificates is initially offered, we will
provide--
o more general information in the related prospectus supplement, and
o specific information in a report which will be filed with the SEC as
part of a Current Report on Form 8-K within 15 days following the
issuance of the certificates.
If any mortgage loan, or group of related mortgage loans, included in one
of our trusts represents a material concentration of credit risk, we will
include in the related prospectus supplement financial statements or other
financial information on the related real property or properties.
If and to the extent available and relevant to an investment decision in a
series of offered certificates, we will include in the related prospectus
supplement information regarding the prepayment experience of a master
servicer's multifamily and/or commercial mortgage loan servicing portfolio.
However, many servicers do not maintain records regarding prepayment experience
or, at least, do not maintain those records in a format that can be readily
aggregated. In addition, if the relevant characteristics of a master servicer's
servicing portfolio are materially different from those of the mortgage loans
included in one of our trusts, the
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master servicer's prepayment experience would not be meaningful to an investor.
For example, differences in geographic dispersion, property type and/or loan
terms, such as mortgage interest rates, terms to maturity and/or prepayment
restrictions, between the two pools of loans may render the master servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a special servicer, we will not include comparable
prepayment information in the related prospectus supplement with respect to the
special servicer's multifamily and/or commercial mortgage loan servicing
portfolio.
Mortgage-Backed Securities
The mortgage backed-securities underlying a series of offered certificates
may include:
o mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations or other mortgage-backed
securities that are not insured or guaranteed by any governmental
agency or instrumentality, or
o certificates issued and/or insured or guaranteed by the Federal Home
Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage
Association ("FNMA"), the Governmental National Mortgage Association
("GNMA"), the Federal Agricultural Mortgage Corporation ("FAMC") or
another federal or state governmental agency or instrumentality.
In addition, each of those mortgage-backed securities will directly or
indirectly evidence an interest in, or be secured by a pledge of, multifamily
and/or commercial mortgage loans.
We will acquire each mortgage-backed security included in one of our
trusts, directly or through an affiliate, in a bona fide secondary market
transaction. In addition, the security will be--
o registered under the Securities Act of 1933, as amended (the
"Securities Act"), or
o exempt from registration requirements of the Securities Act, or
o held for at least the holding period specified in Rule 144(k) under
the Securities Act.
We will describe in the related prospectus supplement the characteristics
of the mortgage-backed securities that we will include in any of our trusts. In
general, we will provide in the related prospectus supplement, among other
items, the following information on the particular mortgage-backed securities
included in one of our trusts:
o the initial and outstanding principal amount(s) and type of the
securities;
o the original and remaining term(s) to stated maturity of the
securities;
o the pass-through or bond rate(s) of the securities or the formula
for determining such rate(s);
o the payment characteristics of the securities;
o the identity of the issuer(s), servicer(s) and trustee(s) for the
securities;
o a description of the related credit support (if any);
o the type of mortgage loans underlying the securities;
o the circumstances under which the related underlying mortgage loans,
or the securities themselves, may be purchased prior to maturity;
o the terms and conditions for substituting mortgage loans backing the
securities; and
o the characteristics of any agreements or instruments providing
interest rate protection to the securities.
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With respect to any mortgage-backed security included in one of our
trusts, we will provide in our reports filed under the Exchange Act of 1934, as
amended (the "Exchange Act") the same information regarding the security as is
provided by the issuer of the security in its own reports filed under the
Exchange Act, if the security was publicly offered, or in the reports the issuer
of the security provides to the related trustee, if the security was privately
issued.
Undelivered Mortgage Assets
In general, the aggregate outstanding principal balance of the mortgage
assets transferred by us to any particular trust will equal or exceed the
initial aggregate outstanding principal balance of the related series of
certificates. In the event that the aggregate outstanding principal balance of
the related mortgage assets initially delivered by us to the related trustee is
less than the initial aggregate outstanding principal balance of any series of
certificates, we may deposit or arrange for the deposit of cash or liquid
investments on an interim basis with the related trustee to cover the shortfall.
For 90 days following the date of initial issuance of that series of
certificates, we will be entitled to obtain a release of the deposited cash or
investments if we deliver or arrange for delivery of a corresponding amount of
mortgage assets. If we fail, however, to deliver mortgage assets sufficient to
make up the entire shortfall, any of the cash or, following liquidation,
investments remaining on deposit with the related trustee will be used by the
related trustee to pay down the aggregate principal balance of the related
series of certificates, as described in the related prospectus supplement.
Accounts
The trust assets underlying a series of offered certificates will include
one or more accounts established and maintained on behalf of the holders. All
payments and collections received or advanced on the mortgage assets and other
trust assets will be deposited and held in those accounts. We will identify and
describe those accounts, and will further describe the deposits to and
withdrawals from those accounts, in the related prospectus supplement.
Credit Support
General. The holders of any class of offered certificates may be the
beneficiaries of credit support designed to protect them partially or fully
against all or particular defaults and losses on the related mortgage assets.
The types of credit support that may benefit the holders of a class of offered
certificates include:
o the subordination or one or more other classes of certificates of
the same series;
o a letter of credit;
o a surety bond;
o an insurance policy;
o a guarantee; and/or
o a reserve fund.
In the related prospectus supplement, we will describe the amount and
types of any credit support benefiting the holders of a class of offered
certificates.
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Arrangements Providing Interest Rate Protection
The trust assets for a series of offered certificates may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for that series will be invested at a specified rate. The
trust assets may also include:
o interest rate exchange agreements;
o interest rate cap agreements;
o interest rate floor agreements; or
o other agreements or arrangements designed to reduce the effects of
interest rate fluctuations on the mortgage assets.
In the related prospectus supplement, we will describe any agreements or
other arrangements designed to protect the holders of a class of offered
certificates against shortfalls resulting from movements or fluctuations in
interest rates. If applicable, we will also identify any obligor under the
agreement or other arrangement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on your certificates will depend on--
o the price you paid for your certificates,
o the pass-through rate on your certificates,
o the amount and timing of payments on your certificates.
The following discussion contemplates a trust established by us that
consists only of mortgage loans. If one of our trusts also includes a
mortgage-backed security, the payment terms of that security will soften or
enhance the effects that the characteristics and behavior of mortgage loans
backing that security can have on the yield to maturity and/or weighted average
life of a class of offered certificates. If one of our trusts includes a
mortgage-backed security, we will discuss in the related prospectus supplement
the effect, if any, that the security may have on the yield to maturity and
weighted average lives of the related offered certificates.
Pass-Through Rate
A class of interest-bearing offered certificates may have a fixed,
variable or adjustable pass-through rate. We will specify in the related
prospectus supplement the pass-through rate for each class of interest-bearing
offered certificates or, if the pass-through rate is variable or adjustable, the
method of determining the pass-through rate.
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Payment Delays
There will be a delay between the date on which payments on the underlying
mortgage loans are due and the date on which those payments are passed through
to you and other investors. That delay will reduce the yield that would
otherwise be produced if mortgage loan payments were passed through on your
certificates on the same date that the payments were due.
Yield and Prepayment Considerations
The yield to maturity on your certificates will be affected by the rate of
principal payments on the mortgage loans and the allocation of those principal
payments to reduce the principal balance or notional amount of your
certificates. The rate of principal payments on the mortgage loans will be
affected by the following:
o the amortization schedules of the mortgage loans, which may change
from time to time to reflect, among other things, changes in
mortgage interest rates or partial prepayments of principal;
o the dates on which any balloon payments are due; and
o the rate of principal prepayments on the mortgage loans, including
voluntary prepayments by borrowers and involuntary prepayments
resulting from liquidations, casualties or purchases of mortgage
loans.
Because the rate of principal prepayments on the mortgage loans underlying
your certificates will depend on future events and a variety of factors, we
cannot give you any assurance as to that rate.
The extent to which the yield to maturity of your certificates may vary
from your anticipated yield will depend upon--
o whether you purchased your certificates at a discount or premium
and, if so, the extent of that discount or premium, and
o when, and to what degree, payments of principal on the underlying
mortgage loans are applied or otherwise result in the reduction of
the principal balance or notional amount of your certificates.
If you purchase your certificates at a discount, you should consider the
risk that a slower than anticipated rate of principal payments on the underlying
mortgage loans could result in an actual yield to you that is lower than your
anticipated yield. If you purchase your certificates at a premium, you should
consider the risk that a faster than anticipated rate of principal payments on
the underlying mortgage loans could result in an actual yield to you that is
lower than your anticipated yield.
If your certificates entitle you to payments of interest, with
disproportionate, nominal or no payments of principal, you should consider that
your yield will be extremely sensitive to prepayments on the underlying mortgage
loans and, under some prepayment scenarios, may be negative.
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If a class of offered certificates accrues interest on a notional amount,
that notional amount will, in general, either--
(a) be based on the principal balances of some or all of the mortgage
assets in the related trust, or
(b) equal the aggregate principal balance of one or more of the other
classes of certificates of the same series.
Accordingly, the yield on that class of certificates will be inversely
related to, as applicable, the rate at which payments and other collections of
principal are received on the mortgage assets or referred to in clause (a) above
or payments are made in reduction of the aggregate principal balance of the
class or classes of certificates referred to in clause (b) above.
The extent of prepayments of principal of the mortgage loans underlying
your certificates may be affected by a number of factors, including:
o the availability of mortgage credit;
o the relative economic vitality of the area in which the related real
properties are located;
o the quality of management of the related real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o other opportunities for investment.
In general, those factors which increase the attractiveness of selling or
refinancing a multifamily or commercial property that secures a mortgage loan,
as well as those factors which increase the likelihood of default under the
mortgage loan, would be expected to cause the rate of prepayment to accelerate.
In contrast, those factors having an opposite effect would be expected to cause
the rate of prepayment to slow.
The rate of principal payments on the mortgage loans underlying your
certificates may also be affected by the existence and enforceability of
prepayment restrictions, such as prepayment lock-out periods and requirements
that voluntary principal prepayments be accompanied by prepayment premiums, fees
or charges. If enforceable, those provisions could constitute either an absolute
prohibition, in the case of a prepayment lock-out period, or a disincentive, in
the case of a prepayment premium, fee or charge, to a borrower's voluntarily
prepaying its mortgage loan, thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a comparable
type, term and risk level. As prevailing market interest rates decline, a
borrower may have an increased incentive to refinance its mortgage loan. Even in
the case of adjustable rate mortgage loans, as prevailing market interest rates
decline, the related borrowers may have an increased incentive to refinance for
the following purposes:
o to convert to a fixed rate loan and thereby "lock in" that rate, or
o to take advantage of a different index, margin or rate cap or floor
on another adjustable rate mortgage loan.
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Subject to prevailing market interest rates and economic conditions
generally, a borrower may sell a real property in order to--
o realize its equity in the property,
o meet cash flow needs or
o make other investments.
Additionally, some borrowers may be motivated by federal and state tax laws,
which are subject to change, to sell their properties prior to the exhaustion of
tax depreciation benefits. We make no representation as to--
o the particular factors that will affect the prepayment of the
mortgage loans underlying any series of offered certificates,
o the relative importance of those factors
o the percentage of the principal balance of those mortgage loans that
will be paid as of any date; or
o the overall rate of prepayment on those mortgage loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the mortgage loans
underlying any series of offered certificates will affect the ultimate maturity
and the weighted average life of one or more classes of the offered certificates
of that related series. In general, weighted average life refers to the average
amount of time that will elapse from the date of issuance of an instrument until
each dollar allocable as principal of such instrument is repaid to the investor.
The weighted average life and maturity of a class of offered certificates
will be influenced by the rate at which principal on the underlying mortgage
loans is paid to that class, whether in the form of scheduled amortization or
prepayments, including voluntary prepayments by borrowers and involuntary
prepayments resulting from liquidations, casualties or condemnations and
purchases of mortgage loans out of the related trust.
Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of those loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the 30th month. Beginning in the 30th month, and in each month
thereafter during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
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Neither CPR nor SPA nor any other prepayment model or assumption is a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. It is unlikely that the prepayment
experience of the mortgage loans underlying any series of offered certificates
will conform to any particular level of CPR or SPA.
In the prospectus supplement for a series of offered certificates, we will
include tables, if applicable, setting forth the projected weighted average life
of each class of those offered certificates with an aggregate principal balance,
and the percentage of the initial aggregate certificate principal balance of
each such class that would be outstanding on specified dates, based on the
assumptions stated in that prospectus supplement, including assumptions
regarding prepayments on the underlying mortgage loans. Those tables and
assumptions illustrate the sensitivity of the weighted average lives of the
certificates to various assumed prepayment rates and are not intended to
predict, or to provide information that will enable you to predict, the actual
weighted average lives of your certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans underlying a series of offered certificates may require that balloon
payments be made at maturity. The ability of a borrower to make a balloon
payment typically will depend upon its ability either (a) to refinance the loan,
or (b) to sell the related real property. If a borrower is unable to refinance
or sell the related real property, there is a possibility that the borrower may
default on the mortgage loan or that the maturity of the mortgage loan may be
extended in connection with a workout. If a borrower defaults, recovery of
proceeds may be delayed by (a) the bankruptcy of the borrower, or (b) adverse
economic conditions in the market where the related real property is located.
In order to minimize losses on defaulted mortgage loans, the related
master servicer or special servicer may be authorized within prescribed limits
to modify mortgage loans that are in default or as to which a payment default is
reasonably foreseeable. Any defaulted balloon payment or modification that
extends the maturity of a mortgage loan may delay payments of principal on your
certificates and extend the weighted average life of your certificates.
Negative Amortization. The weighted average life of a class of
certificates can be affected by mortgage loans that permit negative amortization
to occur. Those are the mortgage loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues on
the mortgage loan, with the unpaid portion of such interest being added to the
related principal balance. Negative amortization most commonly occurs in respect
of an adjustable rate mortgage loan that:
o limits the amount by which its scheduled payment may adjust in
response to a change in its mortgage interest rate;
o provides that its scheduled payment will adjust less frequently than
its mortgage interest rate; or
o provides for constant scheduled payments regardless of adjustments
to its mortgage interest rate.
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Negative amortization on one or more mortgage loans in any of our trusts
may result in negative amortization on a related class of offered certificates.
We will describe in the related prospectus supplement, if applicable, the manner
in which negative amortization in respect of the underlying mortgage loans is
allocated among the respective classes of a series of offered certificates.
The portion of any mortgage loan negative amortization allocated to a
class of offered certificates may result in a deferral of some or all of the
interest payable on those certificates. Deferred interest may be added to the
aggregate principal balance of a class of offered certificates. In addition, an
adjustable rate mortgage loan that permits negative amortization would be
expected during a period of increasing interest rates to amortize, if at all, at
a slower rate than if interest rates were declining or were remaining constant.
This slower rate of mortgage loan amortization would be reflected in a slower
rate of amortization for one or more classes of certificates of the related
series. Accordingly, there may be an increase in the weighted average lives of
those classes of certificates to which any mortgage loan negative amortization
would be allocated or that would bear the effects of a slower rate of
amortization of the underlying mortgage loans.
During a period of declining interest rates, the scheduled payment on an
adjustable rate mortgage loan may exceed the amount necessary to amortize the
loan fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. The result is the accelerated amortization of
the mortgage loan. The acceleration in amortization of a mortgage loan will
shorten the weighted average lives of those classes of certificates that entitle
their holders to a portion of the principal payments on the mortgage loan.
The extent to which the yield on your certificates may be affected by the
inclusion in the related trust of mortgage loans that permit negative
amortization, will depend upon the following:
o whether you purchase your certificates at a premium or a discount;
and
o whether the payment characteristics of the underlying mortgage loans
delay or accelerate the payments of principal on, or in reduction of
the notional amount of, your certificates.
See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The weighted average life of and yield on
your certificates will be affected by--
o the number of foreclosures with respect to the underlying mortgage
loans; and
o the principal amount of the foreclosed mortgage loans in relation to
the principal amount of those mortgage loans that are repaid in
accordance with their terms.
Servicing decisions made with respect to mortgage loans, including the use
of payment plans prior to a demand for acceleration and the restructuring of
mortgage loans in bankruptcy proceedings or otherwise, may also affect the
payment patterns of particular mortgage loans and, as a result, the weighted
average life of and yield on your certificates.
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Losses and Shortfalls on the Mortgage Assets. The yield on your
certificates will directly depend on the extent to which you are required to
bear the effects of any losses or shortfalls in collections on the underlying
mortgage loans and the timing of those losses and shortfalls. In general, the
earlier that you bear any loss or shortfall, the greater will be the negative
effect on the yield of your certificates.
The amount of any losses or shortfalls in collections on the mortgage
assets in any of our trusts will to the extent not covered or offset by draws on
any reserve fund or under any instrument of credit support, be allocated among
the various classes of certificates of the related series in the priority and
manner, and subject to the limitations, that we specify in the related
prospectus supplement. As described in the related prospectus supplement, those
allocations may be effected by the following:
o a reduction in the entitlements to interest and/or the aggregate
principal balances of one or more classes of certificates; and/or
o the establishment of a priority of payments among classes of
certificates.
If you purchase subordinated certificates, the yield to maturity on those
certificates may be extremely sensitive to losses and shortfalls in collections
on the underlying mortgage loans.
Additional Certificate Amortization. If your certificates have a principal
balance, then they entitle you to a specified portion of the principal payments
received on the underlying mortgage loans. They may also entitle you to payments
of principal from the following sources:
o amounts attributable to interest accrued but not currently payable
on one or more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that
is in excess of the interest currently accrued on the certificates
of the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
The amortization of your certificates out of the sources described in the
prior paragraph would shorten their weighted average life and, if your
certificates were purchased at a premium, reduce their yield to maturity.
DLJ COMMERCIAL MORTGAGE CORP.
We were incorporated in Delaware on July 10, 1997. We were organized,
among other things, for the purposes of--
o acquiring mortgage loans secured by first or junior liens on
commercial and multifamily real properties;
o acquiring mortgage-backed securities that evidence interests in
mortgage loans that are secured by commercial and multifamily real
properties;
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o forming pools of mortgage loans and mortgage-backed securities; and
o acting as settler or depositor of trusts formed to issue bonds,
notes or other evidences of indebtedness or to issue shares,
participation certificates or like instruments, that are secured by
or represent interests in, pools of mortgage loans and
mortgage-backed securities.
We are a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc., a
Delaware corporation. Our principal executive offices are located at 277 Park
Avenue, 9th Floor, New York, New York 10172. Our telephone number is (212)
892-3000. We do not have, and we do not expect to have, any significant assets.
DESCRIPTION OF THE CERTIFICATES
General
Each series of offered certificates, together with any non-offered
certificates of the same series, will represent the entire beneficial ownership
interest in a trust established by us. Each series of offered certificates will
consist of one or more classes. Any non-offered certificates of that series will
likewise consist of one or more classes.
A "series" of certificates are all those certificates that--
o have the same series designation;
o were issued pursuant to the same governing documents; and
o represent beneficial ownership interests in the same trust.
A "class" of certificates are all those certificates of a particular
series that--
o have the same class designation; and
o have the same payment terms.
The respective classes of offered and non-offered certificates of any
series may have a variety of payment terms. An offered certificate may entitle
the holder to receive:
o a stated principal amount, which will be represented by its
principal balance;
o interest on a principal balance or notional amount, at a fixed,
variable or adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or
other amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no payments
of interest;
o payments of interest, with disproportionate, nominal or no payments
of principal;
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o payments of interest or principal that commence only as of a
specified date or only after the occurrence of certain events, such
as the payment in full of the interest and principal outstanding on
one or more other classes of certificates of the same series;
o payments of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases, substantially
slower) than the rate at which payments or other collections of
principal are received on the related mortgage assets;
o payments of principal to be made, subject to available funds, based
on a specified principal payment schedule or other methodology; or
o payments of all or part of the prepayment or repayment premiums,
fees and charges, equity participations payments or other similar
items received on the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one or
more other classes of certificates of the same series, including a non-offered
class of certificates of that series, for purposes of some or all payments
and/or allocations of losses or other shortfalls.
A class of offered certificates may have two or more component parts, each
having characteristics that are described in this prospectus as being
attributable to separate and distinct classes. For example, a class of offered
certificates may have an aggregate principal balance on which it accrues
interest at a fixed, variable or adjustable rate. That class of offered
certificates may also accrue interest on an aggregate notional amount at a
different fixed, variable or adjustable rate. In addition, a class of offered
certificates may accrue interest on one portion of its aggregate principal
balance or notional amount at one fixed, variable or adjustable rate and on
another portion of its aggregate principal balance or notional amount at a
different fixed, variable or adjustable rate.
Each class of offered certificates will be issued in minimum denominations
corresponding to specified principal balances, notional amounts or percentage
interests, as described in the related prospectus supplement. A class of offered
certificates may be issued in fully registered, definitive form and evidenced by
physical certificates or may be issued in book-entry form through the facilities
of The Depository Trust Company ("DTC"). Offered certificates held in fully
registered, definitive form may be transferred or exchanged, subject to any
restrictions on transfer described in the related prospectus supplement, at the
location specified in the related prospectus supplement, without the payment of
any service charges, except for any tax or other governmental charge payable in
connection with the transfer or exchange. Interests in offered certificates held
in book-entry form will be transferred on the book-entry records of DTC and its
participating organizations (the "DTC Participants"). If we so specify in the
related prospectus supplement, we will arrange for clearance and settlement
through CEDEL, S.A. or the Euroclear System, for so long as they are
participants in DTC.
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Payments on the Certificates
General. Payments on a series of offered certificates may occur monthly,
bi-monthly, quarterly, semi-annually, annually or at any other specified
interval. In the prospectus supplement for each series of offered certificates,
we will identify:
o the periodic payment date for that series, and
o the record date as of which certificateholders entitled to payments
on any particular payment date will be established.
All payments with respect to a class of offered certificates on any
payment date will be allocated pro rata among the outstanding certificates of
that class in proportion to the respective principal balances, notional amounts
or percentage interests, as the case may be, of those certificates. Payments on
an offered certificate will be made to the holder entitled thereto either--
o by wire transfer of immediately available funds to the account of
that holder at a bank or similar entity, provided that the holder
has furnished the party making the payments with wiring instructions
no later than the applicable record date and has satisfied any other
conditions specified in the related prospectus supplement, or
o by check mailed to the address of that holder as it appears in the
certificate register, in all other cases.
In general, the final payment on any offered certificate will be made only
upon presentation and surrender of that certificate at the location specified to
the holder in notice of final payment.
Payments of Interest. In the case of each class of interest-bearing
offered certificates, interest will accrue from time to time, at the applicable
pass-through rate and in accordance with the applicable interest accrual method,
on the aggregate outstanding principal balance or notional amount of that class.
The pass-through rate for a class of interest-bearing offered certificates
may be fixed, variable or adjustable. We will specify in the related prospectus
supplement the pass-through rate for each class of interest-bearing offered
certificates or, in the case of a variable or adjustable pass-through rate, the
method for determining that pass-through rate.
Interest may accrue with respect to any offered certificate on the basis
of:
o a 360-day year consisting of 12 30-day months,
o the actual number of days elapsed during each relevant period in a
year assumed to consist of 360 days,
o the actual number of days elapsed during each relevant period in a
normal calendar year, or
o such other method identified in the related prospectus supplement.
