<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-77215
Subject to Completion, Dated April 12, 2000
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 13, 1999)
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I TRUST 2000-LIFE1
as Issuer
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
as Depositor
PRINCIPAL COMMERCIAL FUNDING, LLC
JOHN HANCOCK REAL ESTATE FINANCE, INC.
WELLS FARGO BANK, NATIONAL ASSOCIATION
MORGAN STANLEY MORTGAGE CAPITAL INC.
as Mortgage Loan Sellers
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-LIFE1
------------------------------
Morgan Stanley Dean Witter Capital I Inc. is offering selected classes
of its Series 2000-LIFE1 Commercial Mortgage Pass-Through Certificates, which
represent beneficial ownership interests in a trust. The trust's assets will
primarily be 133 mortgage loans secured by liens on commercial and multifamily
properties. The Series 2000-LIFE1 Certificates are not obligations of Morgan
Stanley Dean Witter Capital I Inc., the sellers of the mortgage loans or any of
their affiliates, and neither the certificates nor the underlying mortgage loans
are insured or guaranteed by any governmental agency.
------------------------------
INVESTING IN THE CERTIFICATES OFFERED TO YOU INVOLVES RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE S-23 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 17 OF THE
PROSPECTUS.
------------------------------
Characteristics of the certificates offered to you include:
<TABLE>
<CAPTION>
PASS-THROUGH
APPROXIMATE INITIAL INITIAL PASS-THROUGH RATES RATINGS
CLASS CERTIFICATE BALANCE RATE DESCRIPTION (FITCH/S&P)
- ----- ------------------- ---- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A-1 $113,834,030 % FIXED AAA/AAA
CLASS A-2 $439,000,000 % FIXED AAA/AAA
CLASS B $22,408,000 % VARIABLE AA/AA
CLASS C $25,854,000 % VARIABLE A/A
CLASS D $8,619,000 % VARIABLE A-/A-
CLASS E $17,236,000 % VARIABLE BBB/BBB
</TABLE>
------------------------------
The certificate balances are approximate and may vary by up to 5%.
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved the certificates offered to you or determined
if this prospectus supplement or the accompanying prospectus are truthful or
complete. Any representation to the contrary is a criminal offense.
------------------------------
Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and Norwest
Investment Services, Inc. will purchase the certificates offered to you from
Morgan Stanley Dean Witter Capital I Inc. and will offer them to the public at
negotiated prices determined at the time of sale. Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co. and Norwest Investment Services, Inc. expect
to deliver the certificates to purchasers on or about April __, 2000. Morgan
Stanley Dean Witter Capital I Inc. expects to receive from this offering
approximately $___________, plus accrued interest from April 1, 2000, before
deducting expenses payable by Morgan Stanley Dean Witter Capital I Inc.
------------------------------
MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.
NORWEST INVESTMENT SERVICES, INC.
April __, 2000
<PAGE>
The information in this prospectus supplement and the prospectus is not complete
and may be changed. These securities may not be sold nor may offers to buy be
accepted prior to the time a final prospectus is delivered. This prospectus
supplement and prospectus are not an offering to sell these securities and are
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
Commercial Mortgage Pass-Through Certificates, Series 2000 - LIFE I
Geographic Overview of Mortgage Pool
WASHINGTON
$12,249,931
1.78% of total
OREGON
$6,315,220
0.92% of total
NORTHERN CALIFORNIA
$95,514,222
13.85% of total
CALIFORNIA
$243,233,659
35.28% of total
SOUTHERN CALIFORNIA
$147,719,437
21.43% of total
ARIZONA
$23,402,960
3.39% of total
NEW MEXICO
$3,212,259
0.47% of total
COLORADO
$25,580,717
3.71% of total
TEXAS
$22,757,056
3.30% of total
OKLAHOMA
$7,483,517
1.09% of total
LOUISIANA
$18,305,907
2.66% of total
MINNESOTA
$12,124,458
1.76% of total
ILLINOIS
$26,960,034
3.91% of total
WISCONSIN
$12,313,718
1.79% of total
MICHIGAN
$2,670,428
0.39% of total
OHIO
$31,524,889
4.57% of total
PENNSYLVANIA
$16,952,767
2.46% of total
NEW YORK
$32,241,186
4.68% of total
MASSACHUSETTS
$28,501,376
4.13% of total
CONNECTICUT
$4,525,723
0.66% of total
RHODE ISLAND
$11,901,082
1.73% of total
NEW JERSEY
$27,564,971
4.00% of total
MARYLAND
$8,587,834
1.25% of total
VIRGINIA
$3,480,294
0.50% of total
NORTH CAROLINA
$24,830,378
3.60% of total
SOUTH CAROLINA
$3,394,922
0.49% of total
GEORGIA
$44,384,613
6.44% of total
FLORIDA
$34,964,803
5.07% of total
[ ] less than 1.0% of Cut-Off Date Balance
[ ] 1.0% - 5.0% of Cut-Off Date Balance
[ ] 5.0% - 10.0% of Cut-Off Date Balance
[ ] more than 10.0% of Cut-Off Date Balance
<PAGE>
PHOTOS OF PROPERTY
[PHOTO]
325 WEST HURON
Chicago, IL
[PHOTO]
212 WEST SUPERIOR
Chicago, IL
[PHOTO]
322 SOUTH GREEN
Chicago, IL
[PHOTO]
ONE COMMERCE CENTER
Colorado Springs, CO
[PHOTO]
COLUMBINE PLACE
Denver, CO
[PHOTO]
CENTENNIAL CENTER
Louisville, CO
[PHOTO]
FONTANA PLAZA
Fontana, CA
[PHOTO]
FOOTHILL PLAZA
Fontana, CA
[PHOTO]
PLAZA EAST
Fontana, CA
[PHOTO]
JABIL CIRCUIT BUILDING
San Jose, CA
[PHOTO]
120 EAST 23 STREET
New York, NY
[PHOTO]
NORWALK DISTRIBUTION CENTER
Santa Fe Springs, CA
[PHOTO]
MANHATTAN GATEWAY
Manhattan Beach, CA
[PHOTO]
LINCOLN NORTH
Lincoln, MA
[PHOTO]
133 EAST 58 STREET
New York, NY
[PHOTO]
INTERNATIONAL AIRPORT CENTER
Los Angeles, CA
<PAGE>
The pass-through rate on the Class A-1 and Class A-2 Certificates will be fixed
at the respective per annum rates set forth on the cover; provided that in each
case such pass-through rate for any distribution date will not exceed the NWAC
Rate for such distribution date. The pass-through rates on the Class B, Class C,
Class D and Class E Certificates set forth on the cover are approximate initial
pass-through rates for those classes. The pass-through rates on the Class B,
Class C, Class D and Class E Certificates will be a per annum rate based on the
NWAC Rate described below for each distribution date. The NWAC rate for a
particular distribution date is, generally, a weighted average of the interest
rates on the mortgage loans minus a weighted average annual administrative cost
rate, which includes the master servicing fee rate, any excess servicing fee
rate, the primary servicing fee rate and the trustee fee rate, calculated as
described in this prospectus supplement. You should read the section entitled
"Ratings" in this prospectus supplement.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the certificates offered to you is contained in two
separate documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the certificates offered to you; and (b) this prospectus supplement, which
describes the specific terms of the certificates offered to you.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. Morgan Stanley Dean Witter Capital I
Inc. has not authorized anyone to provide you with information that is different
from that contained in this prospectus supplement and the prospectus.
------------------------------
This prospectus supplement and the accompanying prospectus include
cross references to sections in these materials where you can find further
related discussions. The tables of contents in this prospectus supplement and
the prospectus identify the pages where these sections are located.
The Series 2000-LIFE1 Certificates are not obligations of Morgan
Stanley Dean Witter Capital I Inc. or any of its affiliates, and neither the
certificates nor the underlying mortgage loans are insured or guaranteed by any
governmental agency.
------------------------------
Morgan Stanley Dean Witter Capital I Inc. will not list the
certificates offered to you on any national securities exchange or any automated
quotation system of any registered securities association such as NASDAQ.
------------------------------
Until ninety days after the date of this prospectus supplement, all
dealers that buy, sell or trade the certificates offered by this prospectus
supplement, whether or not participating in this offering, may be required to
deliver a prospectus supplement and the accompanying prospectus. This is in
addition to the dealers' obligation to deliver a prospectus supplement and the
accompanying prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
S-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
S-4
<PAGE>
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS..........3
Executive Summary...................................6
Certificate Summary.................................7
Summary of Prospectus Supplement....................8
What You Will Own................................8
Relevant Parties and Dates.......................8
Offered Certificates............................10
Information About the Mortgage Pool.............14
Additional Aspects of Certificates..............20
Risk Factors.......................................23
Description Of The Offered Certificates............50
General.........................................50
Certificate Balances............................51
Pass-Through Rates..............................52
Distributions...................................52
Optional Termination............................58
Advances........................................58
Reports to Certificateholders; Available
Information.....................................60
Example of Distributions........................63
The Trustee and the Fiscal Agent................64
The Paying Agent, Certificate Registrar and
Authenticating Agent............................65
Expected Final Distribution Date; Rated
Final Distribution Date.........................65
Yield, Prepayment And Maturity Considerations......66
General.........................................66
Rate and Timing of Principal Payments...........66
Losses and Shortfalls...........................67
Relevant Factors................................68
Weighted Average Life...........................68
Description Of The Mortgage Pool...................72
General.........................................72
Material Terms and Characteristics of the
Mortgage Loans..................................72
Cross Collateralization; Related Parties........76
Assessments of Property Value and Condition.....76
Additional Mortgage Loan Information............78
Standard Hazard Insurance.......................79
The Sellers.....................................80
Sale of the Mortgage Loans......................81
Representations and Warranties..................81
Repurchases and Other Remedies..................83
Changes In Mortgage Pool Characteristics........84
Servicing Of The Mortgage Loans....................85
General.........................................85
The Master Servicer and Special Servicer........86
Master Servicer.................................87
Events of Default...............................88
The Special Servicer............................89
The Operating Adviser...........................90
Mortgage Loan Modifications.....................90
Sale of Defaulted Mortgage Loans and
REO Properties..................................91
Foreclosures....................................92
Material Federal Income Tax Consequences...........93
General.........................................93
Original Issue Discount and Premium.............94
Additional Considerations.......................95
Legal Aspects Of Mortgage Loans....................96
California......................................96
ERISA Considerations...............................96
Plan Assets.....................................96
Special Exemption Applicable to Class A
Certificates....................................97
Insurance Company General Accounts..............99
General Investment Considerations...............99
Legal Investment..................................100
Use Of Proceeds...................................100
Plan Of Distribution..............................100
Legal Matters.....................................102
Ratings...........................................103
Glossary Of Terms.................................104
APPENDIX I - Mortgage Pool
Information (Tables)........................I-1
APPENDIX II - Certain Characteristics
Of The Mortgage Loans.......................II-1
APPENDIX III - Significant
Loan Summaries...............................III-1
S-5
<PAGE>
EXECUTIVE SUMMARY
This Executive Summary highlights selected information regarding the
certificates offered to you. It does not contain all of the information you need
to consider in making your investment decision. TO UNDERSTAND ALL OF THE TERMS
OF THIS OFFERING AND THE UNDERLYING MORTGAGE LOANS, YOU SHOULD READ THIS ENTIRE
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS CAREFULLY.
CERTIFICATE STRUCTURE
<TABLE>
<CAPTION>
- --------------------- --------------------- ---------------- ------------------- ------------------ ---------------------
APPROXIMATE APPROXIMATE PERCENT
APPROXIMATE CREDIT CERTIFICATE RATINGS OF TOTAL
SUPPORT CLASS BALANCE (FITCH/S&P) CERTIFICATES
- --------------------- --------------------- ---------------- ------------------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
CLASS X
19.75% $689,003,732 CLASS A-1 $113,834,030 AAA/AAA 16.58%
(Approximate
Notional Amount)
- --------------------- ---------------- ------------------- ------------------ ---------------------
19.75% CLASS A-2 $439,000,000 AAA/AAA 63.67%
- --------------------- ---------------- ------------------- ------------------ ---------------------
16.50% CLASS B $22,408,000 AA/AA 3.25%
- --------------------- ---------------- ------------------- ------------------ ---------------------
12.75% CLASS C $25,854,000 A/A 3.75%
- --------------------- ---------------- ------------------- ------------------ ---------------------
11.50% CLASS D $8,619,000 A-/A- 1.25%
- --------------------- ---------------- ------------------- ------------------ ---------------------
9.00% CLASS E $17,236,000 BBB/BBB 2.50%
- --------------------- ---------------- ------------------- ------------------ ---------------------
__________ CLASSES F-M _________ _________ _______
- --------------------- --------------------- ---------------- ------------------- ------------------ ---------------------
</TABLE>
o The percentages indicated under the column "Approximate Credit Support"
with respect to the Class A-1 and Class A-2 Certificates represent the
approximate credit support for the Class A-1 and Class A-2 Certificates in
the aggregate.
o The Class X, Class F, Class G, Class H, Class J, Class K, Class L, and
Class M Certificates are not offered pursuant to this prospectus
supplement.
o The Series 2000-LIFE1 Class R-I, R-II, R-III and R-IV Certificates also
represent ownership interests in the trust. These certificates are not
represented in this table and are not offered pursuant to this prospectus
supplement.
Offered certificates.
-----
Certificates not offered pursuant to this prospectus supplement.
-----
S-6
<PAGE>
CERTIFICATE SUMMARY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INITIAL WEIGHTED
INITIAL PASS-THROUGH AVERAGE PRINCIPAL
APPROXIMATE CERTIFICATE APPROXIMATE RATE AND RATE RATINGS LIFE WINDOW
CREDIT SUPPORT CLASS BALANCE % OF TOTAL DESCRIPTION FITCH/S&P (YRS.) (MONTHS)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19.75% A-1 % (Fixed) 1-103
$113,834,030 16.58% AAA/AAA 5.70
- ---------------------------------------------------------------------------------------------------------------------
19.75% A-2 % (Fixed) 103-116
$439,000,000 63.67% AAA/AAA 9.34
- ---------------------------------------------------------------------------------------------------------------------
16.50% B % (Variable) 116-117
$22,408,000 3.25% AA/AA 9.69
- ---------------------------------------------------------------------------------------------------------------------
12.75% C % (Variable) 117-117
$25,854,000 3.75% A/A 9.72
- ---------------------------------------------------------------------------------------------------------------------
11.50% D % (Variable) 117-117
$8,619,000 1.25% A-/A- 9.72
- ---------------------------------------------------------------------------------------------------------------------
9.00% E % (Variable) 117-118
$17,236,000 2.50% BBB/BBB 9.74
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
With respect to the table above:
o The Class X, Class F, Class G, Class H, Class J, Class K, Class L, and
Class M Certificates are not offered pursuant to this prospectus
supplement.
o The initial certificate balances may vary by up to 5%.
o The pass-through rates for the Class A-1 and Class A-2 Certificates
presented in the table are fixed at their respective per annum rates set
forth above, provided that in each case such pass-through rate for any
distribution date will not exceed the NWAC Rate for such distribution date.
The pass-through rates on the Class B, Class C, Class D and Class E
Certificates set forth on the cover are approximate initial pass-through
rates for those classes. The pass-through rates on the Class B, Class C,
Class D and Class E Certificates will be a per annum rate based on the NWAC
Rate for each distribution date.
o With respect to the column entitled "Principal Window," the principal
window is expressed in months following the settlement date and reflects
the period during which distributions of principal would be received. The
weighted average life and principal window figures presented above are
based on the assumptions that the mortgage loans suffer no losses and that
they are fully paid on their respective stated maturity dates.
o The percentages indicated under the column "Approximate Credit Support"
with respect to the Class A-1 and Class A-2 Certificates represent the
approximate credit support for the Class A-1 and Class A-2 Certificates in
the aggregate.
S-7
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary highlights selected information from this prospectus
supplement. It does not contain all of the information you need to consider in
making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING
OF THE OFFERED CERTIFICATES, YOU SHOULD READ THIS ENTIRE DOCUMENT AND THE
ACCOMPANYING PROSPECTUS CAREFULLY.
WHAT YOU WILL OWN
GENERAL.................. Your certificates (along with the privately offered
certificates) represent beneficial interests in a
trust created by Morgan Stanley Dean Witter Capital I
Inc. on the Closing Date. All payments to you will
come only from the amounts received in connection
with the assets of the trust. The trust's assets will
primarily be 133 mortgage loans secured by liens on
commercial and multifamily properties.
TITLE OF CERTIFICATES.... Commercial Mortgage Pass-Through Certificates, Series
2000-LIFE1
MORTGAGE POOL............ The mortgage pool consists of approximately 133
mortgage loans with an aggregate principal balance of
all mortgage loans as of March 1, 2000, of
approximately $689,464,702, which may vary by up to
5%. For purposes of those mortgage loans that have a
due date on a date other than the first of the month,
we have assumed that those mortgage loans are due on
the first of the month for purposes of determining
their cut-off dates and cut-off date balances. ALL
NUMERICAL INFORMATION IN THIS PROSPECTUS SUPPLEMENT
CONCERNING THE MORTGAGE LOANS IS BASED UPON THEIR
OUTSTANDING PRINCIPAL BALANCES AS OF MARCH 1, 2000,
NOTWITHSTANDING THAT A PORTION OF THE MONTHLY
PAYMENTS ON THE MORTGAGE LOANS THAT WAS PAID IN APRIL
2000 REPRESENTED PRINCIPAL AMORTIZATION. IN THE
AGGREGATE, THE PRINCIPAL AMORTIZATION ON SUCH
MORTGAGE LOANS WAS APPROXIMATELY $461,000 AND THE
AGGREGATE PRINCIPAL BALANCE OF THE MORTGAGE LOANS IS
APPROXIMATELY $689,003,732 AS OF APRIL 1, 2000. THE
CERTIFICATE BALANCE OR NOTIONAL AMOUNT OF EACH CLASS
OF CERTIFICATES IS BASED ON THE AGGREGATE PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AS OF APRIL 1, 2000.
As of March 1, 2000, the balances of the mortgage
loans in the mortgage pool ranged from approximately
$1,148,373 to approximately $18,569,532 and the
mortgage loans had an approximate average balance of
$5,183,945.
RELEVANT PARTIES AND DATES
ISSUER................... Morgan Stanley Dean Witter Capital I Trust
2000-LIFE1.
DEPOSITOR................ Morgan Stanley Dean Witter Capital I Inc.
MASTER SERVICER.......... Wells Fargo Bank, National Association, a national
banking association.
SPECIAL SERVICER......... Lennar Partners, Inc., a Florida corporation.
S-8
<PAGE>
PRIMARY SERVICERS........ Principal Capital Management, LLC, John Hancock Real
Estate Finance, Inc. and Wells Fargo Bank, National
Association.
TRUSTEE.................. LaSalle Bank National Association, a national banking
association.
FISCAL AGENT............. ABN AMRO Bank N.V., a Netherlands banking corporation
and indirect corporate parent of the trustee.
PAYING AGENT............. Norwest Bank Minnesota, National Association, a
national banking association. Norwest Bank Minnesota,
National Association will also act as the certificate
registrar. See "Description of the Certificates--The
Paying Agent" in this prospectus supplement.
OPERATING ADVISER........ The holders of certificates representing more than
50% of the aggregate certificate balance of the most
subordinate class of certificates, outstanding at any
time of determination, or, if the certificate balance
of that class of certificates is less than 25% of the
initial certificate balance of that class, the next
most subordinate class of certificates, may appoint a
representative for the purposes described in this
prospectus supplement. The initial operating adviser
will be First Chicago Capital Corporation.
SELLERS.................. Principal Commercial Funding, LLC, as to 65 mortgage
loans, representing 47.1% of the initial outstanding
pool balance.
John Hancock Real Estate Finance, Inc., as to 22
mortgage loans, representing 22.8% of the initial
outstanding pool balance.
Wells Fargo Bank, National Association, as to 34
mortgage loans, representing 22.4% of the initial
outstanding pool balance.
Morgan Stanley Dean Witter Mortgage Capital Inc., as
to 12 mortgage loans, representing 7.7% of the
initial outstanding pool balance.
UNDERWRITERS............. Morgan Stanley & Co. Incorporated, Goldman, Sachs &
Co. and Norwest Investment Services, Inc.
CUT-OFF DATE............. March 1, 2000 for any mortgage loan that has a due
date on the first day of each month. The cut-off date
for any mortgage loan that has a due date on a date
other than the first day of each month shall be March
5, 2000. For purposes of the information contained in
this prospectus supplement (including the appendices
hereto) we present those loans as if their scheduled
payments due in March 2000 were due on March 1, 2000
not the actual day which such scheduled payments were
due.
SETTLEMENT DATE.......... On or about April _, 2000.
DISTRIBUTION DATE........ The 15th day of each month, or, if such 15th day is
not a business day, the business day immediately
following such 15th day, commencing in May 2000.
RECORD DATE.............. With respect to each distribution date, the close of
business on the last business day of the preceding
calendar month.
S-9
<PAGE>
EXPECTED FINAL
DISTRIBUTION DATE...... ------------------------ ----------------------------
Class A-1 November 15, 2008
------------------------ ----------------------------
Class A-2 December 15, 2009
------------------------ ----------------------------
Class B January 15, 2010
------------------------ ----------------------------
Class C January 15, 2010
------------------------ ----------------------------
Class D January 15, 2010
------------------------ ----------------------------
Class E February 15, 2010
------------------------ ----------------------------
The Expected Final Distribution Date for each class
of certificates is the date on which such class is
expected to be paid in full.
RATED FINAL
DISTRIBUTION DATE....... As to each class of offered certificates, November
15, 2036.
OFFERED CERTIFICATES
GENERAL.................. Morgan Stanley Dean Witter Capital I Inc. is offering
the following six classes of its Series 2000-LIFE1
Commercial Mortgage Pass-Through Certificates:
o Class A-l
o Class A-2
o Class B
o Class C
o Class D
o Class E
The entire series will consist of a total of eighteen
(18) classes, the following twelve (12) of which are
not being offered by this prospectus supplement and
the accompanying prospectus: Class X, Class F, Class
G, Class H, Class J, Class K, Class L, Class M, Class
R-I, Class R-II, Class R-III and Class R-IV.
CERTIFICATE BALANCE...... Your certificates will have the approximate aggregate
initial certificate balance presented in the chart
below and this balance below may vary by up to 5%:
S-10
<PAGE>
------------- ---------------------------------------
Class A-1 $113,834,030 Certificate Balance
------------- ---------------------------------------
Class A-2 $439,000,000 Certificate Balance
------------- ---------------------------------------
Class B $22,408,000 Certificate Balance
------------- ---------------------------------------
Class C $25,854,000 Certificate Balance
------------- ---------------------------------------
Class D $8,619,000 Certificate Balance
------------- ---------------------------------------
Class E $17,236,000 Certificate Balance
------------- ---------------------------------------
PASS-THROUGH RATES....... Your certificates will accrue interest at an annual
rate called a pass-through rate. The following table
lists the pass-through rates for each class of
offered certificates:
------------- ---------------------------------------
Class A-1 % (Fixed)
------------- ---------------------------------------
Class A-2 % (Fixed)
------------- ---------------------------------------
Class B % (Variable)
------------- ---------------------------------------
Class C % (Variable)
------------- ---------------------------------------
Class D % (Variable)
------------- ---------------------------------------
Class E % (Variable)
------------- ---------------------------------------
Interest on your certificates will be calculated on
the basis of a 360-day year consisting of twelve
30-day months, also referred to in this prospectus
supplement as a 30/360 basis.
The weighted average net mortgage rate or NWAC rate
for a particular distribution date is a weighted
average of the interest rates on the mortgage loans
minus a weighted average annual administrative cost
rate, which includes the master servicing fee rate,
any excess servicing fee rate, the primary servicing
fee rate and the trustee fee rate. The relevant
weighting is based upon the respective principal
balances of the mortgage loans as in effect
immediately prior to the relevant distribution date.
For purposes of calculating the NWAC rate, the
mortgage loan interest rates will not reflect any
default interest rate. The mortgage loan interest
rates will also be determined without regard to any
loan term modifications agreed to by the special
servicer or resulting from any borrower's bankruptcy
or insolvency. In addition, for purposes of
calculating the NWAC rate, if a mortgage loan does
not accrue interest on a 30/360 basis, its interest
rate for any month that is not a 30-day month will,
in general, be deemed to be the rate per annum that,
when calculated on a 30/360 basis, will produce the
amount of interest that actually accrues on that loan
in that month.
The pass-through rate applicable to the Class X
Certificates for each distribution date subsequent to
the initial distribution date will, in general, equal
the excess, if any, of (i) the Weighted Average Net
S-11
<PAGE>
Mortgage Rate for such Distribution Date, over (ii)
the weighted average of the pass-through rates
applicable to the Class A-1, Class A-2, Class B,
Class C, Class D, Class E, Class F, Class G, Class H,
Class J, Class K, Class L and Class M Certificates
for such distribution date, the relevant weighting to
be on the basis of the respective aggregate
certificate balances of such Classes of Certificates
immediately prior to such distribution date.
DISTRIBUTIONS
A. AMOUNT AND ORDER
OF DISTRIBUTIONS.. On each distribution date, funds available for
distribution from the mortgage loans, net of
specified trust expenses, including all servicing
fees, trustee fees and related compensation, will be
distributed in the following amounts and priority:
Step l/Class A and Class X: To interest on
Classes A-1, A-2 and X, pro rata, in accordance with
their interest entitlements.
Step 2/Class A: To the extent of amounts
then required to be distributed as principal on the
Class A-1 and, if Class A-1 has been retired, to
Class A-2, until each in turn is reduced to zero. If
the principal amount of each class of certificates
other than Classes A-1 and A-2 has been reduced to
zero as a result of losses on the mortgage loans or
an appraisal reduction, principal will be distributed
to Classes A-1 and A-2, pro rata, rather than
sequentially.
Step 3/Class A: To reimburse Classes A-1 and
A-2 and X, pro rata, for any previously unreimbursed
losses on the mortgage loans allocable to principal
that were previously borne by those classes, together
with interest at the applicable pass-through rate.
Step 4/Class B: To Class B as follows: (a)
to interest on Class B in the amount of its interest
entitlement; (b) to principal on Class B in the
amount of its principal entitlement until its
principal amount is reduced to zero; and (c) to
reimburse Class B for any previously unreimbursed
losses on the mortgage loans allocable to principal
that were previously borne by that class, together
with interest at the applicable pass-through rate.
Step 5/Class C: To Class C in a manner
analogous to the Class B allocations of Step 4.
Step 6/Class D: To Class D in a manner
analogous to the Class B allocations of Step 4.
Step 7/Class E: To Class E in a manner
analogous to the Class B allocations of Step 4.
Step 8/Subordinate Private Certificates: In
the amounts and order of priority described in this
prospectus supplement.
B. INTEREST AND
PRINCIPAL
ENTITLEMENTS...... A description of the interest entitlement payable to
each Class can be found in "Description of the
Offered Certificates--Distributions" in this
prospectus supplement. As described in that section,
there are
S-12
<PAGE>
circumstances relating to the timing of prepayments
in which your interest entitlement for a distribution
date could be less than one full month's interest at
the pass-through rate on your certificate's principal
amount. In addition, the right of the master
servicer, the trustee and the fiscal agent to
reimbursement or payment for non-recoverable advances
will be prior to your right to receive distributions
of principal or interest.
The Class X Certificates will not be entitled to
principal distributions. The amount of principal
required to be distributed on the classes entitled to
principal on a particular distribution date will, in
general, be equal to:
o the principal portion of all scheduled
payments, other than balloon payments,
whether or not received, due during the
related collection period;
o all principal prepayments and the principal
portion of balloon payments received during
the related collection period;
o the principal portion of other collections
on the mortgage loans received during the
related collection period, such as
liquidation proceeds, condemnation proceeds,
insurance proceeds and income on "real
estate owned"; and
o the principal portion of proceeds of
mortgage loan repurchases received during
the related collection period.
As described herein, the amount actually available
for principal distributions on any distribution date
may be less than the amount required to be
distributed on that date.
C. PREPAYMENT
PREMIUMS......... The manner in which any prepayment premiums received
during a particular collection period will be
allocated to the Class X Certificates, on the one
hand, and the classes of certificates entitled to
principal, on the other hand, is described in
"Description of the Offered
Certificates--Distributions" in this prospectus
supplement.
SUBORDINATION
A. GENERAL...... The chart below describes the manner in which the
rights of various classes will be senior to the
rights of other classes. Entitlement to receive
principal and interest on any distribution date is
depicted in descending order. The manner in which
mortgage loan losses (including interest) are
allocated is depicted in ascending order.
S-13
<PAGE>
------------------------------
Class A-l, Class A-2 and
Class X
------------------------------
------------------------------
Class B
------------------------------
------------------------------
Class C
------------------------------
------------------------------
Class D
------------------------------
------------------------------
Class E
------------------------------
------------------------------
Classes F-M
------------------------------
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE AVAILABLE
TO YOU AS A HOLDER OF OFFERED CERTIFICATES.
B. SHORTFALLS IN
AVAILABLE FUNDS.... The following types of shortfalls in available funds
will be allocated in the same manner as mortgage loan
losses:
o shortfalls resulting from compensation which
the special servicer is entitled to receive.
o shortfalls resulting from interest on
advances made by the master servicer, the
trustee or the fiscal agent, to the extent
not covered by default interest and late
payment charges paid by the borrower.
o shortfalls resulting from a reduction of a
mortgage loan's interest rate by a
bankruptcy court or from other
unanticipated, extraordinary or
default-related expenses of the trust.
Shortfalls in mortgage loan interest as a result of
the timing of prepayments (net of certain amounts
required to be used by the master servicer or special
servicer to offset such shortfalls) will be allocated
to each class of certificates, pro rata, in
accordance with their respective interest
entitlements.
INFORMATION ABOUT THE MORTGAGE POOL
CHARACTERISTICS OF THE MORTGAGE POOL
A............... GENERAL All numerical information in this prospectus
supplement concerning the mortgage loans is
approximate. All weighted average information
regarding the mortgage loans reflects the weighting
of the mortgage loans based upon their outstanding
principal balances as of
S-14
<PAGE>
March 1, 2000. With respect to mortgage loans not
having due dates on the first day of each month,
scheduled payments due in March 2000 have been deemed
received on March 1, 2000. Generally, for purposes of
the presentation of mortgage pool information in this
prospectus supplement, multiple mortgaged properties
securing a single mortgage loan have been treated as
multiple cross-collateralized and cross-defaulted
mortgage loans, each secured by one of the related
mortgaged properties and each having a principal
balance in an amount equal to an allocated portion of
the aggregate indebtedness represented by such
obligation. ALL NUMERICAL INFORMATION IN THIS
PROSPECTUS SUPPLEMENT CONCERNING THE MORTGAGE LOANS
IS BASED UPON THEIR OUTSTANDING PRINCIPAL BALANCES AS
OF MARCH 1, 2000, NOTWITHSTANDING THAT A PORTION OF
THE MONTHLY PAYMENTS ON THE MORTGAGE LOANS THAT WAS
PAID IN APRIL 2000 REPRESENTED PRINCIPAL
AMORTIZATION. IN THE AGGREGATE, THE PRINCIPAL
AMORTIZATION ON SUCH MORTGAGE LOANS WAS APPROXIMATELY
$461,000 AND THE AGGREGATE PRINCIPAL BALANCE OF THE
MORTGAGE LOANS IS APPROXIMATELY $689,003,732 AS OF
APRIL 1, 2000. THE CERTIFICATE BALANCE OR NOTIONAL
AMOUNT OF EACH CLASS OF CERTIFICATES IS BASED ON THE
AGGREGATE PRINCIPAL BALANCE OF THE MORTGAGE LOANS AS
OF APRIL 1, 2000.
B. PRINCIPAL BALANCES... The trust's primary assets will be 133 mortgage loans
with an aggregate principal balance of all mortgage
loans as of March 1, 2000 of $689,464,702. It is
possible that the mortgage loan balance will vary by
up to 5%. As of March 1, 2000, the principal balance
of the mortgage loans in the mortgage pool ranged
from approximately $1,148,373 to approximately
$18,569,532 and the mortgage loans had an approximate
average balance of $5,183,945.
C. FEE SIMPLE/LEASEHOLD. 131 mortgage loans, representing 98.4% of the
aggregate principal balance of the mortgage loans,
are secured by a first mortgage lien on a fee simple
estate in an income-producing real property. In three
(3) of those cases, the borrower's interest in the
property consists of a fee interest in one portion
and a ground leasehold interest in another portion of
the property. In each of these cases the fee owner is
a party to the related mortgage and has subordinated
its interest, and therefore such mortgage loan is
disclosed as a fee loan. We consider the borrower's
interest in those properties to be a fee simple
estate for purposes of this prospectus supplement.
1 mortgage loan, representing 0.9% of the aggregate
principal balance of the mortgage loans, is secured
by a first mortgage lien on a leasehold interest in
an income-producing real property.
1 mortgage loan, representing 0.6% of the aggregate
principal balance of the mortgage loans, is secured
by a first mortgage lien on both a fee and a
leasehold interest in an income-producing real
property.
S-15
<PAGE>
D. PROPERTY TYPES....... The following table shows how the mortgage loans are
distributed among different types of properties.
-------------------- --------------------------------- ------------------
Percentage of Aggregate
Principal Balance of Mortgage Number of
Property Type Loans as of the Cut-off Date Mortgage Loans
-------------------- --------------------------------- ------------------
Retail 33.0% 44
-------------------- --------------------------------- ------------------
Office 31.8% 40
-------------------- --------------------------------- ------------------
Industrial 16.9% 20
-------------------- --------------------------------- ------------------
Multifamily 10.3% 17
-------------------- --------------------------------- ------------------
Assisted Living 3.1% 2
-------------------- --------------------------------- ------------------
Hospitality 2.0% 2
-------------------- --------------------------------- ------------------
Self Storage 1.4% 4
-------------------- --------------------------------- ------------------
Manufactured 0.8% 2
Housing
-------------------- --------------------------------- ------------------
Mixed Use 0.8% 2
-------------------- --------------------------------- ------------------
E. PROPERTY LOCATION.... The number of mortgage loans, and the approximate
percentage of the aggregate principal balance of the
mortgage loans represented by the mortgage loans,
that are secured by mortgaged properties located in
the eight states with the highest concentrations of
mortgaged properties, are as described in the table
below:
--------------------------- -------------------------------- -------------
Percentage of Aggregate Number of
Principal Balance of Mortgage Mortgage
State Loans as of the Cut-off Date Loans
--------------------------- -------------------------------- -------------
California 35.3% 45
--------------------------- -------------------------------- -------------
Southern California 21.4% 27
--------------------------- -------------------------------- -------------
Northern California 13.9% 18
--------------------------- -------------------------------- -------------
Georgia 6.4% 6
--------------------------- -------------------------------- -------------
Florida 5.1% 6
--------------------------- -------------------------------- -------------
New York 4.7% 3
--------------------------- -------------------------------- -------------
Ohio 4.6% 8
--------------------------- -------------------------------- -------------
Massachusetts 4.1% 3
--------------------------- -------------------------------- -------------
New Jersey 4.0% 6
--------------------------- -------------------------------- -------------
Illinois 3.9% 7
--------------------------- -------------------------------- -------------
The remaining mortgaged properties are located
throughout 18 other states. None of these states has
a concentration of mortgaged properties that
represents security for more than 3.9% of the
aggregate principal balance of the mortgage loans, as
of March 1, 2000.
S-16
<PAGE>
F. OTHER MORTGAGE
LOAN FEATURES....... As of March 1, 2000, the mortgage loans had the
following characteristics:
o No scheduled payment of principal and
interest on any mortgage loan was thirty
days or more past due, and no mortgage loan
had been thirty days or more delinquent in
the past year.
o Two (2) separate groups of mortgage loans
are, within each group, separate obligations
cross-collateralized with each other, the
largest group of which represents 3.0% of
the aggregate principal balance of the
mortgage loans. See Appendix III attached
hereto.
o One (1) separate group of mortgage loans is,
within that group, a single obligation
secured by multiple mortgaged properties.
Such group represents 2.7% of the aggregate
principal balance of the mortgage loans. See
Appendix II attached hereto.
o Eight (8) groups of mortgage loans were made
to the same borrower or to borrowers that
are affiliated with one another through
partial or complete direct or indirect
common ownership. The three largest of these
groups represent 4.3%, 3.0% and 2.9%,
respectively, of the aggregate principal
balance of the mortgage loans. See Appendix
II attached hereto.
o Certain of the mortgage loans are included
in more than one of the categories described
in the preceding three paragraphs.
o Thirty (30) mortgage loans, representing
23.5% of the aggregate principal balance of
the mortgage loans, are secured by mortgaged
properties that are each 100% leased to a
single tenant.
o The mortgage loans bear interest at fixed
rates.
o No mortgage loan permits negative
amortization or the deferral of accrued
interest.
G. BALLOON LOANS........ As of March 1, 2000, the mortgage loans had
the following characteristics:
o One hundred twenty-seven (127) of the
mortgage loans, representing 97.9% of the
aggregate principal balance of the mortgage
loans as of March 1, 2000, are "balloon
loans." For purposes of this prospectus
supplement, we consider a mortgage loan to
be a "balloon loan" if its principal balance
is not scheduled to be fully or
substantially amortized by the loan's
maturity date.
o The remaining six (6) mortgage loans,
representing 2.1% of the aggregate principal
balance of the mortgage loans as of March 1,
2000 are expected to have principal balances
of less than approximately 6% of their
respective original principal balance as of
their respective stated maturity dates.
H. INTEREST ONLY LOANS.. Five (5) mortgage loans, representing 5.3% of the
aggregate principal balance of the mortgage loans as
of March 1, 2000, each provides for monthly payments
of interest only for a portion of its term and then
provides for the monthly payment of principal and
interest over its remaining term.
S-17
<PAGE>
I. PREPAYMENT/DEFEASANCE
PROVISIONS........... As of March 1, 2000, all of the mortgage loans
restricted voluntary principal prepayments as
follows:
o Ninety-three (93) mortgage loans,
representing 63.8% of the initial
outstanding pool balance, prohibit voluntary
principal prepayments for a period ending on
a date determined by the related mortgage
note, which period is referred in this
prospectus supplement as a lock-out period,
but permit the related borrower, after an
initial period of at least two years
following the date of issuance of the
certificates, to defease the loan by
pledging direct, non-callable United States
Treasury obligations and obtaining the
release of the mortgaged property from the
lien of the mortgage.
o Thirty-two (32) mortgage loans, representing
31.6% of the initial outstanding pool
balance, prohibit voluntary principal
prepayments during a lock-out period and
following the lock-out period provide for
prepayment premiums calculated on the basis
of the greater of a yield maintenance
formula and 1% of the amount prepaid. See
Appendix II attached hereto for specific
yield maintenance provisions.
o Eight (8) mortgage loans, representing 4.5%
of the initial outstanding pool balance,
prohibit voluntary principal prepayments
during a lock-out period. Following the
lock-out period, these loans provide for
prepayment premiums calculated on the basis
of a yield maintenance formula and 1% of the
amount prepaid, but also permit the related
borrower, after an initial period of at
least two years following the date of the
issuance of the certificates, to defease the
loan by pledging direct, non-callable United
States Treasury obligations and obtaining
the release of the mortgage property from
the lien of the mortgage.
o Despite the above, the mortgage loans
generally provide for a maximum period
commencing one to seven payment dates prior
to and including the maturity date during
which the related borrower may prepay the
mortgage loan without premium or defeasance
requirements.
J. MORTGAGE LOAN RANGES
AND WEIGHTED AVERAGES. As of March 1, 2000, the mortgage loans had the
following additional characteristics:
i. MORTGAGE INTEREST
RATES Mortgage interest rates ranging from 6.760% per annum
to 8.930% per annum, and a weighted average mortgage
interest rate of 7.866% per annum;
ii. REMAINING TERMS Remaining terms to scheduled maturity ranging from
52 months to 236 months, and a weighted average
remaining term to scheduled maturity of 116 months;
iii. REMAINING
AMORTIZATION
TERMS Remaining amortization terms ranging from 112 months
to 404 months, and a weighted average remaining
amortization term of 335 months;
S-18
<PAGE>
iv. LOAN-TO-VALUE
RATIOS Loan-to-value ratios ranging from 33.7% to 79.9%, and
a weighted average loan-to-value ratio, calculated as
described in this prospectus supplement, of 65.4%;
and
v. DEBT SERVICE
COVERAGE RATIOS Debt service coverage ratios, determined according
to the methodology presented in this prospectus
supplement, ranging from 1.18x to 2.91x and a
weighted average debt service coverage ratio,
calculated as described in this prospectus
supplement, of 1.50x.
ADVANCES OF PRINCIPAL
AND INTEREST
A. GENERAL............. The master servicer is required to advance delinquent
monthly mortgage loan payments. The master servicer
will not be required to advance any additional
interest accrued as a --- result of the imposition of
any default rate. The master servicer also is not
required --- to advance prepayment or yield
maintenance premiums, or balloon payments. With
respect to any balloon payment, the master servicer
will instead be required to advance an amount equal
to the scheduled payment that would have been due if
the related balloon payment had not become due. If
this type of advance is made, the master servicer
will defer rather than advance its master servicing
fee, the excess servicing fee and the primary
servicing fee, but will advance the trustee fee.
If the master servicer fails to make a required
advance, the trustee will be required to make the
advance, and if the trustee fails to make a required
advance, the fiscal agent will be required to make
the advance, each subject to the same limitations,
and with the same rights of the master servicer.
All advances made by the master servicer, the trustee
or the fiscal agent will accrue interest at a rate
equal to the "prime rate" as reported in The Wall
Street Journal.
Neither the master servicer, the trustee nor the
fiscal agent will be obligated to make any advance if
it reasonably determines that such advance would not
be recoverable in accordance with the servicing
standard and the trustee and the fiscal agent may
rely on any such determination made by the master
servicer.
B. ADVANCES DURING AN
APPRAISAL REDUCTION
EVENT................ The occurrence of certain adverse events affecting a
mortgage loan will require the special servicer to
obtain a new appraisal or other valuation of the
related mortgaged property. In general, if the
principal amount of the loan plus all other amounts
due thereunder and interest on advances made with
respect thereto exceeds 90% of the value of the
mortgaged property determined by an appraisal or
other valuation, an appraisal reduction may be
created in the amount of the excess as described in
this prospectus supplement. If there exists an
appraisal reduction for any mortgage loan, the amount
required to be advanced on that mortgage loan will be
proportionately reduced to the extent of that
appraisal reduction. This will reduce the funds
available to pay interest and principal on the most
subordinate class or classes of certificates then
outstanding.
S-19
<PAGE>
ADDITIONAL ASPECTS OF CERTIFICATES
RATINGS.................. The certificates offered to you will not be issued
unless each of the classes of certificates being
offered by this prospectus supplement receives the
following ratings from Fitch IBCA, Inc. and Standard
& Poor's Ratings Services.
---------------------------- -----------------------
Ratings
Class Fitch/S&P
---------------------------- -----------------------
Classes A-1 and A-2 AAA/AAA
---------------------------- -----------------------
Class B AA/AA
---------------------------- -----------------------
Class C A/A
---------------------------- -----------------------
Class D A-/A-
---------------------------- -----------------------
Class E BBB/BBB
---------------------------- -----------------------
A rating agency may lower or withdraw a security
rating at any time.
See "Ratings" in this prospectus supplement and in
the prospectus for a discussion of the basis upon
which ratings are given, the limitations of and
restrictions on the ratings, and the conclusions that
should not be drawn from a rating.
OPTIONAL TERMINATION..... On any distribution date on which the aggregate
certificate balance of all classes of certificates is
less than or equal to 1% of the aggregate principal
balance of the mortgage loans as of March 1, 2000,
Morgan Stanley Dean Witter Capital I Inc., the master
servicer, the special servicer and any holder of a
majority interest in the Class R-I Certificates, each
in turn, will have the option to purchase all of the
remaining mortgage loans, and all property acquired
through exercise of remedies in respect of any
mortgage loan, at the price specified in this
prospectus supplement. Exercise of this option would
terminate the trust and retire the then outstanding
certificates.
DENOMINATIONS............ The Class A-1 and Class A-2 Certificates will be
offered in minimum denominations of $25,000. The
remaining offered certificates will be offered in
minimum denominations of $100,000. Investments in
excess of the minimum denominations may be made in
multiples of $1.
REGISTRATION, CLEARANCE
AND SETTLEMENT........ Your certificates will be registered in the name of
CEDE & Co., as nominee of The Depository Trust
Company, and will not be registered in your name. You
will not receive a definitive certificate
representing your ownership interest, except in very
limited circumstances described in this prospectus
supplement. As a result, you will hold your
certificates only in book-entry form and will not be
a certificateholder of record. You will receive
distributions on your certificates and reports
relating to distributions only through The Depository
Trust Company, Clearstream Banking, societe anonyme
or the Euroclear System or through participants in
The Depository Trust Company, Clearstream Banking or
Euroclear.
S-20
<PAGE>
You may hold your certificates through:
o The Depository Trust Company in the United
States; or
o Clearstream Banking or Euroclear in Europe.
Transfers within The Depository Trust Company,
Clearstream Banking or Euroclear will be made in
accordance with the usual rules and operating
procedures of those systems. Cross-market transfers
between persons holding directly through The
Depository Trust Company, Clearstream Banking or
Euroclear will be effected in The Depository Trust
Company through the relevant depositories of
Clearstream Banking or Euroclear.
Morgan Stanley Dean Witter Capital I Inc. may elect
to terminate the book-entry system through The
Depository Trust Company with respect to all or any
portion of any class of the certificates offered to
you.
Morgan Stanley Dean Witter Capital I Inc. expects
that the certificates offered to you will be
delivered in book-entry form through the facilities
of The Depository Trust Company, Clearstream Banking
or Euroclear on or about April __, 2000.
TAX STATUS............. An election will be made to treat designated portions
of the trust as four separate "real estate mortgage
investment conduits" --REMIC I, REMIC II, REMIC III
and REMIC IV--for federal income tax purposes. In the
opinion of counsel, the trust (and each such
designated portion of the trust) will qualify for
this treatment and each class of offered certificates
will constitute "regular interests" in REMIC IV.
Pertinent federal income tax consequences of an
investment in the offered certificates include:
o The regular interests will be treated as
newly originated debt instruments for
federal income tax purposes.
o Beneficial owners of offered certificates
will be required to report income on the
certificates in accordance with the accrual
method of accounting.
o Certain classes of Certificates offered
hereby may be issued with original issue
discount.
CONSIDERATIONS RELATED
TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY
ACT OF 1974............ Subject to the satisfaction of important conditions
described under ERISA Considerations in this
prospectus supplement and in the accompanying
prospectus, the Class A-1 and Class A-2 Certificates
may be purchased by persons investing assets of
employee benefit plans or individual retirement
accounts.
THE CLASS B, CLASS C, CLASS D AND CLASS E AND
CERTIFICATES MAY NOT BE PURCHASED BY, OR TRANSFERRED
TO, AN EMPLOYEE BENEFIT PLAN OR INDIVIDUAL RETIREMENT
ACCOUNT OR ANY PERSON INVESTING THE ASSETS OF AN
EMPLOYEE BENEFIT PLAN OR INDIVIDUAL RETIREMENT
ACCOUNT, UNLESS SUCH TRANSACTION IS COVERED BY A
PROHIBITED TRANSACTION CLASS EXEMPTION ISSUED BY THE
U.S. DEPARTMENT OF LABOR (PTC 95-60, SECTIONS I AND
II).
S-21
<PAGE>
LEGAL INVESTMENTS...... The offered certificates will not constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as
amended.
For purposes of any applicable legal investment
restrictions, regulatory capital requirements or
other similar purposes, neither the prospectus nor
this prospectus supplement makes any representation
to you regarding the proper characterization of the
certificates offered by this prospectus supplement.
Regulated entities should consult with their own
advisors regarding these matters.
S-22
<PAGE>
RISK FACTORS
You should carefully consider the risks involved in owning a
certificate before purchasing a certificate. Among other risks, the timing of
payments and payments you receive on your certificates will depend on payments
received on and other recoveries with respect to the mortgage loans. Therefore,
you should carefully consider both the risk factors relating to the mortgage
loans and the mortgaged properties and the other risks relating to the
certificates.
The risks and uncertainties described in this section, together with
those risks described in the prospectus under Risk Factors, summarize the
material risks relating to your certificates. Your investment could be
materially and adversely affected by the actual and potential circumstances that
we describe in such sections.
YOUR INVESTMENT IS NOT INSURED
OR GUARANTEED AND YOUR SOURCE
FOR REPAYMENTS IS LIMITED TO
PAYMENTS UNDER THE MORTGAGE LOANS Payments under the mortgage loans are not
insured or guaranteed by any governmental
entity or mortgage insurer. Accordingly, the
sources for repayment of your certificates
are limited to amounts due with respect to
the mortgage loans.
You should consider all of the mortgage
loans to be nonrecourse loans. If a default
occurs, the lender's remedies generally are
limited to foreclosing against the specific
properties and other assets that have been
pledged to secure the loan. Such remedies
may be insufficient to provide a full return
on your investment. Payment of amounts due
under the mortgage loan prior to maturity is
dependent primarily on the sufficiency of
the net operating income of the mortgaged
property. Payment of those mortgage loans
that are balloon loans at maturity is
primarily dependent upon the borrower's
ability to sell or refinance the property
for an amount sufficient to repay the loan.
In limited circumstances, Principal
Commercial Funding, LLC, John Hancock Real
Estate Finance, Inc., Wells Fargo Bank,
National Association and Morgan Stanley
Mortgage Capital Inc., each as mortgage loan
sellers, may be obligated to repurchase or
replace a mortgage loan that it sold to
Morgan Stanley Dean Witter Capital I Inc. if
its representations and warranties
concerning such mortgage loan are breached
or if there are material defects in the
documentation for the mortgage loan.
However, there can be no assurance that any
of such entities will be in a financial
position to effect such repurchase or
substitution. The representations and
warranties address the characteristics of
the mortgage loans and mortgaged properties
as of the date of issuance of the
certificates. They do not relieve you or the
trust of the risk of defaults and losses on
the mortgage loans.
THE REPAYMENT OF A COMMERCIAL
MORTGAGE LOAN IS DEPENDENT ON
THE CASH FLOW PRODUCED
BY THE PROPERTY WHICH
CAN BE VOLATILE AND
INSUFFICIENT TO ALLOW TIMELY
PAYMENT ON YOUR CERTIFICATES The mortgage loans are secured by various
types of income-producing commercial
properties. Commercial lending is generally
thought to expose a lender to greater risk
than one-to-four family residential lending
because, among other things, it typically
involves larger loans.
S-23
<PAGE>
All of the mortgage loans were originated
within twenty-four (24) months prior to the
cut-off date. Consequently, the mortgage
loans do not have a long-standing payment
history.
The repayment of a commercial mortgage loan
is typically dependent upon the ability of
the applicable property to produce cash
flow. Even the liquidation value of a
commercial property is determined, in
substantial part, by the amount of the
property's cash flow (or its potential to
generate cash flow). However, net operating
income and cash flow can be volatile and may
be insufficient to cover debt service on the
loan at any given time.
The net operating income, cash flow and
property value of the mortgaged properties
may be adversely affected by any one or more
of the following factors:
o the age, design and construction
quality of the property;
o perceptions regarding the safety,
convenience and attractiveness of
the property;
o the proximity and attractiveness of
competing properties;
o the adequacy of the property's
management and maintenance;
o increases in operating expenses at
the property and in relation to
competing properties;
o an increase in the capital
expenditures needed to maintain the
property or make improvements;
o the dependence upon a single
tenant, or a concentration of
tenants in a particular business or
industry;
o a decline in the financial
condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases
are renewed or entered into with
new tenants.
Other factors are more general in nature,
such as:
o national, regional or local
economic conditions (including
plant closings, military base
closings, industry slowdowns and
unemployment rates);
o local real estate conditions (such
as an oversupply of competing
properties, rental space or
multifamily housing);
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and
preferences; and
o retroactive changes in building
codes.
The volatility of net operating income will
be influenced by many of the foregoing
factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
S-24
<PAGE>
o the level of tenant defaults;
o the rate at which new rentals
occur; and
o the property's operating leverage
(which is the percentage of total
property expenses in relation to
revenue), the ratio of fixed
operating expenses to those that
vary with revenues, and the level
of capital expenditures required to
maintain the property and to retain
or replace tenants.
A decline in the real estate market or in
the financial condition of a major tenant
will tend to have a more immediate effect on
the net operating income of properties with
short-term revenue sources and may lead to
higher rates of delinquency or defaults
under mortgage loans secured by such
properties.
CONVERTING COMMERCIAL
PROPERTIES TO ALTERNATIVE USES
MAY REQUIRE SIGNIFICANT
EXPENSES WHICH COULD REDUCE
PAYMENTS ON YOUR CERTIFICATES Some of the mortgaged properties may not be
readily convertible to alternative uses if
those properties were to become unprofitable
for any reason. This is because:
o converting commercial properties to
alternate uses or converting
single-tenant commercial properties
to multi-tenant properties
generally requires substantial
capital expenditures; and
o zoning or other restrictions also
may prevent alternative uses.
The liquidation value of a mortgaged
property not readily convertible to an
alternative use may be substantially less
than would be the case if the mortgaged
property were readily adaptable to other
uses. If this type of mortgage property were
liquidated and a lower liquidation value
were obtained, less funds would be available
for distributions on your certificates.
PROPERTY VALUE MAY BE ADVERSELY
AFFECTED EVEN WHEN THERE IS NO
CHANGE IN CURRENT OPERATING
INCOME Various factors may adversely affect the
value of the mortgaged properties without
affecting the properties' current net
operating income. These factors include,
among others:
o changes in governmental
regulations, fiscal policy, zoning
or tax laws;
o potential environmental legislation
or liabilities or other legal
liabilities;
o the availability of refinancing;
and
o changes in interest rate levels.
S-25
<PAGE>
TENANT CONCENTRATION INCREASES
THE RISK THAT CASH FLOW WILL BE
INTERRUPTED WHICH COULD
REDUCE PAYMENTS ON
YOUR CERTIFICATES A deterioration in the financial condition
of a tenant can be particularly significant
if a mortgaged property is leased to a
single tenant or a small number of tenants,
because rent interruptions by a tenant may
cause the borrower to default on its
obligations to the lender. Thirty (30)
mortgage loans, representing 23.5% of the
aggregate principal balance of all mortgage
loans as of March 1, 2000, are secured by
mortgaged properties leased to single
tenants and in some cases, the tenant is
related to the borrower. Mortgaged
properties leased to a single tenant or a
small number of tenants also are more
susceptible to interruptions of cash flow if
a tenant fails to renew its lease or
defaults under its lease. This is so
because:
o the financial effect of the absence
of rental income may be severe;
o more time may be required to
re-lease the space; and
o substantial capital costs may be
incurred to make the space
appropriate for replacement
tenants.
Another factor that you should consider is
that retail, industrial and office
properties also may be adversely affected if
there is a concentration of tenants or of
tenants in the same or similar business or
industry.
LEASING MORTGAGED PROPERTIES
TO MULTIPLE TENANTS MAY RESULT
IN HIGHER RE-LEASING COSTS
WHICH COULD REDUCE PAYMENTS
ON YOUR CERTIFICATES If a mortgaged property has multiple
tenants, re-leasing costs may be more
frequent than in the case of mortgaged
properties with fewer tenants, thereby
reducing the cash flow available for debt
service payments. These costs may cause a
borrower to default in its obligations to a
lender which could reduce cash flow
available for debt service payments.
Multi-tenanted mortgaged properties also may
experience higher continuing vacancy rates
and greater volatility in rental income and
expenses.
THE CONCENTRATION OF LOANS
WITH THE SAME OR RELATED
BORROWERS INCREASES THE
POSSIBILITY OF LOSS ON THE LOANS
WHICH COULD REDUCE PAYMENTS
ON YOUR CERTIFICATES The effect of mortgage pool loan losses
will be more severe:
o if the pool is comprised of a small
number of loans, each with a
relatively large principal amount;
or
o if the losses relate to loans that
account for a disproportionately
large percentage of the pool's
aggregate principal balance of all
mortgage loans.
Eight (8) groups of mortgage loans,
including cross-collateralized mortgage loan
groups and single obligation multiple
mortgaged property groups, are made to the
same borrower or borrowers related through
common ownership and where, in general, the
related mortgaged properties are commonly
managed. The loans associated
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with these eight borrower concentrations
constitute 18.5% of the outstanding
aggregate principal balance of all mortgage
loans, as of March 1, 2000. The three
largest borrower concentrations represent
4.3%, 3.0% and 2.9% respectively of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000.
A CONCENTRATION OF LOANS WITH
THE SAME PROPERTY TYPES
INCREASES THE POSSIBILITY OF LOSS
ON THE LOANS WHICH COULD
REDUCE PAYMENTS ON YOUR
CERTIFICATES A concentration of mortgaged property types
also can pose increased risks. The following
property types represent the indicated
percentage of the outstanding aggregate
principal balance of all mortgage loans as
of March 1, 2000:
o retail properties represent 33.0%;
o office properties represent 31.8%;
o industrial properties represent
16.9%;
o multifamily properties represent
10.3%;
o senior housing properties represent
3.1%;
o hospitality properties represent
2.0%;
o self storage properties represent
1.4%;
o manufactured housing properties
represent 0.8%; and
o mixed use properties represent
0.8%;
A CONCENTRATION OF MORTGAGED
PROPERTIES IN A LIMITED NUMBER
OF LOCATIONS MAY ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Concentrations of mortgaged properties in
geographic areas may increase the risk that
adverse economic or other developments or a
natural disaster affecting a particular
region of the country could increase the
frequency and severity of losses on mortgage
loans secured by the properties. In recent
periods, several regions of the United
States have experienced significant real
estate downturns. Regional economic declines
or adverse conditions in regional real
estate markets could adversely affect the
income from, and market value of, the
mortgaged properties located in the region.
Other regional factors--e.g., earthquakes,
floods or hurricanes or changes in
governmental rules or fiscal policies--also
may adversely affect those mortgaged
properties.
The mortgaged properties are located
throughout 26 states. In particular,
investors should note that approximately
35.3% of the mortgaged properties, based on
the outstanding aggregate principal balance
of all mortgage loans as of March 1, 2000,
are located in California. Mortgaged
properties located in California may be more
susceptible to some types of special hazards
that may not be covered by insurance (such
as earthquakes) than properties located in
other parts of the country. The mortgage
loans generally do not require any borrowers
to maintain earthquake insurance.
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<PAGE>
In addition, 6.4%, 5.1%, 4.7%, 4.6%, 4.1%,
4.0% and 3.9% of the mortgaged properties,
based on the outstanding aggregate principal
balance of all mortgage loans as of March 1,
2000, are located in Georgia, Florida, New
York, Ohio, Massachusetts, New Jersey and
Illinois, respectively, and concentrations
of mortgaged properties, in each case,
representing less than 3.9% of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000, also
exist in several other states.
A LARGE CONCENTRATION OF RETAIL
PROPERTIES IN THE MORTGAGE POOL
WILL SUBJECT YOUR INVESTMENT TO
THE SPECIAL RISKS OF RETAIL
PROPERTIES Retail properties secure forty-four (44) of
the mortgage loans, representing 33.0% of
the outstanding aggregate principal balance
of all mortgage loans, as of March 1, 2000.
The quality and success of a retail
property's tenants significantly affect the
property's value.
The presence or absence of an anchor store
in a shopping center also can be important
because anchor stores play a key role in
generating customer traffic and making a
center desirable for other tenants.
Consequently, the economic performance of an
anchored retail property will be adversely
affected by:
o an anchor store's failure to renew
its lease;
o termination of an anchor store's
lease;
o the bankruptcy or economic decline
of an anchor store or self-owned
anchor or the parent company
thereof; or
o the cessation of the business of an
anchor store at the shopping
center, even if, as a tenant, it
continues to pay rent.
There are retail properties with anchor
stores that are permitted to cease operating
at any time if certain other stores are not
operated at those locations. Furthermore,
there may be non-anchor tenants that are
permitted to terminate their leases if
certain anchor stores are either not
operated or fail to meet certain business
objectives.
Retail properties also face competition from
sources outside a given real estate market.
For example, all of the following compete
with more traditional retail properties for
consumer dollars: factory outlet centers,
discount shopping centers and clubs,
catalogue retailers, home shopping networks,
internet web sites and telemarketing.
Continued growth of these alternative retail
outlets, which often have lower operating
costs, could adversely affect the rents
collectible at the retail properties
included in the mortgage pool, as well as
the income from, and market value of, the
mortgaged properties. Moreover, additional
competing retail properties may be built in
the areas where the retail properties are
located, which could adversely affect the
rents collectible at the retail properties
included in the mortgage pool, as well as
the income from, and market value of, the
mortgaged properties.
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A LARGE CONCENTRATION OF OFFICE
PROPERTIES IN THE MORTGAGE POOL
WILL SUBJECT YOUR INVESTMENT TO
THE SPECIAL RISK OF OFFICE
PROPERTIES Office properties secure forty (40) of the
mortgage loans, representing 31.8% of the
outstanding aggregate principal balance of
all mortgage loans, as of March 1, 2000.
A large number of factors affect the value
of these office properties, including:
o the quality of an office building's
tenants;
o the diversity of an office
building's tenants (or reliance on
a single or dominant tenant);
o the physical attributes of the
building in relation to competing
buildings, e.g., age, condition,
design, location, access to
transportation and ability to offer
certain amenities, such as
sophisticated building systems;
o the desirability of the area as a
business location; and
o the strength and nature of the
local economy (including labor
costs and quality, tax environment
and quality of life for employees).
Moreover, the cost of refitting office space
for a new tenant is often higher than the
cost of refitting other types of property.
A LARGE CONCENTRATION OF
INDUSTRIAL PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF INDUSTRIAL PROPERTIES Industrial properties secure twenty (20) of
the mortgage loans, representing 16.9% of
the outstanding aggregate principal balance
of all mortgage loans, as of March 1, 2000.
Various factors may adversely affect the
economic performance of these industrial
properties, which could adversely affect
payments on your certificates, including:
o reduced demand for industrial space
because of a decline in a
particular industry segment;
o a property becoming functionally
obsolete;
o insufficient supply of labor to
meet demand;
o changes in access to the property,
energy prices, strikes, relocation
of highways or the construction of
additional highways;
o a change in the proximity of supply
sources; and
o environmental hazards.
A LARGE CONCENTRATION OF
MULTIFAMILY PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF MULTIFAMILY PROPERTIES Multifamily properties secure seventeen (17)
of the mortgage loans, representing 10.3% of
the outstanding aggregate principal balance
of all mortgage loans, as of March 1, 2000.
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<PAGE>
A large number of factors may affect the
value and successful operation of these
multifamily properties, including:
o the physical attributes of the
apartment building, such as its
age, appearance and construction
quality;
o the location of the property;
o the ability of management to
provide adequate maintenance and
insurance;
o the types of services and amenities
provided at the property;
o the property's reputation;
o the level of mortgage interest
rates, which may encourage tenants
to purchase rather than rent
housing;
o the presence of competing
properties;
o local or national economic
conditions;
o state and local regulations; and
o government assistance/rent subsidy
programs.
A LARGE CONCENTRATION OF
ASSISTED LIVING PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF ASSISTED LIVING FACILITIES Assisted living facilities secure two (2) of
the mortgage loans representing 3.1% of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000.
Providers of long-term nursing care and
other medical services are highly regulated
and are subject to licensing requirements,
facility inspections, rate setting and
reimbursement policies. They are also
subject to laws relating to the adequacy of
medical care, distribution of
pharmaceuticals, equipment, personnel
operating policies and maintenance of and
additions to facilities and services. These
factors can increase the cost of operations,
limit growth and in extreme cases, require
or result in suspension or cessation of
operations.
In the event that the trustee or another
party forecloses on an assisted living
facility, it would not generally be entitled
to reimbursements by Social Security,
Medicare and Medicaid for services rendered
prior to such foreclosure, if any. In
addition, such party may have to apply in
its own right for its necessary licenses and
regulatory approvals. There can be no
assurance that a new license could be
obtained or that new approvals would be
granted. This uncertainty may adversely
affect the liquidation value of the
facility.
Other factors that may adversely effect the
value and successful operation of a senior
housing facility include:
o increasing governmental regulation
and supervision (as to those
facilities not already subject to
it);
o a decline in the financial health,
skills or reputation of the
operator;
o increased operational expenses; and
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<PAGE>
o competing facilities owned by
non-profit organizations or
government agencies supported by
endowments, charitable
contributions, tax revenues and
other sources.
A LARGE CONCENTRATION OF
HOSPITALITY PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF HOSPITALITY PROPERTIES Hospitality properties secure two (2) of the
mortgage loans, representing 2.0% of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000.
Various factors may adversely affect the
economic performance of a hospitality
property, including:
o adverse economic and social
conditions, either local, regional,
national or international which may
limit the amount that can be
charged for a room and reduce
occupancy levels;
o the construction of competing
hotels or resorts;
o continuing expenditures for
modernizing, refurbishing, and
maintaining existing facilities
prior to the expiration of their
anticipated useful lives;
o a deterioration in the financial
strength or managerial capabilities
of the owner and/or operator of a
hotel; and
o changes in travel patterns,
increases in energy prices,
strikes, relocation of highways or
the construction of additional
highways.
Because hotel rooms generally are rented for
short periods of time, the financial
performance of hotels tends to be affected
by adverse economic conditions and
competition more quickly than are other
types of commercial properties.
Moreover, the hotel and lodging industry is
generally seasonal in nature. This
seasonality can be expected to cause
periodic fluctuations in a hotel property's
revenues, occupancy levels, room rates and
operating expenses.