We will identify the interest accrual method for each class of offered
certificates in the related prospectus supplement.
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Subject to available funds and any adjustments to interest entitlements
described in the related prospectus supplement, accrued interest in respect of
each class of interest-bearing offered certificates will normally be payable on
each payment date. However, in the case of some classes of interest-bearing
offered certificates, which we will refer to as "compound interest
certificates," payments of accrued interest will only begin on a particular
payment date or under the circumstances described in the related prospectus
supplement. Prior to that time, the amount of accrued interest otherwise payable
on that class will be added to its aggregate principal balance on each date or
otherwise deferred as described in the related prospectus supplement.
If a class of offered certificates accrues interest on an aggregate
notional amount, that aggregate notional amount, in general, will be either:
(a) based on the principal balances of some or all of the related
mortgage assets; or
(b) equal to the aggregate principal balances of one or more other
classes of certificates of the same series.
Reference to the notional amount of any certificate is solely for convenience in
making certain calculations of interest and does not represent the right to
receive any payments of principal.
We will describe in the related prospectus supplement the extent to which
the amount of accrued interest that is payable on, or that may be added to the
aggregate principal balance of, a class of interest-bearing offered certificates
may be reduced as a result of any contingencies, including shortfalls in
interest collections due to prepayments, delinquencies, losses and deferred
interest on the related mortgage assets.
Payments of Principal. A class of offered certificates may or may not have
an aggregate principal balance. If it does, that aggregate principal balance
outstanding from time to time will represent the maximum amount that the holders
of that class will be entitled to receive as principal out of the future cash
flow on the related mortgage assets and the other related trust assets. The
aggregate outstanding principal balance of any class of offered certificates
will be reduced by--
o payments of principal actually made to the holders of that class,
and
o if and to the extent that we so specify in the related prospectus
supplement, losses of principal on the related mortgage assets that
are allocated to or are required to be borne by that class.
If a class of offered certificates are compound interest certificates, then the
aggregate outstanding principal balance of that class may be increased by the
amount of any interest accrued, but not currently payable, on that class. We
will describe in the related prospectus supplement any other adjustments to the
aggregate outstanding principal balance of a class of offered certificates.
Unless we so state in the related prospectus supplement, the initial
aggregate principal balance of all classes of a series will not be greater than
the aggregate outstanding principal balance of the related mortgage assets
transferred by us to the related trust. We will specify the expected initial
aggregate principal balance of each class of offered certificates in the related
prospectus supplement.
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The payments of principal to be made on a series of offered certificates
from time to time will, in general, be a function of the payments, other
collections and advances received or made with respect to the related prospectus
supplement. Payments of principal on a series of offered certificates may also
be made from the following sources:
o amounts attributable to interest accrued but not currently payable
on one or more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that
is in excess of the interest currently accrued on the certificates
of the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
We will describe in the related prospectus supplement the principal
entitlement of each class of offered certificates on each payment date.
Allocation of Losses and Shortfalls
If and to the extent that any losses or shortfalls in collections on the
mortgage assets in any of our trusts are not covered or offset by delinquency
advances or draws on any reserve fund or under any instrument of credit support,
they will be allocated among the various classes of certificates of the related
series in the priority and manner, and subject to the limitations, specified in
the related prospectus supplement. As described in the related prospectus
supplement, the allocations may be effected as follows:
(i) by reducing the entitlements to interest and/or the aggregate
principal balances of one or more of those classes; and/or
(ii) by establishing a priority of payments among those classes.
See "Description of Credit Support."
Advances in Respect of Delinquencies
If any trust established by us includes mortgage loans, then as and to the
extent described in the related prospectus supplement, the related master
servicer, the related special servicer, the related trustee, any related
provider of credit support and/or any other specified person may be obligated to
advance, or have the option of advancing, delinquent payments of principal and
interest due on those mortgage loans, other than balloon payments. If there are
any limitations with respect to a party's advancing obligations, we will discuss
those limitations in the related prospectus supplement.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to certificateholders. Advances are not a guarantee against
losses. The advancing party will be entitled to recover all of its advances out
of subsequent recoveries on the related mortgage loans, including amounts drawn
under any fund or instrument constituting credit support, and out of any other
specific sources identified in the related prospectus supplement.
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If and to the extent that we so specify in the related prospectus
supplement, any entity making advances will be entitled to receive interest on
some or all of those advances for a specified period during which they are
outstanding at the rate specified in that prospectus supplement. That entity may
be entitled to payment of interest on its outstanding advances periodically from
general collections on the mortgage assets in the related trust, prior to any
payment to the related series of certificateholders, or at such other times and
from such sources as we may describe in the related prospectus supplement.
If any trust established by us includes mortgage-backed securities, we
will discuss in the related prospectus supplement any comparable advancing
obligations in respect of those securities or the mortgage loans that back them.
Reports to Certificateholders
On or about each payment date, the related master servicer, manager or
trustee will forward to each offered certificateholder a statement substantially
in the form, or specifying the information, set forth in the related prospectus
supplement. In general, that statement will include information regarding (i)
the payments made on that payment date with respect to the applicable class of
offered certificates and (ii) the recent performance of the mortgage assets.
Within a reasonable period of time after the end of each calendar year,
the related master servicer, manager or trustee, as the case may be, will be
required to furnish to each person who at any time during the calendar year was
a holder of an offered certificate a statement containing information regarding
the principal, interest and other amounts paid on the applicable class of
offered certificates, aggregated for that calendar year or the applicable
portion thereof during which the person was a certificateholder. The obligation
to provide that annual statement will be deemed to have been satisfied by the
related master servicer, manager or trustee, as the case may be, to the extent
that substantially comparable information is provided pursuant to any
requirements of the Internal Revenue Code of 1986.
See, also, "--Book-Entry Registration and Definitive Certificates" below.
If one of our trusts includes mortgage-backed securities, the ability of
the related master servicer, manager or trustee, as the case may be, to include
in any payment date statement information regarding the mortgage loans that back
those securities will depend on comparable reports being received with respect
to them.
Voting Rights
Voting rights will be allocated among the respective classes of offered
and non-offered certificates of each series in the manner described in the
related prospectus supplement. Certificateholders will generally not have a
right to vote, except with respect to certain amendments to the governing
documents or as otherwise specified in the related prospectus supplement. See
"Description of the governing Documents--Amendment."
As and to the extent described in the related prospectus supplement, the
holders of specified amounts of certificates of a particular series will have
the right to act as a group to remove or replace the related trustee, master
servicer, special servicer or manager. In general, any such removal or
replacement must be for cause. We will identify exceptions in the related
prospectus supplement.
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Termination
The trust for each series of offered certificates will terminate and cease
to exist following:
o the final payment or other liquidation of the last mortgage asset in
that trust; and
o the payment, or provision for payment, to the certificateholders of
that series of all amounts required to be paid to them.
Written notice of termination of a trust will be given to each affected
certificateholder, and the final payment will be made only upon presentation and
surrender of the certificates of the related series at the location to be
specified in the notice of termination.
If we so specify in the related prospectus supplement, one or more
designated parties will be entitled to purchase all of the mortgage assets
underlying a series of offered certificates, thereby effecting early retirement
of the certificates and early termination of the related trust. We will describe
in the related prospectus supplement the circumstances under which that purchase
may occur.
In addition, if we so specify in the related prospectus supplement, on a
specified date or upon the reduction of the aggregate principal balance of a
specified class or classes of certificates by a specified percentage or amount,
a party designated in the related prospectus supplement may be authorized or
required to solicit bids for the purchase of all the mortgage assets of the
related trust or of a sufficient portion of the mortgage assets to retire that
class or those classes of certificates. The solicitation of bids must be
conducted in a commercially reasonable manner, and assets will, in general, be
sold at their fair market value. If the fair market value of the mortgage assets
being sold is less than their unpaid balance, then the certificateholders of one
or more classes of certificates may receive an amount less than the aggregate
certificate principal balance of, and accrued and unpaid interest on, their
certificates.
Book-Entry Registration and Definitive Certificates
Any class of offered certificates may be issued in book-entry form through
the facilities of DTC. If so, that class will be represented by one or more
global certificates registered in the name of DTC or its nominee. If we so
specify in the related prospectus supplement, we will arrange for clearance and
settlement through the Euroclear System or CEDEL, S.A., for so long they are
participants in DTC.
DTC is:
o a limited-purpose trust company organized under the New York Banking
Law,
o a "banking corporation" within the meaning of the New York Banking
Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
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DTC was created to hold securities for DTC Participants and to facilitate
the clearance and settlement of securities transactions between DTC Participants
through electronic computerized book-entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. DTC
Participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include other
organizations. DTC is owned by a number of DTC Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
directly or indirectly clear through or maintain a custodial relationship with a
DTC Participant that maintains an account with DTC. The rules applicable to DTC
and DTC Participants are on file with the SEC.
Purchases of book-entry certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such purpose.
In turn, the Financial Intermediary's ownership of those certificates will be
recorded on the records of DTC or, alternatively, if the beneficial owner's
Financial Intermediary is not a DTC Participant, on the records of a
participating firm that acts as agent for the Financial Intermediary, whose
interest will in turn be recorded on the records of DTC. A beneficial owner of
book-entry certificates must rely on the foregoing procedures to evidence its
beneficial ownership of those certificates. The beneficial ownership interest of
the owner of a book-entry certificate may only be transferred by compliance with
the rules, regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual beneficial owners of the book-entry
certificates. DTC's records reflect only the identity of the DTC Participants to
whose accounts those certificates are credited, which may or may not be the
actual beneficial owners. The DTC Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants,
and by DTC Participants to Financial Intermediaries and beneficial owners, will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payments on the book-entry certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related payment date in
accordance with their respective holdings shown on DTC's records, unless DTC has
reason to believe that it will not receive payment on that date. Disbursement of
such payments by DTC Participants to Financial Intermediaries and beneficial
owners will be--
o governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer
form or registered in "street name,"
o the sole responsibility of each such DTC Participant, subject to any
statutory or regulatory requirements in effect from time to time.
Under a book-entry system, beneficial owners may receive payments after the
related payment date.
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The only "certificateholder" of book-entry certificates will be DTC or its
nominee. Parties to the governing documents for any series of offered
certificates need not recognize beneficial owners of book-entry certificates as
"certificateholders." The beneficial owners of book-entry certificates will be
permitted to exercise the rights of "certificateholders" only indirectly through
the DTC Participants, who in turn will exercise their rights through DTC. We
have been informed that DTC will take action permitted to be taken by a
"certificateholder" only at the direction of one or more DTC Participants. DTC
may take conflicting actions with respect to the book-entry certificates to the
extent that such actions are taken on behalf of Financial Intermediaries whose
holdings include those certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain beneficial owners, the ability of
a beneficial owner to pledge its interest in a class of book-entry certificates
to persons or entities that do not participate in the DTC system, or otherwise
to take actions in respect of its interest in a class of book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing such interest.
Unless we specify otherwise in the related prospectus supplement,
beneficial owners of affected offered certificates initially issued in
book-entry form will not be able to obtain physical certificates that represent
those offered certificates, unless:
o we advise the related trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to those offered certificates and we are
unable to locate a qualified successor; or
o we elect, at our option, to terminate the book-entry system through
DTC with respect to those offered certificates.
Upon the occurrence of either of the two events described above, DTC will
be required to notify all DTC Participants of the availability through DTC of
physical certificates with respect to the affected offered certificates. Upon
surrender by DTC of the certificate or certificates representing a class of
book-entry offered certificates, together with instructions for registration,
the related trustee or other designated party will be required to issue to the
beneficial owners identified in those instructions physical certificates
representing those offered certificates.
DESCRIPTION OF THE GOVERNING DOCUMENTS
General
The offered certificates of each series will be issued pursuant to a
pooling and servicing agreement or other similar agreement or collection of
agreements (individually and collectively, the "Governing Documents"). In
general, the parties to the Governing Document for a series of offered
certificates will include us, a trustee, a master servicer and a special
servicer. However, if the related trust assets include mortgage-backed
securities, the Governing Document may include a manager as a party, but may not
include a master servicer, special servicer or other servicer as a party. We
will identify in the related prospectus supplement the parties to the Governing
Document for a series of offered certificates.
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If we so specify in the related prospectus supplement, a party from whom
we acquire mortgage assets or one of its affiliates may perform the functions of
master servicer, special servicer or manager for the trust to which we transfer
those assets. If we so specify in the related prospectus supplement, the same
person or entity may act as both master servicer and special servicer for one of
our trusts.
Any party to the Governing Document for a series of offered certificates,
or any of its affiliate, may own certificates issued thereunder. However, except
in limited circumstances, including with respect to required consents to certain
amendments to the Governing Document for a series of offered certificates,
certificates that are held by the related master servicer, special servicer or
manager will not be allocated voting rights.
A form of a pooling and servicing agreement has been filed as an exhibit
to the registration statement of which this prospectus is a part. However, the
provisions of the Governing Document for each series of offered certificates
will vary depending upon the nature of the certificates to be issued thereunder
and the nature of the related trust assets. The following summaries describe
certain provisions that may appear in the Governing Document for each series of
offered certificates. The prospectus supplement for each series of offered
certificates will provide material additional information regarding the
Governing Document for that series. The summaries in this prospectus do not
purport to be complete, and you should refer to the provisions of the Governing
Document for your certificates and, further, to the description of those
provisions in the related prospectus supplement. We will provide a copy of the
Governing Document, exclusive of exhibits, that relates to your certificates,
without charge, upon written request addressed to our principal executive
offices specified under "DLJ Commercial Mortgage Corp."
Assignment of Mortgage Assets
At the time of initial issuance of any series of offered certificates, we
will assign or cause to be assigned to the designated trustee the mortgage
assets to be included in the related trust, together with certain related
assets. We will specify in the related prospectus all material documents in
respect of the related mortgage assets that will be delivered to the related
trustee, and all other actions to be taken by us or any prior holder of the
related mortgage assets, in connection with that assignment. Concurrently with
that assignment, the related trustee will deliver to us or our designee the
certificates of that series in exchange for the mortgage assets and the other
assets to be included in the related trust.
Each mortgage asset included in one of our trusts will be identified in a
schedule appearing as an exhibit to the related Governing Document. That
schedule generally will include detailed information about each mortgage asset
transferred to the related trust, including:
o in the case of a mortgage loan, the address of the related real
property and the type of that property; the mortgage interest rate
and, if applicable, the applicable index, gross margin, adjustment
date and any rate cap information; the remaining term to maturity;
the remaining amortization term; and the outstanding principal
balance; and
o in the case of a mortgage-backed security, the outstanding principal
balance and the pass-through rate or coupon rate.
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Representations and Warranties with respect to Mortgage Assets; Repurchases and
Other Remedies
Unless we state otherwise in the prospectus supplement for any series of
offered certificates, we will, with respect to each mortgage asset in the
related trust, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example:
o the accuracy of the information set forth for each mortgage asset on
the schedule of mortgage assets appearing as an exhibit to the
Governing Document for that series;
o the Warranting Party's title to each mortgage asset and the
authority of the Warranting Party to sell that mortgage asset; and
o in the case of a mortgage loan, the enforceability of the related
mortgage note and mortgage, the existence of title insurance
insuring the lien priority of the related mortgage, the payment
status of the mortgage loan and the delivery of all documents
required to be delivered with respect to the mortgage loan as
contemplated under "--Assignment of Mortgage Assets."
We will identify the Warranting Party, and give a more complete sampling
of the representations and warranties made thereby, in the related prospectus
supplement. We will also specify in the related prospectus supplement any
remedies against the warranting party available to the related
certificateholders, or the related trustee on their behalf, in the event of a
breach of any of those representations and warranties. In most cases, the
Warranting Party will be a prior holder of the particular mortgage assets.
Collection and Other Servicing Procedures with Respect to Mortgage Loans
The Governing Document for each series of offered certificates will govern
the servicing and administration of any mortgage loans included in the related
trust.
In general, the related master servicer and special servicer, directly or
through sub-servicers, will be obligated to service and administer for the
benefit of the related certificateholders the mortgage loans in any of our
trusts. The master servicer and the special servicer will be required to service
and administer those mortgage loans in accordance with applicable law and,
further, in accordance with the terms of the related Governing Document, the
mortgage loans themselves and any instrument of credit support included in that
trust. Subject to the foregoing, the master servicer and the special servicer
will each have full power and authority to do any and all things in connection
with that servicing and administration that it may deem necessary and desirable.
As part of its servicing duties, each of the master servicer and the
special servicer for one of our trusts will be required to make reasonable
efforts to collect all payments called for under the terms and provisions of the
related mortgage loans that it services and, in general, will be obligated to
follow the same collection procedures as it would follow for comparable mortgage
loans held for its own account, provided that:
(i) those procedures are consistent with the terms of the related
Governing Document; and
(ii) they do not impair recovery under any instrument of credit support
included in the related trust.
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Consistent with the foregoing, the master servicer and the special servicer will
each be permitted, in its discretion, to waive any default charge in connection
with collecting a late payment on any defaulted mortgage loan.
The master servicer and/or the special servicer for one or our trusts,
directly or through sub-servicers, will also be required to perform various
other customary functions of a servicer of comparable loans, including:
o maintaining escrow or impound accounts for the payment of taxes,
insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items;
o ensuring that the related properties are properly insured;
o attempting to collect delinquent payments;
o supervising foreclosures;
o negotiating modifications;
o responding to borrower requests for partial releases of the
encumbered property, easements, consents to alteration or demolition
and similar matters;
o protecting the interests of certificateholders with respect to
senior lienholders;
o conducting inspections of the related real properties on a periodic
or other basis;
o collecting and evaluating financial statements for the related real
properties;
o managing or overseeing the management of real properties acquired on
behalf of the trust through foreclosure, deed-in-lieu of foreclosure
or otherwise; and
o maintaining servicing records relating to mortgage loans in the
trust.
We will specify in the related prospectus supplement when, and the extent
to which, servicing of a mortgage loan is to be transferred from a master
servicer to a special servicer. In general, a special servicer for any of our
trusts will be responsible for the servicing and administration of:
o mortgage loans that are delinquent in respect of a specified number
of scheduled payments;
o mortgage loans as to which there is a material non-monetary default;
o mortgage loans as to which the related borrower has entered into or
consented to bankruptcy, appointment of a receiver or conservator or
similar insolvency proceeding, or the related borrower has become
the subject of a decree or order for such a proceeding which shall
have remained in force undischarged or unstayed for a specified
number of days; and
o real properties acquired as part o the trust in respect of defaulted
mortgage loans.
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The related Governing Document may also may provide that if a default on a
mortgage loan in the related trust has occurred or, in the judgment of the
related master servicer, a payment default is reasonably foreseeable, the
related master servicer may elect to transfer the servicing of that mortgage
loan, in whole or in part, to the related special servicer. When the
circumstances no longer warrant a special servicer's continuing to service a
particular mortgage loan, such as when the related borrower is paying in
accordance with the forbearance arrangement entered into between the special
servicer and that borrower, the master servicer will generally resume the
servicing duties with respect to the particular mortgage loan.
A borrower's failure to make required mortgage loan payments may mean that
operating income from the related real property is insufficient to service the
mortgage debt, or may reflect the diversion of that income from the servicing of
the mortgage debt. In addition, a borrower that is unable to make mortgage loan
payments may also be unable to make timely payment of taxes and otherwise to
maintain and insure the related real property. In general, the related special
servicer will be required to monitor any mortgage loan that is in default,
evaluate whether the causes of the default can be corrected over a reasonable
period without significant impairment of the value of the related real property,
initiate corrective action in cooperation with the mortgagor if cure is likely,
inspect the related real property and take such other actions as it deems
necessary and appropriate. A significant period of time may elapse before a
special servicer is able to assess the success of any such corrective action or
the need for additional initiatives. The time within which a special servicer
can make the initial determination of appropriate action, evaluate the success
of corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose, or accept a deed to a real property in lieu
of foreclosure, on behalf of the certificateholders of the related series may
vary considerably depending on the particular mortgage loan, the related real
property, the borrower, the presence of an acceptable party to assume the
mortgage loan and the laws of the jurisdiction in which the related real
property is located. If a borrower files a bankruptcy petition, the special
servicer may not be permitted to accelerate the maturity of the defaulted loan
or to foreclose on the related real property for a considerable period of time.
See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
A special servicer may also perform certain limited duties in respect of
mortgage loans for which the master servicer is primarily responsible, such as
performing property inspections and collecting evaluating financial statements.
A master servicer may perform certain limited duties in respect of any mortgage
loan for which the special servicer is primarily responsible, such as continuing
to receive payments on the mortgage loan, making certain calculations with
respect to the mortgage loan and making remittances and preparing certain
reports to the related trustee and/or certificateholders with respect to such
mortgage loan. The duties of the master servicer and special servicer for your
series will be more fully described in the related prospectus supplement.
Unless we state otherwise in the related prospectus supplement, the master
servicer for your series will be responsible for filing and settling claims in
respect of particular mortgage loans for your series under any applicable
instrument of credit support. See "Description of Credit Support" in this
Prospectus.
Sub-Servicers
A master servicer or special servicer may delegate its servicing
obligations to one or more third-party servicers or sub-servicers. However,
unless we specify otherwise in the related prospectus supplement, the master
servicer or special servicer will remain obligated under the related Governing
Document. Each sub-servicing agreement between a master servicer or special
servicer, as applicable, and a sub-servicer must provide for servicing of the
applicable mortgage loans consistent with the related Governing Document. Any
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master servicer and special servicer for one of our trusts will each be required
to monitor the performance of sub-servicers retained by it.
Unless we specify otherwise in the related prospectus supplement, any
master servicer or special servicer for the related trust will be solely liable
for all fees owed by it to any sub-servicer, regardless of whether the master
servicer's or special servicer's compensation pursuant to the related Governing
Document is sufficient to pay those fees. Each sub-servicer will be entitled to
reimbursement from the master servicer or special servicer, as the case may be,
that retained it, for certain expenditures which it makes, generally to the same
extent the master servicer or special servicer would be reimbursed under the
related Governing Document.
Collection of Payments on Mortgage-Backed Securities
Unless we specify otherwise in the related prospectus supplement, if a
mortgage-backed security is included among the trust assets underlying any
series of offered certificates, then--
o that mortgage-backed security will be registered in the name of the
related trustee or its designee;
o the related trustee will receive payments on that mortgage-backed
security; and
o subject to any conditions described in the related prospectus
supplement, the related trustee or a designated manager will, on
behalf and at the expense of the trust, exercise all rights and
remedies in respect of that mortgaged-backed security, including the
prosecution of any legal action necessary in connection with any
payment default.
Certain Matters Regarding the Master Servicer, the Special Servicer, the Manager
and Us
Unless we specify otherwise in the related prospectus supplement, no
master servicer, special servicer or manager for any of our trusts may resign
from its obligations in such capacity, except upon--
o the appointment of, and the acceptance of such appointment by, a
successor to the resigning party and receipt by the related trustee
of written confirmation from each applicable rating agency that the
resignation and appointment will not result in a withdrawal or
downgrade of any rating assigned by that rating agency to any class
of certificates of the related series, or
o a determination that those obligations are no longer permissible
under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by the resigning
party.
In general, no resignation will become effective until the related trustee
or other successor has assumed the obligations and duties of the resigning
master servicer, special servicer or manager, as the case may be.
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Each master servicer, special servicer and, if it receives distributions
on mortgage-backed securities, manager for one of our trusts will be required to
maintain a fidelity bond and errors and omissions policy or their equivalent
that provides coverage against losses that may be sustained as a result of an
officer's or employee's misappropriation of funds or errors and omissions,
subject to such limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions as may be permitted by the rating agencies
assigning ratings to the related series of certificates.
In no event will we, any master servicer, special servicer or manager for
one of our trusts, or any of our or their respective directors, officers,
employees or agents be under any liability to the related trust or
certificateholders for any action taken, or not taken, in good faith pursuant to
the Governing Document for any series of certificates or for errors in judgment.
Neither we nor any of those other persons or entities will be protected,
however, against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of
obligations or duties under the Governing Document for any series of
certificates or by reason of reckless disregard of those obligations and duties.
Furthermore, the Governing Document for each series of offered
certificates will entitle us, the master servicer, special servicer and/or
manager for the related trust, and our and their respective directors, officers,
employees and agents to indemnification out of the related trust assets for any
loss, liability or expense incurred in connection with any legal action that
relates to that Governing Document or series of offered certificates or to the
related trust. The indemnification will not extend, however, to any loss,
liability or expense--
(i) specifically required to be borne by the relevant party, without
right of reimbursement, pursuant to the terms of that Governing
Document,
(ii) incurred in connection with any legal action against the relevant
party resulting from any breach of a representation or warranty made
in that Governing Document, or
(iii) incurred in connection with any legal action against the relevant
party resulting from any willful misfeasance, bad faith or gross
negligence in the performance of obligations or duties under that
Governing Document.
Neither we nor any master servicer, special servicer or manager for the
related trust will be under any obligation to appear in, prosecute or defend any
legal action unless--
o the action is related to the respective responsibilities of that
party under the Governing Document for the affected series of
offered certificates, and
o either (i) that party is specifically required to bear the expense
of the action, or (ii) the action will not, in its opinion, involve
that party in any ultimate expense or liability for which it would
not be reimbursed under the Governing Document for the affected
series of offered certificates.
However, we and each of those other parties may undertake any legal action that
may be necessary or desirable with respect to the enforcement or protection of
the rights and duties of the parties to the Governing Document for any series of
offered certificates and the interests of the certificateholders of that series
under that Government Document. In that event, the legal expenses and costs of
the action, and any liability
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resulting therefrom, will be expenses, costs and liabilities of the related
trust and payable out of related trust assets.
With limited exception, any person into which we or any related master
servicer, a special servicer or manager may be merged or consolidated, or any
person resulting from any merger or consolidation to which we or any related
master servicer, special servicer, manager is a party, or any person succeeding
to our business or the business of any related master servicer, special servicer
or manager, will be the successor of us or that master servicer, special
servicer or manager, as the case may be, under the Governing Document for each
series of offered certificates.
The compensation arrangements with respect to any master servicer, special
servicer or manager for any of our trusts will be set forth in the related
prospectus supplement. In general, that compensation will be payable out of the
related trust assets.
Events of Default
We will identify in related prospectus supplement the various events of
default under the Governing Document for each series of offered certificates for
which any related master servicer, special servicer or manager may be terminated
in that capacity.
Amendment
The Governing Document for each series of offered certificates may be
amended by the parties thereto, without the consent of any of the holders of
those certificates, or of any non-offered certificates of the same series, for
the following reasons:
(i) to cure any ambiguity;
(ii) to correct, modify or supplement any provision in the Governing
Document which may be inconsistent with any other provision therein
or to correct any error;
(iii) to add any other provisions with respect to matters or questions
arising under the Governing Documents that are not inconsistent with
the existing provisions of that document;
(iv) to the extent applicable, to relax or eliminate any requirement
under the Governing Document imposed by the provisions of the
Internal Revenue Code of 1986 relating to REMICs if the provisions
of that Code are amended or clarified so as to allow for the
relaxation or elimination of that requirement;
(v) to relax or eliminate any requirement under the Governing Document
imposed by the Securities Act of 1933, as amended, or the rules
under that Act if that Act or those rules are amended or clarified
so as to allow for the relaxation or elimination of that
requirement;
(vi) to comply with any requirements imposed by the Internal Revenue Code
of 1986 or any final, temporary or, in some cases, proposed
regulation, revenue ruling, revenue procedure or other written
official announcement or interpretation relating to federal income
tax laws, or to avoid
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a prohibited transaction or reduce the incidence of any tax that
would arise from any actions taken with respect to the operation of
any REMIC created under the Governing Document;
(vii) to the extent applicable, to modify, add to or eliminate certain
transfer restrictions relating to the certificates which are
"residual interests" in a REMIC; or
(viii) for any other purpose.
However, no amendment of the Governing Document for any series of offered
certificates, other than an amendment for any of the specific purposes described
in clauses (vi) and (vii) above, may adversely affect in any material respect
the interests of any holders of offered or non-offered certificates of that
series. In addition, no amendment of the Governing Document for any series of
offered certificates covered solely by clause (viii) above may result in a
downgrade or withdrawal of any then current rating assigned to any class of
certificates of the related series, as evidenced by written confirmation to that
effect from each applicable rating agency obtained by or delivered to the
related trustee.
In general, the Governing Agreement for a series of offered certificates
may also be amended by the parties to that document, with the consent of the
holders of offered and non-offered certificates representing, in the aggregate,
not less than 66-2/3%, or such other percentage specified in the related
prospectus supplement, of all the voting rights allocated to those classes of
that series that are affected by the amendment. However, the Governing Document
for a series of offered certificates may not be amended to--
o reduce in any manner the amount of, or delay the timing of, payments
received on the related mortgage assets which are required to be
distributed on any offered or non-offered certificate of that series
without the consent of the holder of that certificate; or
o adversely affect in any material respect the interests of the
holders of any class of offered or non-offered certificates of that
series in any other manner without the consent of the holders of all
certificates of that class; or
o modify the provisions of the Governing Document relating to
amendments thereof without the consent of the holders of all offered
and non-offered certificates of that series then outstanding.
List of Certificateholders
Upon written request of three or more certificateholders of record of any
series made for purposes of communicating with other holders of certificates of
the same series with respect to their rights under the related Governing
Document, the related trustee or other certificate registrar of that series will
afford the requesting certificateholders access during normal business hours to
the most recent list of certificateholders of that series.
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The Trustee
The trustee for each series of offered certificates will be named in the
related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee for any
series of offered certificates may have typical banking relationships with the
us and our affiliates and with any of the other parties to the related Governing
Document and its affiliates.
Duties of the Trustee
The trustee for each series of offered certificates will make no
representation as to the validity or sufficiency of those certificates, the
related Governing Document or any underlying mortgage asset or related document
and will not be accountable for the use or application by or on behalf of any
other party to the related Governing Document of any funds paid to that party in
respect of those certificates or the underlying mortgage assets. If no event of
default has occurred and is continuing, the trustee for each series will be
required to perform only those duties specifically required under the related
Governing Document. However, upon receipt of any of the various certificates,
reports or other instruments required to be furnished to it pursuant to the
related Governing Document, the trustee must examine those documents and
determine whether they conform to the requirements of that Governing Document.
Certain Matters Regarding the Trustee
As and to the extent described in the related prospectus supplement, the
fees and normal disbursements of the trustee for any series of offered
certificates may be the expense of the related master servicer or other
specified person or may be required to be paid by the related trust assets.
The trustee for each series of offered certificates will be entitled to
indemnification, out of related trust assets, for any loss, liability or expense
incurred by that trustee in connection with its acceptance or administration of
its trusts under the related Governing Document. The indemnification of a
trustee will not extend to any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence on the part of the trustee in
the performance of its obligations and duties under the related Governing
Document, or by reason of its reckless disregard of those obligations or duties.
The trustee for each series of offered certificates will be entitled to
execute any of its trusts or powers and perform any of its duties under the
related Governing Document, either directly or by or through agents or
attorneys. The trustee will not be responsible for any willful misconduct or
gross negligence on the part of any such agent or attorney appointed by it with
due care.
Resignation and Removal of the Trustee
The trustee for any series of offered certificates may resign at any time.
We will be obligated to appoint a successor to a resigning trustee. We may also
remove the trustee for any series of offered certificates if that trustee ceases
to be eligible to continue as such under the related Governing Document or if
that trustee becomes insolvent. Unless we indicate otherwise in the related
prospectus supplement, the trustee for any series of offered certificates may
also be removed at any time by the holders of the offered and
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non-offered certificates of that series evidencing not less than 51%, or such
other percentage specified in the related prospectus supplement, of the voting
rights for that series. However, if the removal was without cause, the
certificateholders effecting the removal may be responsible for any costs and
expenses incurred by the terminated trustee in connection with its removal. Any
resignation or removal of a trustee and appointment of a successor trustee will
not become effective until acceptance of the appointment by the successor
trustee.
DESCRIPTION OF CREDIT SUPPORT
General
Credit support may be provided with respect to one or more classes of the
offered certificates of any series or with respect to the related mortgage
assets. That credit support may be in the form of any of the following:
o the subordination of one or more other classes of certificates of
the same series;
o the use of a letter of credit, a surety bond, an insurance policy or
a guarantee;
o the establishment of one or more reserve funds; or
o any combination of the foregoing.
If and to the extent described in the related prospectus supplement, any
of the above forms of credit support may provide credit enhancement for
non-offered certificates, as well as offered certificates, or for more than one
series of certificates.
If you are the beneficiary of any particular form of credit support, that
credit support may not protect you against all risks of loss and will not
guarantee payment to you of all amounts to which you are entitled under your
certificates. If losses or shortfalls occur that exceed the amount covered by
that credit support or that are of a type not covered by that credit support,
you will bear your allocable share of deficiencies. Moreover, if that credit
support covers the offered certificates of more than one class or series and
total losses on the related mortgage assets exceed the amount of that credit
support, it is possible that the holders of offered certificates of other
classes and/or series will be disproportionately benefited by that credit
support to your detriment.
If you are the beneficiary of any particular form of credit support, we
will include in the related prospectus supplement a description of the
following:
o the nature and amount of coverage under that credit support;
o any conditions to payment not otherwise described in this
prospectus;
o any conditions under which the amount of coverage under that credit
support may be reduced and under which that credit support may be
terminated or replaced; and
o the material provisions relating to that credit support.
Additionally, we will set forth in the related prospectus supplement certain
information with respect to the obligor, if any, under any instrument of credit
support.
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Subordinate Certificates
If and to the extent described in the related prospectus supplement, one
or more classes of certificates of any series may be subordinate to one or more
other classes of certificates of that series. If you purchase subordinate
certificates, your right to receive payments out of collections and advances on
the related trust assets on any payment date will be subordinated to the
corresponding rights of the holders of the more senior classes of certificates.
If and to the extent described in the related prospectus supplement, the
subordination of a class of certificates may apply only in the event of certain
types of losses or shortfalls. In the related prospectus supplement, we will set
forth information concerning the method and amount of subordination provided by
a class or classes of subordinate certificates in a series and the circumstances
under which that subordination will be available.
If the mortgage assets in any trust established us are divided into
separate groups, each supporting a separate class or classes of certificates of
the related series, credit support may be provided by cross-support provisions
requiring that payments be made on senior certificates evidencing interests in
one group of those mortgage assets prior to payments on subordinate certificates
evidencing interests in a different group of those mortgage assets. We will
describe in the related prospectus supplement the manner and conditions for
applying any cross-support provisions.
Insurance or Guarantees with Respect to Mortgage Loans
The mortgage loans included in any trust established by us may be covered
for certain default risks by insurance policies or guarantees. If so, we will
describe in the related prospectus supplement the nature of such default risks
and the extent of such coverage.
Letter of Credit
If and to the extent described in the prospectus supplement, deficiencies
in amounts otherwise payable on a series of offered certificates or certain
classes of those certificates will be covered by one or more letters of credit,
issued by a bank or other financial institution specified in the related
prospectus supplement (the "Letter of Credit Bank"). Under a letter of credit,
the Letter of Credit Bank will be obligated to honor draws under the letter of
credit in an aggregate fixed dollar amount, net of unreimbursed payments under
the letter of credit, generally equal to a percentage specified in the related
prospectus supplement of the aggregate principal balance of some or all of the
related mortgage assets as of the date the related trust was formed or of the
initial aggregate principal balance of one or more classes of certificates of
the applicable series. The letter of credit may permit draws only in the event
of certain types of losses and shortfalls. The amount available under the letter
of credit will, in all cases, be reduced to the extent of the unreimbursed
payments thereunder and may otherwise be reduced as described in the related
prospectus supplement. The obligations of the Letter of Credit Bank under the
letter of credit for any series of offered certificates will expire at the
earlier of the date specified in the related prospectus supplement or the
termination of the related trust.
Certificate Insurance and Surety Bonds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by insurance policies or
surety bonds provided by one or more insurance companies or sureties. Those
instruments may cover, with respect to one or more classes of the offered
certificates of the related series, timely payments
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of interest and principal or timely payments of interest and payments of
principal on the basis of a schedule of principal payments set forth in or
determined in the manner specified in the related prospectus supplement. We will
describe in the related prospectus supplement any limitations on the draws that
may be made under any such instrument.
Reserve Funds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered, to the extent of
available funds, by one or more reserve funds in which cash, a letter of credit,
permitted investments, a demand note or a combination of the foregoing, will be
deposited, in the amounts specified in the related prospectus supplement. If and
to the extent described in the related prospectus supplement, the reserve fund
for the related series of offered certificates may also be funded over time.
Amounts on deposit in any reserve fund for a series of offered
certificates will be applied for the purposes, in the manner, and to the extent
specified in the related prospectus supplement. If and to the extent described
in the related prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each payment date for the related series of offered certificates,
amounts in a reserve fund in excess of any required balance may be released from
the reserve fund under the conditions and to the extent specified in the related
prospectus supplement.
Credit Support with Respect to MBS
If and to the extent described in the related prospectus supplement, any
mortgage-backed security included in one of our trusts and/or the mortgage loans
that back that security may be covered by one or more of the types of credit
support described in this prospectus. We will specify in the related prospectus
supplement, as to each such form of credit support, the information indicated
above with respect to that mortgage-backed security, to the extent that the
information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
Most, if not all, of the underlying mortgage loans will be secured by
multifamily and commercial properties in the United States. However, some
mortgage loans underlying a series of offered certificates may be secured by
multifamily and commercial properties outside the United States.
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by multifamily and commercial properties in
the United States. Because these legal aspects are governed by applicable state
law, which may differ substantially from state to state, the summaries do not
purport to be complete, to reflect the laws of any particular state, or to
encompass the laws of all jurisdictions in which the security for the mortgage
loans underlying the offered certificates is situated. Accordingly, you should
be aware that the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "Description of the Trust Assets--Mortgage
Loans."
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If a significant percentage of mortgage loans underlying a series of
offered certificates, are secured by properties in a particular state, we will
discuss the relevant state laws, to the extent they vary materially from this
discussion, in the related prospectus supplement. For purposes of this
discussion, "mortgage loan" means a multifamily or commercial mortgage loan that
directly or indirectly backs a series of offered certificates.
General
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property. The instrument
granting a security interest in real property may be a mortgage, deed of trust
or a deed to secure debt, depending upon the prevailing practice and law in the
state in which the related mortgaged property is located. Mortgages, deeds of
trust and deeds to secure debt are herein collectively referred to as
"mortgages." A mortgage creates a lien upon, or grants a title interest in, the
real property covered by the mortgage, and represents the security for the
repayment of the indebtedness customarily evidenced by a promissory note. The
priority of the lien created or interest granted will depend on--
o the terms of the mortgage,
o the terms of separate subordination agreements or intercreditor
agreements with others that hold interests in the real property,
o the knowledge of the parties to the mortgage, and
o in general, the order of recordation of the mortgage in the
appropriate public recording office.
However, the lien of a recorded mortgage will generally be subordinate to
later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage--
o a mortgagor, who is the owner of the encumbered interest in the real
property, and
o a mortgagee, who is the lender.
In general, the mortgagor is also the borrower.
In contrast, a deed of trust is a three-party instrument. The parties to a
deed of trust are--
o the trustor, who is the equivalent of a mortgagor,
o the trustee to whom the real property is conveyed, and
o the beneficiary for whose benefit the conveyance is made, who is the
lender.
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Under a deed of trust, the trustor grants the property, irrevocably until the
debt is paid, in trust and generally with a power of sale, to the trustee to
secure repayment of the indebtedness evidenced by the related note.
A deed to secure debt typically has two parties. Pursuant to a deed to
secure debt, the grantor, who is the equivalent of a mortgagor, conveys title to
the real property to the grantee, who is the lender, generally with a power of
sale, until the debt is repaid.
Where the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally liable
for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under
a deed of trust and the grantee's authority under a deed to secure debt are
governed by:
o the express provisions of the related instrument,
o the law of the state in which the real property is located,
o certain federal laws, and
o in some deed of trust transactions, the directions of the
beneficiary.
Leases and Rents
A mortgage that encumbers an income-producing property often contains an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases. Under an assignment of rents and leases, the
borrower assigns to the lender the borrower's right, title and interest as
landlord under each lease and the income derived from each lease. However, the
borrower retains a revocable license to collect the rents, provided there is no
default and the rents are not directly paid to the lender. If the borrower
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code (the "UCC"). Room rates are
generally pledged by the borrower as additional security for the loan when a
mortgage loan is secured by a hotel or motel. In general, the lender must file
financing statements in order to perfect its security interest in the room rates
and must file continuation statements, generally every five years, to maintain
that perfection. Mortgage loans secured by hotels or motels may be included in
one of our trusts even if the security interest in the room rates was not
perfected or the requisite UCC filings were allowed to lapse. A lender will
generally be required to commence a foreclosure action or otherwise take
possession of the property in order to enforce its rights to collect the room
rates following a default, even if the lender's security interest in room rates
is perfected under applicable nonbankruptcy law.
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In the bankruptcy setting, the lender will be stayed from enforcing its
rights to collect hotel and motel room rates. However, the room rates will
constitute "cash collateral" and cannot be used by the bankrupt borrower--
o without a hearing or the lender's consent, or
o unless the lender's interest in the room rates is given adequate
protection.
Such "adequate protection" may include a cash payment for otherwise encumbered
funds or a replacement lien on unencumbered property, in either case equal in
value to the amount of room rates that the bankrupt borrower proposes to use.
See "--Bankruptcy Laws" below.
Personalty
Certain types of mortgaged properties, such as hotels, motels and nursing
homes, may include personal property, which may, to the extent it is owned by
the borrower and not previously pledged, constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest in the personal
property and must file continuation statements, generally every five years, to
maintain that perfection. In certain cases, mortgage loans secured in part by
personal property may be included in one of our trusts even if the security
interest in the personal property was not perfected or the requisite UCC filings
were allowed to lapse.
Foreclosure
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property security at public auction to
satisfy the indebtedness.
Foreclosure Procedures vary from State to State. The two primary methods
of foreclosing a mortgage are--
o judicial foreclosure, involving court proceedings, and
o nonjudicial foreclosure pursuant to a power of sale granted in the
mortgage instrument.
Other foreclosure procedures are available in some states, but they are
either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed. A
foreclosure action sometimes requires several years to complete.
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Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, a lender
initiates the action by the service of legal pleadings upon--
o all parties having a subordinate interest of record in the real
property, and
o all parties in possession of the property, under leases or
otherwise, whose interests are subordinate to the mortgage.
Delays in completion of the foreclosure may occasionally result from
difficulties in locating defendants. When the lender's right to foreclose is
contested, the legal proceedings can be time-consuming. The court generally
issues a judgment of foreclosure and appoints a referee or other officer to
conduct a public sale of the mortgaged property upon successful completion of a
judicial foreclosure proceeding. The proceeds of that public sale are used to
satisfy the judgment. The procedures that govern these public sales vary from
state to state.
Equitable and Other Limitations on Enforceability of Certain Provisions.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These principles
are generally designed to relieve borrowers from the effects of mortgage
defaults perceived as harsh or unfair. Relying on such principles, a court may:
o alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or
overreaching;
o require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower
will be able to reinstate the loan;
o require the lender to reinstate a loan or recast a payment schedule
in order to accommodate a borrower that is suffering from a
temporary financial disability; or
o limit the right of the lender to foreclose in the case of a
nonmonetary default, such as a failure to adequately maintain the
mortgaged property or an impermissible further encumbrance of the
mortgaged property.
Some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily-prescribed
minimum notice. For the most part, these cases have--
o upheld the reasonableness of the notice provisions, or
o found that a public sale under a mortgage providing for a power of
sale does not involve sufficient state action to trigger
constitutional protections.
In addition, some states may have statutory protection such as the right
of the borrower to reinstate its mortgage loan after commencement of foreclosure
proceedings but prior to a foreclosure sale.
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Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following--
o a request from the beneficiary/lender to the trustee to sell the
property upon default by the borrower, and
o notice of sale is given in accordance with the terms of the deed of
trust and applicable state law.
In some states, prior to a nonjudicial public sale, the trustee under the
deed of trust must--
o record a notice of default and notice of sale, and
o send a copy of those notices to the borrower and to any other party
who has recorded a request for a copy of them.
In addition, in some states, the trustee must provide notice to any other party
having an interest of record in the real property, including junior lienholders.
A notice of sale must be posted in a public place and, in most states, published
for a specified period of time in one or more newspapers. Some states require a
reinstatement period during which the borrower or junior lienholder may have the
right to cure the default by paying the entire actual amount in arrears, without
regard to the acceleration of the indebtedness, plus the lender's expenses
incurred in enforcing the obligation. In other states, the borrower or the
junior lienholder has only the right to pay off the entire debt to prevent the
foreclosure sale. Generally, state law governs the procedure for public sale,
the parties entitled to notice, the method of giving notice and the applicable
time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of--
o the difficulty in determining the exact status of title to the
property due to, among other things, redemption rights that may
exist, and
o the possibility that physical deterioration of the property may have
occurred during the foreclosure proceedings.
As a result of the foregoing, it is common for the lender to purchase the
mortgaged property and become the owner thereof, subject to the borrower's right
in some states to remain in possession during a redemption period. In that case,
the lender will have both the benefits and burdens of ownership, including the
obligation to pay debt service on any senior mortgages, to pay taxes, to obtain
casualty insurance and to make repairs necessary to render the property suitable
for sale. The costs of operating and maintaining a commercial or multifamily
residential property may be significant and may be greater than the income
derived from that property. The lender also will commonly obtain the services of
a real estate broker and pay the broker's commission in connection with the sale
or lease of the property. Whether, the ultimate proceeds of the sale of the
property equal the lender's investment in the property depends upon market
conditions.