A LARGE CONCENTRATION OF SELF-
STORAGE FACILITIES IN THE
MORTGAGE POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF SELF STORAGE FACILITIES Self-storage facilities secure four (4) of
the mortgage loans, representing 1.4% of the
outstanding aggregate principal balance of
all mortgage loans, as of March 1, 2000.
Various factors may adversely affect the
value and successful operation of a
self-storage facility:
o competition, because both
acquisition and development costs
and break-even occupancy are
relatively low;
o conversion of a self-storage
facility to an alternative use
generally requires substantial
capital expenditures;
o security concerns; and
o user privacy and ease of access to
individual storage space may
increase environmental risks
(although lease agreements
generally prohibit users from
storing hazardous substances in the
units).
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<PAGE>
The environmental assessments discussed
herein did not include an inspection of the
contents of the self-storage units of the
self-storage properties. Accordingly, there
is no assurance that all of the units
included in the self-storage properties are
free from hazardous substances or will
remain so in the future.
A LARGE CONCENTRATION OF
MANUFACTURED HOUSING
COMMUNITIES IN THE MORTGAGE
POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL RISKS
OF MANUFACTURED HOUSING
COMMUNITIES Manufactured housing communities secure two
(2) of the mortgage loans representing 0.8%
of the initial outstanding aggregate
principal balance of all mortgage loans, as
of March 1, 2000. Loans secured by liens on
properties of these types pose risks not
associated with loans secured by liens on
other types of income-producing real estate,
including:
o the number of competing
manufactured housing communities
and other residential developments
(such as apartment buildings and
single-family homes) in the local
market;
o the age, appearance and reputation
of the community;
o the ability of management to
provide adequate maintenance and
insurance; and
o the types of services and amenities
it provides.
Manufactured housing communities are
"special purpose" properties that could not
be readily converted to general residential,
retail or office use.
Some properties within manufactured housing
communities may lease sites to non-permanent
recreational vehicles, which often have very
seasonal occupancy.
TENANT BANKRUPTCY MAY
ADVERSELY AFFECT THE INCOME
PRODUCED BY THE PROPERTY AND
MAY ADVERSELY AFFECT THE
PAYMENTS ON YOUR CERTIFICATES The bankruptcy or insolvency of a major
tenant, or a number of smaller tenants, in
retail, industrial and office properties may
adversely affect the income produced by the
property. Under the federal bankruptcy code,
a tenant/debtor has the option of affirming
or rejecting any unexpired lease. If the
tenant rejects the lease, the landlord's
claim for breach of the lease would be a
general unsecured claim against the tenant,
absent collateral securing the claim. The
claim would be limited to the unpaid rent
under the lease for the periods prior to the
bankruptcy petition, or earlier surrender of
the leased premises, plus the rent under the
lease for the greater of one year, or 15%,
not to exceed three years, of the remaining
term of such lease and the actual amount of
the recovery could be less than the amount
of the claim.
ENVIRONMENTAL LAWS
ENTAIL RISKS THAT MAY ADVERSELY
PAYMENTS ON YOUR CERTIFICATES Various environmental laws may make a
current or previous owner or operator of
real property liable for the costs of
removal or remediation
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<PAGE>
of hazardous or toxic substances on, under
or adjacent to such property. Those laws
often impose liability whether or not the
owner or operator knew of, or was
responsible for, the presence of 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
asbestos-containing materials. In some
states, contamination of a property may give
rise to a lien on the property to assure
payment of the costs of cleanup. In some
states, this lien has priority over the lien
of a pre-existing mortgage. Additionally,
third parties may seek recovery from owners
or operators of real properties for cleanup
costs, property damage or personal injury
associated with releases of, or other
exposure to hazardous substances related to
the properties.
The owner's liability for any required
remediation generally is not limited by law
and could, accordingly, exceed the value of
the property and/or the aggregate assets of
the owner. The presence of hazardous or
toxic substances also may adversely affect
the owner's ability to refinance the
property or to sell the property to a third
party. The presence of, or strong potential
for contamination by, hazardous substances
consequently can have a materially adverse
effect on the value of the property and a
borrower's ability to repay its mortgage
loan.
In addition, under certain circumstances, a
lender (such as the trust) could be liable
for the costs of responding to an
environmental hazard.
ENVIRONMENTAL RISKS RELATING TO
SPECIFIC MORTGAGED PROPERTIES
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES All of the mortgaged properties securing the
mortgage loans have been subject to
environmental site assessments, or in some
cases an update of a previous assessment, in
connection with the origination of the
loans. Environmental assessments on
properties securing twenty-four (24) of the
mortgage loans (representing 18.7% of the
initial outstanding pool balance) are more
than a year old as of March 1, 2000. In all
cases, the environmental site assessment was
a Phase I environmental assessment. These
reports generally did not disclose the
presence or risk of environmental
contamination that is considered material
and adverse to the interests of the holders
of the certificates; however, in certain
cases, such assessments did reveal
conditions that resulted in requirements
that the related borrowers establish
operations and maintenance plans, monitor
the mortgaged property, abate or remediate
the condition, and/or provide additional
security such as letters of credit or
reserves. Morgan Stanley Dean Witter Capital
I Inc. cannot assure you, however, that the
environmental assessments revealed all
existing or potential environmental risks or
that all adverse environmental conditions
have been completely abated or remediated.
Moreover, Morgan Stanley Dean Witter Capital
I Inc. cannot assure you that: (i) future
laws, ordinances or regulations will not
impose any material environmental liability;
or (ii) the current environmental condition
of the mortgaged properties will not be
adversely affected by tenants or by the
condition of land or operations in the
vicinity of the mortgaged properties (such
as underground storage tanks).
Portions of some of the mortgaged properties
securing the mortgage loans include tenants
which operate as on-site dry-cleaners and
gasoline
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<PAGE>
stations. Both types of operations involve
the use and storage of hazardous substances,
leading to an increased risk of liability to
the tenant, the landowner and, under certain
circumstances, a lender (such as the trust)
under environmental laws. Dry-cleaners and
gasoline station operators may be required
to obtain various environmental permits and
licenses in connection with their operations
and activities and comply with various
environmental laws, including those
governing the use and storage of hazardous
substances. These operations incur ongoing
costs to comply with environmental laws
governing, among other things, containment
systems and underground storage tank
systems. In addition, any liability to
borrowers under environmental laws,
including in connection with releases into
the environment of gasoline, dry-cleaning
solvents or other hazardous substances from
underground storage tank systems or
otherwise, could adversely impact the
related borrower's ability to repay the
related mortgage loan.
Before the special servicer acquires title
to a mortgaged property on behalf of the
trust or assumes operation of the property,
it must obtain an environmental assessment
of the property, or rely on a recent
environmental assessment. This requirement
will decrease the likelihood that the trust
will become liable under any environmental
law. However, this requirement may
effectively preclude foreclosure until a
satisfactory environmental assessment is
obtained, or until any required remedial
action is thereafter taken. There is
accordingly some risk that the mortgaged
property will decline in value while this
assessment is being obtained. Moreover,
Morgan Stanley Dean Witter Capital I Inc.
cannot assure you that this requirement will
effectively insulate the trust from
potential liability under environmental
laws. Any such potential liability could
reduce or delay payments to
certificateholders.
IF A BORROWER IS UNABLE TO
REPAY ITS LOAN ON ITS MATURITY
DATE, YOU MAY EXPERIENCE A
LOSS One hundred twenty-seven (127) of the
mortgage loans, representing 97.9% of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000, are
balloon loans. For purposes of this
prospectus supplement, we consider a
mortgage loan to be a "balloon loan" if its
principal balance is not scheduled to be
fully or substantially amortized by the
loan's maturity date. Morgan Stanley Dean
Witter Capital I Inc. cannot assure you that
each borrower will have the ability to repay
the principal balance outstanding on the
stated maturity dates. Balloon loans involve
greater risk than fully amortizing loans
because borrower's ability to repay the loan
on its stated maturity date typically will
depend upon its ability either to refinance
the loan or to sell the mortgaged property
at a price sufficient to permit repayment. A
borrower's ability to achieve either of
these goals will be affected by a number of
factors, including:
o the availability of, and
competition for, credit for
commercial real estate projects;
o prevailing interest rates;
o the fair market value of the
related mortgaged property;
o the borrower's equity in the
related mortgaged property;
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<PAGE>
o the borrower's financial condition;
o the operating history and occupancy
level of the property;
o tax laws; and
o prevailing general and regional
economic conditions.
The availability of funds in the credit
markets fluctuates over time.
Principal Commercial Funding, LLC, John
Hancock Real Estate Finance, Inc., Wells
Fargo Bank, National Association and Morgan
Stanley Mortgage Capital Inc., each as a
mortgage loan seller, and their respective
affiliates are not under any obligation to
refinance any mortgage loan.
A BORROWER'S OTHER LOANS MAY
REDUCE THE CASH FLOW AVAILABLE
TO THE MORTGAGED PROPERTY
WHICH MAY ADVERSELY AFFECT
PAYMENT ON YOUR CERTIFICATES As of March 1, 2000, none of the mortgaged
properties secures any debt other than the
related mortgage loan. Two (2) of the
mortgage loans, representing 4.2% of the
aggregate principal balance of all the
mortgage loans as of March 1, 2000 permit
the borrower, subject to a maximum
loan-to-value ratio of 60% and minimum debt
service coverage ratio of 1.60x, to utilize
the mortgaged property as collateral for
subordinated loans. One (1) mortgage loan,
representing 1.8% of the aggregate principal
balance of all the mortgage loans as of
March 1, 2000, permits the borrower, subject
to a maximum loan-to-value ratio of 70% and
minimum debt service coverage ratio of
1.30x, to utilize the mortgaged property as
collateral for subordinated loans. Five (5)
of the mortgage loans, representing 5.9% of
the aggregate principal balance of all the
mortgage loans as of March 1, 2000, permit
the borrower to engage in additional
financing that is not secured by the
mortgaged property. Morgan Stanley Dean
Witter Capital I Inc. makes no
representation as to whether any other
secured subordinate financing currently
encumbers any mortgaged property or whether
a third-party holds debt secured by a pledge
of equity interest in a related borrower.
Debt that is incurred by the owner of equity
in one or more borrowers and is secured by a
guaranty of the borrower or by a pledge of
the equity ownership interests in such
borrowers effectively reduces the equity
owners economic stake in the related
mortgaged property. The existence of such
debt may reduce cash flow on the related
borrower's mortgaged property after the
payment of debt service and may increase the
likelihood that the owner of a borrower will
permit the value or income producing
potential of a mortgaged property to suffer
by not making capital infusions to support
the mortgaged property. Substantially all of
the mortgage loans also permit the related
borrower to incur limited indebtedness,
including, but not limited to, trade
payables, in the ordinary course of
business.
When a mortgage loan borrower, or its
constituent members, also have one or more
other outstanding loans, even if the loans
are subordinated or are mezzanine loans not
directly secured by the mortgaged property,
the trust is subjected to the following
additional risks. The borrower may have
difficulty servicing and repaying multiple
loans. Also, the existence of another loan
generally will make it more difficult for
the borrower to obtain refinancing of the
mortgage loan and may thus jeopardize the
borrower's ability to repay any balloon
payment due
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<PAGE>
under the mortgage loan at maturity.
Moreover, the need to service additional
debt may reduce the cash flow available to
the borrower to operate and maintain the
mortgaged property.
Additionally, if the borrower, or its
constituent members, are obligated to
another lender, actions taken by other
lenders could impair the security available
to the trust. If a junior lender files an
involuntary bankruptcy petition against the
borrower, or the borrower files a voluntary
bankruptcy petition to stay enforcement by a
junior lender, the trust's ability to
foreclose on the property will be
automatically stayed, and principal and
interest payments might not be made during
the course of the bankruptcy case. The
bankruptcy of a junior lender also may
operate to stay foreclosure by the trust.
Further, if another loan secured by the
mortgaged property is in default, the other
lender may foreclose on the mortgaged
property, absent an agreement to the
contrary, thereby causing a delay in
payments and/or an involuntary repayment of
the mortgage loan prior to maturity. The
trust may also be subject to the costs and
administrative burdens of involvement in
foreclosure proceedings or related
litigation.
BANKRUPTCY PROCEEDINGS RELATING
TO A BORROWER CAN RESULT IN
DISSOLUTION OF THE BORROWER
AND THE ACCELERATION OF THE
RELATED MORTGAGE LOAN AND CAN
OTHERWISE ADVERSELY IMPACT
REPAYMENT OF THE
RELATED MORTGAGE LOAN Under the federal bankruptcy code, the
filing of a bankruptcy petition by or
against a borrower will stay the
commencement or continuation of a
foreclosure action. In addition, if a court
determines that the value of the mortgaged
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-current value of
the mortgaged property. Such an action would
make the lender a general unsecured creditor
for the difference between the then-current
value 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 trustee of the borrower's
bankruptcy or the borrower, as debtor in
possession, has special powers to avoid,
subordinate or disallow debts. In some
circumstances, the claims of the mortgage
lender may be subordinated to financing
obtained by a debtor-in-possession
subsequent to its bankruptcy.
The filing of a bankruptcy petition will
also stay the lender from enforcing a
borrower's assignment of rents and leases.
The federal bankruptcy code also may
interfere with the trustee's ability to
enforce any lockbox requirements. The legal
proceedings necessary to resolve these
issues can be time consuming and may
significantly delay the lender's receipt of
rents. A bankruptcy court may also permit
rents
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otherwise subject to an assignment and/or
lock-box arrangement to be used by the
borrower to maintain the mortgaged property
or for other court authorized expenses.
As a result of the foregoing, the 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.
A number of the borrowers under the mortgage
loans are limited or general partnerships.
Under some circumstances, the bankruptcy of
a general partner of the partnership may
result in the dissolution of that
partnership. The dissolution of a borrower
partnership, the winding up of its affairs
and the distribution of its assets could
result in an early repayment of the related
mortgage loan.
BORROWERS THAT ARE NOT
BANKRUPTCY REMOTE ENTITIES
MAY BE MORE LIKELY TO FILE
BANKRUPTCY PETITIONS AND THIS
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES While the borrowers have generally agreed to
certain special purpose covenants to limit
the bankruptcy risk arising from activities
unrelated to the operation of the property,
the borrowers and their owners, generally do
not have an independent director whose
consent would be required to file a
bankruptcy petition on behalf of such
borrower. One of the purposes of an
independent director is to avoid a
bankruptcy petition filing that is intended
solely to benefit a borrower's affiliate and
is not justified by the borrower's own
economic circumstances.
THE OPERATION OF COMMERCIAL
PROPERTIES IS DEPENDENT UPON
SUCCESSFUL MANAGEMENT The successful operation of a real estate
project depends upon the property manager's
performance and viability. The property
manager is generally responsible for:
o responding to changes in the local
market;
o planning and implementing the
rental structure;
o operating the property and
providing building services;
o managing operating expenses; and
o assuring that maintenance and
capital improvements are carried
out in a timely fashion.
Properties deriving revenues primarily from
short-term sources are generally more
management-intensive than properties leased
to creditworthy tenants under long-term
leases.
A property manager, by controlling costs,
providing appropriate service to tenants and
seeing to property maintenance and general
upkeep, can improve cash flow, reduce
vacancy, leasing and repair costs and
preserve building value. On the other hand,
management errors can, in some cases, impair
short-term cash flow and the long-term
viability of an income producing property.
Morgan Stanley Dean Witter Capital I Inc.
makes no representation or warranty as to
the skills of any present or future
managers.
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Additionally, Morgan Stanley Dean Witter
Capital I Inc. cannot assure you that the
property managers will be in a financial
condition to fulfill their management
responsibilities throughout the terms of
their respective management agreements.
THE ABSENCE OF LOCKBOXES
ENTAILS RISKS THAT COULD
ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES The mortgage loans generally do not require
the related borrower to cause rent and other
payments to be made into a lock box account
maintained on behalf of the mortgagee. If
rental payments are not required to be made
directly into a lock box account, there is a
risk that the borrower will divert such
funds for other purposes.
RESERVES TO FUND CAPITAL
EXPENDITURES MAY BE
INSUFFICIENT AND THIS MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES The mortgage loans generally require that
funds be put aside for specific reserves.
Morgan Stanley Dean Witter Capital I Inc.
cannot assure you that the reserve amounts
will be sufficient to cover the actual costs
of the items for which the reserves were
established. Morgan Stanley Dean Witter
Capital I Inc. also cannot assure you that
cash flow from the properties will be
sufficient to fully fund the ongoing monthly
reserve requirements.
INADEQUACY OF TITLE INSURERS
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES Title insurance for a mortgaged property
generally insures a lender against risks
relating to a lender not having a first lien
with respect to a mortgaged property, and in
some cases can insure a lender against
specific other risks. The protection
afforded by title insurance depends on the
ability of the title insurer to pay claims
made upon it. Morgan Stanley Dean Witter
Capital I Inc. cannot assure you that
o a title insurer will have the
ability to pay title insurance
claims made upon it;
o the title insurer will maintain its
present financial strength; or
o a title insurer will not contest
claims made upon it.
MORTGAGED PROPERTIES SECURING
THE MORTGAGE LOANS THAT ARE
NOT IN COMPLIANCE WITH ZONING
AND BUILDING CODE
REQUIREMENTS COULD ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Noncompliance with zoning and building codes
may cause the borrower to experience cash
flow delays and shortfalls that would reduce
or delay the amount of proceeds available
for distributions on your certificates. The
mortgage loan sellers have taken steps to
establish that the use and operation of the
mortgaged properties securing the mortgage
loans are in compliance in all material
respects with all applicable zoning,
land-use and building ordinances, rules,
regulations, and orders. Evidence of this
compliance may be in the form of legal
opinions, confirmations from government
officials, title policy endorsements and/or
representations by the related borrower in
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the related mortgage loan documents. These
steps may not have revealed all possible
violations.
Some violations of zoning, land use and
building regulations may be known to exist
at any particular mortgaged property, but
the mortgage loan sellers generally do not
consider those defects known to them to be
material. In many cases, the use, operation
and/or structure of a mortgaged property
constitutes a permitted nonconforming use
and/or structure and the structure may not
be rebuilt to its current state or be used
for its current purpose if a material
casualty event occurs. Generally, insurance
proceeds would be available for application
to the mortgage loan if a material casualty
event were to occur, or the mortgage
property, as rebuilt for a conforming use,
would generate sufficient income to service
the mortgage loan. If a mortgaged property
could not be rebuilt to its current state or
its current use were no longer permitted due
to building violations or changes in zoning
or other regulations, then the borrower
might experience cash flow delays and
shortfalls that would reduce or delay the
amount of proceeds available for
distributions on your certificates.
CONDEMNATIONS WITH RESPECT TO
MORTGAGED PROPERTIES SECURING
THE MORTGAGE LOANS COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES From time to time, there may be
condemnations pending or threatened against
one or more of the mortgaged properties.
There can be no assurance that the proceeds
payable in connection with a total
condemnation will be sufficient to restore
the related mortgaged property or to satisfy
the remaining indebtedness of the related
mortgage loan. The occurrence of a partial
condemnation may have a material adverse
effect on the continued use of the affected
mortgaged property, or on an affected
borrower's ability to meet its obligations
under the related mortgage loan. Therefore,
Morgan Stanley Dean Witter Capital I Inc.
cannot assure you that the occurrence of any
condemnation will not have a negative impact
upon the distributions to you.
THE ABSENCE OF OR INADEQUACY
OF INSURANCE COVERAGE ON THE
PROPERTY MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES The mortgaged properties may suffer casualty
losses due to risks that are not covered by
insurance or for which insurance coverage is
not available at commercially reasonable
rates. In addition, some of the mortgaged
properties are located in California and in
coastal areas of Florida, Georgia, North
Carolina, South Carolina and Texas, areas
that have historically been at greater risk
of acts of nature, including earthquakes,
hurricanes and floods. The mortgage loans
generally do not require borrowers to
maintain earthquake, hurricane or flood
insurance and Morgan Stanley Dean Witter
Capital I Inc. cannot assure you that
borrowers will attempt or be able to obtain
adequate insurance against such risks.
Moreover, if reconstruction or major repairs
are required following a casualty, changes
in laws that have occurred since the time of
original construction may materially impair
the borrower's ability to effect such
reconstruction or major repairs or may
materially increase the cost thereof.
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<PAGE>
As a result of these factors, the amount
available to make distributions on your
certificates could be reduced.
CLAIMS UNDER BLANKET
INSURANCE POLICIES MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES Some of the mortgaged properties are covered
by blanket insurance policies which also
cover other properties of the related
borrower or its affiliates. In the event
that such policies are drawn on to cover
losses on such other properties, the amount
of insurance coverage available under such
policies may thereby be reduced and could be
insufficient to cover each mortgaged
property's insurable risks.
PROPERTY INSPECTIONS AND
ENGINEERING REPORTS MAY NOT
REFLECT ALL CONDITIONS THAT
REQUIRE REPAIR ON THE
PROPERTY Other than in the case of two mortgage
loans, representing 3.1% of the outstanding
aggregate principal balance of the mortgage
loans as of March 1, 2000, each secured by a
newly constructed property, licensed
engineers or consultants inspected all of
the mortgaged properties and prepared
engineering reports in connection with the
origination of the mortgage loans to assess
items such as structure, exterior walls,
roofing, interior construction, mechanical
and electrical systems and general condition
of the site, buildings and other
improvements. However, Morgan Stanley Dean
Witter Capital I Inc. cannot assure you that
all conditions requiring repair or
replacement were identified. In those cases
where a material condition was disclosed,
such condition has been or is required to be
remedied to the seller's satisfaction, or
funds as deemed necessary by the seller, or
the related engineer or consultant have been
reserved to remedy the material condition.
APPRAISALS MAY INACCURATELY
REFLECT THE VALUE OF THE
MORTGAGED PROPERTIES A FIRREA appraisal was conducted in respect
of each mortgaged property in connection
with the origination or securitization of
the related mortgage loan. The resulting
estimates of value are the basis of the
March 1, 2000 loan-to-value ratios referred
to in this prospectus supplement. Those
estimates represent the analysis and opinion
of the person performing the appraisal or
market analysis and are not guarantees of
present or future values. Moreover, the
values of the mortgaged properties may have
changed significantly since the appraisal or
market study was performed. In addition,
appraisals seek to establish the amount a
typically motivated buyer would pay a
typically motivated seller. Such amount
could be significantly higher than the
amount obtained from the sale of a mortgaged
property under a distress or liquidation
sale. The estimates of value reflected in
the appraisals are presented for
illustrative purposes only in Appendix I and
Appendix II hereto. In each case the
estimate presented is the one set forth in
the most recent appraisal available to us as
of March 1, 2000, although we generally have
not obtained updates to the appraisals.
S-40
<PAGE>
THE TIMING OF MORTGAGE LOAN
AMORTIZATION MAY ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES As principal payments or prepayments are
made on mortgage loans, the remaining
mortgage pool may be subject to increased
concentrations of property types, geographic
locations and other pool characteristics of
the mortgage loans and the mortgaged
properties, some of which may be
unfavorable. Classes of certificates that
have a lower payment priority are more
likely to be exposed to this concentration
risk than are certificate classes with a
higher payment priority. This occurs because
realized losses are allocated to the class
outstanding at any time with the lowest
payment priority and principal on the
certificates entitled to principal is
generally payable in sequential order or
alphabetical order, with such classes
generally not being entitled to receive
principal until the preceding class or
classes entitled to receive principal have
been retired.
SUBORDINATION OF SOME
CERTIFICATES MAY AFFECT THE
TIMING OF PAYMENTS AND THE
APPLICATION OF LOSSES ON YOUR
CERTIFICATES As described in this prospectus supplement,
the rights of the holders of each class of
subordinate certificates to receive payments
of principal and interest otherwise payable
on their certificates will be subordinated
to such rights of the holders of the more
senior certificates having an earlier
alphabetical class designation. Losses on
the mortgage loans will be allocated to the
Class M, Class L, Class K, Class J, Class H,
Class G, Class F, Class E, Class D, Class C
and Class B Certificates, in that order,
reducing amounts otherwise payable to each
class. Any remaining losses would then be
allocated to the Class A-1 and Class A-2
certificates, and, solely with respect to
losses of interest, to the Class X
Certificates, in proportion to the amounts
of interest or principal payable thereon.
THE OPERATION OF THE
MORTGAGED PROPERTY FOLLOWING
FORECLOSURE OF THE MORTGAGE
LOAN MAY AFFECT THE TAX STATUS
OF THE TRUST AND MAY
ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES If the trust acquires a mortgaged property
as a result of a foreclosure or deed in lieu
of foreclosure, the special servicer will
generally retain an independent contractor
to operate the property. Any net income from
operations other than qualifying "rents from
real property", or any rental income based
on the net profits of a tenant or sub-tenant
or allocable to a non-customary service,
will subject the trust to a federal tax on
such income at the highest marginal
corporate tax rate, which is currently 35%,
and, in addition, possible state or local
tax. In this event, the net proceeds
available for distribution on your
certificates will be reduced. The special
servicer may permit the trust to earn such
above described "net income from foreclosure
property" but only if it determines that the
net after-tax benefit to certificateholders
is greater than under another method of
operating or leasing the mortgaged property.
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<PAGE>
STATE LAWS APPLICABLE TO
FORECLOSURE ACTIONS MAY AFFECT
THE TIMING OF PAYMENTS ON
YOUR CERTIFICATES Some states, including California, have laws
prohibiting more than one "judicial action"
to enforce a mortgage obligation. Some
courts have construed the term "judicial
action" broadly. In the case of a mortgage
loan secured by mortgaged properties located
in multiple states, the master servicer or
special servicer may be required to
foreclose first on mortgaged properties
located in states where these "one action"
rules apply (and where non-judicial
foreclosure is permitted) before foreclosing
on properties located in states where
judicial foreclosure is the only permitted
method of foreclosure. As a result, the
ability to realize upon the mortgage loans
may be limited by the application of state
laws.
CROSS-COLLATERALIZATION OF GROUPS
OF MORTGAGE LOANS COULD LEAD
TO REDUCED PAYMENTS ON YOUR
CERTIFICATES The mortgage pool includes two (2) separate
groups of mortgage loans, the largest of
which collectively represents 3.0% of the
outstanding aggregate principal balance of
all mortgage loans as of March 1, 2000,
under which an aggregate amount of
indebtedness is evidenced by multiple
obligations that are cross-defaulted and
cross-collateralized among multiple
mortgaged properties.
Cross-collateralization arrangements
involving more than one borrower could be
challenged as fraudulent conveyances by
creditors of the related borrower in an
action brought outside a bankruptcy case or,
if such borrower were to become a debtor in
a bankruptcy case, by the borrower or its
representative. Specifically, a lien granted
by a borrower entity for the benefit of
another borrower or borrowers in a
cross-collateralization arrangement could be
avoided if a court were to determine that:
o such borrower entity was insolvent
when it granted the lien, was
rendered insolvent by the granting
of the lien or was left with
inadequate capital, or was not able
to pay its debts as they matured;
and
o such borrower entity did not
receive fair consideration or
reasonably equivalent value when it
allowed its mortgaged property or
properties to be encumbered by a
lien benefiting the other
borrowers.
Among other things, a legal challenge to the
granting of the liens may focus on (i) the
benefits realized by such borrower entity
from the respective mortgage loan proceeds
as compared to the value of its respective
property, and (ii) the overall
cross-collateralization. If a court were to
conclude that the granting of the liens was
an avoidable fraudulent conveyance, that
court could subordinate all or part of the
borrower's respective mortgage loan to
existing or future indebtedness of that
borrower. The court also could recover
payments made under that mortgage loan or
take other actions detrimental to the
holders of the certificates, including,
under certain circumstances, invalidating
the loan or the related mortgages that are
subject to such cross-collateralization.
S-42
<PAGE>
THE BANKRUPTCY OR INSOLVENCY OF
ANY AFFILIATED BORROWERS MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES Eight (8) groups of mortgage loans
(including cross-collateralized mortgage
loan groups) the largest of which represents
4.3% of the outstanding aggregate principal
balance of all mortgage loans as of March 1,
2000, were made to borrowers that are
affiliated through common ownership of
partnership or other equity interests and
where, in general, the related mortgaged
properties are commonly managed.
The bankruptcy or insolvency of any such
borrower or respective affiliate could have
an adverse effect on the operation of all of
the related mortgaged properties and on the
ability of such related mortgaged properties
to produce sufficient cash flow to make
required payments on the related mortgage
loans. For example, if a person that owns or
controls several mortgaged properties
experiences financial difficulty at one such
property, it could defer maintenance at one
or more other mortgaged properties in order
to satisfy current expenses with respect to
the mortgaged property experiencing
financial difficulty, or it could attempt to
avert foreclosure by filing a bankruptcy
petition that might have the effect of
interrupting monthly payments for an
indefinite period on all the related
mortgage loans.
TENANT LEASES MAY HAVE
PROVISIONS THAT COULD ADVERSELY
AFFECT PAYMENTS
ON YOUR CERTIFICATES In certain jurisdictions, if tenant leases
are subordinate to the liens created by the
mortgage and do not contain attornment
provisions which require the tenant to
recognize a successor owner, following
foreclosure, as landlord under the lease,
the leases may terminate upon the transfer
of the property to a foreclosing lender or
purchaser at foreclosure. Not all leases
were reviewed to ascertain the existence of
these provisions. Accordingly, if a
mortgaged property is located in such a
jurisdiction and is leased to one or more
desirable tenants under leases that are
subordinate to the mortgage and do not
contain attornment provisions, such
mortgaged property could experience a
further decline in value if such tenants'
leases were terminated. This is particularly
likely if such tenants were paying
above-market rents or could not be replaced.
Some of the leases at the mortgaged
properties securing the mortgage loans
included in the trust may not be subordinate
to the related mortgage. If a lease is not
subordinate to a mortgage, the trust will
not possess the right to dispossess the
tenant upon foreclosure of the mortgaged
property unless it has otherwise agreed with
the tenant. If the lease contains provisions
inconsistent with the mortgage, for example,
provisions relating to application of
insurance proceeds or condemnation awards,
or which could affect the enforcement of the
lender's rights, for example, a right of
first refusal to purchase the property, the
provisions of the lease will take precedence
over the provisions of the mortgage.
LITIGATION ARISING OUT OF
ORDINARY BUSINESS COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES
There may be pending or threatened legal
proceedings against the borrowers and
managers of the mortgaged properties and
their
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<PAGE>
respective affiliates arising out of their
ordinary business. Morgan Stanley Dean
Witter Capital I Inc. cannot assure you that
any such litigation would not have a
material adverse effect on your
certificates.
RISKS RELATING TO COMPLIANCE
WITH THE AMERICANS WITH
DISABILITIES ACT COULD ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Under the Americans with Disabilities Act of
1990, public accommodations are required to
meet certain federal requirements related to
access and use by disabled persons.
Borrowers may incur costs complying with the
Americans with Disabilities Act. In
addition, noncompliance could result in the
imposition of fines by the federal
government or an award of damages to private
litigants. If a borrower incurs such costs
or fines, the amount available to pay debt
service would be reduced.
CONFLICTS OF INTEREST MAY HAVE
AN ADVERSE EFFECT ON YOUR
CERTIFICATES Conflicts between various
certificateholders. The special servicer is
given considerable latitude in determining
whether and in what manner to liquidate or
modify defaulted mortgage loans. The
operating adviser will have the right to
replace the special servicer upon
satisfaction of certain conditions set forth
in the pooling and servicing agreement. At
any given time, the operating adviser will
be controlled generally by the holders of
the most subordinate, or, if the certificate
principal balance thereof is less than 25%
of its original certificate balance, the
next most subordinate, class of
certificates, that is, the controlling
class, outstanding from time to time, and
such holders may have interests in conflict
with those of the holders of the other
certificates. For instance, the holders of
certificates of the controlling class might
desire to mitigate the potential for loss to
that class from a troubled mortgage loan by
deferring enforcement in the hope of
maximizing future proceeds. However, the
interests of the trust may be better served
by prompt action, since delay followed by a
market downturn could result in less
proceeds to the trust than would have been
realized if earlier action had been taken.
The master servicer, the special servicer or
an affiliate of either of them may acquire
certain of the most subordinated
certificates, including those of the initial
controlling class. Under such circumstances,
the master servicer and the special servicer
may have interests that conflict with the
interests of the other holders of the
certificates. The initial Operating Adviser
will be First Chicago Capital Corporation.
Conflicts between borrowers and property
managers. It is likely that many of the
property managers of the mortgaged
properties, or their affiliates, manage
additional properties, including properties
that may compete with the mortgaged
properties. Affiliates of the managers, and
managers themselves, also may own other
properties, including competing properties.
The managers of the mortgaged properties may
accordingly experience conflicts of interest
in the management of such mortgaged
properties.
Conflicts between the trust and sellers. For
example, the activities of the sellers may
involve properties which are in the same
markets as the mortgaged properties
underlying the certificates. In such case,
the interests of each of the sellers or such
affiliates may differ from, and compete
with, the interests of the trust, and
decisions made with respect
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<PAGE>
to those assets may adversely affect the
amount and timing of distributions with
respect to the certificates. Conflicts of
interest may arise between the trust and
each of the sellers or their affiliates that
engage in the acquisition, development,
operation, financing and disposition of real
estate if such sellers acquire any
certificates. In particular, if certificates
held by a seller are part of a class that is
or becomes the controlling class the seller
as part of the holders of the controlling
class would have the ability to influence
certain actions of the special servicer
under circumstances where the interests of
the trust conflict with the interests of the
seller or its affiliates as acquirors,
developers, operators, financers or sellers
of real estate related assets.
Affiliates of the sellers may acquire a
portion of the certificates. Under such
circumstances, they may become the
controlling class, and as such have
interests that may conflict with their
interests as a seller of the mortgage loans.
PREPAYMENTS MAY REDUCE
THE YIELD ON YOUR CERTIFICATES The yield to maturity on your certificates
will depend, in significant part, upon the
rate and timing of principal payments on the
mortgage loans. For this purpose, principal
payments include both voluntary prepayments,
if permitted, and involuntary prepayments,
such as prepayments resulting from casualty
or condemnation of mortgaged properties,
defaults and liquidations by borrowers, or
repurchases as a result of a seller's breach
of representations and warranties or
material defects in a mortgage loan's
documentation.
The investment performance of your
certificates may vary materially and
adversely from your expectations if the
actual rate of prepayment is higher or lower
than you anticipate.
Voluntary prepayments under some of the
mortgage loans require payment of a
prepayment premium unless the prepayment
occurs within generally three to seven
payments prior to and including the stated
maturity date. Nevertheless, Morgan Stanley
Dean Witter Capital I Inc. cannot assure you
that the related borrowers will refrain from
prepaying their mortgage loans due to the
existence of a prepayment premium. Morgan
Stanley Dean Witter Capital I Inc. also
cannot assure you that involuntary
prepayments will not occur. The rate at
which voluntary prepayments occur on the
mortgage loans will be affected by a variety
of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment
lockout period;
o the level of prevailing interest
rates;
o the availability of mortgage
credit;
o the applicable yield maintenance
charges or prepayment premiums;
o the occurrence of casualties or
natural disasters; and
o economic, demographic, tax or legal
factors.
Generally, no prepayment premium will be
required for prepayments in connection with
a casualty or condemnation. In addition, if
a seller repurchases any mortgage loan from
the trust due to the breach of a
representation or warranty, the repurchase
price paid will be passed
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<PAGE>
through to the holders of the certificates
with the same effect as if the mortgage loan
had been prepaid in part or in full, except
that no prepayment premium will be payable.
Such a repurchase may, therefore, adversely
affect the yield to maturity on your
certificates.
Also, the description in the mortgage notes
of the method of calculation of prepayment
premiums is complex and subject to legal
interpretation and it is possible that
another person would interpret the
methodology differently from the way we did
in estimating an assumed yield to maturity
on your certificates as described in this
prospectus supplement. See Appendix II
attached hereto for a description of the
various pre-payment provisions.
THE YIELD ON YOUR CERTIFICATE
WILL BE AFFECTED BY THE PRICE AT
WHICH THE CERTIFICATE WAS
PURCHASED AND THE RATE, TIMING
AND AMOUNT OF DISTRIBUTIONS ON
YOUR CERTIFICATE The yield on any certificate will depend on
(1) the price at which such certificate is
purchased by you and (2) the rate, timing
and amount of distributions on your
certificate. The rate, timing and amount of
distributions on any certificate will, in
turn, depend on, among other things:
o the interest rate for such
certificate;
o the rate and timing of principal
payments (including principal
prepayments) and other principal
collections on or in respect of the
mortgage loans and the extent to
which such amounts are to be
applied or otherwise result in a
reduction of the certificate
balance of such certificate;
o the rate, timing and severity of
losses on or in respect of the
mortgage loans or unanticipated
expenses of the trust;
o the timing and severity of any
interest shortfalls resulting from
prepayments to the extent not
offset by a reduction in master
servicer compensation as described
in this prospectus supplement;
o the timing and severity of any
reductions in the appraised value
of any mortgaged property in a
manner that has an effect on the
amount of advancing required on the
related mortgage loan; and
o the method of calculation of
prepayment premiums and the extent
to which prepayment premiums are
collected and, in turn, distributed
on such certificate.
YOU BEAR THE RISK OF
BORROWER DEFAULTS The rate and timing of delinquencies or
defaults on the mortgage loans could affect
the following aspects of the offered
certificates:
o the aggregate amount of
distributions on them;
o their yields to maturity;
o their rates of principal payments;
and
o their weighted average lives.
The rights of holders of each class of
subordinate certificates to receive payments
of principal and interest otherwise payable
on their certificates will be subordinated
to such rights of the holders of the
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<PAGE>
more senior certificates having an earlier
alphabetical class designation. Losses on
the mortgage loans will be allocated to the
Class M, Class L, Class K, Class J, Class H,
Class G, Class F, Class E, Class D, Class C
and Class B Certificates, in that order,
reducing amounts otherwise payable to each
class. Any remaining losses would then be
allocated to the Class A-1, Class A-2 and,
with respect to interest losses only, the
Class X Certificates based on their
respective entitlements.
If losses on the mortgage loans exceed the
aggregate certificate balance of the classes
of certificates subordinated to a particular
class, such class will suffer a loss equal
to the full amount of such excess up to the
outstanding certificate balance of such
class.
If you calculate your anticipated yield
based on assumed rates of default and losses
that are lower than the default rate and
losses actually experienced and such losses
are allocable to your certificates, your
actual yield to maturity will be lower than
the assumed yield. Under extreme scenarios,
such yield could be negative. In general,
the earlier a loss borne by your
certificates occurs, the greater the effect
on your yield to maturity.
Even if losses on the mortgage loans are not
borne by your certificates, those losses may
affect the weighted average life and yield
to maturity of your certificates. This may
be so because those losses cause your
certificates to have a higher percentage
ownership interest in the trust, and
therefore a greater portion of the related
distributions of principal payments on the
mortgage loans, than would otherwise have
been the case. The effect on the weighted
average life and yield to maturity of your
certificates will depend upon the
characteristics of the remaining mortgage
loans.
Additionally, delinquencies and defaults on
the mortgage loans may significantly delay
the receipt of distributions by you on your
certificates, unless advances are made to
cover delinquent payments or the
subordination of another class of
certificates fully offsets the effects of
any such delinquency or default.
COMPENSATION TO THE MASTER
SERVICER, THE SPECIAL SERVICER
AND THE TRUSTEE MAY HAVE AN
ADVERSE EFFECT ON THE PAYMENTS
ON YOUR CERTIFICATES To the extent described in this prospectus
supplement, the master servicer, the trustee
or the fiscal agent will be entitled to
receive interest on unreimbursed advances
they have made with respect to defaulted
monthly payments or that are made with
respect to the preservation and protection
of the related mortgaged property. This
interest will generally accrue from the date
on which the related advance is made or the
related expense is incurred to the date of
reimbursement. This interest may be offset
in part by default interest and late payment
charges paid by the borrower or by certain
other amounts. In addition, under certain
circumstances, including delinquencies in
the payment of principal and interest, a
mortgage loan will be serviced by the
special servicer, and the special servicer
is entitled to compensation for special
servicing activities. The right to receive
interest on advances and special servicing
compensation is senior to the rights of
certificateholders to receive distributions.
S-47
<PAGE>
THE SELLERS OF THE MORTGAGE
LOANS ARE SUBJECT TO BANKRUPTCY
OR INSOLVENCY LAWS THAT MAY
AFFECT THE TRUST'S OWNERSHIP OF
THE MORTGAGE LOANS In the event of the insolvency of any
seller, it is possible the trust's right to
payment from or ownership of the mortgage
loans could be challenged, and if such
challenge were successful, delays or
reductions in payments on your certificates
could occur.
Based upon opinions of counsel that the
conveyance of the mortgage loans would
generally be respected in the event of
insolvency of the Sellers, which opinions
are subject to various assumptions and
qualifications, the sellers believe that
such a challenge will be unsuccessful, but
there can be no assurance that a bankruptcy
trustee, if applicable, or other interested
party will not attempt to assert such a
position. Even if actions seeking such
results were not successful, it is possible
that payments on the certificates would be
delayed while a court resolves the claim.
LIMITED LIQUIDITY AND MARKET
VALUE MAY ADVERSELY EFFECT
PAYMENTS ON YOUR CERTIFICATES Your certificates will not be listed on any
securities exchange, and there is currently
no secondary market for the certificates.
While Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co. and Norwest Investment
Services, Inc. each currently intends to
make a secondary market in the certificates,
none of them is obligated to do so.
Accordingly, you may not have an active or
liquid secondary market for your
certificates, which could result in a
substantial decrease in the market value of
your certificates. The market value of your
certificates also may be affected by many
other factors, including then-prevailing
interest rates. Furthermore, you should be
aware that the market for securities of the
same type as the certificates has in the
past been volatile and offered very limited
liquidity.
INTEREST RATES BASED ON A
WEIGHTED AVERAGE COUPON RATE
ENTAIL RISKS WHICH MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES The interest rates on the Class B, Class C,
Class D and Class E Certificates are based
on a weighted average of the mortgage loan
interest rates, which is calculated based
upon the respective principal balances of
those mortgage loans. This weighted average
rate is further described in this Prospectus
Supplement under the definition of weighted
average net mortgage rate. All of those
classes of certificates which are either
fully or partially based upon weighted
average rate will be affected by
disproportionate principal payments,
prepayments, defaults and other unscheduled
payments on the mortgage loans. Because some
mortgage loans will amortize their principal
more quickly than others, the rate will
fluctuate over the life of those classes of
your certificates.
In general, mortgage loans with relatively
high mortgage interest rates are more likely
to prepay than mortgage loans with
relatively low mortgage interest rates.
Varying rates of principal payments on
mortgage loans having mortgage interest
rates above the weighted average of the
rates of the mortgage loans will have the
effect of reducing the interest rate of the
certificates.
S-48
<PAGE>
This prospectus supplement also contains forward-looking statements
that involve risks and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a result of a
variety of factors, including the risks described above in this Risk Factors
section and elsewhere in this prospectus supplement.
S-49
<PAGE>
DESCRIPTION OF THE OFFERED CERTIFICATES
Capitalized terms are defined in the "Glossary of Terms" beginning on
page S-106.
GENERAL
The Series 2000-LIFE1 Commercial Mortgage Pass-Through Certificates
will be issued on or about April __, 2000 pursuant to a Pooling and Servicing
Agreement to be dated as of March 1, 2000, as amended and restated as of April
__, 2000, among Morgan Stanley Dean Witter Capital I Inc., the master servicer,
the special servicer, the fiscal agent, the paying agent, and the trustee.
The certificates will represent in the aggregate the entire beneficial
ownership interest in a trust formed on March 29, 2000. The trust consists
primarily of:
o the mortgage loans and all payments under and proceeds of the
mortgage loans received after the Cut-off Date, exclusive of
principal prepayments received prior to the Cut-off Date and
scheduled payments of principal and interest due on or before
the Cut-off Date;
o any mortgaged property acquired on behalf of the
Certificateholders in respect of a defaulted mortgage loan
through foreclosure, deed in lieu of foreclosure or otherwise;
and
o certain rights of Morgan Stanley Dean Witter Capital I Inc.
under, or assigned to Morgan Stanley Dean Witter Capital I
Inc. pursuant to, each of the Mortgage Loan Purchase
Agreements relating to mortgage loan document delivery
requirements and the representations and warranties of the
related seller regarding its mortgage loans.
The certificates will be issued on April __, 2000 and, notwithstanding
the foregoing, will only be entitled to scheduled payments on the mortgage loans
that are due (and unscheduled payments that are received) after April 1, 2000.
The certificates will consist of eighteen (18) classes, to be
designated as:
o the Class A-1 Certificates and the Class A-2 Certificates;
o the Class X Certificates;
o the Class B Certificates, the Class C Certificates, the Class
D Certificates, the Class E Certificates, the Class F
Certificates, the Class G Certificates, the Class H
Certificates, the Class J Certificates, the Class K
Certificates, the Class L Certificates, and the Class M
Certificates; and
o the Class R-I Certificates, the Class R-II Certificates, the
Class R-III Certificates and the Class R-IV Certificates.
The Class A Certificates will be issued in denominations of $25,000
initial Certificate Balance and in any whole dollar denomination in excess of
that amount. The Class B, Class C, Class D and Class E Certificates will be
issued in denominations of $100,000 initial Certificate Balance and in any whole
dollar denomination in excess thereof.
Each class of offered certificates will initially be represented by one
or more global certificates registered in the name of the nominee of The
Depository Trust Company ("DTC"). Morgan Stanley Dean Witter Capital I Inc. has
been informed by DTC that DTC's nominee initially will be Cede & Co. No person
acquiring an interest in an offered certificate will be entitled to receive a
fully registered physical certificate representing such interest, except as
presented in the prospectus under "Description of the Certificates--Book-Entry
Registration and Definitive Certificates". Unless and until definitive
certificates are issued in respect of any Class of offered certificates, all
S-50
<PAGE>
references to actions by holders of the offered certificates will refer to
actions taken by DTC upon instructions received from the related Certificate
Owners through DTC's participating organizations.
All references herein to payments, notices, reports and statements to
holders of the offered certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder of the offered
certificates, for distribution to the related Certificate Owners through DTC's
Participants in accordance with DTC procedures. Until definitive certificates
are issued in respect of any Class of offered certificates, interests in such
certificates will be transferred on the book-entry records of DTC and its
Participants. See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates" in the prospectus.
Certificateholders must hold their offered certificates in book-entry
form, and delivery of the offered certificates will be made through the
facilities of DTC, in the United States, and may be made through the facilities
of Clearstream Banking or Euroclear, in Europe. Transfers within DTC,
Clearstream or Euroclear, as the case may be, will be in accordance with the
usual rules and operating procedures of the relevant system. Crossmarket
transfers between persons holding directly or indirectly through DTC, on the one
hand, and counterparties holding directly or indirectly through Clearstream or
Euroclear, on the other, will be effected in DTC through Citibank, N.A. or The
Chase Manhattan Bank, the relevant depositaries of Clearstream and Euroclear,
respectively.
Because of time-zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Euroclear participant or Clearstream customer on such business day.
Cash received in Clearstream or Euroclear as a result of sales of securities by
or through a Clearstream customer or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
CERTIFICATE BALANCES
Upon initial issuance, the Class A-1, Class A-2, Class B, Class C,
Class D and Class E Certificates will have the following aggregate Certificate
Balances. In each case, the Certificate Balance may vary by 5%:
<TABLE>
<CAPTION>
APPROXIMATE
INITIAL AGGREGATE PERCENT OF INITIAL RATINGS APPROXIMATE
CLASS CERTIFICATE BALANCE POOL BALANCE (FITCH/S&P) CREDIT SUPPORT
<S> <C> <C> <C> <C>
Class A-1 $113,834,030 16.58% AAA/AAA 19.75%
Class A-2 $439,000,000 63.67% AAA/AAA 19.75%
Class B $22,408,000 3.25% AA/AA 16.50%
Class C $25,854,000 3.75% A/A 12.75%
Class D $8,619,000 1.25% A-/A- 11.50%
Class E $17,236,000 2.50% BBB/BBB 9.00%
</TABLE>
The percentages indicated under the columns "Approximate Credit
Support" with respect to the Class A-1 and Class A-2 Certificates represent the
approximate credit support for the Class A-1 and Class A-2 Certificates in the
aggregate.
The initial Certificate Balance of each Principal Balance Certificate
will be presented on the face thereof. On each Distribution Date, the
Certificate Balance of each Principal Balance Certificate will be reduced by any
distributions of principal actually made on that certificate on the applicable
Distribution Date, and will be further reduced by any Realized Losses and
Expense Losses allocated to such certificate on such Distribution Date. See
"--Distributions" and "--Distributions--Subordination; Allocation of Losses and
Certain Expenses" below.
S-51
<PAGE>
The Interest Only Certificates will not have a Certificate Balance.
Such Class of certificates will represent the right to receive distributions of
interest accrued as described herein on a Notional Amount.
The aggregate Notional Amount of the Interest Only Certificates will
equal 100% of the aggregate Certificate Balance of the Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L and Class M Certificates outstanding from time to time. The Interest
Only Certificates will have an initial aggregate Notional Amount of
$689,003,732, subject to a permitted variance of plus or minus 5%. The Notional
Amount of the Interest Only Certificate is used solely for the purpose of
determining the amount of interest to be distributed on such Certificate and
does not represent the right to receive any distributions of principal.
The Residual Certificates will not have Certificate Balances or
Notional Amounts.
PASS-THROUGH RATES
The Pass-Through Rates applicable to the Class A-1 and A-2 Certificates
for each Distribution Date will be equal to ___% and ___% per annum,
respectively; provided, however, that each such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Rate for such Distribution Date. The
Pass-Through Rates on the Class B, Class C, Class D and Class E Certificates are
variable, and for the initial Distribution Date will be equal to __%, __%, __%,
__% and __% per annum, respectively. For each subsequent Distribution Date, the
Pass-Through Rate on the Class B, Class C, Class D and Class E Certificates will
be a per annum rate equal to the Weighted Average Net Mortgage Rate for each
Distribution Date.
The Pass-Through Rate applicable to the Class X Certificates for the
initial Distribution Date will equal approximately ___% per annum.
The Pass-Through Rate applicable to the Class X Certificates for each
Distribution Date subsequent to the initial Distribution Date will, in general,
equal the excess, if any, of:
o the Weighted Average Net Mortgage Rate for such Distribution Date, over
o the weighted average of the Pass-Through Rates applicable to the Class A-1,
Class A-2, Class B, Class C, Class D, Class E, Class F, Class G, Class H,
Class J, Class K, Class L and Class M Certificates for such Distribution
Date, the relevant weighting to be on the basis of the respective aggregate
Certificate Balances of such Classes of Certificates immediately prior to
such Distribution Date.
The Administrative Cost Rate for each mortgage loan is presented in
Appendix II. The Administrative Cost Rate will be payable on the Scheduled
Principal Balance of each mortgage loan outstanding from time to time. The
Administrative Cost Rate applicable to a mortgage loan in any month will be
determined using the same interest accrual basis, that is, a 360-day year
consisting of twelve 30-day months or a 360-day year and actual days elapsed, on
which interest accrues under the terms of such mortgage loan.
DISTRIBUTIONS
General
Distributions on or with respect to the certificates will be made by
the paying agent, to the extent of available funds, and in accordance with the
manner and priority presented in the Prospectus Supplement, on each Distribution
Date, commencing on May 15, 2000. Except as otherwise described below, all such
distributions will be made to the persons in whose names the certificates are
registered at the close of business on the related Record Date. Every
distribution will be made by wire transfer in immediately available funds to the
account specified by the Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder will have provided
the paying agent with wiring instructions on or before the related Record Date,
or otherwise by check mailed to such Certificateholder.
S-52
<PAGE>
The final distribution on any certificate will be determined without
regard to any possible future reimbursement of any Realized Losses or Expense
Losses previously allocated to such certificate. The final distribution will be
made in the same manner as earlier distributions, but only upon presentation and
surrender of such certificate at the location that will be specified in a notice
of the pendency of such final distribution. Any distribution that is to be made
with respect to a certificate in reimbursement of a Realized Loss or Expense
Loss previously allocated thereto, which reimbursement is to occur after the
date on which such certificate is surrendered as contemplated by the preceding
sentence, will be made by check mailed to the Certificateholder that surrendered
such certificate. The likelihood of any such distribution is remote. All
distributions made on or with respect to a Class of certificates will be
allocated pro rata among such certificates based on their respective Percentage
Interests in such Class.
The Available Distribution Amount
With respect to any Distribution Date, distributions of interest on and
principal of the certificates will be made from the Available Distribution
Amount for that Distribution Date.
With respect to the Distribution Date occurring in each January, other
than a leap year, and each February, the Interest Reserve Amount will be
deposited to the Interest Reserve Account in respect of each Interest Reserve
Loan in an amount equal to one day's interest at the related Net Mortgage Rate
on its principal balance as of the Due Date in the month in which such
Distribution Date occurs, to the extent a Scheduled Payment or P&I Advance is
timely made in respect thereof for such Due Date. The Net Mortgage Rate will be
applied without regard to any adjustment for Interest Reserve Amounts or the
interest accrual basis as described in the definition of "Net Mortgage Rate" in
the Glossary. With respect to the Distribution Date occurring in March of each
year, an amount is required to be withdrawn from the Interest Reserve Account in
respect of each Interest Reserve Loan equal to the related Interest Reserve
Amount from the preceding January, if applicable, and February, and the
withdrawn amount is to be included as part of the Available Distribution Amount
for such Distribution Date.
Application of the Available Distribution Amount
On each Distribution Date, except as described under "--Optional
Termination" below, for so long as any Class of offered certificates remains
outstanding, the paying agent will apply the Available Distribution Amount other
than Excess Liquidation Proceeds, if any for such date for the following
purposes and in the following order of priority:
(i) to the holders of the Class A-1, Class A-2 and Class X Certificates,
the Distributable Certificate Interest Amount in respect of each such
Class of certificates for such Distribution Date, pro rata in
proportion to the Distributable Certificate Interest Amount payable in
respect of each such Class;
(ii) to the holders of the Class A-1 Certificates, the Principal
Distribution Amount for such Distribution Date, until the aggregate
Certificate Balance of the Class A-1 Certificates has been reduced to
zero;
(iii) upon payment in full of the aggregate Certificate Balance of the Class
A-1 Certificates, to the holders of the Class A-2 Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class A-2 Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed hereunder will be reduced by any portion thereof
distributed to the holders of the Class A-1 Certificates;
(iv) to the holders of the Class A and Class X Certificates, pro rata in
proportion to their respective entitlements to reimbursement described
in this clause, to reimburse them for any Realized Losses previously
allocated to such Classes of certificates, plus interest on such
Realized Losses, compounded monthly, at one-twelfth the applicable
Pass-Through Rate;
(v) to the holders of the Class B Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates
for such Distribution Date;
S-53
<PAGE>
(vi) upon payment in full of the aggregate Certificate Balance of the Class
A-2 Certificates, to the holders of the Class B Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class B Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed hereunder will be reduced by any portion thereof
distributed to the holders of the Class A Certificates;
(vii) to the holders of the Class B Certificates, to reimburse them for any
Realized Losses previously allocated to such Class of certificates,
plus interest on such Realized Losses, compounded monthly, at
one-twelfth the applicable Pass-Through Rate;
(viii) to the holders of the Class C Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates
for such Distribution Date;
(ix) upon payment in full of the aggregate Certificate Balance of the Class
B Certificates, to the holders of the Class C Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class C Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed hereunder will be reduced by any portion thereof
distributed to the holders of the Class A and Class B Certificates;
(x) to the holders of the Class C Certificates, to reimburse them for any
Realized Losses previously allocated to such Class of certificates,
plus interest on such Realized Losses, compounded monthly, at
one-twelfth the applicable Pass-Through Rate;
(xi) to the holders of the Class D Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates
for such Distribution Date;
(xii) upon payment in full of the aggregate Certificate Balance of the Class
C Certificates, to the holders of the Class D Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class D Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed hereunder will be reduced by any portion thereof
distributed to the holders of the Class A, Class B and Class C
Certificates;
(xiii) to the holders of the Class D Certificates, to reimburse them for any
Realized Losses previously allocated to such Class of certificates,
plus interest on such Realized Losses, compounded monthly, at
one-twelfth the applicable Pass-Through Rate;
(xiv) to the holders of the Class E Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates
for such Distribution Date;
(xv) upon payment in full of the aggregate Certificate Balance of the Class
D Certificates, to the holders of the Class E Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class E Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed hereunder will be reduced by any portion thereof
distributed to the holders of the Class A, Class B, Class C and Class D
Certificates;
(xvi) to the holders of the Class E Certificates, to reimburse them for any
Realized Losses previously allocated to such Class of certificates,
plus interest on such Realized Losses, compounded monthly, at
one-twelfth the applicable Pass-Through Rate; and
(xvii) to make payments to the holders of the private certificates as
contemplated below.
Notwithstanding the foregoing, on each Distribution Date occurring on
or after the date, if any, upon which the aggregate Certificate Balance of all
Classes of Subordinate Certificates has been reduced to zero or the aggregate
Appraisal Reduction in effect is greater than or equal to the aggregate
Certificate Balance of all Classes of Subordinate Certificates, the Principal
Distribution Amount will be distributed:
S-54
<PAGE>
o first, to the Class A-1 and Class A-2 Certificates, in proportion to their
respective Certificate Balances, in reduction of their respective
Certificate Balances, until the aggregate Certificate Balance of each such
Class is reduced to zero; and,
o second, to the Class A-1 and Class A-2 Certificates, based on their
respective entitlements to reimbursement, for the unreimbursed amount of
Realized Losses and Expense Losses previously allocated to such Classes.
On each Distribution Date, following the above-described distributions
on the offered certificates and the Class X Certificates, the paying agent will
apply the remaining portion, if any, of the Available Distribution Amount for
such date to make payments to the holders of each of the respective Classes of
Private Certificates, other than the Class X Certificates and Residual
Certificates, in alphabetical order of Class designation, in each case for the
following purposes and in the following order of priority, that is, payments
under clauses (1), (2) and (3) below, in that order, to the holders of the Class
F Certificates, then payments under clauses (1), (2), and (3) below, in that
order, to the holders of the Class G, Class H, Class J, Class K, Class L, and
Class M Certificates:
(1) to pay interest to the holders of the particular Class of
certificates, up to an amount equal to the Distributable
Certificate Interest Amount in respect of such Class of
certificates for such Distribution Date;
(2) if the aggregate Certificate Balance of each other Class of
Subordinate Certificates, if any, with an earlier alphabetical
Class designation has been reduced to zero, to pay principal
to the holders of the particular Class of certificates, up to
an amount equal to the lesser of (a) the then outstanding
aggregate Certificate Balance of such Class of certificates
and (b) the aggregate of the remaining Principal Distribution
Amount for such Distribution Date; and
(3) to reimburse the holders of the particular Class of
certificates, up to an amount equal to (a) all Realized Losses
and Expense Losses, if any, previously allocated to such Class
of certificates and for which no reimbursement has previously
been paid, plus (b) all unpaid interest on such amounts,
compounded monthly, at one-twelfth the Pass-Through Rate of
such Classes.
Any portion of the Available Distribution Amount for any Distribution
Date that is not otherwise payable to the holders of REMIC Regular Certificates
as contemplated above, will be paid to the holders of the Class R-I
Certificates.
Excess Liquidation Proceeds will be deposited to the Reserve Account.
On each Distribution Date, amounts on deposit in the Reserve Account will be
used, first, to reimburse the holders of the Principal Balance Certificates --
in order of alphabetical Class designation -- for any, and to the extent of,
Realized Losses, including interest on Advances, previously allocated to them;
and second, upon the reduction of the aggregate Certificate Balance of the
Principal Balance Certificates to zero, to pay any amounts remaining on deposit
in such account to the special servicer as additional special servicer
compensation.
Distributions of Prepayment Premiums
Any Prepayment Premium collected with respect to a mortgage loan during
any particular Collection Period will be distributed on the following
Distribution Date as follows: The holders of the Class A, Class B, Class C,
Class D, Class E, Class F and Class G Certificates then entitled to
distributions of principal on such Distribution Date will be entitled to an
aggregate amount, allocable among such Classes, if more than one, as described
below, equal to the lesser of (a) such Prepayment Premium and (b) such
Prepayment Premium multiplied by a fraction, the numerator of which is equal to
the excess, if any, of the Pass-Through Rate applicable to the most senior of
such Classes of Principal Balance Certificates then outstanding, or, in the case
of the two Classes of Class A Certificates, first, the Pass-Through Rate
applicable to the Class A-1 Certificates and second, the Pass-Through Rate
applicable to the Class A-2 Certificates, over the relevant Discount Rate, and
the denominator of which is equal to the excess, if any, of the mortgage rate of
the Mortgage Loan that prepaid, over the relevant Discount Rate. If there is
more than one such Class of Principal Balance Certificates entitled to
distributions of principal on such Distribution Date, the aggregate amount
described in the preceding sentence will be allocated
S-55
<PAGE>
among such Classes on a pro rata basis in accordance with the relative amounts
of entitlement to such distributions of principal.
Any portion of any Prepayment Premium remaining after any such payment
to the holders of such Principal Balance Certificates as described above will be
distributed to the holders of the Class X Certificates.
Any Prepayment Premiums distributed to the holders of a class of
certificates may not be sufficient to fully compensate such Certificateholders
for any loss in yield attributable to the related Principal Prepayments.
Treatment of REO Properties
Notwithstanding that any mortgaged property may be acquired as part of
the trust through foreclosure, deed in lieu of foreclosure or otherwise, the
related mortgage loan will, for purposes of, among other things, determining
Pass-Through Rates of, distributions on and allocations of Realized Losses and
Expense Losses to the certificates, as well as the amount of Master Servicing
Fees, Primary Servicing Fees, Excess Servicing Fees, Trustee Fees and Special
Servicing Fees payable under the Pooling and Servicing Agreement, be treated as
having remained outstanding until such REO Property is liquidated. In connection
therewith, operating revenues and other proceeds derived from such REO Property,
exclusive of related operating costs, will be "applied" by the master servicer
as principal, interest and other amounts "due" on such mortgage loan; and,
subject to the recoverability determination described under "--Advances" below
and the effect of any Appraisal Reductions described under "--Appraisal
Reductions" below, the master servicer will be required to make P&I Advances in
respect of such mortgage loan, in all cases as if such mortgage loan had
remained outstanding. References to mortgage loan and mortgage loans in the
definitions of Weighted Average Net Mortgage Rate and Principal Distribution
Amount are intended to include any mortgage loan or mortgage loans as to which
the related mortgaged property has become an REO Property.
Appraisal Reductions
Not later than the earliest Appraisal Event, the special servicer is
required to obtain an MAI appraisal, if the Scheduled Principal Balance of the
mortgage loan is greater than $2,000,000, or an internal valuation, if the
Scheduled Principal Balance of the mortgage loan is equal to or less than
$2,000,000, of the related mortgaged property or REO Property, as the case may
be. However, the special servicer, in accordance with the Servicing Standard,
need not obtain either the MAI appraisal or the internal valuation if such an
appraisal or valuation had been obtained within the prior twelve months.
As a result of such appraisal or internal valuation, an Appraisal
Reduction may be created. An Appraisal Reduction will be reduced to zero as of
the date the related mortgage loan is brought current under the then current
terms of the mortgage loan for at least three consecutive months. No Appraisal
Reduction will exist as to any mortgage loan after it has been paid in full,
liquidated, repurchased or otherwise disposed of. An appraisal for any mortgage
loan that has not been brought current for at least three consecutive months
will be updated annually, with a corresponding adjustment to the amount of the
related Appraisal Reduction. In addition, the Operating Adviser may at any time
request the special servicer to obtain -- at the Operating Adviser's expense --
an updated appraisal, with a corresponding adjustment to the amount of the
Appraisal Reduction.
The existence of an Appraisal Reduction will proportionately reduce the
master servicer's, the trustee's or the fiscal agent's, as the case may be,
obligation to make P&I Advances in respect of the related mortgage loan, which
will generally result in a reduction in current distributions in respect of the
then most subordinate Class or Classes of Principal Balance Certificates. See
"--Advances--P&I Advances" below.
Subordination; Allocation of Losses and Certain Expenses
As and to the extent described herein, the rights of holders of the
Subordinate Certificates to receive distributions of amounts collected or
advanced on the mortgage loans will be subordinated, to the extent described
herein, to the rights of holders of the Senior Certificates, and to the rights
of the holders of each other Class of Subordinate Certificates with an earlier
alphabetical Class designation. This subordination is intended to enhance the
likelihood of timely receipt by the holders of the Senior Certificates of the
full amount of all interest payable in
S-56
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respect of the Senior Certificates on each Distribution Date, and the ultimate
receipt by the holders of each Class of Class A Certificates of principal in an
amount equal to the entire Certificate Balance of the Class A Certificates.
Similarly, but to decreasing degrees and in alphabetical order of Class
designation, this subordination is also intended to enhance the likelihood of
timely receipt by the holders of the Subordinate Certificates, other than the
Class M Certificates, which do not have the benefit of any effective
subordination, of the full amount of interest payable in respect of such Classes
of certificates on each Distribution Date, and the ultimate receipt by such
holders of principal equal to, in each case, the entire Certificate Balance of
such Class of certificates. This subordination will be accomplished by the
application of the Available Distribution Amount on each Distribution Date in
accordance with the order of priority described above under "--Application of
the Available Distribution Amount" and by the allocation of Realized Losses and
Expense Losses as described below. No other form of credit support will be
available for the benefit of the holders of the certificates.
Allocation to the Class A Certificates, for so long as they are
outstanding, of the entire Principal Distribution Amount for each Distribution
Date will generally have the effect of reducing the Certificate Balance of that
Class at a faster rate than would be the case if principal payments were
allocated pro rata to all Classes of certificates with Certificate Balances.