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Moreover, because of the expenses associated with acquiring, owning and selling
a mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged property is sold at foreclosure, or resold after it is
acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens. In addition, it
may be obliged to keep senior mortgage loans current in order to avoid
foreclosure of its interest in the property. Furthermore, if the foreclosure of
a junior mortgage triggers the enforcement of a "due-on-sale" clause contained
in a senior mortgage, the junior mortgagee could be required to pay the full
amount of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are--
o to enable the lender to realize upon its security, and
o to bar the borrower, and all persons who have interests in the
property that are subordinate to that of the foreclosing lender,
from exercising their "equity of redemption."
The doctrine of equity of redemption provides that, until the property
encumbered by a mortgage has been sold in accordance with a properly conducted
foreclosure and foreclosure sale, those having interests that are subordinate to
that of the foreclosing lender have an equity of redemption and may redeem the
property by paying the entire debt with interest. Those having an equity of
redemption must generally be made parties to the foreclosure proceeding in order
for their equity of redemption to be terminated.
The equity of redemption is a common-law, nonstatutory right which should
be distinguished from post-sale statutory rights of redemption. In some states,
the borrower and foreclosed junior lienors are given a statutory period in which
to redeem the property after sale pursuant to a deed of trust or foreclosure of
a mortgage. In some states, statutory redemption may occur only upon payment of
the foreclosure sale price. In other states, redemption may be permitted if the
former borrower pays only a portion of the sums due. A statutory right of
redemption will diminish the ability of the lender to sell the foreclosed
property because the exercise of a right of redemption would defeat the title of
any purchaser through a foreclosure. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property and pay the
expenses of ownership until the redemption period has expired. In some states, a
post-sale statutory right of redemption may exist following a judicial
foreclosure, but not following a trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans. Therefore, recourse in the case of default on such a mortgage
loan will be limited to the mortgaged property and such other assets, if any,
that were pledged to secure the mortgage loan. However, even if a mortgage loan
by its terms provides for recourse to the borrower's other assets, a lender's
ability to realize upon those assets may be limited by state law. For example,
in some states, a lender cannot obtain a deficiency judgment against the
borrower following foreclosure or sale under a deed of trust. A deficiency
judgment is a personal judgment against the former borrower equal to the
difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Other statutes may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting the security, but in doing so, the lender may be deemed to have
elected a remedy and
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thus may be precluded from foreclosing upon the security. Consequently, lenders
will usually proceed first against the security in states where an election of
remedy provision exists. Finally, other statutory provisions limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale. These other statutory provisions
are intended to protect borrowers from exposure to large deficiency judgments
that might result from bidding at below-market values at the foreclosure sale.
Leasehold Considerations. Mortgage loans may be secured by a mortgage on
the borrower's leasehold interest under a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease:
o requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them,
o permits the leasehold estate to be assigned to and by the leasehold
mortgagee or the purchaser at a foreclosure sale, and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Certain mortgage loans, however, may be secured by ground leases which do
not contain these provisions.
Cooperative Shares. Mortgage loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
belonging to those shares, allocable to cooperative dwelling units that may be
vacant or occupied by nonowner tenants. Loans secured in this manner are subject
to certain risks not associated with mortgage loans secured by a lien on the fee
estate of a borrower in real property. The loan typically is subordinate to the
mortgage, if any, on the cooperative's building. That mortgage, if foreclosed,
could extinguish the equity in the building and the proprietary leases of the
dwelling units derived from ownership of the shares of the cooperative. Further,
transfer of shares in a cooperative is subject to various regulations as well as
to restrictions under the governing documents of the cooperative. The shares may
be canceled in the event that associated maintenance charges due under the
related proprietary leases are not paid. Typically, a recognition agreement
between the lender and the cooperative provides, among other things, that the
lender may cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
cooperative corporation to receive sums due under the proprietary leases.
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Bankruptcy Laws
Operation of the U.S. Bankruptcy Code and related state laws may interfere
with or affect the ability of a lender to realize upon collateral or to enforce
a deficiency judgment. For example, under the U.S. Bankruptcy Code, virtually
all actions, including foreclosure actions and deficiency judgment proceedings,
to collect a debt are automatically stayed upon the filing of the bankruptcy
petition. Often, no interest or principal payments are made during the course of
the bankruptcy case. The delay caused by an automatic stay and its consequences
can be significant. Also, under the U.S. Bankruptcy Code, the filing of a
petition in bankruptcy by or on behalf of a junior lienor may stay the senior
lender from taking action to foreclose out the junior lien.
Under the U.S. Bankruptcy Code, the amount and terms of a mortgage loan
secured by a lien on property of the debtor may be modified provided that
substantive and procedural safeguards protective of the lender are met. A
bankruptcy court may, among other things--
o reduce the secured portion of the outstanding amount of the loan to
the then-current value of the property, thereby leaving the lender a
general unsecured creditor for the difference between the
then-current value of the property and the outstanding balance of
the loan;
o reduce the amount of each scheduled payment, by means of a reduction
in the rate of interest and/or an alteration of the repayment
schedule, with or without affecting the unpaid principal balance of
the loan;
o extend or shorten the term to maturity;
o permit the bankrupt borrower to cure of a mortgage loan default by
paying the arrearage over a number of years; or
o permit the bankrupt borrower, through its rehabilitative plan, to
reinstate a mortgage loan payment schedule even if the lender has
obtained a final judgment of foreclosure prior to the filing of the
debtor's petition.
Federal bankruptcy law may also interfere with or affect the ability of a
secured lender to enforce the borrower's assignment of rents and leases related
to the mortgaged property. A lender may be stayed from enforcing the assignment
under the U.S. Bankruptcy Code. In addition, the legal proceedings necessary to
resolve the issue could be time-consuming, and result in delays in the lender's
receipt of the rents. However, recent amendments to the U.S. Bankruptcy Code may
minimize the impairment of the lender's ability to enforce the borrower's
assignment of rents and leases. In addition to the inclusion of hotel revenues
within the definition of "cash collateral" as noted above, the amendments
provide that a pre-petition security interest in rents or hotel revenues is
designed to overcome those cases holding that a security interest in rents is
unperfected under the laws of certain states until the lender has taken some
further action, such as commencing foreclosure or obtaining a receiver prior to
activation of the assignment of rents.
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A borrower's ability to make payment on a mortgage loan may be impaired by
the commencement of a bankruptcy case relating to the tenant under a lease of
the related property. Under the U.S. Bankruptcy Code, the filing of a petition
in bankruptcy by or on behalf of a tenant results in a stay in bankruptcy
against the commencement or continuation of any state court proceeding for--
o past due rent,
o accelerated rent,
o damages, or
o a summary eviction order with respect to a default under the lease
that occurred prior to the filing of the tenant's bankruptcy
petition.
In addition, the U.S. Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court:
o assume the lease and either retain it or assign it to a third party,
or
o reject the lease.
If the lease is assumed, the trustee, 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. These remedies may be insufficient, and any assurances provided to
the lessor may be inadequate. If the lease is rejected, the lessor will be
treated, except potentially to the extent of any security deposit, as an
unsecured creditor with respect to its claim for damages for termination of the
lease. The U.S. Bankruptcy Code also limits a lessor's damages for lease
rejection to:
o the rent reserved by the lease without regard to acceleration for
the greater of one year, or 15%, not to exceed three years, of the
remaining term of the lease, plus
o unpaid rent to the earlier of the surrender of the property or the
lessee's bankruptcy filing.
Environmental Considerations
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Those environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
that lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien."
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CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of the mortgaged property or the operations of
the borrower. Liability may exist even if the lender did not cause or contribute
to the contamination and regardless of whether the lender has actually taken
possession of a mortgaged property through foreclosure, deed in lieu of
foreclosure or otherwise. Moreover, liability is not limited to the original or
unamortized principal balance of a loan or to the value of the property securing
a loan. Excluded from CERCLA's definition of "owner" or "operator," however, is
a person who, without participating in the management of the facility, holds
indicia of ownership primarily to protect his security interest. This is the so
called "secured creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Lender Liability Act") amended, among other things, the provisions of
CERCLA with respect to lender liability and the secured creditor exemption. The
Lender Liability Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. In order for a lender to be deemed to have
participated in the management of a mortgaged property, the lender must actually
participate in the operational affairs of the property of the borrower. The
Lender Liability Act provides that "merely having the capacity to influence, or
unexercised right to control" operations does not constitute participation in
management. A lender will lose the protection of the secured creditor exemption
only if--
o it exercises decision-making control over the borrower's
environmental compliance and hazardous substance handling and
disposal practices, or
o assumes day-to-day management of operational functions of the
mortgaged property.
The Lender Liability Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed-in-lieu of
foreclosure, provided that the lender seeks to sell that property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act.
Certain federal, state and local laws, regulations and ordinances govern
the management, removal, encapsulation or disturbance of asbestos-containing
materials. These laws, as well as common law standards, may impose liability for
releases of or exposure to asbestos-containing materials and may provide for
third parties to seek recovery from owners or operators of real properties for
personal injuries associated with such releases.
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Recent federal legislation will require owners of residential housing
constructed prior to 1978 to disclose to potential residents or purchasers any
known lead-based paint hazards and will impose treble damages for any failure to
disclose. In addition, the ingestion of lead-based paint chips or dust particles
by children can result in lead poisoning. If lead-based paint hazards exist at a
property, then the owner of that property may be held liable for injuries and
for the costs of removal or encapsulation of the lead-based paint.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action related to hazardous environmental conditions on a property,
such as actions based on nuisance or on toxic tort resulting in death, personal
injury or damage to property. While it may be more difficult to hold a lender
liable under common law causes of action, unanticipated or uninsured liabilities
of the borrower may jeopardize the borrower's ability to meet its loan
obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. These costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard. However, that individual or entity may be without
substantial assets. Accordingly, it is possible that the costs could become a
liability of the related trust and occasion a loss to the related
certificateholders.
If the operations on a foreclosed property are subject to environmental
laws and regulations, the lender will be required to operate the property in
accordance with those laws and regulations. This compliance may entail
substantial expense, especially in the case of industrial or manufacturing
properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers,
including prospective buyers at a foreclosure sale or following foreclosure.
This disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially.
Environmental Site Assessments. In most cases, an environmental site
assessment of each mortgaged property will have been performed in connection
with the origination of the related mortgage loan or at some time prior to the
issuance of the related series of offered certificates. Environmental site
assessments, however, vary considerably in their content, quality and cost. Even
when adhering to good professional practices, environmental consultants will
sometimes not detect significant environmental problems because to do an
exhaustive environmental assessment would be far too costly and time-consuming
to be practical.
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Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the a mortgaged
property. In recent years, court decisions and legislative actions placed
substantial restrictions on the right of lenders to enforce these clauses in
many states. However, the Garn-St Germain Depository Institutions Act of 1982
generally preempts state laws that prohibit the enforcement of due-on-sale
clauses and permits lenders to enforce these clauses in accordance with their
terms, subject to the limitations prescribed in that Act and the regulations
promulgated thereunder.
Junior Liens; Rights of Holders of Senior Liens
Any of our trusts may include mortgage loans secured by junior liens,
while the loans secured by the related senior liens may not be included in that
trust. The primary risk to holders of mortgage loans secured by junior liens is
the possibility that adequate funds will not be received in connection with a
foreclosure of the related senior liens to satisfy fully both the senior loans
and the junior loan.
In the event that a holder of a senior lien forecloses on a mortgaged
property, the proceeds of the foreclosure or similar sale will be applied as
follows:
o first, to the payment of court costs and fees in connection with the
foreclosure;
o second, to real estate taxes;
o third, in satisfaction of all principal, interest, prepayment or
acceleration penalties, if any, and any other sums due and owing to
the holder of the senior liens; and
o last, in satisfaction of all principal, interest, prepayment and
acceleration penalties, if any, and any other sums due and owing to
the holder of the junior mortgage loan.
Subordinate Financing
The terms of certain of the mortgage loans underlying the offered
certificates may not restrict the ability of the borrower to use the mortgaged
property as security for one or more additional loans, or the restrictions may
be unenforceable. Where a borrower encumbers a mortgaged property with one or
more junior liens, the senior lender is subjected to the following additional
risks:
o the borrower may have difficulty servicing and repaying multiple
loans;
o if the subordinate financing permits recourse to the borrower, as is
frequently the case, and the senior loan does not, a borrower may
have more incentive to repay sums due on the subordinate loan;
o acts of the senior lender that prejudice the junior lender or impair
the junior lender's security, such as the senior lender's agreeing
to an increase in the principal amount of or the interest rate
payable on the senior loan, may create a superior equity in favor of
the junior lender;
o if the borrower defaults on the senior loan and/or any junior loan
or loans, the existence of junior loans and actions taken by junior
lenders can impair the security available to the senior lender and
can interfere with or delay the taking of action by the senior
lender; and
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o the bankruptcy of a junior lender may operate to stay foreclosure or
similar proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made. They
may also contain provisions that prohibit prepayments for a specified period
and/or condition prepayments upon the borrower's payment of prepayment premium,
fee or charge. In certain states, there are or may be specific limitations upon
the late charges that a lender may collect from a borrower for delinquent
payments. Certain states also limit the amounts that a lender may collect from a
borrower as an additional charge if the loan is prepaid. In addition, the
enforceability of provisions that provide for prepayment premiums, fees and
charges upon an involuntary prepayment is unclear under the laws of many states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential, including multifamily, first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not rejected, any state is authorized by the
law to adopt a provision limiting discount points or other charges on mortgage
loans covered by Title V. Certain states have taken action to reimpose interest
rate limits and/or to limit discount points or other charges.
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, owners of public accommodations, such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments, must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, the 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 property
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, because the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender that is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
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Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of the borrower's mortgage loan, including a borrower who was in
reserve status and is called to active duty after origination of the mortgage
loan, may not be charged interest, including fees and charges, above an annual
rate of 6% during the period of the borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service, including reservists who are called to
active duty, after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act.
Application of the Relief Act would adversely affect, for an indeterminate
period of time, the ability of a master servicer or special servicer to collect
full amounts of interest on certain of the mortgage loans underlying the offered
certificates. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts
distributable to the holders of certificates of the related series, and would
not be covered by advances or, unless otherwise specified in the related
prospectus supplement, any form of credit support provided in connection with
the certificates. In addition, the Relief Act imposes limitations that would
impair the ability of a master servicer or special servicer to foreclose on an
affected mortgage loan during the borrower's period of active duty status and,
under certain circumstances, during an additional three month period after the
active duty status ceases.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, those crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property," including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that--
o its mortgage was executed and recorded before commission of the
crime upon which the forfeiture is based, or
o the lender was, at the time of execution of the mortgage,
"reasonably without cause to believe" that the property was used in,
or purchased with the proceeds of, illegal drug or RICO activities.
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FEDERAL INCOME TAX CONSEQUENCES
General
This is a general discussion of the material federal income tax
consequences of owning the offered certificates. To the extent it relates to
matters of law or legal conclusions, it represents the opinion of our counsel,
subject to any qualifications as may be expressed in this discussion. Unless we
otherwise specify in the related prospectus supplement, our counsel for each
series will be Sidley & Austin.
This discussion is directed to certificateholders that hold the offered
certificates as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, which we will refer to throughout this "Federal
Income Tax Consequences" section as the "Code." It does not discuss all federal
income tax consequences that may be relevant to owners of offered certificates,
particularly as to investors subject to special treatment under the Code,
including:
o banks,
o insurance companies, and
o foreign investors.
Further, this discussion and any legal opinions referred to in this
discussion are based on authorities that can change, or be differently
interpreted, with possible retroactive effect. No rulings have been or will be
sought from the IRS with respect to any of the federal income tax consequences
discussed below. Accordingly, the IRS may take contrary positions.
Investors and preparers of tax returns should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice is--
o given with respect to events that have occurred at the time the
advice is rendered, and
o is directly relevant to the determination of an entry on a tax
return.
Accordingly, even if this discussion addresses an issue regarding the tax
treatment of the owner of the offered certificates, investors should consult
their own tax advisors regarding that issue. Investors should do so not only as
to federal taxes, but also under state and local taxes. See "State and Other Tax
Consequences."
The following discussion addresses securities of two general types:
o "REMIC certificates" representing interests in a trust, or a portion
thereof, as to which the trustee or an agent appointed by the
trustee will make a real estate mortgage investment conduit, or
"REMIC," election under Sections 860A through 860G of the Code, and
o "grantor trust certificates" representing interests in a trust or a
portion thereof, as to which no REMIC election will be made.
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We will indicate in the prospectus supplement for each series whether the
related trustee, another party to the related Governing Document or an agent
appointed by that trustee or other party (in any event, a "tax administrator")
will make a REMIC election for the related trust. If the related tax
administrator is required to make a REMIC election, we also will identify in the
related prospectus supplement all "regular interests" and "residual interests"
in the resulting REMIC.
The following discussion is limited to certificates offered under this
prospectus. In addition, this discussion applies only to the extent that the
related trust holds only mortgage loans. If a trust holds assets other than
mortgage loans, including REMIC certificates and other mortgage pass-through
certificates, we will disclose in the related prospectus supplement the tax
consequences associated with those other assets being included. In addition, if
cash flow agreements other than guaranteed investment contracts are included in
a trust, the anticipated material tax consequences associated with these cash
flow agreements also will be discussed in the related prospectus supplement. See
"Description of the Trusts Assets--Arrangements Providing Interest Rate
Protection."
The following discussion is based in part on the rules governing original
issue discount in Sections 1271-1273 and 1275 of the Code and in the Treasury
regulations issued under those sections. It is also based on the rules governing
REMICs in Sections 860A-860G of the Code and in the Treasury regulations issued
under those sections. The regulations relating to original issue discount do not
adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, certain securities, including the offered
certificates.
REMICs
Classification of REMICs. With respect to each series as to which the
related tax administrator will make a REMIC election, our counsel will deliver
its opinion generally to the effect that, assuming compliance with all
provisions of the Governing Documents, and subject to certain assumptions set
forth in the opinion:
o the related trust, or the relevant designated portion of the trust,
will qualify as a REMIC, and
o the offered certificates of that series will be considered to
evidence ownership of--
(i) REMIC "regular interests," or
(ii) REMIC "residual interests."
We refer to certificates that evidence REMIC "regular interests" as the
"REMIC regular certificates" and to certificates that represent REMIC "residual
interests" as the "REMIC residual certificates."
If an entity electing to be treated as a REMIC fails to comply with the
ongoing requirements of the Code for REMIC status, it may lose its REMIC status.
If so, the entity may become taxable as a corporation. Therefore, the related
certificates may not be given the tax treatment summarized below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent
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termination of REMIC status, the Treasury Department has not done so. Any relief
mentioned above, moreover, may be accompanied by sanctions. These sanctions
could include the imposition of a corporate tax on all or a portion of a trust's
income for the period in which the requirements for REMIC status are not
satisfied. The Governing Documents with respect to each REMIC will include
provisions designed to maintain the applicable trust's status as a REMIC under
the Code.
Characterization of Investments in REMIC Certificates. Unless we state
otherwise in the related prospectus supplement, the offered certificates that
are REMIC certificates will be treated as--
o "real estate assets" within the meaning of Section 856(c)(5)(B) of
the Code in the hands of a real estate investment trust, and
o "loans secured by an interest in real property" or other assets
described in Section 7701(a)(19)(C) of the Code in the hands of a
thrift institution,
in the same proportion that the assets of the related REMIC are so treated.
However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
related offered certificates will not be treated as assets qualifying under
Section 7701(a)(19)(C). If 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
related offered certificates will qualify for the corresponding status in their
entirety for that calendar year.
In addition, offered certificates that are REMIC regular certificates will
be:
o "qualified mortgages" within the meaning of Section 860G(a)(3) of
the Code in the hands of another REMIC; and
o "permitted assets" under Section 860L(c)(1)(G) for a financial asset
securitization investment trust or "FASIT."
Finally, interest, including original issue discount, on offered
certificates that are REMIC regular certificates, and income allocated to
offered certificates that are REMIC residual certificates, will be interest
described in Section 856(c)(3)(B) of the Code if received by a real estate
investment trust, to the extent that these certificates are treated as "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code.
The related tax administrator will determine the percentage of the REMIC's
assets that constitute assets described in the above-referenced sections of the
Code with respect to each calendar quarter based on the average adjusted basis
of each category of the assets held by the REMIC during that calendar quarter.
The related tax administrator will report those determinations to
certificateholders in the manner and at the times required by applicable
Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the related offered
certificates and any property acquired by foreclosure held pending sale, and may
include amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts, would be
considered to be part of the mortgage loans, or whether these assets otherwise
would receive the same treatment as the mortgage loans
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for purposes of the above-referenced sections of the Code. In addition, in some
instances, the mortgage loans may not be treated entirely as assets described in
those sections of the Code. If so, we will describe in the related prospectus
supplement those mortgage loans that are characterized differently. The Treasury
regulations do provide, however, that cash received from payments on mortgage
loans held pending distribution is considered part of the mortgage loans for
purposes of Section 856(c)(5)(B) of the Code, relating to real estate investment
trusts.
To the extent an offered certificate represents ownership of an interest
in a mortgage loan that is secured in part by the related borrower's interest in
a bank account, that mortgage loan is not secured solely by real estate and
therefore:
o a portion of that certificate may not represent ownership of "loans
secured by an interest in real property" or other assets described
in Section 7701(a)(19)(C) of the Code;
o a portion of that certificate may not represent ownership of "real
estate assets" under Section 856(c)(5)(B) of the Code; and
o the interest on that certificate may not constitute "interest on
obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code.
Tiered REMIC Structures. For certain series of REMIC certificates, the
trustee or an agent appointed by the trustee may make two or more REMIC
elections as to the related trust for federal income tax purposes. As to each of
these series of REMIC certificates, our counsel will opine that each portion of
the related trust as to which a REMIC election is to be made will qualify as a
REMIC. Each of these series will be treated as one REMIC solely for purposes of
determining:
o whether the related REMIC certificates will be "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code,
o whether the related REMIC certificates will be "loans secured by an
interest in real property" under Section 7701(a)(19)(C) of the Code,
and
o whether the income on the related REMIC certificates is interest
described in Section 856(c)(3)(B) of the Code.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, the Code treats
REMIC regular certificates as debt instruments issued by the REMIC and not as
ownership interests in the REMIC or its assets. Holders of REMIC regular
certificates that otherwise report income under the cash method of accounting
must nevertheless report income with respect to REMIC regular certificates under
the accrual method.
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Original Issue Discount. Certain REMIC regular certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC regular certificates issued with original issue
discount generally will have to include original issue discount in income as it
accrues, in accordance with the "constant yield" method described below, prior
to the receipt of the cash attributable to that income. Section 1272(a)(6) of
the Code provides special rules applicable to the accrual of original issue
discount on, among other things, REMIC regular certificates. The Treasury
Department has not issued regulations under that section.
The Code requires, in computing the accrual of original issue discount on
REMIC regular certificates, that a reasonable assumption be used concerning the
rate at which borrowers will prepay the mortgage loans held by the related
REMIC. Further, adjustments must be made in the accrual of that original issue
discount to reflect differences between the prepayment rate actually experienced
and the assumed prepayment rate. The prepayment assumption is to be determined
in a manner prescribed in Treasury regulations that the Treasury Department has
not yet issued. The Conference Committee Report accompanying the Tax Reform Act
of 1986 (the "Committee Report") indicates that the regulations should provide
that the prepayment assumption used with respect to a REMIC regular certificate
is determined once, at initial issuance, and must be the same as that used in
pricing. The prepayment assumption used in reporting original issue discount for
each series of REMIC regular certificates will be consistent with this standard
and will be disclosed in the related prospectus supplement. However, neither we
nor any other person will make any representation that the mortgage loans will
in fact prepay at a rate conforming to the prepayment assumption or at any other
rate or that the IRS will not challenge on audit the prepayment assumption used.
The original issue discount, if any, on a REMIC regular certificate will
be the excess of its stated redemption price at maturity over its issue price.
The issue price of a particular class of REMIC regular certificates will
be the first cash price at which a substantial amount of those certificates are
sold, excluding sales to bond houses, brokers and underwriters. If less than a
substantial amount of a particular class of REMIC regular certificates is sold
for cash on or prior to the related date of initial issuance of those
certificates, the issue price for that class will be the fair market value of
that class on the date of initial issuance.
Under the Treasury regulations, the stated redemption price of a REMIC
regular certificate is equal to the total of all payments to be made on that
certificate other than "qualified stated interest." "Qualified stated interest"
is interest that is unconditionally payable at least annually, during the entire
term of the instrument, at:
o a single fixed rate,
o a "qualified floating rate,"
o an "objective rate,"
o a combination of a single fixed rate and one or more "qualified
floating rates,"
o a combination of a single fixed rate and one "qualified inverse
floating rate," or
o a combination of "qualified floating rates" that does not operate in
a manner that accelerates or defers interest payments on the REMIC
regular certificate.
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In the case of REMIC regular certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
those certificates. If the original issue discount rules apply to those
certificates, we will describe in the related prospectus supplement the manner
in which those rules will be applied with respect to those certificates in
preparing information returns to the certificateholders and the IRS.
Certain classes of REMIC regular certificates may provide that the first
interest payment with respect to those certificates be made more than one month
after the date of initial issuance, a period that is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" for
original issue discount is the monthly period that ends on each payment date,
then, as a result of this "long first accrual period," some or all interest
payments may be required to be included in the stated redemption price of the
REMIC regular certificate and accounted for as original issue discount. Because
interest on REMIC regular certificates must in any event be accounted for under
an accrual method, applying this analysis would result in only a slight
difference in the timing of the inclusion in income of the yield on the REMIC
regular certificates.
In addition, if the accrued interest to be paid on the first payment date
is computed with respect to a period that begins prior to the date of initial
issuance, a portion of the purchase price paid for a REMIC regular certificate
will reflect that accrued interest. In those cases, information returns provided
to the certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued prior to the date of
initial issuance is treated as part of the overall cost of the REMIC regular
certificate. Therefore, the portion of the interest paid on the first payment
date in excess of interest accrued from the date of initial issuance to the
first payment date is included in the stated redemption price of the REMIC
regular certificate. However, the Treasury regulations state that all or some
portion of this accrued interest may be treated as a separate asset, the cost of
which is recovered entirely out of interest paid on the first payment date. It
is unclear how an election to do so would be made under these regulations and
whether this election could be made unilaterally by a certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC regular certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the
certificate multiplied by its weighted average maturity. For this purpose, the
weighted average maturity of a REMIC regular certificate is computed as the sum
of the amounts determined, as to each payment included in the stated redemption
price of the certificate, by multiplying:
o the number of complete years, rounding down for partial years, from
the date of initial issuance, until that payment is expected to be
made, presumably taking into account the prepayment assumption, by
o a fraction--
(i) the numerator of which is the amount of the payment, and
(ii) the denominator of which is the stated redemption price at
maturity of the certificate.
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Under the Treasury regulations, original issue discount of only a de
minimis amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of:
o the total amount of the de minimis original issue discount, and
o a fraction--
(i) the numerator of which is the amount of the principal payment,
and
(ii) the denominator of which is the outstanding stated principal
amount of the subject REMIC regular certificate.
The Treasury regulations also would permit you to elect to accrue de
minimis original issue discount into income currently based on a constant yield
method. See "--REMICs--Taxation of Owners of REMIC Regular Certificates--Market
Discount" below for a description of that election under the applicable Treasury
regulations.
If original issue discount on a REMIC regular certificate is in excess of
a de minimis amount, the holder of the certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held the certificate, including the
purchase date but excluding the disposition date. In the case of an original
holder of a REMIC regular certificate, the daily portions of original issue
discount will be determined as described below.
As to each accrual period, the related tax administrator will calculate
the original issue discount that accrued during that accrual period. For these
purposes, an accrual period is, unless we otherwise state in the related
prospectus supplement, the period that begins on a date that corresponds to a
payment date, or in the case of the first accrual period, begins on the date of
initial issuance, and ends on the day preceding the immediately following
payment date. The portion of original issue discount that accrues in any accrual
period will equal the excess, if any, of:
o the sum of:
(i) the present value, as of the end of the accrual period, of all
of the payments remaining to be made on the subject REMIC
regular certificate, if any, in future periods, presumably
taking into account the prepayment assumption, and
(ii) the payments made on that certificate during the accrual
period of amounts included in the stated redemption price,
over
o the adjusted issue price of the subject REMIC regular certificate at
the beginning of the accrual period.
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The adjusted issue price of a REMIC regular certificate is:
o the issue price of the certificate, increased by
o the aggregate amount of original issue discount previously accrued
on the certificate, reduced by
o the amount of all prior payments of amounts included in its stated
redemption price.
The present value of the remaining payments referred to in item (i)(a),
above, will be calculated:
o assuming that payments on the REMIC regular certificate will be
received in future periods based on the mortgage loans being prepaid
at a rate equal to the prepayment assumption;
o using a discount rate equal to the original yield to maturity of the
certificate, based on its issue price and the assumption that the
mortgage loans will be prepaid at a rate equal to the prepayment
assumption; and
o taking into account events, including actual prepayments, that have
occurred before the close of the accrual period.
The original issue discount accruing during any accrual period, computed
as described above, will be allocated ratably to each day during the accrual
period to determine the daily portion of original issue discount for that day.
A subsequent purchaser of a REMIC regular certificate that purchases the
certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, that is less than its remaining stated
redemption price, will also be required to include in gross income the daily
portions of any original issue discount with respect to the certificate.
However, the daily portion will be reduced, if the cost is in excess of its
"adjusted issue price," in proportion to the ratio that such excess bears to the
aggregate original issue discount remaining to be accrued on the certificate.
The adjusted issue price of a REMIC regular certificate, as of any date of
determination, equals the sum of:
(i) the adjusted issue price or, in the case of the first accrual
period, the issue price, of the certificate at the beginning of the
accrual period which includes that date of determination, and
(ii) the daily portions of original issue discount for all days during
such accrual period prior to that date of determination.
If the foregoing method for computing original issue discount results in a
negative amount of original issue discount as to any accrual period with respect
to a REMIC regular certificate held by you, the amount of original issue
discount accrued for that accrual period will be zero. That is, no current
deduction of the negative amount will be allowed to you. Instead, you will only
be permitted to offset the negative amount against future positive original
issue discount, if any, attributable to the certificate. Although not free from
doubt, it is possible that you may be permitted to deduct a loss to the extent
your basis in the certificate exceeds the maximum amount of payments that you
could ever receive with respect to the certificate.
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However, any such loss may be a capital loss, which is limited in its
deductibility. The foregoing considerations are particularly relevant to
certificates that have no, or disproportionately small, amount of principal
because they can have negative yields if the mortgage loans held by the related
REMIC prepay more quickly than anticipated. See "Risk Factors--The Investment
Performance of Your Certificate will Depend Upon Payments, Defaults and Losses
on the Underlying Mortgage Loans."
Market Discount. You will be considered to have purchased a REMIC regular
certificate at a market discount if--
o in the case of a REMIC regular certificate issued without original
issue discount, you purchased the certificate at a price less than
its remaining stated principal amount, or
o in the case of a REMIC regular certificate issued with original
issue discount, you purchased the certificate at a price less than
its adjusted issue price.
If you purchase a REMIC regular certificate with more than a de minimis
amount of market discount, you will recognize gain upon receipt of each payment
representing stated redemption price. In particular, under Section 1276 of the
Code, you generally will be required to allocate the portion of each payment
representing some or all of the stated redemption price first to accrued market
discount not previously included in income. You must recognize ordinary income
to that extent. You may elect to include market discount in income currently as
it accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, this election will apply to all market discount bonds
acquired by you on or after the first day of the first taxable year to which
this election applies.
The Treasury regulations also permit you to elect to accrue all interest
and discount, including de minimis market or original issue discount, in income
as interest, and to amortize premium, based on a constant yield method. Your
making this election with respect to a REMIC regular certificate with market
discount would be deemed to be an election to include currently market discount
in income with respect to all other debt instruments with market discount that
you acquire during the taxable year of the election or thereafter, and possibly
previously acquired instruments. Similarly, your making this election as to a
certificate acquired at a premium would be deemed to be an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that you own or acquire. See "--REMICs --Taxation of Owners of REMIC
Regular Certificates--Premium" below. Each of the elections in this and the
preceding paragraphs to accrue interest, discount and premium with respect to a
certificate on a constant yield method or as interest would be irrevocable
except with the approval of the IRS.
However, market discount with respect to a REMIC regular certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if the
market discount is less than 0.25% of the remaining stated redemption price of
the certificate multiplied by the number of complete years to maturity remaining
after the date of its purchase. In interpreting a similar rule with respect to
original issue discount on obligations payable in installments, the Treasury
regulations refer to the weighted average maturity of obligations, and it is
likely that the same rule will be applied with respect to market discount,
presumably taking into account the prepayment assumption. If market discount is
treated as de minimis under this rule, it appears that the actual discount would
be treated in a manner similar to original issue discount of a de minimis
amount. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. This treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
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Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on a REMIC regular certificate held
by you should accrue, at your option:
o on the basis of a constant yield method,
o in the case of a REMIC regular certificate issued without original
issue discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid in the accrual
period bears to the total amount of stated interest remaining to be
paid on the certificate as of the beginning of the accrual period,
or
o in the case of a REMIC regular certificate issued with original
issue discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in
the accrual period bears to the total original issue discount
remaining on the certificate at the beginning of the accrual period.
The prepayment assumption used in calculating the accrual of original
issue discount is also used in calculating the accrual of market discount.
To the extent that REMIC regular certificates provide for monthly or other
periodic payments throughout their term, the effect of these rules may be to
require market discount to be includible in income at a rate that is not
significantly slower than the rate at which the discount would accrue if it were
original issue discount. Moreover, in any event a holder of a REMIC regular
certificate generally will be required to treat a portion of any gain on the
sale or exchange of the certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, Section 1277 of the Code may require you to defer a portion of
your interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry a REMIC regular certificate purchased
with market discount. For these purposes, the de minimis rule referred to above
applies. Any deferred interest expense would not exceed the market discount that
accrues during the related taxable year and is, in general, allowed as a
deduction not later than the year in which the related market discount is
includible in income. If you, however, have elected to include market discount
in income currently as it accrues, the interest deferral rule described above
would not apply.
Premium. A REMIC regular certificate purchased at a cost, excluding any
portion of the cost attributable to accrued qualified stated interest, that is
greater than its remaining stated redemption price will be considered to be
purchased at a premium. You may elect under Section 171 of the Code to amortize
the premium under the constant yield method over the life of the certificate. If
you elect to amortize bond premium, bond premium would be amortized on a
constant yield method and would be applied as an offset against qualified stated
interest. If made, this election will apply to all debt instruments having
amortizable bond premium that you own or subsequently acquire. The IRS recently
finalized new regulations on the amortization of bond premium. However, the
regulations do not specifically apply to holders of REMIC regular certificates.
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The Treasury regulations also permit you to elect to include all interest,
discount and premium in income based on a constant yield method, further
treating you as having made the election to amortize premium generally. See
"--Taxation of Owners of REMIC Regular Certificates--Market Discount" above. The
Committee Report states that the same rules that apply to accrual of market
discount and requires the use of a prepayment assumption in accruing market
discount with respect to REMIC regular certificates without regard to whether
those certificates have original issue discount, will also apply in amortizing
bond premium under Section 171 of the Code.
Realized Losses. Under Section 166 of the Code, if you are either a
corporate holder of the REMIC regular certificate and or a noncorporate holder
of the REMIC regular certificate that acquires the certificate in connection
with a trade or business, you should be allowed to deduct, as ordinary losses,
any losses sustained during a taxable year in which your certificate becomes
wholly or partially worthless as the result of one or more realized losses on
the mortgage loans. However, if you are a noncorporate holder that does not
acquire a REMIC regular certificate in connection with a trade or business, it
appears that--
o you will not be entitled to deduct a loss under Section 166 of the
Code until your certificate becomes wholly worthless, which is when
its principal balance has been reduced to zero, and
o the loss will be characterized as a short-term capital loss.
You must accrue interest and original issue discount with respect to your
REMIC regular certificate, without giving effect to any reductions in payments
attributable to defaults or delinquencies on the mortgage loans or the
underlying certificates, until it can be established that any reduction
ultimately will not be recoverable. As a result, the amount of taxable income
you report in any period could exceed the amount of economic income actually
realized by you in that period. If any such amounts that were previously accrued
and included income are not ultimately realized because of a loss on the
mortgage loans, you should be able to recognize a loss or reduction in income.
However, the law is unclear with respect to the timing and character of this
loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, the Code does not subject a REMIC to entity-level taxation, except
with regard to prohibited transactions and certain other transactions. See
"--REMICs--Prohibited Transactions Tax and Other Taxes" below. Rather, a holder
of REMIC residual certificates must generally take in income the taxable income
or net loss of the related REMIC. Accordingly, the Code treats the REMIC
residual certificates much differently than it would if they were direct
ownership interests in the mortgage loans or as debt instruments issued by the
REMIC.
Holders of REMIC residual certificates generally will be required to
report their daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the related REMIC for each day during
a calendar quarter that they own those certificates. For this purpose, the
taxable income or net loss of the REMIC will be allocated to each day in the
calendar quarter ratably using a "30 days per month/90 days per quarter/360 days
per year" convention unless we otherwise disclose in the related prospectus
supplement. These daily amounts then will be allocated among the holders of the
REMIC residual certificates in proportion to their respective ownership
interests on that day. Any amount included in the certificateholders' gross
income or allowed as a loss to them by virtue of this paragraph will be treated
as ordinary income or loss. The taxable income of the REMIC will be determined
under the rules described
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below in "--REMICs--Taxation of Owners of REMIC Residual Certificates--Taxable
Income of the REMIC." Holders of REMIC residual certificates must report the
taxable income of the related REMIC without regard to the timing or amount of
cash payments by the REMIC until the REMIC's termination.
A holder of a REMIC residual certificate that purchased the certificate
from a prior holder also will be required to report on its federal income tax
return amounts representing its daily share of the taxable income, or net loss,
of the related REMIC for each day that it holds the REMIC residual certificate.
These daily amounts generally will equal the amounts of taxable income or net
loss determined as described above. The Committee Report indicates that certain
modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce, or increase, the income of a holder of a REMIC residual
certificate. These modifications would occur when a holder purchases the REMIC
residual certificate from a prior holder at a price other than the adjusted
basis that the REMIC residual certificate would have had in the hands of an
original holder of that certificate. The Treasury regulations, however, do not
provide for these modifications.
Any payments that you receive from the seller of a REMIC residual
certificate in connection with the acquisition of that certificate will be
income to you. Although it appears likely that these payments would be
includible in income immediately upon receipt, the IRS might assert that you
should include these payments in income over time according to an amortization
schedule or according to some other method. Because of the uncertainty
concerning the treatment of these payments, we recommend that you consult your
tax advisor concerning the treatment of these payments for income tax purposes.
The amount of income that holders of REMIC residual certificates will be
required to report, or the tax liability associated with that income, may exceed
the amount of cash payments received from the REMIC for the corresponding
period. Consequently, certificateholders should have (i) other sources of funds
sufficient to pay any federal income taxes due as a result of their ownership of
REMIC residual certificates or (ii) unrelated deductions against which income
may be offset. See, however, the rules discussed below relating to:
o "excess inclusions,"
o residual interests without "significant value," and
o "noneconomic" residual interests.
The fact that the tax liability associated with this income allocated to
certificateholders may exceed the cash payments received by them for the
corresponding period may significantly and adversely affect their after-tax rate
of return. This disparity between income and payments may not be offset by
corresponding losses or reductions of income attributable to holders of REMIC
residual certificates until subsequent tax years. Even then, the extra income
may not be completely offset due to changes in the Code, tax rates or character
of the income or loss. Therefore, the REMIC residual certificates may in some
instances have negative "value." See "Risk Factors--'Residual Interests' in a
'Real Estate Mortgage Investment Conduit' Have Adverse Tax Consequences."
Taxable Income of the REMIC. The taxable income of a REMIC will equal:
o the income from the mortgage loans and other assets of the REMIC,
plus
o any cancellation of indebtedness income due to the allocation of
realized losses to REMIC regular certificates, less:
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(i) the deductions allowed to the REMIC for interest, including original
issue discount but reduced by any premium on issuance, on any class
of REMIC certificates constituting "regular interests" in the REMIC,
whether offered or not,
(ii) amortization of any premium on the mortgage loans,
(iii) bad debt losses with respect to the mortgage loans, and
(iv) except as described below, servicing, administrative and other
expenses.
For purposes of determining its taxable income, a REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC certificates, or in the case of REMIC certificates not sold initially,
their fair market values. The aggregate basis will be allocated among the
mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC certificates offered
hereby will be determined in the manner described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount." The issue price of a REMIC certificate received in exchange for an
interest in the mortgage loans or other property will equal the fair market
value of the interests in the mortgage loans or other property. Accordingly, if
one or more classes of REMIC certificates are retained initially rather than
sold, the related tax administrator may be required to estimate the fair market
value of these interests in order to determine the basis of the REMIC in the
mortgage loans and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by a REMIC of original issue discount income and market discount income
with respect to mortgage loans that it holds will be equivalent to the method
for accruing original issue discount income for holders of REMIC regular
certificates. That method is a constant yield method taking into account the
prepayment assumption. However, a REMIC that acquires loans at a market discount
must include that market discount in income currently, as it accrues, on a
constant yield basis. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing the discount income
that is analogous to that required to be used by a REMIC as to mortgage loans
with market discount that it holds.
A REMIC will acquire a mortgage loan with discount, or premium, to the
extent that the REMIC's basis therein, determined as described in the preceding
paragraph, is other than its stated redemption price. Any of that discount will
be includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to that income, under a method similar to the method
described above for accruing original issue discount on the REMIC regular
certificates. A REMIC probably will elect under Section 171 of the Code to
amortize any premium on the mortgage loans. Premium on any mortgage loan to
which this election applies may be amortized under a constant yield method,
presumably taking into account a prepayment assumption.
A REMIC will be allowed deductions for interest, including original issue
discount, on all of the certificates which constitute "regular interests" in the
REMIC, whether or not offered hereby. The amount of these deductions equals the
deductions that would be allowed if all of those certificates were indebtedness
of the REMIC. Original issue discount will be considered to accrue for this
purpose as described above under "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." However, the de minimis rule and the
adjustments for subsequent holders of any REMIC regular certificates, whether or
not initially offered, described therein will not apply.
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If a class of REMIC regular certificates is issued at a price in excess of
the stated redemption price of that class, the net amount of interest deductions
that are allowed to the REMIC in each taxable year with respect to those
certificates will be reduced by an amount equal to the portion of that excess
that is considered to be amortized or repaid in that year. Although the matter
is not entirely certain, it is likely that this excess would be amortized under
a constant yield method in a manner analogous to the method of accruing original
issue discount described above under "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount."
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--REMICs--Prohibited Transactions Tax and Other Taxes"
below. Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code will not be applied at the REMIC level so
that the REMIC will be allowed full deductions for servicing, administrative and
other noninterest expenses in determining its taxable income. Otherwise, Section
67 of the Code would limit these deductions only to the extent they exceed in
the aggregate two percent of the taxpayer's adjusted gross income. All of these
expenses will be allocated as a separate item to the holders of the related
REMIC certificates, subject to the limitation of Section 67 of the Code. See
"--REMICs--Taxation of Owners of REMIC Residual Certificates--Possible
Pass-Through of Miscellaneous Itemized Deductions" below. If the deductions
allowed to the REMIC exceed its gross income for a calendar quarter, the excess
will be the net loss for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Payments. The adjusted basis of a REMIC
residual certificate will be equal to:
(i) the amount paid for that REMIC residual certificate,
(ii) increased by, amounts included in the income of the holder of that
REMIC residual certificate, and
(iii) decreased, but not below zero, by payments made, and by net losses
allocated, to the holder of that REMIC residual certificate.
A holder of a REMIC residual certificate is not allowed to take into
account any net loss for any calendar quarter to the extent that the net loss
exceeds the adjusted basis to that holder as of the close of that calendar
quarter, determined without regard to that net loss. Any loss that is not
currently deductible by reason of this limitation may be carried forward
indefinitely to future calendar quarters and, subject to the same limitation,
may be used only to offset income from the REMIC residual certificate. The
ability of a holder of a REMIC residual certificate to deduct net losses may be
subject to additional limitations under the Code. We recommend that holders of
REMIC residual certificates consult their tax advisors concerning the
deductibility of any net losses of the REMIC.
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Any payment on a REMIC residual certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC residual certificate. To the extent a payment on a
REMIC residual certificate exceeds the holder's adjusted basis, it will be
treated as gain from the sale of that REMIC residual certificate. Holders of
certain REMIC residual certificates may be entitled to payments early in the
term of the related REMIC under circumstances in which their bases in the REMIC
residual certificates will not be sufficiently large, such that those payments
will be treated as nontaxable returns of capital.
A holder's basis in a REMIC residual certificate will initially equal the
amount paid for the certificate and will be increased by that holder's allocable
share of taxable income of the related REMIC. However, these increases in basis
may not occur until the end of the calendar quarter, or perhaps the end of the
calendar year, with respect to which the related REMIC's taxable income is
allocated to that holder. To the extent the initial basis of the holder of a
REMIC residual certificate is less than the payments to that holder, and
increases in the initial basis either occur after these payments or, together
with the initial basis, are less than the amount of these payments, gain will be
recognized to that holder on these payments. This gain will be treated as gain
from the sale of its REMIC residual certificate.
The effect of these rules is that a holder of a REMIC residual certificate
may not amortize its basis in a REMIC residual certificate, but may only recover
its basis:
o through payments,
o through the deduction of any net losses of the REMIC, or
o upon the sale of its REMIC residual certificate. See
"--REMICs--Sales of REMIC Certificates" below.