Thus, as principal is distributed to the holders of the Class A Certificates,
the percentage interest in the trust evidenced by the Class A Certificates will
be decreased, with a corresponding increase in the percentage interest in the
trust evidenced by the Subordinate Certificates, thereby increasing, relative to
their respective Certificate Balances, the subordination afforded the Class A
Certificates by the Subordinate Certificates.
Following retirement of the Class A Certificates, the herein described
successive allocation to the Subordinate Certificates, in alphabetical order of
Class designation, in each case until such Class is paid in full, of the entire
Principal Distribution Amount for each Distribution Date will provide a similar
benefit to each such Class of Certificates as regards the relative amount of
subordination afforded thereto by the other Classes of Certificates with later
alphabetical Class designations.
Realized Losses of principal and interest on the mortgage loans and
Expense Losses for any Distribution Date, to the extent not previously allocated
and net of amounts, if any, on deposit in the Reserve Account, will be allocated
to the Class M, Class L, Class K, Class J, Class H, Class G, Class F, Class E,
Class D, Class C and Class B Certificates, in that order, and then to the Class
A-1 and Class A-2 Certificates and, solely with respect to Realized Losses and
Expense Losses of interest, to the Class X Certificates, pro rata, in each case
reducing principal and/or interest otherwise payable thereon.
Any shortfall in the amount of the Distributable Certificate Interest
Amount paid to the Certificateholders of any Class of certificates on any
Distribution Date will result in Unpaid Interest for such Class which, together
with interest thereon compounded monthly at one-twelfth the applicable
Pass-Through Rate, will be distributable in subsequent periods to the extent of
funds available therefor.
Prepayment Interest Shortfalls and Prepayment Interest Excesses
To the extent that the aggregate Prepayment Interest Shortfalls on all
mortgage loans other than Specially Serviced Mortgage Loans exceed the aggregate
Prepayment Interest Excesses for such mortgage loans for the Collection Period
related to a Distribution Date, the Master Servicing Fee will be reduced by the
amount of such excess. Likewise, to the extent that the aggregate Prepayment
Interest Shortfalls on all Specially Serviced Mortgage Loans that result from
voluntary Principal Prepayments--not from Liquidations Proceeds or from
modifications to Specially Serviced Mortgage Loans--exceed the aggregate
Prepayment Interest Excesses for such Mortgage Loans for the Collection Period
related to a Distribution Date, the Special Servicing Fee will be reduced by the
amount of such excess. See "Servicing of the Mortgage Loans--The Master
Servicer--Master Servicer Compensation" and "--The Special Servicer--Special
Servicer Compensation" in this prospectus supplement.
Any Net Aggregate Prepayment Interest Shortfall for a Distribution Date
will be allocated to each Class of certificates, pro rata, in each case reducing
interest otherwise payable thereon. The Distributable Certificate Interest
Amount in respect of any Class of certificates will be reduced to the extent any
Net Aggregate Prepayment Interest
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Shortfalls are allocated to such Class of certificates. See "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expense" in this
prospectus supplement.
On any Distribution Date, to the extent that the aggregate Prepayment
Interest Excesses on all mortgage loans other than Specially Serviced Mortgage
Loans exceed the aggregate Prepayment Interest Shortfalls for such mortgage
loans for such Distribution Date, the excess amount will be payable to the
master servicer as additional servicing compensation. Likewise, to the extent
that the aggregate Prepayment Interest Excesses on all Specially Serviced
Mortgage Loans exceed the aggregate Prepayment Interest Shortfalls for such
mortgage loans for such Distribution Date, the excess amount will be payable to
the special servicer as additional servicing compensation.
OPTIONAL TERMINATION
Morgan Stanley Dean Witter Capital I Inc., the master servicer, the
special servicer and the holder of the majority interest in the Class R-I
Certificates, in that order, will have the option to purchase, in whole but not
in part, the mortgage loans and any other property remaining in the trust on any
Distribution Date on or after the Distribution Date on which the aggregate
Certificate Balance of all Classes of Principal Balance Certificates then
outstanding is less than or equal to 1% of the Initial Pool Balance.
The purchase price for any such purchase will be 100% of the aggregate
unpaid principal balances of the mortgage loans, other than any mortgage loans
as to which the master servicer has determined that all payments or recoveries
with respect thereto have been made, plus accrued and unpaid interest at the
mortgage rate--or the mortgage rate less the Master Servicing Fee Rate--if the
master servicer is the purchaser--to the Due Date for each mortgage loan ending
in the Collection Period with respect to which such purchase occurs, plus
unreimbursed Advances, with interest thereon at the Advance Rate, and the fair
market value of any other property remaining in the trust. The optional
termination of the trust must be conducted so as to constitute a "qualified
liquidation" of each REMIC under Section 860F of the Code.
Upon any such termination, the purchase price for the mortgage loans
and the other property in the trust will be applied to pay accrued and unpaid
interest on and reduce the Certificate Balance of all outstanding Classes to
zero in the manner provided under "Description of the
Certificates--Distributions--Application of the Available Distribution Amount"
in this prospectus supplement. Notice of any optional termination must be mailed
by the trustee to the Certificateholders and the Rating Agencies upon the
receipt of written notice of such optional termination by the trustee and the
paying agent.
ANY SUCH TERMINATION WILL HAVE AN ADVERSE EFFECT ON THE YIELD OF ANY
OUTSTANDING OFFERED CERTIFICATES PURCHASED AT A PREMIUM. SEE "YIELD, PREPAYMENT
AND MATURITY CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT.
ADVANCES
P&I Advances
On the business day prior to each Distribution Date, the master
servicer will be obligated to make a P&I Advance, but only to the extent that
the master servicer determines, in its sole discretion, exercised in good faith,
that the amount so advanced, plus interest expected to accrue thereon, will be
recoverable from subsequent payments or collections, including Insurance
Proceeds and Liquidation Proceeds, in respect of the related mortgage loan, and
only until the mortgage loan has been liquidated; provided, however, that the
amount of any P&I Advance required to be advanced by the master servicer with
respect to interest on a mortgage loan as to which there has been an Appraisal
Reduction will be an amount equal to the product of:
o the amount required to be advanced by the master servicer without
giving effect to this sentence; and
o a fraction, the numerator of which is the Scheduled Principal Balance
of such mortgage loan as of the immediately preceding Determination
Date less any Appraisal Reduction in effect with respect to such
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mortgage loan and the denominator of which is the Scheduled Principal
Balance of the mortgage loan as of such Determination Date.
With respect to any mortgage loan that is delinquent in respect of its
Balloon Payment, including any REO Property as to which the related mortgage
loan provided for a Balloon Payment, P&I Advances will be required in an amount
equal to the Assumed Scheduled Payment, less the related Master Servicing Fee,
the Excess Servicing Fee and Primary Servicing Fee, subject to the same
conditions and limitations, as described above, that apply to P&I Advances of
other Scheduled Payments.
The master servicer will be entitled to interest on P&I Advances, which
interest will accrue at the Advance Rate.
P&I Advances and interest accrued thereon at the Advance Rate will be
reimbursable or payable from recoveries on the related mortgage loans and, to
the extent the master servicer determines in its sole discretion, exercised in
good faith, that a P&I Advance will not be ultimately recoverable from related
recoveries, from any funds on deposit in the Certificate Account and
Distribution Account. In no event will the master servicer be required to make
aggregate P&I Advances with respect to any mortgage loan which, when including
the amount of interest accrued thereon at the Advance Rate, equals an amount
greater than the Scheduled Principal Balance plus all overdue amounts thereof,
less any Appraisal Reductions with respect thereto.
The right of the master servicer to reimbursement or payment out of
recoveries will be prior to the right of the Certificateholders to receive any
amounts recovered with respect to any mortgage loan. If the master servicer
fails to make a required P&I Advance, the trustee is required to make such P&I
Advance, and if the trustee fails to make a required P&I Advance, the fiscal
agent is required to make such P&I Advance, each subject to the same
limitations, and with the same rights, as described above for the master
servicer.
Servicing Advances
Servicing Advances, in all cases, will be reimbursable as described
below. The master servicer will be permitted to pay, or to direct the payment
of, certain servicing expenses directly out of the Certificate Account or
Distribution Account and under certain circumstances without regard to the
relationship between the expense and the funds from which it is being paid.
With respect to mortgage loans, the master servicer will be obligated
to make Servicing Advances for real estate taxes and insurance premiums, to the
extent that insurance coverage is available at commercially reasonable rates,
not paid by the related borrower on a timely basis and for collection or
foreclosure costs, including reasonable attorneys fees. With respect to REO
Properties, the master servicer will be obligated to make Servicing Advances, if
necessary and to the extent that funds from the operation of the related REO
Property are unavailable to pay any amounts due and payable, for:
o insurance premiums, to the extent that insurance coverage is available
at commercially reasonable rates;
o items such as real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien;
o any ground rents in respect of such REO Property; and
o costs and expenses necessary to maintain, manage or operate such REO
Property.
Notwithstanding the foregoing, the master servicer will be obligated to
make such Servicing Advances only to the extent that the master servicer
determines, as described below, that the amount so advanced will be recoverable
from subsequent payments or collections, including Insurance Proceeds,
Liquidation Proceeds and REO Income, in respect of such Mortgage Loan or REO
Property.
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The master servicer may incur certain costs and expenses in connection
with the servicing of a mortgage loan or the administration of REO Property.
Servicing Advances, including interest accrued thereon at the Advance Rate, will
be reimbursable from recoveries or collections on the related mortgage loan or
REO Property. However, if the master servicer determines, as described below,
that any Servicing Advance previously made, and accrued interest thereon at the
Advance Rate, will not be ultimately recoverable from such related recoveries,
such advances will be reimbursable from any amounts on deposit in the
Certificate Account or Distribution Account. If the master servicer fails to
make a required Servicing Advance, the trustee is required to make such
Servicing Advance, and if the trustee fails to make a required Servicing
Advance, the fiscal agent is required to make such Servicing Advance, each
subject to the same limitations, and with the same rights, as described above
for the master servicer.
Nonrecoverable Advances
The determination by the master servicer that any P&I Advance or
Servicing Advance, previously made or proposed to be made, would not be
recoverable will be made in the sole discretion of the master servicer,
exercising good faith, and is required to be accompanied by an officer's
certificate delivered to the trustee, the special servicer, the operating
adviser, the Rating Agencies, the paying agent and Morgan Stanley Dean Witter
Capital I Inc. and setting forth the reasons for such determination, with copies
of appraisals or internal valuations, if any, or other information that supports
such determination. The master servicer's determination of nonrecoverability
will be conclusive and binding upon the Certificateholders, the trustee and the
fiscal agent. The trustee and the fiscal agent will be entitled to rely
conclusively on any determination by the master servicer of nonrecoverability
with respect to such Advance and shall have no obligation, but will be entitled,
to make a separate determination of recoverability.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Paying Agent Reports
Based solely on information provided in monthly reports prepared by the
master servicer and the special servicer and delivered to the trustee and the
paying agent, the paying agent will be required to provide or make available to
each Certificateholder on each Distribution Date:
(a) A statement setting forth, to the extent applicable:
(i) the amount, if any, of such distributions to the
holders of each Class of Principal Balance
Certificates applied to reduce the aggregate
Certificate Balance thereof;
(ii) the amount of such distribution to holders of each
Class of REMIC Regular Certificates allocable to (A)
interest and (B) Prepayment Premiums;
(iii) the number of outstanding mortgage loans and the
aggregate principal balance and Scheduled Principal
Balance of the mortgage loans at the close of
business on the related Determination Date;
(iv) the number and aggregate Scheduled Principal Balance
of mortgage loans:
(A) delinquent 30 to 59 days,
(B) delinquent 60 to 89 days,
(C) delinquent 90 days or more,
(D) as to which foreclosure proceedings have
been commenced, or
(E) as to which bankruptcy proceedings have been
commenced;
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(v) with respect to any REO Property included in the
trust, the principal balance of the related mortgage
loan as of the date of acquisition of the REO
Property and the Scheduled Principal Balance of the
mortgage loan;
(vi) as of the related Determination Date:
(A) as to any REO Property sold during the
related Collection Period, the date of the
related determination by the special
servicer that it has recovered all payments
which it expects to be finally recoverable
and the amount of the proceeds of such sale
deposited into the Certificate Account, and
(B) the aggregate amount of other revenues
collected by the special servicer with
respect to each REO Property during the
related Collection Period and credited to
the Certificate Account, in each case
identifying such REO Property by the loan
number of the related mortgage loan;
(vii) the aggregate Certificate Balance or Notional Amount
of each Class of REMIC Regular Certificates before
and after giving effect to the distribution made on
such Distribution Date;
(viii) the aggregate amount of Principal Prepayments made
during the related Collection Period;
(ix) the Pass-Through Rate applicable to each Class of
REMIC Regular Certificates for such Distribution
Date;
(x) the aggregate amount of servicing fees paid to the
master servicer, the Primary Servicers and the
special servicer and the holders of the rights to
Excess Servicing Fees;
(xi) the amount of Unpaid Interest, Realized Losses or
Expense Losses, if any, incurred with respect to the
mortgage loans, including a break out by type of such
Expense Losses;
(xii) the aggregate amount of Servicing Advances and P&I
Advances outstanding, separately stated, that have
been made by the master servicer, the trustee and the
fiscal agent;
(xiii) the amount of any Appraisal Reductions effected
during the related Collection Period on a
loan-by-loan basis and the total Appraisal Reductions
in effect as of such Distribution Date; and
(xiv) such other information and in such form as will be
specified in the Pooling and Servicing Agreement.
(b) A report containing information regarding the mortgage loans
as of the end of the related Collection Period, which report
will contain substantially the categories of information
regarding the mortgage loans presented in Appendix I and will
be presented in a tabular format substantially similar to the
format utilized in Appendix I.
The reports described in clauses (a) and (b) above may be combined into
one report for purposes of dissemination.
In the case of information furnished pursuant to subclauses (a)(i),
(a)(ii) and (a)(xi) above, the amounts shall be expressed as a dollar amount per
$1,000 of original actual principal amount of the certificates for all
certificates of each applicable Class.
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The paying agent will make the foregoing reports and certain other
information available each month to any interested party via the paying agent's
website, which shall initially be located at www.ctslink.net/cmbs (the "Paying
Agent's Website") In addition, the paying agent will also make certain other
additional reports available via the Paying Agent's Website on a restricted
basis to the Depositor, the Rating Agencies, parties to the Pooling and
Servicing Agreement, the Underwriters, Certificateholders and any beneficial
owners of Certificates who provide the paying agent with an investor
certification satisfactory to the paying agent. For assistance with the paying
agent's Website, investors may call (301) 815-6600. The trustee and the paying
agent will make no representations or warranties as to the accuracy or
completeness of such documents and will assume no responsibility therefor. In
addition, the trustee and the paying agent may disclaim responsibility for any
information of which it is not the original source.
In connection with providing access to the Paying Agent's Website, the
paying agent may require registration and the acceptance of a disclaimer. The
trustee and the paying agent will not be liable for the dissemination of
information in accordance with the Pooling and Servicing Agreement.
On an annual basis, the master servicer is required to deliver the
Annual Report to the trustee and the paying agent, which will make such report
available as described above to the Underwriters, the Certificateholders, Morgan
Stanley Dean Witter Capital I Inc. and anyone Morgan Stanley Dean Witter Capital
I Inc. or either Underwriter reasonably designates, the special servicer, the
Rating Agencies, and, any Certificateholder.
The PAYING AGENT shall make available at its corporate trust offices
(either in physical or electronic form), during normal business hours, upon
reasonable advance written notice for review by any certificateholder, any
certificate owner, any prospective investor, the Underwriters, each rating
agency, the special servicer and the depositor, originals or copies of, among
other things, the following items: (i) the most recent property inspection
reports in the possession of the PAYING AGENT in respect of each Mortgaged
Property and REO Property, (ii) the most recent Mortgaged Property/REO Property
annual operating statement and rent roll, if any, collected or otherwise
obtained by or on behalf of the master servicer or the special servicer and
delivered to the PAYING AGENT, (iii) any Phase I Environmental Report or
engineering report prepared or appraisals performed in respect of each Mortgaged
Property provided, however, that the PAYING AGENT shall be permitted to require
payment by the requesting party (other than either rating agency) of a sum
sufficient to cover the reasonable expenses actually incurred by the PAYING
AGENT of providing access or copies (including electronic or digital copies) of
any such information reasonably requested in accordance with the preceding
sentence.
Special Servicer Reports
On or about each Determination Date, the special servicer will prepare,
or provide the master servicer with the information to prepare, the Special
Servicer Reports with respect to Specially Serviced Mortgage Loans as required
by the Pooling and Servicing Agreement. Such reports will be delivered, no later
than the business day prior to each Distribution Date, to the Underwriters, the
Rating Agencies, the trustee and Morgan Stanley Dean Witter Capital I Inc.;
provided that certain limitations will be imposed on such recipients with
respect to the use and further dissemination of the information in such reports
to the extent described in the Pooling and Servicing Agreement.
Other Information
The Pooling and Servicing Agreement generally requires that the trustee
make available, at its corporate trust offices or at such other office as it may
reasonably designate, during normal business hours, upon reasonable advance
notice for review by any Certificateholder, each Rating Agency or Morgan Stanley
Dean Witter Capital I Inc., originals or copies of, among other things, the
following items, except to the extent not permitted by applicable law or under
any of the mortgage loan documents:
o the Pooling and Servicing Agreement and any amendments thereto;
o all reports or statements delivered to holders of the relevant Class of
certificates since the Closing Date;
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o all officer's certificates delivered to the trustee since the Closing
Date;
o all accountants' reports delivered to the trustee since the Closing
Date;
o the most recent property inspection report prepared by or on behalf of
the master servicer or the special servicer in respect of each
mortgaged property;
o the most recent mortgaged property annual operating statements and rent
rolls, if any, collected by or on behalf of the master servicer or the
special servicer;
o any and all modifications, waivers and amendments of the terms of a
mortgage loan entered into by the master servicer and/or the special
servicer; and
o any and all officer's certificates and other evidence delivered to the
trustee to support the master servicer's determination that any Advance
was not or, if made, would not be, recoverable.
Copies of any and all of the foregoing items and any servicer reports
will be available from the trustee upon request; however, the trustee will be
permitted to require the requesting party to pay a sum sufficient to cover the
reasonable costs and expenses of providing such copies. Recipients of such
information will generally be required to acknowledge that such information may
be used only in connection with an evaluation of the certificates by such
recipient.
Book-Entry Certificates
Until such time, if any, as definitive certificates are issued in
respect of the offered certificates, the foregoing information and access will
be available to the related Certificate Owners only to the extent it is
forwarded by, or otherwise available through, DTC and its Participants or
otherwise made available publicly by the paying agent. The manner in which
notices and other communications are conveyed by DTC to its Participants, and by
such Participants to the Certificate Owners, will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
The master servicer, the special servicer, the trustee, the paying
agent and Morgan Stanley Dean Witter Capital I Inc. are required to recognize as
Certificateholders only those persons in whose names the certificates are
registered with the Certificate Registrar as of the related Record Date;
however, any Certificate Owner that has delivered to the Certificate Registrar a
written certification, in the form prescribed by the Pooling and Servicing
Agreement, regarding such Certificate Owner's beneficial ownership of offered
certificates will be recognized as a Certificateholder for purposes of obtaining
the foregoing information and access.
EXAMPLE OF DISTRIBUTIONS
The following chart sets forth an example of distributions on the
certificates as if the Certificates had been issued in March 2000:
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The close of business on
March 1 (A) Cut-off Date.
March 31 (B) Record Date for all Classes of Certificates.
March 2 - April 10 (C) The Collection Period. The master servicer
receives Scheduled Payments due after the
Cut-off Date and any Principal Prepayments
made after the Cut-off Date and on or prior
to April 10.
April 10 (D) Determination Date.
April 14 (E) Master Servicer Remittance Date.
April 17 (F) Distribution Date.
Succeeding monthly periods follow the pattern of (B) through (F)
(except as described below).
(A) The outstanding principal balance of the mortgage loans will be the
aggregate outstanding principal balance of the mortgage loans at the close of
business on the Cut-off Date, after deducting principal payments due on or
before such date, whether or not received. Principal payments due on or before
such date, and the accompanying interest payments, are not part of the trust.
(B) Distributions on the next Distribution Date will be made to those
persons that are Certificateholders of record on this date. Each subsequent
Record Date will be the last business day of the month preceding the related
Distribution Date.
(C) Any Scheduled Payments due and collected and Principal Prepayments
collected, after the Cut-off Date and on or prior to April 10, 2000 will be
deposited in the Certificate Account. Each subsequent Collection Period will
begin on the day after the Determination Date in the month preceding the month
of each Distribution Date and will end on the Determination Date in the month in
which the Distribution Date occurs.
(D) As of the close of business on the Determination Date, the master
servicer will have determined the amounts of principal and interest that will be
remitted with respect to the related Collection Period.
(E) The master servicer will remit to the paying agent no later than
the business day prior to the related Distribution Date all amounts held by the
master servicer, and any P&I Advances required to be made by the master
servicer, that together constitute the Available Distribution Amount for such
Distribution Date.
(F) The paying agent will make distributions to Certificateholders on
the 15th day of each month or, if such day is not a business day, the next
succeeding business day.
THE TRUSTEE AND THE FISCAL AGENT
The Trustee
LaSalle Bank National Association will act as the trustee. LaSalle Bank
National Association is a subsidiary of LaSalle National Corporation which is a
subsidiary of the fiscal agent. The trustee, is at all times required to be, and
will be required to resign if it fails to be, (i) an institution insured by the
FDIC, (ii) a corporation, national bank or national banking association,
organized and doing business under the laws of the United States of America or
any state thereof, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority and (iii) an
institution whose long-term senior unsecured debt, or that of its fiscal agent,
if applicable, is rated not less than "AA" by Fitch and "AA" by S&P, or such
lower ratings as the Rating Agencies would permit without an adverse effect on
any of the then-current ratings of the Certificates. The corporate trust office
of the trustee responsible for administration of the trust is located at 135
South LaSalle Street, Suite 1625, Chicago, Illinois
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60603, Attention: Asset-Backed Securities Trust Services Group - Morgan Stanley
Dean Witter Capital I Inc., Commercial Mortgage Pass-Through Certificates,
Series 2000-LIFE1. As of June 30, 1999, the trustee had assets of approximately
$28.7 billion. See "Servicing of the Mortgage Loans--Duties of the Trustee",
"Servicing of the Mortgage Loans--Certain Matters Regarding the Trustee" and
"Servicing of the Mortgage Loans--Resignation and Removal of the "Trustee" in
the prospectus.
The trustee will be paid the Trustee Fee as compensation for its duties
under the Pooling and Servicing Agreement.
The Fiscal Agent
ABN AMRO Bank N.V., a Netherlands banking corporation and the indirect
corporate parent of the trustee, will act as fiscal agent for the trust and will
be obligated to make any Advance required to be made, and not made, by the
master servicer and the trustee under the Pooling and Servicing Agreement,
provided that the fiscal agent will not be obligated to make any Advance that it
deems to be a Nonrecoverable Advance. The fiscal agent will be entitled -- but
not obligated -- to rely conclusively on any determination by the master
servicer, the special servicer -- solely in the case of Servicing Advances -- or
the trustee that an Advance, if made, would be a Nonrecoverable Advance. The
fiscal agent will be entitled to reimbursement for each Advance made by it in
the same manner and to the same extent as, but prior to, the master servicer and
the trustee. See "--Advances" above. The fiscal agent will be entitled to
various rights, protections and indemnities similar to those afforded the
trustee. The trustee will be responsible for payment of the compensation of the
fiscal agent. As of June 30, 1999, the fiscal agent had consolidated assets of
approximately $480 billion. In the event that LaSalle Bank National Association
shall, for any reason, cease to act as trustee under the Pooling and Servicing
Agreement, ABN AMRO Bank N.V. likewise shall no longer serve in the capacity of
fiscal agent thereunder.
THE PAYING AGENT, CERTIFICATE REGISTRAR AND AUTHENTICATING AGENT
Norwest Bank Minnesota, National Association ("Norwest Bank"), will
serve as the paying agent (in such capacity, the "paying agent"). In addition,
Norwest Bank Minnesota, National Association will serve as registrar (in such
capacity, the "Certificate Registrar") for purposes of recording and otherwise
providing for the registration of the Offered Certificates and of transfers and
exchanges of the Definitive Certificates, if issued, and as authenticating agent
of the Certificates (in such capacity, the "Authenticating Agent"). Norwest
Bank's principal office is located at Norwest Center, Sixth and Marquette,
Minneapolis, Minnesota 55479-0113. Norwest Bank is an affiliate of the Master
Servicer. As compensation for the performance of its duties as paying agent,
Certificate Registrar and Authenticating Agent, Norwest Bank will be paid a
portion of the monthly Trustee Fee as set forth in the Pooling and Servicing
Agreement.
EXPECTED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The Expected Final Distribution Date for each Class of certificates
presented under "Summary of Prospectus Supplement--Expected Final Distribution
Date" in this prospectus supplement is the date on which such Class is expected
to be paid in full, assuming timely payments and no Principal Prepayments will
be made on the mortgage loans in accordance with their terms and otherwise based
on the Structuring Assumptions.
The Rated Final Distribution Date of each Class of certificates is the
Distribution Date in November 2036.
The ratings assigned by the Rating Agencies to each Class of Principal
Balance Certificates reflects an assessment of the likelihood that the
Certificateholders of such Class will receive, on or before the Rated Final
Distribution Date, all principal distributions to which they are entitled.
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YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
GENERAL
The yield to maturity on the offered certificates will be affected by
the price paid by the Certificateholder, the related Pass-Through Rates and the
rate, timing and amount of distributions on such offered certificates. The rate,
timing and amount of distributions on any such certificate will in turn depend
on, among other things:
o the Pass-Through Rate for such 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 such amounts are to be applied in reduction of the Certificate
Balance or Notional Amount of such certificate;
o the rate, timing and severity of Realized Losses and Expense Losses and the
extent to which such losses and expenses are allocable in reduction of the
Certificate Balance or Notional Amount of such certificate; and
o the timing and severity of any Net Aggregate Prepayment Interest Shortfalls
and the extent to which such shortfalls are allocable in reduction of the
Distributable Certificate Interest Amount payable on such certificate.
In addition, the effective yield to holders of the offered certificates
will differ from the yield otherwise produced by the applicable Pass-Through
Rate and purchase prices of such certificates because interest distributions
will not be payable to such holders until at least the 15th day of the month
following the month of accrual without any additional distribution of interest
or earnings thereon in respect of such delay.
PASS-THROUGH RATES
The Pass-Through Rates on the Class B, Class C, Class D and Class E
Certificates will be based on or subject to the Weighted Average Net Mortgage
Rate. The Pass-Through Rate for the Class X Certificates will be variable and
will generally equal the excess, if any, of (i) the Weighted Average Net
Mortgage Rate for such Distribution Date, over (ii) the weighted average of the
Pass-Through Rates applicable to the Class A-1, Class A-2, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L and Class
M Certificates for such Distribution Date, the relevant weighting to be on the
basis of the respective aggregate Certificate Balances of such Classes of
Certificates immediately prior to such Distribution Date. Accordingly, the
yields on the offered certificates will be sensitive to changes in the relative
composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and any unscheduled collections of principal and/or any
experience of Realized Losses as a result of liquidations of mortgage loans. In
general, the effect of any such changes on such yields and Pass-Through Rates
will be particularly adverse to the extent that mortgage loans with relatively
higher mortgage rates experience faster rates of such scheduled amortization,
voluntary prepayments and unscheduled collections or Realized Losses than
mortgage loans with relatively lower mortgage rates.
RATE AND TIMING OF PRINCIPAL PAYMENTS
The yield to maturity on the Class X Certificates will be extremely
sensitive to, and the yield to maturity on any Class of offered certificate
purchased at a discount or premium will be affected by the rate and timing of
principal payments made in reduction of the aggregate Certificate Balance or
Notional Amount of such Class of certificates. As described herein, the
Principal Distribution Amount for each Distribution Date will be distributable
entirely in respect of the Class A-1 Certificates until the Certificate Balance
thereof is reduced to zero, and will thereafter be distributable entirely in
respect of each other Class of Principal Balance Certificates, in descending
alphabetical, and, if applicable, descending numerical, order of Class
designation, in each case until the aggregate Certificate Balance of such Class
of Certificates is, in turn, reduced to zero. Consequently, the rate and timing
of principal payments that are distributed or otherwise result in reduction of
the aggregate Certificate Balance of each Class of offered certificates will be
directly related to the rate and timing of principal payments on or in respect
of the mortgage loans, which will in turn be affected by the amortization
schedules thereof, the dates on which Balloon Payments are due and the rate and
timing of Principal Prepayments and other unscheduled collections thereon,
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including for this purpose, collections made in connection with liquidations of
mortgage loans due to defaults, casualties or condemnations affecting the
mortgaged properties and purchases of mortgage loans out of the trust.
Prepayments and, assuming the respective maturity dates therefor have
not occurred, liquidations of the mortgage loans will result in distributions on
the certificates of amounts that would otherwise be distributed over the
remaining terms of the mortgage loans and will tend to shorten the weighted
average lives of the Principal Balance Certificates. Any early termination of
the trust as described herein under "Description of the Certificates--Optional
Termination" will also shorten the weighted average lives of those certificates
then outstanding. Defaults on the mortgage loans, particularly at or near their
maturity dates, may result in significant delays in payments of principal on the
mortgage loans, and, accordingly, on the Principal Balance Certificates, while
work-outs are negotiated or foreclosures are completed, and such delays will
tend to lengthen the weighted average lives of those certificates. See
"Servicing of the Mortgage Loans--Mortgage Loan Modifications" in this
prospectus supplement.
The extent to which the yield to maturity of any offered certificate
may vary from the anticipated yield will depend upon the degree to which such
Certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the mortgage loans in turn are distributed or otherwise
result in a reduction of the aggregate Certificate Balance or Notional Amounts
of its Class. An investor should consider, in the case of any such certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the mortgage loans could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of any
certificate purchased at a premium, the risk that a faster than anticipated rate
of principal payments on the mortgage loans could result in an actual yield to
such investor that is lower than the anticipated yield.
In general, if an offered certificate is purchased at a discount or
premium, the earlier a payment of principal on the mortgage loans is distributed
or otherwise results in reduction of the Certificate Balance or Notional Amounts
of the related Class, the greater will be the effect on the yield to maturity of
such certificate. As a result, the effect on an investor's yield of principal
payments on the mortgage loans occurring at a rate higher, or lower than the
rate anticipated by the investor during any particular period may not be fully
offset by a subsequent like reduction, or increase, in the rate of such
principal payments. With respect to the Class A, Class B, Class C, Class D,
Class E, Class F and Class G Certificates, the allocation of a portion of
collected Prepayment Premiums to the certificates as described herein is
intended to mitigate those risks; however, such allocation, if any, may be
insufficient to offset fully the adverse effects on yield that such prepayments
may have. The Prepayment Premium payable, if any, with respect to any Mortgage
Loan, is required to be calculated as presented in "Appendix II - Certain
Characteristics of the Mortgage Loans."
Because the rate of principal payments on the Mortgage Loans will
depend on future events and a variety of factors (as described more fully
below), no assurance can be given as to such rate or the rate of Principal
Prepayments in particular. Because the rate of principal payments on the
mortgage loans will depend on future events and a variety of factors, as
described more fully below, no assurance can be given as to such rate or the
rate of Principal Prepayments in particular. Morgan Stanley Dean Witter Capital
I Inc. is not aware of any relevant publicly available or authoritative
statistics with respect to the historical prepayment experience of a large group
of mortgage loans comparable to the mortgage loans.
LOSSES AND SHORTFALLS
The yield to holders of the offered certificates will also depend on
the extent to which such holders are required to bear the effects of any losses
or shortfalls on the mortgage loans. Realized Losses and Expense Losses will
generally be applied to reduce the Certificate Balances of the Principal Balance
Certificates in the following order: first, to the Class M Certificates until
the Certificate Balance thereof has been reduced to zero; then to the other
respective Classes of Principal Balance Certificates, in ascending -- that is,
from L to A -- alphabetical order of Class designation, until the remaining
Certificate Balance of each such Class of certificates has been reduced to zero;
provided that with respect to interest, Realized Losses and Expense Losses of
interest will be allocated to the Class A-1, Class A-2 and Class X Certificates,
pro rata based on interest distributable on such certificates. Net Aggregate
Prepayment Interest Shortfalls will be borne by the holders of each Class of
certificates, pro rata in each case reducing interest otherwise payable thereon.
Shortfalls arising from delinquencies and defaults, to the extent the master
servicer determines that P&I Advances would be nonrecoverable, Appraisal
Reductions, Expense Losses
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and Realized Losses generally will result in, among other things, a shortfall in
current distributions to the most subordinate Class of certificates outstanding.
RELEVANT FACTORS
The rate and timing of principal payments and defaults and the severity
of losses on the mortgage loans may be affected by a number of factors
including, without limitation, prevailing interest rates, the terms of the
mortgage loans--for example, provisions prohibiting Principal Prepayments for
certain periods and/or requiring the payment of Prepayment Premiums, and
amortization terms that require Balloon Payments--the demographics and relative
economic vitality of the areas in which the mortgaged properties are located and
the general supply and demand for rental units or comparable commercial space,
as applicable, in such areas, the quality of management of the mortgaged
properties, the servicing of the mortgage loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors" in this prospectus
supplement and "Risk Factors" in the prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower has an incentive to refinance its mortgage
loan. A requirement that a prepayment be accompanied by a Prepayment Premium may
not provide a sufficient economic disincentive to deter a borrower from
refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance mortgaged properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws, which are subject to change, to sell
mortgaged properties prior to the exhaustion of tax depreciation benefits.
Morgan Stanley Dean Witter Capital I Inc. makes no representation as to
the particular factors that will affect the rate and timing of prepayments and
defaults on the mortgage loans, as to the relative importance of such factors,
as to the percentage of the principal balance of the mortgage loans that will be
prepaid or as to whether a default will have occurred as of any date or as to
the overall rate of prepayment or default on the mortgage loans.
WEIGHTED AVERAGE LIFE
Weighted average life refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of any Principal
Balance Certificate will be influenced by, among other things, the rate at which
principal on the mortgage loans is paid or otherwise collected or advanced and
applied to reduce the Certificate Balance of such certificate.
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 or CPR model. Morgan Stanley Dean
Witter Capital I Inc. makes no representation as to the appropriateness of using
the CPR model for purposes of analyzing an investment in the offered
certificates.
The following tables indicate the percent of the initial Certificate
Balance of each Class of offered certificates after each of the dates shown and
the corresponding weighted average life of each such Class of the certificates,
if the Mortgage Pool were to prepay at the indicated levels of CPR, and sets
forth the percentage of the initial Certificate Balance or of such certificates
that would be outstanding after each of the dates shown. The tables below have
also been prepared generally on the basis of the Structuring Assumptions.
The mortgage loans do not have all of the characteristics of the
Structuring Assumptions. To the extent that the mortgage loans have
characteristics that differ from those assumed in preparing the tables, the
Classes of Certificates analyzed in the tables may mature earlier or later than
indicated by the tables. Certain of the mortgage loans permit partial
prepayments. Additionally, mortgage loans generally do not prepay at any
constant rate. Accordingly, it is highly unlikely that the mortgage loans will
prepay in a manner consistent with the Structuring Assumptions. Furthermore, it
is unlikely that the mortgage loans will experience no defaults or losses. In
addition,
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variations in the actual prepayment experience and the balance of the mortgage
loans that prepay may increase or decrease the percentages of initial
Certificate Balances, and shorten or extend the weighted average lives, shown in
the following tables. Investors are urged to conduct their own analyses of the
rates at which the mortgage loans may be expected to prepay.
For the purposes of each table, the weighted average life of a
certificate is determined by:
o multiplying the amount of each reduction in the Certificate Balance
thereon by the number of years from the date of issuance of the
certificate to the related Distribution Date;
o summing the results; and
o dividing the sum by the aggregate amount of the reductions in the
Certificate Balance of such certificate.
The characteristics of the mortgage loans differ in substantial
respects from those assumed in preparing the tables below, and the tables are
presented for illustrative purposes only. In particular, it is unlikely that the
Mortgage Pool will not experience any defaults or losses, or that the Mortgage
Pool or any mortgage loan will prepay at any constant rate. Therefore, there can
be no assurance that the mortgage loans will prepay at any particular rate.
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-1 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 94% 94% 94% 94% 94% 94%
April 2002 88% 88% 88% 88% 88% 88%
April 2003 81% 81% 81% 81% 81% 81%
April 2004 74% 74% 74% 74% 74% 74%
April 2005 62% 62% 62% 62% 62% 62%
April 2006 53% 53% 53% 53% 53% 53%
April 2007 44% 44% 44% 44% 44% 44%
April 2008 17% 17% 17% 17% 17% 17%
April 2009 0% 0% 0% 0% 0% 0%
Weighted average life (years) 5.70 5.70 5.70 5.70 5.70 5.70
</TABLE>
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-2 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 100% 100% 100% 100% 100% 100%
April 2002 100% 100% 100% 100% 100% 100%
April 2003 100% 100% 100% 100% 100% 100%
April 2004 100% 100% 100% 100% 100% 100%
April 2005 100% 100% 100% 100% 100% 100%
April 2006 100% 100% 100% 100% 100% 100%
April 2007 100% 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100% 100%
April 2009 90% 90% 89% 89% 89% 89%
April 2010 0% 0% 0% 0% 0% 0%
Weighted average life (years) 9.34 9.33 9.33 9.33 9.33 9.33
</TABLE>
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<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS B CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 100% 100% 100% 100% 100% 100%
April 2002 100% 100% 100% 100% 100% 100%
April 2003 100% 100% 100% 100% 100% 100%
April 2004 100% 100% 100% 100% 100% 100%
April 2005 100% 100% 100% 100% 100% 100%
April 2006 100% 100% 100% 100% 100% 100%
April 2007 100% 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100% 100%
April 2010 0% 0% 0% 0% 0% 0%
Weighted average life (years) 9.69 9.68 9.68 9.68 9.68 9.67
</TABLE>
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS C CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 100% 100% 100% 100% 100% 100%
April 2002 100% 100% 100% 100% 100% 100%
April 2003 100% 100% 100% 100% 100% 100%
April 2004 100% 100% 100% 100% 100% 100%
April 2005 100% 100% 100% 100% 100% 100%
April 2006 100% 100% 100% 100% 100% 100%
April 2007 100% 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100% 100%
April 2010 0% 0% 0% 0% 0% 0%
Weighted average life (years) 9.72 9.72 9.72 9.72 9.72 9.72
</TABLE>
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS D CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 100% 100% 100% 100% 100% 100%
April 2002 100% 100% 100% 100% 100% 100%
April 2003 100% 100% 100% 100% 100% 100%
April 2004 100% 100% 100% 100% 100% 100%
April 2005 100% 100% 100% 100% 100% 100%
April 2006 100% 100% 100% 100% 100% 100%
April 2007 100% 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100% 100%
April 2010 0% 0% 0% 0% 0% 0%
Weighted average life (years) 9.72 9.72 9.72 9.72 9.72 9.72
</TABLE>
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<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS E CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
<TABLE>
<CAPTION>
DISTRIBUTION DATE 0% 3% 5% 7% 10% 15%
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Settlement Date 100% 100% 100% 100% 100% 100%
April 2001 100% 100% 100% 100% 100% 100%
April 2002 100% 100% 100% 100% 100% 100%
April 2003 100% 100% 100% 100% 100% 100%
April 2004 100% 100% 100% 100% 100% 100%
April 2005 100% 100% 100% 100% 100% 100%
April 2006 100% 100% 100% 100% 100% 100%
April 2007 100% 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100% 100%
April 2010 0% 0% 0% 0% 0% 0%
Weighted average life (years) 9.74 9.74 9.74 9.74 9.74 9.73
</TABLE>
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<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of one hundred thirty three (133)
fixed-rate mortgage loans with an aggregate Cut-off Date Balance of $689,464,702
subject to a permitted variance of plus or minus 5%. The Cut-off Date Balances
of the mortgage loans range from $1,148,373 to $18,569,532, and the mortgage
loans have an average Cut-off Date Balance of $5,183,945. Generally, for
purposes of the presentation of Mortgage Pool information in this prospectus
supplement, multiple mortgaged properties securing a single mortgage loan have
been treated as multiple cross-collateralized and cross-defaulted mortgage
loans, each secured by one of the related mortgaged properties and each having a
principal balance in an amount equal to an allocated portion of the aggregate
indebtedness represented by such obligation.
The mortgage loans were originated between March 16, 1998 and February
23, 2000. As of the Cut-off Date, none of the mortgage loans were 30 days or
more delinquent, or had been 30 days or more delinquent during the 12 calendar
months preceding the Cut-off Date. Brief summaries of the material terms of the
mortgage loans associated with the ten (10) largest borrower concentrations in
the Mortgage Pool are contained in Appendix III attached.
One hundred thirty one (131) mortgage loans, representing 98.4% of the
Initial Pool Balance, are evidenced by a mortgage note and secured by a
mortgage, deed of trust or similar security instrument that creates a first
mortgage lien on a fee simple estate in one or more income-producing mortgaged
properties. In three (3) of those cases, the borrower's interest in the property
consists of a fee interest in one portion and a ground leasehold interest in
another portion of the property. In each of those cases, the fee owner is a
party to the related mortgage and has subordinated its interest, therefore, we
consider the borrower's interests in those properties to be fee simple estate
for purposes of this prospectus supplement. One (1) mortgage loan, representing
0.9% of the Initial Pool Balance, is secured by a leasehold mortgage, deed of
trust or similar security instrument that creates a first mortgage lien in a
leasehold interest in one or more income-producing real properties. One (1)
mortgage loan, representing 0.6% of the Initial Pool Balance, is secured by a
leasehold mortgage, deed of trust or similar security instrument that creates a
first mortgage lien in both a fee and a leasehold interest in one or more
income-producing real properties.
On or prior to the Closing Date, Morgan Stanley Dean Witter Capital I
Inc. acquired the mortgage loans from the sellers, in each case pursuant to a
Mortgage Loan Purchase Agreement entered into between Morgan Stanley Dean Witter
Capital I Inc. and the particular seller. Morgan Stanley Dean Witter Capital I
Inc. sold its interests in the mortgage loans, without recourse, to the trustee
for the benefit of the Certificateholders. See "--The Sellers" and "--Assignment
of Mortgage Loans" below.
MATERIAL TERMS AND CHARACTERISTICS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest
The mortgage loans bear interest at mortgage rates that will remain
fixed for their remaining terms. Twenty (20) of the mortgage loans, representing
20.5% of the Initial Pool Balance, accrue interest on the basis of a 360-day
year consisting of twelve 30-day months. One hundred twelve (112) mortgage
loans, representing 78.8% of the Initial Pool Balance, accrue interest on the
basis of the actual number of days elapsed each month in a 360-day year. One (1)
mortgage loan, representing 0.7% of the Initial Pool Balance, accrues interest
on the basis of a 360-day year consisting of twelve 30-day months during the
interest-only period, and thereafter accrues interest on the basis of the actual
number of days elapsed each month in a 360-day year.
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<PAGE>
Property Types
The mortgaged properties consist of the following property types:
o Retail - Forty-four (44) of the mortgage loans, which
represent 33.0% of the Initial Pool Balance, are secured by
retail properties;
o Office - Forty (40) of the mortgage loans, which represent
31.8% of the Initial Pool Balance, are secured by office
properties;
o Industrial - Twenty (20) of the mortgage loans, which
represent 16.9% of the Initial Pool Balance, are secured by
industrial properties;
o Multifamily - Seventeen (17) of the mortgage loans, which
represent 10.3% of the Initial Pool Balance, are secured by
multifamily properties;
o Assisted Living - Two (2) of the mortgage loans, which
represent security for 3.1% of the Initial Pool Balance, are
secured by senior housing properties;
o Hospitality - Two (2) of the mortgage loans, which represent
security for 2.0% of the Initial Pool Balance, are secured by
hospitality properties;
o Self-Storage - Four (4) of the mortgage loans, which represent
security for 1.4% of the Initial Pool Balance, are secured by
self-storage properties;
o Manufactured Housing - Two (2) of the mortgage loans, which
represent security for 0.8% of the Initial Pool Balance, are
secured by manufactured housing properties;
o Mixed Use - Two (2) of the mortgage loans, which represent
security for 0.8% of the Initial Pool Balance, are secured by
mixed use property types;
Property Location
The following eight states contain the largest concentrations of
mortgaged properties securing the mortgage loans: California, Georgia, Florida,
New York, Ohio, Massachusetts, New Jersey and Illinois.
o Forty-five (45) mortgage loans, representing 35.3% of the
Initial Pool Balance are secured by mortgaged properties
located in California. Of the mortgaged properties located in
California, twenty seven (27) of such mortgaged properties,
representing 21.4% of the Initial Pool Balance, are located in
Southern California, and eighteen (18) mortgaged properties,
representing 13.9% of the Initial pool Balance, are located in
Northern California.
o Six (6) mortgage loans, representing 6.4% of the Initial Pool
Balance are secured by mortgaged properties located in
Georgia;
o Six (6) mortgage loans, representing 5.1% of the Initial Pool
Balance are secured by mortgaged properties located in
Florida;
o Three (3) mortgage loans, representing 4.7% of the Initial
Pool Balance are secured by mortgaged properties located in
New York;
o Eight (8) mortgage loans, representing 4.6% of the Initial
Pool Balance are secured by mortgaged properties located in
Ohio;
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o Three (3) mortgage loans, representing 4.1% of the Initial
Pool Balance are secured by mortgaged properties located in
Massachusetts;
o Six (6) mortgage loans, representing 4.0% of the Initial Pool
Balance are secured by mortgaged properties located in New
Jersey and
o Seven (7) mortgage loans, representing 3.9% of the Initial
Pool Balance are secured by mortgaged properties located in
Illinois.
Due Dates
One hundred twenty-seven (127) of the mortgage loans, representing
95.9% of the Initial Pool Balance, have Due Dates on the first day of each
calendar month. Two (2) of the mortgage loans, representing 0.9% of the Initial
Pool Balance, have Due Dates on the third day of each calendar month without any
grace period for late payments. Four (4) of the mortgage loans, representing
3.2% of the Initial Pool Balance, have Due Dates on the fifth day of each
calendar month without any grace period for late payments.
Amortization
The mortgage loans have the following amortization features:
o One hundred twenty-seven (127) of the mortgage loans, representing 97.9% of
the Initial Pool Balance, are Balloon Loans. The amount of the Balloon
Payments on those mortgage loans that accrue interest on the basis of the
actual number of days elapsed each month in a 360-day year will be greater,
and the actual amortization terms will be longer, than would be the case if
such mortgage loans accrued interest on the basis of a 360-day year
consisting of 30-day months as a result of the application of interest and
principal on such mortgage loans over time. See "Risk Factors And Other
Special Considerations--The Mortgage Loans--Balloon Payments."
o Five (5) of such Balloon Loans, representing 5.3% of the Initial Pool
Balance, are interest-only loans and do not provide for any amortization of
their principal balances for a portion of their term, and then provide for
the payment of principal and interest until their maturity dates.
o The remaining six (6) mortgage loans, representing 2.1% of the Initial Pool
Balance, fully amortize to an amount less than 6% of the Original Principal
Balance of the mortgage loans over their respective terms.
Prepayment Restrictions
As of the Cut-off Date, the following prepayment restrictions applied
to the mortgage loans:
o Ninety-three (93) mortgage loans, representing 63.8% of the Initial Pool
Balance, prohibit voluntary principal prepayments during the Lock-out
Period but permit the related borrower (after an initial period of at least
two years following the date of issuance of the certificates) to defease
the loan by pledging direct, non-callable United States Treasury
obligations and obtaining the release of the mortgaged property from the
lien of the mortgage.
o Thirty-two (32) mortgage loans, representing 31.6% of the Initial Pool
Balance, prohibit voluntary principal prepayments during a Lock-out Period
and thereafter provide for prepayment premiums calculated on the basis of
the greater of a yield maintenance formula and 1% of the amount prepaid.
o Eight mortgage loans, representing 4.5% of the initial outstanding pool
balance prohibit voluntary principal payments during a Lock-out period and
thereafter provide for prepayment premiums calculated on the basis of the
greater of a yield maintenance formula and 1% of the amount prepaid but
permit the related borrower (after an initial period of at least two years
following the date of issuance of the certificates to defease the Loan by
pledging direct, non-callable United States Treasury obligations and
obtaining the release of the Mortgaged Property from the lien of the
mortgage.
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<PAGE>
o Notwithstanding the foregoing, the mortgage loans generally provide for a
period of one (1) to seven (7) payments prior to and including the maturity
date in which the related borrower may prepay the mortgage loan without
premium or defeasance requirements.
The method of calculation of any Prepayment Premium will vary for any
mortgage loan as presented in "Appendix II - Material Characteristics of the
Mortgage Loans."
Non-Recourse Obligations
The mortgage loans are generally non-recourse obligations of the
related borrowers and, upon any such borrower's default in the payment of any
amount due under the related mortgage loan, the holder thereof may look only to
the related mortgaged property for satisfaction of the borrower's obligations.
In those cases where the loan documents permit recourse to the borrower or a
guarantor, Morgan Stanley Dean Witter Capital I Inc. has not evaluated the
financial condition of any such person, and prospective investors should thus
consider all of the mortgage loans to be non-recourse. None of the mortgage
loans is insured or guaranteed by the United States, any government entity or
instrumentality or mortgage insurer.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions
The mortgages generally contain due-on-sale and due-on-encumbrance
clauses that permit the holder of the mortgage to accelerate the maturity of the
related mortgage loan if the borrower sells or otherwise transfers or encumbers
the related mortgaged property or that prohibit the borrower from doing so
without the consent of the holder of the Mortgage. However, the mortgage loans
generally permit transfers of the related mortgaged property, subject to
reasonable approval of the proposed transferee by the holder of the mortgage,
payment of an assumption fee, which may be waived by the master servicer or the
special servicer, as the case may be, or, if collected, will be paid to the
master servicer or the special servicer as additional servicing compensation,
and certain other conditions.
In addition, some of the mortgage loans permit the borrower to transfer
the related mortgaged property to an affiliate or subsidiary of the borrower, or
an entity of which the borrower is the controlling beneficial owner, upon the
satisfaction of certain limited conditions set forth in the applicable mortgage
loan documents and/or as determined by the master servicer. The master servicer
or the special servicer, as the case may be, will determine, in a manner
consistent with the Servicing Standard, whether to exercise any right it may
have under any such clause to accelerate payment of the related mortgage loan
upon, or to withhold its consent to, any transfer or further encumbrance of the
related mortgaged property in accordance with the Pooling and Servicing
Agreement.
Subordinate and Other Financing
As of March 1, 2000, none of the mortgaged properties secures any debt
other than the related mortgage loan. One hundred twenty-five (125) mortgage
loans, representing 88.0% of the Initial Pool Balance, either prohibit the
respective borrowers from incurring secured subordinate indebtedness or require
the consent of the holder of the mortgage prior to doing so.
Two (2) mortgage loans, which represent 4.2% of the aggregate principal
balance of all the mortgage loans as of March 1, 2000 permit the borrower,
subject to a maximum loan-to-value ratio of 60% and minimum debt service
coverage ratio of 1.60x, to utilize the mortgaged property as collateral for
subordinated loans. One (1) mortgage loans, which represents 1.8% of the
aggregate principal balance of all the mortgage loans as of March 1, 2000,
permits the borrower, subject to a maximum loan-to-value ratio of 70% and
minimum debt service coverage ratio of 1.30x, to utilize the mortgaged property
as collateral for subordinated loans. Five (5) mortgage loans, which represent
5.9% of the aggregate principal balance of all the mortgage loans of March 1,
2000, permit the borrower to engage in additional financing that is not secured
by the mortgaged property.
Substantially all of the mortgage loans also permit the related
borrower to incur unsecured indebtedness in the ordinary course of business.
Morgan Stanley Dean Witter Capital I Inc. makes no representation as to whether
any other secured subordinate financing currently encumbers any mortgage
property or whether a third-party holds debt secured by a pledge of an equity
interest in a related borrower. See "Certain Legal Aspects of the Mortgage
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Loans and the Leases--Subordinate Financing" in the prospectus and "Risk
Factors--Authority to Effect Other Borrowings Entails Risks" in this prospectus
supplement.
Additional Collateral
Thirty-one (31) of the mortgage loans, representing 21.3% of the
Initial Pool Balance, have additional collateral in the form of reserves under
which monies disbursed by the originating lender or letters of credit are
reserved for specified periods which are to be released only upon the
satisfaction of certain conditions by the borrower. If the borrowers do not
satisfy conditions for release of the monies or letters of credit by the outside
release date, such monies or letters of credit may be applied to partially repay
the related mortgage loan, in some cases, without the payment of any prepayment
premium, or may be held by the lender as additional security for the mortgage
loans. In addition, some of the other mortgage loans provide for reserves for
items such as deferred maintenance, environmental remediation and capital
improvements. For further information with respect to additional collateral, see
Appendix II.
Releases
Certain of the mortgage loans provide for a partial release of certain
parcels from the lien of the related mortgage subject to the satisfaction of
certain conditions, including paydowns of the related mortgage loan which may be
subject to a yield maintenance premium to be paid by the related borrower and or
the creation of a separate tax parcel, and the payment of costs and expenses. In
addition, the Mortgage Pool contains mortgage loans that provide for a partial
release of collateral. In general, such collateral does not contribute to the
Underwritable Cash Flow of the property or to the appraised value. In addition,
certain mortgage loans do not require partial prepayment as a condition of the
release. For further information with respect to certain releases, see Appendix
II.
CROSS COLLATERALIZATION; RELATED PARTIES
The Mortgage Pool includes one (1) group of mortgage loans, which
collectively represents 2.7% of the Initial Pool Balance, under which an
aggregate amount of indebtedness is evidenced by a single obligation secured by
multiple mortgaged properties. Generally, for purposes of the presentation of
Mortgage Pool information herein, such mortgage loans have been treated as
multiple cross collateralized and cross defaulted mortgage loans, each secured
by one of the related mortgaged properties and each having a principal balance
in an amount equal to an allocated portion of the aggregate indebtedness
represented by such obligation.
In addition, the Mortgage Pool includes two (2) separate groups of
mortgage loans, the largest of which collectively represents 3.0% of the Initial
Pool Balance, under which an aggregate amount of indebtedness is evidenced by
multiple obligations and is secured by mortgages on multiple mortgaged
properties. Each such mortgage loan is cross defaulted and cross collateralized
with the other mortgage loan or loans in such group. See Appendix II for further
information with respect to such groups.
ASSESSMENTS OF PROPERTY VALUE AND CONDITION
Appraisals
In connection with the origination of each of the mortgage loans, the
related mortgaged property was appraised by an independent appraiser who,
generally, was a Member of the Appraisal Institute. Each such appraisal complied
with the real estate appraisal regulations issued jointly by the federal bank
regulatory agencies under the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended. In general, those appraisals represent the
analysis and opinion of the person performing the appraisal and are not
guarantees of, and may not be indicative of, present or future value. There can
be no assurance that another person would not have arrived at a different
valuation, even if such person used the same general approach to and same method
of valuing the property. Moreover, such appraisals sought to establish the
amount of typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale of a
mortgaged property under a distress or liquidation sale. Information regarding
the values of the Mortgaged Properties as of the Cut-off Date is presented
herein for illustrative purposes only.
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Environmental Assessments
An environmental site assessment was performed with respect to each
mortgaged property generally within the twelve-month period preceding the
origination of the related mortgage loan. In all cases, the environmental site
assessment was a "Phase I" environmental assessment, generally performed in
accordance with industry practice. In general, the environmental assessments
contained no recommendations for further significant environmental remediation
efforts which, if not undertaken, would have a material adverse effect on the
interests of the certificate holders. However, in certain cases, the assessment
disclosed the existence of or potential for adverse environmental conditions,
generally the result of the activities of identified tenants, adjacent property
owners or previous owners of the mortgaged property. In certain of such cases,
the related borrowers were required to establish operations and maintenance
plans, monitor the mortgaged property, abate or remediate the condition and/or
provide additional security such as letters of credit or reserves. See "Risk
Factors--Environmental Risks Relating to Specific Mortgaged Properties" in this
prospectus supplement.
Property Condition Assessments
The mortgaged properties were inspected in connection with the
origination of the related mortgage loan, by a representative of the related
seller or by a third party professional engaged by such seller. Furthermore,
except for two (2) newly constructed properties representing 3.1% of the Initial
Pool Balance, a licensed engineer or consultant inspected the related mortgaged
property, in connection with the origination of the related mortgage loan, to
assess the structure, exterior walls, roofing, interior structure and mechanical
and electrical systems. Engineering reports by licensed engineers or consultants
were prepared, except for newly constructed properties, for all of the mortgaged
properties in connection with the origination or securitization of the related
mortgage loan. See "Risk Factors Risks Relating to Property Inspections" in this
prospectus supplement Environmental Assessments. In certain cases where material
deficiencies were noted in such reports, the related borrower was required to
establish reserves for replacement or repair or remediate the deficiency.
Seismic Review Process
In general, the underwriting guidelines applicable to the origination
of the mortgage loans required that prospective borrowers seeking loans secured
by properties located in California and areas of other states where seismic risk
is deemed material obtain a seismic engineering report of the building and,
based thereon and on certain statistical information, an estimate of probable
maximum loss ("PML"), in an earthquake scenario. Generally, any of the mortgage
loans as to which the property was estimated to have PML in excess of 20% of the
estimated replacement cost would either be subject to a lower loan-to-value
limit at origination, be conditioned on seismic upgrading (or appropriate
reserves or letter of credit for retrofitting), be conditioned on satisfactory
earthquake insurance or be declined.
The Mortgage Pool contains two (2) mortgage loans, representing 1.4% of
the Initial Pool Balance, that have PMLs in excess of 20% of the estimated
replacement costs of the improvements and are subject to the above-described
mitigants.
For the loans to be sold by Wells Fargo Bank, National Association,
loan requests secured by properties located in California were screened using a
software system to perform a preliminary PML analysis. Properties with any one
of the following characteristics were subject to a third party seismic survey
performed by an approved seismic engineering firm:
o a property with a preliminary PML over 20% of the estimated
replacement cost of the improvements.
o a property that would secure a loan of more than $10,000,000,
o a property located in an Alquist Priolo Zone (a zone
surrounding active California earthquake faults, as
established under California law),
o a property of three or more stories,
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o a property constructed of non-reinforced masonry, or
o a property found to exhibit indications of significant seismic
stress during the completion of the property condition
assessment or a property located in a county having special
inspection or retrofit requirements.
Zoning and Building Code Compliance
Each seller took steps to establish that the use and operation of the
mortgaged properties that represent security for its mortgage loans were, at
their respective dates of origination, in compliance in all material respects
with applicable zoning, land-use and similar laws and ordinances, but no
assurance can be given that such steps revealed all possible violations.
Evidence of such compliance may have been in the form of legal opinions,
confirmations from government officials, title insurance endorsements, survey
endorsements and/or representations by the related borrower contained in the
related Mortgage Loan documents. Violations may be known to exist at any
particular mortgaged property, but the related seller has informed Morgan
Stanley Dean Witter Capital I Inc. that it does not consider any such violations
known to it to be material.
ADDITIONAL MORTGAGE LOAN INFORMATION
Each of the tables presented in Appendix I sets forth selected
characteristics of the Mortgage Pool presented, where applicable, as of the
Cut-off Date. For a detailed presentation of certain of the characteristics of
the mortgage loans and the mortgaged properties, on an individual basis, see
Appendix II hereto, and for a brief summary of the mortgage loans associated
with the ten (10) largest borrower concentrations significant mortgage loans in
the Mortgage Pool, see Appendix III hereto. Additional information regarding the
mortgage loans is contained in this prospectus supplement under "Risk Factors"
elsewhere in this "Description of the Mortgage Pool" section and under "Legal
Aspects of Mortgage Loans and the Leases" in the prospectus.
For purposes of the tables in Appendix I and for the information
presented in Appendix II and Appendix III:
(1) References to "DSCR" are references to "Debt Service Coverage
Ratios". In general, debt service coverage ratios are used by
income property lenders to measure the ratio of (a) cash
currently generated by a property or expected to be generated
by a property based upon executed leases that is available for
debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or
recent, ability of a property to service mortgage debt. If a
property does not possess a stable operating expectancy (for
instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for
above-market rents and/or that may be difficult to replace), a
debt service coverage ratio may not be a reliable indicator of
a property's ability to service the mortgage debt over the
entire remaining loan term. For purposes of this prospectus
supplement, including for the tables in Appendix I and the
information presented in Appendix II and Appendix III, the
"Debt Service Coverage Ratio" or "DSCR" for any mortgage loan
(or group of cross-collateralized mortgage loans) is
calculated pursuant to the definition thereof under the
"Glossary of Terms" in this prospectus supplement.
In connection with the calculation of DSCR and loan-to-value
ratios, in determining Underwritable Cash Flow for a mortgaged
property, the applicable seller relied on rent rolls and other
generally unaudited financial information provided by the
respective borrowers and calculated stabilized estimates of
cash flow that took into consideration historical financial
statements, material changes in the operating position of the
mortgaged property of which the seller was aware (e.g., new
signed leases or end of "free rent" periods and market data),
and estimated capital expenditures, leasing commission and
tenant improvement reserves. The applicable seller made
changes to operating statements and operating information
obtained from the respective borrowers, resulting in either an
increase or decrease in the estimate of Underwritable Cash
Flow derived therefrom, based upon the seller's evaluation of
such operating statements and operating information and the
assumptions applied by the respective borrowers in preparing
such statements and information. In most cases, borrower
supplied "trailing-12 months"
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income and/or expense information or the most recent operating
statements or rent rolls were utilized. In some cases, partial
year operating income data was annualized, with certain
adjustments for items deemed not appropriate to be annualized.
In some instances, historical expenses were inflated. For
purposes of calculating Underwritable Cash Flow for mortgage
loans where leases have been executed by one or more
affiliates of the borrower, the rents under some of such
leases have been adjusted to reflect market rents for similar
properties.
Historical operating results may not be available for some of
the mortgage loans which are secured by mortgaged properties
with newly constructed improvements, mortgaged properties with
triple net leases, mortgaged properties that have recently
undergone substantial renovations and newly acquired mortgaged
properties. In such cases, items of revenue and expense used
in calculating Underwritable Cash Flow were generally derived
from rent rolls, estimates set forth in the related appraisal,
leases with tenants or from other borrower-supplied
information. No assurance can be given with respect to the
accuracy of the information provided by any borrowers, or the
adequacy of the procedures used by the applicable seller in
determining the presented operating information.
The Debt Service Coverage Ratios are presented herein for
illustrative purposes only and, as discussed above, are
limited in their usefulness in assessing the current, or
predicting the future, ability of a mortgaged property to
generate sufficient cash flow to repay the related mortgage
loan. Accordingly, no assurance can be given, and no
representation is made, that the Debt Service Coverage Ratios
accurately reflect that ability.
(2) References in the tables to "Cut-off Date LTV" are references
to "Cut-off Date Loan-to-Value" and references to "Balloon
LTV" are references to "Balloon Loan-to-Value." For purposes
of this prospectus supplement, including for the tables in
Appendix I and the information presented in Appendix II and
Appendix III, the "Cut-off Date LTV," "Cut-off Date
Loan-to-Value," "Balloon LTV" or "Balloon Loan-to-Value" for
any Mortgage Loan is calculated pursuant to the definition
thereof under the "Glossary of Terms" in this prospectus
supplement.
The value of the related mortgaged property or properties for
purposes of determining the Cut-off Date LTV are each based on
the appraisals described above under "--Assessments of
Property Value and Condition--Appraisals".
No representation is made that any such value would
approximate either the value that would be determined in a
current appraisal of the related mortgaged property or the
amount that would be realized upon a sale.
(3) References to "weighted averages" are references to averages
weighted on the basis of the Cut-off Date Balances of the
related mortgage loans.
The sum in any column of any of the tables in Appendix I may not equal
the indicated total due to rounding.
Generally, the loan documents with respect to the mortgage loans
require the borrowers to provide the related lender with quarterly and/or annual
operating statements and rent rolls.
STANDARD HAZARD INSURANCE
The master servicer will, consistent with the Servicing Standard
require each borrower to maintain a fire and hazard insurance policy with
extended coverage in the manner required under the related mortgage loan.
Certain mortgage loans may permit such hazard insurance policy to be maintained
by a tenant at the related mortgaged property, or may permit the related
borrower to self-insure. The coverage of each such policy will be in an amount,
subject to a deductible customary in the related geographic area, that is not
less than the lesser of the full replacement cost of the improvements that
represent security for such mortgage loan, with no deduction for depreciation,
and the outstanding principal balance owing on such mortgage loan, but in any
event, unless otherwise
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specified in the applicable mortgage or mortgage note, in an amount sufficient
to avoid the application of any coinsurance clause.
If, on the date of origination of a mortgage loan, the portion of the
improvements on a related mortgaged property was in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available), the master
servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
in an amount representing coverage of at least the lesser of:
o the outstanding principal balance of the related mortgage loan; and
o the maximum amount of such insurance available for the related mortgaged
property, but only to the extent such mortgage loan permits the lender to
require such coverage and such coverage conforms to the Servicing Standard.
If a borrower fails to maintain such hazard insurance, the master
servicer will be required to obtain such insurance and the cost thereof will be
a Servicing Advance, subject to a determination of recoverability. The special
servicer will be required to maintain fire insurance with extended coverage and,
if applicable, flood insurance on an REO Property in an amount not less than the
maximum amount obtainable with respect to such REO Property and the cost thereof
will be a Servicing Advance, subject to a determination of recoverability.