For a discussion of possible modifications of these rules that may require
adjustments to income of a holder of a REMIC residual certificate other than an
original holder see "--REMICs--Taxation of Owners of REMIC Residual
Certificates--General" above. These adjustments could require a holder of a
REMIC residual certificate to account for any difference between the cost of the
certificate to the holder and the adjusted basis of the certificate would have
been in the hands of an original holder.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
residual certificate will be subject to federal income tax in all events. In
general, the "excess inclusions" with respect to a REMIC residual certificate
for any calendar quarter will be the excess, if any, of:
(i) the daily portions of REMIC taxable income allocable to that
certificate, over
(ii) the sum of the "daily accruals" for each day during the quarter that
the certificate was held by that holder.
The daily accruals of a holder of a REMIC residual certificate will be
determined by allocating to each day during a calendar quarter its ratable
portion of a numerical calculation. That calculation is the product of the
"adjusted issue price" of the REMIC residual certificate at the beginning of the
calendar quarter and 120% of the "long-term Federal rate" in effect on the date
of initial issuance. For this purpose, the adjusted issue price of a REMIC
residual certificate as of the beginning of any calendar quarter will be equal
to:
(i) the issue price of the certificate, increased by
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(ii) the sum of the daily accruals for all prior quarters, and decreased,
but not below zero, by
(iii) any payments made with respect to the certificate before the
beginning of that quarter.
The issue price of a REMIC residual certificate is the initial offering
price to the public at which a substantial amount of the REMIC residual
certificates were sold, but excluding sales to bond houses, brokers and
underwriters. The "long-term Federal rate" is an average of current yields on
Treasury securities with a remaining term of greater than nine years, computed
and published monthly by the IRS.
Although it has not done so, the Treasury Department has authority to
issue regulations that would treat the entire amount of income accruing on a
REMIC residual certificate as excess inclusions if the REMIC residual
certificates are considered not to have "significant value." The Treasury
regulations provide that in order for a REMIC residual certificate to be treated
as having significant value:
o the certificate must have an aggregate issue price at least equal to
two percent of the aggregate issue prices of all of the related
REMIC's regular and residual interests, and
o the anticipated weighted average life of the REMIC residual
certificate must equal or exceed 20 percent of the anticipated
weighted average life of the REMIC, based on the prepayment
assumption and on any required or permitted clean up calls or
required liquidation provided for in the related Governing
Documents.
We will disclose in the related prospectus supplement whether the offered
REMIC residual certificates may be considered to have "significant value" under
the Treasury regulations. However, we will base any disclosure that a REMIC
residual certificate will have "significant value" upon certain assumptions.
Further, we will make no representation that a REMIC residual certificate will,
in fact, have "significant value" for purposes of the above-described rules.
For holders of REMIC Residual Certificates, excess inclusions:
o will not be permitted to be offset by deductions, losses or loss
carryovers from other activities,
o will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization, and
o will not be eligible for any rate reduction or exemption under any
applicable tax treaty with respect to the 30% United States
withholding tax imposed on payments to holders of REMIC residual
certificates that are foreign investors. See, however,
"--REMICs--Foreign Investors in REMIC Certificates" below.
Furthermore, for purposes of the alternative minimum tax:
o excess inclusions will not be permitted to be offset by the
alternative tax net operating loss deduction, and
o alternative minimum taxable income may not be less than the
taxpayer's excess inclusions.
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This last rule has the effect of preventing non-refundable tax credits from
reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In the case of any REMIC residual certificates held by a real estate
investment trust, or REIT, the aggregate excess inclusions with respect to these
REMIC residual certificates will be allocated among the shareholders of the REIT
in proportion to the dividends received by the shareholders from the REIT. Any
amount so allocated will be treated as an excess inclusion with respect to a
REMIC residual certificate as if held directly by the shareholder. The aggregate
excess inclusions referred to in the previous sentence will be reduced, but not
below zero, by any REIT taxable income, within the meaning of Section 857(b)(2)
of the Code, other than any net capital gain. Treasury regulations yet to be
issued could apply a similar rule to:
o regulated investment companies,
o common trusts, and
o certain cooperatives.
The Treasury regulations, however, currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the Treasury regulations,
transfers of "noneconomic" REMIC residual certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax." If a
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on the "noneconomic" REMIC residual
certificate. The Treasury regulations provide that a REMIC residual certificate
is noneconomic unless, based on the prepayment assumption and on any required or
permitted clean up calls, or required liquidation provided for in the related
Governing Documents:
o the present value of the expected future payments on the REMIC
residual certificate equals at least the present value of the
expected tax on the anticipated excess inclusions, and
o the transferor reasonably expects that the transferee will receive
payments with respect to the REMIC residual certificate at or after
the time the taxes accrue on the anticipated excess inclusions in an
amount sufficient to satisfy the accrued taxes.
The present value calculation referred to above is calculated using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected to accrue with respect to
the REMIC residual certificate. This rate is computed and published monthly by
the IRS.
Accordingly, all transfers of REMIC residual certificates that may
constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related Governing Documents that are
intended to reduce the possibility of any transfer being disregarded. These
restrictions will require an affidavit:
o from each party to the transfer, stating that no purpose of the
transfer is to impede the assessment or collection of tax,
o from the prospective transferee, providing certain representations
as to its financial condition, and
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o from the prospective transferor, stating that it has made a
reasonable investigation to determine the transferee's historic
payment of its debts and ability to continue to pay its debts as
they come due in the future.
Prior to purchasing a REMIC residual certificate, prospective purchasers
should consider the possibility that a purported transfer of a REMIC residual
certificate to another party at some future date may be disregarded in
accordance with the above-described rules. This would result in the retention of
tax liability by the transferor in respect of that purported transfer.
We will disclose in the related prospectus supplement whether the offered
REMIC residual certificates may be considered "noneconomic" residual interests
under the Treasury regulations. However, we will base any disclosure that a
REMIC residual certificate will not be considered "noneconomic" upon certain
assumptions. Further, we will make no representation that a REMIC residual
certificate will not be considered "noneconomic" for purposes of the
above-described rules.
See "--REMICs--Foreign Investors in REMIC Certificates" below for
additional restrictions applicable to transfers of certain REMIC residual
certificates to foreign persons.
Mark-to-Market Rules. The IRS recently released regulations under Section
475 of the Code relating to the requirement that a securities dealer mark to
market securities held for sale to customers. This mark-to-market requirement
applies to all securities owned by a dealer, except to the extent that the
dealer has specifically identified a security as held for investment. These
regulations provide that for purposes of this mark-to-market requirement, a
REMIC residual certificate is not treated as a security for purposes of Section
475 of the Code. Thus, a REMIC residual certificate is not subject to the
mark-to-market rules. We recommend that prospective purchasers of a REMIC
residual certificate consult their tax advisors regarding these new regulations.
Unless we otherwise state in the related prospectus supplement, transfers
of REMIC residual certificates to investors that are foreign persons under the
Code will be prohibited under the related Governing Documents. If transfers of
REMIC residual certificates to investors that are foreign persons are permitted
pursuant to the related Governing Documents, we will describe in the related
prospectus supplement additional restrictions applicable to transfers of certain
REMIC residual certificates to these persons.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC residual certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of these fees and expenses should be allocated to the
holders of the related REMIC regular certificates. Unless we otherwise state in
the related prospectus supplement, however, these fees and expenses will be
allocated to holders of the related REMIC residual certificates in their
entirety and not to the holders of the related REMIC regular certificates.
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If the holder of a REMIC certificate receives an allocation of fees and
expenses in accordance with the preceding discussion, and if that holder is:
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts,
then--
o an amount equal to this individual's, estate's or trust's share of
these fees and expenses will be added to the gross income of this
holder, and
o the individual's, estate's or trust's share of these fees and
expenses will be treated as a miscellaneous itemized deduction
allowable subject to the limitation of Section 67 of the Code, which
permits the deduction of these fees and expenses only to the extent
they exceed in the aggregate 2% of a taxpayer's adjusted gross
income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over the
specified amount, or
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by holders of REMIC
certificates that are subject to the limitations of either Section 67 or Section
68 of the Code may be substantial. Furthermore, in determining the alternative
minimum taxable income of a holder of a REMIC certificate that is--
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts,
no deduction will be allowed for the holder's allocable portion of servicing
fees and other miscellaneous itemized deductions of the REMIC, even though an
amount equal to the amount of these fees and other deductions will be included
in the holder's gross income.
Accordingly, REMIC residual certificates will generally not be appropriate
investments for:
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts.
We recommend that such prospective investors consult with their tax
advisors prior to making an investment in a REMIC residual certificate.
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Sales of REMIC Certificates. If a REMIC certificate is sold, the selling
certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC certificate.
The adjusted basis of a REMIC regular certificate generally will equal:
o the cost of the certificate to that certificateholder, increased by
o income reported by that certificateholder with respect to the
certificate, including original issue discount and market discount
income, and reduced, but not below zero, by
o payments on the certificate received by that certificateholder and
by that amortized premium.
The adjusted basis of a REMIC residual certificate will be determined as
described above under "--REMICs--Taxation of Owners of REMIC Residual
Certificates--Basis Rules, Net Losses and Distributions." Except as described
below, any gain or loss from the sale of a REMIC certificate will be capital
gain or loss, provided that the holder holds the certificate as a capital asset
within the meaning of Section 1221 of the Code, which is generally property held
for investment.
The Code as of the date of this prospectus provides for lower rates as to
long-term capital gains than those applicable to the short-term capital gains
and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain from the sale of a REMIC regular certificate that might otherwise be
a capital gain will be treated as ordinary income to the extent that the gain
does not exceed the excess, if any, of:
o the amount that would have been includible in the seller's income
with respect to that REMIC regular certificate assuming that income
had accrued thereon at a rate equal to 110% of the "applicable
Federal rate" determined as of the date of purchase of the
certificate, which is a rate based on an average of current yields
on Treasury securities having a maturity comparable to that of the
certificate based on the application of the prepayment assumption to
the certificate, over
o the amount of ordinary income actually includible in the seller's
income prior to that sale.
In addition, gain recognized on the sale of a REMIC regular certificate by
a seller who purchased the certificate at a market discount will be taxable as
ordinary income in an amount not exceeding the portion of that discount that
accrued during the period the certificate was held by the seller, reduced by any
market discount included in income under the rules described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Market Discount"
and "--Premium."
REMIC certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC certificate by a bank or thrift institution to which that section of
the Code applies will be ordinary income or loss.
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A portion of any gain from the sale of a REMIC regular certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that a holder holds the certificate as part of a "conversion transaction" within
the meaning of Section 1258 of the Code. A conversion transaction generally is
one in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in that transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
The Code requires the recognition of gain upon the "constructive sale of
an appreciated financial position." A constructive sale of an appreciated
financial position occurs if a taxpayer enters into certain transactions or
series of such transactions that have the effect of substantially eliminating
the taxpayer's risk of loss and opportunity for gain with respect to the
financial instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related party,
cannot be the subject of a constructive sale for this purpose. Because most
REMIC regular certificates meet this exception, this Section will not apply to
most REMIC regular certificates. However, certain REMIC regular certificates
have no, or disproportionately small, amount of principal and these certificates
can be the subject of a constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for the taxable year. A taxpayer would do so
because of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.
Except as may be provided in Treasury regulations yet to be issued, a sale
of a REMIC residual certificate will be subject to the "wash sale" rules of
Section 1091 of the Code, if during the period beginning six months before, and
ending six months after, the date of that sale the seller of that certificate:
o reacquires that same REMIC residual certificate,
o acquires any other residual interest in a REMIC, or
o acquires any similar interest in a "taxable mortgage pool," which
term is defined in Section 7701(i) of the Code.
In that event, any loss realized by the holder of a REMIC residual certificate
on the sale will not be deductible, but instead will be added to that holder's
adjusted basis in the newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions."
In general, subject to certain specified exceptions, a prohibited transaction
includes:
o the disposition of a non-defaulted mortgage loan,
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o the receipt of income from a source other than a mortgage loan or
certain other permitted investments,
o the receipt of compensation for services, or
o the gain from the disposition of an asset purchased with the
payments on the mortgage loans for temporary investment pending
payment on the REMIC certificates.
It is not anticipated that any REMIC will engage in any prohibited transactions
as to which it would be subject to this tax.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property. The related
Governing Documents will include provisions designed to prevent the acceptance
of any contributions that would be subject to this tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property," determined by reference to the
rules applicable to REITs. "Net income from foreclosure property" generally
means income from foreclosure property other than qualifying rents and other
qualifying income for a REIT. Under certain circumstances, the special servicer
may be authorized to conduct activities with respect to a mortgaged property
acquired by a trust that causes the trust to incur this tax if doing so would,
in the reasonable discretion of the special servicer, maximize the net after-tax
proceeds to certificateholders. However, under no circumstance will the special
servicer cause the acquired mortgaged property to cease to be a "permitted
investment" under Section 860G(a)(5) of the Code.
Unless we otherwise disclose in the related prospectus supplement, it is
not anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless we otherwise state in the related prospectus supplement, and to the
extent permitted by then applicable laws, any tax on prohibited transactions,
certain contributions or "net income from foreclosure property," and any state
or local income or franchise tax, that may be imposed on the REMIC will be borne
by the related trustee, tax administrator, master servicer, special servicer or
manager, in any case out of its own funds, provided that--
o the person has sufficient assets to do so, and
o the tax arises out of a breach of that person's obligations under
the related Governing Documents.
Any tax not borne by one of these persons would be charged against the related
trust resulting in a reduction in amounts payable to holders of the related
REMIC certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC residual certificate is transferred to a
"disqualified organization," 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 the REMIC residual certificate for periods after the
transfer, and
(ii) the highest marginal federal income tax rate applicable to
corporations.
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The value of the anticipated excess inclusions is discounted using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected to accrue with respect to
the REMIC residual certificate.
The anticipated excess inclusions must be determined as of the date that
the REMIC residual certificate is transferred and must be based on:
o events that have occurred up to the time of the transfer,
o the prepayment assumption, and
o any required or permitted clean up calls or required liquidation
provided for in the related Governing Documents.
The tax on transfers to "disqualified organizations" generally would be
imposed on the transferor of the REMIC residual certificate, except when the
transfer is through an agent for a disqualified organization. In that case, the
tax would instead be imposed on the agent. However, a transferor of a REMIC
residual certificate would in no event be liable for the tax with respect to a
transfer if:
o the transferee furnishes to the transferor an affidavit that the
transferee is not a disqualified organization, and
o as of the time of the transfer, the transferor does not have actual
knowledge that the affidavit is false.
In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC residual certificate, and a disqualified
organization is the record holder of an interest in that entity, then a tax will
be imposed on that entity equal to the product of:
(i) the amount of excess inclusions on the certificate that are
allocable to the interest in the pass-through entity held by the
disqualified organization, and
(ii) the highest marginal federal income tax rate imposed on
corporations.
A pass-through entity will not be subject to this tax for any period,
however, if each record holder of an interest in that pass-through entity
furnishes to that pass-through entity:
o the holder's social security number and a statement under penalties
of perjury that the social security number is that of the record
holder, or
o a statement under penalties of perjury that the record holder is not
a disqualified organization.
For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a REMIC residual certificate, all interests in the
electing large partnership are treated as held by disqualified organizations for
purposes of the tax imposed on pass-through entities described in the second
preceding paragraph. This tax on electing large partnerships must be paid even
if each record holder of an interest in that partnership provides a statement
mentioned in the prior paragraph.
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For these purposes, a "disqualified organization" means:
o the United States,
o any State or political subdivision thereof,
o any foreign government,
o any international organization,
o any agency or instrumentality of the foregoing, except for
instrumentalities described in Section 168(h)(2)(D) of the Code or
the FHLMC,
o any organization, other than a cooperative described in Section 521
of the Code, that is exempt from federal income tax, except if it is
subject to the tax imposed by Section 511 of the Code, or
o any organization described in Section 1381(a)(2)(C) of the Code.
For these purposes, a "pass-through entity" means any:
o regulated investment company,
o real estate investment trust,
o trust,
o partnership, or
o certain other entities described in Section 860E(e)(6) of the Code.
For these purposes, an "electing large partnership" means any partnership
having more than 100 members during the preceding tax year which elects to apply
simplified reporting provisions under the Code, except for certain service
partnerships and commodity pools.
In addition, a person holding an interest in a pass-through entity as a
nominee for another person will, with respect to that interest, be treated as a
pass-through entity.
Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that:
o the residual interests in the entity are not held by disqualified
organizations, and
o the information necessary for the application of the tax described
herein will be made available.
We will include in the related Governing Documents restrictions on the
transfer of REMIC residual certificates and certain other provisions that are
intended to meet this requirement, and we will discuss those restrictions and
provisions in any prospectus supplement relating to the offering of any REMIC
residual certificate.
Termination. A REMIC will terminate immediately after the payment date
following receipt by the REMIC of the final payment in respect of the mortgage
loans or upon a sale of the REMIC's assets following the adoption by the REMIC
of a plan of complete liquidation. The last payment on a REMIC regular
certificate will be treated as a payment in retirement of a debt instrument. In
the case of a REMIC residual certificate, if the last payment on that
certificate is less than the REMIC residual certificateholder's adjusted basis
in the certificate, that holder should, but may not, be treated as realizing a
capital loss equal to the amount of that difference.
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Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, a REMIC will be treated as a partnership
and holders of the related REMIC residual certificates will be treated as
partners. Unless we otherwise state in the related prospectus supplement, the
related trustee, another party to the related Governing Documents or an agent
appointed by the related trustee or that other party will file REMIC federal
income tax returns on behalf of the REMIC, and will be designated as and will
act as or on behalf of the "tax matters person" with respect to the REMIC in all
respects. The related tax administrator may hold at least a nominal amount of
REMIC residual certificates.
As, or as agent for, the tax matters person, the related tax
administrator, subject to certain notice requirements and various restrictions
and limitations, generally will have the authority to act on behalf of the REMIC
and the holders of the REMIC residual certificates in connection with the
administrative and judicial review of the REMIC's--
o income,
o deductions
o gains,
o losses, and
o classification as a REMIC.
Holders of REMIC residual certificates generally will be required to
report these REMIC items consistently with their treatment on the related
REMIC's tax return. In addition, these holders may in some circumstances be
bound by a settlement agreement between the related tax administrator, as, or as
agent for, the tax matters person, and the IRS concerning any REMIC item.
Adjustments made to the REMIC's tax return may require these holders to make
corresponding adjustments on their returns. An audit of the REMIC's tax return,
or the adjustments resulting from that audit, could result in an audit of a
holder's return.
No REMIC will be registered as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that any REMIC will have a net loss for
any of the first five taxable years of its existence. Any person that holds a
REMIC residual certificate as a nominee for another person may be required to
furnish to the related REMIC, in a manner to be provided in Treasury
regulations, the name and address of that other person, as well as other
information.
Reporting of interest income, including any original issue discount, with
respect to REMIC regular certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent or made readily available through electronic means to
individual holders of REMIC regular certificates and the IRS. Holders of REMIC
regular certificates that are--
o corporations,
o trusts,
o securities dealers, and
o certain other non-individuals,
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will be provided interest and original issue discount income information and the
information set forth in the following paragraphs. This information will be
provided upon request in accordance with the requirements of the applicable
regulations. The information must be provided by the later of:
o 30 days after the end of the quarter for which the information was
requested, or
o two weeks after the receipt of the request.
The REMIC must also comply with rules requiring a REMIC regular
certificate issued with original issue discount to disclose on its face the
amount of original issue discount and the issue date, and requiring that
information to be reported to the IRS. Reporting with respect to REMIC residual
certificates, including--
o income,
o excess inclusions,
o investment expenses, and
o relevant information regarding qualification of the REMIC's assets,
will be made as required under the Treasury regulations, generally on a
quarterly basis.
As applicable, the REMIC regular certificate information reports will
include a statement of the adjusted issue price of the REMIC regular certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, the regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
Unless we otherwise specify in the related prospectus supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the trustee or an agent appointed by the trustee.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of these payments:
o fail to furnish to the payor certain information, including their
taxpayer identification numbers, or
o otherwise fail to establish an exemption from this tax.
Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against the recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
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Foreign Investors in REMIC Certificates. Unless we otherwise disclose in
the related prospectus supplement, a holder of a REMIC regular certificate that
is--
o a foreign person, and
o not subject to federal income tax as a result of any direct or
indirect connection to the United States in addition to its
ownership of that certificate,
will normally not be subject to United States federal income or withholding tax
in respect of a payment on a REMIC regular certificate. To avoid withholding or
tax, that holder must comply with certain identification requirements. These
requirements include delivery of a statement, signed by the certificateholder
under penalties of perjury, certifying that the certificateholder is a foreign
person and providing the name and address of the certificateholder.
For these purposes, a foreign person is anyone other than a United States
person. A "United States person" is:
o a citizen or resident of the United States,
o a corporation, partnership or other entity created or organized in,
or under the laws of, the United States or any political subdivision
thereof,
o an estate whose income from sources without the United States is
includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or
business within the United States, or
o a trust as to which--
(i) a court in the United States is able to exercise primary
supervision over the administration of the trust, and
(ii) one or more United States persons have the authority to
control all substantial decisions of the trust.
In addition, to the extent provided in the Treasury Regulations, a trust will be
a United States person if it was in existence on August 20, 1996 and it elected
to be treated as a United States person.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC regular certificate held by a person or
entity that owns directly or indirectly a 10% or greater interest in the related
REMIC residual certificates. If the holder does not qualify for exemption,
payments of interest, including payments in respect of accrued original issue
discount, to that holder may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder who is a
foreign person and either--
o owns 10% or more of one or more underlying mortgagors, or
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o if the holder is a controlled foreign corporation, is related to one
or more mortgagors in the applicable trust.
Further, it appears that a REMIC regular certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, it is recommended that certificateholders
who are nonresident alien individuals consult their tax advisors concerning this
question.
Unless we otherwise state in the related prospectus supplement, the
related Governing Documents will prohibit transfers of REMIC residual
certificates to investors that are:
o foreign persons, or
o United States persons, if classified as a partnership under the
Code, unless all of their beneficial owners are United States
persons.
Grantor Trusts
Classification of Grantor Trusts. With respect to each series of grantor
trust certificates, our counsel will deliver its opinion to the effect that,
assuming compliance with all provisions of the related Governing Documents, the
related trust, or relevant portion thereof, will be classified as a grantor
trust under subpart E, part I of subchapter J of the Code and not as a
partnership or an association taxable as a corporation.
For purposes of the following discussion:
o A grantor trust certificate representing an undivided equitable
ownership interest in the principal of the mortgage loans
constituting the related grantor trust, together with interest
thereon at a pass-through rate, will be referred to as a "Grantor
Trust Fractional Interest Certificate."
o A grantor trust certificate representing ownership of all or a
portion of the difference between--
(i) interest paid on the mortgage loans constituting the related
grantor trust,
(ii) net of normal administration fees, and
(iii) net of interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to that
grantor trust
will be referred to as a "Grantor Trust Strip Certificate." A
Grantor Trust Strip Certificate may also evidence a nominal
ownership interest in the principal of the mortgage loans
constituting the related grantor trust.