In addition, the master servicer may require any borrower to maintain
other forms of insurance as the master servicer may be permitted to require
under the related mortgage, including, but not limited to, loss of rents
endorsements and comprehensive public liability insurance. The master servicer
will not require borrowers to maintain earthquake insurance unless the related
borrower is required under the terms of its mortgage loan to maintain earthquake
insurance. Any losses incurred with respect to mortgage loans due to uninsured
risks, including earthquakes, mudflows and floods, or insufficient hazard
insurance proceeds may adversely affect payments to Certificateholders. The
special servicer will have the right, but not the obligation, at the expense of
the trust, to obtain earthquake insurance on any mortgaged property securing a
Specially Serviced Mortgage Loan and/or any REO Property so long as such
insurance is available at commercially reasonable rates.
THE SELLERS
Principal Commercial Funding, LLC
PCF is wholly owned subsidiary of Principal Capital Management, LLC
which is wholly owned subsidiary of Principal Life Insurance Company. PCF was
formed as a Delaware limited liability company to originate and acquire loans
secured by commercial and multi-family real estate. Each of the PCF loans was
originated and underwritten by PCF and/or its affiliates. The offices of PCF are
located at 801 Grand Avenue, Des Moines, IA 50392. PCF's phone number is (515)
248-3944.
John Hancock Real Estate Finance, Inc.
JHREF is a wholly-owned subsidiary of John Hancock Subsidiaries, Inc.
which is a wholly owned subsidiary of John Hancock Life Insurance Company. JHREF
was founded in 1982 and is headquartered in Boston, Massachusetts.
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JHREF presently has seven offices across the country and a loan
servicing center located in Atlanta, Georgia. Except for three mortgage loans
which were underwritten and closed by John Hancock Life Insurance Company, each
of the JHREF Loans was underwritten at JHREF's Boston headquarters and closed by
JHREF. The principal offices of JHREF are located at 200 Clarendon Street, 53rd
Floor, Boston, Massachusetts 02117. JHREF's telephone number is (617) 572-8716.
Wells Fargo Bank, National Association
A description of Wells Fargo Bank, National Association is contained
under "Servicing of the Mortgage Loans -- The Master Servicer" in this
prospectus supplement.
Morgan Stanley Dean Witter Mortgage Capital Inc.
MSMC is a subsidiary of Morgan Stanley & Co., Inc., formed as a New
York corporation to originate and acquire loans secured by mortgages on
commercial and multifamily real estate. Each of the Morgan Stanley Loans was
originated by MSMC, and underwritten by MSMC underwriters. The principal offices
of MSMC are located at 1585 Broadway, New York, New York 10036. Its telephone
number is (212) 761-4700.
SALE OF THE MORTGAGE LOANS
On the Closing Date, each seller sold its mortgage loans, without
recourse, to Morgan Stanley Dean Witter Capital I Inc., and Morgan Stanley Dean
Witter Capital I Inc., sold all of the mortgage loans, without recourse, to the
trustee for the benefit of the Certificateholders. In connection with such
assignments, each seller was required in accordance with the related Mortgage
Loan Purchase Agreement to deliver the Mortgage File, with respect to each
mortgage loan so assigned by it to the trustee or its designee.
The trustee will be required to review the documents delivered by each
seller with respect to its mortgage loans within 75 days following the Closing
Date, and the trustee will hold the related documents in trust. Within 45 days
following the Closing Date, pursuant to the Pooling and Servicing Agreement, the
assignments with respect to each mortgage loan and any related assignment of
rents and leases, as described in the "Glossary of Terms" under the term
"Mortgage File", are to be completed in the name of the trustee, if delivered in
blank, and submitted for recording in the real property records of the
appropriate jurisdictions at the expense of the applicable Seller.
REPRESENTATIONS AND WARRANTIES
In each Mortgage Loan Purchase Agreement, the related seller has
represented and warranted with respect to each of its mortgage loans, subject to
certain specified exceptions, as of the Closing Date or as of such other date
specifically provided in the representation and warranty, among other things,
generally to the effect that:
(1) the information presented in the schedule of the mortgage loans
attached to the related Mortgage Loan Purchase Agreement is complete, true and
correct in all material respects;
(2) such seller owns the mortgage loan free and clear of any and all
pledges, liens and/or other encumbrances;
(3) no scheduled payment of principal and interest under the mortgage
loan was 30 days or more past due as of the Cut-off Date, and the mortgage loan
has not been 30 days or more delinquent in the twelve-month period immediately
preceding the Cut-off Date;
(4) the related mortgage constitutes a valid and, subject to certain
creditors' rights exceptions, enforceable first priority mortgage lien, subject
to certain permitted encumbrances, upon the related mortgaged property;
(5) the assignment of the related mortgage in favor of the trustee
constitutes a legal, valid and binding assignment;
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(6) the related assignment of leases establishes and creates a valid
and, subject to certain creditor's rights exceptions, enforceable first priority
lien in the related borrower's interest in all leases of the mortgaged property;
(7) the mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part, and the related mortgaged property
has not been released from the lien of such mortgage, in whole or in material
part;
(8) except as set forth in a property inspection report prepared in
connection with the origination of the mortgage loan, the related mortgaged
property is, to the seller's knowledge, free and clear of any damage that would
materially and adversely affect its value as security for the mortgage loan;
(9) the seller has received no notice of the commencement of any
proceeding for the condemnation of all or any material portion of any mortgaged
property;
(10) the related mortgaged property is covered by an American Land
Title Association, or an equivalent form of, lender's title insurance policy
that insures that the related mortgage is a valid, first priority lien on such
mortgaged property, subject only to certain permitted encumbrances;
(11) the proceeds of the mortgage loan have been fully disbursed and
there is no obligation for future advances with respect thereto;
(12) an environmental site assessment was performed with respect to the
mortgaged property in connection with the origination of the related mortgage
loan, a report of each such assessment has been delivered to Morgan Stanley Dean
Witter Capital I Inc., and such seller has no knowledge of any material and
adverse environmental condition or circumstance affecting such mortgaged
property that was not disclosed in such report;
(13) each mortgage note, mortgage and other agreement that evidences or
secures the mortgage loan is, subject to certain creditors' rights exceptions
and other exceptions of general application, the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its terms, and
there is no valid defense, counterclaim or right of offset or rescission
available to the related borrower with respect to such mortgage note, mortgage
or other agreement;
(14) the related mortgaged property is, and is required pursuant to the
related mortgage to be, insured by casualty, business interruption and liability
insurance policies of a type specified in the related Mortgage Loan Purchase
Agreement;
(15) to such seller's knowledge, there are no delinquent or unpaid
taxes, assessments or other outstanding charges affecting the related mortgaged
property that are or may become a lien of priority equal to or higher than the
lien of the related Mortgage;
(16) the related borrower is not, to the seller's knowledge, a debtor
in any state or federal bankruptcy or insolvency proceeding;
(17) the mortgage loan is not cross-collateralized with any loan other
than one or more other mortgage loans;
(18) no mortgage requires the holder thereof to release all or any
material portion of the related mortgaged property from the lien thereof except
upon payment in full of the mortgage loan or, in certain cases, upon (a) the
satisfaction of certain legal and underwriting requirements and (b) except where
the portion of the related mortgaged property permitted to be released was not
considered by the seller to be material in underwriting the mortgage loan, the
payment of a release price and prepayment consideration in connection therewith;
(19) to such seller's knowledge, there exists no material default,
breach, violation or event of acceleration, and no event which, with the passage
of time or the giving of notice, or both, would constitute any of
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the foregoing, under the related mortgage note or mortgage in any such case to
the extent the same materially and adversely affects the value of the mortgage
loan and the related mortgaged property, other than those defaults that are
covered by certain other of the preceding representations and warranties; and
(20) the related mortgaged property consists of a fee simple estate in
real estate or, if the related mortgage encumbers the interest of a borrower as
a lessee under a ground lease of the mortgaged property (a) such ground lease or
a memorandum thereof has been or will be duly recorded and (or the related
estoppel letter or lender protection agreement between the seller and related
lessor) permits the interest of the lessee thereunder to be encumbered by the
related mortgage; (b) the lessee's interest in such ground lease is not subject
to any liens or encumbrances superior to, or of equal priority with, the related
mortgage, other than certain permitted encumbrances; (c) the borrower's interest
in such ground lease is assignable to Morgan Stanley Dean Witter Capital I Inc.
and its successors and assigns upon notice to, but without the consent of, the
lessor thereunder (or if it is required it will have been obtained prior to the
closing date); (d) such ground lease is in full force and effect and the seller
has received no notice that an event of default has occurred thereunder; (e)
such ground lease, or an estoppel letter related thereto, requires the lessor
under such ground lease to give notice of any default by the lessee to the
holder of the mortgage and further provides that no notice of termination given
under such ground lease is effective against such holder unless a copy has been
delivered to such holder and the lessor has offered to enter into a new lease
with such holder on the terms that do not materially vary from the economic
terms of the ground lease; (f) the holder of the mortgage is permitted a
reasonable opportunity (including, where necessary, sufficient time to gain
possession of the interest of the lessee under such ground lease) to cure any
default under such ground lease, which is curable after the receipt of notice of
any such default, before the lessor thereunder may terminate such ground lease;
and (g) such ground lease has an original term (including any extension options
set forth therein) which extends not less than twenty years beyond the scheduled
maturity date of the related mortgage loan.
REPURCHASES AND OTHER REMEDIES
If any Mortgage Loan document required to be delivered to the trustee
by a seller with respect to its mortgage loans as described under "--Sale of the
Mortgage Loans" above has a Material Document Defect, or if there is a Material
Breach by a seller regarding the characteristics of any of its mortgage loans
and/or the related mortgaged properties as described under "--Representations
and Warranties" above, then such seller will be obligated to cure such Material
Document Defect or Material Breach in all material respects within the
applicable Permitted Cure Period.
If any such Material Document Defect or Material Breach cannot be
corrected or cured in all material respects within the applicable Permitted Cure
Period, the seller will be obligated, not later than the last day of such
Permitted Cure Period, to:
o repurchase the affected mortgage loan from the trust at the Purchase
Price; or, at its option,
o if within the two-year period commencing on the Closing Date:
o replace such Mortgage Loan with a Qualifying Substitute
Mortgage Loan; and
o pay an amount generally equal to the excess of the applicable
Purchase Price for the mortgage loan to be replaced
(calculated as if it were to be repurchased instead of
replaced), over the unpaid principal balance of the applicable
Qualifying Substitute Mortgage Loan as of the date of
substitution, after application of all payments due on or
before such date, whether or not received.
The seller must cure any Material Document Defect or the Material
Breach within the Permitted Cure Period, provided, however, that if such
Material Document Defect or Material Breach would cause the mortgage loan to be
other than a "qualified mortgage", as defined in the Code, then the repurchase
or substitution must occur within 85 days from the date the seller was notified
of the defect or breach.
The foregoing obligations of any seller to cure a Material Document
Defect or a Material Breach in respect of any of its mortgage loans or
repurchase or replace the defective mortgage loan, will constitute the sole
remedies
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of the trustee and the Certificateholders with respect to such Material Document
Defect or Material Breach; and none of Morgan Stanley Dean Witter Capital I
Inc., the other sellers or any other person or entity will be obligated to
repurchase or replace the affected mortgage loan if the related seller defaults
on its obligation to do so. Each seller is obligated to cure, repurchase or
replace only mortgage loans that are sold by it, and will have no obligations
with respect to any mortgage loan sold by any other seller.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this prospectus supplement of the Mortgage Pool and
the mortgaged properties is based upon the Mortgage Pool as expected to be
constituted at the time the offered certificates are issued. Prior to the
issuance of the offered certificates, a mortgage loan may be removed from the
Mortgage Pool if Morgan Stanley Dean Witter Capital I Inc. deems such removal
necessary or appropriate or if it is prepaid. A limited number of other mortgage
loans may be included in the Mortgage Pool prior to the issuance of the offered
certificates, unless including such mortgage loans would materially alter the
characteristics of the Mortgage Pool as described herein. The information
presented herein is representative of the characteristics of the Mortgage Pool
as it will be constituted at the time the offered certificates are issued,
although the range of mortgage rates and maturities and certain other
characteristics of the mortgage loans in the Mortgage Pool may vary.
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SERVICING OF THE MORTGAGE LOANS
GENERAL
The master servicer and the special servicer, either directly or
through sub-servicers, will be required to service and administer the mortgage
loans in accordance with the Servicing Standard.
Each of the master servicer and the special servicer is required to
adhere to the Servicing Standard without regard to any conflict of interest that
it may have, any fees or other compensation to which it is entitled, any
relationship it may have with any borrower, and the different payment priorities
among the Classes of certificates. Each of the master servicer and the special
servicer may become the owner or pledgee of certificates with the same rights as
each would have if it were not the master servicer or a special servicer, as the
case may be.
Any such interest of the master servicer or the special servicer in the
certificates will not be taken into account when evaluating whether actions of
the master servicer or the special servicer are consistent with their respective
obligations in accordance with the Servicing Standard, regardless of whether
such actions may have the effect of benefiting the Class or Classes of
certificates owned by the master servicer or the special servicer. In addition,
the master servicer or the special servicer may, under limited circumstances,
lend money on an unsecured basis to, accept deposits from, and otherwise
generally engage in any kind of business or dealings with, any borrower as
though the master servicer or the special servicer were not a party to the
transactions contemplated hereby.
On the Closing Date, the master servicer entered into an agreement with
each of the Primary Servicers under which the Primary Servicers assumed many of
the servicing obligations of the master servicer presented in this section with
respect to mortgage loans sold by it or its affiliates to the trust. The Primary
Servicers are subject to the Servicing Standard. If an Event of Default occurs
in respect of the master servicer and the master servicer is terminated, such
termination will not in and of itself cause the termination of any Primary
Servicers. Notwithstanding the provisions of any primary servicing agreement or
the Pooling and Servicing Agreement, the Master Servicer shall remain obligated
and liable to the trustee, paying agent and the certificateholders for servicing
and administering of the mortgage loans in accordance with the provisions of the
Pooling and Servicing Agreement to the same extent as if the Master Servicer was
alone servicing and administering the mortgage loans.
Each of the master servicer, the Primary Servicers and the special
servicer is permitted to enter into a sub-servicing agreement and any such
Sub-Servicer will receive a fee for the services specified in such sub-servicing
agreement. However, any subservicing is subject to various conditions set forth
in the Pooling and Servicing Agreement including the requirement that the master
servicer or the special servicer, as the case may be, will remain liable for its
servicing obligations under the Pooling and Servicing Agreement. The master
servicer or the special servicer, as the case may be, will be required to pay
any servicing compensation due to any Sub-Servicer out of its own funds.
The master servicer may resign from the obligations and duties imposed
on it under the Pooling and Servicing Agreement, upon 30 days notice to the
trustee, provided that:
o a successor servicer is available and willing to assume the obligations
of the master servicer, and accepts appointment as successor master
servicer, on substantially the same terms and conditions, and for not
more than equivalent compensation;
o the master servicer bears all costs associated with its resignation and
the transfer of servicing; and
o the Rating Agencies have confirmed in writing that such servicing
transfer will not result in a withdrawal, downgrade or qualification of
the then current ratings on the Certificates.
Furthermore, the master servicer may resign if it determines that the
master servicer's duties are no longer permissible under applicable law or are
in material conflict by reason of applicable law with any other activities
carried on by it. A resignation of the master servicer will not affect the
rights and obligations of the Primary
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Servicers to continue to act as primary servicers. If the master servicer ceases
to serve as such and shall not have been replaced by a qualified successor, the
trustee or an agent of the trustee will assume the master servicer's duties and
obligations under the Pooling and Servicing Agreement. If the special servicer
shall cease to serve as such and a qualified successor shall not have been
engaged, the master servicer will assume the special servicer's duties and
obligations and, if the master servicer fails to so assume such duties and
responsibilities, the trustee or an agent will assume the duties and obligations
of the special servicer.
The relationship of each of the master servicer and the special
servicer to the trustee is intended to be that of an independent contractor and
not that of a joint venturer, partner or agent.
The master servicer will have no responsibility for the performance by
the special servicer, to the extent they are different entities, of its duties
under the Pooling and Servicing Agreement, and the special servicer will have no
responsibility for the performance by the master servicer of its duties under
the Pooling and Servicing Agreement.
The master servicer initially will be responsible for the servicing and
administration of the entire Mortgage Pool. However, the special servicer will
be responsible for servicing and administering any Specially Serviced Mortgage
Loans.
In the event of any of the foregoing with respect to any mortgage loan,
the master servicer will be required to transfer its principal servicing
responsibilities with respect thereto to the special servicer in accordance with
the procedures set forth in the Pooling and Servicing Agreement. Notwithstanding
such transfer, the master servicer will continue to receive any payments on such
mortgage loan, including amounts collected by the special servicer, to make
selected calculations with respect to such mortgage loan, and to make
remittances to the paying agent and prepare reports to the trustee and the
paying agent with respect to such mortgage loan. If title to the related
mortgaged property is acquired by the trust, whether through foreclosure,
deed-in-lieu of foreclosure or otherwise, the special servicer will be
responsible for the operation and management thereof and such loan will be
considered a Specially Serviced Mortgage Loan.
A Specially Serviced Mortgage Loan can become a Rehabilitated Mortgage
Loan to which the master servicer will re-assume all servicing responsibilities.
The special servicer will prepare a report (an "Asset Status Report")
for each mortgage loan which becomes a Specially Serviced Mortgaged Loan not
later than 30 days after the Servicing Transfer Event for such mortgage loan.
Each Asset Status Report will be delivered in accordance with the Pooling and
Servicing Agreement. The Operating Adviser has certain rights to approve certain
actions contemplated by the Asset Status Report, provided that any actions
recommended by the special servicer in the Asset Status Report (or any
revisions) shall be consistent with the Servicing Standard and the special
servicer may not take any action inconsistent with an Asset Status Report unless
such action would be required in order to act in accordance with the Servicing
Standard.
The master servicer and the special servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement and will not be
entitled to reimbursement therefor except as expressly provided in the Pooling
and Servicing Agreement. See "Description of the
Certificates--Advances--Servicing Advances" in this prospectus supplement.
THE MASTER SERVICER AND SPECIAL SERVICER
Master Servicer
Wells Fargo Bank, National Association ("Wells Fargo") will be
responsible for servicing the mortgage loans as master servicer. Wells Fargo
provides a full range of banking services to individual, agribusiness, real
estate, commercial and small business customers.
Wells Fargo's principal servicing offices are located at 555 Montgomery
Street, San Francisco, California 94104.
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As of December 31, 1999, Wells Fargo was responsible for servicing
approximately 1,888 commercial and multifamily mortgage loans, totaling
approximately $10.84 billion in aggregate outstanding principal amounts,
including loans securitized in mortgage-backed securitization transactions.
Wells Fargo & Company is the holding company for Wells Fargo. Wells
Fargo & Company files reports with the Securities and Exchange Commission that
are required under the Securities Exchange Act of 1934. Such reports include
information regarding the master servicer and may be obtained at the website
maintained by the Securities and Exchange Commission at http://www.sec.gov.
The information presented herein concerning Wells Fargo has been
provided by Wells Fargo. Accordingly, Morgan Stanley Dean Witter Capital I Inc.
makes no representations or warranty as to the accuracy or completeness of such
information.
SPECIAL SERVICER
Lennar Partners, Inc., a Florida corporation and a subsidiary of LNR
Property Corporation ("LNR"), will initially be appointed as special servicer of
the Mortgage Loans. The principal executive offices of the Special Servicer are
located at 760 NW 107th Avenue, Miami, Florida, 33172, and its telephone number
is (305) 485-2000. LNR, its subsidiaries and affiliates are involved in the real
estate investment and management business and engage principally in (i)
acquiring, developing, managing and repositioning commercial and multi-family
residential real estate properties, (ii) acquiring (often in partnership with
financial institutions or real estate funds) and managing portfolios of mortgage
loans and other real estate related assets, (iii) investing in unrated and
non-investment grade rated commercial mortgage-backed securities ("CMBS") as to
which the Company has the right to be special servicer, and (iv) making high
yielding real estate related loans and equity investments. The Special Servicer
has regional offices located across the country in Florida, Georgia, Oregon and
California. As of November 1, 1999, the Special Servicer and its affiliates were
managing a portfolio including over 10,000 assets in most states with an
original face value of over $50 billion, most of which are commercial real
estate assets. Included in this managed portfolio are $44 billion of commercial
real estate assets representing 57 securitization transactions, for which the
Special Servicer is servicer or special servicer. The Special Servicer and its
affiliates own and are in the business of acquiring assets similar in type to
the assets of the Trust Fund. Accordingly, the assets of the Special Servicer
and its affiliates may, depending upon the particular circumstances including
the nature and location of such assets, compete with the Mortgaged Properties
for tenants, purchasers, financing and so forth.
The information set forth herein concerning the Special Servicer has
been provided by it, and neither the Depositor nor the Underwriters make any
representation or warranty as to the accuracy or completeness of such
information.
MASTER SERVICER
Master Servicer Compensation
The master servicer will be entitled to a Master Servicing Fee equal to
the Master Servicing Fee Rate applied to the outstanding Scheduled Principal
Balance of each mortgage loan, including REO Properties. The master servicer
will be entitled to retain as additional servicing compensation all investment
income earned on amounts on deposit in the Certificate Account and interest on
escrow accounts if permitted by the related loan documents, and--in each case to
the extent not payable to the special servicer or any Sub-Servicer or Primary
Servicer as provided in the Pooling and Servicing Agreement or any sub-servicing
agreement--late payment charges, assumption fees, modification fees, extension
fees and default interest payable at a rate above the related mortgage rate.
The amount of the related Master Servicing Fee will be reduced, to not
less than zero, on each Distribution Date by the amount, if any, of Compensating
Interest Payment made by the master servicer on such Distribution Date. The
amount of the related Primary Servicing Fee will not be reduced by any payments
in respect of Compensating Interest Payments. Any Net Aggregate Prepayment
Interest Shortfall will be allocated as presented under "Description of the
Certificates--Distributions--Prepayment Interest Shortfalls and Prepayment
Interest
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Excesses" in this prospectus supplement. If Prepayment Interest Excesses for all
mortgage loans other than Specially Serviced Mortgage Loans exceed Prepayment
Interest Shortfalls for such mortgage loans as of any Distribution Date, such
excess amount will be payable to the master servicer as additional servicing
compensation.
In the event that Wells Fargo resigns or is no longer master servicer
for any reason, Wells Fargo will continue to have the right to receive its
portion of the Excess Servicing Fee. Any successor servicer will receive the
Master Servicing Fee as compensation. The portion of the Excess Servicing Fee
payable to JHREF shall similarly not be terminated if it resigns or is
terminated as one of the Primary Servicers.
EVENTS OF DEFAULT
If an Event of Default described under the third, fourth, fifth, sixth
or seventh bullet under the definition of "Event of Default" under the "Glossary
of Terms" has occurred, the obligations and responsibilities of the master
servicer under the Pooling and Servicing Agreement will terminate on the date
which is 60 days following the date on which the trustee or Morgan Stanley Dean
Witter Capital I Inc. gives written notice to the master servicer that the
master servicer is terminated. If an event of default described under the first,
second, eighth, ninth or tenth bullet under the definition of "Event of Default"
under the "Glossary of Terms" has occurred, the obligations and responsibilities
of the master servicer under the Pooling and Servicing Agreement will terminate,
immediately upon the date which the trustee or the Depositor give written notice
to the master servicer that the master servicer is terminated. After any Event
of Default, the trustee may elect to terminate the master servicer by providing
such notice, and shall provide such notice if holders of certificates
representing more than 25% of the Certificate Balance of all certificates so
direct the trustee. Notwithstanding the foregoing, and in accordance with the
Pooling and Servicing Agreement, if the Event of Default occurs solely by reason
of the occurrence of a default of a primary servicer under a primary servicing
agreement, then the initial master servicer shall have the right to require that
any successor master servicer enter into a primary servicing agreement with the
initial master servicer with respect to all the mortgage loans as to which the
primary servicing default occurred so long as the initial master servicer is on
the approved list of commercial mortgage loan servicers maintained by S&P.
Upon such termination, all authority, power and rights of the master
servicer under the Pooling and Servicing Agreement, whether with respect to the
mortgage loans or otherwise, shall terminate except for any rights related to
unpaid servicing compensation or unreimbursed Advances or the Excess Servicing
Fee, provided that in no event shall the termination of the master servicer be
effective until a successor servicer shall have succeeded the master servicer as
successor servicer, subject to approval by the Rating Agencies, notified the
master servicer of such designation, and such successor servicer shall have
assumed the master servicer's obligations and responsibilities with respect to
the mortgage loans as set forth in the Pooling and Servicing Agreement. The
trustee may not succeed the master servicer as servicer until and unless it has
satisfied the provisions specified in the Pooling and Servicing Agreement.
However, if the master servicer is terminated as a result of an Event of Default
described under the eighth, ninth or tenth bullet under the definition of "Event
of Default" under the "Glossary of Terms", the trustee shall act as successor
servicer immediately and shall use its best efforts to either satisfy the
conditions specified in the Pooling and Servicing Agreement or transfer the
duties of the master servicer to a successor servicer who has satisfied such
conditions.
However, if the master servicer is terminated solely due to an Event of
Default described in the fifth, sixth or seventh bullet of the definition
thereof, and prior to being replaced as described in the previous paragraph the
terminated master servicer provides the trustee with the appropriate "request
for proposal" material, the trustee will solicit good faith bids for the rights
to service the mortgage loans in accordance with the Pooling and Servicing
Agreement. The trustee will have thirty days to sell the rights and obligations
of the master servicer under the Pooling and Servicing Agreement to a successor
servicer that meets the requirements of a master servicer under the Pooling and
Servicing Agreement, provided that the Rating Agencies have confirmed in writing
that such servicing transfer will not result in a withdrawal, downgrade or
qualification of the then current ratings on the certificates. The termination
of the master servicer, will be effective when such servicer has succeeded the
master servicer, as successor servicer and such successor servicer has assumed
the master servicer's, obligations and responsibilities with respect to the
mortgage loans, as set forth in an agreement substantially in the form of the
Pooling and Servicing Agreement. If a successor master servicer is not appointed
within thirty days, the master servicer, will be replaced by the trustee as
described in the previous paragraph.
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THE SPECIAL SERVICER
The special servicer will oversee the resolution of Specially Serviced
Mortgage Loans, act as disposition manager of REO Properties acquired on behalf
of the trust through foreclosure or deed in lieu of foreclosure, maintain
insurance with respect to REO Properties and provide monthly reports to the
master servicer, the trustee and the paying agent.
Special Servicer Compensation
The special servicer will be entitled to receive:
o a Special Servicing Fee;
o a Workout Fee; and
o a Liquidation Fee equal to 1.00% of the related Liquidation Proceeds.
The Workout Fee with respect to any Rehabilitated Mortgage Loan will
cease to be payable if such loan again becomes a Specially Serviced Mortgage
Loan or if the related mortgaged property becomes an REO Property otherwise such
fee is paid until maturity. If the special servicer is terminated for any
reason, it will retain the right to receive any Workout Fees payable on mortgage
loans that became Rehabilitated Mortgage Loans while it acted as special
servicer and remained Rehabilitated Mortgage Loans at the time of such
termination until such mortgage loan becomes a Specially Serviced Mortgage Loan
or if the related mortgaged property becomes an REO Property. The successor
special servicer will not be entitled to any portion of such Workout Fees.
The special servicer is also permitted to retain, in general, certain
assumption fees, modification fees and extension fees collected on Specially
Serviced Mortgage Loans, certain borrower-paid fees, investment income earned on
amounts on deposit in any accounts maintained for REO Property collections, and
other charges specified in the Pooling and Servicing Agreement. The Special
Servicing Fee, the Liquidation Fee and the Workout Fee will be obligations of
the trust and will represent Expense Losses. The Special Servicer Compensation
will be payable in addition to the Master Servicing Fee payable to the master
servicer.
In addition, the special servicer will be entitled to all assumption
fees received in connection with any Specially Serviced Mortgage Loan and 50% of
any other assumption fees. The special servicer will be entitled to approve
assumptions with respect to all mortgage loans. The amount of the Special
Servicing Fee, but not the fee payable to the trustee, will be reduced, to not
less than zero, on each Distribution Date by the amount, if any, of Compensating
Interest paid by the special servicer on such Distribution Date. If Prepayment
Interest Excesses for all Specially Serviced Mortgage Loans exceed Prepayment
Interest Shortfalls for such mortgage loans as of any Distribution Date, such
excess amount will be payable to the special servicer as additional servicing
compensation.
As described in this prospectus supplement under "--The Operating
Adviser," the Operating Adviser will have the right to receive notification of
actions of the special servicer, subject to the limitations described in this
prospectus supplement.
Termination of Special Servicer
The trustee may terminate the special servicer upon a Special Servicer
Event of Default. However, if the special servicer is terminated solely due to a
Special Servicer Event of Default described in the fifth, sixth or seventh
bullet of the definition thereof, and prior to being replaced the terminated
special servicer provides the trustee with the appropriate request for proposal
material, the trustee will solicit good faith bids for the rights to specially
service the mortgage loans in accordance with the Pooling and Servicing
Agreement. The trustee will have thirty days to sell the rights and obligations
of the special servicer under the Pooling and Servicing Agreement to a successor
servicer that meets the requirements of a special servicer under the Pooling and
Servicing Agreement, provided that the Rating Agencies have confirmed in writing
that such servicing transfer will not result in a withdrawal, downgrade or
qualification of the then current ratings on the certificates. The special
servicer is required to consult
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with the Operating Adviser in connection with such sale of servicing rights. The
termination of the special servicer, will be effective when such servicer has
succeeded the special servicer, as successor servicer and such successor
servicer has assumed the special servicer's, obligations and responsibilities
with respect to the mortgage loans, as set forth in an agreement substantially
in the form of the Pooling and Servicing Agreement. If a successor special
servicer is not appointed within thirty days, the special servicer, will be
replaced by the trustee as described in the previous paragraphs.
In addition to the termination of the special servicer upon a Special
Servicer Event of Default, upon the direction of the Operating Adviser, subject
to the satisfaction of certain conditions, the trustee will remove the special
servicer from its duties as special servicer at any time upon the appointment
and acceptance of such appointment by a successor special servicer appointed by
the Operating Adviser; provided that, prior to the effectiveness of any such
appointment the trustee shall have received a letter from each rating agency to
the effect that such appointment would not result in a downgrade or withdrawal
in any rating then assigned to any Class of certificates.
THE OPERATING ADVISER
An Operating Adviser appointed by the holders of a majority of the
Controlling Class will have the right to receive notification from the special
servicer in regard to certain actions. The special servicer will be required to
notify the Operating Adviser of, among other things:
o any proposed modification of a Money Term of a mortgage loan other than
an extension of the original maturity date for two years or less;
o any foreclosure or comparable conversion of the ownership of a
mortgaged property;
o any proposed sale of a Specially Serviced Mortgage Loan, other than in
connection with the termination of the trust as described in this
prospectus supplement under "Description of the Certificates--Optional
Termination";
o any proposal to bring an REO Property into compliance with applicable
environmental laws; and
o any acceptance of substitute or additional collateral for a mortgage
loan.
In addition, subject to the satisfaction of certain conditions, the
Operating Adviser will have the right to direct the trustee to remove the
special servicer at any time, with or without cause, upon the appointment and
acceptance of such appointment by a successor special servicer appointed by the
Operating Adviser; provided that, prior to the effectiveness of any such
appointment the trustee shall have received a letter from each rating agency to
the effect that such appointment would not result in a downgrade or withdrawal
in any rating then assigned to any class of certificates. The Operating Adviser
shall pay costs and expenses incurred in connection with the removal and
appointment of a special servicer (unless such removal is based on certain
events or circumstances specified in the Pooling and Servicing Agreement).
At any time, the holders of a majority of the Controlling Class may
direct the paying agent in writing to hold an election for an Operating Adviser,
which election will be held commencing as soon as practicable thereafter.
The Operating Adviser shall be responsible for its own expenses.
MORTGAGE LOAN MODIFICATIONS
Subject to any restrictions applicable to REMICs, and to limitations
imposed by the Pooling and Servicing Agreement, the master servicer may amend
any term, (other than a modification that adds, deletes, or alters a customary
accounting or financial covenant), of a mortgage loan that is not a Specially
Serviced Mortgage Loan and may extend the maturity date of any Balloon Loan,
other than a Specially Serviced Mortgage Loan, to a date not more than 60 days
beyond the original maturity date.
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Subject to any restrictions applicable to REMICs, the special servicer
will be permitted to enter into a modification, waiver or amendment of the terms
of any Specially Serviced Mortgage Loan, including any modification, waiver or
amendment to:
o reduce the amounts owing under any Specially Serviced Mortgage Loan by
forgiving principal, accrued interest and/or any Prepayment Premium;
o reduce the amount of the Scheduled Payment on any Specially Serviced
Mortgage Loan, including by way of a reduction in the related mortgage
rate;
o forbear in the enforcement of any right granted under any mortgage note
or mortgage relating to a Specially Serviced Mortgage Loan;
o extend the maturity date of any Specially Serviced Mortgage Loan;
and/or
o accept a Principal Prepayment during any Lock-out Period;
provided in each case that (1) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable judgment of the
special servicer, such default is reasonably foreseeable, and (2) in the
reasonable judgment of the special servicer, such modification, waiver or
amendment would increase the recovery to Certificateholders on a net present
value basis, as demonstrated in writing by the special servicer to the trustee
and the paying agent.
In no event, however, will the special servicer be permitted to:
o extend the maturity date of a Specially Serviced Mortgage Loan beyond a
date that is two years prior to the Rated Final Distribution Date; and
o if the Specially Serviced Mortgage Loan is secured by a ground lease,
extend the maturity date of such Specially Serviced Mortgage Loan
beyond a date which is twenty (20) years prior to the expiration of the
term of such ground lease.
Modifications that forgive principal or interest of a mortgage loan
will result in Realized Losses on such mortgage loan and such Realized Losses
will be allocated among the various Classes of Certificates in the manner
described under "Description of the Certificates--Distributions--Subordination;
Allocation of Losses and Expenses" in this prospectus supplement.
The modification of a mortgage loan may tend to reduce prepayments by
avoiding liquidations and therefore may extend the weighted average life of the
certificates beyond that which might otherwise be the case. See "Yield,
Prepayment and Maturity Considerations" in this prospectus supplement.
SALE OF DEFAULTED MORTGAGE LOANS AND REO PROPERTIES
The Pooling and Servicing Agreement grants to each of the master
servicer, the special servicer, any holder of certificates evidencing a majority
interest in the Controlling Class and any seller with respect to mortgage loans
it originated a right to purchase from the trust, at the applicable Purchase
Price, those defaulted mortgage loans that are at least 60 days delinquent and
which the special servicer has determined, in its reasonable and good faith
judgment, in accordance with the Servicing Standard, will become the subject of
foreclosure proceedings, other than any such mortgage loan that it determines,
in its reasonable and good faith judgment, in accordance with the Servicing
Standard, is in default to avoid a prepayment restriction.
The special servicer may, upon notice to the Operating Adviser and the
trustee, offer to sell any such defaulted mortgage loan not otherwise purchased
pursuant to the prior paragraph, other than any such mortgage loan that it
determines, in its reasonable and good faith judgment, in accordance with the
Servicing
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Standard, is in default to avoid a prepayment restriction, if and when the
special servicer determines, consistent with the Servicing Standard, that such a
sale would be in the best economic interests of the trust. Such offer is to be
made in a commercially reasonable manner for a period of not less than 30 days.
Unless the special servicer determines that acceptance, in accordance with the
Servicing Standard, of any offer would not be in the best economic interests of
the trust, the special servicer shall accept the highest cash offer received
from any person that constitutes a fair price, which may be less than the
Purchase Price, for such mortgage loan. When an Interested Party is to be the
purchaser of any such defaulted mortgage loan, the trustee is to determine, with
the aid of an independent real estate adviser and an appraisal, what constitutes
a fair price. The trustee is not permitted to purchase any defaulted mortgage
loan.
FORECLOSURES
The special servicer may at any time, with notification to the
Operating Adviser and in accordance with the Pooling and Servicing Agreement,
institute foreclosure proceedings, exercise any power of sale contained in any
mortgage, accept a deed in lieu of foreclosure or otherwise acquire title to a
mortgaged property by operation of law or otherwise, if such action is
consistent with the Servicing Standard and a default on the related mortgage
loan has occurred but subject, in all cases, to limitations concerning
environmental matters and, in specified situations, the receipt of an opinion of
counsel relating to REMIC requirements.
If any mortgaged property is acquired as described in the preceding
paragraph, the special servicer is required to sell the REO Property within
three years after the end of the year in which it was acquired, or any
applicable extension period, unless the special servicer has obtained an
extension from the Internal Revenue Service or has previously delivered to the
trustee an opinion of counsel to the effect that the holding of the REO Property
by the trust subsequent to three years after the end of the year in which it was
acquired, or to the expiration of such extension period, will not result in the
failure of such REO Property to qualify as "foreclosure property" under the
REMIC provisions of the Code. In addition, the special servicer is required to
use its best efforts to sell any REO Property prior to the Rated Final
Distribution Date.
If the trust acquires a mortgaged property by foreclosure or
deed-in-lieu of foreclosure upon a default of a mortgage loan, the Pooling and
Servicing Agreement provides the special servicer, on behalf of the trustee,
must administer such mortgaged property so that it qualifies at all times as
"foreclosure property" within the meaning of Code Section 860G(a)(8). The
Pooling and Servicing Agreement also requires that any such mortgaged property
be managed and operated by an "independent contractor," within the meaning of
applicable Treasury regulations, who furnishes or renders services to the
tenants of such mortgaged property. Among other things, the independent
contractor will not be permitted to perform construction work on the mortgaged
property unless such construction was at least 10% completed when default on the
related Mortgage Loan became imminent. Generally, REMIC I will not be taxable on
income received with respect to a mortgaged property to the extent that it
constitutes "rents from real property," within the meaning of Code Section
856(c)(3)(A) and Treasury regulations thereunder. "Rents from real property" do
not include the portion of any rental based on the net income or gain of any
tenant or sub-tenant. No determination has been made whether rent on any of the
mortgaged properties meets this requirement. "Rents from real property" include
charges for services customarily furnished or rendered in connection with the
rental of real property, whether or not the charges are separately stated.
Services furnished to the tenants of a particular building will be considered as
customary if, in the geographic market in which the building is located, tenants
in buildings which are of similar class are customarily provided with the
service. No determination has been made whether the services furnished to the
tenants of the mortgaged properties are "customary" within the meaning of
applicable regulations. It is therefore possible that a portion of the rental
income with respect to a mortgaged property owned by a trust, presumably
allocated based on the value of any non-qualifying services, would not
constitute "rents from real property." In addition to the foregoing, any net
income from a trade or business operated or managed by an independent contractor
on a mortgaged property owned by REMIC I, including but not limited to a hotel
or healthcare business, will not constitute "rents from real property." Any of
the foregoing types of income may instead constitute "net income from
foreclosure property," which would be taxable to REMIC I at the highest marginal
federal corporate rate -- currently 35% -- and may also be subject to state or
local taxes. Any such taxes would be chargeable against the related income for
purposes of determining the Net REO Proceeds available for distribution to
holders of certificates. Under the Pooling and Servicing Agreement, the special
servicer is required to determine whether the earning of such income taxable to
REMIC I would result in a greater recovery to Certificateholders on a net
after-tax basis than a different method of operation of such property.
Prospective investors are advised to consult their own tax advisors regarding
the possible imposition of REO Taxes in connection with the operation of
commercial REO Properties by REMICs.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion, when read in conjunction with the discussion
of "Federal Income Tax Consequences" in the prospectus, describes the material
federal income tax considerations for investors in the offered certificates.
However, these two discussions do not purport to deal with all federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules, and do not address state and local tax considerations.
Prospective purchasers should consult their own tax advisers in determining the
federal, state, local and any other tax consequences to them of the purchase,
ownership and disposition of the offered certificates.
GENERAL
For United States federal income tax purposes, the trust will be a
"tiered REMIC structure" described in the prospectus. See "Federal Income Tax
Consequences--REMICs--Tiered REMIC Structures" in the prospectus. Four separate
REMIC elections will be made with respect to designated portions of the trust.
Upon the issuance of the offered certificates, Latham & Watkins, counsel to
Morgan Stanley Dean Witter Capital I Inc., will deliver its opinion generally to
the effect that, assuming:
o the making of proper elections;
o ongoing compliance with all provisions of the Pooling and Servicing
Agreement; and
o compliance with applicable provisions of the Code, as it may be amended
from time to time, and applicable Treasury Regulations adopted
thereunder.
For federal income tax purposes, each of REMIC I, REMIC II, REMIC III
and REMIC IV will qualify as a REMIC under the Code.
For federal income tax purposes, the Residual Certificates will
represent four separate classes of REMIC residual interests evidencing the sole
class of "residual interests" in each of REMIC I, REMIC II, REMIC III and REMIC
IV; and the REMIC Regular Certificates will evidence the "regular interests" in,
and will be treated as debt instruments of, REMIC IV. See "Federal Income Tax
Consequences--REMICs" in the prospectus. The offered certificates will be REMIC
Regular Certificates issued by REMIC IV. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the
prospectus for a discussion of the principal federal income tax consequences of
the purchase, ownership and disposition of the offered certificates. References
in the prospectus to the Master REMIC should be read as references to REMIC IV.
Each of REMIC I, REMIC II and REMIC III will be a Subsidiary REMIC as such term
is used in the prospectus.
The offered certificates will be "real estate assets" within the
meaning of Section 856(c)(4)(A) and 856(c)(5)(B) of the Code in the same
proportion that the assets REMIC would be so treated. In addition, interest,
including original issue discount, if any, on the offered certificates will be
interest described in Section 856(c)(3)(B) of the Code to the extent that such
certificates are treated as "real estate assets" under Section 856(c)(4)(A) of
the Code. However, if 95% or more of the REMIC's assets are real estate assets
within the meaning of Section 856(c)(4)(A), then the entire offered certificates
shall be treated as real estate assets and all interest from the offered
certificates shall be treated as interest described in Section 856(c)(3)(B).
Moreover, the offered certificates will be "qualified mortgages" under
Section 860G(a)(3) of the Code if transferred to another REMIC on its start-up
day in exchange for regular or residual interests therein. Offered certificates
also will qualify for treatment as "permitted assets," within the meaning of
Section 860L(c)(1)(G) of the Code, of a FASIT, and those offered certificates
held by certain financial institutions will constitute "evidence of
indebtedness" within the meaning of Section 582(c)(1) of the Code.
The offered certificates will be treated as assets described in
Section 7701(a)(19)(C)(xi) of the Code generally only in the proportion which
the REMIC's assets consist of property described in 7701(a)(19)(C)(i) through
7701(a)(19)(C)(x). However, if 95% or more of the REMIC's assets are assets
described in
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7701(a)(19)(C)(i) through 7701(a)(19)(C)(x), then the entire offered
certificates shall be treated as qualified property under 7701(a)(19)(C). The
percentage of such mortgage loans included in the initial principal balance of
the mortgage pool is 13.36%. The Small Business Job Protection Act of 1996, as
part of the repeal of the bad debt reserve method for thrift institutions,
repealed the application of Section 593(d) to any taxable year beginning after
December 31, 1995. See "Description of the Mortgage Pool" in this prospectus
supplement and "Federal Income Tax Consequences--REMICs" in the prospectus.
ORIGINAL ISSUE DISCOUNT AND PREMIUM
The offered certificates may be treated as having been issued with
original issue discount or federal income tax reporting purposes. Certain
Classes of offered certificates may be issued with premium depending on the
price at which such Classes of certificates are initially sold. The prepayment
assumption that will be used in determining the rate of accrual of original
issue discount and amortizable premium, if any, for federal income tax purposes
will be a 0% CPR, as described in the prospectus, applied to each mortgage loan
during any period that voluntary principal prepayments may be made thereon
without a Prepayment Premium being required. For a description of CPR, see
"Yield, Prepayment and Maturity Considerations" in this prospectus supplement.
However, Morgan Stanley Dean Witter Capital I Inc. makes no representation that
the mortgage loans will not prepay during any such period or that they will
prepay at any particular rate before or during any such period.
The IRS has issued OID Regulations under Sections 1271 to 1275 of the
Code generally addressing the treatment of debt instruments issued with original
issue discount. See "Federal Income Tax Consequences--REMICs--Taxation of Owners
of REMIC Regular Certificates--Original Issue Discount and Premium" in the
prospectus. Purchasers of the offered certificates should be aware that the OID
Regulations and Section 1272(a)(6) of the Code do not adequately address all of
the issues relevant to accrual of original issue discount on prepayable
securities such as the offered certificates.
Moreover, the OID Regulations include an anti-abuse rule allowing the
IRS to apply or depart from the OID Regulations where necessary or appropriate
to ensure a reasonable tax result in light of applicable statutory provisions.
No assurance can be given that the Internal Revenue Service will not take a
different position as to matters respecting accrual of original issue discount
with respect to the offered certificates. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount and Premium" in the prospectus. Prospective purchasers of the
offered certificates are advised to consult their tax advisors concerning the
tax treatment of such certificates, and the appropriate method of reporting
interest and original issue discount with respect to offered certificates.
If the method for computing original issue discount described in the
prospectus results in a negative amount for any period with respect to a holder
of a certificate, the amount of original issue discount allocable to such period
would be zero and such Certificateholder will be permitted to offset such
negative amount only against future original issue discount (if any)
attributable to such certificate. Although the matter is not free from doubt, a
holder may be permitted to deduct a loss to the extent that his or her
respective remaining basis in such certificate exceeds the maximum amount of
future payments to which such certificateholder is entitled, assuming no further
prepayments of the mortgage loans. Any such loss might be treated as a capital
loss.
Whether any holder of any Class of certificates will be treated as
holding a certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made on
such Certificate at the time of its acquisition by such Certificateholder.
On December 31, 1997, the IRS published in the Federal Register final
regulations on the amortization of bond premium. Those regulations (a) do not
apply to regular interests in a REMIC such as the offered certificates, and (b)
state that they are intended to create no inference concerning the amortization
of premium of such instruments. Holders of each such Class of certificates
should consult their tax advisors regarding the possibility of making an
election to amortize such premium. See "Federal Income Tax Consequences--
REMICs--Taxation of Owners of REMIC Regular Certificates--Premium" in the
prospectus. To the extent that any offered certificate is purchased in this
offering or in the secondary market at not more than a de minimis discount, as
defined in the prospectus, a holder who receives a payment that is included in
the stated redemption price at maturity, generally, the principal amount, of
such certificate will recognize gain equal to the excess, if any, of the amount
of the payment
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over an allocable portion of the holder's adjusted basis in the offered
certificate. Such allocable portion of the holder's adjusted basis will be based
upon the proportion that such payment of stated redemption price bears to the
total remaining stated redemption price at maturity, immediately before such
payment is made, of such certificate. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount and Premium" and "--Sale Exchange or Redemption" in the
prospectus.
The current administration's budget proposal for the fiscal year 2001,
released February 7, 2000, proposes legislation that would amend the market
discount provisions of the Code described in the prospectus, see "Federal Income
Tax Consequences--REMICs--Taxation of Owners of Regular Certificates--Market
Discount" in the prospectus, to require holders of debt instruments, such as
REMIC Regular Certificates, that use an accrual method of accounting to include
market discount in income as it accrues. For purposes of determining and
accruing market discount, the proposed legislation would provide that a
Certificateholder's yield can not exceed five (5) percentage points over the
greater of (1) the original yield to maturity of the Certificate, or (2) the
applicable Federal rate in effect at the time the Certificateholder acquired the
Certificate. It is unclear how this proposal would apply to instruments, such as
the REMIC Regular Certificates, which have uncertain yields to maturity
attributable to possible prepayments on an underlying pool of prepayable
securities. This proposal is intended to be effective for debt instruments
acquired on or after the date the proposed legislation is enacted.
The OID Regulations in some circumstances permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that used by the issuer. Accordingly, it is possible that holders of offered
certificates may be able to select a method for recognizing original issue
discount that differs from that used by the paying agent in preparing reports to
Certificateholders and the IRS. Prospective purchasers of offered certificates
issued with original issue discount are advised to consult their tax advisors
concerning the treatment of such certificates.
Prepayment Premiums actually collected on the mortgage loans will be
distributed to the holders of each Class of certificates entitled thereto as
described under "Description of the Certificates--Distributions--Distributions
of Prepayment Premiums" in this prospectus supplement. It is not entirely clear
under the Code when the amount of a Prepayment Premium should be taxed to the
holders of a Class of certificates entitled to a Prepayment Premium. For federal
income tax information reporting purposes, Prepayment Premiums will be treated
as income to the holders of a Class of certificates entitled to Prepayment
Premiums only after the master servicer's actual receipt of a Prepayment Premium
to which the holders of such Class of certificates is entitled under the terms
of the Pooling and Servicing Agreement, rather than including projected
Prepayment Premiums in the determination of a Certificateholder's projected
constant yield to maturity. It appears that Prepayment Premiums are treated as
ordinary income rather than capital gain. However, the timing and
characterization of such income is not entirely clear and Certificateholders
should consult their tax advisors concerning the treatment of Prepayment
Premiums.
ADDITIONAL CONSIDERATIONS
The special servicer is authorized, when doing so is consistent with
maximizing the trust's net after-tax proceeds from an REO Property, to incur
taxes on the trust in connection with the operation of such REO Property. Any
such taxes imposed on the trust would reduce the amount distributable to
Certificateholders. See "Servicing of the Mortgage Loans--Foreclosure" in this
prospectus supplement.
Federal income tax information reporting duties with respect to the
offered certificates and REMIC I, REMIC II, REMIC III and REMIC IV will be the
obligation of the paying agent, and not of the master servicer. See "Federal
Income Tax Consequences REMICs--Information Reporting and Backup Withholding" in
the prospectus.
As explained under "Federal Income Tax Consequences--REMICs--Tax
Related Restrictions on Transfers of REMIC Residual Certificates--Noneconomic
REMIC Residual Certificates" in the prospectus, transfers of a Noneconomic REMIC
Residual Certificate are disregarded for tax purposes if the transferor either
knew or should have known that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC. A transferor is
presumed not to have such knowledge if (1) the transferor conducted, at the time
of the transfer, a reasonable investigation of the financial condition of the
transferee and, as a result of the investigation, the transferor determined that
the transferee had historically paid its debts as they came due and found no
significant evidence that the transferee would not continue to pay its debts as
they come due in the future and (2)
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the transferee represents to the transferor that it understands that, as the
holder of the Noneconomic REMIC Residual Certificate, the transferee may incur
tax liabilities in excess of cash flows generated by the interest and that the
transferee intends to pay taxes associated with holding the residual interest as
they came due. A recently proposed Treasury Regulation would, if finalized in
its present form, provide that such a presumption would not apply where the
present value of the anticipated tax liabilities associated with holding the
Noneconomic REMIC Residual Certificate exceeds the sum of (1) the present value
of any consideration given to the transferee to acquire the Noneconomic REMIC
Residual Certificate, (2) the present value of the expected future distributions
on the Noneconomic REMIC Residual Certificate and (3) the present value of the
anticipated tax savings associated with holding the Noneconomic REMIC Residual
Certificate as the REMIC generates losses. For purposes of making this
calculation, the transferor is assumed to pay tax at the highest corporate rate
and present values are computed using a discount rate equal to the applicable
federal rate, compounded semiannually, unless the transferor can demonstrate
that it regularly borrows substantial funds in the course of its business at a
lower rate. The proposed Treasury Regulation, if finalized in its present form,
would be effective as of February 4, 2000.
For further information regarding the tax consequences of investing in
the offered certificates, see "Federal Income Tax Consequences--REMICs" and
"State Tax Considerations" in the prospectus.
LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion summarizes certain legal aspects of mortgage
loans secured by real property in California (approximately 35.3% of the initial
pool balance) which are general in nature. This summary does not purport to be
complete and is qualified in its entirety by reference to the applicable federal
and state laws governing the mortgage loans.
CALIFORNIA
Under California law a foreclosure may be accomplished either
judicially or non-judicially. Generally, no deficiency judgment is permitted
under California law following a nonjudicial sale under a deed of trust. Other
California statutes, except in certain cases involving environmentally impaired
real property, require the lender to attempt to satisfy the full debt through a
foreclosure against the property before bringing a personal action, if otherwise
permitted, against the borrower for recovery of the debt. California case law
has held that acts such as an offset of an unpledged account or the application
of rents from secured property prior to foreclosure, under some circumstances,
constitute violations of such statutes. Violations of such statutes may result
in the loss of some or all of the security under the loan. Finally, other
statutory provisions in California limit any deficiency judgment (if otherwise
permitted) against the borrower, and possibly any guarantor, following a
judicial sale to the excess to the outstanding debt over the greater (i) the
fair market value of the property at the time of the public sale or (ii) the
amount of the winning bid in the foreclosure. Borrowers also are allowed a
one-year period within which to redeem the property.
ERISA CONSIDERATIONS
ERISA and the Code impose restrictions on Plans that are subject to
ERISA and/or Section 4975 of the Code and on persons that are Parties in
Interest. ERISA also imposes duties on persons who are fiduciaries of Plans
subject to ERISA and prohibits selected transactions between a Plan and Parties
in Interest with respect to such Plan. Under ERISA, any person who exercises any
authority or control respecting the management or disposition of the assets of a
Plan, and any person who provides investment advice with respect to such assets
for a fee, is a fiduciary of such Plan.
PLAN ASSETS
Neither ERISA nor the Code defines the term "plan assets." However, the
U.S. Department of Labor ("DOL") has issued a final regulation (29 C.F.R.
Section 2510.3-101) concerning the definition of what constitutes the assets of
a Plan. The DOL Regulation provides that, as a general rule, the underlying
assets and properties of corporations, partnerships, trusts and certain other
entities in which a Plan makes an "equity" investment will be deemed for certain
purposes, including the prohibited transaction provisions of ERISA and Section
4975 of the
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Code, to be assets of the investing Plan unless certain exceptions apply. Under
the terms of the regulation, if the assets of the trust were deemed to
constitute Plan assets by reason of a Plan's investment in certificates, such
Plan asset would include an undivided interest in the mortgage loans and any
other assets of the trust. If the mortgage loans or other trust assets
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets may be deemed to be a "fiduciary" with respect to
those assets, and thus subject to the fiduciary requirements and prohibited
transaction provisions of ERISA and Section 4975 of the Code with respect to the
mortgage loans and other trust assets.
Affiliates of Morgan Stanley Dean Witter Capital I, Inc., the
Underwriters, the master servicer, the special servicer and certain of their
respective affiliates might be considered or might become fiduciaries or other
Parties in Interest with respect to investing Plans. Moreover, the trustee, the
paying agent, the fiscal agent, the master servicer, the special servicer, the
Operating Adviser, any insurer, primary insurer or any other issuer of a credit
support instrument relating to the primary assets in the trust or certain of
their respective affiliates might be considered fiduciaries or other Parties in
Interest with respect to investing Plans. In the absence of an applicable
exemption, "prohibited transactions--" within the meaning of ERISA and Section
4975 of the Code -- could arise if certificates were acquired by, or with "plan
assets" of, a Plan with respect to which any such person is a Party in Interest.
In addition, an insurance company proposing to acquire or hold the
Subordinate Certificates with assets of its general account should consider the
extent to which such acquisition or holding would be subject to the requirements
of ERISA and Section 4975 of the Code under John Hancock Mutual Life Insurance
Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), and Section 401(c) of
ERISA, as amended by the Small Business Job Protection Act of 1996, Public Law
No. 104-188, and subsequent DOL and judicial guidance. See "--Insurance Company
General Accounts" below.
SPECIAL EXEMPTION APPLICABLE TO CLASS A CERTIFICATES
With respect to the acquisition and holding of Class A Certificates,
the DOL has granted to the Underwriters individual prohibited transaction
exemptions, which generally exempt from certain of the prohibited transaction
rules of ERISA and Section 4975 of the Code transactions relating to:
o the initial purchase, the holding, and the subsequent resale by Plans
of certificates evidencing interests in pass-through trusts; and
o transactions in connection with the servicing, management and operation
of such trusts, provided that the assets of such trusts consist of
certain secured receivables, loans and other obligations that meet the
conditions and requirements of the Exemptions.
The assets covered by the Exemptions include mortgage loans such as the
mortgage loans and fractional undivided interests in such loans.
The Exemptions set forth the following six general conditions which
must be satisfied for exemptive relief:
o the acquisition of the certificates by a Plan must be on terms,
including the price for the certificates, that are at least as
favorable to the Plan as they would be in an arm's-length transaction
with an unrelated party;
o the rights and interests evidenced by the certificates acquired by the
Plan are not subordinated to the rights and interests evidenced by
other certificates of the trust;
o the certificates acquired by the Plan must have received a rating at
the time of such acquisition that is in one of the three highest
generic rating categories from Fitch, S&P, Moody's Investors Service,
Inc. or Duff & Phelps Credit Rating Co.;
o the trustee cannot be an affiliate of any member of the "Restricted
Group," which consists of the Underwriters, the depositor, the master
servicer, the special servicer, each primary servicer and any mortgagor
with respect to
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mortgage loans constituting more than 5% of the aggregate unamortized
principal balance of the mortgage loans as of the date of initial
issuance of such classes of certificates;
o the sum of all payments made to the Underwriters in connection with the
distribution of the certificates must represent not more than
reasonable compensation for underwriting the certificates; the sum of
all payments made to and retained by Morgan Stanley Dean Witter Capital
I Inc. in consideration of the assignment of the mortgage loans to the
trust must represent not more than the fair market value of such
mortgage loans; the sum of all payments made to and retained by the
master servicer, the special servicer, and any sub-servicer must
represent not more than reasonable compensation for such person's
services under the Pooling and Servicing Agreement or other relevant
servicing agreement and reimbursement of such person's reasonable
expenses in connection therewith; and
o the Plan investing in the certificates must be an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D of the Securities and
Exchange Commission under the 1933 Act.
Because the Class A Certificates are not subordinate to any other class
of certificates, the second general condition set forth above is satisfied with
respect to such certificates. It is a condition of the issuance of Class A
Certificates that they be rated "AAA" by Fitch and "AAA" by Standard & Poor's. A
fiduciary of a Plan contemplating purchasing any such class of certificates in
the secondary market must make its own determination that at the time of such
acquisition, any such class of certificates continues to satisfy the third
general condition set forth above. Morgan Stanley Dean Witter Capital I Inc.
expects that the fourth general condition set forth above will be satisfied with
respect to each of such classes of certificates. A fiduciary of a Plan
contemplating purchasing any such class of certificates must make its own
determination that the first, third, fifth and sixth general conditions set
forth above will be satisfied with respect to any such class of certificate.
The Class B, Class C, Class D and Class E Certificates do not satisfy
the second condition described above because they are subordinated to the Class
A Certificates, and furthermore the Class E Certificates are not expected to
satisfy the third condition described above.
Before purchasing any such class of certificates, a fiduciary of a Plan
should itself confirm (a) that such certificates constitute "certificates" for
purposes of the Exemptions and (b) that the specific and general conditions of
the Exemptions and the other requirements set forth in the Exemptions would be
satisfied. In addition to making its own determination as to the availability of
the exemptive relief provided in the Exemptions, the Plan fiduciary should
consider the availability of other prohibited transaction exemptions.
Moreover, the Exemptions provide relief from certain
self-dealing/conflict of interest prohibited transactions, but only if, among
other requirements:
o the investing Plan fiduciary or its affiliates is an obligor with
respect to five percent or less of the fair market value of the
obligations contained in the trust;
o the Plan's investment in each class of certificates does not exceed 25%
of all of the certificates outstanding of that class at the time of the
acquisition; and
o immediately after the acquisition, no more than 25% of the assets of
the Plan are invested in certificates representing an interest in one
or more trusts containing assets sold or serviced by the same entity.
Morgan Stanley Dean Witter Capital I Inc. believes that the Exemptions
will apply to the acquisition and holding of Class A Certificates by Plans or
persons acting on behalf of or with "plan assets" of Plans, and that all
conditions of the Exemptions, other than those within the control of the
investing Plans or Plan investors, have been met. Upon request, the Underwriters
will deliver to any fiduciary or other person considering investing "plan
assets" of any Plan in the certificates a list identifying each borrower that is
the obligor under each mortgage loan that constitutes more than 5% of the
aggregate principal balance of the assets of the trust.
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Because the characteristics of the Class B, Class C, Class D and Class
E Certificates do not meet the requirements of the Exemptions, the purchase or
holding of such certificates by, on behalf of or with "plan assets" of any Plan
may result in a non-exempt prohibited transaction or the imposition of excise
taxes or civil penalties under ERISA and/or Section 4975 of the Code.
Accordingly, such certificates may not be purchased by, transferred to or held
by a Plan or any person using "plan assets" of any Plan to effect such
acquisition or holding. Each person that acquires or holds any Class B, Class C,
Class D or Class E Certificate shall be deemed to have represented and warranted
to Morgan Stanley Dean Witter Capital I Inc., the trustee, the paying agent, the
fiscal agent and the master servicer that it satisfies the foregoing limitation,
provided that an insurance company investing solely assets of its general
account may acquire and hold such certificates subject to the limitations
described in "--Insurance Company General Accounts" below.
INSURANCE COMPANY GENERAL ACCOUNTS
Based on the reasoning of the United States Supreme Court in John
Hancock Life Ins. Co. v. Harris Trust and Savings Bank, an insurance company's
general account may be deemed to include assets of the Plans investing in the
general account (e.g., through the purchase of an annuity contract), and the
insurance company might be treated as a Party in Interest with respect to a Plan
by virtue of such investment. Any investor that is an insurance company using
the assets of an insurance company general account should note that the Small
Business Job Protection Act of 1996 added Section 401(c) of ERISA relating to
the status of the assets of insurance company general accounts under ERISA and
Section 4975 of the Code. Pursuant to Section 401(c), the Department of Labor
issued final regulations effective January 5, 2000 with respect to insurance
policies issued on or before December 31, 1998 that are supported by an
insurer's general account. As a result of these regulations, assets of an
insurance company general account will not be treated as "plan assets" for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code to the extent such assets relate to contracts issued to employee
benefit plans on or before December 31, 1998 and the insurer satisfied various
conditions.
Section 401(c) also provides that until the date that is 18 months
after the 401(c) Regulations became final (January 5, 2000), no liability under
the fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code may result on the basis of a claim that the assets of
the general account of an insurance company constitute the "plan assets" of any
such plan, except (a) to prevent avoidance of the 401(c) Regulations, and (b)
actions brought by the Secretary of Labor relating to certain breaches of
fiduciary duties that also constitute breaches of state or federal criminal law.
Any assets of an insurance company general account which support
insurance policies or annuity contracts issued to Plans after December 31, 1998,
or on or before that date for which the insurer does not comply with the 401(c)
Regulations, may be treated as "plan assets" of such Plans. Because Section
401(c) does not relate to insurance company separate accounts, separate account
assets continue to be treated as "plan assets" of any Plan that is invested in
such separate account. Insurance companies contemplating the investment of
general account assets in the Subordinate Certificates should consult with their
legal counsel with respect to the applicability of Section 401(c), including the
general account's ability to continue to hold such Certificates after July 5,
2001, which is the date 18 months after the date the 401(c) Regulations became
final.
Accordingly, any insurance company that acquires or holds any Class B,
Class C, Class D or Class E Certificate shall be deemed to have represented and
warranted to Morgan Stanley Dean Witter Capital I Inc., the trustee, the paying
agent, the fiscal agent and the master servicer that (1) such acquisition and
holding is permissible under applicable law, will not constitute or result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and
will not subject Morgan Stanley Dean Witter Capital I Inc., the trustee, the
paying agent, the fiscal agent or the master servicer to any obligation in
addition to those undertaken in the Pooling and Servicing Agreement, or (2) the
source of funds used to acquire and hold such certificates is an "insurance
company general account", as defined in DOL Prohibited Transaction Class
Exemption 95-60, and the applicable conditions set forth in PTCE 95-60 have been
satisfied.
GENERAL INVESTMENT CONSIDERATIONS
Prospective Plan investors should consult with their legal counsel
concerning the impact of ERISA and Section 4975 of the Code, the applicability
of the Exemptions, or other exemptive relief, and the potential
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consequences to their specific circumstances, prior to making an investment in
the certificates. Moreover, each Plan fiduciary should determine whether, under
the general fiduciary standards of ERISA regarding prudent investment procedure
and diversification, an investment in the certificates is appropriate for the
Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
LEGAL INVESTMENT
The offered certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984, as amended. 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, may be subject
to significant interpretive uncertainties. All investors whose investment
authority is subject to legal investment laws and regulations, regulatory
capital requirements or review by regulatory authorities should consult their
own legal advisors to determine whether, and to what extent, the offered
certificates will constitute legal investments for them or are subject to
investment, capital or other restrictions.
No representations are made as to the proper characterization of the
offered certificates for legal investment or financial institution regulatory
purposes, or as to the ability of particular investors to purchase the offered
certificates under applicable legal investment or other restrictions. The
uncertainties referred to above, and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the offered certificates, may adversely affect the liquidity of the offered
certificates. See "Legal Investment" in the prospectus.
USE OF PROCEEDS
Morgan Stanley Dean Witter Capital I Inc. will apply the net proceeds
of the offering of the certificates towards the simultaneous purchase of the
mortgage loans from the sellers and to the payment of expenses in connection
with the issuance of the certificates.
PLAN OF DISTRIBUTION
Morgan Stanley Dean Witter Capital I Inc. has entered into an
Underwriting Agreement with Morgan Stanley & Co., Incorporated, an affiliate of
Morgan Stanley Dean Witter Capital I Inc., Goldman, Sachs & Co. and Norwest
Investment Services, Inc. Subject to the terms and conditions set forth in the
Underwriting Agreement, Morgan Stanley Dean Witter Capital I Inc. has agreed to
sell to each Underwriter, and each Underwriter has agreed severally to purchase
from Morgan Stanley Dean Witter Capital I Inc. the respective aggregate
Certificate Balance of each Class of offered certificates presented below.
<TABLE>
<CAPTION>
UNDERWRITERS CLASS A-1 CLASS A-2 CLASS B CLASS C CLASS D CLASS E
- ------------------ --------------- --------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Morgan Stanley &
Co. $ $ $ $ $ $
Incorporated
Goldman, Sachs &
Co. $ $ $ $ $ $
Norwest
Investment
Services, Inc. $ $ $ $ $ $
--------------- -------------- -------------- -------------- -------------- ---------------
Total........ $113,834,030 $439,000,000 $22,408,000 $25,854,000 $8,619,000 $17,236,000
</TABLE>
Morgan Stanley & Co. Incorporated will act as sole lead manager and
bookrunner with respect to the offered certificates.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to conditions precedent, and that the Underwriters
severally will be obligated to purchase all of the offered certificates if any
are purchased. In the event of a default by an Underwriter, the Underwriting
Agreement provides that the purchase commitment of the non-defaulting
Underwriter may be increased. Proceeds to Morgan Stanley Dean Witter Capital
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I Inc. from the sale of the offered certificates, before deducting expenses
payable by Morgan Stanley Dean Witter Capital I Inc., will be approximately
$__________, plus accrued interest.
The Underwriters have advised Morgan Stanley Dean Witter Capital I Inc.
that they will propose to offer the offered certificates from time to time for
sale in one or more negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The Underwriters may effect such transactions by
selling such Classes of offered certificates to or through dealers and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters and any purchasers of such
Classes of offered certificates for whom they may act as agent.
The offered certificates are offered by the Underwriters when, as and
if issued by Morgan Stanley Dean Witter Capital I Inc., delivered to and
accepted by the Underwriters and subject to their right to reject orders in
whole or in part. It is expected that delivery of the offered certificates will
be made in book-entry form through the facilities of DTC against payment
therefor on or about April __, 2000, which is the _______ business day following
the date of pricing of the Certificates.
Under Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended, trades in the secondary market generally are required to settle in
three business days, unless the parties to any such trade expressly agree
otherwise. Accordingly, purchasers who wish to trade offered certificates in the
secondary market prior to such delivery should specify a longer settlement
cycle, or should refrain from specifying a shorter settlement cycle, to the
extent that failing to do so would result in a settlement date that is earlier
than the date of delivery of such offered certificates.
The Underwriters and any dealers that participate with the Underwriters
in the distribution of the offered certificates may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of such Classes of offered certificates by them may be deemed to
be underwriting discounts or commissions, under the Securities Act of 1933, as
amended.
Morgan Stanley Dean Witter Capital I Inc. has agreed to indemnify the
Underwriters against civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Underwriters currently intend to make a secondary market in the
offered certificates, but they are not obligated to do so.
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LEGAL MATTERS
The legality of the offered certificates and the material federal
income tax consequences of investing in the offered certificates will be passed
upon for Morgan Stanley Dean Witter Capital I Inc. by Latham & Watkins, New
York, New York. Legal matters with respect to the offered certificates will be
passed upon for the Underwriters by Latham & Watkins, New York, New York. Legal
matters will be passed upon for Principal Commercial Funding, LLC by Dechert
Price & Rhoads, New York, New York, for John Hancock Real Estate Finance, Inc.
by Cadwalader, Wickersham & Taft, New York, New York, for Morgan Stanley
Mortgage Capital Inc. by Latham & Watkins, New York, New York and for Wells
Fargo Bank, National Association by Sidley & Austin, New York, New York.
S-102
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RATINGS
It is a condition of the issuance of the offered certificates that they
receive the following credit ratings from Fitch and S&P.
CLASS FITCH S&P
- ------------------------------------------- ----- ---
Class A-1.................................. AAA AAA
Class A-2.................................. AAA AAA
Class B.................................... AA AA
Class C.................................... A A
Class D.................................... A- A-
Class E.................................... BBB BBB
The ratings of the offered certificates address the likelihood of the
timely payment of interest and the ultimate payment of principal, if any, due on
the offered certificates by the Rated Final Distribution Date. That date is the
first Distribution Date that follows by at least 36 months the end of the
amortization term of the mortgage loan that, as of the Cut-off Date, has the
longest remaining amortization term. 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 agency.
The ratings of the certificates do not represent any assessment of (1)
the likelihood or frequency of principal prepayments, voluntary or involuntary,
on the mortgage loans, (2) the degree to which such prepayments might differ
from those originally anticipated, (3) whether and to what extent Prepayment
Premiums or default interest will be received or (4) the allocation of Net
Aggregate Prepayment Interest Shortfalls. A security rating does not represent
any assessment of the yield to maturity that investors may experience. In
general, the ratings thus address credit risk and not prepayment risk.
There can be no assurance as to whether any rating agency not requested
to rate the offered certificates will nonetheless issue a rating to any Class
thereof and, if so, what such rating would be. A rating assigned to any Class of
offered certificates by a rating agency that has not been requested by Morgan
Stanley Dean Witter Capital I Inc. to do so may be lower than the ratings
assigned thereto at the request of Morgan Stanley Dean Witter Capital I Inc.
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GLOSSARY OF TERMS
The certificates will be issued pursuant to the Pooling and Servicing
Agreement. The following Glossary of Terms is not complete. You should also
refer to the prospectus and the Pooling and Servicing Agreement for additional
definitions. If you send a written request to the trustee at its corporate
office, the trustee will provide to you without charge a copy of the Pooling and
Servicing Agreement, without exhibits and schedules.
Unless the context requires otherwise, the definitions contained in
this Glossary of Terms apply only to this series of certificates and will not
necessarily apply to any other series of certificates the Trust may issue.
"Accrued Certificate Interest" means, in respect of each Class of REMIC
Regular Certificates for each Distribution Date, the amount of interest for the
applicable Interest Accrual Period accrued at the applicable Pass-Through Rate
on the aggregate Certificate Balance or Notional Amount, as the case may be, of
such Class of certificates outstanding immediately prior to such Distribution
Date. Accrued Certificate Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
"Administrative Cost Rate" will equal the sum of the related Master
Servicing Fee, the Excess Servicing Fee, the Primary Servicing Fee and the
Trustee Fee for any month (in each case, expressed as a per annum rate) for any
Mortgage Loan in such month.
"Advance Rate" means a rate equal to the "Prime Rate" as reported in
The Wall Street Journal from time to time.
"Advances" means Servicing Advances and P&I Advances, collectively.
"Annual Report" means a report for each mortgage loan based on the most
recently available year-end financial statements and most recently available
rent rolls of each applicable borrower, to the extent such information is
provided to the master servicer, containing such information and analyses as
required by the Pooling and Servicing Agreement including, without limitation,
Debt Service Coverage Ratios, to the extent available, and in such form as shall
be specified in the Pooling and Servicing Agreement.
"Appraisal Event" means not later than the earliest of the following:
o the date 120 days after the occurrence of any delinquency in payment
with respect to a mortgage loan if such delinquency remains uncured;
o the date 30 days after receipt of notice that the related borrower has
filed a bankruptcy petition, an involuntary bankruptcy has occurred or
a receiver is appointed in respect of the related mortgaged property,
provided that such petition or appointment remains in effect;
o the effective date of any modification to a Money Term of a mortgage
loan, other than an extension of the date that a Balloon Payment is due
for a period of less than six months from the original due date of such
Balloon Payment; and
o the date 30 days following the date a mortgaged property becomes an REO
Property.
"Appraisal Reduction" will equal, for any mortgage loan, including a
mortgage loan as to which the related mortgaged property has become an REO
Property, an amount, calculated as of the first Determination Date that is at
least fifteen days after the date on which the appraisal is obtained or the
internal valuation is performed, equal to the excess, if any, of:
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o the sum of:
o the Scheduled Principal Balance of such mortgage loan or in
the case of an REO Property, the related REO Mortgage Loan,
less the principal amount of any undrawn letter of credit that
is then securing such mortgage loan;
o to the extent not previously advanced by the master servicer,
the trustee or the fiscal agent, all accrued and unpaid
interest on the mortgage loan;
o all related unreimbursed Advances and interest on such
Advances at the Advance Rate; and
o to the extent funds on deposit in any applicable Escrow
Accounts are not sufficient therefor, and to the extent not
previously advanced by the master servicer, the trustee or the
fiscal agent, all currently due and unpaid real estate taxes
and assessments, insurance premiums and, if applicable, ground
rents in respect of the related mortgaged property or REO
Property, as the case may be,
over
o 90% of the value (net of any prior mortgage liens) of such mortgaged
property or REO Property as determined by such appraisal or internal
valuation plus the amount of any escrows held by or on behalf of the
trustee as security for the mortgage loan (less the estimated amount of
obligations anticipated to be payable in the next twelve months to
which such escrows relate).
"Assumed Scheduled Payment" means an amount deemed due in respect of:
o any Balloon Loan that is delinquent in respect of its Balloon Payment
beyond the first Determination Date that follows its original stated
maturity date; or
o any mortgage loan as to which the related mortgaged property has become
an REO Property.
The Assumed Scheduled Payment deemed due on any such Balloon Loan on its
original stated maturity date and on each successive Due Date that it remains or
is deemed to remain outstanding will equal the Scheduled Payment that would have
been due on such date if the related Balloon Payment had not come due, but
rather such mortgage loan had continued to amortize in accordance with its
amortization schedule in effect immediately prior to maturity. With respect to
any mortgage loan as to which the related mortgaged property has become an REO
Property, the Assumed Scheduled Payment deemed due on each Due Date for so long
as the REO Property remains part of the trust, equals the Scheduled Payment (or
Assumed Scheduled Payment) due on the last Due Date prior to the acquisition of
such REO Property.
"Available Distribution Amount" means in general, for any Distribution
Date:
(1) all amounts on deposit in the Certificate Account as of the
business day preceding the related Distribution Date,
exclusive of any portion thereof that represents one or more
of the following:
o Scheduled Payments collected but due on a Due Date
subsequent to the related Collection Period;
o Prepayment Premiums (which are separately
distributable on the certificates as described in
this prospectus supplement);
o amounts that are payable or reimbursable to any
person other than the Certificateholders (including,
among other things, amounts attributable to Expense
Losses and amounts payable to the master servicer,
the special servicer, the Primary Servicers, the
trustee, the fiscal agent and the paying agent as
compensation or in reimbursement of outstanding
Advances or as Excess Servicing Fees);
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o amounts deposited in the Certificate Account in
error; and
o if such Distribution Date occurs during January,
other than a leap year, or February of any year, the
Interest Reserve Amounts with respect to the Interest
Reserve Loans to be deposited into the Interest
Reserve Account;
(2) to the extent not already included in clause (1), any P&I
Advances made and any Compensating Interest Payments paid with
respect to such Distribution Date; and
(3) if such Distribution Date occurs during March of any year, the
aggregate of the Interest Reserve Amounts then on deposit in
the Interest Reserve Account in respect of each Interest
Reserve Loan.
"Balloon Loans" means mortgage loans that provide for Scheduled
Payments based on amortization schedules significantly longer than their terms
to maturity and that are expected to have remaining principal balances equal to
or greater than 6% of the original principal balance of those mortgage loans as
of their respective stated maturity date.
"Balloon LTV" - See "Balloon LTV Ratio."
"Balloon LTV Ratio" or "Balloon LTV" means the ratio, expressed as a
percentage, of the principal balance of a Balloon Loan anticipated to be
outstanding on the date on which the related Balloon Payment is scheduled to be
due (calculated based on the Structuring Assumptions and a 0% CPR) to the value
of the related mortgaged property or properties determined as described under
"Description of the Mortgage Pool--Additional Mortgage Loan Information" in this
prospectus supplement.
"Balloon Payment" means, with respect to the Balloon Loans, the
principal payments and scheduled interest due and payable on the relevant
maturity dates.
"Certificate Account" means one or more separate accounts established
and maintained by the master servicer, any Primary Servicer or any sub-servicer
on behalf of the master servicer, pursuant to the Pooling and Servicing
Agreement.
"Certificate Balance" will equal the then maximum amount that the
holder of each Principal Balance Certificate will be entitled to receive in
respect of principal out of future cash flow on the mortgage loans and other
assets included in the trust.
"Certificateholder" or "Holder" means an investor certificateholder, a
Person in whose name a certificate is registered in the Certificate Registrar or
a Person in whose name ownership of an uncertificated certificate is recorded in
the books and records of the Certificate Registrar.
"Certificate Owner" means a Person acquiring an interest in an offered
certificate.
"Certificate Registrar" means the paying agent, in its capacity as the
Certificate Registrar.
"Class" means the designation applied to the offered certificates and
the private certificates, pursuant to this prospectus supplement.
"Class A Certificates" means the Class A-1 Certificates and the Class
A-2 Certificates.
"Clearstream Banking" means Clearstream Banking, societe anonyme.
"Closing Date" means March 29, 2000.
"Collection Period" means, with respect to any Distribution Date, the
period beginning with the day after the Determination Date in the month
preceding such Distribution Date (or, in the case of the first Distribution
Date,
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the Cut-off Date) and ending with the Determination Date occurring in the month
in which such Distribution Date occurs.
"Compensating Interest" means with respect to any Distribution Date, an
amount equal to the excess of (A) Prepayment Interest Shortfalls resulting from
Principal Prepayments during the related Collection Period over (B) Prepayment
Interest Excesses resulting from Principal Prepayments during the same
Collection Period, but in any event (i) with respect to Compensating Interest to
be paid by the master servicer, not more than the portion of the aggregate
Master Servicing Fee for the related Collection Period calculated in respect of
all the mortgage loans and (ii) with respect to Compensating Interest to be paid
by the special servicer, not more than the portion of the aggregate Special
Servicing Fee for the related Collection Period calculated in respect of all the
Specially Serviced Mortgage Loans.
"Compensating Interest Payment" means any payment of Compensating
Interest.
"Constant Prepayment Rate" or "CPR" means a rate that 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
mortgage loans for the life of such mortgage loans. CPR does not purport to be
either a historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any
mortgage loans, including the mortgage loans underlying the certificates.
"Controlling Class" means the most subordinate Class of Subordinate
Certificates outstanding at any time of determination; provided, however, that
if the aggregate Certificate Balance of such Class of certificates is less than
25% of the initial aggregate Certificate Balance of such Class as of the Closing
Date, the Controlling Class will be the next most subordinate Class of
certificates.
"CPR" - See "Constant Prepayment Rate" above.
"Cut-off Date" means March 1, 2000. The Cut-off Date for any mortgage
loan that has a due date on a date other than the first day of each month shall
be March 5, 2000.
"Cut-off Date Balance" means, with respect to any mortgage loan, such
mortgage loan's principal balance outstanding as of its Cut-off Date, after
application of all payments of principal due on or before such date, whether or
not received determined as described under "Description of the Mortgage
Pool--Additional Mortgage Loan Information" in this prospectus supplement. For
purposes of those mortgage loans that have a due date on a date other than the
first of the month, we have assumed that monthly payments on such mortgage loans
are due on the first of the month for purposes of determining their Cut-off Date
Balances. All numerical information in this prospectus supplement concerning the
mortgage loans is based upon their outstanding principal balances as of March 1,
2000, notwithstanding that a portion of the monthly payments on the mortgage
loans paid in April 2000 represented principal amortization. In the aggregate,
the principal amortization on such mortgage loans was approximately $461,000 and
the aggregate principal balance of the mortgage loans is approximately
$689,003,732 as of April 1, 2000. The Certificate Balance or Notional Amount of
each Class of Certificates is based on the aggregate principal balance of the
mortgage loans as of April 1, 2000.
"Cut-off Date Loan-to-Value" or "Cut-off Date LTV" means a ratio,
expressed as a percentage, of the Cut-off Date Balance of a mortgage loan (or
the aggregate principal balance of a group of cross-collateralized mortgage
loans, to the value of the related mortgaged property or properties) determined
as described under "Description of the Mortgage Pool--Additional Mortgage Loan
Information" in this prospectus supplement.
"Cut-off Date LTV" - See "Cut-off Date Loan-to-Value."
"Debt Service Coverage Ratio" or "DSCR" means, the ratio of
Underwritable Cash Flow estimated to be produced by the related mortgaged
property or properties to the annualized amount of debt service payable under
that mortgage loan (or that group of cross-collateralized mortgage loans).
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"Determination Date" means, with respect to any Distribution Date, the
earlier of (i) the 10th day of the month in which such Distribution Date occurs,
or, if such day is not a business day, the next preceding business day, and (ii)
the 4th business day prior to the related Distribution Date.
"Discount Rate" means, for the purposes of the distribution of
Prepayment Premiums, the rate which, when compounded monthly, is equivalent to
the Treasury Rate when compounded semi-annually.
"Distributable Certificate Interest Amount" means, in respect of any
Class of REMIC Regular Certificates for any Distribution Date, the sum of:
o Accrued Certificate Interest in respect of such Class of certificates
for such Distribution Date, reduced (to not less than zero) by:
o any Net Aggregate Prepayment Interest Shortfalls; and
o Realized Losses and Expense Losses, in each case specifically
allocated with respect to such Distribution Date to reduce the
Distributable Certificate Interest Amount payable in respect
of such Class in accordance with the terms of the Pooling and
Servicing Agreement; and
o the portion of the Distributable Certificate Interest Amount for such
Class remaining unpaid as of the close of business on the preceding
Distribution Date, plus the Unpaid Interest.
"Distribution Account" means the distribution account maintained by the
paying agent, in accordance with the Pooling and Servicing Agreement.
"Distribution Date" means the 15th day of each month, or if any such
15th day is not a business day, on the next succeeding business day.
"Document Defect" means a situation in which a mortgage loan is not
delivered as and when required, is not properly executed or is defective on its
face.
"DOL Regulation" means the final regulation, issued by the DOL,
defining the term "plan assets" which provides, generally, that when a Plan
makes an equity investment in another entity, the underlying assets of that
entity may be considered plan assets unless exceptions apply (29 C.F.R. Section
2510.3-101).
"DSCR" - See "Debt Service Coverage Ratio."
"DTC" means The Depository Trust Company.
"DTC Systems" means those computer applications, systems, and the like
for processing data for DTC.
"Due Dates" means dates upon which the related Scheduled Payments are
due.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" means the Euroclear System.
"Event of Default" means, with respect to the master servicer under the
Pooling and Servicing Agreement, any one of the following events:
o any failure by the master servicer to remit to the paying agent any
payment required to be remitted by the master servicer under the terms
of the Pooling and Servicing Agreement, including any required
Advances;
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o any failure by the master servicer to make a required deposit to the
Certificate Account which continues unremedied for one business day
following the date on which such deposit was first required to be made;
o any failure on the part of the master servicer duly to observe or
perform in any material respect any other of the duties, covenants or
agreements on the part of the master servicer contained in the Pooling
and Servicing Agreement which continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the master servicer
by Morgan Stanley Dean Witter Capital I Inc. or the trustee; provided,
however, that if the master servicer certifies to the trustee and
Morgan Stanley Dean Witter Capital I Inc. that the master servicer is
in good faith attempting to remedy such failure, such cure period will
be extended to the extent necessary to permit the master servicer to
cure such failure; provided, further that such cure period may not
exceed 90 days;
o any breach of the representations and warranties of the master servicer
in the Pooling and Servicing Agreement that materially and adversely
affects the interest of any holder of any Class of certificates and
that continues unremedied for a period of 30 days after the date on
which notice of such breach, requiring the same to be remedied shall
have been given to the master servicer by Morgan Stanley Dean Witter
Capital I Inc. or the trustee, provided, however, that if the master
servicer certifies to the trustee and Morgan Stanley Dean Witter
Capital I Inc. that the master servicer is in good faith attempting to
remedy such breach, such cure period will be extended to the extent
necessary to permit the master servicer to cure such breach; provided,
further that such cure period may not exceed 90 days;
o the trustee shall receive notice from Fitch to the effect that the
continuation of the master servicer in such capacity would result in
the downgrade, qualification or withdrawal of any rating then assigned
by Fitch to any Class of certificates; or
o the master servicer has been downgraded to a servicer rating level
below CMS3, or its then equivalent, by Fitch;
o the master servicer is no longer on the approved list of commercial
mortgage loan master servicers maintained by S&P;
o a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law for
the appointment of a conservator, receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the master servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days;
o the master servicer shall consent to the appointment of a conservator,
receiver, liquidator, trustee or similar official in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the master servicer or of or
relating to all or substantially all of its property; or
o the master servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable bankruptcy, insolvency or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations, or take any corporate action in
furtherance of the foregoing.
"Excess Liquidation Proceeds" the excess of (i) proceeds from the sale
or liquidation of a mortgage loan or related REO Property, net of expenses and
any related Advances and interest thereon over (ii) the amount that would have
been received if a prepayment in full had been made with respect to such
mortgage loan on the date such proceeds were received.
"Excess Servicing Fee" means an additional fee payable to Wells Fargo
or JHREF that accrues at a rate set forth in the Pooling and Servicing
Agreement, which is assignable and non-terminable.
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"Exemptions" means the individual prohibited transaction exemptions
granted by the DOL to the Underwriters.
"Expense Losses" means, among other things:
o any interest paid to the master servicer, the trustee or the fiscal
agent in respect of unreimbursed Advances;
o all Special Servicer Compensation payable to the special servicer from
amounts that are part of the trust;
o other expenses of the trust, including, but not limited to, specified
reimbursements and indemnification payments to the trustee, the paying
agent and certain related persons, specified reimbursements and
indemnification payments to Morgan Stanley Dean Witter Capital I Inc.,
the master servicer, the special servicer, the Primary Servicer and
certain related persons, specified taxes payable from the assets of the
trust, the costs and expenses of any tax audits with respect to the
trust and other tax-related expenses and the cost of various opinions
of counsel required to be obtained in connection with the servicing of
the mortgage loans and administration of the trust; and
o any other expense of the trust not specifically included in the
calculation of Realized Loss for which there is no corresponding
collection from the borrower.
"FASIT" means a financial asset securitization investment trust.
"Fitch" means Fitch IBCA, Inc.
"401(c) Regulations" means the final regulations issued by the DOL
under Section 401(c) clarifying the application of ERISA to Insurance Company
General Accounts of ERISA.
"Hazardous Materials" means gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related or similar
materials, and any other substance or material as may be defined as a hazardous
or toxic substance, material or waste by any federal, state or local
environmental law, ordinance, rule, regulation or order, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C.(Sections) 9601 et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C.(Sections)
1801, et seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C.(Sections) 6901 et seq.), the Federal Water Pollution Control Act, as
amended (33 U.S.C.(Sections) 1251 et seq.), the Clean Air Act, as amended
(42 U.S.C.(Sections) 7401 et seq.), and any regulations promulgated
pursuant thereto.
"Initial Pool Balance" means the aggregate Cut-off Date Balance of
$689,464,702.
"Insurance Proceeds" means all amounts paid by an insurer in connection
with a mortgage loan, other than any amounts required to be paid to the related
borrower.
"Interest Accrual Period" means, for each Class of REMIC Regular
Certificates and each Distribution Date, the calendar month immediately
preceding the month in which such Distribution Date occurs.
"Interest Only Certificates" means the Class X Certificates.
"Interest Reserve Account" means an account that the master servicer
has established and will maintain for the benefit of the holders of the
certificates.
"Interest Reserve Amount" means all amounts deposited in the Interest
Reserve Account with respect to Scheduled Payments due in any applicable January
and February.
"Interest Reserve Loan" - See "Non-30/360 Loan" below.
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"Interested Party" means the special servicer, the master servicer,
Morgan Stanley Dean Witter Capital I Inc., the holder of any related junior
indebtedness, the Operating Advisor, a holder of 50% or more of the Controlling
Class, any independent contractor engaged by the master servicer or the special
servicer pursuant to the Pooling and Servicing Agreement or any person actually
know to a responsible officer of the trustee to be an affiliate of any of them.
"JHREF" means John Hancock Real Estate Finance Inc.
"JHREF Loans" means the twenty-two (22) mortgage loans that were
originated by JHREF.
"Liquidation Fee" means 1.00% of the related Liquidation Proceeds.
"Liquidation Proceeds" means proceeds from the sale or liquidation of a
mortgage loan or related REO Property, net of expenses and any related Advances
and interest thereon.
"Lock-out Period" means the period ending on a date determined by the
related mortgage note during which voluntary principal prepayments are
prohibited.
"Master Servicer Remittance Date" means in each month the business day
preceding the Distribution Date.
"Master Servicing Fee" means the monthly amount, based on the Master
Servicing Fee Rate, to which the master servicer is entitled in compensation for
servicing the mortgage loans.
"Master Servicing Fee Rate" means ____% per annum.
"Material Breach" means a breach of any of the representations and
warranties that materially and adversely affects the interests of the holders of
the certificates.
"Material Document Defect" means a breach of any of the representations
and warranties has occurred that has resulted from a Document Defect and that
materially and adversely affects the interests of the Holders of the
certificates.
"Money Term" means, with respect to any mortgage loan, the stated
maturity date, mortgage rate, principal balance, amortization term or payment
frequency thereof or any provision thereof requiring the payment of a Prepayment
Premium (but does not include late fee or default interest provisions).
"Mortgage File" means the following documents, among others:
o the original mortgage note, endorsed (without recourse) in blank or to
the order of the trustee;
o the original or a copy of the related mortgage(s), together with
originals or copies of any intervening assignments of such document(s),
in each case with evidence of recording thereon (unless such
document(s) have not been returned by the applicable recorder's
office);
o the original or a copy of any related assignment(s) of rents and leases
(if any such item is a document separate from the mortgage), together
with originals or copies of any intervening assignments of such
document(s), in each case with evidence of recording thereon (unless
such document(s) have not been returned by the applicable recorder's
office);
o an assignment of each related mortgage in blank or in favor of the
trustee, in recordable form;
o an assignment of any related assignment(s) of rents and leases (if any
such item is a document separate from the mortgage) in blank or in
favor of the trustee, in recordable form;
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o an original or copy of the related lender's title insurance policy (or,
if a title insurance policy has not yet been issued, a commitment for
title insurance "marked-up" at the closing of such mortgage loan); and
o when relevant, the related ground lease or a copy thereof.
"Mortgage Loan Purchase Agreement" means each of the agreements entered
into between Morgan Stanley Dean Witter Capital I Inc. and the respective
seller, as the case may be.
"MSMC" means Morgan Stanley Mortgage Capital Inc.
"MSMC Loans" means the twelve (12) mortgage loans that were originated
or acquired by MSMC.
"Net Aggregate Prepayment Interest Shortfall" means, for the related
Distribution Date, the aggregate of all Prepayment Interest Shortfalls incurred
in respect of all of the mortgage loans during any Collection Period that are
neither offset by Prepayment Interest Excesses collected on the mortgage loans
during such Collection Period nor covered by a Compensating Interest Payment
paid by the master servicer or special servicer.
"Net Mortgage Rate" means, in general, with respect to any mortgage
loan, a per annum rate equal to the related mortgage rate minus the related
Administrative Cost Rate; provided that, for purposes of calculating the
Pass-Through Rate for each Class of REMIC Regular Certificates from time to
time, the Net Mortgage Rate for any mortgage loan will be calculated without
regard to any modification, waiver or amendment of the terms of such mortgage
loan subsequent to the Closing Date. In addition, because the certificates
accrue interest on the basis of a 360-day year consisting of twelve 30-day
months, when calculating the Pass-Through Rate for each Class of certificates
for each Distribution Date, the Net Mortgage Rate on a Non-30/360 Loan will be
appropriately adjusted to reflect such difference. However, with respect to each
Non-30/360 Loan:
o the Net Mortgage Rate that would otherwise be in effect for purposes of
the Scheduled Payment due in January of each year (other than a leap
year) and February of each year will be adjusted to take into account
the applicable Interest Reserve Amount; and
o the Net Mortgage Rate that would otherwise be in effect for purposes of
the Scheduled Payment due in March of each year (commencing in 2000)
will be adjusted to take into account the related withdrawal from the
Interest Reserve Account for the preceding January (if applicable) and
February.
"Non-30/360 Loan" or "Interest Reserve Loan" means a mortgage loan that
accrues interest other than on the basis of a 360-day year consisting of 12
30-day months.
"Notional Amount" means the notional principal amount of the Class X
Certificates, which will be based upon the outstanding principal balance of the
Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L and Class M Certificates.
"NWAC Rate" - See "Weighted Average Net Mortgage Rate."
"OID" means original issue discount.
"Open Period" means the period beginning on a date prior to maturity as
determined by the related mortgage note when voluntary principal prepayments are
permitted without any Prepayment Premiums.
"Operating Adviser" means that entity appointed by the holders of a
majority of the Controlling Class which will have the right to receive
notification from, and in specified cases to direct, the special servicer in
regard to specified actions.
"P&I Advance" means the amount of any Scheduled Payments or Assumed
Schedule Payment (net of the related Master Servicing Fees, Excess Servicing
Fees and Primary Servicing Fees), other than any Balloon Payment, on the
mortgage loans that are delinquent as of the close of business on the preceding
Determination Date.
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"Participants" means DTC's participating organizations.
"Parties in Interest" means persons who have specified relationships to
Plans ("parties in interest" under ERISA or "disqualified persons" under Section
4975 of the Code).
"Pass-Through Rate" means the rate per annum at which any Class of
certificates, other than the Residual Certificates, accrues interest.
"PCF" means Principal Commercial Funding, LLC.
"PCF Loans" means the sixty-five (65) mortgage loans that were
originated by PCF or its affiliates.
"Percentage Interest" will equal, as evidenced by any REMIC Regular
Certificate in the Class to which it belongs, a fraction, expressed as a
percentage, the numerator of which is equal to the initial Certificate Balance
or Notional Amount, as the case may be, of such certificate as set forth on the
face thereof, and the denominator of which is equal to the initial aggregate
Certificate Balance or Notional Amount, as the case may be, of such Class.
"Permitted Cure Period" means, for the purposes of any Material
Document Defect or Material Breach in respect of any mortgage loan, the 85-day
period immediately following the earlier of the discovery by the related seller
or receipt by the related seller of notice of such Material Document Defect or
Material Breach, as the case may be. However, if such Material Document Defect
or Material Breach, as the case may be, cannot be corrected or cured in all
material respects within such 85-day period and such Document Defect or breach
would not cause the mortgage loan to be other than a "qualified mortgage", but
the related seller is diligently attempting to effect such correction or cure,
then the applicable Permitted Cure Period will be extended for an additional 90
days.
"Plans" means (a) employee benefit plans as defined in Section 3(3) of
ERISA that are subject to Title I of ERISA, (b) plans as defined in Section 4975
of the Code that are subject to Section 4975 of the Code, and (c) entities whose
underlying assets include plan assets by reason of a plan's investment in such
entities.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of March 1, 2000, as amended and restated as of April __,
2000, among Morgan Stanley Dean Witter Capital I Inc., as depositor, Wells
Fargo, as master servicer, Lennar Partners, Inc. as special servicer, LaSalle
Bank National Association, as trustee and ABN AMRO Bank N.V., as fiscal agent.
"Prepayment Interest Excess" means, in a case in which a full or
partial Principal Prepayment or a Balloon Payment is made during any Collection
Period after the Due Date for such mortgage loan, the amount of interest which
accrues on the amount of such Principal Prepayment or Balloon Payment that
exceeds the corresponding amount of interest accruing on the certificates. The
amount of the Prepayment Interest Excess in any such case will generally equal
the interest that accrues on the mortgage loan from such Due Date to the date
such payment was made, net of the Master Servicing Fee, the Primary Servicing
Fee and Excess Servicing Fee or, if the related mortgage loan is a Specially
Serviced Mortgage Loan, the Special Servicing Fee and the Trustee Fee.
"Prepayment Interest Shortfall" means, for any Distribution Date and
with respect to any mortgage loan as to which the related borrower has made a
full or partial Principal Prepayment or a Balloon Payment during the related
Collection Period, and the date such payment was made (or, in the case of a
Balloon Payment, the date through which interest thereon accrues) occurred prior
to the Due Date for such mortgage loan in such Collection Period. Such a
shortfall arises because the amount of interest (net of the Master Servicing
Fee, the Primary Servicing Fee, the Excess Servicing Fee, the Special Servicing
Fee, if the related mortgage loan is a Specially Serviced Mortgage Loan and the
Trustee Fee) that accrues on the amount of such Principal Prepayment or Balloon
Payment will be less than the corresponding amount of interest accruing on the
Certificates. In such a case, the Prepayment Interest Shortfall will generally
equal the excess of:
o the aggregate amount of interest that would have accrued at the Net
Mortgage Rate (less the Special Servicing Fee, if the related mortgage
loan is a Specially Serviced Mortgage Loan) on the Scheduled Principal
Balance of
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such mortgage loan for the 30 days ending on such Due Date if such Principal
Prepayment or Balloon Payment had not been made, over
o the aggregate interest that did so accrue through the date such payment
was made.
"Prepayment Premium" means, with respect to any Distribution Date, the
aggregate of all prepayment premiums, yield maintenance charges and prepayment
charges, if any, received during the related Collection Period in connection
with Principal Prepayments.
"Primary Servicer" means Principal Capital Management, LLC, John
Hancock Real Estate Finance, Inc. and Wells Fargo.
"Primary Servicing Fee" means the monthly amount, based on the Primary
Servicing Fee Rate, to which the Primary Servicers are entitled in compensation
for servicing the mortgage loans.
"Primary Servicing Fee Rate" means an amount per annum set forth in the
Pooling and Servicing Agreement, which is payable each month with respect to a
Mortgage Loan in connection with the Primary Servicing Fee.
"Principal Balance Certificates" means, upon initial issuance, the
Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L and Class M Certificates.
"Principal Distribution Amount" equals, in general, for any
Distribution Date, the aggregate of the following:
o the principal portions of all Scheduled Payments (other than the
principal portion of Balloon Payments) and any Assumed Scheduled
Payments due or deemed due, as the case may be, in respect of the
mortgage loans for their respective Due Dates occurring during the
related Collection Period; and
o all payments (including Principal Prepayments and the principal portion
of Balloon Payments) and other collections (including Liquidation
Proceeds (other than the portion thereof, if any, constituting Excess
Liquidation Proceeds), Condemnation Proceeds, Insurance Proceeds and
REO Income (each as defined herein) and proceeds of Mortgage Loan
repurchases) that were received on or in respect of the mortgage loans
during the related Collection Period and that were identified and
applied by the master servicer as recoveries of principal thereof, in
each case net of any portion of such payment or other collection that
represents a recovery of the principal portion of any Scheduled Payment
(other than a Balloon Payment) due, or the principal portion of any
Assumed Scheduled Payment deemed due, in respect of the related
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered.
"Principal Prepayments" means the payments and collections with respect
to principal of the mortgage loans including all voluntary and involuntary
prepayments of principal made prior to their scheduled Due Dates.
"PTCE" means a DOL Prohibited Transaction Class Exemption.
"Purchase Price" means that amount at least equal to the unpaid
principal balance of such mortgage loan, together with accrued but unpaid
interest thereon to but not including the Due Date in the Collection Period in
which the purchase occurs and the amount of any expenses related to such
mortgage loan or REO Property (including any Servicing Advances, Advance
interest related to such mortgage loan and any Special Servicing Fees and
Liquidation Fees) that are reimbursable to the master servicer, the special
servicer, the trustee or the fiscal agent, plus if such mortgage loan is being
repurchased or substituted for by a seller pursuant to the related Mortgage Loan
Purchase Agreement, all expenses reasonably incurred or to be incurred by the
primary servicer, the master servicer, the special servicer, Morgan Stanley Dean
Witter Capital I Inc. or the trustee in respect of the Material Breach or
Material Document Defect giving rise to the repurchase or substitution
obligation (and that are not otherwise included above).
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"Qualifying Substitute Mortgage Loan" means a mortgage loan having the
characteristics required in the Pooling and Servicing Agreement and otherwise
satisfying the conditions set forth therein and for which the Rating Agencies
have confirmed in writing that such mortgage loan would not result in a
withdrawal, downgrade or qualification of the then current ratings on the
certificates.
"Rated Final Distribution Date" means the first Distribution Date that
follows by at least 36 months the end of the amortization term of the mortgage
loan that, as of the Cut-off Date, has the longest remaining amortization term.
"Rating Agencies" means Fitch and S&P.
"Realized Losses" means losses arising from the inability of the master
servicer or the special servicer to collect all amounts due and owing under any
defaulted mortgage loan, including by reason of any modifications to the terms
of a mortgage loan, bankruptcy of the related borrower or a casualty of any
nature at the related mortgaged property, to the extent not covered by
insurance. The Realized Loss, if any, in respect of a liquidated mortgage loan
or related REO Property, will generally equal the excess, if any, of:
o the outstanding principal balance of such mortgage loan as of the date
of liquidation, together with all accrued and unpaid interest thereon
at the related mortgage rate, over
o the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with such liquidation, net of any portion of such
liquidation proceeds that is payable or reimbursable in respect of
related liquidation and other servicing expenses. If the mortgage rate
on any mortgage loan is reduced or a portion of the debt due under any
mortgage loan is forgiven, whether in connection with a modification,
waiver or amendment granted or agreed to by the special servicer or in
connection with a bankruptcy or similar proceeding involving the
related borrower, the resulting reduction in interest paid and the
principal amount so forgiven, as the case may be, also will be treated
as a Realized Loss.
"Record Date" means, with respect to each Class of offered certificates
for each Distribution Date, the last business day of the calendar month
immediately preceding the month in which such Distribution Date occurs.
"Rehabilitated Mortgage Loan" means a Specially Serviced Mortgage Loan
for which (a) three consecutive Scheduled Payments have been made, in the case
of any such mortgage loan that was modified, based on the modified terms, (b) no
other Servicing Transfer Event has occurred and is continuing with respect to
such mortgage loan and (c) the trust has been reimbursed for all costs incurred
as a result of the occurrence of the Servicing Transfer Event or such amounts
have been forgiven.
"REMIC Regular Certificates" means the Senior Certificates and the
Subordinate Certificates.
"REO Income" means the Liquidation Proceeds and income received in
connection with the operation of an REO Property, net of certain expenses
specified in the Pooling and Servicing Agreement.
"REO Property" means any mortgaged property acquired on behalf of the
Certificateholders in respect of a defaulted mortgage loan through foreclosure,
deed in lieu of foreclosure or otherwise.
"REO Tax" means a tax on "net income from foreclosure property" within
the meaning of the REMIC provisions of the Code.
"Reserve Account" means an account in the name of the paying agent for
the deposit of any Excess Liquidation Proceeds.
"Residual Certificates" means the Class R-I Certificates, the Class
R-II Certificates, the Class R-III Certificates and the Class R-IV Certificates.
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"Scheduled Payment" means, in general, for any mortgage loan on any Due
Date, the amount of the scheduled payment of principal and interest, or interest
only, due thereon on such date, taking into account any waiver, modification or
amendment of the terms of such mortgage loan subsequent to the Closing Date,
whether agreed to by the special servicer or occurring in connection with a
bankruptcy proceeding involving the related borrower.
"Scheduled Principal Balance" of any Mortgage Loan on any Distribution
Date will generally equal the Cut-off Date Balance, as defined above (less any
principal amortization occurring on or prior to April 1, 2000), thereof,
reduced, to not less than zero, by:
o any payments or other collections of principal, or Advances in lieu
thereof, on such mortgage loan that have been collected or received
during any preceding Collection Period, other than any Scheduled
Payments due in any subsequent Collection Period; and
o the principal portion of any Realized Loss incurred in respect of such
mortgage loan during any preceding Collection Period.
"Settlement Date" means April __, 2000.
"Senior Certificates" means the Class A Certificates and the Class X
Certificates.
"Servicing Advances" means, in general, customary, reasonable and
necessary "out-of-pocket" costs and expenses required to be incurred by the
master servicer in connection with the servicing of a mortgage loan after a
default, whether or not a payment default, delinquency or other unanticipated
event, or in connection with the administration of any REO Property.
"Servicing Standard" means the higher of the following standards of
care:
o in the same manner in which and with the same care, skill, prudence and
diligence with which the master servicer or the special servicer, as
the case may be, services and administers similar mortgage loans for
other third-party portfolios, giving due consideration to customary and
usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own mortgage loans and to the
maximization of the net present value of the mortgage loans; and
o the care, skill, prudence and diligence the master servicer or the
special servicer, as the case may be, uses for loans which it owns and
which are similar to the mortgage loans, giving due consideration to
the maximization of the net present value of the mortgage loans, but
without regard to:
i. any other relationship that the master servicer,
the special servicer, the Primary Servicers, Morgan Stanley
Dean Witter Capital I Inc. or the trustee, or any affiliate of
any of them may have with the related borrower or any
affiliate of the borrower, Morgan Stanley Dean Witter Capital
I Inc. or any Seller;
ii. the ownership of any certificate by the master
servicer, the special servicer or any affiliate of any of
them;
iii. the master servicer's, the trustee's or the
fiscal agent's obligation to make Advances or to incur
servicing expenses with respect to the mortgage loan;
iv. the master servicer's, the special servicer's or
the Primary Servicer's right to receive compensation for its
services or with respect to any particular transaction;
v. the ownership or servicing or management for
others by the master servicer, the special servicer or the
Primary Servicers of any other mortgage loans or property;
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vi. any obligation of the master servicer to pay any
indemnity with respect to any repurchase obligation; or
vii. the ownership of any junior indebtedness by the
master servicer or special servicer or any Affiliate with
respect to the mortgaged property securing any mortgage loan.
"Servicing Transfer Event" means an instance where an event has
occurred that has caused a mortgage loan to become a Specially Serviced
Mortgage Loan.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"Specially Serviced Mortgage Loan" means the following:
o any mortgage loan as to which a Balloon Payment is past due, and the
master servicer has determined that payment is unlikely to be made on
or before the 60th day succeeding the date the Balloon Payment was due,
or any other payment is more than 60 days past due or has not been made
on or before the second Due Date following the date such payment was
due;
o any mortgage loan as to which, to the master servicer's knowledge, the
borrower has consented to the appointment of a receiver or conservator
in any insolvency or similar proceeding of or relating to such borrower
or to all or substantially all of its property, or the borrower has
become the subject of a decree or order issued under a bankruptcy,
insolvency or similar law and such decree or order shall have remained
undischarged or unstayed for a period of 30 days;
o any mortgage loan as to which the master servicer shall have received
notice of the foreclosure or proposed foreclosure of any other lien on
the mortgaged property;
o any mortgage loan as to which the master servicer has knowledge of a
default (other than a failure by the related borrower to pay principal
or interest) which, in the judgment of the master servicer, materially
and adversely affects the interests of the Certificateholders and which
has occurred and remains unremedied for the applicable grace period
specified in such mortgage loan (or, if no grace period is specified,
60 days);
o any mortgage loan as to which the borrower admits in writing its
inability to pay its debts generally as they become due, files a
petition to take advantage of any applicable insolvency or
reorganization statute, makes an assignment for the benefit of its
creditors or voluntarily suspends payment of its obligations; or
o any mortgage loan as to which, in the judgment of the master servicer,
(a) a payment default is imminent or is likely to occur within 60 days,
or (b) any other default is imminent or is likely to occur within 60
days and such default, in the judgment of the master servicer is
reasonably likely to materially and adversely affect the interests of
the Certificateholders.
"Special Servicer Compensation" means such fees payable to the special
servicer, collectively, the Special Servicing Fee, the Workout Fee and the
Liquidation Fee.
"Special Servicer Event of Default" means, with respect to the special
servicer under the Pooling and Servicing Agreement, any one of the following
events:
o any failure by the special servicer to remit to the paying agent or the
master servicer when due any amount required to be so remitted under
the terms of the Pooling and Servicing Agreement;
o any failure by the special servicer to deposit into any account any
amount required to be so deposited or remitted under the terms of the
Pooling and Servicing Agreement which failure continues unremedied for
one business day following the date on which such deposit or remittance
was first required to be made;
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o any failure on the part of the special servicer duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the special servicer contained in the Pooling
and Servicing Agreement which continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the special servicer
by Morgan Stanley Dean Witter Capital I Inc. or the trustee; provided,
however, that to the extent that the special servicer certifies to the
trustee and Morgan Stanley Dean Witter Capital I Inc. that the special
servicer is in good faith attempting to remedy such failure and the
Certificateholders shall not be materially and adversely affected
thereby, such cure period will be extended to the extent necessary to
permit the special servicer to cure such failure, provided that such
cure period may not exceed 90 days;
o any breach by the special servicer of the representations and
warranties contained in the Pooling and Servicing Agreement that
materially and adversely affects the interests of the holders of any
Class of certificates and that continues unremedied for a period of 30
days after the date on which notice of such breach, requiring the same
to be remedied, shall have been given to the special servicer by Morgan
Stanley Dean Witter Capital I Inc. or the trustee, provided, however,
that to the extent that the special servicer is in good faith
attempting to remedy such breach and the Certificateholders shall not
be materially and adversely affected thereby, such cure period may be
extended to the extent necessary to permit the special servicer to cure
such failure, provided that such cure period may not exceed 90 days;
o the trustee shall receive notice from Fitch to the effect that the
continuation of the special servicer in such capacity would result in
the downgrade, qualification or withdrawal of any rating then assigned
by Fitch to any Class of Certificates;
o the special servicer has been downgraded to a servicer rating level
below CSS3, or its then equivalent, by Fitch;
o the special servicer is no longer on the approved list of commercial
mortgage loan special servicers maintained by S&P;
o a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law for
the appointment of a conservator, receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the special servicer or an affiliate thereof and such decree or
order shall have remained in force undischarged or unstayed for a
period of 60 days;
o the special servicer or an affiliate thereof shall consent to the
appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the special servicer or of or relating to all or
substantially all of its property; or
o the special servicer or an affiliate thereof shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations, or take any
corporate action in furtherance of the foregoing.
"Special Servicer Report" means, generally, a report showing
loan-by-loan detail on each Specially Serviced Mortgage Loan that is 60 days
delinquent, 90 days delinquent, or in the process of foreclosure, an REO status
report for each REO Property and a modification report showing loan-by-loan
detail for each modification closed during the most recent reporting period.
"Special Servicing Fee" means an amount (subject to reduction in
respect of Compensating Interest) equal to, in any month, the portion of a rate
equal to 0.25% per annum applicable to such month, determined in the same manner
as the applicable mortgage rate is determined for each Specially Serviced
Mortgage Loan for such month, of the outstanding Scheduled Principal Balance of
each Specially Serviced Mortgage Loan.
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"S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
"Structuring Assumptions" means the following assumptions:
o the initial Certificate Balances and initial Pass-Through Rates of the
Certificates are as presented herein;
o the settlement date for the sale of the certificates is April 26, 2000;
o distributions on the certificates are made on the 15th day of each
month, commencing in May 15, 2000;
o there are no delinquencies, defaults or Realized Losses with respect to
the mortgage loans;
o Scheduled Payments on the mortgage loans are timely received on the
first day of each month;
o the trust does not experience any Expense Losses;
o no Principal Prepayment on any mortgage loan is made during its
Lock-out Period, if any, or during any period when Principal
Prepayments on such mortgage loans are required to be accompanied by a
Prepayment Premium, and otherwise Principal Prepayments are made on the
mortgage loans at the indicated levels of CPR, notwithstanding any
limitations in the mortgage loans on partial prepayments;
o any Prepayment Premiums are allocated as described elsewhere in this
prospectus supplement;
o no Prepayment Interest Shortfalls occur; and
o no mortgage loan is the subject of a repurchase or substitution by the
respective seller and no optional termination of the trust occurs;
"Subordinate Certificates" means the Class B Certificates, the Class C
Certificates, the Class D Certificates, the Class E Certificates, the Class F
Certificates, the Class G Certificates, the Class H Certificates, the Class J
Certificates, the Class K Certificates, the Class L Certificates and the Class M
Certificates.
"Sub-Servicer" means an entity with whom either the master servicer,
the Primary Servicer or the special servicer has entered a sub-servicing
agreement.
"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 maturity date of the
mortgage loan prepaid. If Release H.15 is no longer published, the master
servicer will select a comparable publication to determine the Treasury Rate.
"Trustee Fee" means a monthly fee as set forth in the Pooling and
Servicing Agreement to be paid from the Distribution Account to the trustee as
compensation for the performance of its duties.
"Underwritable Cash Flow" means an estimate of stabilized cash flow
available for debt service. In general, it is the estimated stabilized revenue
derived from the use and operation of a mortgaged property, consisting primarily
of rental income, less the sum of (a) estimated stabilized operating expenses
(such as utilities, administrative expenses, repairs and maintenance, management
fees and advertising), (b) fixed expenses, such as insurance, real estate taxes
and, if applicable, ground lease payments, and (c) reserves for capital
expenditures, including tenant improvement costs and leasing commissions.
Underwritable Cash Flow generally does not reflect interest expenses and
non-cash items such as depreciation and amortization.
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"Underwriting Agreement" means that agreement, dated April ___, 2000,
entered into by Morgan Stanley Dean Witter Capital I Inc., Morgan Stanley & Co.
Incorporated, an affiliate of Morgan Stanley Dean Witter Capital I Inc.,
Goldman, Sachs & Co. and Norwest Investment Services, Inc.
"Underwriters" means Morgan Stanley & Co. Incorporated, Goldman, Sachs
& Co. and Norwest Investment Services, Inc.
"Unpaid Interest" means one month's interest upon the portion of the
Distributable Certificate Interest Amount for such Class remaining unpaid as of
the close of business on the preceding Distribution Date plus one month's
interest thereon at the applicable Pass-Through Rate other than unpaid interest
relating to Net Aggregate Prepayment Interest Shortfalls.
"Weighted Average Net Mortgage Rate" or "NWAC Rate" means, for any
Distribution Date, the weighted average of the Net Mortgage Rates for the
mortgage loans (in the case of each mortgage loan that is a Non-30/360 Mortgage
Loan, adjusted as described under the definition of Net Mortgage Rate), weighted
on the basis of their respective Scheduled Principal Balances as of the close of
business on the preceding Distribution Date.
"Wells Fargo" means Wells Fargo Bank, National Association.
"Wells Fargo Loans" means the thirty four (34) mortgage loans that were
originated by Wells Fargo or its affiliates.
"Workout Fee" means that fee, payable with respect to any Rehabilitated
Mortgage Loan, equal to 1.00% of the amount of each collection of interest and
principal received on such Mortgage Loan for so long as it remains a
Rehabilitated Mortgage Loan.
S-120
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
- --------------------------- --------- -------------- ------------ ---------- -------------- --------- ------------- ---------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- --------------------------- --------- -------------- ------------ ---------- -------------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1,000,001 to 2,000,000 21 34,285,203 4.97 7.986 113 1.64 59.7 46.9
2,000,001 to 3,000,000 29 72,501,510 10.52 7.992 117 1.44 65.1 55.0
3,000,001 to 4,000,000 17 57,837,507 8.39 8.099 115 1.36 69.2 60.4
4,000,001 to 5,000,000 14 63,803,692 9.25 7.947 125 1.75 55.3 45.1
5,000,001 to 6,000,000 11 59,959,138 8.70 7.670 117 1.45 69.3 60.5
6,000,001 to 7,000,000 10 65,042,998 9.43 7.725 113 1.56 63.4 55.7
7,000,001 to 8,000,000 4 30,670,228 4.45 7.745 111 1.41 71.1 62.3
8,000,001 to 9,000,000 5 42,895,038 6.22 8.028 115 1.52 67.9 60.2
9,000,001 to 10,000,000 8 77,693,272 11.27 7.951 115 1.48 70.9 63.9
10,000,001 to 15,000,000 12 150,089,299 21.77 7.742 115 1.51 63.0 54.9
15,000,001 to 20,000,000 2 34,686,817 5.03 7.808 111 1.38 71.7 64.3
- --------------------------- --------- -------------- ------------ ---------- -------------- --------- ------------- ---------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
=========================== ========= ============== ============ ========== ============== ========= ============= ===============
Min: $1,148,373
Max: $18,569,532
Average: $5,183,945
</TABLE>
I-1
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
STATES
<TABLE>
<CAPTION>
- -------------------------- --------- ------------- -------------- ---------- -------------- ----------- ------------- ------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
STATE LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- -------------------------- --------- ------------- -------------- ---------- -------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California 45 243,233,659 35.28 7.876 118 1.46 66.3 56.4
Georgia 6 44,384,613 6.44 7.742 116 1.65 67.4 61.4
Florida 6 34,964,803 5.07 8.171 116 1.37 70.1 63.1
New York 3 32,241,186 4.68 7.224 112 1.97 42.8 32.8
Ohio 8 31,524,889 4.57 8.074 121 1.51 67.1 61.2
Massachusetts 3 28,501,376 4.13 7.774 110 1.44 69.1 62.8
New Jersey 6 27,564,971 4.00 7.610 115 1.69 65.5 57.6
Illinois 7 26,960,034 3.91 7.427 101 1.50 71.4 63.9
Colorado 6 25,580,717 3.71 8.099 115 1.59 52.3 47.1
North Carolina 4 24,830,378 3.60 8.096 117 1.45 69.8 62.6
Arizona 5 23,402,960 3.39 8.252 115 1.33 67.6 59.9
Texas 8 22,757,056 3.30 8.176 110 1.34 69.4 58.0
Louisiana 3 18,305,907 2.66 8.343 116 1.32 67.5 55.3
Pennsylvania 3 16,952,767 2.46 8.023 116 1.70 62.7 54.3
Wisconsin 3 12,313,718 1.79 7.800 119 1.54 63.0 56.2
Washington 2 12,249,931 1.78 7.512 115 1.70 57.4 46.4
Minnesota 2 12,124,458 1.76 7.542 107 1.26 71.3 61.5
Rhode Island 1 11,901,082 1.73 8.000 114 1.41 72.6 64.0
Maryland 1 8,587,834 1.25 7.750 118 1.54 60.1 53.5
Oklahoma 2 7,483,517 1.09 7.351 148 1.30 72.7 57.3
Oregon 3 6,315,220 0.92 7.701 112 1.58 53.7 44.6
Connecticut 2 4,525,723 0.66 7.981 111 1.39 73.3 63.4
Virginia 1 3,480,294 0.50 8.310 114 1.28 73.3 61.4
South Carolina 1 3,394,922 0.49 7.480 118 1.80 59.6 52.7
New Mexico 1 3,212,259 0.47 8.150 113 1.31 73.0 65.9
Michigan 1 2,670,428 0.39 8.210 117 1.36 69.9 63.0
- -------------------------- --------- ------------- -------------- ---------- -------------- ----------- ------------- ------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
========================== ========= ============= ============== ========== ============== =========== ============= ============
</TABLE>
I-2
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PROPERTY TYPES
<TABLE>
<CAPTION>
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
PROPERTY TYPE LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retail
Anchored 34 195,272,361 28.32 7.862 115 1.46 68.3 60.6
Shadowed Anchored 4 17,013,885 2.47 8.091 117 1.46 67.4 58.6
Unanchored 5 12,930,669 1.88 8.263 113 1.36 65.0 58.6
Specialty Retail 1 2,168,562 0.31 8.280 175 1.40 52.1 0.5
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 44 $227,385,477 32.98% 7.906% 115 1.45X 67.9% 59.8%
Office
Suburban 30 145,858,064 21.16 7.823 119 1.59 61.8 53.3
Urban 9 62,441,946 9.06 7.223 106 1.74 55.9 47.2
Medical Office 1 10,704,659 1.55 7.730 116 1.55 59.5 49.0
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 40 $219,004,669 31.76% 7.648% 115 1.63X 60.0% 51.3%
Industrial
Warehouse 11 66,499,262 9.65 7.967 115 1.32 67.3 59.4
Light Industrial 7 29,700,235 4.31 7.979 119 1.49 62.8 52.2
Flex Industrial 2 20,456,145 2.97 8.329 111 1.28 73.5 66.7
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 20 $116,655,642 16.92% 8.034% 115 1.35X 67.3% 58.8%
Multifamily
Garden 14 61,257,386 8.88 7.865 121 1.50 70.1 60.4
Mid-Rise 2 5,177,333 0.75 7.588 113 1.61 69.0 59.2
Senior Housing 1 4,527,557 0.66 7.630 109 1.25 76.7 68.6
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 17 $70,962,276 10.29% 7.830% 120 1.50X 70.4% 60.8%
Assisted Living 2 21,332,134 3.09 8.190 114 1.43 73.4 63.7
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 2 $21,332,134 3.09% 8.190% 114 1.43X 73.4% 63.7%
Hospitality
Full Service 2 13,914,858 2.02 8.572 116 1.79 56.1 44.6
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 2 $13,914,858 2.02% 8.572% 116 1.79X 56.1% 44.6%
Self Storage Facility 4 9,354,372 1.36 8.280 112 1.52 70.0 59.8
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 4 $9,354,372 1.36% 8.280% 112 1.52X 70.0% 59.8%
Mobile Home Park 2 5,453,595 0.79 7.712 111 1.61 53.2 44.9
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 2 $5,453,595 0.79% 7.712% 111 1.61X 53.2% 44.9%
Mixed Use
Office/Flex 1 3,063,164 0.44 8.250 113 1.26 74.7 67.6
Retail/Multifamily 1 2,338,515 0.34 8.300 111 1.32 68.8 62.3
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
SUBTOTAL: 2 $5,401,679 0.78% 8.272% 112 1.29X 72.1% 65.3%
- ---------------------------- ---------- -------------- ------------- ---------- -------------- --------- ------------- -----------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
============================ ========== ============== ============= ========== ============== ========= ============= ===========
</TABLE>
I-3
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE RATES
<TABLE>
<CAPTION>
- ---------------------------- ---------- -------------- ------------- --------- -------------- --------- ------------- ----------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
MORTGAGE RATE (%) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- ---------------------------- ---------- -------------- ------------- --------- -------------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.501 to 7.000 4 34,787,883 5.05 6.898 110 1.94 53.2 43.4
7.001 to 7.500 28 167,152,140 24.24 7.288 114 1.65 62.7 53.6
7.501 to 8.000 37 184,183,564 26.71 7.815 117 1.48 65.4 57.0
8.001 to 8.500 52 248,279,431 36.01 8.262 116 1.38 69.3 61.0
8.501 to 9.000 12 55,061,684 7.99 8.624 117 1.42 64.3 55.0
- ---------------------------- ---------- -------------- ------------- --------- -------------- --------- ------------- ----------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
============================ ========== ============== ============= ========= ============== ========= ============= ==========
Min: 6.760%
Max: 8.930%
Weighted Average Coupon: 7.866%
</TABLE>
I-4
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
- -------------------------- ---------- ------------- ------------- ---------- -------------- ---------- -------------- -------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
ORIGINAL TERM TO STATED MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
MATURITY (MOS) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- -------------------------- ---------- ------------- ------------- ---------- -------------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 60 2 3,873,849 0.56 8.394 52 1.61 53.2 50.1
61 to 120 123 653,804,857 94.83 7.870 114 1.50 66.0 58.0
121 to 180 6 25,399,589 3.68 7.719 146 1.59 58.6 41.4
181 to 240 2 6,386,407 0.93 7.740 234 1.60 46.2 1.1
- -------------------------- ---------- ------------- ------------- ---------- -------------- ---------- -------------- -------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
========================== ========== ============= ============= ========== ============== ========== ============== =============
Min: 60
Max: 240
Weighted Average: 122
</TABLE>
I-5
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
- -------------------------- ---------- -------------- -------------- --------- ---------------- ----------- ------------- -----------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
REMAINING TERM TO STATED MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
MATURITY (MOS) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- -------------------------- ---------- -------------- -------------- --------- ---------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 60 2 3,873,849 0.56 8.394 52 1.61 53.2 50.1
61 to 120 124 656,087,835 95.16 7.869 114 1.50 65.9 57.9
121 to 180 5 23,116,610 3.35 7.743 150 1.56 59.7 41.3
181 to 240 2 6,386,407 0.93 7.740 234 1.60 46.2 1.1
- -------------------------- ---------- -------------- -------------- --------- ---------------- ----------- ------------- -----------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
========================== ========== ============== ============== ========= ================ =========== ============= ===========
Min: 52
Max: 236
Weighted Average: 116
</TABLE>
I-6
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
<TABLE>
<CAPTION>
- --------------------------- ---------- --------------- -------------- ---------- -------------- ---------- -------------- ----------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
ORIGINAL AMORTIZATION TERM MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
(MOS) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- --------------------------- ---------- --------------- -------------- ---------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALLOON LOAN
Interest Only 5 36,600,000 5.31 7.475 119 2.18 49.9 46.8
240 3 21,671,533 3.14 7.374 112 2.04 42.1 29.2
300 30 122,972,396 17.84 7.854 112 1.61 59.8 49.5
324 2 13,807,160 2.00 8.332 114 1.51 72.4 62.1
355 1 12,504,464 1.81 6.849 109 1.46 71.0 61.8
360 85 458,175,021 66.45 7.920 114 1.40 69.5 62.1
>360 1 9,590,423 1.39 8.640 117 1.39 68.0 64.2
- --------------------------- ---------- --------------- -------------- ---------- -------------- ---------- -------------- ----------
SUBTOTAL: 127 $675,320,996 97.95% 7.865% 114 1.50X 65.8% 57.9%
FULLY AMORTIZING LOAN
120 1 1,532,775 0.22 8.750 112 1.61 47.9 1.3
180 3 6,224,524 0.90 7.937 176 1.54 46.6 0.8
240 2 6,386,407 0.93 7.740 234 1.60 46.2 1.1
- --------------------------- ---------- --------------- -------------- ---------- -------------- ---------- -------------- ----------
SUBTOTAL: 6 $14,143,705 2.05% 7.936% 195 1.57X 46.5% 1.0%
- --------------------------- ---------- --------------- -------------- ---------- -------------- ---------- -------------- ----------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
=========================== ========== =============== ============== ========== ============== ========== ============== ==========
Min: 120
Max: 407
Weighted Average: 341
</TABLE>
I-7
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
- ----------------------- -------------- ------------- ------------ ------------- -------------- ------------ ------------ -----------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
REMAINING AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE RATE TERM TO AVERAGE DSCR CUT-OFF BALLOON LTV
TERM (MOS) MORTGAGE LOANS BALANCE BALANCE (%) (%) MATURITY (MOS) (X) DATE LTV (%) (%)
- ----------------------- -------------- ------------- ------------ ------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Only 5 36,600,000 5.31 7.475 119 2.18 49.9 46.8
61 to 120 1 1,532,775 0.22 8.750 112 1.61 47.9 1.3
121 to 180 3 6,224,524 0.90 7.937 176 1.54 46.6 0.8
181 to 240 5 28,057,940 4.07 7.457 140 1.94 43.0 22.8
241 to 360 118 607,459,041 88.11 7.894 114 1.44 67.6 59.5
360> 1 9,590,423 1.39 8.640 117 1.39 68.0 64.2
- ----------------------- -------------- ------------- ------------ ------------- -------------- ------------ ------------ -----------
TOTAL OR WEIGHTED
AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
======================= ============== ============= ============ ============= ============== ============ ============ ==========
Min: 112
Max: 404
Weighted Average: 335
</TABLE>
I-8
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
- --------------------------- ------------ -------------- ------------- ---------- -------------- --------- ------------- ------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
COVERAGE RATIO (X) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- --------------------------- ------------ -------------- ------------- ---------- -------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.16 to 1.25 17 101,388,617 14.71 8.183 118 1.22 72.3 64.1
1.26 to 1.35 28 144,633,995 20.98 8.197 116 1.30 72.4 63.7
1.36 to 1.50 40 188,282,924 27.31 7.768 111 1.42 70.4 61.7
1.51 to 1.75 26 138,682,243 20.11 7.708 119 1.56 61.9 51.3
1.76 to 2.00 10 55,095,297 7.99 7.734 116 1.83 51.4 44.6
2.01>= 12 61,381,626 8.90 7.344 114 2.30 43.0 36.7
- --------------------------- ------------ -------------- ------------- ---------- -------------- --------- ------------- ------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
=========================== ============ ============== ============= ========== ============== ========= ============= ============
Min: 1.18x
Max: 2.91x
Weighted Average: 1.50x
</TABLE>
I-9
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
- -------------------------- ---------- -------------- ------------- ---------- -------------- ---------- -------------- ------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
CUT-OFF DATE NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- -------------------------- ---------- -------------- ------------- ---------- -------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30.1 to 40.0 4 22,907,493 3.32 7.178 113 2.30 36.5 26.2
40.1 to 50.0 15 64,141,457 9.30 7.529 126 2.03 44.5 33.1
50.1 to 60.0 20 97,558,205 14.15 7.927 118 1.69 55.7 47.5
60.1 to 70.0 40 202,672,829 29.40 8.028 114 1.38 66.4 58.3
70.1 to 80.0 54 302,184,718 43.83 7.863 113 1.35 74.6 66.1
- -------------------------- ---------- -------------- ------------- ---------- -------------- ---------- -------------- ------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
========================== ========== ============== ============= ========== ============== ========== ============== ============
Min: 33.7%
Max: 79.9%
Weighted Average: 65.4%
</TABLE>
I-10
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
BALLOON LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
- --------------------------- ----------- ------------- ------------- ---------- -------------- ---------- ------------- ------------
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM TO AVERAGE CUT-OFF BALLOON
RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) MATURITY (MOS) DSCR (X) DATE LTV (%) LTV (%)
- --------------------------- ----------- ------------- ------------- ---------- -------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.1 to 10.0 6 14,143,705 2.05 7.936 195 1.57 46.5 1.0
20.1 to 30.0 4 22,907,493 3.32 7.178 113 2.30 36.5 26.2
30.1 to 40.0 4 25,660,798 3.72 7.422 114 2.06 42.4 35.1
40.1 to 50.0 20 93,861,992 13.61 7.848 114 1.83 52.2 45.6
50.1 to 60.0 36 156,007,369 22.63 7.897 117 1.45 64.4 56.0
60.1 to 70.0 56 338,968,744 49.16 7.896 112 1.37 72.5 64.7
70.1 to 75.0 7 37,914,600 5.50 8.218 116 1.28 79.1 71.3
- --------------------------- ----------- ------------- ------------- ---------- -------------- ---------- ------------- ------------
TOTAL OR WEIGHTED AVERAGE: 133 $689,464,702 100.00% 7.866% 116 1.50X 65.4% 56.8%
=========================== =========== ============= ============= ========== ============== ========== ============= ============
Min: 0.3%
Max: 72.3%
Weighted Average: 56.8%
</TABLE>
I-11
<PAGE>
APPENDIX I
MORTGAGE POOL INFORMATION
PREPAYMENT RESTRICTION ANALYSIS
<TABLE>
<CAPTION>
- --------------------------- --------------- ------------- -------------- -------------- -------------- -------------
PREPAYMENT RESTRICTION MAR 00 MAR 01 MAR 02 MAR 03 MAR 04 MAR 05
- --------------------------- --------------- ------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 100.00% 100.00% 97.95% 84.52% 77.53% 63.98%
Yield Maintenance 0.00% 0.00% 2.05% 15.48% 22.19% 36.02%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Open 0.00% 0.00% 0.00% 0.00% 0.29% 0.00%
- --------------------------- --------------- ------------- -------------- -------------- -------------- -------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
=========================== =============== ============= ============== ============== ============== =============
Mortgage Pool Balance Outstanding
(in millions) $689,464,701.95 $682,881,108.76 $675,707,481.14 $667,914,557.31 $659,596,656.43 $646,839,417.03
% of Initial Pool Balance 100.00% 99.05% 98.00% 96.87% 95.67% 93.82%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------- ------------------ ----------------- ------------------ ------------------ ------------------
PREPAYMENT RESTRICTION MAR 06 MAR 07 MAR 08 MAR 09 MAR 10
- ---------------------------------- ------------------ ----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Locked Out/Defeasance 64.07% 64.16% 64.26% 62.52% 97.23%
Yield Maintenance 35.93% 35.84% 32.71% 18.16% 2.77%
Penalty Points
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 0.00% 0.00%
Open 0.00% 0.00% 3.03% 19.33% 0.00%
- ---------------------------------- ------------------ ----------------- ------------------ ------------------ ------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00%
================================== ================== ================= ================== ================== ==================
Mortgage Pool Balance Outstanding
(in millions) 636,859,556.10 626,062,708.90 614,490,019.24 550,831,327.32 22,605,224.74
% of Initial Pool Balance 92.37% 90.80% 89.13% 79.89% 3.28%
</TABLE>
Notes: (1) The above analysis is based on Maturity Assumptions and a 0%
CPR as discussed in the Prospectus Supplement.