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Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. Unless we otherwise
disclose in the related prospectus supplement, any offered certificates that are
Grantor Trust Fractional Interest Certificates will generally represent
interests in:
o "loans...secured by an interest in real property" within the meaning
of Section 7701(a)(19)(C)(v) of the Code, but only to the extent
that the underlying mortgage loans have been made with respect to
property that is used for residential or certain other prescribed
purposes;
o "obligation[s] (including any participation or certificate of
beneficial ownership therein) which... [are] principally secured by
an interest in real property" within the meaning of Section
860G(a)(3) of the Code;
o "permitted assets" within the meaning of Section 860L(a)(1)(C) of
the Code; and
o "real estate assets" within the meaning of Section 856(c)(5)(B) of
the Code.
In addition, interest on offered certificates that are Grantor Trust
Fractional Interest Certificates will, to the same extent, be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a grantor trust--
o consisting of mortgage loans that are "loans...secured by an
interest in real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code,
o consisting of mortgage loans that are "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code, and
o the interest on which is "interest on obligations secured by
mortgages on real property" within the meaning of Section
856(c)(3)(A) of the Code,
it is unclear whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized. We recommend that prospective purchasers to
which the characterization of an investment in Grantor Trust Strip Certificates
is material consult their tax advisors regarding whether the Grantor Trust Strip
Certificates, and the income therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be:
o "obligation[s] (including any participation or certificate of
beneficial ownership therein) which... [are] principally secured by
an interest in real property" within the meaning of Section
860G(a)(3)(A) of the Code, and
o in general, "permitted assets" within the meaning of Section
860L(a)(1)(C) of the Code.
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Taxation of Owners of Grantor Trust Fractional Interest Certificates
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally:
o will be required to report on their federal income tax returns their
shares of the entire income from the mortgage loans, including
amounts used to pay reasonable servicing fees and other expenses,
and
o will be entitled to deduct their shares of any reasonable servicing
fees and other expenses.
Because of stripped interests, market or original issue discount, or
premium, the amount includible in income on account of a Grantor Trust
Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the mortgage loans.
Section 67 of the Code allows an individual, estate or trust holding a
Grantor Trust Fractional Interest Certificate directly or through certain
pass-through entities a deduction for any reasonable servicing fees and expenses
only to the extent that the aggregate of the holder's miscellaneous itemized
deductions exceeds two percent of the holder's adjusted gross income.
Section 68 of the Code reduces the amount of itemized deductions otherwise
allowable for an individual whose adjusted gross income exceeds a specified
amount by the lesser of:
o 3% of the excess of the individual's adjusted gross income over that
amount, and
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by holders of Grantor
Trust Fractional Interest Certificates who are subject to the limitations of
either Section 67 or Section 68 of the Code may be substantial. Further,
certificateholders, other than corporations, subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining their
alternative minimum taxable income.
Although it is not entirely clear, it appears that in transactions in
which multiple classes of grantor trust certificates, including Grantor Trust
Strip Certificates, are issued, any fees and expenses should be allocated among
those classes of grantor trust certificates. The method of this allocation must
recognize that each class benefits from the related services. In the absence of
statutory or administrative clarification as to the method to be used, we
currently expect that information returns or reports to the IRS and
certificateholders will be based on a method that allocates these fees and
expenses among classes of grantor trust certificates with respect to each period
based on the payments made to each class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if:
o a class of Grantor Trust Strip Certificates is issued as part of the
same series, or
o we or any of our affiliates retain, for our or their own account or
for purposes of resale, a right to receive a specified portion of
the interest payable on a mortgaged property.
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Further, the IRS has ruled that an unreasonably high servicing fee
retained by a seller or servicer will be treated as a retained ownership
interest in mortgages that constitutes a stripped coupon. We will include in the
related prospectus supplement information regarding servicing fees paid out of
the assets of the related trust to:
o a master servicer,
o a special servicer,
o any sub-servicer, or
o their respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code. This is subject, however, to the discussion below regarding:
o the treatment of certain stripped bonds as market discount bonds,
and
o de minimis market discount.
See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below.
Under the stripped bond rules, the holder of a Grantor Trust Fractional
Interest Certificate, whether a cash or accrual method taxpayer, will be
required to report interest income from its Grantor Trust Fractional Interest
Certificate for each month. The amount of reportable interest income must equal
the income that accrues on the certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by that
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be:
o the sum of all payments to be made on that certificate, other than
"qualified stated interest," if any, and
o the certificate's share of reasonable servicing fees and other
expenses.
See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of:
(i) the holder's adjusted basis in the Grantor Trust Fractional Interest
Certificate at the beginning of the related month, as defined in
"--Grantor Trust Funds--Sales of Grantor Trust Certificates," and
(ii) the yield of that Grantor Trust Fractional Interest Certificate to
the holder.
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The yield would be computed as the rate, that, if used to discount the holder's
share of future payments on the related mortgage loans, would cause the present
value of those future payments to equal the price at which the holder purchased
the certificate. This rate is compounded based on the regular interval between
payment dates. In computing yield under the stripped bond rules, a
certificateholder's share of future payments on the mortgage loans will not
include any payments made in respect of any ownership interest in the mortgage
loans retained by--
o us,
o a master servicer,
o a special servicer,
o a sub-servicer, or
o our or their respective affiliates,
but will include the certificateholder's share of any reasonable servicing fees
and other expenses.
With respect to certain categories of debt instruments, Section 1272(a)(6)
of the Code requires:
o the use of a reasonable prepayment assumption in accruing original
issue discount, and
o adjustments in the accrual of original issue discount when
prepayments do not conform to the prepayment assumption.
Recent legislation extends the scope of that section to any pool of debt
instruments the yield on which may be affected by reason of prepayments,
effective for taxable years beginning after enactment. The precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain:
o whether a prepayment assumption will be applied:
(i) collectively to all a taxpayer's investments in pools of debt
instruments, or
(ii) will be applied on an investment-by-investment basis, and
o whether the assumed prepayment rate, as to investments in Grantor
Trust Fractional Interest Certificates, is to be determined based on
conditions:
(i) at the time of the first sale of the certificate or,
(ii) with respect to any holder, at the time of purchase of the
certificate by that holder.
We recommend that certificateholders consult their tax advisors concerning
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to that
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a price less than or greater than the principal amount,
respectively, the use of a reasonable prepayment assumption would increase or
decrease the yield. Therefore, the use of this prepayment assumption would
accelerate or decelerate, respectively, the reporting of income.
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In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on:
o a prepayment assumption determined when certificates are offered and
sold hereunder, which we will disclose in the related prospectus
supplement, and
o a constant yield computed using a representative initial offering
price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans will in fact prepay at a rate conforming to the
prepayment assumption used or any other rate, or
o the prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports that we send, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders of each series
who bought at that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds. Accordingly, any purchaser of such a bond
is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon:
o there is no original issue discount or only a de minimis amount of
original issue discount, or
o the annual stated rate of interest payable on the original bond is
no more than one percentage point lower than the gross interest rate
payable on the original mortgage loan, before subtracting any
servicing fee or any stripped coupon.
If interest payable on a Grantor Trust Fractional Interest Certificate is
more than one percentage point lower than the gross interest rate payable on the
mortgage loans, we will disclose that fact in the related prospectus supplement.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than the
product of:
o 0.25% of the stated redemption price, and
o the weighted average maturity of the mortgage loans,
then the original issue discount or market discount will be considered to be de
minimis. Original issue discount or market discount of only a de minimis amount
will be included in income in the same manner as de minimis original issue
discount and market discount described in "--Grantor Trust Funds--Taxation of
Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond Rules
Do Not Apply" and "--Market Discount" below.
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If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the certificateholder will be required to
report its share of the interest income on the mortgage loans in accordance with
the certificateholder's normal method of accounting. In that case, the original
issue discount rules will apply, even if the stripped bond rules do not apply,
to a Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in mortgage loans issued with original issue discount.
The original issue discount, if any, on the mortgage loans will equal the
difference between:
(i) the stated redemption price of the mortgage loans, and
(ii) their issue price.
For a definition of "stated redemption price," see "--REMICs--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above. In
general, the issue price of a mortgage loan will be the excess of:
(i) the amount received by the borrower from the lender under the terms
of the mortgage loan, over
(ii) any "points" paid by the borrower.
The stated redemption price of a mortgage loan will equal its principal
amount, unless the mortgage loan provides for an initial "teaser," or
below-market interest rate. The determination as to whether original issue
discount will be considered to be de minimis will be calculated using the same
test as in the REMIC discussion. See "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount" above.
In the case of mortgage loans bearing adjustable or variable interest
rates, we will describe in the related prospectus supplement the manner in which
these rules will be applied with respect to the mortgage loans by the related
trustee or master servicer, as applicable, in preparing information returns to
certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. Under
recent legislation, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing yield with respect to any pool of debt
instruments, the yield on which may be affected by prepayments. The precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain:
(i) whether a prepayment assumption will be applied:
o collectively to all a taxpayer's investments in pools of debt
instruments, or
o will be applied on an investment-by-investment basis, and
(ii) as to investments in Grantor Trust Fractional Interest Certificates,
whether the assumed prepayment rate is to be determined based on
conditions:
o at the time of the first sale of the certificate or,
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o with respect to any holder, at the time of purchase of the
certificate by that holder.
We recommend that certificateholders consult their own tax advisors concerning
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. In addition, certificateholders should refer to the
related prospectus supplement with respect to each series to determine whether
and in what manner the original issue discount rules will apply to mortgage
loans in the series.
A purchaser of a Grantor Trust Fractional Interest Certificate may
purchase the Grantor Trust Fractional Interest Certificate at a cost less than
the certificate's allocable portion of the aggregate remaining stated redemption
price of the mortgage loans held in the related trust. In that case, the
purchaser will also be required to include in gross income the certificate's
daily portions of any original issue discount with respect to those mortgage
loans. However, each daily portion will be reduced, if the cost of the Grantor
Trust Fractional Interest Certificate to the purchaser is in excess of the
certificate's allocable portion of the aggregate "adjusted issue prices" of the
mortgage loans held in the related trust. The reduction will be approximately in
proportion to the ratio that such excess bears to the certificate's allocable
portion of the aggregate original issue discount remaining to be accrued on the
mortgage loans.
The adjusted issue price of a mortgage loan on any given day equals the
sum of:
(i) the adjusted issue price or the issue price, in the case of the
first accrual period, of the mortgage loan at the beginning of the
accrual period that includes that day, and
(ii) the daily portions of original issue discount for all days during
the accrual period prior to that day.
The adjusted issue price of a mortgage loan at the beginning of any
accrual period will equal:
(i) the issue price of that mortgage loan, increased by
(ii) the aggregate amount of original issue discount with respect to that
mortgage loan that accrued in prior accrual periods, and reduced by
(iii) the amount of any payments made on that mortgage loan in prior
accrual periods of amounts included in its stated redemption price.
In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on:
o a prepayment assumption determined when the certificates are offered
and sold hereunder and disclosed in the related prospectus
supplement, and
o a constant yield computed using a representative initial offering
price for each class of certificates.
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However, neither we nor any other person will make any representation
that--
o the mortgage loans will in fact prepay at a rate conforming to the
prepayment assumption or any other rate, or
o the prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Market Discount. If the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, a certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a "market
discount." A mortgage loan is considered to have been purchased at a "market
discount" if--
o in the case of a mortgage loan issued without original issue
discount, it is purchased at a price less than its remaining stated
redemption price, or
o in the case of a mortgage loan issued with original issue discount,
it is purchased at a price less than its adjusted issue price.
If market discount is in excess of a de minimis amount, the holder
generally will be required to include in income in each month the amount of the
discount that has accrued, under the rules described below, through that month
that has not previously been included in income. The inclusion will be limited,
in the case of the portion of the discount that is allocable to any mortgage
loan, to the payment of stated redemption price on the mortgage loan that is
received by or, for accrual method certificateholders, due to, the trust in that
month. A certificateholder may elect to include market discount in income
currently as it accrues, under a constant yield method based on the yield of the
certificate to the holder, rather than including it on a deferred basis in
accordance with the foregoing under rules similar to those described in
"--REMICs--Taxation of Owners of REMIC Regular Interests--Market Discount"
above.
Section 1276(b)(3) of the Code authorizes the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until the time that regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period, you may accrue market discount on the mortgage loans, at your
option:
o on the basis of a constant yield method,
o in the case of a mortgage loan issued without original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid in the accrual
period bears to the total stated interest remaining to be paid on
the mortgage loan as of the beginning of the accrual period, or
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o in the case of a mortgage loan issued with original issue discount,
in an amount that bears the same ratio to the total remaining market
discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining at the
beginning of the accrual period.
Under recent legislation, Section 1272(a)(6) of the Code requires that a
prepayment assumption be used in computing the accrual of original issue
discount with respect to any pool of debt instruments, the yield on which may be
affected by prepayments. Because the mortgage loans will be a pool described in
that section, it appears that the prepayment assumption used, or that would be
used, in calculating the accrual of original issue discount, if any, is also to
be used in calculating the accrual of market discount. However, the precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain:
o whether a prepayment assumption will be applied--
(i) collectively to all of a taxpayer's investments in pools of
debt instruments, or
(ii) on an investment-by-investment basis, and
o whether the assumed prepayment rate is to be determined--
(i) at the time of the first sale of the Grantor Trust Fractional
Interest Certificate, or
(ii) with respect to any holder, at the time of that holder's
purchase of the Grantor Trust Fractional Interest Certificate.
Moreover, because the regulations referred to in the preceding paragraph
have not been issued, it is not possible to predict what effect the regulations
might have on the tax treatment of a mortgage loan purchased at a discount in
the secondary market. We recommend that certificateholders consult their own tax
advisors concerning accrual of market discount with respect to Grantor Trust
Fractional Interest Certificates. Certificateholders should also refer to the
related prospectus supplement with respect to each series to determine whether
and in what manner the market discount will apply to mortgage loans purchased at
a market discount in that series.
To the extent that the mortgage loans provide for periodic payments of
stated redemption price, market discount may be required to be included in
income at a rate that is not significantly slower than the rate at which that
discount would be included in income if it were original issue discount.
Market discount with respect to mortgage loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described under "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
Further, under the rules described under "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount" above, any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the mortgage loans.
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Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, which is a price in excess of their remaining
stated redemption price, the certificateholder may elect under Section 171 of
the Code to amortize the portion of that premium allocable to mortgage loans
originated after September 27, 1985 using a constant yield method. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to mortgage loans originated before September 28, 1985 or to mortgage
loans for which an amortization election is not made, should:
o be allocated among the payments of stated redemption price on the
mortgage loan, and
o be allowed as a deduction as those payments are made or, for an
accrual method certificateholder, due.
It appears that a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code similar to that
described for calculating the accrual of market discount of Grantor Trust
Fractional Interest Certificates. See "--Grantor Trust Funds--Taxation of Owners
of Grantor Trust Fractional Interest Certificates--Market Discount" above.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above under "--Grantor Trust Funds--Taxation
of Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond
Rules Apply," no regulations or published rulings under Section 1286 of the Code
have been issued and some uncertainty exists as to how it will be applied to
securities, such as the Grantor Trust Strip Certificates. Accordingly, we
recommend that holders of Grantor Trust Strip Certificates consult their tax
advisors concerning the method to be used in reporting income or loss with
respect to those certificates.
The Treasury regulations promulgated under the original discount rules do
not apply to "stripped coupons," although they provide general guidance as to
how the original issue discount sections of the Code will be applied.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of the holder's adjusted basis in the Grantor Trust
Strip Certificate at the beginning of that month and the yield of the Grantor
Trust Strip Certificate to that holder. This yield would be calculated based on:
o the price paid for that Grantor Trust Strip Certificate by its
holder, and
o the payments remaining to be made thereon at the time of the
purchase, plus
o an allocable portion of the servicing fees and expenses to be paid
with respect to the mortgage loans.
See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
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As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments. The Code also requires
adjustments be made in the amount and rate of accrual of that discount when
prepayments do not conform to the prepayment assumption. It appears that those
provisions would apply to Grantor Trust Strip Certificates. It is uncertain
whether the assumed prepayment rate would be determined based on:
o conditions at the time of the first sale of the Grantor Trust Strip
Certificate or,
o with respect to any subsequent holder, at the time of purchase of
the Grantor Trust Strip Certificate by that holder.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a Grantor Trust Strip Certificate, the amount of
original issue discount allocable to that accrual period will be zero. That is,
no current deduction of the negative amount will be allowed to the holder of
that certificate. The holder will instead only be permitted to offset that
negative amount against future positive original issue discount, if any,
attributable to that certificate. Although not free from doubt, it is possible
that a certificateholder may be permitted to deduct a loss to the extent his or
her basis in the certificate exceeds the maximum amount of payments the
certificateholder could ever receive with respect to that certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to grantor trust certificates
with no, or disproportionately small, amounts of principal, which can have
negative yields under circumstances that are not default related. See "Risk
Factors--The Investment Performance of Your Certificates Depend Upon Payments,
Defaults and Losses on the Underlying Mortgage Loans" herein.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, we currently expect that information returns or reports to the
IRS and certificateholders will be based on:
o the prepayment assumption we will disclose in the related prospectus
supplement, and
o a constant yield computed using a representative initial offering
price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans will in fact prepay at a rate conforming to the
prepayment assumption or at any other rate or
o the prepayment assumption will not be challenged by the IRS on
audit.
We recommend that prospective purchasers of the Grantor Trust Strip Certificates
consult their tax advisors regarding the use of the prepayment assumption.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
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Sales of Grantor Trust Certificates. Any gain or loss recognized on the
sale or exchange of a grantor trust certificate by an investor who holds that
certificate as a capital asset, will be capital gain or loss, except as
described below. The amount recognized equals the difference between:
o the amount realized on the sale or exchange of a grantor trust
certificate, and
o its adjusted basis.
The adjusted basis of a grantor trust certificate generally will equal:
o its cost, increased by
o any income reported by the seller, including original issue discount
and market discount income, and reduced, but not below zero, by
o any and all--
(i) previously reported losses,
(ii) amortized premium, and
(iii) payments with respect to that grantor trust certificate.
As of the date of this prospectus, the Code provides for lower rates as to
long-term capital gains, than those applicable to the short-term capital gains
and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a grantor trust certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income.
Gain or loss recognized by banks and other financial institutions subject to
Section 582(c) of the Code will be treated as ordinary income.
Furthermore, a portion of any gain that might otherwise be capital gain
may be treated as ordinary income to the extent that the grantor trust
certificate is held as part of a "conversion transaction" within the meaning of
Section 1258 of the Code. A conversion transaction generally is one in which the
taxpayer has taken two or more positions in the same or similar property that
reduce or eliminate market risk, if substantially all of the taxpayer's return
is attributable to the time value of the taxpayer's net investment in the
transaction. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable Federal rate." That rate is computed and published
monthly by the IRS, at the time the taxpayer enters into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income items from the transaction.
The Code requires the recognition of gain upon the "constructive sale of
an appreciated financial position." A constructive sale of an appreciated
financial position occurs if a taxpayer enters into certain transactions or
series of such transactions that have the effect of substantially eliminating
the taxpayer's risk of loss and opportunity for gain with respect to the
financial instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
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o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related party,
cannot be the subject of a constructive sale for this purpose. Because most
grantor trust certificates meet this exception, this Section will not apply to
most grantor trust certificates. However, certain grantor trust certificates
have no, or a disproportionately small, amount of principal and these
certificates can be the subject of a constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for that taxable year. This election would
be done for purposes of the rule that limits the deduction of interest on
indebtedness incurred to purchase or carry property held for investment to a
taxpayer's net investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
prospectus supplement, the related tax administrator will furnish or make
readily available through electronic means to each holder of a grantor trust
certificate with each payment a statement setting forth the amount of the
payment allocable to principal on the underlying mortgage loans and to interest
thereon at the related pass-through rate. In addition, the related tax
administrator will furnish, within a reasonable time after the end of each
calendar year, to each holder of a grantor trust certificate who was a holder at
any time during that year, information regarding:
o the amount of servicing compensation received by a master servicer
or special servicer, and
o all other customary factual information the reporting party deems
necessary or desirable to enable holders of the related grantor
trust certificates to prepare their tax returns.
The reporting party will furnish comparable information to the IRS as and when
required by law to do so.
Because the rules for accruing discount and amortizing premium with
respect to grantor trust certificates are uncertain in various respects, there
is no assurance the IRS will agree with the information reports of those items
of income and expense. Moreover, those information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial certificateholders that bought their certificates at the representative
initial offering price used in preparing the reports.
On August 13, 1998, the Service published proposed regulations, which
will, when effective, establish a reporting framework for interests in "widely
held fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity classified as a
"trust" under Treasury Regulation Section 301.7701-4(c) in which any interest is
held by a middleman, which includes, but is not limited to:
o a custodian of a person's account,
o a nominee, and
o a broker holding an interest for a customer in street name.
These regulations are proposed to be effective for calendar years beginning on
or after the date that the final regulations are published in the Federal
Register.
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Backup Withholding. In general, the rules described under
"--REMICs--Backup Withholding with Respect to REMIC Certificates" above will
also apply to grantor trust certificates.
Foreign Investors. In general, the discussion with respect to REMIC
regular certificates under "--REMICs--Foreign Investors in REMIC Certificates"
above applies to grantor trust certificates. However, unless we otherwise
specify in the related prospectus supplement, grantor trust certificates will be
eligible for exemption from U.S. withholding tax, subject to the conditions
described in the discussion above, only to the extent the related mortgage loans
were originated after July 18, 1984.
To the extent that interest on a grantor trust certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the grantor trust certificate is not held in connection with a
certificateholder's trade or business in the United States, the grantor trust
certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state and
local tax consequences concerning 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, we recommend that prospective investors consult
their tax advisors with respect to the various tax consequences of investments
in the offered certificates.
ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Internal Revenue Code of 1986 impose various requirements on--
o employee benefit plans, and on certain other retirement plans,
arrangements and accounts, that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Internal
Revenue Code of 1986 ("ERISA Plans"), and
o persons that are fiduciaries with respect to ERISA Plans ("Plan
Fiduciaries"),
in connection with the investment of the assets of an ERISA Plan ("Plan
Assets"). For purposes of this discussion, ERISA Plans may include individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts, including as applicable, insurance company general
accounts, in which other ERISA Plans are invested.
Governmental plans and, if they have not made an election under Section
410(d) of the Internal Revenue Code of 1986, church plans are not subject to
ERISA requirements. Accordingly, assets of those plans may be invested in the
offered certificates without regard to the ERISA considerations described below,
subject to the provisions of other applicable federal and state law. Any such
plan which is qualified and
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exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue
Code of 1986, however, is subject to the prohibited transaction rules in Section
503 of that Code.
ERISA imposes certain general fiduciary requirements on Plan Fiduciaries
that are investing Plan Assets, including--
o investment prudence and diversification, and
o compliance with the investing ERISA Plan's governing the documents.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986
also prohibit a broad range of transactions involving Plan Assets and any person
that--
o is a "party in interest" within the meaning of ERISA or a
"disqualified person" within the meaning of the Internal Revenue
Code of 1986, and
o has certain specified relationships to the affected ERISA Plan (any
such person, a "Party in Interest"),
unless a statutory or administrative exemption exists. The types of transactions
between ERISA Plans and Parties in Interest that are prohibited include:
o sales, exchanges or leases of property;
o loans or other extensions of credit; and
o the furnishing of goods and services.