(2) Thirty-one (31) loans with an aggregate principal balance of
$146,617,473 are structured with a performance holdback or
letter of credit ("LOC") subject to achievement of certain
release conditions. If release conditions are not met, there
will be partial prepayments of said mortgage loans to be
accompanied by a yield maintenance premium. The aggregate
amount of the partial prepayments is $14,993,983.
(3) See footnote 14 in Appendix II for a description of the Yield
Maintenance.
I-12
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
LOAN INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AGGREGATE CUT-OFF
LOAN RELATED BORROWER CUT-OFF DATE BALANCE/ MORTGAGE
NO. SELLER(1) PROPERTY NAME(2) LOAN NUMBERS DATE BALANCE(3) UNIT OR SF(4) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 JHREF 325 West Huron Street (A) 2-5 $7,026,460 $59 7.190%
2 JHREF 322 South Green Street (A) 1, 3-5 $5,306,697 $59 7.190%
3 JHREF 222 W. Hubbard (A) 1, 2, 4, 5 $3,783,478 $59 7.190%
4 JHREF 212 W. Superior (A) 1-3, 5 $2,899,029 $59 7.190%
5 JHREF 215 W. Superior (A) 1-4 $1,818,035 $59 7.190%
6 PCF One Commerce Center (B) 7-9 $4,387,365 $48 8.100%
7 PCF Centennial Center (B) 6, 8, 9 $6,381,622 $48 8.100%
8 PCF Columbine Place (B) 6, 7, 9 $6,281,910 $48 8.100%
9 PCF Erindale Square Retail Center (B) 6-8 $2,891,673 $48 8.100%
10 JHREF Fontana Plaza (C) (I) 11, 12 $8,083,152 $59 7.480%
11 JHREF Plaza East (C) (I) 10, 12 $5,356,861 $59 7.480%
12 JHREF Foothill Plaza (C) (I) 10, 11 $5,136,776 $59 7.480%
13 PCF Jabil Circuit Building $18,569,532 $102 8.380%
14 JHREF Lincoln North $16,117,285 $129 7.150%
15 JHREF 120 East 23rd Street $14,832,033 $63 7.100%
16 JHREF 133 East 58th Street $14,272,720 $133 7.000%
17 WF Norwalk Distribution Center (7) $13,778,154 $39 8.515%
18 WF International Airport Center - LAX $13,684,373 $41 7.980%
19 WF Manhattan Gateway $13,183,119 $161 8.247%
20 WF 11428 Sherman Way 80 $12,504,464 $40 6.849%
21 JHREF Riverside Market $12,297,031 $84 8.410%
22 JHREF The Village at Hillsgrove $11,901,082 $99,176 8.000%
23 WF Middlebrook Center $11,614,314 $111 7.050%
24 PCF United Health Care Building $11,000,000 $77 7.850%
25 PCF Thousand Oaks Medical Office $10,704,659 $134 7.730%
26 JHREF The Robb & Stucky Retail Store $10,317,349 $91 8.370%
27 PCF SAFECO Insurance Building (7) $10,000,000 $64 7.300%
28 PCF Lincoln Square (7) $9,976,843 $71 8.300%
29 PCF Highland Chase Apartments 40, 45, 55 $9,974,577 $47,050 7.900%
30 MSMC Shamrock Center $9,943,971 $162 7.770%
31 PCF ZBR Publications (7) $9,590,423 $36 8.640%
32 WF Bay Area Bank Building $9,436,776 $171 7.440%
33 JHREF Laurel Springs $9,431,053 $83,461 8.430%
34 MSMC The Center Martinez $9,339,629 $82 7.850%
35 MSMC Latham Hotel $8,989,330 $64,671 8.650%
36 PCF Sarasota Towne Center $8,665,717 $90 8.160%
37 PCF Rivers Center (7) $8,587,834 $59 7.750%
38 PCF Corporate Woods Office Park $8,569,005 $73 8.040%
39 WF Watsonville Square Shopping Center $7,975,900 $81 7.910%
40 PCF Highland Grove Apartments 29, 45, 55 $7,911,953 $38,038 8.360%
41 PCF Twin Cities Shopping Center $7,755,915 $59 7.450%
42 PCF Oak Hollow Square Shopping Center (7) $6,989,947 $58 7.680%
43 WF Floral Trade Center $6,799,328 $52 7.095%
44 PCF Cuyahoga Falls Retail $6,638,207 $84 8.060%
45 PCF Highland Glen Apartments 29, 40, 55 $6,598,042 $37,920 7.530%
46 PCF Park Promenade Shopping Center(7) $6,494,264 $52 8.100%
47 JHREF San Jose Office Plaza-Airport IV $6,400,000 $105 6.760%
48 PCF QuadraMed Building (7) $6,238,095 $185 8.620%
49 JHREF Department of Agriculture Building $6,221,585 $83 7.250%
50 PCF Abington Shopping Center(7) $5,969,568 $81 7.140%
51 PCF Burnsville Plus Property (7) $5,902,873 $43 7.850%
52 WF Broadway Village Apartments $5,892,087 $26,782 7.340%
53 PCF Whitnall Square 64, 109 $5,519,943 $41 7.800%
54 PCF Airport Plaza $5,335,003 $96 7.470%
55 PCF Highland Court Apartments 29, 40, 45 $5,300,041 $34,869 7.910%
56 PCF College Village Shopping Center(7) $5,145,649 $36 8.470%
57 PCF Baycenter Commerce (7) $5,093,640 $34 8.370%
58 PCF JC Penney Credit Processing Ctr $4,993,803 $74 8.400%
59 PCF Sprint Office Building $4,945,251 $46 7.480%
60 WF Holiday Inn El Paso $4,925,528 $23,910 8.430%
61 WF Torrey Pines Village Apartments $4,679,347 $34,921 7.495%
62 PCF Lake City Commons Shopping Center $4,600,000 $50 7.410%
63 PCF Waterfall Villiage Apartments $4,600,000 $29,870 8.020%
64 PCF Racine Centre 53, 109 $4,580,803 $34 7.800%
65 MSMC Creekside Senior Apartments $4,527,557 $29,787 7.630%
66 PCF Rosauers Plaza $4,494,016 $35 7.620%
67 JHREF MidCity Business Park $4,476,101 $21 8.020%
68 WF Metro Self-Storage 131 $4,376,107 $4,216 8.120%
69 PCF Trak Auto Warehouse (7) $4,129,142 $24 8.450%
70 PCF Pecan Grove Festival Center (7) $4,088,671 $61 8.350%
71 JHREF The Woodlands Apartments I & II $3,977,887 $16,170 7.770%
72 PCF Randolph Industrial $3,890,840 $49 8.240%
73 PCF Pearland Centennial Shopping Center (7) $3,595,471 $108 8.110%
74 PCF Phillips Plywood $3,583,010 $40 8.170%
75 PCF Hillside Plaza (7) $3,485,258 $79 7.900%
76 PCF Kmart Plaza Shopping Center $3,480,294 $36 8.310%
77 WF America's Funding Source $3,439,127 $119 8.580%
78 PCF Poplar Springs Shopping Center $3,394,922 $53 7.480%
79 PCF Sports Authority (7) $3,242,240 $80 8.170%
80 WF 14714 Carmenita Road 20 $3,240,557 $73 8.080%
81 MSMC Nob Hill Shopping Center $3,212,259 $67 8.150%
82 WF Village North $3,171,505 $26,877 8.380%
83 JHREF 2473-2475 Broadway $3,136,433 $209 8.830%
84 PCF Fairfield Industrial $3,095,998 $29 7.880%
85 MSMC 4100 Broadway Center $3,063,164 $65 8.250%
86 PCF Colorado MEDtech Building (7) $3,045,067 $59 8.430%
87 WF Five Star Suites $2,990,125 $55,373 7.550%
88 WF Cypress Hills Mobile Home Park $2,980,310 $28,657 7.950%
89 PCF Rose Garden Apartments (7) $2,793,668 $38,801 8.400%
90 PCF Jennings Business Center $2,789,137 $41 8.220%
91 PCF One Crosspointe Plaza (7) $2,717,940 $67 7.710%
92 PCF Marketplace Square (7) $2,691,537 $118 7.750%
93 MSMC Westnedge Corners $2,670,428 $35 8.210%
94 PCF Golden Bear Center (7) 100 $2,595,858 $80 8.490%
95 PCF Flatiron (7) $2,593,081 $63 7.700%
96 PCF Cherry Acres (7) $2,591,704 $41 7.660%
97 JHREF Jefferson Park of Hudson (7) $2,544,998 $96 8.160%
98 MSMC Westheimer-Fountainview Shopping Center $2,539,650 $126 8.440%
99 WF Medford Mobile Estates $2,473,285 $10,136 7.425%
100 PCF Big Bear Grocery Store (7) 94 $2,396,079 $81 8.390%
101 PCF 8 Corporate Drive $2,394,965 $43 8.030%
102 PCF Rite Aid Pharmacy $2,394,468 $143 8.320%
103 PCF 41 Corporate Park (7) $2,391,224 $85 7.980%
104 MSMC Trolley Barn Apartments $2,338,515 $97,438 8.300%
105 MSMC Martinez Retail Center $2,318,404 $194 7.410%
106 WF California Federal Bank Building $2,282,979 $50 7.470%
107 WF Stormaster $2,280,546 $49 8.210%
108 WF Staples Office Superstore $2,231,236 $94 8.570%
109 PCF Cudahy Center (7) 53, 64 $2,212,972 $21 7.800%
110 MSMC Howe Place Apartments $2,187,208 $28,041 7.640%
111 WF 750 Bush Parking Garage $2,168,562 $36 8.280%
112 PCF Scranton Industrial Warehouse (7) $2,097,422 $12 8.330%
113 PCF Cornerstone Market(7) $2,044,509 $117 8.370%
114 PCF Illinois Tool Works $1,997,193 $42 7.790%
115 PCF Whiteland Point Office Building $1,993,869 $107 7.840%
116 WF 5385 Hollister Avenue $1,987,236 $33 8.930%
117 PCF Kenilworth Bldg $1,968,855 $27 7.780%
118 JHREF Meacham & Apel Building $1,967,266 $109 8.220%
119 PCF Unitron, Incorporated $1,886,613 $47 7.830%
120 WF Montanero Street $1,734,749 $17 8.080%
121 MSMC Norwegian Woods Apartments $1,689,976 $14,956 8.100%
122 WF Gresham Park Apartments $1,610,699 $31,582 6.920%
123 PCF Concord Hall Manor Apartments (7) $1,593,346 $28,453 7.950%
124 WF Staples Office Superstore $1,591,431 $66 7.390%
125 WF Ticketmaster Call Center $1,532,775 $41 8.750%
126 WF 350 Second Street $1,488,946 $161 8.220%
127 WF Vintage Office $1,482,140 $58 7.480%
128 WF Orange Tree Gardens Apartments $1,464,258 $21,855 7.920%
129 WF Woodward Business Park $1,441,156 $52 8.630%
130 WF Captain's at Holt & Mountain Self Storage $1,410,458 $27 8.680%
131 WF A-American Self-Storage 68 $1,287,261 $24 8.510%
132 WF Otay Professional Building $1,190,569 $51 7.890%
133 PCF Eckerd Drug Store $1,148,373 $103 7.750%
TOTALS/WEIGHTED AVERAGES: $689,464,702 7.866%
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ORIGINAL REM. ORIGINAL
TERM TO TERM TO AMORT.
LOAN NOTE MATURITY MATURITY TERM BALLOON BALLOON SECURITY
NO. DATE MATURITY DATE (MOS) (MOS) (MOS)(5) BALANCE LTV(4) TYPE(6)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 03/16/1998 04/01/2008 120 97 360 $6,277,884 65.3% Fee
2 03/16/1998 04/01/2008 120 97 360 $4,741,339 65.3% Fee
3 03/16/1998 04/01/2008 120 97 360 $3,380,399 65.3% Fee
4 03/16/1998 04/01/2008 120 97 360 $2,590,176 65.3% Fee
5 03/16/1998 04/01/2008 120 97 360 $1,624,348 65.3% Fee
6 09/02/1999 10/01/2009 120 115 360 $3,951,372 46.3% Fee
7 09/02/1999 10/01/2009 120 115 360 $5,747,451 46.3% Fee
8 09/02/1999 10/01/2009 120 115 360 $5,657,647 46.3% Leasehold
9 09/02/1999 10/01/2009 120 115 360 $2,604,314 46.3% Fee
10 04/22/1999 05/01/2009 120 110 360 $7,200,022 64.5% Fee
11 04/22/1999 05/01/2009 120 110 360 $4,771,595 64.5% Fee
12 04/22/1999 05/01/2009 120 110 360 $4,575,555 64.5% Fee
13 11/17/1999 12/01/2009 120 117 360 $16,811,010 67.6% Fee
14 10/29/1998 12/01/2008 120 105 360 $14,298,108 60.6% Fee
15 05/21/1999 06/01/2009 120 111 300 $11,864,766 34.4% Fee
16 06/10/1999 07/01/2009 120 112 240 $9,737,796 25.9% Fee
17 11/24/1999 12/01/2009 120 117 360 $12,510,721 60.1% Fee
18 09/09/1999 10/01/2009 120 115 360 $12,290,805 57.4% Fee
19 11/23/1999 01/01/2010 120 118 360 $11,889,100 69.9% Fee
20 06/29/1999 04/01/2009 116 109 355 $10,871,260 61.8% Fee
21 11/24/1999 12/01/2009 120 117 360 $10,914,286 62.0% Fee
22 08/19/1999 09/01/2009 120 114 360 $10,500,781 64.0% Fee
23 04/09/1999 05/01/2009 120 110 360 $10,239,633 64.8% Fee
24 01/14/2000 02/01/2011 132 131 IO $10,402,567 55.4% Fee
25 10/15/1999 11/05/2009 120 116 300 $8,814,418 49.0% Fee
26 09/20/1999 10/01/2009 120 115 360 $9,161,977 61.8% Fee
27 12/22/1999 01/01/2010 120 118 IO $9,597,302 43.0% Fee
28 09/21/1999 11/01/2009 120 116 360 $9,018,212 70.7% Fee
29 10/14/1999 11/01/2009 120 116 360 $8,934,451 71.5% Fee
30 05/27/1999 06/01/2009 120 111 360 $8,908,816 65.9% Fee
31 11/04/1999 12/01/2009 120 117 407 $9,048,336 64.2% Fee
32 04/07/1999 05/01/2009 120 110 360 $8,397,883 65.9% Fee
33 09/30/1999 10/01/2009 120 115 324 $8,048,282 63.4% Fee
34 08/15/1999 09/01/2009 120 114 360 $8,366,363 66.9% Fee
35 01/07/2000 02/01/2010 120 119 300 $7,570,196 46.4% Fee
36 07/16/1999 08/01/2009 120 113 360 $7,822,438 68.6% Fee
37 12/21/1999 01/01/2010 120 118 360 $7,655,714 53.5% Fee
38 08/11/1999 09/01/2009 120 114 360 $7,709,414 68.8% Fee
39 09/02/1999 10/01/2009 120 115 360 $7,152,120 57.7% Fee
40 11/22/1999 12/01/2009 120 117 360 $7,159,499 72.3% Fee
41 07/14/1999 08/01/2009 120 113 300 $6,244,334 54.3% Fee
42 12/16/1999 01/01/2010 120 118 360 $6,110,206 50.9% Fee
43 09/17/1998 10/01/2008 120 103 300 $5,496,586 53.4% Fee
44 11/12/1999 12/01/2009 120 117 360 $5,966,123 61.2% Fee
45 08/09/1999 09/01/2009 120 114 360 $5,866,298 69.8% Fee
46 01/31/2000 02/01/2010 120 119 360 $5,833,484 59.7% Fee
47 11/09/1998 12/01/2008 120 105 IO $5,711,583 44.8% Fee
48 12/17/1999 01/01/2010 120 118 300 $5,254,119 58.4% Fee
49 09/15/1998 10/01/2008 120 103 360 $5,540,668 66.4% Fee
50 07/20/1999 08/01/2009 120 113 360 $5,261,468 65.0% Fee
51 06/10/1999 07/01/2009 120 112 300 $4,898,813 56.3% Fee
52 04/22/1998 05/01/2013 180 158 360 $4,512,609 57.9% Fee
53 01/05/2000 02/01/2010 120 119 360 $4,923,415 63.1% Fee
54 09/30/1999 11/01/2009 120 116 360 $4,730,087 44.0% Fee
55 07/01/1999 07/01/2009 120 112 360 $4,761,666 64.3% Fee
56 01/28/2000 02/01/2010 120 119 360 $4,661,099 66.6% Fee
57 12/07/1999 01/01/2010 120 118 360 $4,606,420 54.5% Fee
58 12/23/1999 01/01/2010 120 118 360 $4,519,166 61.9% Fee
59 07/14/1999 09/05/2019 240 234 240 $40,292 0.3% Fee
60 05/03/1999 06/01/2009 120 111 240 $3,510,887 41.3% Fee
61 10/28/1999 11/01/2009 120 116 300 $3,827,237 27.5% Fee
62 08/12/1999 09/01/2009 120 114 IO $4,381,177 45.2% Fee
63 02/23/2000 03/01/2010 120 120 IO $4,254,711 39.2% Fee
64 01/05/2000 02/01/2010 120 119 360 $4,085,766 49.2% Fee
65 03/26/1999 04/01/2009 120 109 360 $4,048,700 68.6% Fee
66 12/16/1999 02/01/2010 120 119 300 $3,677,048 32.8% Fee
67 09/17/1999 10/01/2009 120 115 300 $3,646,615 55.3% Fee/Leasehold
68 07/07/1999 08/01/2009 120 113 324 $3,789,145 59.2% Fee
69 09/16/1999 10/05/2009 120 115 360 $3,747,903 64.6% Fee
70 11/05/1999 12/01/2009 120 117 300 $3,422,883 45.9% Fee
71 09/02/1999 10/01/2009 120 115 300 $3,220,891 60.8% Fee
72 10/07/1999 11/01/2009 120 116 360 $3,512,272 66.3% Fee
73 01/05/2000 02/01/2010 120 119 300 $2,983,338 60.9% Fee
74 09/09/1999 10/01/2009 120 115 300 $2,990,507 59.8% Fee
75 07/09/1999 08/03/2009 120 113 360 $3,127,742 52.1% Fee
76 08/17/1999 09/01/2009 120 114 300 $2,917,672 61.4% Fee
77 08/11/1999 09/01/2009 120 114 360 $3,131,092 63.9% Fee
78 12/21/1999 01/01/2010 120 118 360 $3,006,682 52.7% Fee
79 10/06/1999 11/01/2009 120 116 360 $2,922,171 57.1% Fee
80 11/01/1999 12/01/2009 120 117 300 $2,692,779 57.9% Fee
81 07/16/1999 08/01/2009 120 113 360 $2,899,023 65.9% Fee
82 09/09/1999 10/01/2009 120 115 360 $2,874,265 71.9% Fee
83 12/09/1999 01/01/2010 120 118 360 $2,803,690 56.9% Fee
84 01/24/2000 02/01/2010 120 119 300 $2,552,243 48.6% Fee
85 07/09/1999 08/01/2009 120 113 360 $2,770,588 67.6% Fee
86 11/22/1999 12/01/2009 120 117 360 $2,759,769 56.9% Fee
87 09/28/1999 10/01/2009 120 115 360 $2,658,653 55.4% Fee
88 03/02/1999 04/01/2009 120 109 360 $2,684,306 62.4% Fee
89 10/08/1999 11/01/2009 120 116 360 $2,530,844 70.3% Fee
90 07/26/1999 08/01/2009 120 113 360 $2,521,068 66.3% Fee
91 07/21/1999 08/01/2009 120 113 360 $2,428,483 55.2% Fee
92 09/22/1999 10/01/2009 120 115 360 $2,404,560 68.7% Fee
93 11/02/1999 12/01/2009 120 117 360 $2,408,311 63.0% Fee
94 10/22/1999 12/01/2009 120 117 360 $2,355,771 67.8% Fee
95 10/13/1999 11/01/2009 120 116 360 $2,311,797 41.8% Fee
96 01/10/2000 02/01/2015 180 179 180 $78,672 1.3% Fee
97 11/11/1999 12/01/2009 120 117 360 $2,247,996 64.2% Fee
98 06/25/1999 07/01/2009 120 112 360 $2,308,544 65.0% Fee
99 08/11/1999 09/01/2009 120 114 240 $1,737,023 23.8% Fee
100 10/22/1999 12/01/2009 120 117 360 $2,169,655 70.4% Fee
101 11/30/1999 01/05/2010 120 118 300 $1,984,827 56.7% Fee
102 10/18/1999 11/03/2009 120 116 360 $2,165,359 58.5% Fee
103 08/10/1999 09/01/2009 120 114 360 $2,148,425 52.7% Fee
104 05/26/1999 06/01/2009 120 111 360 $2,119,874 62.3% Fee
105 07/02/1998 08/01/2008 120 101 360 $2,074,807 62.5% Fee
106 02/08/1999 05/01/2009 121 110 360 $2,031,071 42.3% Fee
107 05/19/1999 06/01/2009 120 111 300 $1,912,491 57.4% Fee
108 06/04/1999 07/01/2009 120 112 360 $2,033,835 63.6% Fee
109 01/05/2000 02/01/2010 120 119 360 $1,973,822 53.3% Fee
110 05/05/1999 06/01/2009 120 111 300 $1,806,181 64.5% Fee
111 09/22/1999 10/01/2014 180 175 180 $21,235 0.5% Fee
112 01/11/2000 02/01/2010 120 119 300 $1,751,003 59.4% Fee
113 09/01/1999 10/01/2009 120 115 360 $1,852,484 66.2% Fee
114 12/23/1999 01/01/2010 120 118 360 $1,782,118 48.2% Fee
115 09/15/1999 10/01/2009 120 115 360 $1,785,034 57.6% Fee
116 06/23/1999 07/01/2004 60 52 300 $1,883,398 42.8% Fee
117 09/09/1999 10/01/2009 120 115 360 $1,760,170 56.8% Fee
118 08/19/1999 09/01/2009 120 114 360 $1,743,172 65.8% Fee
119 07/02/1999 08/01/2004 60 53 300 $1,765,533 57.7% Fee
120 08/10/1999 09/01/2009 120 114 300 $1,445,314 36.1% Fee
121 08/31/1999 09/01/2009 120 114 360 $1,522,506 71.8% Fee
122 04/01/1999 05/01/2009 120 110 300 $1,305,120 50.2% Fee
123 06/29/1999 08/01/2009 120 113 360 $1,431,529 57.3% Fee
124 06/04/1999 07/01/2009 120 112 360 $1,412,556 55.2% Fee
125 06/04/1999 07/01/2009 120 112 120 $41,891 1.3% Fee
126 06/02/1999 07/01/2009 120 112 300 $1,248,131 53.7% Fee
127 03/17/1999 04/01/2009 120 109 300 $1,221,279 28.7% Fee
128 05/21/1999 07/01/2014 180 172 180 $14,173 0.4% Fee
129 10/04/1999 11/01/2019 240 236 240 $86,953 3.7% Fee
130 06/02/1999 07/01/2009 120 112 300 $1,196,675 63.0% Fee
131 03/17/1999 04/01/2009 120 109 300 $1,090,060 62.3% Fee
132 06/10/1999 07/01/2009 120 112 300 $989,161 43.0% Fee
133 12/09/1999 01/01/2010 120 118 360 $1,023,729 43.1% Fee
122 116 341 $592,783,184 56.8%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN
NO. PROPERTY NAME(2) ADDRESS CITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 325 West Huron Street (A) 325 West Huron Street Chicago
2 322 South Green Street (A) 322 South Green Street Chicago
3 222 W. Hubbard (A) 222 W. Hubbard Chicago
4 212 W. Superior (A) 212 W. Superior Chicago
5 215 W. Superior (A) 215 W. Superior Chicago
6 One Commerce Center (B) 7222 Commerce Center Drive Colorado Springs
7 Centennial Center (B) 300-400 S. McCaslin Louisville
8 Columbine Place (B) 216 16th Street Denver
9 Erindale Square Retail Center (B) 5905-5975 N. Academy Colorado Springs
10 Fontana Plaza (C) (I) 9880-9881 Sierra Avenue Fontana
11 Plaza East (C) (I) 9765-9781 Sierra Avenue Fontana
12 Foothill Plaza (C) (I) 16910 - 16990 Foothill Blvd. Fontana
13 Jabil Circuit Building 30 - 32 Great Oaks Blvd. San Jose
14 Lincoln North 55 Old Bedford Road Lincoln
15 120 East 23rd Street 120 East 23rd Street New York
16 133 East 58th Street 133 East 58th Street New York
17 Norwalk Distribution Center (7) 11204 Norwalk Boulevard Santa Fe Springs
18 International Airport Center - LAX W. 102nd / W. 104th / Century / La Cienega Los Angeles
19 Manhattan Gateway 1800 Rosecrans Avenue Manhattan Beach
20 11428 Sherman Way 11428 Sherman Way North Hollywood
21 Riverside Market 5300-5400 Tchoupitoulas Street New Orleans
22 The Village at Hillsgrove 75 Minnesota Avenue Warwick
23 Middlebrook Center Tea Street and Union Avenue (Rte 28) Bound Brook
24 United Health Care Building 9200 Worthington Road Columbus
25 Thousand Oaks Medical Office 227 W Janss Road /2190 Lynn Road Thousand Oaks
26 The Robb & Stucky Retail Store 15440 North Scottsdale Road Scottsdale
27 SAFECO Insurance Building (7) 2055 Sugarloaf Circle Duluth
28 Lincoln Square (7) 5505 - 5605 Six Forks Road Raleigh
29 Highland Chase Apartments 400 Ashley Place Atlanta
30 Shamrock Center 665 Irwin Street San Rafael
31 ZBR Publications (7) 200 Ward Hill Ave Haverhill
32 Bay Area Bank Building 900 Veterans Boulevard Redwood City
33 Laurel Springs 8100 Westwold Drive Bakersfield
34 The Center Martinez 1029-1037 Arnold Drive Martinez
35 Latham Hotel 135 South 17th Street Philadelphia
36 Sarasota Towne Center 5360-5446 Fruitville Rd. Sarasota
37 Rivers Center (7) 8300, 8310, 8320, 8325 & 8335 Guilford Rd Columbia
38 Corporate Woods Office Park 54010 Corporate Woods Drive Pensacola
39 Watsonville Square Shopping Center 1810-1962 & 1970-1994 Main Street Watsonville
40 Highland Grove Apartments 1650 Austell Road Marietta
41 Twin Cities Shopping Center 780 Ocean Beach Highway Longview
42 Oak Hollow Square Shopping Center (7) 1589 Skeet Club Road High Point
43 Floral Trade Center 5600 Avenida Encinas Carlsbad
44 Cuyahoga Falls Retail 355 - 385 Howe Avenue Cuyahoga Falls
45 Highland Glen Apartments 3535 & 3665 Lawrenceville Highway Atlanta
46 Park Promenade Shopping Center(7) 2700 N. Hiawassee Road Orlando
47 San Jose Office Plaza-Airport IV 1735 North First Street San Jose
48 QuadraMed Building (7) 22 Pelican Way San Rafael
49 Department of Agriculture Building 90 West Plato Boulevard St. Paul
50 Abington Shopping Center(7) 1411-1441 Old York Road Abington
51 Burnsville Plus Property (7) 1780 County Rd. 42 W Burnsville
52 Broadway Village Apartments 14140 N. Broadway Avenue Oklahoma City
53 Whitnall Square 4698 South Whitnall Avenue St. Francis
54 Airport Plaza 16500-30 Sherman Way Los Angeles
55 Highland Court Apartments 676 Horizon Place Marietta
56 College Village Shopping Center(7) E Lexington Ave. @ N Centennial Street High Point
57 Baycenter Commerce (7) 8030 8032 & 8036 Phillips Highway Jacksonville
58 JC Penney Credit Processing Ctr 140 Wekiva Springs Road Longwood
59 Sprint Office Building 3068 Kilgore Road Rancho Cordova
60 Holiday Inn El Paso 6655 Gateway West El Paso
61 Torrey Pines Village Apartments 8929, 8933, 8939, 8943, 8945, & 8949 Lombard Place San Diego
62 Lake City Commons Shopping Center Jonesboro Road at Highway 54 Lake City
63 Waterfall Villiage Apartments 245 Hamburg Turnpike Bloomgindale
64 Racine Centre 5201 W. Washington Avenue Racine
65 Creekside Senior Apartments 4291 Monroe Street Riverside
66 Rosauers Plaza 2502 -2630 E 29th Avenue Spokane
67 MidCity Business Park 300 Jefferson Highway New Orleans
68 Metro Self-Storage 4425-4455 Federal Boulevard San Diego
69 Trak Auto Warehouse (7) 8811 South 77th Avenue Bridgeview
70 Pecan Grove Festival Center (7) 655 West Warner Road Tempe
71 The Woodlands Apartments I & II 1021 & 1023 College Drive Texarkana
72 Randolph Industrial 4 Middlebury Boulevard Randolph
73 Pearland Centennial Shopping Center (7) 2800 East Broadway (FM 518) Pearland
74 Phillips Plywood 13599 Desmond Street Pacoima
75 Hillside Plaza (7) 23161 Mill Crek Drive Laguna Hills
76 Kmart Plaza Shopping Center 1325-1349 West Main Street Salem
77 America's Funding Source 5671 Santa Teresa Boulevard San Jose
78 Poplar Springs Shopping Center 2153 East Main Street Duncan
79 Sports Authority (7) 7360 West Bell Road Glendale
80 14714 Carmenita Road 14714 Carmenita Road Norwalk
81 Nob Hill Shopping Center 3500 Central Avenue SE Albuquerque
82 Village North 302 West Benjamin Holt Dr Stockton
83 2473-2475 Broadway 2473-2475 Broadway New York
84 Fairfield Industrial Various in Fairfield Fairfield
85 4100 Broadway Center 4100 East Broadway Phoenix
86 Colorado MEDtech Building (7) 6175 Longbow Drive Boulder
87 Five Star Suites 2069 North Argyle Avenue Los Angeles
88 Cypress Hills Mobile Home Park 8661 Winter Garden Blvd. Lakeside
89 Rose Garden Apartments (7) 258-262 Union Ave. Framingham
90 Jennings Business Center 4550 & 4562 Hinckley Ind. Pkwy. Cleveland
91 One Crosspointe Plaza (7) 5505 Creedmoor Rd Raleigh
92 Marketplace Square (7) 1442 East Chandler Blvd. Phoenix
93 Westnedge Corners 4425 South Westnedge Kalamazoo
94 Golden Bear Center (7) 3700 Riverside Drive Upper Arlington
95 Flatiron (7) 5665 Flatiron Parkway Boulder
96 Cherry Acres (7) 1671 -1699 Mabury Road San Jose
97 Jefferson Park of Hudson (7) 5876 Darrow Road Hudson
98 Westheimer-Fountainview Shopping Center 5887 Westheimer Road Houston
99 Medford Mobile Estates 3555 South Pacific Highway Medford
100 Big Bear Grocery Store (7) 280 East Whittier Street Columbus
101 8 Corporate Drive 8 Corporate Drive Cranbury
102 Rite Aid Pharmacy 24330 El Toro Road Clemmens Laguna Woods
103 41 Corporate Park (7) 41 Corporate Park Irvine
104 Trolley Barn Apartments 10 Wall Street Norwalk
105 Martinez Retail Center 530-550 Morello Avenue Martinez
106 California Federal Bank Building 3900 Lennane Drive Sacramento
107 Stormaster 2750 California Avenue Pittsburg
108 Staples Office Superstore 1150 NE Highway 99W McMinnville
109 Cudahy Center (7) 5800 South Packard Avenue Cudahy
110 Howe Place Apartments 70 Howe Street New Haven
111 750 Bush Parking Garage 750 Bush Street San Francisco
112 Scranton Industrial Warehouse (7) 8710-9040 Scranton Street Houston
113 Cornerstone Market(7) 3801 Bee Caves Rd West Lake Hills
114 Illinois Tool Works 309 East Crossroads Parkway Bolingbrook
115 Whiteland Point Office Building 49 E Lancaster Pike Avenue Frazer
116 5385 Hollister Avenue 5385 Hollister Avenue Goleta
117 Kenilworth Bldg 555 N Michigan Ave Kenilworth
118 Meacham & Apel Building 6161 Riverside Drive Dublin
119 Unitron, Incorporated 10925 Miller Road Dallas
120 Montanero Street 17022-17044 Montanero Carson
121 Norwegian Woods Apartments 220 Archer Drive Sherman
122 Gresham Park Apartments 805 NE Kane Drive Gresham
123 Concord Hall Manor Apartments (7) 9880 Old Johnnycake Road Concord Township (Mentor)
124 Staples Office Superstore 2911 Old Shawnee Road Muskogee
125 Ticketmaster Call Center 411 Ashley Ridge Blvd. Shreveport
126 350 Second Street 350 Second Street Los Altos
127 Vintage Office 25 Orinda Way Orinda
128 Orange Tree Gardens Apartments 3354 W. Orange Ave. Anaheim
129 Woodward Business Park 7636-7638 North Ingram Fresno
130 Captain's at Holt & Mountain Self Storage 112 S. Mountain Avenue Ontario
131 A-American Self-Storage 44820 Florida Avenue Hemet
132 Otay Professional Building 2320 Paseo de Las Americas San Diego
133 Eckerd Drug Store 6170 Lakeland Highland Road Lakeland
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LOAN PROPERTY PROPERTY YEAR YEAR
NO. STATE ZIP CODE TYPE SUB-TYPE UNITS/NSF BUILT RENOVATED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IL 60610 Office Urban 115,170 1920 1982
2 IL 60607 Office Urban 84,330 1920 1987
3 IL 60610 Office Urban 52,079 1918 1989
4 IL 60610 Office Urban 64,771 1918 1980
5 IL 60610 Office Urban 34,744 1918 1980
6 CO 80919 Office Suburban 81,956 1984 NAP
7 CO 80027 Office Suburban 84,356 1986 NAP
8 CO 80202 Office Urban 145,137 1983 NAP
9 CO 80918 Retail Unanchored 103,010 1980/1988 NAP
10 CA 92335 Retail Anchored 124,399 1981 NAP
11 CA 92335 Retail Anchored 98,246 1985 NAP
12 CA 92335 Retail Anchored 93,989 1979/1987 NAP
13 CA 95119 Industrial Flex Industrial 181,736 1984 NAP
14 MA 01773 Office Suburban 124,998 1990 NAP
15 NY 10010 Office Urban 236,406 1916 1985/1991
16 NY 10022 Office Urban 107,556 1930 NAP
17 CA 90670 Industrial Warehouse 355,590 1999 NAP
18 CA 90045 Industrial Warehouse 330,358 1953 1998
19 CA 90266 Retail Anchored 82,000 1999 NAP
20 CA 91605 Industrial Warehouse 310,479 1970 1990
21 LA 70115 Retail Anchored 146,544 1986 NAP
22 RI 02888 Health Care Assisted Living Facility 120 1998 NAP
23 NJ 08805 Retail Anchored 104,700 1998 NAP
24 OH 43082 Office Suburban 142,346 1999 NAP
25 CA 91360 Office Medical Office 80,077 1981/1991 NAP
26 AZ 85254 Retail Anchored 113,071 1997 NAP
27 GA 30097 Office Suburban 157,486 1999 NAP
28 NC 27609 Office Suburban 140,400 1981-1983 NAP
29 GA 30083 Multifamily Garden 212 1983 NAP
30 CA 94901 Retail Big Box 61,382 1998 NAP
31 MA 01835 Industrial Light Industrial 264,612 1983/1999 NAP
32 CA 94063 Office Suburban 55,034 1981 NAP
33 CA 93311 Health Care Assisted Living Facility 113 1998 NAP
34 CA 94553 Retail Anchored 114,258 1989 1994
35 PA 19103 Hospitality Full Service 139 1908 1997
36 FL 34232 Retail Anchored 95,783 1998 NAP
37 MD 21044 Office Suburban 146,445 1984 NAP
38 FL 32504 Office Suburban 116,624 1986-1989 NAP
39 CA 95076 Retail Anchored 98,440 1985 NAP
40 GA 30008 Multifamily Garden 208 1968 NAP
41 WA 98632 Retail Anchored 132,576 1990 NAP
42 NC 27265 Retail Anchored 120,804 1999 NAP
43 CA 92008 Industrial Light Industrial 129,815 1968 1989
44 OH 44221 Retail Shadow Anchored 79,461 1997-1998 NAP
45 GA 30084 Multifamily Garden 174 1972 1999
46 FL 32818 Retail Anchored 125,806 1987 NAP
47 CA 95112 Office Suburban 61,026 1980 NAP
48 CA 94901 Office Suburban 33,760 1999 NAP
49 MN 55107 Office Urban 75,163 1979/1989 1993
50 PA 19046 Retail Anchored 73,916 1959 1998
51 MN 55337 Retail Anchored 137,396 1983 NAP
52 OK 73013 Multifamily Garden 220 1997 NAP
53 WI 53235 Retail Anchored 133,301 1989 1996
54 CA 91335 Retail Anchored 55,500 1994 NAP
55 GA 30062 Multifamily Garden 152 1970 1998
56 NC 27262 Retail Anchored 142,081 1958 1998
57 FL 32256 Industrial Warehouse/Office/Showroom 148,500 1985-1987 NAP
58 FL 32779 Office Suburban 67,775 1982 1995
59 CA 95670 Office Suburban 108,324 1989 NAP
60 TX 79925 Hospitality Full Service 206 1963 1998
61 CA 92122 Multifamily Garden 134 1978 1998
62 GA 30260 Retail Anchored 91,794 1998 NAP
63 NJ 07403 Multifamily Garden 154 1973 1992
64 WI 53406 Retail Anchored 135,827 1988 NAP
65 CA 92504 Multifamily Senior Housing 152 1991 NAP
66 WA 99223 Retail Anchored 128,532 1978/1986 1989
67 LA 70121 Industrial Warehouse 214,327 1979/1980 NAP
68 CA 92102 Self Storage Self Storage 95,671 1986 NAP
69 IL 60455 Industrial Warehouse 175,628 1978 NAP
70 AZ 85284 Retail Shadow Anchored 67,555 1989 1997
71 TX 75503 Multifamily Garden 246 1973/1984 1998
72 NJ 07869 Industrial Light Industrial 79,760 1989 NAP
73 TX 77581 Retail Shadow Anchored 33,255 1999 NAP
74 CA 91331 Industrial Warehouse 89,216 1980 1989
75 CA 92653 Office Suburban 44,327 1987 NAP
76 VA 24153 Retail Anchored 95,999 1989 NAP
77 CA 95123 Office Suburban 28,994 1980 NAP
78 SC 29369 Retail Anchored 64,038 1995 NAP
79 AZ 85308 Retail Anchored 40,700 1996 NAP
80 CA 90650 Office Suburban 44,250 1981 NAP
81 NM 87106 Retail Anchored 47,654 1947 1985
82 CA 95207 Multifamily Garden 118 1970 NAP
83 NY 10025 Retail Unanchored 15,000 1929 1994/1997
84 NJ 07004 Industrial Light Industrial 105,200 1971/1975/1980/1982 1995
85 AZ 85040 Mixed Use Office/Flex 47,048 1985 NAP
86 CO 80301 Office Suburban 51,939 1984 NAP
87 CA 90068 Multifamily Mid-Rise 54 1988 1999
88 CA 92040 Mobile Home Park Mobile Home Park 104 1969 NAP
89 MA 01702 Multifamily Garden 72 1970 1996
90 OH 44109 Industrial Warehouse 68,153 1998 NAP
91 NC 27612 Office Suburban 40,663 1984 NAP
92 AZ 85048 Retail Shadow Anchored 22,874 1999 NAP
93 MI 49007 Retail Anchored 77,194 1970 1993
94 OH 43221 Retail Anchored 32,400 1966-1967 NAP
95 CO 80301 Office Suburban 41,107 1988 NAP
96 CA 95133 Industrial Light Industrial 63,249 1986 NAP
97 OH 44236 Office Suburban 26,400 1990 1997
98 TX 77057 Retail Unanchored 20,188 1990 NAP
99 OR 97501 Mobile Home Park Mobile Home Park 244 1973 NAP
100 OH 43206 Retail Free Standing 29,700 1955 1999
101 NJ 08512 Industrial Warehouse 56,143 1999 NAP
102 CA 92653 Retail Free Standing 16,730 1999 NAP
103 CA 92606 Office Suburban 28,067 1986 NAP
104 CT 06851 Mixed Use Retail/Multifamily 24 1866 1988
105 CA 94553 Retail Unanchored 11,950 1998 NAP
106 CA 95834 Office Suburban 45,800 1984 1998
107 CA 94565 Self Storage Self Storage 47,018 1994 NAP
108 OR 97128 Retail Big Box 23,805 1969 1997
109 WI 53110 Retail Anchored 103,254 1972 NAP
110 CT 06511 Multifamily Mid-Rise 78 1920 1987
111 CA 94108 Retail Specialty 60,155 1940 1978
112 TX 77075 Industrial Warehouse 172,700 1970/1976 NAP
113 TX 78746 Retail Unanchored 17,526 1995 NAP
114 IL 60440 Industrial Light Industrial 48,024 1999 NAP
115 PA 19355 Office Suburban 18,639 1990 NAP
116 CA 93111 Office Suburban 60,177 1965 1996
117 NJ 07033 Industrial Warehouse 74,057 1965 1994
118 OH 43017 Office Suburban 18,006 1999 NAP
119 TX 75238 Industrial Flex Industrial 40,000 1984 NAP
120 CA 90746 Industrial Light Industrial 103,215 1979 NAP
121 TX 75092 Multifamily Garden 113 1972 1998
122 OR 97030 Multifamily Garden 51 1991 1991
123 OH 44060 Multifamily Garden 56 1968 NAP
124 OK 74403 Retail Big Box 24,049 1998 NAP
125 LA 71106 Office Suburban 37,000 1992 1998
126 CA 94022 Office Suburban 9,226 1981 NAP
127 CA 94563 Office Suburban 25,433 1972 NAP
128 CA 92804 Multifamily Garden 67 1973 1998
129 CA 93711 Office Suburban 27,820 1994 NAP
130 CA 91762 Self Storage Self Storage 51,721 1986 NAP
131 CA 92544 Self Storage Self Storage 54,575 1985 NAP
132 CA 92173 Office Suburban 23,267 1990 NAP
133 FL 33813 Retail Free Standing 11,200 1999 NAP
</TABLE>
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PROPERTY OPERATING INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN UNDERWRITABLE MONTHLY FIRST APPRAISED
NO. PROPERTY NAME(2) CASH FLOW PAYMENT(8) PMT DATE(9) DSCR(4) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 325 West Huron Street (A) $885,132 $48,484.96 05/01/1998 1.49 $10,100,000
2 322 South Green Street (A) $730,232 $36,618.02 05/01/1998 1.49 $7,000,000
3 222 W. Hubbard (A) $405,247 $26,107.29 05/01/1998 1.49 $5,000,000
4 212 W. Superior (A) $294,663 $20,004.29 05/01/1998 1.49 $3,800,000
5 215 W. Superior (A) $249,997 $12,545.06 05/01/1998 1.49 $2,600,000
6 One Commerce Center (B) $581,589 $32,592.90 11/01/1999 1.57 $8,100,000
7 Centennial Center (B) $939,263 $47,407.85 11/01/1999 1.57 $11,000,000
8 Columbine Place (B) $840,065 $46,667.10 11/01/1999 1.57 $14,200,000
9 Erindale Square Retail Center (B) $430,049 $21,481.68 11/01/1999 1.57 $5,500,000
10 Fontana Plaza (C) (I) $1,026,020 $56,782.00 06/01/1999 1.51 $11,165,205
11 Plaza East (C) (I) $680,153 $37,631.00 06/01/1999 1.51 $7,399,399
12 Foothill Plaza (C) (I) $652,227 $36,085.00 06/01/1999 1.51 $7,095,396
13 Jabil Circuit Building $2,142,807 $141,439.09 01/01/2000 1.26 $24,850,000
14 Lincoln North $1,990,091 $110,091.30 01/01/1999 1.51 $23,600,000
15 120 East 23rd Street $2,376,375 $106,975.69 07/01/1999 1.85 $34,500,000
16 133 East 58th Street $3,037,745 $112,418.35 08/01/1999 2.25 $37,600,000
17 Norwalk Distribution Center (7) $1,509,059 $106,256.80 01/01/2000 1.18 $20,800,000
18 International Airport Center - LAX $1,511,997 $100,517.89 11/01/1999 1.25 $21,400,000
19 Manhattan Gateway $1,406,597 $99,139.35 02/01/2000 1.18 $17,000,000
20 11428 Sherman Way $1,455,307 $83,341.39 09/01/1999 1.46 $17,600,000
21 Riverside Market $1,446,259 $93,945.45 01/01/2000 1.28 $17,600,000
22 The Village at Hillsgrove $1,484,839 $87,684.87 10/01/1999 1.41 $16,400,000
23 Middlebrook Center $1,453,986 $78,233.68 06/01/1999 1.55 $15,800,000
24 United Health Care Building $1,538,681 $71,958.33 03/01/2005 1.76 $18,770,000
25 Thousand Oaks Medical Office $1,503,788 $81,056.74 12/05/1999 1.55 $18,000,000
26 The Robb & Stucky Retail Store $1,198,276 $78,630.95 11/01/1999 1.27 $14,835,000
27 SAFECO Insurance Building (7) $1,657,400 $60,833.33 02/01/2005 2.27 $22,300,000
28 Lincoln Square (7) $1,194,311 $75,478.46 12/01/1999 1.32 $12,760,000
29 Highland Chase Apartments $1,131,548 $72,680.54 12/01/1999 1.30 $12,500,000
30 Shamrock Center $1,150,954 $71,779.49 07/01/1999 1.34 $13,520,000
31 ZBR Publications (7) $1,215,860 $73,068.60 01/01/2000 1.39 $14,100,000
32 Bay Area Bank Building $1,102,130 $66,035.51 06/01/1999 1.39 $12,735,000
33 Laurel Springs $1,303,977 $74,207.55 11/01/1999 1.46 $12,700,000
34 The Center Martinez $1,111,524 $67,812.65 10/01/1999 1.37 $12,500,000
35 Latham Hotel $1,715,009 $73,382.44 03/01/2000 1.95 $16,300,000
36 Sarasota Towne Center $944,681 $64,810.56 09/01/1999 1.21 $11,400,000
37 Rivers Center (7) $1,136,386 $61,611.45 02/01/2000 1.54 $14,300,000
38 Corporate Woods Office Park $1,031,542 $63,343.73 10/01/1999 1.36 $11,200,000
39 Watsonville Square Shopping Center $1,019,667 $58,200.02 11/01/1999 1.46 $12,400,000
40 Highland Grove Apartments $903,464 $60,151.83 01/01/2000 1.25 $9,900,000
41 Twin Cities Shopping Center $1,001,691 $57,535.02 09/01/1999 1.45 $11,500,000
42 Oak Hollow Square Shopping Center (7) $1,063,039 $49,810.68 02/01/2000 1.78 $12,000,000
43 Floral Trade Center $811,863 $49,543.14 11/01/1998 1.37 $10,300,000
44 Cuyahoga Falls Retail $904,103 $49,073.78 01/01/2000 1.54 $9,750,000
45 Highland Glen Apartments $755,777 $46,459.13 10/01/1999 1.36 $8,400,000
46 Park Promenade Shopping Center(7) $889,555 $48,148.60 03/01/2000 1.54 $9,775,000
47 San Jose Office Plaza-Airport IV $976,600 $36,053.33 01/01/2001 2.26 $12,750,000
48 QuadraMed Building (7) $805,237 $50,833.11 02/01/2000 1.32 $9,000,000
49 Department of Agriculture Building $660,609 $42,977.11 11/01/1998 1.28 $8,340,000
50 Abington Shopping Center(7) $677,296 $40,483.88 09/01/1999 1.39 $8,100,000
51 Burnsville Plus Property (7) $673,874 $45,334.00 08/01/1999 1.24 $8,700,000
52 Broadway Village Apartments $611,506 $41,297.48 06/01/1998 1.23 $7,800,000
53 Whitnall Square $716,275 $39,772.85 03/01/2000 1.50 $7,800,000
54 Airport Plaza $932,668 $37,298.14 12/01/1999 2.08 $10,750,000
55 Highland Court Apartments $653,747 $38,739.39 08/01/1999 1.41 $7,400,000
56 College Village Shopping Center(7) $590,446 $39,489.60 03/01/2000 1.25 $7,000,000
57 Baycenter Commerce (7) $647,513 $38,745.69 02/01/2000 1.39 $8,450,000
58 JC Penney Credit Processing Ctr $613,746 $38,091.88 02/01/2000 1.34 $7,300,000
59 Sprint Office Building $816,881 $40,554.64 10/05/1999 1.68 $11,870,000
60 Holiday Inn El Paso $782,727 $43,169.90 07/01/1999 1.51 $8,500,000
61 Torrey Pines Village Apartments $1,040,335 $34,717.30 12/01/1999 2.50 $13,900,000
62 Lake City Commons Shopping Center $832,248 $28,405.00 10/01/2004 2.44 $9,700,000
63 Waterfall Villiage Apartments $987,226 $31,768.11 04/01/2002 2.64 $10,850,000
64 Racine Centre $599,095 $33,006.06 03/01/2000 1.51 $8,300,000
65 Creekside Senior Apartments $483,093 $32,291.08 05/01/1999 1.25 $5,900,000
66 Rosauers Plaza $861,436 $33,606.65 03/01/2000 2.14 $11,200,000
67 MidCity Business Park $555,273 $34,791.37 11/01/1999 1.33 $6,600,000
68 Metro Self-Storage $647,395 $33,546.51 09/01/1999 1.61 $6,400,000
69 Trak Auto Warehouse (7) $542,709 $31,686.43 11/05/1999 1.43 $5,800,000
70 Pecan Grove Festival Center (7) $615,725 $32,600.90 01/01/2000 1.57 $7,450,000
71 The Woodlands Apartments I & II $440,029 $30,265.69 11/01/1999 1.21 $5,300,000
72 Randolph Industrial $454,867 $29,271.98 12/01/1999 1.29 $5,300,000
73 Pearland Centennial Shopping Center (7) $438,671 $28,048.22 03/01/2000 1.30 $4,900,000
74 Phillips Plywood $439,183 $28,192.02 11/01/1999 1.30 $5,000,000
75 Hillside Plaza (7) $432,331 $25,438.19 09/03/1999 1.42 $6,000,000
76 Kmart Plaza Shopping Center $424,588 $27,736.23 10/01/1999 1.28 $4,750,000
77 America's Funding Source $416,922 $26,723.37 10/01/1999 1.30 $4,900,000
78 Poplar Springs Shopping Center $513,893 $23,726.75 02/01/2000 1.80 $5,700,000
79 Sports Authority (7) $381,306 $24,233.62 12/01/1999 1.31 $5,120,000
80 14714 Carmenita Road $402,180 $25,256.51 01/01/2000 1.33 $4,650,000
81 Nob Hill Shopping Center $377,771 $24,002.00 09/01/1999 1.31 $4,400,000
82 Village North $354,893 $24,181.52 11/01/1999 1.22 $4,000,000
83 2473-2475 Broadway $363,298 $24,882.02 02/01/2000 1.22 $4,925,000
84 Fairfield Industrial $469,853 $23,680.40 03/01/2000 1.65 $5,250,000
85 4100 Broadway Center $349,467 $23,101.45 09/01/1999 1.26 $4,100,000
86 Colorado MEDtech Building (7) $387,386 $23,300.72 01/01/2000 1.39 $4,850,000
87 Five Star Suites $431,749 $21,079.25 11/01/1999 1.71 $4,800,000
88 Cypress Hills Mobile Home Park $370,517 $21,908.46 05/01/1999 1.41 $4,300,000
89 Rose Garden Apartments (7) $310,905 $21,331.45 12/01/1999 1.21 $3,600,000
90 Jennings Business Center $319,827 $20,976.44 09/01/1999 1.27 $3,800,000
91 One Crosspointe Plaza (7) $350,794 $19,482.65 09/01/1999 1.50 $4,400,000
92 Marketplace Square (7) $305,407 $19,343.13 11/01/1999 1.32 $3,500,000
93 Westnedge Corners $326,039 $20,021.21 01/01/2000 1.36 $3,820,000
94 Golden Bear Center (7) $298,471 $19,973.33 01/01/2000 1.25 $3,475,000
95 Flatiron (7) $448,256 $18,536.96 12/01/1999 2.02 $5,530,000
96 Cherry Acres (7) $457,174 $24,339.32 03/01/2000 1.57 $6,000,000
97 Jefferson Park of Hudson (7) $294,693 $18,996.20 01/01/2000 1.29 $3,500,000
98 Westheimer-Fountainview Shopping Center $300,865 $19,498.96 08/01/1999 1.29 $3,550,000
99 Medford Mobile Estates $446,802 $20,025.34 10/01/1999 1.86 $7,300,000
100 Big Bear Grocery Store (7) $275,005 $18,267.15 01/01/2000 1.25 $3,080,000
101 8 Corporate Drive $319,017 $18,571.31 02/05/2000 1.43 $3,500,000
102 Rite Aid Pharmacy $273,224 $18,148.64 12/03/1999 1.25 $3,700,000
103 41 Corporate Park (7) $269,662 $17,576.90 10/01/1999 1.28 $4,075,000
104 Trolley Barn Apartments $281,607 $17,737.44 07/01/1999 1.32 $3,400,000
105 Martinez Retail Center $284,312 $16,286.96 09/01/1998 1.45 $3,320,000
106 California Federal Bank Building $346,182 $16,034.71 05/01/1999 1.80 $4,800,000
107 Stormaster $301,260 $18,072.92 07/01/1999 1.39 $3,330,000
108 Staples Office Superstore $259,467 $17,334.91 08/01/1999 1.25 $3,200,000
109 Cudahy Center (7) $323,008 $15,945.13 03/01/2000 1.69 $3,700,000
110 Howe Place Apartments $292,343 $16,518.52 07/01/1999 1.47 $2,800,000
111 750 Bush Parking Garage $358,407 $21,381.50 11/01/1999 1.40 $4,160,000
112 Scranton Industrial Warehouse (7) $259,648 $16,669.87 03/01/2000 1.30 $2,950,000
113 Cornerstone Market(7) $235,741 $15,574.25 11/01/1999 1.26 $2,800,000
114 Illinois Tool Works $307,991 $14,383.56 02/01/2000 1.78 $3,700,000
115 Whiteland Point Office Building $255,991 $14,452.83 11/01/1999 1.48 $3,100,000
116 5385 Hollister Avenue $355,467 $16,688.16 08/01/1999 1.78 $4,400,000
117 Kenilworth Bldg $239,660 $14,190.11 11/01/1999 1.41 $3,100,000
118 Meacham & Apel Building $244,261 $14,795.88 10/01/1999 1.38 $2,650,000
119 Unitron, Incorporated $250,236 $14,451.18 09/01/1999 1.44 $3,060,000
120 Montanero Street $347,993 $13,560.80 10/01/1999 2.14 $4,000,000
121 Norwegian Woods Apartments $210,990 $12,563.08 10/01/1999 1.40 $2,120,000
122 Gresham Park Apartments $218,402 $11,437.45 06/01/1999 1.59 $2,600,000
123 Concord Hall Manor Apartments (7) $205,118 $11,684.51 09/01/1999 1.46 $2,500,000
124 Staples Office Superstore $208,975 $11,067.16 08/01/1999 1.57 $2,560,000
125 Ticketmaster Call Center $387,630 $20,052.28 08/01/1999 1.61 $3,200,000
126 350 Second Street $199,206 $11,796.70 08/01/1999 1.41 $2,325,000
127 Vintage Office $386,758 $11,065.36 05/01/1999 2.91 $4,250,000
128 Orange Tree Gardens Apartments $287,664 $14,265.59 08/01/1999 1.68 $3,300,000
129 Woodward Business Park $202,770 $12,703.00 12/01/1999 1.33 $2,340,000
130 Captain's at Holt & Mountain Self Storage $199,997 $11,606.98 08/01/1999 1.44 $1,900,000
131 A-American Self-Storage $188,335 $10,476.71 05/01/1999 1.50 $1,750,000
132 Otay Professional Building $250,741 $9,174.52 08/01/1999 2.28 $2,300,000
133 Eckerd Drug Store $175,050 $8,238.74 02/01/2000 1.77 $2,375,000
TOTALS/WEIGHTED AVERAGES: 1.50X
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
LOAN VALUATION PERCENT LEASED(10) TENANT INFORMATION(11)
NO. DATE LTV(4) LEASED DATE LARGEST TENANT % NSF
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 01/23/1998 73.1% 100.0% 10/28/1999 Cushing and Company 12.2%
2 01/23/1998 73.1% 100.0% 10/28/1999 QV, Inc. 31.2%
3 01/23/1998 73.1% 100.0% 10/28/1999 Standard Studios Ltd. Partnership 39.1%
4 01/23/1998 73.1% 97.0% 10/28/1999 Closer Look Creative, Inc. 37.9%
5 01/23/1998 73.1% 99.4% 10/28/1999 Televersions, LLC 14.4%
6 07/22/1999 51.4% 90.0% 10/01/1999 Pikes Peak Community College 20.2%
7 07/14/1999 51.4% 90.5% 10/01/1999 La Petite Academy 11.1%
8 07/28/1999 51.4% 98.6% 10/01/1999 Carter & Burgess, Inc. 24.5%
9 07/15/1999 51.4% 87.3% 10/01/1999 Mountain Entertainment, Inc. 14.6%
10 11/04/1998 72.4% 91.9% 10/07/1999 Lucky Supermarket 22.7%
11 11/04/1998 72.4% 100.0% 10/07/1999 Fontana Indoor Swap Meet, Inc. 51.1%
12 11/04/1998 72.4% 98.0% 10/07/1999 Fiesta Mexicana Market 37.2%
13 10/27/1999 74.7% 100.0% 11/11/1999 Jabil Circuits, Inc. 100.0%
14 09/29/1998 68.3% 100.0% 11/02/1999 FASTech Integration 36.2%
15 12/02/1999 43.0% 100.0% 05/12/1999 Time Warner Entertainment Co., LP 47.0%
16 11/17/1999 38.0% 93.2% 11/01/1999 Express LLC (Limited) 18.6%
17 11/01/1999 66.2% 100.0% 11/30/1999 Performance Team Freight Systems 100.0%
18 08/05/1999 63.9% 100.0% 09/30/1999 Neutrogena / Panalpina 22.7%
19 11/26/1999 77.5% 100.0% 11/18/1999 Old Navy 30.5%
20 06/08/1999 71.0% 100.0% 11/18/1999 Southern Wine and Spirits 100.0%
21 10/01/1999 69.9% 96.0% 11/08/1999 Winn/Dixie 32.1%
22 07/12/1999 72.6% 94.7% 08/17/1999 NAP NAP
23 01/31/1999 73.5% 96.9% 02/10/1999 Foodarama Supermarkets, Inc. 82.6%
24 12/07/1999 58.6% 100.0% 01/05/2000 United HealthCare Services Inc 100.0%
25 09/27/1999 59.5% 100.0% 11/12/1999 Les Robles SurgiCenter 13.2%
26 06/07/1999 69.5% 100.0% 08/31/1999 Robb & Stucky 100.0%
27 02/01/2000 44.8% 100.0% 12/15/1999 SAFECO Insurance Company 100.0%
28 07/07/1999 78.2% 100.0% 09/21/1999 IBM 100.0%
29 09/21/1999 79.8% 97.2% 09/25/1999 NAP NAP
30 12/01/1998 73.6% 100.0% 04/01/1999 CompUSA 40.3%
31 11/24/1999 68.0% 100.0% 10/28/1999 ZBR Publications, Bldg 1 67.3%
32 03/01/1999 74.1% 100.0% 11/01/1999 Bay Area Bank 15.1%
33 08/23/1999 74.3% 94.0% 09/03/1999 NAP NAP
34 04/05/1999 74.7% 99.0% 11/30/1999 Homebase 87.8%
35 12/13/1999 55.1% 77.1% 10/31/1999 NAP NAP
36 06/01/1999 76.0% 96.7% 09/30/1999 Winn-Dixie 54.0%
37 12/07/1999 60.1% 93.4% 12/08/1999 Young Care 14.5%
38 07/10/1999 76.5% 100.0% 09/30/1999 Blue Cross and Blue Shield of Florida 19.2%
39 08/04/1999 64.3% 92.0% 10/19/1999 Nob Hill 27.1%
40 10/25/1999 79.9% 94.0% 10/31/1999 NAP NAP
41 06/21/1999 67.4% 98.6% 10/13/1999 Sinnett's Market Place Foods 43.4%
42 11/10/1999 58.2% 96.0% 10/30/1999 Stein Mart 29.8%
43 07/23/1998 66.0% 97.6% 12/20/1999 Wilsey Bennett 13.1%
44 10/11/1999 68.1% 100.0% 11/19/1999 Home Place Management, Inc. 56.8%
45 07/26/1999 78.5% 97.7% 09/30/1999 NAP NAP
46 01/15/2000 66.4% 97.0% 01/14/2000 Publix 43.7%
47 11/16/1999 50.2% 93.4% 11/01/1999 Santa Clara County 28.4%
48 12/01/1999 69.3% 100.0% 12/17/1999 QuadraMed Corporation 100.0%
49 06/26/1998 74.6% 100.0% 09/30/1999 State of Minnesota 100.0%
50 03/04/1999 73.7% 93.0% 10/20/1999 Shorday's Supermarket 45.3%
51 04/01/1999 67.8% 100.0% 09/30/1999 Burnsville 1998 LLC 65.7%
52 04/01/1998 75.5% 98.0% 10/25/1999 NAP NAP
53 11/11/1999 70.8% 94.7% 01/04/2000 Pick' N Save 51.8%
54 08/13/1999 49.6% 100.0% 09/30/1999 Food 4 Less 81.1%
55 06/07/1999 71.6% 95.4% 09/30/1999 NAP NAP
56 11/10/1999 73.5% 74.0% 10/13/1999 Food Lion 20.4%
57 10/29/1999 60.3% 98.0% 12/07/1999 Splash Pool & Spa 8.4%
58 09/23/1999 68.4% 100.0% 12/23/1999 GE Capital Corporation 100.0%
59 06/22/1999 41.7% 100.0% 10/01/1999 Sprint Communications 100.0%
60 10/13/1998 57.9% 72.2% 12/31/1999 NAP NAP
61 08/06/1999 33.7% 99.3% 10/13/1999 NAP NAP
62 07/12/1999 47.4% 97.0% 10/11/1999 The Kroger Co. 69.1%
63 12/29/1999 42.4% 100.0% 02/01/2000 NAP NAP
64 11/11/1999 55.2% 96.4% 01/04/2000 SuperSaver 37.5%
65 10/26/1998 76.7% 100.0% 09/28/1999 NAP NAP
66 10/08/1999 40.1% 96.3% 12/16/1999 Rosauer's/Rosauer's Plaza 37.3%
67 07/21/1999 67.8% 98.0% 07/01/1999 Roadway Pack System 21.2%
68 06/07/1999 68.4% 99.0% 10/01/1999 NAP NAP
69 11/22/1999 71.2% 100.0% 09/01/1999 Trak Auto Corporation 100.0%
70 09/21/1999 54.9% 87.6% 11/09/1999 Ross Stores 37.6%
71 07/28/1999 75.1% 100.0% 08/26/1999 NAP NAP
72 09/10/1999 73.4% 100.0% 10/07/1999 Recon Solutions, Inc. 23.2%
73 09/19/1999 73.4% 100.0% 01/03/2000 Joyce's Hallmark 14.7%
74 07/30/1999 71.7% 100.0% 09/30/1999 Phillips Plywood 100.0%
75 07/13/1999 58.1% 100.0% 11/10/1999 Blytheco 29.8%
76 07/23/1999 73.3% 100.0% 09/30/1999 K-Mart Corporation 90.1%
77 04/30/1999 70.2% 100.0% 09/30/1999 First American Title Guaranty 52.2%
78 12/07/1999 59.6% 100.0% 12/21/1999 Publix 74.9%
79 09/06/1999 63.3% 100.0% 10/01/1999 Sports Authority 100.0%
80 08/27/1999 69.7% 100.0% 05/15/1999 Los Angeles County Dept Social Services 100.0%
81 06/17/1999 73.0% 100.0% 11/23/1999 La Montanita 22.8%
82 06/30/1999 79.3% 97.5% 09/30/1999 NAP NAP
83 08/15/1999 63.7% 100.0% 11/29/1999 2473-2475 Broadway Associates, Ltd. 100.0%
84 12/01/1999 59.0% 100.0% 12/29/1999 Viking Supply Net 31.4%
85 05/11/1999 74.7% 100.0% 11/01/1999 Mesa Airlines 16.1%
86 10/14/1999 62.8% 100.0% 11/17/1999 Colorado MEDtech 100.0%
87 08/20/1999 62.3% 98.1% 09/30/1999 NAP NAP
88 12/22/1998 69.3% 98.1% 09/30/1999 NAP NAP
89 09/01/1999 77.6% 98.0% 09/16/1999 NAP NAP
90 07/15/1999 73.4% 100.0% 10/28/1999 Independence Office & Business 48.7%
91 04/22/1999 61.8% 94.6% 09/30/1999 Dewberry & Davis 33.2%
92 09/01/1999 76.9% 100.0% 09/16/1999 Triple R Childcare, Inc. 26.3%
93 08/12/1999 69.9% 100.0% 11/01/1999 Big Lots 57.7%
94 09/08/1999 74.7% 100.0% 10/22/1999 U.S. Post Office 57.6%
95 09/01/1999 46.9% 100.0% 10/13/1999 Safety-Kleen, Inc. 100.0%
96 11/30/1999 43.2% 100.0% 12/21/1999 ATE International, Inc. 36.6%
97 10/12/1999 72.7% 100.0% 07/27/1999 Allstate Insurance 90.9%
98 05/19/1999 71.5% 84.6% 11/30/1999 East Bay, Inc. 17.8%
99 06/03/1999 33.9% 99.2% 09/30/1999 NAP NAP
100 11/29/1999 77.8% 100.0% 10/22/1999 The Penn Traffic Company 100.0%
101 12/01/1999 68.4% 100.0% 12/15/1999 Coinmach Laundry Corporation 47.8%
102 10/27/1999 64.7% 100.0% 10/18/1999 Thrifty/Payless (Rite Aid) 100.0%
103 06/02/1999 58.7% 100.0% 09/30/1999 Pacific National Bank 79.1%
104 02/05/1999 68.8% 95.8% 06/01/1999 Sedona Group 29.6%
105 09/01/1998 69.8% 89.5% 12/03/1999 Hollywood Entertainment 39.7%
106 01/15/1999 47.6% 100.0% 10/08/1999 California Federal Bank 100.0%
107 03/18/1999 68.5% 93.3% 09/30/1999 NAP NAP
108 05/06/1999 69.7% 100.0% 10/18/1999 Staples, Inc. 100.0%
109 11/11/1999 59.8% 84.6% 01/04/2000 Pick' N Save 60.9%
110 02/11/1999 78.1% 97.4% 10/29/1999 NAP NAP
111 08/19/1999 52.1% 100.0% 09/29/1999 S.F. Parking Co., Inc., DBA City Park 100.0%
112 10/08/1999 71.1% 100.0% 01/06/2000 School Depot 18.5%
113 07/19/1999 73.0% 100.0% 09/01/1999 Cornerstone General hardward Ltd 66.2%
114 01/01/2000 54.0% 100.0% 12/14/1999 Illinois Tool Works Inc. 100.0%
115 08/04/1999 64.3% 100.0% 09/30/1999 Planco Inc. 86.6%
116 03/01/1999 45.2% 99.6% 09/30/1999 Indigo 19.6%
117 08/12/1999 63.5% 94.4% 09/30/1999 Cal Ostlund, Inc. 68.9%
118 09/01/1999 74.2% 100.0% 07/25/1999 Meacham & Apel 100.0%
119 05/12/1999 61.7% 100.0% 10/29/1999 Unitron, Inc. 100.0%
120 06/01/1999 43.4% 100.0% 10/11/1999 Kundan Foods 14.4%
121 07/26/1999 79.7% 94.7% 09/26/1999 NAP NAP
122 03/03/1999 61.9% 100.0% 09/01/1999 NAP NAP
123 05/26/1999 63.7% 89.0% 09/30/1999 NAP NAP
124 05/13/1999 62.2% 100.0% 10/22/1999 Staples, Inc/Staples The Office Superstore 100.0%
125 12/14/1998 47.9% 100.0% 09/30/1999 Ticketmaster-Direct, Inc. 100.0%
126 05/11/2009 64.0% 100.0% 10/01/1999 Moison Investment Co. 27.1%
127 03/03/1999 34.9% 100.0% 09/30/1999 Intraware 78.6%
128 05/20/1999 44.4% 97.0% 10/31/1999 NAP NAP
129 08/27/1999 61.6% 95.2% 07/19/1999 MCG, Inc. (Forward Advantage) 9.1%
130 05/01/1999 74.2% 94.5% 09/30/1999 NAP NAP
131 03/08/1999 73.6% 90.4% 10/01/1999 NAP NAP
132 05/19/1999 51.8% 96.8% 09/01/1999 Matsushita Electronics 28.7%
133 11/28/1999 48.4% 100.0% 12/09/1999 Eckerd Drug 100.0%
65.4% 97.3%
</TABLE>
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
PREPAYMENT AND SERVICING INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT CODE(13)
LOAN INTEREST ACCRUAL LOCKOUT
NO. PROPERTY NAME(2) ACTUAL/360 SEASONING(12) PERIOD DEF DEF/YM1 YM1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 325 West Huron Street (A) Actual/360 23 60 56
2 322 South Green Street (A) Actual/360 23 60 56
3 222 W. Hubbard (A) Actual/360 23 60 56
4 212 W. Superior (A) Actual/360 23 60 56
5 215 W. Superior (A) Actual/360 23 60 56
6 One Commerce Center (B) Actual/360 5 37 79
7 Centennial Center (B) Actual/360 5 37 79
8 Columbine Place (B) Actual/360 5 37 79
9 Erindale Square Retail Center (B) Actual/360 5 37 79
10 Fontana Plaza (C) (I) Actual/360 10 60 53
11 Plaza East (C) (I) Actual/360 10 60 53
12 Foothill Plaza (C) (I) Actual/360 10 60 53
13 Jabil Circuit Building Actual/360 3 27 89
14 Lincoln North Actual/360 15 48 65
15 120 East 23rd Street 30/360 9 48 68
16 133 East 58th Street 30/360 8 36 80
17 Norwalk Distribution Center (7) Actual/360 3 35 82
18 International Airport Center - LAX Actual/360 5 35 82
19 Manhattan Gateway Actual/360 2 34 83
20 11428 Sherman Way Actual/360 7 32 78
21 Riverside Market 30/360 3 60 56
22 The Village at Hillsgrove 30/360 6 60 56
23 Middlebrook Center Actual/360 10 35 81
24 United Health Care Building Actual/360 1 25 103
25 Thousand Oaks Medical Office Actual/360 4 28 88
26 The Robb & Stucky Retail Store 30/360 5 60 56
27 SAFECO Insurance Building (7) 30/360 2 26 90
28 Lincoln Square (7) Actual/360 4 28 88
29 Highland Chase Apartments Actual/360 4 28 88
30 Shamrock Center Actual/360 9 59 60
31 ZBR Publications (7) Actual/360 3 27 89
32 Bay Area Bank Building Actual/360 10 35 79
33 Laurel Springs 30/360 5 60 56
34 The Center Martinez Actual/360 6 30 86
35 Latham Hotel Actual/360 1 59 57
36 Sarasota Towne Center Actual/360 7 31 85
37 Rivers Center (7) Actual/360 2 26 90
38 Corporate Woods Office Park Actual/360 6 30 86
39 Watsonville Square Shopping Center Actual/360 5 35 79
40 Highland Grove Apartments Actual/360 3 27 89
41 Twin Cities Shopping Center 30/360 7 31 85
42 Oak Hollow Square Shopping Center (7) 30/360 2 26 90
43 Floral Trade Center 30/360 17 41 73
44 Cuyahoga Falls Retail Actual/360 3 27 89
45 Highland Glen Apartments Actual/360 6 30 86
46 Park Promenade Shopping Center(7) Actual/360 1 25 91
47 San Jose Office Plaza-Airport IV 30/360 15 48 68
48 QuadraMed Building (7) Actual/360 2 26 90
49 Department of Agriculture Building Actual/360 17 60 56
50 Abington Shopping Center(7) Actual/360 7 47 69
51 Burnsville Plus Property (7) Actual/360 8 32 84
52 Broadway Village Apartments 30/360 22 59 115
53 Whitnall Square Actual/360 1 25 91
54 Airport Plaza Actual/360 4 28 88
55 Highland Court Apartments Actual/360 8 32 84
56 College Village Shopping Center(7) Actual/360 1 25 91
57 Baycenter Commerce (7) Actual/360 2 26 90
58 JC Penney Credit Processing Ctr Actual/360 2 26 90
59 Sprint Office Building Actual/360 6 30 206
60 Holiday Inn El Paso 30/360 9 35 79
61 Torrey Pines Village Apartments Actual/360 4 35 82
62 Lake City Commons Shopping Center 30/360:Actual/360 6 30 86
63 Waterfall Villiage Apartments Actual/360 0 24 92
64 Racine Centre Actual/360 1 25 91
65 Creekside Senior Apartments Actual/360 11 35 81
66 Rosauers Plaza Actual/360 1 25 91
67 MidCity Business Park 30/360 5 60 56
68 Metro Self-Storage Actual/360 7 35 82
69 Trak Auto Warehouse (7) Actual/360 5 29 87
70 Pecan Grove Festival Center (7) Actual/360 3 27 89
71 The Woodlands Apartments I & II 30/360 5 60 56
72 Randolph Industrial Actual/360 4 28 88
73 Pearland Centennial Shopping Center (7) Actual/360 1 25 88
74 Phillips Plywood Actual/360 5 29 87
75 Hillside Plaza (7) Actual/360 7 31 85
76 Kmart Plaza Shopping Center Actual/360 6 36 81
77 America's Funding Source Actual/360 6 35 79
78 Poplar Springs Shopping Center Actual/360 1 26 90
79 Sports Authority (7) Actual/360 4 28 88
80 14714 Carmenita Road Actual/360 3 35 79
81 Nob Hill Shopping Center Actual/360 7 31 85
82 Village North Actual/360 5 35 82
83 2473-2475 Broadway 30/360 2 48 67
84 Fairfield Industrial Actual/360 1 25 91
85 4100 Broadway Center Actual/360 7 31 85
86 Colorado MEDtech Building (7) Actual/360 3 27 89
87 Five Star Suites Actual/360 5 35 82
88 Cypress Hills Mobile Home Park Actual/360 11 35 79
89 Rose Garden Apartments (7) Actual/360 4 28 88
90 Jennings Business Center Actual/360 7 48 68
91 One Crosspointe Plaza (7) Actual/360 7 31 85
92 Marketplace Square (7) Actual/360 5 29 87
93 Westnedge Corners Actual/360 3 27 89
94 Golden Bear Center (7) Actual/360 3 27 89
95 Flatiron (7) Actual/360 4 28 88
96 Cherry Acres (7) Actual/360 1 25 151
97 Jefferson Park of Hudson (7) 30/360 3 60 56
98 Westheimer-Fountainview Shopping Center Actual/360 8 32 84
99 Medford Mobile Estates Actual/360 6 35 82
100 Big Bear Grocery Store (7) Actual/360 3 27 89
101 8 Corporate Drive Actual/360 2 26 90
102 Rite Aid Pharmacy Actual/360 4 28 88
103 41 Corporate Park (7) Actual/360 6 30 86
104 Trolley Barn Apartments Actual/360 9 33 83
105 Martinez Retail Center Actual/360 19 43 73
106 California Federal Bank Building Actual/360 11 36 79
107 Stormaster Actual/360 9 35 82
108 Staples Office Superstore Actual/360 8 35 82
109 Cudahy Center (7) Actual/360 1 25 91
110 Howe Place Apartments Actual/360 9 33 83
111 750 Bush Parking Garage 30/360 5 35 142
112 Scranton Industrial Warehouse (7) Actual/360 1 48 68
113 Cornerstone Market(7) Actual/360 5 29 87
114 Illinois Tool Works Actual/360 1 26 90
115 Whiteland Point Office Building Actual/360 5 29 87
116 5385 Hollister Avenue Actual/360 8 35 19
117 Kenilworth Bldg Actual/360 5 29 87
118 Meacham & Apel Building 30/360 6 60 56
119 Unitron, Incorporated Actual/360 7 31 25
120 Montanero Street Actual/360 6 35 82
121 Norwegian Woods Apartments Actual/360 6 30 86
122 Gresham Park Apartments Actual/360 10 35 79
123 Concord Hall Manor Apartments (7) Actual/360 7 48 68
124 Staples Office Superstore Actual/360 8 35 79
125 Ticketmaster Call Center Actual/360 8 35 79
126 350 Second Street Actual/360 8 35 82
127 Vintage Office Actual/360 11 35 79
128 Orange Tree Gardens Apartments 30/360 8 34 140
129 Woodward Business Park Actual/360 4 59 178
130 Captain's at Holt & Mountain Self Storage Actual/360 8 35 82
131 A-American Self-Storage Actual/360 11 35 79
132 Otay Professional Building Actual/360 8 35 82
133 Eckerd Drug Store Actual/360 1 26 90
TOTALS/WEIGHTED AVERAGES: 6
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
LOAN YM ADMINISTRATIVE
NO. 5% 4% 3% 2% 1% OPEN FORMULA(14) COST RATE (BPS)(15)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 4 I 11.34
2 4 I 11.34
3 4 I 11.34
4 4 I 11.34
5 4 I 11.34
6 4 C 4.34
7 4 C 4.34
8 4 C 4.34
9 4 C 4.34
10 7 I 11.34
11 7 I 11.34
12 7 I 11.34
13 4 NAP 4.34
14 7 I 11.34
15 4 J 11.34
16 4 L 11.34
17 3 NAP 5.34
18 3 NAP 5.34
19 3 NAP 5.34
20 6 G 5.34
21 4 I 11.34
22 4 I 11.34
23 4 E 5.34
24 4 NAP 4.34
25 4 NAP 4.34
26 4 I 11.34
27 4 NAP 4.34
28 4 NAP 4.34
29 4 NAP 4.34
30 1 B 3.34
31 4 NAP 4.34
32 6 NAP 5.34
33 4 I 11.34
34 4 NAP 3.34
35 4 A 11.34
36 4 NAP 4.34
37 4 NAP 4.34
38 4 NAP 4.34
39 6 NAP 5.34
40 4 NAP 4.34
41 4 NAP 4.34
42 4 NAP 4.34
43 6 F 5.34
44 4 NAP 4.34
45 4 NAP 4.34
46 4 NAP 4.34
47 4 K 11.34
48 4 NAP 4.34
49 4 I 11.34
50 4 NAP 4.34
51 4 NAP 4.34
52 6 NAP 5.34
53 4 NAP 4.34
54 4 NAP 4.34
55 4 NAP 4.34
56 4 NAP 4.34
57 4 NAP 4.34
58 4 NAP 4.34
59 4 NAP 4.34
60 6 G 5.34
61 3 NAP 5.34
62 4 H 4.34
63 4 NAP 4.34
64 4 NAP 4.34
65 4 NAP 3.34
66 4 NAP 4.34
67 4 I 11.34
68 3 NAP 5.34
69 4 NAP 4.34
70 4 NAP 4.34
71 4 I 11.34
72 4 NAP 4.34
73 7 NAP 4.34
74 4 NAP 4.34
75 4 NAP 4.34
76 3 D 4.34
77 6 NAP 5.34
78 4 NAP 4.34
79 4 NAP 4.34
80 6 NAP 5.34
81 4 NAP 3.34
82 3 NAP 5.34
83 5 I 11.34
84 4 NAP 4.34
85 4 NAP 3.34
86 4 NAP 4.34
87 3 NAP 5.34
88 6 NAP 5.34
89 4 NAP 4.34
90 4 NAP 4.34
91 4 NAP 4.34
92 4 NAP 4.34
93 4 NAP 3.34
94 4 NAP 4.34
95 4 NAP 4.34
96 4 NAP 4.34
97 4 I 11.34
98 4 NAP 11.34
99 3 NAP 5.34
100 4 NAP 4.34
101 4 NAP 4.34
102 4 NAP 4.34
103 4 NAP 4.34
104 4 NAP 3.34
105 4 NAP 3.34
106 6 NAP 5.34
107 3 NAP 5.34
108 3 NAP 5.34
109 4 NAP 4.34
110 4 NAP 3.34
111 3 NAP 5.34
112 4 D 4.34
113 4 NAP 4.34
114 4 NAP 4.34
115 4 NAP 4.34
116 6 NAP 5.34
117 4 NAP 4.34
118 4 I 11.34
119 4 NAP 4.34
120 3 NAP 5.34
121 4 NAP 3.34
122 6 NAP 5.34
123 4 NAP 4.34
124 6 NAP 5.34
125 6 NAP 5.34
126 3 G 5.34
127 6 G 5.34
128 6 G 5.34
129 3 NAP 5.34
130 3 G 5.34
131 6 G 5.34
132 3 NAP 5.34
133 4 NAP 4.34
6.22
</TABLE>
<PAGE>
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ESCROW INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN INSURANCE ESCROW TAX ESCROW CAPITAL EXPENDITURE TI/LC
NO. PROPERTY NAME(2) REQUIRED REQUIRED ESCROW REQUIRED(16) ESCROW REQUIRED(17)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 325 West Huron Street (A) Yes Yes Yes Yes
2 322 South Green Street (A) Yes Yes Yes Yes
3 222 W. Hubbard (A) Yes Yes Yes Yes
4 212 W. Superior (A) Yes Yes Yes Yes
5 215 W. Superior (A) Yes Yes Yes Yes
6 One Commerce Center (B) Yes Yes Yes No
7 Centennial Center (B) Yes Yes Yes No
8 Columbine Place (B) Yes Yes Yes No
9 Erindale Square Retail Center (B) Yes Yes Yes No
10 Fontana Plaza (C) (I) No Yes Yes Yes
11 Plaza East (C) (I) No Yes Yes Yes
12 Foothill Plaza (C) (I) No Yes Yes Yes
13 Jabil Circuit Building Yes Yes No Yes
14 Lincoln North No Yes Yes Yes
15 120 East 23rd Street No Yes No Yes
16 133 East 58th Street No No No No
17 Norwalk Distribution Center (7) Yes Yes No No
18 International Airport Center - LAX Yes Yes Yes Yes
19 Manhattan Gateway Yes Yes Yes Yes
20 11428 Sherman Way No No No No
21 Riverside Market No Yes Yes Yes
22 The Village at Hillsgrove No Yes Yes No
23 Middlebrook Center No Yes Yes No
24 United Health Care Building No Yes No Yes
25 Thousand Oaks Medical Office Yes Yes No No
26 The Robb & Stucky Retail Store No Yes No No
27 SAFECO Insurance Building (7) No Yes No No
28 Lincoln Square (7) Yes Yes No Yes
29 Highland Chase Apartments Yes Yes Yes No
30 Shamrock Center No No No No
31 ZBR Publications (7) Yes Yes Yes Yes
32 Bay Area Bank Building Yes Yes Yes Yes
33 Laurel Springs No Yes Yes No
34 The Center Martinez Yes Yes Yes No
35 Latham Hotel No Yes Yes No
36 Sarasota Towne Center Yes Yes Yes No
37 Rivers Center (7) No Yes Yes No
38 Corporate Woods Office Park Yes Yes No No
39 Watsonville Square Shopping Center No Yes Yes No
40 Highland Grove Apartments Yes Yes Yes No
41 Twin Cities Shopping Center Yes Yes No No
42 Oak Hollow Square Shopping Center (7) No No No No
43 Floral Trade Center No Yes No No
44 Cuyahoga Falls Retail No Yes No Yes
45 Highland Glen Apartments Yes Yes Yes No
46 Park Promenade Shopping Center(7) Yes Yes No Yes
47 San Jose Office Plaza-Airport IV No Yes Yes No
48 QuadraMed Building (7) Yes Yes Yes Yes
49 Department of Agriculture Building Yes Yes Yes Yes
50 Abington Shopping Center(7) Yes Yes Yes Yes
51 Burnsville Plus Property (7) No Yes Yes No
52 Broadway Village Apartments No Yes No No
53 Whitnall Square No Yes Yes No
54 Airport Plaza No No No No
55 Highland Court Apartments Yes Yes Yes No
56 College Village Shopping Center(7) Yes Yes Yes Yes
57 Baycenter Commerce (7) Yes Yes Yes Yes
58 JC Penney Credit Processing Ctr No No No Yes
59 Sprint Office Building No No No No
60 Holiday Inn El Paso No Yes No No
61 Torrey Pines Village Apartments Yes Yes No No
62 Lake City Commons Shopping Center No Yes No No
63 Waterfall Villiage Apartments No No No No
64 Racine Centre No Yes No No
65 Creekside Senior Apartments Yes Yes Yes No
66 Rosauers Plaza No Yes No No
67 MidCity Business Park No Yes Yes Yes
68 Metro Self-Storage Yes Yes No No
69 Trak Auto Warehouse (7) No Yes Yes No
70 Pecan Grove Festival Center (7) No No No Yes
71 The Woodlands Apartments I & II Yes Yes Yes No
72 Randolph Industrial Yes Yes Yes Yes
73 Pearland Centennial Shopping Center (7) Yes Yes No Yes
74 Phillips Plywood Yes Yes Yes No
75 Hillside Plaza (7) Yes Yes Yes Yes
76 Kmart Plaza Shopping Center Yes Yes Yes No
77 America's Funding Source Yes Yes No Yes
78 Poplar Springs Shopping Center Yes Yes No No
79 Sports Authority (7) No Yes Yes No
80 14714 Carmenita Road No No No No
81 Nob Hill Shopping Center Yes Yes Yes Yes
82 Village North No Yes Yes No
83 2473-2475 Broadway No Yes Yes Yes
84 Fairfield Industrial No No No No
85 4100 Broadway Center Yes Yes Yes Yes
86 Colorado MEDtech Building (7) Yes Yes Yes Yes
87 Five Star Suites Yes Yes Yes No
88 Cypress Hills Mobile Home Park No Yes Yes No
89 Rose Garden Apartments (7) Yes Yes Yes No
90 Jennings Business Center Yes Yes No Yes
91 One Crosspointe Plaza (7) Yes Yes Yes No
92 Marketplace Square (7) Yes Yes No Yes
93 Westnedge Corners No Yes Yes Yes
94 Golden Bear Center (7) Yes Yes Yes Yes
95 Flatiron (7) Yes Yes No No
96 Cherry Acres (7) No Yes Yes No
97 Jefferson Park of Hudson (7) No Yes No Yes
98 Westheimer-Fountainview Shopping Center Yes Yes Yes Yes
99 Medford Mobile Estates No Yes No No
100 Big Bear Grocery Store (7) No No Yes Yes
101 8 Corporate Drive Yes Yes No Yes
102 Rite Aid Pharmacy No No No No
103 41 Corporate Park (7) Yes Yes Yes No
104 Trolley Barn Apartments Yes Yes Yes Yes
105 Martinez Retail Center No Yes Yes No
106 California Federal Bank Building Yes Yes Yes Yes
107 Stormaster Yes Yes No No
108 Staples Office Superstore No No Yes No
109 Cudahy Center (7) No Yes Yes No
110 Howe Place Apartments Yes Yes Yes No
111 750 Bush Parking Garage Yes Yes Yes No
112 Scranton Industrial Warehouse (7) Yes Yes Yes No
113 Cornerstone Market(7) Yes Yes Yes Yes
114 Illinois Tool Works No No No Yes
115 Whiteland Point Office Building Yes Yes Yes Yes
116 5385 Hollister Avenue No Yes No No
117 Kenilworth Bldg Yes Yes Yes Yes
118 Meacham & Apel Building No Yes No Yes
119 Unitron, Incorporated Yes Yes No No
120 Montanero Street No Yes No No
121 Norwegian Woods Apartments Yes Yes Yes No
122 Gresham Park Apartments Yes Yes No No
123 Concord Hall Manor Apartments (7) Yes Yes Yes No
124 Staples Office Superstore No No No No
125 Ticketmaster Call Center No Yes No No
126 350 Second Street Yes Yes No No
127 Vintage Office No Yes No No
128 Orange Tree Gardens Apartments Yes Yes No No
129 Woodward Business Park No Yes No No
130 Captain's at Holt & Mountain Self Storage Yes Yes No No
131 A-American Self-Storage Yes Yes No No
132 Otay Professional Building Yes Yes No No
133 Eckerd Drug Store No No No No
TOTALS/PERCENT OF CUT-OFF DATE BALANCE: 50.8% 87.6% 56.7% 50.2%
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
INITIAL CAPITAL CURRENT CAPITAL MONTHLY CAPITAL INITIAL TI/LC
LOAN EXPENDITURE ESCROW EXPENDITURE ESCROW EXPENDITURE ESCROW ESCROW CURRENT TI/LC
NO. REQUIREMENT(18) BALANCE(19) REQUIREMENT(20) REQUIREMENT(21) ESCROW BALANCE(22)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $11,000 $81,127 $4,000 $0 $92,701
2 $5,500 $35,602 $1,900 $0 $16,232
3 $95,575 $46,768 $2,820 $0 $66,586
4 $125,750 $8,209 $4,200 $0 $64,887
5 $62,300 $31,719 $1,870 $0 $44,009
6 $0 $6,838 $1,366 $0 $0
7 $0 $7,043 $1,407 $0 $0
8 $0 $12,118 $2,421 $0 $0
9 $0 $8,595 $1,717 $0 $0
10 $6,760 $6,760 $2,755 $15,925 $25,665
11 $9,277 $9,277 $1,826 $10,554 $17,008
12 $9,752 $9,752 $1,751 $10,120 $16,310
13 $0 $0 $0 $0 $0
14 $26,250 $24,759 $2,050 $1,304,465 $658,667
15 $0 $0 $0 $1,000,000 $1,000,000
16 $0 $0 $0 $0 $0
17 $0 $0 $0 $0 $0
18 $0 $12,387 $4,129 $0 $17,343
19 $0 $0 $1,025 $0 $0
20 $0 $0 $0 $0 $0
21 $50,000 $50,000 $0 $0 $0
22 $42,000 $42,145 $0 $0 $0
23 $0 $11,816 $1,306 $0 $0
24 $0 $0 $0 $700,000 $0
25 $0 $0 $0 $0 $0
26 $0 $0 $0 $0 $0
27 $0 $0 $0 $3,900,026 $3,900,026
28 $0 $0 $0 $1,000,000 $0
29 $44,520 $62,188 $4,417 $0 $0
30 $0 $0 $0 $0 $0
31 $0 $9,923 $3,308 $0 $12,501
32 $0 $4,513 $1,147 $0 $18,745
33 $520 $1,560 $520 $0 $0
34 $0 $4,285 $1,428 $0 $0
35 $0 $0 4% of Gross Income, capped at $25K/mo. $0 $0
36 $14,000 $8,381 $1,197 $0 $0
37 $104,038 $104,038 $0 $0 $0
38 $0 $0 $0 $0 $0
39 $0 $7,908 $1,977 $0 $0
40 $126,768 $139,767 $4,333 $0 $0
41 $0 $0 $0 $0 $0
42 $0 $0 $0 $0 $0
43 $0 $0 $0 $0 $0
44 $0 $0 $0 $0 $4,966
45 $0 $21,750 $3,625 $0 $0
46 $0 $0 $0 $100,000 $0
47 $50,000 $51,938 $0 $0 $0
48 $72,500 $73,625 $563 $0 $3,300
49 $356,300 $178,598 $0 $500,000 $510,151
50 $0 $8,519 $1,217 $0 $14,000
51 $14,625 $28,619 $1,717 $0 $0
52 $0 $0 $0 $0 $0
53 $0 $1,777 $889 $0 $0
54 $0 $0 $0 $0 $0
55 $0 $20,937 $3,420 $0 $0
56 $102,500 $102,500 $765 $0 $0
57 $750,000 $751,260 $0 $0 $5,000
58 $0 $0 $0 $0 $3,000
59 $0 $0 $0 $0 $0
60 $1,000,000 $0 $0 $0 $0
61 $0 $0 $0 $0 $0
62 $0 $0 $0 $0 $0
63 $0 $0 $0 $0 $0
64 $0 $0 $0 $0 $0
65 $20,875 $49,375 $3,167 $0 $0
66 $0 $0 $0 $0 $0
67 $30,000 $30,000 $0 $155,000 $155,000
68 $0 $0 $0 $0 $0
69 $220,000 $0 $0 $0 $0
70 $0 $0 $0 $100,000 $100,264
71 $19,500 $9,720 $4,860 $0 $0
72 $0 $2,659 $665 $0 $6,668
73 $0 $0 $0 $65,000 $66,000
74 $0 $5,576 $1,115 $0 $0
75 $0 $5,186 $739 $302,373 $335,721
76 $0 $9,600 $1,600 $0 $0
77 $0 $0 $0 $50,000 $62,812
78 $0 $0 $0 $0 $0
79 $0 $2,037 $509 $0 $0
80 $0 $0 $0 $0 $0
81 $0 $3,812 $953 $0 $7,944
82 $0 $8,850 $2,950 $0 $0
83 $2,500 $2,500 $188 $160,000 $160,000
84 $0 $0 $0 $0 $0
85 $0 $3,776 $941 $32,000 $32,201
86 $13,375 $15,973 $866 $225,000 $0
87 $0 $3,384 $1,128 $0 $0
88 $26,040 $6,262 $435 $0 $0
89 $23,702 $29,702 $1,500 $0 $0
90 $0 $0 $0 $0 $14,700
91 $30,000 $0 $0 $0 $0
92 $0 $0 $0 $20,000 $21,430
93 $22,875 $0 $965 $0 $0
94 $42,625 $43,561 $312 $0 $3,657
95 $0 $0 $0 $0 $0
96 $149,625 $149,625 $0 $0 $0
97 $0 $0 $0 $323,716 $323,716
98 $0 $1,265 $253 $60,000 $60,000
99 $0 $0 $0 $0 $0
100 $875,000 $880,176 $430 $0 $1,944
101 $0 $0 $0 $0 $2,500
102 $0 $0 $0 $0 $0
103 $50,000 $52,807 $468 $100,000 $0
104 $0 $4,619 $770 $25,000 $28,631
105 $0 $2,400 $150 $0 $0
106 $0 $7,650 $765 $0 $50,474
107 $0 $0 $0 $0 $0
108 $0 $1,788 $298 $0 $0
109 $431,000 $431,000 $0 $0 $0
110 $750 $8,583 $1,300 $0 $0
111 $0 $1,500 $500 $0 $0
112 $31,875 $33,314 $1,439 $0 $0
113 $0 $1,461 $292 $30,000 $42,762
114 $0 $0 $0 $0 $0
115 $0 $1,553 $311 $0 $10,000
116 $0 $0 $0 $0 $0
117 $0 $4,629 $926 $0 $0
118 $0 $0 $0 $180,000 $107,388
119 $0 $0 $0 $0 $0
120 $0 $0 $0 $0 $0
121 $33,700 $38,408 $2,354 $0 $0
122 $0 $0 $0 $0 $0
123 $23,719 $13,686 $1,167 $0 $0
124 $0 $0 $0 $0 $0
125 $0 $0 $0 $0 $0
126 $0 $0 $0 $0 $0
127 $0 $0 $0 $0 $0
128 $44,068 $0 $0 $0 $0
129 $0 $0 $0 $0 $0
130 $0 $0 $0 $0 $0
131 $0 $0 $0 $0 $0
132 $0 $0 $0 $0 $0
133 $0 $0 $0 $0 $0
$5,171,164 $3,853,438 $101,378 $10,369,179 $8,084,911
</TABLE>
<PAGE>
FOOTNOTES TO APPENDIX II
1 "PCF", "JHREF", "WF" and "MSMC" denote Principal Commercial Funding, LLC,
John Hancock Real Estate Finance, Inc., Wells Fargo Bank, National
Association and Morgan Stanley Mortgage Capital Inc., respectively, as
Sellers.
2 Mortgage Loan Nos. 10-12, the Fontana portfolio, represent multiple
properties secured under a single note, and are designated by identical
Roman Numeral coding. For the purpose of the statistical information set
forth in this Prospectus Supplement, a portion of the aggregate Cut-off
Date Balance has been allocated to each property, based on respective
appraised values or Underwritable Cash Flows. The following loan pools
represent cross-collateralized/cross-defaulted properties and are
designated by identical alphabetical coding: Mortgage Loan Nos. 1-5, 6-9
and 10-12.
3 With respect to Mortgage Loan Nos. 1-5, the Chicago portfolio, the mortgage
permits the partial release of one or more of the mortgage loans and
properties of these cross collateralized and cross defaulted loans (either
by way of repayment of the mortgage loan or upon transfer of the property
and assumption of the loan by another borrower, in each case in accordance
with the terms of the loan documents) upon satisfaction of specified
conditions, which include without limitation that the remaining security
after the release must have a combined Debt Service Coverage Ratio (DSCR)
of not less than 1.35x, the remaining security after the release must have
a Loan to Value (LTV) of no greater than 75%, and in no event may more than
three of the properties constituting the security be released.
With respect to Mortgage Loan Nos. 6-9, the Columbine portfolio (One
Commerce Center, Centennial Center, Columbine Place and Erindale Square
Retail Center), one or more of the Mortgage Loans may be released provided
annual net operating income from leases (having at least 3 years remaining)
for the remaining crossed loans equals or exceeds 1.60x the annual debt
service coverage on the remaining crossed loans. Any such release must be
accompanied by a yield maintenance premium.
With respect to Mortgage Loan No. 83, 2473-2475 Broadway, the borrower
under certain circumstances may release the air and development rights
above the building on the security, for no additional consideration, upon
the satisfaction of several conditions contained in the mortgage (section
72), including without limitation that the rights may not be used above or
to further develop the existing building, the LTV after the release may not
be greater than 75% and the DSCR must be at least 1.25x.
The Mortgage Pool contains additional Mortgage Loans that provide for a
partial release of collateral. In general, such collateral does not
contribute to the Underwritable Cash Flow of the property, nor to the
Appraised Value. In addition, such Mortgage Loans do not require partial
prepayment as a condition of the release.
With respect to Mortgage Loan No. 15, 120 East 23rd Street, the Borrower
has the right to obtain secondary financing, secured by the property, upon
the satisfaction of certain conditions, which include without limitation
that upon the placement of the secondary financing the property will have a
combined maximum LTV of 60% and a combined minimum DSCR of 1.60x.
With respect to Mortgage Loan No. 16, 133 East 58th Street, the Borrower
has the right to obtain secondary financing in the form of a junior lien,
upon the satisfaction of certain conditions, which include without
limitation that upon the placement of the secondary financing the property
will have a combined maximum LTV of 60% and a combined minimum DSCR of
1.60x.
With respect to Mortgage Loan No. 20, 11428 Sherman Way, the Borrower has
the right to obtain secondary financing, secured by the property, upon the
satisfaction of certain conditions, which include without limitation that
upon the placement of the secondary financing the property will have a
combined maximum LTV of 70% and a combined minimum DSCR of 1.30x.
With respect to Mortgage Loan Nos. 18, International Airport Center - LAX,
24, United Health Care Building, 50, Abington Shopping Center, 56, College
Village Shopping Center, and 58, JC Penney Credit Processing Ctr,
additional financing is permitted in the future, not to be secured by the
property. However, in certain cases, maximum LTVs, minimum DSCRs, or capped
financing are required.
II-16
<PAGE>
FOOTNOTES TO APPENDIX II
4 Certain ratios including Cut-off Date Balance/Unit or SF, DSCR, LTV and
Balloon LTV are calculated on a combined basis for Mortgage Loans that are
single-note, multiple-property or cross-collateralized and cross-defaulted.
5 The "Original Amortization Term" shown is the basis for determining the
fixed monthly principal and interest payment as set forth in the related
note. Due to the Actual/360 interest calculation methodology applied to
most Mortgage Loans, the actual amortization to a zero balance for such
loans will be longer.
6 Mortgage Loan Nos. 30, Shamrock Center, 60, Holiday Inn El Paso, and 97,
Jefferson Park of Hudson, are subject to a ground lease on a portion of the
subject properties. However, in each case, as the related fee-owner is a
party to the mortgage and has subordinated its interest, the loans are
disclosed as fee loans.
7 Each of the following Mortgage Loans is structured with a performance
holdback or letter of credit ("LOC") subject to achievement of certain
release conditions. The amount of the holdback was escrowed, or the letter
of credit was established, for each Mortgage Loan at closing. Although
Mortgage Loan Nos. 14, Lincoln North, 28, Lincoln Square, 37, Rivers
Center, 42, Oak Hollow Square Shopping Center, 46, Park Promenade Shopping
Center, 50, Abington Shopping Center, 56, College View Shopping Center, 69,
Trak Auto Warehouse, 70, Pecan Grove Festival Center, 86, Colorado MEDtech
Building, 92, Marketplace Square, 95, Flatiron, 103, 41 Corporate Park,
112, Scranton Warehouse, and 113, Cornerstone Market, do not have defined
Outside Dates for Release, their loan balances may be prepaid if the
associated LOCs are not replaced per LOC Agreement terms, or upon an event
of default. Although generally the Mortgage Loans prohibit voluntary
partial prepayment, the following Mortgage Loans may require partial
prepayments as described.
<TABLE>
<CAPTION>
Escrowed Holdback or
Mortgage Letter of Credit Outside Date Prepayment
Loan No. Property Name Release Conditions Initial Amount for Release Premium Provisions
- -------- ------------- ------------------ -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
17 Norwalk Distribution Center 1) Tenant, Performance Team $1,750,000 06/30/2004 Yield Maintenance
Freight Systems, does not
default.
27 SAFECO Building 1) Lender receives a lessee's $3,900,026 06/01/2000 Yield Maintenance
estoppel for SAFECO Insurance
Company and evidence that
tenant improvements have been
completed.
28 Lincoln Square 1a) IBM extends its lease for $1,000,000 NAP Yield Maintenance
at least two years following
9/30/2004 expiration for at
least $10 psf on a net basis;
or 1b) (i) The property is 95%
leased to tenants acceptable
to lender and rent has
commenced; (ii) lender
receives evidence that all
tenant improvements have been
completed; and (iii) net
operating income from leases
with at least 12 months
remaining equals or exceeds
annual debt service by 1.50
times.
</TABLE>
II-17
<PAGE>
FOOTNOTES TO APPENDIX II
<TABLE>
<CAPTION>
Escrowed Holdback or
Mortgage Letter of Credit Outside Date Prepayment
Loan No. Property Name Release Conditions Initial Amount for Release Premium Provisions
- -------- ------------- ------------------ -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
31 ZBR Publications 1a) Lender receives evidence the $2,900,000 08/01/2000 Yield Maintenance
expansion of the building has been
completed in accordance with plans
and specifications, including
receipt of all lien waivers, title
endorsement, survey, certificate of
occupancy, lessee's estoppel,
updated appraisal and property
condition assessment; and
1b) No material adverse change has
occurred with respect to the
security or the financial condition
of the borrower or guarantor.
37 Rivers Center 1) Immediate repairs are $104,038 NAP Yield Maintenance
performed per agreement.
42 Oak Hollow Square Shopping Center 1) Lender receives lessee's $21,500 NAP Yield Maintenance
certificates from tenants Papa
John's and Body Works by
Olivia.
46 Park Promenade Shopping Center 1a) Lender receives $100,000 NAP Yield Maintenance
unconditional lien waivers,
lessee's estoppel certificates
from Orange County Library
System and certificate of
occupancy; and
1b) Lender receives
unconditional lien wavers,
lessee's estoppel certificates
from Publix, and evidence that
tenant improvements have been
performed, an architect's
certificate, and certificate
of occupancy.
48 QuadraMed Building 1) Escrow will be released $300,000 02/01/2003 Yield Maintenance
2/1/2003 provided the lease with
QuadraMed Corporation remains in
full force and effect and the
tenant has not filed bankruptcy.
2) Immediate repairs are $72,500 04/15/2000 Yield Maintenance
performed per agreement.
50 Abington Shopping Center 1) Lender receives remedial $750,000 NAP Yield Maintenance
action plan, lien waivers,
title endorcements, copies of
invoices, inspection, and a
'no further action' letter.
51 Burnsville Plus Property 1) Immediate repairs are $14,625 08/01/2000 Yield Maintenance
performed per agreement.
56 College Village Shopping Center 1) Immediate repairs are $42,500 02/01/2001 Yield Maintenance
performed per agreement.
2) Lender receives $60,000 NAP Yield Maintenance
unconditional lien wavers,
title endorsements,
evidence that capital
improvements have been
completed, and architect's
certificate.
</TABLE>
II-18
<PAGE>
FOOTNOTES TO APPENDIX II
<TABLE>
<CAPTION>
Escrowed Holdback or
Mortgage Letter of Credit Outside Date Prepayment
Loan No. Property Name Release Conditions Initial Amount for Release Premium Provisions
- -------- ------------- ------------------ -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
57 Baycenter Commerce 1) Lender receives evidence $750,000 12/01/2000 Yield Maintenance
certain capital improvements
have been completed.
69 Trak Auto Warehouse 1) Lender receives evidence $220,000 NAP Yield Maintenance
that roof repairs and certain
capital expenditures have been
completed.
2) Lender receives evidence $15,000 09/15/2000 Yield Maintenance
that borrower has completed
environmental remediation that
meets the appropriate state
authorities' requirements.
70 Pecan Grove Festival Center 1) Lender receives evidence of $100,000 NAP Yield Maintenance
lien waiver,title endorcement,
architect's certificate, fully
executed leases and estoppel
certificates for improved
space currently occupied by
Cornerstone General Hardware,
Ltd.
73 Pearland Centennial 1a) Lender receives evidence $65,000 07/01/2000 Yield Maintenance
of completion of tenant
improvements and payment of
leasing commissions for Marble
Slab, Mailboxes, Etc. and GTE;
and
1b) Lender receives estoppels
from each tenant confirming
rent has commenced.
75 Hillside Plaza 1) Occupancy of the property $300,000 04/30/2000 Yield Maintenance
equals or exceeds 94% and net
operating income from leases
approved by lender equals or
exceeds annual debt service by
1.30 times.
2) Lender receives lessee's $2,373 04/30/2000 Yield Maintenance
estoppels evidencing rent has
commenced for certain spaces
unoccupied at closing.
79 Sports Authority 1) Provided no event of $145,500 11/01/2002 Yield Maintenance
default on the mortgage loan
or Sports Authority lease has
occurred, funds will be
released on 11/1/2002 or such
sooner time as (i) net income
of Sports Authority equals or
exceeds $40 million as
determined by lender or (ii)
commencement of rental
payments by a replacement
tenant acceptable to lender.
</TABLE>
II-19
<PAGE>
FOOTNOTES TO APPENDIX II
<TABLE>
<CAPTION>
Escrowed Holdback or
Mortgage Letter of Credit Outside Date Prepayment
Loan No. Property Name Release Conditions Initial Amount for Release Premium Provisions
- -------- ------------- ------------------ -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
86 Colorade MEDtech Building 1a) Lender receives an $225,000 NAP Yield Maintenance
extention of lease to Colorado
MEDtech to at least 12/1/2014,
providing net operating income
equal to or exceeding annual debt
service by at least 1.25 times; or
1b) Lender receives (i) evidence of
completion of tenant improvements
and payment of leasing commissions
and (ii) fully executed leases and
estoppels from acceptable tenants
confirming rent has commenced.
2) Immediate repairs are $13,375 05/01/2000 Yield Maintenance
performed per agreement.
89 Rose Garden Apartments 1) Immediate repairs are $23,702 07/31/2000 Yield Maintenance
performed per agreement.
91 One Crosspointe Plaza 1) Immediate repairs are $30,000 NAP Yield Maintenance
performed per agreement
92 Marketplace Square 2a) Lender receives an $20,000 06/30/2000 Yield Maintenance
executed lease and lessee's
estoppel from Brent D. Pully,
DMD; and
2b) Lender receives evidence
of completion of tenant
improvements and payment of
leasing commissions.
94 Golden Bear Center 1) Immediate repairs are $42,625 06/01/2000 Yield Maintenance
performed per agreement.
95 Flatiron 1a) Net operating income from $100,000 NAP Yield Maintenance
approved leases with terms
expiring not earlier than
11/1/2010 equals or exceeds
annual debt service by 1.50
times; or
1b) Lender receives lessee's
estoppels from such tenants.
96 Cherry Acres 1) Immediate Repairs are $149,625 01/01/2001 Yield Maintenance
performed per agreement.
97 Jefferson Park of Hudson 1a) Tenant does not default; and $195,000 3/31/2000 Yield Maintenance
1b) Lender receives evidence
of rent in place (e.g. copy of
rent check).
1c) Lender's fees & expenses
are paid.
100 Big Bear Grocery Store 1) Immediate repairs are performed $875,000 10/01/2000 Yield Maintenance
per agreement.
</TABLE>
II-20
<PAGE>
FOOTNOTES TO APPENDIX II
<TABLE>
<CAPTION>
Escrowed Holdback or
Mortgage Letter of Credit Outside Date Prepayment
Loan No. Property Name Release Conditions Initial Amount for Release Premium Provisions
- -------- ------------- ------------------ -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
103 41 Corporate Park 1a) Lender receives evidence $100,000 NAP Yield Maintenance
of completion of tenant
improvements and payment of
leasing commissions for the
space currently leased by
Pacific National Bank; and
1b) Lender receives lessee's
certificates for such space.
2) Immediate repairs are $50,000 06/18/2000 Yield Maintenance
performed per agreement.
109 Cudahy Center 1) Immediate repairs are $431,000 01/01/2001 Yield Maintenance
performed per agreement.
112 Scranton Warehouse 1) Immediate repairs are $31,875 01/10/2001 Yield Maintenance
performed per agreement.
2) Lender receives evidence of $40,000 NAP Yield Maintenance
completion of tenant
improvements and payment of
leasing commissions.
113 Cornerstone Market 1) Lender receives evidence of $30,000 NAP Yield Maintenance
lien waiver, title
endorsement, architect's
certificate, fully executed
leases and estoppel
certificates for improved
space currently occupied by
Ross Stores, Inc., or if Ross
Stores renews their lease and
DSCR is at least 1.40x and LTV
is no greater than 60%.
123 Concord Hall Manor Apartments 1) Immediate repairs are performed $23,719 06/01/2000 Yield Maintenance
per agreement.
</TABLE>
All yield maintenance premiums indicated above are to be paid by the
Borrower.
With respect to Mortgage Loan No. 13, Jabil Circuit Building, the Borrower
must establish a Letter of Credit (LOC) on August 1, 2003 in the amount of
$60,000. The Letter of Credit must be inreased by $60,000 annually until it
totals $300,000. Beginning February 1, 2008 the borrower will escrow cash
for the next six months beginning with $50,000 the first month and
increasing $50,000 each month thereafter till they reach $300,000. The LOC
and escrow may be released on the completion of certain tenant improvements
and the payment of certain leasing commissions, and both may be used to pay
down the principal balance with a yield maintenance premium.
II-21
<PAGE>
FOOTNOTES TO APPENDIX II
8 The following Mortgage Loans require monthly payments of interest-only
(I/O) until they begin to amortize according to the below schedule; the
indicated DSCR for such loans reflects current scheduled payments of
interest-only:
<TABLE>
<CAPTION>
Mortgage Amortization
Loan No. Property Name Start Date of P&I Debt Service Term Basis Other
-------- ------------- ----------------- ------------ ---------- -----
<S> <C> <C> <C> <C> <C>
24 United Health Care Building 03/01/2005 $79,566.84 360 Actual/360
interest-accrual
27 SAFECO Insurance Building 02/01/2005 $75,126.66 360 Mortgage Rate is 7.30% through I/O
period, and 8.35% thereafter
47 San Jose Office Plaza - Airport IV 01/01/2001 $41,552.83 360 NAP
62 Lake City Commons Shopping Center 10/01/2004 $31,880.86 360 Interest Accrual Method is 30/360
through I/O period, and Actual/360
thereafter
63 Waterfall Village Apartments 04/01/2002 $33,817.33 360 Actual/360 interest-accrual
</TABLE>
With respect to Mortgage Loan No. 59, Sprint Office Building, the
first Monthly Payment is $40,218.54. Thereafter, the Monthly Payment
is $40, 554.64, as shown.
Mortgage Loan Nos. 24 and 63 are I/O based on an Interest Accrual Method of
Actual/360. The Monthly Payment shown in Appendix II is a monthly average
debt service payment for comparative purposes.
9 The "First PMT Date" represents the date of the first payment of principal
and interest, except for Loan Nos. 24, United Health Care Building, 27,
SAFECO Insurance Building, 47, San Jose Office Plaza Airport IV, 62, Lake
City Commons Shopping Center, and 63, Waterfall Village Apartments, for
which the identified dates represent the date of the first full payment of
interest for each Mortgage Loan.
10 In general for each property, "Percent Leased" was determined based on
a rent roll provided by the borrower. For certain single-tenant
properties, "Percent Leased" was determined based on an executed
lease. For certain hospitality properties, "Percent Leased" was
determined based on certain other statement provided by the Borrower.
"Percent Leased" as of Date indicates the date as of which "Percent
Leased" was determined based on such information.
Mortgage Loan No. 68, Metro Self Storage, contains 8% of office space
that is leased under month-to-month leases and remains 97.2% occupied.
As the predominant usage of the property is self-storage, it is
disclosed as such.
11 "Largest Tenant" refers to the tenant that represents the greatest
percentage of the total square footage at the subject property.
12 "Seasoning" represents the number of months elapsed from the "First PMT
Date" to the Cut-off Date.
13 The "Prepayment Code" includes the number of loan payments from the
first Due Date (after the initial partial month interest only payment
date, if any) to the stated maturity. "DEF" represents defeasance.
"DEF/YM1" represents defeasance or the greater of yield maintenance
and 1%. "YM1" represents the greater of yield maintenance and 1%.
"Open" represents the number of payments, including the maturity date,
at which principal prepayments are permitted without payment of a
prepayment premium. For each Mortgage Loan, the number set forth under
a category of "Prepayment Code" represents the number of payments in
the Original Term to Maturity for which such provision applies. See
Footnote 7 for additional prepayment information.
II-22
<PAGE>
FOOTNOTES TO APPENDIX II
14 Mortgage Loans with associated Yield Maintenance Prepayment Premiums
are categorized according to unique Yield Maintenance formulas. There
are 12 different Yield Maintenance formulas represented by the loans
in the subject Mortgage Loan pool. The different formulas are
reference by the letters "A", "B", "C", "D", "E", "F", "G", "H", "I",
"J", "K" and "L". Summaries for the twelve formulas are listed
beginning on page II-24.
15 The "Administrative Cost Rate" indicated for each Mortgage Loan will be
calculated based on the same interest accrual method applicable to each
Mortgage Loan. With respect to Mortgage Loan No. 62, Lake City Commons
Shopping Center, the Interest Accrual Method is 30/360 through I/O period,
and Actual/360 thereafter.
16 For "Capital Expenditure Escrow Required" identified as "Yes," collections
may occur at one-time or be on-going. In certain instances, the amount of
the escrow may be capped or collected only for certain periods of such
Mortgage Loan and/or may not be replenished after a release of funds.
17 For "TI/LC Escrow Required" identified as "Yes," collections may occur
at one-time or be on-going. In certain instances, the amount of the
escrow may be capped or collected only for certain periods of such
Mortgage Loan and/or may not be replenished after a release of funds.
The weighted percentage of Mortgaged Loans disclosed as having TI/LC
cash or letter of credit balances in place considers only Mortgage
Loans on commercial-type properties, excluding multifamily, assisted
living, mobile home park, hospitality and self storage Mortgage Loans.
18 "Initial Capital Expenditures Reserve Requirement" indicates the amount or,
in certain cases, a letter of credit amount, deposited at loan closing. For
certain single-note multi-property loans, such escrows may be allocated to
each property based on the related allocated loan balance, square footage
or number of units.
19 "Current Capital Expenditure Escrow Balance" indicates the balance or, in
certain cases, a letter of credit, in place as of December 5, 1999 for
JHREF Mortgage Loans, January 1, 2000 for WF Mortgage Loans, February 1,
2000 for MSMC Mortgage Loans, and March 5, 2000 for PCF Mortgage Loans. In
certain cases, the balances include collections for deferred maintenance.
20 "Monthly Capital Expenditure Escrow Requirement" indicates the monthly
amount designated for Capital Expenditure Escrow in the loan documents for
such Mortgage Loan (see Footnote 16 above).
21 "Initial TI/LC Escrow Requirement" indicates the amount or, in certain
cases, a letter of credit balance, deposited at loan closing. For
certain single-note multiple-property loans, such escrows may be
allocated to each property based on the related allocated loan
balance, or by square footage or number of units relative to the loan
pool. With respect to Mortgage Loan No. 14, the "Initial TI/LC Escrow
Requirement" and "Current TI/LC Escrow Balance" reflect a $500,000
initial TI/LC escrow that has since been released upon the completion
of certain conditions.
22 "Current TI/LC Escrow Balance" indicates the balance or, in certain cases,
a letter of credit, in place as of December 5, 1999 for JHREF Mortgage
Loans, January 1, 2000 for WF Mortgage Loans, February 1, 2000 for MSMC
Mortgage Loans, and March 5, 2000 for PCF Mortgage Loans. With respect to
Mortgage Loan No. 114, Illinois Tool Works, TI/LC reserves are required
only between 12/1/2008 and 1/1/2010.
II-23
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
The following are summaries of yield maintenance provisions, or formulas,
contained in the related promissory note for certain of the mortgage loans.
There are 12 unique yield maintenance formulas represented by the mortgage
loans, each labeled as "A", "B", "C", "D", "E", "F", "G", "H", "I", "J",
"K" and "L". Each Mortgage Loan, which provides for a yield maintenance
formula, references the applicable formula printed below in the column
titled "YM Formula".
A "YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the greater of:
(i) one percent (1%) of the principal amount of the Loan being prepaid or
(ii) the present value as of the Prepayment Date of the Calculated Payments
from the Prepayment Date through the Maturity Date determined by
discounting such payments at the Discount Rate. As used in this definition,
the term "Prepayment Date" shall mean the date on which prepayment is made.
As used in this definition, the term "Calculated Payments" shall mean the
monthly payments of interest only which would be due based on the principal
amount of the Loan being prepaid on the Prepayment Date and assuming an
interest rate per annum equal to the difference (if such difference is
greater than zero) between (y) the Interest Rate and (z) the Yield
Maintenance Treasury Rate. As used in this definition, the term "Discount
Rate" shall mean the rate which when compounded monthly, is equivalent to
the Treasury Rate when compounded semi-annually. As used in this definitio
Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer or one shorter) most nearly approximating the Maturity Date. In
the event Federal Reserve Statistical Release H.15(519) Selected Interest
Rates is no longer published, Lender shall select a comparable publication
to determine the Yield Maintenance Treasury Rate. In no event, however,
shall Lender be required to reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise.
B At any time after the fifth anniversary of the date of this Note, and upon
giving the holder of this Note thirty (30) days prior written notice, all
or a portion of the principal amount of this Note may be prepaid in full by
paying, in addition to such principal amount, accrued interest, and all
other sums due hereunder, a prepayment consideration equal to the greater
of (A) the percentage of the outstanding principal balance being prepaid
multiplied by an amount equal to the remainder obtained by subtracting (i)
the entire outstanding principal balance of this Note as of the date of the
prepayment from (ii) the present value as of the date of the prepayment of
the remaining scheduled payments of principal and interest under this Note
including any final installment of principal payable on the maturity date
of this Note determined by discounting such payments at the U.S. Treasury
Constant Maturities rate, as such rate is reported in the Federal Reserve
Statistical Release H.15(519) Selected Interest Rates (or ending prior to
the date of the relevant prepayment of the Note, with a maturity date most
nearly approximating the maturity date of this Note when compounded on a
monthly basis; or (B) 1% of the prepaid principal amount. Except as
hereinbefore set forth, no full or partial prepayments of principal shall
be allowed. In consideration of the prepayment privileges herein set forth,
all parties liable hereunder agree that the terms and conditions applicable
thereto, including the prepayment consideration, shall apply to all
prepayments, including any made upon the acceleration of the due date of
this Note because of any default thereunder, to the end that the payment of
this Note prematurely shall include the appropriate prepayment
consideration. Provided, however, the application of the proceeds of
insurance or of a condemnation award in reduction of the indebtedness shall
in no event be construed as a prepayment under this paragraph.
II-24
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
C LOAN PREPAYMENT. Borrower may not repay any principal of the Note prior to
the Maturity Date, except that after the Lockout Date, Borrower may prepay
the Loan (whether or not the Other Indebtedness is being simultaneously
prepaid pursuant to the terms of the Other Loan Documents), upon thirty
(30) days' prior written notice to the Lender, in full, but not in part, by
paying all principal and interest to the date of prepayment, along with all
other Indebtedness then due, and (subject to the provisions in the Deed of
Trust regarding the disposition of casualty and condemnation proceeds) upon
the payment of a "MAKE WHOLE PREMIUM." The Make Whole Premium shall be the
greater of one percent (1%) of the principal amount to be prepaid or a
premium calculated as provided in subparagraphs (i) through (iv) below:
(i) Determine the "REINVESTMENT YIELD." The Reinvestment Yield will
be equal to the yield on the ** U.S. Treasury Issue ("PRIMARY
ISSUE") published one week prior to the date of prepayment and
converted to an equivalent monthly compounded nominal yield. In
the event there is no market activity involving the Primary issue
at the time of prepayment, the Lender shall choose a comparable
Treasury Bond, Note or Bill ("SECONDARY ISSUE") which the Lender
reasonably deems to be similar to the Primary Issue's
characteristics (i.e., rate, remaining time to maturity, yield)
** As of the date of this Loan Agreement, there is not a U.S.
Treasury Issue for this prepayment period. At the time or
prepayment, Lender shall select a U.S. Treasury Issue with the
most similar remaining time to maturity as the Note.
(ii) Calculate the "PRESENT VALUE OF THE LOAN." The Present Value of
the Loan is the present value of the payments to be made in
accordance with the Note (all installment payments and any
remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the
date of prepayment to the Maturity Date.
(iii) Subtract the amount of the prepaid proceeds from the Present
Value of the Loan as of the date of prepayment. Any resulting
positive differential shall be the premium.
(iv) In the event the Loan is prepaid on or after that date which is
three (3) months prior to the Maturity Date, no Make Whole
Premium shall be due.
Upon any such prepayment in full of the Loan, Borrower shall be entitled to
have the Premises released from the lien of the Deed of Trust (whether or
not the Other Indebtedness is being simultaneously prepaid pursuant to the
terms of the Other Loan Documents), at Borrower's sole cost and expense,
upon satisfaction of, and in accordance with, the terms and conditions of,
paragraph 46 of the Deed of Trust; provided, that, if in connection with
any such prepayment in full of the Loan, Borrower simultaneously prepays
the entire amount of the Other Indebtedness pursuant to and in accordance
with the terms of the Other Loan Documents, the terms and conditions of
paragraph 46 of the Deed of Trust shall not so apply.
II-25
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
D LOAN PREPAYMENT. Borrower may not prepay any principal of the Note prior to
the Maturity Date, except that after the Lockout Date, Borrower may prepay
the Loan, upon thirty (30) days' prior written notice to the Lender, in
full, but not in part, by paying all principal and interest to the date of
prepayment, along with all other Indebtedness then due, and (subject to the
provisions in the Mortgage regarding the disposition of casualty and
condemnation proceeds) upon the payment of a "Make Whole Premium."
(1) The Make Whole Premium shall be the greater of one percent (1%) of the
principal amount to be prepaid or a premium calculated as provided in
subparagraphs (i) through (iv) below:
(2) (i) Determine the "REINVESTMENT YIELD." The Reinvestment
Yield will be equal to the yield on the * U.S. Treasury Issue
("PRIMARY ISSUE") published one week prior to the date of
prepayment and converted to an equivalent monthly compounded
nominal yield.
* At this time there is not a U.S. Treasury Issue for this
prepayment period. At the time or prepayment, Lender shall
select in its sole and absolute discretion a U.S. Treasury
Issue with similar remaining time to maturity as the Note.
(ii) Calculate the "PRESENT VALUE OF THE LOAN." The Present Value
of the Loan is the present value of the payments to be made
in accordance with the Note (all installment payments and any
remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from
the date of prepayment to the Maturity Date.
(iii) Subtract the amount of the prepaid proceeds from the Present
Value of the Loan as of the date of prepayment. Any resulting
positive differential shall be the premium.
(iv) In the event the Loan is prepaid on or after that date which
is three (3) months prior to the Maturity Date, no Make Whole
Premium shall be due.
NOTE (1): For Mortgage Loan #112, the paragraph highlighted above should be
substituted with the following paragraph:
The Make Whole Premium shall be the lesser of (i) the maximum amount which
is allowable under applicable law limiting the amount of interest which may
be contracted for, charged or received, after considering all other amounts
constituting or deemed to constitute interest, and (ii) the greater of one
percent (1%) of the principal amount to be prepaid or a premium calculated
as provided in subparagraphs (i) through (iii) below:
NOTE (2): For Mortgage Loan #112, paragraph (i) highlighted above
should be substituted with the following paragraph:
(i) Determine the "REINVESTMENT YIELD." The Reinvestment Yield
will be equal to the yield on the applicable* U.S. Treasury
Issue ("PRIMARY ISSUE") published one week prior to the date
of prepayment and converted to an equivalent monthly
compounded nominal yield. In the event there is not market
activity involving the Primary Issue at the time of
prepayment, the Lender shall choose a comparable Treasury
Bond, Note or Bill ("SECONDARY ISSUE") which the Lender
reasonably deems to be similar to the Primary Issue's
characteristics (i.e., rate, remaining time to maturity,
yield).
II-26
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
E (a) FULL PREPAYMENT. Except as provided in Section 10.3(c) below, if this
Note is prepaid in full after the Conversion Date and more than three (3)
months before the Term Maturity Date, whether such prepayment is voluntary,
involuntary or upon full acceleration the principal amount of this Note by
Lender following the occurrence and during the continuation of a Default,
Borrower shall pay to Lender on the prepayment date (in addition to all
other sums then due and owing to Lender under this Note and the other Loan
Documents) a prepayment charge (the "Yield Maintenance Charge") equal to
the greater of the following two amounts:
(i) An amount equal to one percent (1%) of the then outstanding
principal balance of the Loan; or
(ii) An amount equal to (aa) the sum of the present values as of the
prepayment date of all unpaid principal and interest payments
required under this Note, calculated by discounting such payments
from their respective scheduled payment dates back to the
prepayment date at a discount rate equal to the Periodic Treasury
Yield (as hereinafter defined), minus (bb) the outstanding
principal balance of the Loan as of the prepayment date.
(iii)"Periodic Treasury Yield" means the annual yield to maturity of
the actively traded non-callable United States Treasury fixed
interest rate security (other than any such security which can be
surrendered at the option of the holder at face value in payment
of federal estate tax or which was issued at a substantial
discount) that has a maturity closest to (whether before, on or
after) the Maturity Date (or if two or more such securities have
maturity dates equally close to the Maturity Date, the average
annual yield to maturity of all such securities), as reported in
The Wall Street Journal or other authoritative publication or
news retrieval service on. the fifth (5th) Business Day preceding
the prepayment date, divided by (iv) twelve (12), if scheduled
payment dates are monthly, or four (4), if scheduled payment
dates are quarterly.
(b) PARTIAL PREPAYMENT. Except as provided in Section 10.3(c) below, if
this Note is prepaid in part after the Conversion Date and more than three
(3) months before the Term Maturity Date, whether such prepayment is
involuntary or upon partial acceleration of the principal amount of this
Note by Lender following the occurrence and the continuation of a Default,
Borrower shall pay to Lender on the prepayment date (in addition to all
other sums then due and owing to Lender under this Note and the other Loan
Documents) a prepayment charge equal to (i) the Yield Maintenance Charge
determined in accordance with Section 10.3(a) above multiplied by (ii) a
fraction whose numerator is the amount of the partial prepayment and whose
denominator is the outstanding principal balance of the Loan as of the
prepayment date.