Certain Parties in Interest that participate in a prohibited transaction
may be subject to an excise tax imposed under Section 4975 of the Internal
Revenue Code of 1986 or a penalty imposed under Section 502(i) of ERISA, unless
a statutory or administrative exemption is available. In addition, the persons
involved in the prohibited transaction may have to cancel the transaction and
pay an amount to the affected ERISA Plan for any losses realized by that ERISA
Plan or profits realized by those persons. In addition, individual retirement
accounts involved in the prohibited transaction may be disqualified which would
result in adverse tax consequences to the owner of the account.
Plan Asset Regulations
An ERISA Plan's investment in offered certificates may cause the
underlying mortgage assets and other assets of the related trust to be deemed
assets of that ERISA Plan. Section 2510.3-101 of the regulations (the "Plan
Asset Regulations") of the United States Department of Labor provides that when
an ERISA Plan acquires an equity interest in an entity, the assets that ERISA
Plan or arrangement include both that equity interest and an undivided interest
in each of the underlying assets of the entity, unless an exception applies. One
such exemption is that the equity participation in the entity by "benefit plan
investors," which include both ERISA Plans and certain employee benefit plans
not subject to ERISA, is not "significant." The equity participation by benefit
plan investors will be "significant" on any date if 25% or more of the value of
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any class of equity interests in the entity is held by benefit plan investors.
The percentage owned by benefit plan investors is determined by excluding the
investments of the following persons:
(i) those with discretionary authority or control over the assets of the
entity,
(ii) those who provide investment advice directly or indirectly for a fee
with respect to the assets of the entity, and
(iii) those who are affiliates of the persons described in the preceding
clauses (i) and (ii).
In the case of one of our trusts, investments by us or by the related trustee,
master servicer, special servicer, any other party with discretionary authority
over the trust assets and the affiliates of these persons, will be excluded.
A fiduciary of an investing ERISA Plan is any person who--
o has discretionary authority or control over the management or
disposition of the assets of that ERISA Plan, or
o provides investment advice with respect to the assets of that ERISA
Plan for a fee.
If the mortgage and other assets included in one of our trusts are Plan Assets,
then any party exercising management or discretionary control regarding those
assets, such as the related trustee, master servicer or special servicer, or
affiliates of any of these parties, may be deemed to be a "fiduciary" with
respect to the investing ERISA Plan and, therefore, subject to the fiduciary
responsibility provisions of ERISA. In addition, if the mortgage and other
assets in one of our trusts are Plan Assets, then the operation of that trust
may involve prohibited transactions under ERISA or the Internal Revenue Code of
1986. For example, if a borrower with respect to a mortgage loan in that trust
is a Party in Interest to an investing ERISA Plan, then the purchase by that
ERISA Plan of offered certificates evidencing interests in that trust, could be
a prohibited loan between that ERISA Plan and the Party in Interest.
The Plan Asset Regulations provide that where an ERISA Plan purchases a
"guaranteed governmental mortgage pool certificate," the assets of that ERISA
Plan include the certificate but do not include any of the mortgages underlying
the certificate. The Plan Asset Regulations include in the definition of a
"guaranteed governmental mortgage pool certificate" certain certificates issued
and/or guaranteed by FHLMC, GNMA and FNMA, but do not include certificates
issued or guaranteed by FAMC. Accordingly, even if these types of
mortgaged-backed securities, other than the FAMC certificates, were deemed to be
Plan Assets, the underlying mortgages would not be treated as Plan Assets.
Private label mortgage participations, mortgage pass-through certificates, FAMC
certificates or other mortgage-backed securities are not "guaranteed
governmental mortgage pool certificates" within the meaning of the Plan Asset
Regulations.
In addition, the acquisition or holding of offered certificates by or on
behalf of an ERISA Plan could give rise to a prohibited transaction if we or the
related trustee, master servicer or special servicer or any related underwriter,
sub-servicer, REMIC administrator, manager, borrower or obligor under any credit
enhancement mechanism, or certain of their affiliates, is or becomes a Party in
Interest with respect to an investing ERISA Plan.
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If you are a Plan Fiduciary, you should consult your counsel and review
the ERISA discussion in the related prospectus supplement before purchasing any
offered certificates.
Prohibited Transaction Exemptions
If you are a Plan Fiduciary, then, in connection with your deciding
whether to purchase any of the offered certificates on behalf of an ERISA Plan,
you should consider the availability of one of the following prohibited
transaction class exemptions issued by the U.S. Department of Labor:
o Prohibited transaction class exemption 75-1, which exempts certain
transactions involving ERISA Plans and certain broker-dealers,
reporting dealers and banks;
o Prohibited transaction class exemption 90-1, which exempts certain
transactions between insurance company separate accounts and Parties
in Interest;
o Prohibited transaction class exemption 91-38, which exempts certain
transactions between bank collective investment funds and Parties in
Interest;
o Prohibited transaction class exemption 84-14, which exempts certain
transactions effected on behalf of an ERISA Plan by a "qualified
professional asset manager;"
o Prohibited transaction class exemption 95-60, which exempts certain
transactions between insurance company general accounts and Parties
in Interest; and
o Prohibited transaction class exemption 96-23, which exempts certain
transactions effected on behalf of an ERISA Plan by an "in-house
asset manager."
We cannot provide any assurance that any of these class exemptions will
apply with respect to any particular investment by or on behalf of an ERISA Plan
in any class of offered certificates. Furthermore, even if any of them were
deemed to apply, that particular class exemption may not apply to all
transactions that could occur in connection with the investment. The prospectus
supplement with respect to the offered certificates of any series may contain
additional information regarding the availability of other exemptions, with
respect to those certificates.
Underwriter's Exemption
It is expected that Donaldson, Lufkin & Jenrette Securities Corporation
("DLJSC") will be the sole, lead or co-lead underwriter in each underwritten
offering of certificates made pursuant to this prospectus. The U.S. Department
of Labor has issued an individual prohibited transaction exemption to DLJSC
which generally exempts from the application of the prohibited transaction
provisions of ERISA and the Internal Revenue Code of 1986 certain transactions
relating to, among other things, the servicing and operation of certain mortgage
assets pools, such as the types of mortgage asset pools that will be included in
our trusts, and the purchase, sale and holding of certain certificates
evidencing interests in those pools that are underwritten by DLJSC or any person
affiliated with DLJSC, such as certain of the offered certificates.
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In order for DLJSC's individual prohibited transaction exemption to apply
to an offered certificate, certain requirements must be satisfied, including:
o the acquisition of the certificate by an ERISA Plan must be on terms
that are at least as favorable to the ERISA Plan as they would be in
an arm's-length transaction with an unrelated party;
o the rights and interests evidenced by the certificate must not be
subordinated to the rights and interests evidenced by the other
certificates evidencing interests in the same mortgage asset pool;
o at the time of its acquisition by an ERISA Plan, the certificate
must be rated in one of the three highest generic rating categories
by Moody's Investors Services, Inc., Standard & Poor's Ratings
Service, a Division of the McGraw-Hill Companies, Inc., Fitch IBCA,
Inc. or Duff & Phelps Credit Rating Co.;
o the related trustee cannot be an affiliate of us, the related master
servicer, the related special servicer and certain other persons
o the sum of all payments made to and retained by the related trustee,
the related master servicer, the related special servicer and
certain other persons must represent not more than reasonable
compensation for underwriting the certificates; the sum of all
payments made to and retained by us must represent not more than the
fair market value of obligations deposited in the trust; and the sum
of all payments made to and retained by the related master servicer,
the related special servicer and any related sub-servicer must
represent not more than reasonable compensation for that person's
services and reimbursement of that person's reasonable expenses in
connection therewith; and
o the ERISA Plan must be an accredited investor.
The prospectus supplement with respect to any offered certificates
underwritten by DLJSC may contain additional information regarding the
availability of this exemption.
Insurance Company General Accounts
The Small Business Job Protection Act of 1996 added a new Section 401(c)
to ERISA, which provides relief from the fiduciary and prohibited transaction
provisions of ERISA and the Internal Revenue Code of 1986 for transactions
involving an insurance company general account. This exemption is in addition to
any exemption that may be available under prohibited transaction class exemption
95-60 for the purchase and holding of offered certificates by an insurance
company general account.
Pursuant to Section 401(c) of ERISA, the U.S. Department of Labor was
required to issue final regulations no later than December 31, 1997, providing
guidance for determining, in cases where insurance policies supported by an
insurer's general account are issued to or for the benefit of an ERISA Plan on
or
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before December 31, 1998, which general account assets are Plan Assets. The U.S.
Department of Labor has not yet issued those final regulations. Section 401(c)
of ERISA generally provides that, until the date which is 18 months after the
those final regulations become final, no person will be subject to liability
under Part 4 of Title I of ERISA and Section 4975 of the Internal Revenue Code
of 1986 on the basis of a claim that the assets of an insurance company general
account are Plan Assets, unless--
(i) as otherwise provided by the Secretary of Labor in those final
regulations to prevent avoidance of the regulations; or
(ii) an action is brought by the Secretary of Labor for certain breaches
of fiduciary duty which would also constitute a violation of federal
or state criminal law.
Any assets of an insurance company general account which support insurance
policies issued to an ERISA Plan after December 31, 1998, or issued to an ERISA
Plan on or before December 31, 1998 for which the insurance company does not
comply with the final regulations under Section 401(c) of ERISA, may be treated
as Plan Assets. In addition, because Section 401(c) of ERISA does not relate to
insurance company separate accounts, separate account assets are still treated
as Plan Assets, invested in the separate account. If you are an insurance
company are contemplating the investment of general account assets in offered
certificates, you should consult your legal counsel as to the applicability of
Section 401(c) of ERISA.
Consultation With Counsel
If you are a Plan Fiduciary which proposes to purchase offered
certificates on behalf of or with assets of an ERISA Plan, account or
arrangement, you should consider your general fiduciary obligations under ERISA
and you should consult with your legal counsel as to the potential applicability
of ERISA and the Internal Revenue Code of 1986 to that investment and the
availability of any prohibited transaction exemption in connection with that
investment.
Tax Exempt Investors
An ERISA Plan that is exempt from federal income taxation pursuant to
Section 501 of the Internal Revenue Code of 1986 will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" within the meaning of Section 512 of the Internal Revenue Code of 1986.
All "excess inclusions" of a REMIC allocated to a REMIC residual certificate
held by a tax-exempt ERISA Plan will be considered "unrelated business taxable
income" and will be subject to federal income tax.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates-Excess Inclusions" in this prospectus.
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LEGAL INVESTMENT
If and to the extent specified in the related prospectus supplement, the
offered certificates of any series may constitute "mortgage related securities"
for purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
"Mortgage related securities" are legal investments for entities--
o that are created or existing under the laws of the United States or
any state, including the District of Columbia and Puerto Rico, and
o whose authorized investments are subject to state regulations,
to the same extent that, under applicable law, obligations issued by or
guaranteed as to principal and interest by the United States or any of its
agencies or instrumentalities are legal investments for those entities.
Prior to December 31, 1996, classes of offered certificates would be
"mortgage related securities" for purposes of SMMEA only if they:
o were rated in one of the two highest rating categories by at least
one nationally recognized statistical rating organization; and
o evidenced interests in a trust consisting of loans directly secured
by a first lien on a single parcel of real estate upon which is
located a dwelling or mixed residential and commercial structure,
which loans had been originated by the types of originators
specified in SMMEA.
Further, under SMMEA as originally enacted, if a state enacted legislation
on or before October 3, 1991 that specifically limited the legal investment
authority of any entities referred to in the preceding paragraph with respect to
"mortgage related securities" under that definition, offered certificates would
constitute legal investments for entities subject to the legislation only to the
extent provided in that legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which the
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures." In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state may enact legislation
limiting the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows:
o federal savings and loan associations and federal savings banks may
invest in, sell or otherwise deal with "mortgage related securities"
without limitation as to the percentage of their assets represented
by those securities; and
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o federal credit unions may invest in "mortgage related securities"
and national banks may purchase "mortgage related securities" for
their own account without regard to the limitations generally
applicable to investment securities prescribed in 12 U.S.C. 24
(Seventh),
subject in each case to the regulations that the applicable federal regulatory
authority may prescribe.
Effective December 31, 1996, the Office of the Comptroller of the Currency
(the "OCC") amended 12 C.F.R. Part 1 to authorize national banks to purchase and
sell for their own account, without limitation as to a percentage of the bank's
capital and surplus, but subject to compliance with certain general standards
concerning "safety and soundness" and retention of credit information in 12
C.F.R. ss. 1.5, certain "Type IV securities," which are defined in 12 C.F.R. ss.
1.2(1) to include certain "commercial mortgage-related securities" and
"residential mortgage-related securities." As defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, a "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," we make no representation as to whether any class of
offered certificates will qualify as "commercial mortgage-related securities,"
and thus as "Type IV securities," for investment by national banks.
The National Credit Union Administration (the "NCUA") has adopted rules,
codified at 12 C.F.R. Part 703, which permit federal credit unions to invest in
"mortgage related securities" under certain limited circumstances, other than
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. ss. 703.140.
The Office of Thrift Supervision (the "OTS") has issued Thrift Bulletin
13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
offered certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation (the "FDIC"), the OCC and the OTS effective May 26, 1998,
and by the NCUA effective October 1, 1998. The 1998 Policy Statement sets forth
general guidelines which depository institutions must follow in managing risks,
including market, credit, liquidity, operational (transaction), and legal risks,
applicable to all securities, including mortgage pass-through securities and
mortgage-derivative products used for investment purposes.
There may be other restrictions on your ability either to purchase certain
classes of offered certificates or to purchase offered certificates representing
more than a specified percentage of your assets. We make no representations as
to the proper characterization of any class of offered certificates for legal
investment or other purposes. Also, we make no representations as to the ability
of particular investors to purchase any class of offered certificates under
applicable legal investment restrictions. These uncertainties may adversely
affect the liquidity of any class of offered certificates. Accordingly, if your
investment activities are subject
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to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities, you should consult with your legal advisor in
determining whether and to what extent--
o the offered certificates of any class and series constitute legal
investments or are subject to investment, capital or other
restrictions; and
o if applicable, SMMEA has been overridden in your State.
USE OF PROCEEDS
Unless otherwise specified in the related prospectus supplement, the net
proceeds to be received from the sale of the offered certificates of any series
will be applied by us to the purchase of assets for the related trust or will be
used by us to cover expenses related to that purchase and the issuance of those
certificates. We expect to sell the offered certificates from time to time, but
the timing and amount of offerings of those certificates will depend on a number
of factors, including the volume of mortgage assets acquired by us, prevailing
interest rates, availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The certificates offered by this prospectus and the related prospectus
supplements will be offered in series through one or more of the methods
described below. The prospectus supplement prepared for the offered certificates
of each series will describe the method of offering being utilized for those
certificates and will state the net proceeds to us from the sale of those
certificates.
We intend that offered certificates will be offered through the following
methods from time to time. We further intend that offerings may be made
concurrently through more than one of these methods or that an offering of the
offered certificates of a particular series may be made through a combination of
two or more of these methods. The methods are as follows:
1. by negotiated firm commitment or best efforts underwriting and
public offering by one or more underwriters specified in the related
prospectus supplement;
2. by placements by us with institutional investors through dealers;
and
3. by direct placements by us with institutional investors.
In addition, if specified in the related prospectus supplement, the offered
certificates of a series may be offered in whole or in part to the seller of the
mortgage assets that would back those certificates. Furthermore, the related
trust assets for one series of offered certificates may include offered
certificates from other series.
If underwriters are used in a sale of any offered certificates, other than
in connection with an underwriting on a best efforts basis, the offered
certificates will be acquired by the underwriters for their own account. These
certificates may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices to be determined at the time of sale or at the
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time of commitment therefor. The managing underwriter or underwriters with
respect to the offer and sale of offered certificates of a particular series
will be described on the cover of the prospectus supplement relating to the
series and the members of the underwriting syndicate, if any, will be named in
the relevant prospectus supplement.
Underwriters may receive compensation from us or from purchasers of the
offered certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the payment of the offered
certificates may be deemed to be underwriters in connection with those
certificates. In addition, any discounts or commissions received by them from us
and any profit on the resale of those offered certificates by them may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933,
as amended.
It is anticipated that the underwriting agreement pertaining to the sale
of the offered certificates of any series will provide that--
o the obligations of the underwriters will be subject to certain
conditions precedent,
o the underwriters will be obligated to purchase all the certificates
if any are purchased, other than in connection with an underwriting
on a best efforts basis, and
o in limited circumstances, we will indemnify the several underwriters
and the underwriters will indemnify us against certain civil
liabilities, including liabilities under the Securities Act of 1933,
as amended, or will contribute to payments required to be made in
respect of any liabilities.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between us and purchasers of offered
certificates of that series.
We anticipate that the offered certificates will be sold primarily to
institutional investors. Purchasers of offered certificates, including dealers,
may, depending on the facts and circumstances of the purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended, in
connection with reoffers and sales by them of offered certificates. Holders of
offered certificates should consult with their legal advisors in this regard
prior to any reoffer or sale.
LEGAL MATTERS
Unless otherwise specified in the related prospectus supplement, certain
legal matters in connection with the certificates of each series, including
certain federal income tax consequences, will be passed upon for us by Sidley &
Austin, our counsel.
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FINANCIAL INFORMATION
A new trust will be formed with respect to each series of offered
certificates. None of those trusts will engage in any business activities or
have any assets or obligations prior to the issuance of the related series of
offered certificates. Accordingly, no financial statements with respect to any
trust will be included in this prospectus or in the related prospectus
supplement. We have determined that our financial statements will not be
material to the offering of any offered certificates.
RATING
It is a condition to the issuance of any class of offered certificates
that, at the time of issuance, at least one nationally recognized statistical
rating organization has rated those certificates in one of its generic rating
categories which signifies investment grade. Typically, the four highest rating
categories, within which there may be sub-categories or gradations indicating
relative standing, signify investment grade.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of all payments of interest and/or principal to which
they are entitled. These ratings address the structural, legal and
issuer-related aspects associated with the certificates, the nature of the
underlying mortgage assets and the credit quality of any third-party credit
enhancer. The rating(s) on a class of offered certificates will not represent
any assessment of--
o whether the price paid for those certificates is fair;
o whether those certificates are a suitable investment for any
particular investor;
o the tax attributes of those certificates or of the related trust;
o the yield to maturity or, if they have principal balances, the
average life of those certificates;
o the likelihood or frequency of prepayments of principal on the
underlying mortgage loans;
o the degree to which the amount or frequency of prepayments on the
underlying mortgage loans might differ from those originally
anticipated;
o whether or to what extent the interest payable on those certificates
may be reduced in connection with interest shortfalls resulting from
the timing of voluntary prepayments;
o the likelihood that any amounts other than interest at the related
mortgage interest rates and principal will be received with respect
to the underlying mortgage loans; or
o if those certificates provide solely or primarily for payments of
interest, whether the holders, despite receiving all payments of
interest to which they are entitled, would ultimately recover their
initial investments in those certificates.
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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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The attached diskette contains one spreadsheet file (the "spreadsheet file")
that can be put on a user-specified hard drive or network drive. This file is
"DLJ99CG3.XLS". The file "DLJ99CG3.XLS" is a Microsoft Excel(1), Version 5.0
spreadsheet. The file provides, in electronic format, certain statistical
information that appears under the caption "Description of the Mortgage Pool"
in, and on Exhibits A-1 and A-2 to, this prospectus supplement. Defined terms
used, but not otherwise defined, in the spreadsheet file will have the
respective meanings assigned to them in this prospectus supplement. All the
information contained in the spreadsheet file is subject to the same limitations
and qualifications contained in this prospectus supplement. Prospective
investors are strongly urged to read this prospectus supplement and accompanying
prospectus in its entirety prior to accessing the spreadsheet file.
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(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Important Notice about the Information Contained
in this Prospectus Supplement, the Accompanying Prospectus
and the Related Registration Statement ............................... S-3
Forward-Looking Statements ............................................. S-3
Summary of Prospectus Supplement ....................................... S-4
Risk Factors ........................................................... S-28
Description of the Mortgage Pool ....................................... S-41
Servicing of the Mortgage Loans ........................................ S-93
Description of the Offered Certificates ................................ S-124
Yield and Maturity Considerations ...................................... S-149
Use of Proceeds ........................................................ S-157
Federal Income Tax Consequences ........................................ S-157
Certain ERISA Considerations ........................................... S-160
Legal Investment ....................................................... S-165
Method of Distribution ................................................. S-166
Legal Matters .......................................................... S-167
Ratings ................................................................ S-167
Exhibit A-1--Certain Characteristics of the Mortgage Loans and
the Underlying Real Properties ....................................... A-1-1
Exhibit A-2--Mortgage Pool Information ................................. A-2-1
Exhibit B--Form of Trustee Report ...................................... B-1
Exhibit C--Decrement Tables for the Certificates of the
"A-1A", "A-1B", "A-1C", "A-2", "A-3", "A-4",
"A-5", "B-1" and "B-2" Classes ...................................... C-1
Exhibit D--Price/Yield Tables for the Certificates of the "S" Class .... D-1
Exhibit E--Global Clearance, Settlement and Tax
Documentation Procedures ............................................ E-1
Exhibit F--Summary Term Sheet .......................................... F-1
Prospectus
Important Notice about the Information Presented in this Prospectus ....... 3
Available Information; Incorporation by Reference ......................... 3
Summary of Prospectus ..................................................... 4
Risk Factors .............................................................. 13
Description of the Trust Assets ........................................... 32
Yield and Maturity Considerations ......................................... 56
DLJ Commercial Mortgage Corp. ............................................. 62
Description of the Certificates ........................................... 63
Description of the Governing Documents .................................... 71
Description of Credit Support ............................................. 81
Certain Legal Aspects of Mortgage Loans ................................... 83
Federal Income Tax Consequences ........................................... 98
State and Other Tax Consequences .......................................... 139
ERISA Considerations ...................................................... 139
Legal Investment .......................................................... 145
Use of Proceeds ........................................................... 147
Method of Distribution .................................................... 147
Legal Matters ............................................................. 148
Financial Information ..................................................... 149
Rating .................................................................... 149
Until January 10, 2000, all dealers that complete transactions in the offered
certificates, whether or not participating in this offering, may be required to
deliver a prospectus supplement and the accompanying prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a prospectus
supplement and the accompanying prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
================================================================================
================================================================================
$804,863,000
(Approximate)
DLJ Commercial Mortgage Corp.
(Depositor)
GE Capital Access, Inc.
and
Column Financial, Inc.
(Mortgage Loan Sellers)
Class S, Class A-1A, Class A-1B, Class A-1C, Class A-2, Class
A-3, Class A-4, Class A-5, Class B-1 and Class B-2
DLJ Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 1999-CG3
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
Donaldson, Lufkin & Jenrette
October 5, 1999
================================================================================