(c) INSURANCE OR CONDEMNATION PROCEEDS. No Yield Maintenance Charge shall
apply in respect to any insurance or condemnation proceeds received by
Lender and applied by Lender to the outstanding principal balance of the
Loan.
II-27
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
F PREPAYMENT CHARGE. Except as provided below, if this Note is prepaid prior
to the last six months of the term, whether such prepayment is voluntary,
or upon acceleration of the principal amount of this Note by Lender
following a Default, Borrower shall pay to Lender on the prepayment date
(in addition to all other sums then due and owing to Lender under the Loan
Documents) a prepayment charge equal to the greater of the following two
amounts: (a) an amount equal to 1% of the then outstanding principal
balance of the Loan, or (b) an amount equal to (i) the amount, if any, by
which the sum of the present values as of the prepayment date of all unpaid
principal and interest payments required under this Note, calculated by
discounting such payments from their respective scheduled payment dates
back to the prepayment date at a discount rate equal to the Periodic
Treasury Yield (defined below) exceeds the outstanding principal balance of
the Loan as of the prepayment date, multiplied by (ii) a fraction whose
numer balance of the Loan. For purposes of the foregoing, "Periodic
Treasury Yield' means (c) the annual yield to maturity of the actively
traded non-callable United States Treasury fixed interest rate security
(other than any such security which can be surrendered at the option of the
holder at face value in payment of federal estate tax or which was issued
at a substantial discount) that has a maturity closest to (whether before,
on or after) the Maturity Due (or if two or more such securities have
maturity dates equally close to the Maturity Date, the average annual yield
to maturity of all such securities), as reported in The Wall Street Journal
or other authoritative publication or news retrieval service on the fifth
Business Day (defined below) preceding the prepayment date, divided by (d)
12, if scheduled payment dates are monthly, or 4, if scheduled payment
dates are quarterly.
G PREPAYMENT CHARGE. Except as provided below, if this Note is prepaid prior
to the last six months of the term, whether such prepayment is voluntary,
involuntary or upon acceleration of the principal amount of this Note by
Lender following a Default, Borrower shall pay to Lender on the prepayment
date (in addition to all other sums then due and owing to Lender under the
Loan Documents) a prepayment charge equal to the greater of the following
two amounts: (a) an amount equal to 1% of the then outstanding principal
balance of the Loan; or (b) an amount equal to (i) the amount, if any, by
which the sum of the present values as of the prepayment date of all unpaid
principal and interest payments required under this Note, calculated by
discounting such payments from their respective scheduled payment dates
back to the prepayment date at a discount rate equal to the Periodic
Treasury Yield (defined below) exceeds the outstanding principal balance of
the Loan as of the prepayment date, multiplied by (ii) a fraction
outstanding principal balance of the Loan. For purposes of the foregoing,
"Periodic Treasury Yield" means, (c) the annual yield to maturity of the
actively traded non-callable United States Treasury fixed interest rate
security (other than any such security which can be surrendered at the
option of the holder at face value in payment of federal estate tax or
which was issued at a substantial discount) that has a maturity closest to
(whether before, on or after) the Maturity Date (or if two or more such
securities have maturity dates equally close to the Maturity Date, the
average annual yield to maturity of all such securities), as reported in
The Wall Street Journal or other authoritative publication or news
retrieval service on the fifth Business Day (defined below) preceding the
prepayment date, divided by (d) 12, if scheduled payment dates are monthly,
or 4, if scheduled payment dates are quarterly.
NOTE (1): For Mortgage Loan Nos. 126 and 130, the first sentence of the
above paragraph should begin with the following:
PREPAYMENT CHARGE. Except as provided below, if this Note is prepaid prior
to the last 3 months of the term, . . . .
II-28
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
H LOAN PREPAYMENT. Borrower may not repay any principal of the Note prior to
the Maturity Date, except that after the Lockout Date, but prior to the
date which is three (3) months prior to the Maturity Date, Borrower may
prepay the Loan, upon thirty (30) days' prior written notice to the Lender,
in full, but not in part, by paying all principal and interest to the date
of prepayment, along with all other Indebtedness then due, and (subject to
the provisions in the Mortgage regarding the disposition of casualty and
condemnation proceeds) upon the payment of a "Make Whole Premium." The Make
Whole Premium shall be the greater of one percent (1%) of the principal
amount to be prepaid or a premium calculated as provided in subparagraphs
(i) through (iii) below:
(i) Determine the "Reinvestment Yield." The Reinvestment Yield will
be equal to the yield on the applicable* U.S. Treasury Issue
("Primary Issue") published one week prior to the date of
prepayment and converted to an equivalent monthly compounded
nominal yield. In the event there is no market activity involving
the Primary issue at the time of prepayment, the Lender shall
choose a comparable Treasury Bond, Note or Bill ("Secondary
Issue") which the Lender reasonably deems to be similar to the
Primary Issue's characteristics (i.e., rate, remaining time to
maturity, yield)
* At this time there is not a U.S. Treasury Issue for this
prepayment period. At the time of prepayment, Lender shall select
in its sole and absolute discretion a U.S. Treasury Issue with
similar remaining time to maturity as the Note.
(ii) Calculate the "Present Value of the Loan." The Present Value of
the Loan is the present value of the payments to be made in
accordance with the Note (all installment payments and any
remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the
date of prepayment to the Maturity Date.
(iii) Subtract the amount of the prepaid proceeds from the Present
Value of the Loan as of the date of prepayment. Any resulting
positive differential shall be the premium.
In the event the Loan is prepaid on or after that date which is three (3)
months prior to the Maturity Date, no Make Whole Premium shall be due.
II-29
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
I On or after the end of the applicable Loan Year (as hereinafter defined),
on any scheduled payment date and subject to giving Payee not less than
thirty (30) nor more than ninety (90) days' prior written notice specifying
the scheduled payment date on which prepayment is to be made (the
"Prepayment Date"), Maker may prepay the entire principal amount together
with any and all accrued interest and other sums due under the Loan
Documents, and subject to payment of a prepayment premium equal to the
greater of:
(a) the positive amount, if any, equal to (i) the sum of the present
values of all scheduled payments due under the Note from the
Prepayment Date to and including the Maturity Date, minus (ii)
the principal balance of the Note immediately prior to such
prepayment; or
(b) one percent (1.00%) of the principal balance of the Note
immediately prior to such prepayment.
All present values shall be calculated as of the Prepayment Date, using
a discount rate, compounded monthly, equal to the yield rate, converted to
its monthly equivalent, of the United States Treasury Security having the
closest maturity date to the Maturity Date of the Note as established in
the Wall Street Journal or other business publication of general
circulation five (5) business days before the Prepayment Date.
In the event that the yield rate on publicly traded United States
Treasury Securities is not obtainable, then the nearest equivalent issue or
index shall be selected, at Payee's reasonable determination, and used to
calculate the prepayment premium.
(1) The loan will be open to prepayment without premium during the last
ninety (90) days of the term of the loan. If any notice of prepayment is
given, the principal balance of the loan and the other sums required
pursuant to this Section 2 shall be due and payable on the Prepayment Date,
unless Maker provides written notice to Payee that it is revoking said
prepayment notice no later than five (5) business days prior to the
Prepayment Date.
(2) Provided no default exists under the Loan Documents, the above premium
shall not be applicable to a prepayment resulting from Payee's election to
require insurance loss proceeds or condemnation awards to be applied to a
payment of principal.
No partial prepayment shall be allowed.
The Loan Year is defined as any twelve month period commencing with
the date on which the first monthly installment is due or any
anniversary thereof.
NOTE (1a): For Mortgage Loan Nos. 10, 11, 12, 14, Fontana Plaza, Plaza
East, Foothill Plaza and Lincoln North, the loan will be open to
prepayment without premium during the last one hundred eighty (180)
days of the term of the loan.
NOTE (1b): For Mortgage Loan 83, 2473-2475 Broadway, the loan will be
open to prepayment without premium during the last one hundred twenty
(120) days of the term of the loan.
NOTE (1c): For Mortgage Loan 14, Lincoln North, the following language
should be inserted in place of the language in the first box in this
Yield Maintenance Formula I above: If any notice of prepayment is
given, the principal balance of the loan and the other sums required
pursuant to this Section 2 shall be due and payable on the Prepayment
Date, unless Maker provides written notice to Payee that it is
revoking said prepayment notice prior to the Prepayment Date, in which
event, Maker shall only be liable for any reasonable fees and expenses
of Payee's legal counsel and other out-of-pocket expenses of Payee in
connection with such proposed prepayment. A notice of prepayment shall
not affect Maker's obligation to make timely payments and observe all
other obligations under this Note and the Loan Documents.
NOTE (2): For Mortgage Loan 14, Lincoln North, the following language
should be inserted in place of the language in the second box in this
Yield Maintenance Formula I above: Provided no default exists under
the Loan Documents beyond applicable notice and cure periods and
notwithstanding anything to the contrary contained herein or in any
other Loan Document, the above premium shall not be applicable to a
prepayment resulting from Payee's election to require insurance loss
proceeds or condemnation awards to be applied to a payment of
principal, even though such prepayment is made prior to the 4th Loan
Year.
II-30
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
J On any Installment Payment Date on or after July 1, 2003, upon not less
than 30 nor more than 90 days' prior written notice to the Payee, the Maker
may, at its option, prepay the entire (but not less than the entire)
aggregate principal amount of this Note at the principal amount so prepaid,
together with unpaid interest on the Note accrued to the date fixed for
such prepayment, plus a premium, unless all or any part of the principal of
the Note has become due and payable by declaration or acceleration
following an Event of Default in which event the premium shall be as
provided in subsection (B), equal to the greater of:
(i) 1% of the then outstanding principal balance of the Note or
(ii)
the sum obtained by multiplying the then outstanding principal
balance of the Note by (x) the difference obtained by subtracting
the yield rate on publicly traded United States Treasury
Securities having the closest matching maturity date to the
maturity date of the Note as such yield rate is reported in the
Wall Street Journal or other similar business publication of
general circulation on the fifth business day preceding the
prepayment date or, if no yield rate on publicly traded United
States Treasury Securities is obtainable, at the yield rate of
the issue most closely equivalent to such United States Treasury
Securities, as determined by Payee in its reasonable discretion,
from 7.203% and (y) the number of years and fraction thereof
remaining between the prepayment date and the scheduled maturity
date of the Note.
In addition, during the final 90 days before maturity of the Note, upon
not less than 30 days' prior written notice, Maker may prepay the entire
(but not less than the entire) aggregate principal amount of the Note at
the time outstanding, at the principal amount so prepaid, together with
unpaid interest on the Note accrued to the date fixed for such
prepayment and together with other sums due under this Mortgage and all
other documents evidencing or securing the Note or otherwise pertaining
thereto, without premium, unless Payee has accelerated following an
Event of Default as provided below.
K There shall be no right to prepay the outstanding principal balance, except
that, provided no default exists, the privilege is hereby granted to prepay
the entire unpaid principal balance, together with any and all accrued
interest due thereon and late charges, on or after January 1, 2003, subject
to giving not less than thirty (30) days nor more than ninety (90) days
prior written notice of the intent to prepay to the holder of this Note,
with the payment of a prepayment premium equal to the greater of (x) the
sum obtained by multiplying (a) the outstanding principal balance of the
Note at the time of prepayment by (b) the difference obtained by
subtracting
(i) the current yield on publicly traded United States Treasury
securities having the closest matching maturity to the Maturity
Date, as published five business days prior to the date of said
payment in the Wall Street Journal or other business publication
of general circulation designated by holder at its reasonable
determination, plus fifty (50) basis points, from (ii) the
interest rate on the Note adjusted to its semi-annual equivalent
interest rate of six and eight hundred fifty-six ten thousandths
percent (6.856%) then (c) multiplying the resulting number by the
number of scheduled monthly payments remaining until the Maturity
Date divided by twelve (12);
or (y) an amount equal to one percent (1.0%) of the principal
balance then outstanding. The loan shall be open to prepayment
without premium for the last ninety (90) days of the loan term,
provided that notice of such prepayment is given at the time and
in the manner specified above. In the event that the yield rate
on publicly traded United States Treasury securities is not
obtainable, then the nearest equivalent issue or the index shall
be selected, at holder's reasonable determination, to calculate
the prepayment premium.
II-31
<PAGE>
FOOTNOTES TO APPENDIX II
YIELD MAINTENANCE FORMULAS
L On any Installment Payment Date on or after August 1, 2002, upon not less
than 30 nor more than 90 days' prior written notice to the Payee, the Maker
may, at its option, prepay the entire (but not less than the entire)
aggregate principal amount of this Note at the principal amount so prepaid,
together with unpaid interest on the Note accrued to the date fixed for
such prepayment, plus all other sums due under this Note or the Mortgage,
plus a premium equal to the amount (if any) set forth subpart (a) or (b)
below, whichever is applicable:
(a) If the date fixed for such prepayments occurs during the period
August 1, 2002, to (but not including) April 1, 2009, the greater of
(i) the amount obtained by multiplying:
(A) the product of the then-outstanding principal balance due
under the Note multiplied by the difference obtained by
subtracting (1) the yield rate on publicly traded United
States Treasury Securities (as published in the Wall Street
Journal (or other alternative business publication of
general circulation selected by the payee) five business
days prior to the date fixed for such prepayment) having the
closest matching maturity date to the maturity date of this
Note (July 1, 2009), from (2) 7.103%, times
(B) the number of scheduled monthly installments of principal
and interest remaining under the terms of this Note, divided
by twelve; or
(ii) an amount equal to 1.0% of the outstanding principal balance
under this Note as of the date fixed for such prepayment.
In the event that the yield rate on publicly traded United States
Treasury Securities is not obtainable as aforesaid, then the nearest
equivalent issue or index shall be selected, in Payee's reasonable
discretion, for purposes of the calculation of the prepayment
premium pursuant to subpart (i) above.
(b) If the date fixed for such prepayments occurs on or after August 1,
2009, Zero Dollars.
II-32
<PAGE>
APPENDIX III
SIGNIFICANT LOAN SUMMARIES
LOAN NO. 1-5 - RIVER NORTH LOANS AND PROPERTIES
<TABLE>
<CAPTION>
- ---------------------------------- --------------------------- -------------------------------- ----------------------
<S> <C> <C> <C>
Cut-off Date Balance: $20,833,699 Property Type: Office
Loan Type: Principal & Interest; Location: Chicago, IL
Balloon
Origination Date: March 16, 1998 Year Built/Renovated: 1918-1920/1980-1989
Maturity Date: 4/1/2008 Net Rentable Square Feet: 351,094
Mortgage Rate: 7.190% Cut-off Date Balance/SF: $59
Annual Debt Service: $1,725,115 Appraised Value: $28,500,000
DSCR: 1.49x Cut-off Date LTV: 73.1%
Underwritable Cash Flow: $2,565,271 Balloon LTV: 65.3%
Balance at Maturity: $18,614,145 Percent Leased: 99.5%
Percent Leased as of Date: 10/28/1999
- ---------------------------------- --------------------------- -------------------------------- ----------------------
</TABLE>
THE LOAN
The River North Loans (the "River North Loans") are evidenced by five
(5) separate notes each of which is secured by first mortgages on five (5)
separate office properties in Chicago, Illinois (the "River North Properties").
The River North Loans are then cross-defaulted and cross-collateralized. The
River North Loans were originated by JHREF on March 16, 1998.
The River North Properties are located at the following addresses: (a)
325 West Huron Street, (b) 322 South Green Street, (c) 222 West Hubbard Street,
(d) 212 West Superior Street and (e) 215 West Superior Street.
THE BORROWER. The Borrower for each of the River North Loans is River
North Limited Partnership No. 2, an Illinois limited partnership (the "River
North Borrower"). The sole general partner of the River North Borrower is UI
Properties, Inc., an Illinois corporation.
SECURITY. Each of the River North Loans is secured by a Mortgage,
Assignment of Leases and Rents and Security Agreement ("Mortgage") and certain
additional security documents. Each of these mortgages is a first lien on the
fee interest on the River North Properties. The River North Loans are
non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate for each of the River North Loans is
fixed at 7.19%. The River North Loans require an aggregate monthly payment of
principal and interest in the amount of $143,759.61. This combined payment
divides as follows among each of the River North Loans: (1) 325 West Huron
Street, $48,484.96; (2) 322 South Green Street, $36,618.02; (3) 222 West Hubbard
Street, $26,107.29; (4) 212 West Superior Street, $20,004.29; and (5) 215 West
Superior Street, $12,545.06. Each of the River North Loans matures on April 1,
2008, at which time all unpaid principal and accrued but unpaid interest is due.
Interest on the River North Loans is computed on the basis of the actual number
of days elapsed in each month in a 360-day year, except that interest for a
period of less than a full month shall be computed on the basis of the actual
number of days elapsed in a 365-day year.
PREPAYMENT. Subject to the partial release provisions described below,
the River North Loans may be prepaid in whole, but not in part, with at least 30
days, but not more than 90 days, prior written notice, on or after April 1, 2003
upon payment of a Prepayment Premium calculated on the basis of the greater of a
yield maintenance premium calculated by reference to U.S. Treasury obligations
or one percent (1%) of the then outstanding principal balance of the notes. No
Prepayment Premium is due if the River North Loans are prepaid within ninety
(90) days prior to maturity.
III-1
<PAGE>
If there is an event of default prior to April 1, 2003 and the lender
accelerates the River North Loans, the River North Borrower must pay a
Prepayment Premium calculated on the basis of the greater of (i) a yield
maintenance premium calculated by reference to U.S. Treasury obligations plus
five percent (5%) of the then outstanding principal balance of the notes or (ii)
ten percent (10%) of the then outstanding principal amount of the notes.
LATE FEES AND DEFAULT INTEREST. There is a late fee on overdue
installments of 5% of the amount overdue. The River North Loans accrue interest
at 12.19% per annum while the River North Loans are in default.
TRANSFER OF PROPERTIES OR INTERESTS IN THE BORROWER. The River North
Loans become immediately due and payable upon the transfer of the River North
Properties or any ownership interest in the River North Borrower, other than a
transfer of ten percent (10%) or less of the stock of a corporation that is, at
the time, a successor to the River North Borrower, the guarantor of non-recourse
carve-outs, or a general or limited partner of the River North Borrower except
for the multiple right to transfer the River North Properties, if among other
things, (i) there is no event of default; (ii) the Rating Agencies have
confirmed in writing that such transfer will not result in a requalification,
reduction or withdrawal of the ratings assigned to any related secondary market
transaction; (iii) the transferee is a single purpose, bankruptcy remote entity;
(iv) the transferee assumes the River North Loans and (v) the lender has receive
an assumption fee of 1% of the then outstanding principal amount of the related
note.
Furthermore, the partnership interests in the River North Borrower may
be transferred as long as, among other things, (i) any one or more of Howard R.
Conant, Jr., Howard Conant, Sr., the Conant Family Partnership and Urban
Innovations, Ltd. retain at least fifty and one tenth percent (50.1%) of the
combined general and limited partnership interests in the general partner of the
River North Borrower and maintain a controlling interest in the general partner
of the River North Borrower; (ii) the River North Loans are not in default;
(iii) the transfer does not involve the admittance of any new general partners
to the River North Borrower or any transfers of the River North Borrower's
existing general partnership interests; and (iv) Howard R. Conant, Jr. remains
as President of Urban Innovations, Ltd. and retains control of Urban
Innovations, Ltd.
ESCROW/RESERVES. There is a tax and insurance reserve which requires
deposits in an amount sufficient to pay taxes and insurance premiums when due.
There is also a reserve for capital expenditures which is funded monthly in an
amount of 1/12th of the anticipated annual costs of replacements and capital
repairs. Lastly, there is a reserve for tenant improvements and leasing
commissions, which was partially funded at closing and requires monthly
contributions as follows: (1) 325 West Huron Street, $10,000; (2) 322 South
Green Street, $5,250; (3) 222 West Hubbard Street, $3,250; (4) 212 West Superior
Street, $4,190; and (5) 215 West Superior Street, $2,150. Such amounts will be
disbursed to pay such costs and provide additional security for the River North
Loans. The monthly amounts collected for each of the River North Properties in
the tenant improvement and leasing commission reserve are be used only for the
specific River North Property for which the amount was collected in accordance
with the terms of the reserve agreements.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness and encumbrance of the
River North Properties are prohibited, other than unsecured trade and
operational debt incurred in the ordinary course of business. Interim unsecured
indebtedness in an amount not to exceed $3,000,000 was permitted for the initial
90 days of the term of the River North Loans in order for the Borrower to close
the purchase of the properties. The Borrower reports that this financing was
never taken down and this option has expired.
THE PROPERTIES
The Properties were approximately 99.5% leased as of 10/28/99. The
buildings are constructed with a reinforced concrete frame and an exterior
facade of Chicago common brick.
Approximately 32% of rents are provided by national or regional tenants
including Cushing and Company, Chicago Access Corporation, Standard Studios,
L.P. and Closer Look Creative, Inc.. As of 10/28/99, the Properties were 99.5%
leased to approximately 70 tenants. The larger tenants occupy approximately 32%
of the space, or 113,902 square feet. Contractual lease expirations during the
loan term are as follows: 58,183 square feet (17%) in 2000, 77,634 square feet
(22%) in 2001, 91,142 square feet (26%)in 2002, 51,152 square feet (15%) in
2003, 27,060 square feet (8%) in 2004, 10,536 square feet (3%) in 2005, 13,100
square feet (4%) in 2006, 4,364 square feet (1%)
III-2
<PAGE>
in 2007, and 15,746 square feet (4%) in 2008. As of 10/28/99, average rents for
large tenant space was $16.11 per square foot and average base rents for small
tenant space was $16.18 per square foot.
MANAGEMENT
Jerome H. Meyer & Co., an Illinois corporation, is the property
manager. They are an experienced Chicago Property Manager. They have managed
these properties since 1985.
PARTIAL RELEASES
The River North Loans are cross-defaulted and cross-collateralized. Up
to three of the River North Properties may be released from the cross-default
and cross-collateralization provisions of the River North Loans, provided, among
other things, that: (i) there is no default; (ii) the debt service coverage
ratio is at least 1.35:1 (1) for the remaining River North Loans and, (2) for
the River North Property to be released if the applicable River North Loan is
assumed by another transferee; and (iii) the loan to value ratio does not exceed
75% (1) for each of the River North Properties which are not being released,
either individually or in the aggregate, or (2) for the River North Property to
be released if the applicable River North Loan is assumed by another transferee.
III-3
<PAGE>
LOAN NOS. 6, 7, 8 AND 9 - CENTENNIAL CENTER, COLUMBINE PLACE, ONE COMMERCE
CENTER AND ERINDALE SQUARE RETAIL LOANS AND PROPERTIES
LOAN NO. 6 - CENTENNIAL CENTER
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut off Date Balance: $6,381,622 Property Type: Office
Loan Type: Principal & Interest; Location: Louisville, CO
Balloon
Origination Date: 9/02/1999 Year Built/Renovated 1986
Maturity Date: 10/01/2009 Square Footage: 84,356
Mortgage Rate: 8.100% Cut-off Date Balance/SF: $48
Annual Debt Service: $568,894 Appraisal Value: $11,000,000
DSCR: 1.57x Cut-off Date LTV: 51.4%
Underwritable Cash Flow: $939,263 Percent Leased: 90.5%
Balance at Maturity: $5,747,451 Percent Leased as of Date: 10/01/1999
- ------------------------------------------------------------------------------------------------------------
LOAN NO. 7 - COLUMBINE PLACE
- ------------------------------------------------------------------------------------------------------------
Cut off Date Balance: $6,281,910 Property Type: Office
Loan Type: Principal & Interest; Location: Denver, CO
Balloon
Origination Date: 9/02/1999 Year Built/Renovated 1983
Maturity Date: 10/01/2009 Square Footage: 145,137
Mortgage Rate: 8.100% Cut-off Date Balance/SF: $48
Annual Debt Service: $560,005 Appraisal Value: $14,200,000
DSCR: 1.57x Cut-off Date LTV: 51.4%
Underwritable Cash Flow: $840,065 Percent Leased: 98.6%
Balance at Maturity: $5,657,647 Percent Leased as of Date: 10/01/1999
- ------------------------------------------------------------------------------------------------------------
LOAN NO. 8 - ONE COMMERCE CENTER
- ------------------------------------------------------------------------------------------------------------
Cut off Date Balance: $4,387,365 Property Type: Office
Loan Type: Principal & Interest; Location: Colorado Springs,
Balloon CO
Origination Date: 9/02/1999 Year Built/Renovated 1984
Maturity Date: 10/01/2009 Square Footage: 81,956
Mortgage Rate: 8.100% Cut-off Date Balance/SF: $48
Annual Debt Service: $391,115 Appraisal Value: $8,100,000
DSCR: 1.57x Cut-off Date LTV: 51.4%
Underwritable Cash Flow: $581,589 Percent Leased: 90.0%
Balance at Maturity: $3,951,372 Percent Leased as of Date: 10/01/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
III-4
<PAGE>
LOAN NO. 9 - ERINDALE SQUARE RETAIL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut off Date Balance: $2,891,673 Property Type: Retail
Loan Type: Principal & Interest; Location: Colorado Springs,
Balloon CO
Origination Date: 9/02/1999 Year Built/Renovated 1980-1988
Maturity Date: 10/01/2009 Square Footage: 103,010
Mortgage Rate: 8.100% Cut-off Date Balance/SF: $48
Annual Debt Service: $257,780 Appraisal Value: $5,500,000
DSCR: 1.57X Cut-off Date LTV: 51.4%
Underwritable Cash Flow: $430,049 Percent Leased: 87.3%
Balance at Maturity: $2,604,314 Percent Leased as of Date: 10/01/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOANS
The Centennial Center loan (the "Centennial Center Loan") is secured by
a first mortgage on 84,356 square feet consisting of a one story multi-tenant
retail building, 3 one story pad buildings and a two story office building all
located in Louisville, Colorado (the "Centennial Center Property"). The
Columbine Place loan (the "Columbine Place Loan") is secured by a first
leasehold mortgage on a 145,137 square foot seventeen story office building
located in Denver, Colorado (the "Columbine Place Property"). The One Commerce
Center loan (the "Commerce Center Loan") is secured by a first mortgage on a
81,956 square foot two story office building located in Colorado Springs,
Colorado (the "Commerce Center Property"). The Erindale Square Retail loan (the
"Erindale Loan") is secured by a 103,010 square foot one story retail center
located in Colorado Springs, Colorado (the "Erindale Property").
The Centennial Center Loan, the Columbine Place Loan, the Commerce
Center Loan, and the Erindale Loan are referred to herein as the "Loans." The
Loans were originated by PCF on September 2, 1999. The Loans are
cross-collateralized.
THE BORROWERS. The Borrower for all of the Loans is Columbine West,
LLC, a Colorado limited liability company (the "Columbine Borrower"). The
Columbine Borrower is a limited liability company owned in equal shares by Dan
Kleiman, Hannah Alper, Palev Corporation and Jabag Holdings, Inc. The managing
members of the Columbine Borrower are Dan Kleiman and Jim Elterman. Jim Elterman
has no ownership interest in the limited liability company.
SECURITY. The Loans are secured by a Deed of Trust, Assignment of Rents
and Leases, UCC Financing Statements and certain additional security documents
(the "Financing Documents"). Each Deed of Trust is a first lien on the
Borrower's fee interest, or in the case of Columbine Place a Leasehold interest
in the related Property. The Loans are non-recourse to the Borrower, subject to
certain limited exceptions. Dan E. Kleiman, Hannah Alper, Palev Corporation and
Jabag Holdings, Inc. have executed guaranties for the fraud, misrepresentation
and environmental carveouts.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.100% per annum. The
Centennial Center Loan requires monthly payments of principal and interest of
$47,408 until October 1, 2009, at which time all unpaid principal and accrued
but unpaid interest is due. The Columbine Place Loan requires monthly payments
of principal and interest of $46,667 until October 1, 2009, at which time all
unpaid principal and accrued but unpaid interest is due. The Commerce Center
Loan requires monthly payments of principal and interest of $32,593 until
October 1, 2009, at which time all unpaid principal and accrued but unpaid
interest is due. The Erindale Loan requires monthly payments of principal and
interest of $21,482 until October 1, 2009, at which time all unpaid principal
and accrued but unpaid interest is due. All loans accrue interest computed on
the basis of the actual number of days elapsed in each month in a 360-day year.
III-5
<PAGE>
PREPAYMENT/DEFEASANCE. Voluntary prepayment of the entire loan is
prohibited until three (3) months prior to maturity. However, after November 1,
2002, the entire principal balance for the Loans or any individual Loan may be
prepaid with a Yield Maintenance Payment calculated on the basis of the greater
of (i) a Yield Maintenance Premium calculated by reference to U.S. Treasury
Obligations or (ii) one percent (1%) of their outstanding principal balance. The
property securing the prepaid Loan shall be released as collateral upon the
satisfaction of certain conditions specified in the Financing Documents,
including a condition that requires the annual net operating income generated by
leases having at least 3 years remaining from all of the remaining properties to
equal or exceed 1.6 times the annual debt service coverage for the remaining
Loans.
LATE FEES AND DEFAULT INTEREST. There is a 4% late fee on overdue
installments. The Loans accrue interest at the mortgage rate plus 4% per annum
while the related Loan is in default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Loans provide that
they will become immediately due and payable upon the transfer of the related
Property or any ownership interest in the related Borrower, except in connection
with any of the following permitted transfers.
Upon payment of an assumption fee equal to the greater of $15,000 or
one percent (1%) of the outstanding principal balance on the related Loan, the
Financing Documents permit the Borrower the right to transfer each related
Property, subject to the terms of the Financing Documents. Such transfer is
permitted only upon the satisfaction of certain conditions specified in the
Financing Documents, including the proposed transferee must reasonably satisfy
the Lender's underwriting standards for proposed transferees.
Upon payment of an assumption fee equal to the greater of $15,000 or
one (1%) of the outstanding principal balance of the related Loan or a prorated
amount of said one (1%) if less than the entire interest in the related Borrower
is transferred, the Financing Documents also permit the transfer of all or part
of the ownership interest in the related Borrower only upon the satisfaction of
certain conditions specified in the Financing Documents. In addition, the
Financing Documents permit the Borrower the right to make only a total of 2
transfers involving either the Property or interest in the Borrower unless the
transfer of interest in Borrower is to a then current owner of the Borrower,
then unlimited transfers are permitted provided (i) Lender receives notice; (ii)
Dan E. Kleiman retains, directly or indirectly, at least a 25% interest in the
Borrower and remains manager of the Property unless said transfer of interest is
caused by the death of Dan E. Kleiman provided a substitute guarantor and
manager are appointed within 60 days; and (iii) payment of a reasonable fee not
to exceed $2,500 for each transfer.
ESCROWS/RESERVES. The Financing Documents require monthly escrow
deposits in amounts sufficient to pay taxes and insurance premiums when due.
The Centennial Center Financing Documents provide for $1,406.83 monthly
escrow to cover replacement reserves. The Columbine Place Financing Documents
provide for $2,420.58 monthly escrow to cover replacement reserves. The Commerce
Center Financing Documents provide for $1,365.92 monthly escrow to cover
replacement reserves. The Erindale Financing Documents provide for $1,716.83
monthly escrow to cover replacement reserves.
SUBORDINATED/OTHER DEBT. Subordinate indebtedness and encumbrances are
prohibited by the Financing Documents.
THE PROPERTIES
The Centennial Center Property contains a total of 84,356 square feet
consisting of a one story multi-tenant retail building, 3 one story retail pad
buildings, and a two story office building built in 1986 located in Louisville,
Colorado. The retail buildings total 52,067 square feet and the office building
totals 32,344 square feet. The Centennial Center Property is located in the
southern portion of Louisville near the Boulder Turnpike (US-36). The retail
properties are steel post and beam framing with concrete block wall and a brick
veneer exterior. The office building is steel frame on caissons with a poured-in
place concrete floor over metal deck with brown brick veneer.
III-6
<PAGE>
As of October 1, 1999, the Centennial Center Property was 91% leased to
34 tenants. The LaPetite Academy is the largest tenant and occupies 11.10% of
the space (9,400 square feet) and has a lease expiration date of December 28,
2005. Centennial Liquors is the second largest tenant and occupies 5.70% (4,810
square feet) and has a lease expiration date of September 30, 2006. The third
largest tenant is Centennial Automotive occupies 5.60% (4,742 square feet) and
has a lease expiration date of July 31, 2007.
The Columbine Place Property is a seventeen story office building
located in the Denver Central Business District. The building was completed in
1983 with 114 parking spaces located on floors 2-5. The building contains
145,137 square feet. The exterior is precast exposed aggregate concrete veneer
with cast in place reinforced concrete floor framing on the ground floor and
reinforced concrete piers at load bearing column locations. The 14,495 square
foot land parcel underneath the building is ground leased to the Columbine
Borrower. The unsubordinated ground lease expires on June 30, 2079.
As of October 1, 1999, the Columbine Place Property was 99% leased to
31 tenants. Carter and Burgess is the largest tenant and occupies a total of
24.5% of the building (35,588 square feet) and has a lease expiration date of
June 30, 2003. Carter and Burgess is a Texas based consulting company formed in
1939 with 28 offices in 15 states providing engineering, architectural, planning
and construction management services. The City of Denver is the second largest
tenant occupying 8.2% (11,858 square feet) and has a lease expiration date of
July 31, 2003.
The Commerce Center Property is a two story suburban office building
containing 81,956 square feet located in the northwest quadrant of Colorado
Springs. Commerce Center Property is in close proximity to Interstate 25. The
building was built in 1984 and features a steel frame on caissons with a poured
in place concrete floor over metal deck. The exterior is white stucco.
As of October 1, 1999, the Commerce Center Property was 90% leased to
25 tenants. Pikes Peak Community College is the largest tenant occupying 20.2%
(16,592 square feet) and has a lease expiration date of November 30, 2001. This
is one of nine satellite sites for Pikes Peak Community College. The second
largest tenant is the Shields Corporation, a local real estate firm, occupying
13.40% (10,959 square feet) and has a lease expiration date of February 7, 2003.
John Wiley & Sons, Inc. is the third largest tenant occupying 4.70% (5,692
square feet).
The Erindale Property is a retail center located in the north central
quadrant of Colorado Springs on Academy Boulevard, a major north/south
thoroughfare. The building was constructed in 1980 with concrete block and
stucco walls and poured in place concrete floors. The Erindale Property contains
57,915 square feet of grade level in line retail space in 15 suites, 32,593
square feet of basement storage/flex space and 3 retail pads totaling 12,502
square feet along Academy Boulevard.
As of October 1, 1999, the Erindale Property was 87% leased to 23
tenants. Mountain Entertainment is the largest tenant and occupies 14.60%
(15,044 square feet) of the building and has a lease expiration date of August
31, 2003. William Mulhern (Bedmaster) is the second largest tenant occupying
11.80% (12,120 square feet) and has a lease expiration date of May 1, 2001.
Chung Lin Chang is the third largest tenant occupying 11.70% (12,000 square
feet).
According to an environmental report prepared by EMG on August 4, 1999,
the Erindale Property is listed on the Leaking Underground Storage Tank database
as an active leaking underground storage tank site resulting from 3 underground
storage tanks associated with a former tenant. The site has been under
remediation since 1994 and is nearing the end of a two year sampling program. A
closure approval letter of no further action is anticipated in the near future.
The Erindale Financing Documents require continued compliance with Colorado
State Oil Inspection Section until the Leaking Underground Storage Tank case is
completed and the no further action letter must be obtained within 18 months or
the Erindale Loan will be in default.
III-7
<PAGE>
MANAGEMENT
Venture Investments is the property manager of the Properties. Venture
Investments currently manages commercial real estate valued at approximately
$100 million. Venture Investments is affiliated with the Borrowers. Summit Group
provides leasing services and is not affiliated with the Columbine Borrower. The
Financing Documents contain a property management termination provision.
III-8
<PAGE>
LOAN NOS. 10-12 - FONTANA RETAIL LOAN AND PROPERTIES
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
Cut-off Date Balance: $18,576,789 Property Type: Retail
Loan Type: Principal & Interest; Location: Fontana, CA
Balloon
Origination Date: April 22, 1999 Year Built/Renovated: Various (1)
Maturity Date: 5/1/2009 Net Rentable Square Feet: 316,634
Mortgage Rate: 7.480% Cut-off Date Balance/SF: $59
Annual Debt Service: $1,565,976 Appraised Value: $25,660,000
DSCR: 1.51x Cut-off Date LTV: 72.4%
Underwritable Cash Flow: $2,358,400 Balloon LTV: 64.5%
Balance at Maturity: $16,547,172 Percent Leased: 95.9%
Percent Leased as of Date: 10/7/99
- ---------------------------------- --------------------------- -------------------------------- ----------------------
</TABLE>
- ------------------------
(1) Fontana Plaza: 1981/NAP; Foothill Plaza: 1979-1987/NAP; and Plaza East:
1985/NAP
THE LOAN
The Fontana Retail Loan (the "Fontana Loan") is secured by a first
mortgage on a 124,399 square foot shopping center (the "Fontana Plaza
Property"), a 93,989 square foot shopping center (the "Foothill Plaza Property")
and a 98,246 square foot shopping center (the "Plaza East Property" and,
together with the Fontana Plaza Property and the Foothill Plaza Property, the
"Fontana Properties"), each located in Fontana, California. The Fontana Loan was
originated by JHREF on April 22, 1999.
THE BORROWER. The Borrower is Fontana Properties, Ltd., L.P., a
California limited partnership (the "Fontana Borrower"). The partners of the
Fontana Borrower consist of Sara Management Co. Inc. (General Partner, 1%) and
David Wiener and Renee Wiener, as trustees of Wiener Family Revocable Trust
(Limited Partner, 99%).
The Fontana Borrower has advised JHREF that in a previous loan on the
Fontana Properties (the "Fontana Previous Loan") under which the Fontana
Borrower was the borrower, the Fontana Borrower missed one or more loan payments
and, pursuant to an agreement with the special servicer of the Fontana Previous
Loan, the Fontana Borrower prepaid the Fontana Previous Loan in full (including
outstanding principal, interest and late charges) and the related special
servicer waived an applicable prepayment premium. Another lender had provided
the financing necessary to refinance the Fontana Previous Loan; the proceeds of
the Fontana Loan from JHREF refinanced the loan from this other lender.
SECURITY. The Fontana Loan is secured by a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing and certain additional
security documents. The mortgage is a first lien on the fee interest on each of
the Fontana Properties. The Fontana Loan is non-recourse, subject to certain
limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.480%. The Fontana Loan
requires monthly payments of principal and interest of $130,498 until its
maturity on May 1, 2009, at which time all unpaid principal and accrued but
unpaid interest is due. The Fontana Loan accrues interest computed on the basis
of the actual number of days elapsed each month in a 360-day year, except that
interest for a period of less than a full month shall be computed on the basis
of the actual number of days elapsed in a 365-day year.
PREPAYMENT. The Fontana Loan may be prepaid in whole, but not in part,
with at least 30 days, but not more than 90 days, on or after May 1, 2004 upon
payment of a Prepayment Premium calculated on the basis of the greater of a
yield maintenance premium calculated by reference to U.S. Treasury obligations
or one percent (1%) of the amount prepaid. No yield maintenance payment is due
if the Fontana Loan is prepaid within one-hundred eighty (180) days prior to
maturity.
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<PAGE>
If there is an event of default prior to June 1, 2004 and the lender
accelerates the Fontana Loan, the Fontana Borrower must pay a Prepayment Premium
calculated on the basis of the greater of (i) a yield maintenance premium
calculated by reference to U.S. Treasury obligations plus five percent (5%) of
the then outstanding principal balance of the note or (ii) ten percent (10%) of
the then outstanding principal balance of the note.
LATE FEES AND DEFAULT INTEREST. There is a late fee on overdue
installments of 5% of the amount overdue. The Fontana Loan accrues interest at
12.48% per annum while the Fontana Loan is in default.
TRANSFER OF PROPERTIES OR INTERESTS IN THE BORROWER. The Fontana Loan
becomes immediately due and payable upon the transfer of the Fontana Properties
or any ownership interest in the Fontana Borrower without the lender's consent,
other than a transfer of ten percent (10%) or less of the stock of a corporation
that is, at the time, a successor to the Fontana Borrower, the guarantor of
non-recourse carve-outs, or a general or limited partner of the Fontana
Borrower. However, the lender may not unreasonably withhold its consent to a
transfer of the Fontana Properties to a special purpose, bankruptcy remote
transferee if, among other things: (i) the Fontana Loan is not in default; (ii)
the transferee assumes the Fontana Loan; (iii) the Rating Agencies have
confirmed in writing that such transfer will not result in a qualification,
reduction or withdrawal of the ratings of any related secondary market
transaction; and (iv) the lender has received an assumption fee of 1% of the
then outstanding principal amount of the Fontana Loan. Furthermore, the limited
partnership interests in the Fontana Borrower may be transferred by the limited
partners to another limited partner or a family member of the transferor, if,
among other things: (i) the Fontana Loan is not in default; (ii) the transfer
does not result in the proposed transferee owning more than forty-nine percent
(49%) of the interest in the Fontana Borrower; and (ii) the transfer does not
cause the Fontana Borrower to breach the single purpose entity and separateness
covenants in the loan agreement.
ESCROW/RESERVES. There is a tax reserve which requires deposits in an
amount sufficient to pay taxes when due. There is also a reserve for capital
expenditures which is funded monthly in an amount of 1/12th of the anticipated
annual costs of replacements and capital repairs. Lastly, there is a reserve for
tenant improvements and leasing commission (the "TI/LC Reserve"), which was
partially funded at closing and requires a monthly contribution of $7,300. The
balance of the TI/LC Reserve is capped at $350,000.
There is no requirement to reserve for insurance unless the Fontana
Loan is in default or payments of insurance premiums are not current.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness and encumbrance of the
Fontana Properties are prohibited, other than unsecured trade and operational
debt incurred in the ordinary course of business.
THE PROPERTIES
The Fontana Plaza Property is a 124,399 square foot shopping center
located in Fontana, California. The Fontana Plaza Property was approximately 92%
leased as of 10/7/99. The buildings are wood frame and stucco construction.
Approximately 47% of rents are provided by national or regional tenants
including Albertsons, OSCO/Sav-on and Kragen Auto Parts. As of 10/7/99, the
Fontana Plaza Property was 92% leased to 37 tenants. Anchor tenants occupy
approximately 41% of the space, or 50,717 square feet. The major tenants at the
Fontana Plaza Property are Albertsons Supermarket, Sav-On Drug Store and Kragen
Auto Parts. Contractual lease expirations during the loan term are as follows:
11,934 square feet (10%) in 2000, 13,530 square feet (11%) in 2001, 4,690 square
feet (4%) in 2002, 14,708 square feet (11%) in 2003, 12,610 square feet (10%) in
2004, 2,557 square feet (2%) in 2005, 28,217 square feet (23%) in 2006, 24,300
square feet (20%) in 2008 and 1,388 square feet (1%) in 2009. As of 10/7/99,
average rents for anchor space was $5.03 per square foot and average base rents
for in-line space was $14.27 per square foot.
The Foothill Plaza Property is a 93,989 square foot shopping center
located in Fontana, California. The Foothill Plaza Property was 98% leased and
occupied as of 10/7/99. The buildings are wood frame and stucco construction.
III-10
<PAGE>
Approximately 64% of rents are provided by national/regional tenants
including Fiesta Mexicana, Rite Aid, Kragen Auto Parts and Radio Shack. As of
10/7/99, the Foothill Plaza Property was 98% leased to 23 tenants. Anchor
tenants occupy approximately 56% of the space, or 52,640 square feet. The major
tenants at the Foothill Plaza Property are Fiesta Mexicana Market, Rite Aid Drug
Store, Kragen Auto Parts and Radio Shack. Contractual lease expirations during
the loan term are as follows: 11,941 square feet (13%) in 2000, 10,604 square
feet (11%) in 2001, 25,060 square feet (27%) in 2002, 3,746 square feet (4%) in
2003, 2,640 square feet (3%) in 2006, and 35,000 square feet (37%) in 2007. As
of 10/7/99, average base rents for anchor space was $4.59 per square foot and
average base rents for in-line space was $13.59 per square foot.
The Plaza East Property is a 98,246 square foot shopping center located
in Fontana, California. The Plaza East Property was 100% leased and occupied as
of 10/7/99. The buildings are wood frame and stucco construction.
As of 10/7/99, the Plaza East Property was leased to 15 tenants. Anchor
tenants occupy approximately 51% of the space, or 50,252 square feet. The major
tenant at the Plaza East Property is Fontana Discount Center. Contractual lease
expirations during the loan term are as follows: 4,877 square feet (5%) in 2000,
9,569 square feet (10%) in 2001, 9,611 square feet (10%) in 2002, 12,828 square
feet (13%) in 2003, 3,084 square feet (3%) in 2004, 50,252 square feet (51%) in
2005, 2,500 square feet (2%) in 2006, and 5,525 square feet (6%) in 2011. As of
10/7/99, average base rents for anchor space was $4.81 per square foot and
average base rents for in-line space was $12.61 per square foot.
MANAGEMENT
Medina, Inc. is the property manager. According to information supplied
by the Fontana Borrower, David Wiener, the principal owner of Medina, Inc., is
an experienced owner, operator and investor in commercial real estate. The
property manager is an affiliate of the Fontana Borrower.
III-11
<PAGE>
LOAN NO. 13 - JABIL CIRCUIT BUILDING LOAN AND PROPERTY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut off Date Balance: $18,569,532 Property Type: Industrial
Loan Type: Principal & Interest; Location: San Jose, CA
Balloon
Origination Date: 11/17/1999 Year Built/Renovated 1984
Maturity Date: 12/01/2009 Square Footage: 181,736
Mortgage Rate: 8.380% Cut-off Date Balance/SF: $102
Annual Debt Service: $1,697,269 Appraisal Value: $24,850,000
DSCR: 1.26x Cut-off Date LTV: 74.7%
Underwritable Cash Flow: $2,142,807 Percent Leased: 100.0%
Balance at Maturity: $16,811,010 Percent Leased as of Date: 11/11/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Jabil Circuit Building loan (the "Jabil Loan") is secured by a
first mortgage on a 181,736 square foot industrial building located in San Jose,
California (the "Jabil Property"). The Jabil Loan was originated by PCF on
November 17, 1999.
THE BORROWER. The borrower is Thirty Great Oaks, LLC, a California
limited liability company (the "Jabil Borrower"). The Jabil Borrower is 25%
owned by two key principals, Todd Katz (12 1/2%) and J. Patrick Gregoire (12
1/2%). The Jabil Borrower is a special purpose entity with an independent
director and a non-consolidation opinion.
SECURITY. The Jabil Loan is secured by a Deed of Trust, Assignment of
Rents and Leases, UCC Financing Statements and certain additional security
documents (the "Jabil Financing Documents"). The Deed of Trust is a first lien
on the Jabil Borrower's fee interest in the Jabil Property. The Jabil Loan is
non-recourse to the Jabil Borrower, subject to certain limited exceptions. The
two key principals, Todd Katz and J. Patrick Gregoire, have executed a joint and
several guaranty for the fraud, misrepresentation and environmental carve outs.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.380% per annum. The
Jabil Loan requires monthly payments of principal and interest of $141,439.09
until December 1, 2009, at which time all unpaid principal and accrued but
unpaid interest is due. The Jabil Loan accrues interest computed on the basis of
the actual number of days elapsed in each month in a 360-day year.
PREPAYMENT/DEFEASANCE. Voluntary prepayment is prohibited until three
(3) months prior to maturity. However, the Jabil Borrower may defease on any
date that is 2 years from the date the Jabil Loan is securitized. Defeasance is
permitted only upon the satisfaction of certain conditions specified in the
Jabil Financing Documents, including confirmation from each Rating Agency that
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any class of certificates. No prepayment
premium is due if the Jabil Loan is prepaid within three (3) months prior to
maturity.
LATE FEES AND DEFAULT INTEREST. There is a 4% late fee on overdue
installments. The Jabil Loan accrues interest at the mortgage rate plus 4% per
annum while the Jabil Loan is in default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER
The Jabil Loan provides that it will become immediately due and payable
upon the transfer of the Jabil Property or any ownership interest in the Jabil
Borrower, except in connection with any of the following permitted transfers.
Upon the payment of an assumption fee in the amount of the greater of
$15,000 or 1% of the outstanding principal balance of the Jabil Loan, the Jabil
Financing Documents permit the Jabil Borrower to transfer the Jabil
III-12
<PAGE>
Property two (2) times during the life of the Jabil Loan. Such transfers are
permitted only upon the satisfaction of certain conditions specified in the
Jabil Financing Documents. In addition, any proposed transferee must reasonably
satisfy the lender's underwriting standards with respect to the proposed
transferee.
Upon the payment of an assumption fee in the amount of the greater of
$15,000 or 1% of the outstanding principal balance (or a prorated amount of such
1% if less than the entire interest in the Related Borrower is transferred), and
the payment of a reasonable fee, the Jabil Financing Documents also permit
multiple transfers of all or part of the ownership interest in the Jabil
Borrower subject to the Jabil Financing Documents. Such transfers are permitted
only upon the satisfaction of certain conditions specified in the Jabil
Financing Documents.
ESCROWS/RESERVES. The Jabil Financing Documents require monthly escrow
deposits in amounts sufficient to pay insurance premiums and taxes when due. On
August 1, 2003, the Jabil Financing Documents also require the Jabil Borrower to
establish a letter of credit in the amount of $60,000 to ensure completion of
tenant improvements and leasing commissions if Jabil does not renew its lease in
2008. The letter of credit shall be increased by $60,000 every year until it
totals $300,000. On February 1, 2008, the Jabil Financing Documents also require
the Jabil Borrower to fund an escrow as additional security for the Jabil Loan
in the amount of $50,000. This letter of credit shall be increased by $50,000
every year until it totals $300,000 to ensure completion of tenant improvements
and leasing commissions.
SUBORDINATED/OTHER DEBT. Subordinate indebtedness and encumbrances are
prohibited by the Jabil Financing Documents.
THE PROPERTY
The Jabil Property consists of a 181,736 square foot one and two story
office research and development building built in 1984 located in San Jose,
California. The Jabil Property is comprised of 30% office, 35% lab/assembly, and
35% warehouse. The building is divisible for up to two tenants. The Jabil
Property is in the Edenvale District of South San Jose in Great Oaks Business
Park.
As of November 11, 1999, the Jabil Property was 100% leased to one
tenant, Jabil Circuits, Inc. The Jabil Circuits, Inc. lease expires on August
14, 2008. Jabil Circuits, Inc. is an independent supplier of custom
manufacturing services for circuit board assemblies and systems for original
equipment manufacturers in communications, computer peripherals, automatic and
consumer industries. Jabil was incorporated in 1992 as successor to Jabil
Circuit Co., Inc., which was incorporated in 1969.
MANAGEMENT
Century Park Partners is the manager of the Jabil Property. Century
Park Partners currently manages and leases 5 other single tenant properties.
Century Park Partners is affiliated with the Jabil Borrower. The Jabil Financing
Documents contain termination and management fee subordination provisions.
III-13
<PAGE>
LOAN NO. 14 - LINCOLN NORTH LOAN AND PROPERTY
<TABLE>
<CAPTION>
- -------------------------------- ----------------------------- -------------------------------- ----------------------
<S> <C> <C> <C>
Cut-off Date Balance: $16,117,285 Property Type: Office
Loan Type: Principal & Interest; Location: Lincoln, MA
Balloon
Origination Date: October 29, 1998 Year Built/Renovated: 1990/NA
Maturity Date: 12/1/08 Net Rentable Square Feet: 124,998
Mortgage Rate: 7.15% Cut-off Date Balance/SF: $129
Annual Debt Service: $1,321,096 Appraised Value: $23,600,000
DSCR: 1.51x Cut-off Date LTV: 68.30%
Underwritable Cash Flow: $1,990,091 Balloon LTV: 60.60%
Balance at Maturity: $14,298,108 Percent Leased: 100%
Percent Leased as of Date: 11/2/99
- -------------------------------- ----------------------------- -------------------------------- ----------------------
</TABLE>
THE LOAN
The Lincoln North Loan (the "Lincoln North Loan") is secured by a first
mortgage on a 124,998 net rentable square foot office building (the "Lincoln
North Property"), located in Lincoln, Massachusetts. The Lincoln North Loan was
originated by JHREF on October 29, 1998.
THE BORROWER. The Borrower is LadyLin Properties Limited Partnership, a
Massachusetts limited partnership (the "Lincoln North Borrower"). The general
partner of the Lincoln North Borrower is IBUS LadyLin, Inc. (the "Lincoln North
General Partner") and the limited partners of the Lincoln North Borrower are
Amerikaans Vastgoedfonds Lincoln C.V. and Kort, Inc. (collectively, the "Lincoln
North Limited Partners").
SECURITY. The Lincoln North Loan is secured by a Mortgage, Assignment
of Leases and Rents and Security Agreement ("Mortgage") and certain additional
security documents. The mortgage is a first lien on the fee interest in the
Lincoln North Property. The Lincoln North Property has rights and access to its
septic system by means of an easement over adjacent land. Rights in the easement
are granted as security for the Mortgage and are included in the loan title
insurance policy as part of the property covered by the insured mortgage. The
Lincoln North Loan is non-recourse, subject to certain limited exceptions. The
Lincoln North General Partner has executed a guaranty of the non-recourse carve
outs.
PAYMENT TERMS. The mortgage rate is fixed at 7.150%. The Lincoln North
Loan requires monthly payments of principal and interest of $110,091.30 until
its maturity on December 1, 2008, at which time all unpaid principal and accrued
but unpaid interest is due. Interest on the Lincoln North Loan is computed on
the basis of the actual number of days elapsed in each month in a 360-day year,
except that interest for a period of less than a full month shall be computed on
the basis of the actual number of days elapsed in a 365-day year.
PREPAYMENT. The Lincoln North Loan may be prepaid in whole, but not in
part, with at least 30 days, but not more than 90 days, prior written notice on
or after December 1, 2003 upon payment of a Prepayment Premium calculated on the
basis of the greater of a yield maintenance premium calculated by reference to
U.S. Treasury obligations and one percent (1%) of the then outstanding principal
balance of the note. No Prepayment Premium is due if the Lincoln North Loan is
prepaid within one hundred eighty (180) days prior to maturity.
If there is an event of default prior to January 1, 2003 and the lender
accelerates the Lincoln North Loan, the Lincoln North Borrower must pay a
Prepayment Premium calculated on the basis of the greater of (i) a yield
maintenance premium calculated by reference to U.S. Treasury obligations plus
one percent (1%) of the then outstanding principal balance of the note and (ii)
ten percent (10%) of the then outstanding principal balance of the note.
LATE FEES AND DEFAULT INTEREST. There is a late fee on overdue
installments of 5% of the amount overdue. The Lincoln North Loan accrues
interest at 11.15% per annum while the Lincoln North Loan is in default.
III-14
<PAGE>
TRANSFER OF PROPERTY OR INTERESTS IN THE BORROWER. The Lincoln North
Loan becomes immediately due and payable upon the transfer of the Lincoln North
Property except for the multiple right to transfer the Lincoln North Property,
upon consent of the lender, such consent not to be unreasonably withheld, if
among other things, (i) there is no event of default; (ii) the Rating Agencies
have confirmed in writing that such transfer will not result in a
requalification, reduction or withdrawal of the ratings assigned to any
secondary market transaction; (iii) the transferee is a single purpose,
bankruptcy remote entity; and (iv) the transferee assumes the Lincoln North
Loan.
The Lincoln North Loan becomes immediately due and payable upon the
transfer of ownership interests in the Lincoln North Borrower except for (i) a
transfer of ten percent (10%) or less of the stock of a corporation that is, at
the time, a successor to the Lincoln North Borrower, the guarantor of
non-recourse carve-outs, or a general or limited partner of the Lincoln North
Borrower; (ii) transfers of stock interests in IBUS USA, Inc. ("USA"), the owner
of 100% of the interests in the Lincoln North General Partner and certain
interests in the Lincoln North Limited Partners, as long as (1) the current
named president and vice president of the Lincoln North General Partner together
with the independent director of such entity remain the sole directors of the
Lincoln North General Partner and (2) the current named president and vice
president of the Lincoln North General Partner remain in control of the Lincoln
North Borrower and the operations and management of the Lincoln North Property;
and (iii) transfers of partnership interests in the Lincoln North Borrower as
long as certain conditions are satisfied, including without limitation (1) there
is no event of default; (2) no transfer shall result in the proposed transferee
or any affiliate or family member (except the Lincoln North General Partner) of
the transferee owning more than 49% of the interests in the Lincoln North
Borrower; (3) the Lincoln North General Partner shall (a) remain the sole
general partner of the Lincoln North Borrower, (b) maintain its status as a
single purpose, bankruptcy remote entity and (c) maintain control of the
operations of the Lincoln North Borrower and Lincoln North Property; and (4) USA
shall maintain a controlling interest in the Lincoln North General Partner and
own directly all of the issued and outstanding stock of the Lincoln North
General Partner.
ESCROW/RESERVES. There is a reserve fund which requires deposits in an
amount sufficient to pay taxes when due. There was a repair reserve established
at closing for deferred maintenance; the items identified at closing pursuant to
a repair reserve agreement have been completed and the amount in the reserve has
been disbursed. A replacement repair reserve is in place and requires monthly
payments of $2,050. The Lincoln North Borrower deposited $804,464.60 in a
reserve for certain tenant improvement and leasing commissions at the Lincoln
North Property. The Lincoln North Borrower is required to make monthly payments
of $7,200 if the reserve amount for certain tenant improvements and leasing
commissions drops below $300,000. A reserve agreement was executed indicating
that a reserve in the amount of $1,000,000.00 be established for rental
achievement in connection with two spaces at the Lincoln North Property which
were the focus of re-leasing efforts. Prior to the closing of the Lincoln North
Loan, leases were executed for a portion of the vacant space and the actual
amount of the rental achievement reserve deposited was reduced from $1,000,000
to $500,000.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness or encumbrances of the
Lincoln North Property are prohibited.
THE PROPERTY
The Lincoln North Property is a 3-story office building with 124,998
square feet of net rentable space, located in Lincoln, Massachusetts. The
Lincoln North Property was 100% leased and 100% occupied as of 11/2/99. The
building is constructed with a steel frame and a concrete foundation.
Major office tenants of the Lincoln North Property include PreVision
Marketing and FasTech Integration, Inc. Seven (7) other tenants occupy the
remainder of the occupied space. Contractual lease expirations during the loan
term are as follows: 45,293 square feet (36%) in 2000, 1,121 square feet (1%) in
2001, 11,891 square feet (10%) in 2002, 17,237 square feet (14%) in 2003, 40,253
square feet (32%) in 2004, and 7,725 square feet (7%) in 2005. As of 11/2/99,
the average rent was $26.09 per square foot.
MANAGEMENT
The Lincoln North Property is managed by Cranberry Hill Associates,
Inc. (the "Lincoln North Property Manager"). According to information supplied
by the Lincoln North Borrower, the Lincoln North Property
III-15
<PAGE>
Manager is an entity unaffiliated with the Lincoln North Borrower and manages
approximately 160,000 square feet of office space in the Northwest sub-market of
Boston.
III-16
<PAGE>
LOAN NO. 15 - 120 EAST 23RD STREET LOAN AND PROPERTY
<TABLE>
<CAPTION>
- ------------------------------- ------------------------------- ----------------------------- -----------------------
<S> <C> <C> <C>
Cut-off Date Balance: $14,832,033 Property Type: Office
Loan Type: Principal & Interest; Balloon Location: New York, NY
Origination Date: May 21, 1999 Year Built/Renovated: 1916/1991
Maturity Date: 06/01/09 Net Rentable Square Feet: 236,406
Mortgage Rate: 7.10% Cut-off Date Balance/SF: $63
Annual Debt Service: $1,283,708 Appraised Value: $34,500,000
DSCR: 1.85x Cut-off Date LTV: 43.0%
Underwritable Cash Flow: $2,376,375 Balloon LTV: 34.4%
Balance at Maturity: $11,864,766 Percent Leased: 100%
Percent Leased as of Date: 05/12/1999
- ------------------------------- ------------------------------- ----------------------------- -----------------------
</TABLE>
THE LOAN
The Gramercy Park Loan (the "Gramercy Park Loan") is secured by a first
mortgage on a 236,406 net rentable square foot office building (the "Gramercy
Park Property"), located in the Borough of Manhattan, in New York, New York. A
predecessor loan to the Gramercy Park Loan was originated by John Hancock Mutual
Life Insurance Company, (which has changed its name to John Hancock Life
Insurance Company) ("JHLICO") in August of 1992. That loan was refinanced, to
create the Gramercy Park Loan, by JHLICO on May 21, 1999. The Gramercy Park Loan
was sold to JHREF on November 2, 1999.
THE BORROWER. The borrower in the Gramercy Park Loan is Gramercy Park
Associates, L.P., a New York limited partnership (the "Gramercy Park Borrower").
The general partners of the Gramercy Park Borrower are Jerome M. Cohen, Kenneth
Carmel and Andy Roos (collectively, the "Gramercy General Partners").
SECURITY. The Gramercy Park Loan is secured by a Consolidation,
Extension and Modification Agreement ("Mortgage") and certain additional
security documents. The Mortgage is a first lien on the fee interest in the
Gramercy Park Property. The Gramercy Park Loan is non-recourse, subject to
certain limited exceptions.
PAYMENT TERMS. The mortgage rate is fixed at 7.10%. The Gramercy Park
Loan requires monthly payments of principal and interest of $106,975.69 until
its maturity on June 1, 2009, at which time all unpaid principal and accrued but
unpaid interest is due. The Gramercy Park Loan accrues interest computed on the
basis of twelve 30-days months in a 360-day year.
PREPAYMENT. The Gramercy Park Loan may be prepaid in whole, but not in
part, on or after July 1, 2003, with at least 30 days, but not more than 90
days, prior written notice upon payment of a Prepayment Premium calculated on
the basis of the greater of a yield maintenance premium calculated by reference
to U.S. Treasury obligations or one percent (1%) of the then outstanding
principal balance of the note. No Prepayment Premium is due if the Gramercy Park
Loan is prepaid within ninety (90) days prior to maturity and there is no event
of default outstanding.
If there is an event of default prior to July 1, 2003 and the lender
accelerates the Gramercy Park Loan, causing the loan to become due and payable
in its entirety, the Gramercy Park Borrower must pay a prepayment premium
calculated on the basis of the greater of (i) a yield maintenance premium
calculated by reference to U.S. Treasury obligations or (ii) ten percent (10%)
of the then outstanding principal balance of the note.
LATE FEES AND DEFAULT INTEREST. The Gramercy Park Loan accrues interest
at 14.1% per annum while the Gramercy Park Loan is in default, including
defaults due to late payments of principal and interest.
TRANSFER OF PROPERTY OR INTERESTS IN THE BORROWER. The Gramercy Park
Loan becomes immediately due and payable upon the transfer of the Gramercy Park
Property or any ownership interest, other than a limited partner or non-managing
member interest, in the Gramercy Park Borrower except, provided no event of
default is
III-17
<PAGE>
outstanding, in connection with a transfer by the Gramercy Park General Partners
of their partnership interests (i) to any other of the Gramercy Park General
Partners, (ii) to family members of the Gramercy Park General Partners or to
trusts for their benefit, (iii) to a corporation which becomes the general
partner of the Gramercy Park Borrower or a limited liability company, as long as
the controlling interest in the corporation or limited liability company is held
by the present Gramercy Park General Partners and (iv) by devise or intestate
distribution to members of the immediate family of any of the Gramercy Park
General Partners or to trusts for the benefit of any of the Gramercy Park
General Partners or to a conservator in the event of incapacity of any of the
Gramercy Park General Partners.
ESCROW/RESERVES. There is a reserve fund which requires deposits in an
amount sufficient to pay taxes and hazard insurance premiums when due. There is
also a reserve for tenant improvements and leasing commissions to be released
upon (a) the renewal of the UCP Lease (as described below) for a term of not
less than 5 years, (b) the entering of a new lease for a term of not less than 5
years, or (c) the debt service coverage ratio on the Gramercy Park Property
equaling or exceeding 1.40:1.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness or encumbrances of the
Gramercy Park Property are prohibited except for a one-time right to incur
subordinated debt if the net annual income (the income from the operation of the
Gramercy Park Property after deducting all operating expenses, provisions for
taxes and reserves and all other property deductions) in any year is more than
160% of the combined annual debt service and the combined loan to value ratio
does not exceed 60%.
THE PROPERTY
The Gramercy Park Property is a 12-story office building with 236,406
square feet of net rentable area, located at 120 East 23rd Street. The Gramercy
Park Property was 100% leased and 100% occupied as of 5/12/99. The building is
constructed of concrete, brick masonry, limestone and steel.
The three office tenants of the Gramercy Park Property are Home Box
Office, Time Warner Cablevision and United Cerebral Palsy ("UCP"). Contractual
lease expirations during the loan term are as follows: 37,000 square feet (16%)
in 2001, 88,406 square feet (37%) in 2004, and 111,000 square feet (47%) in
2006. As of 5/12/99, the average rent was $17.41 per square foot.
MANAGEMENT
The Gramercy Park Property is managed by GVA Williams Real Estate
Company (the "Gramercy Park Property Manager"). The Gramercy Park General
Partners are the principals of the Gramercy Park Property Manager. According to
information supplied by the Gramercy Park Borrower, the Gramercy Park Property
Manager is a large New York City commercial property management and leasing
company, which manages over 17 million square feet of office space in Manhattan.
III-18
<PAGE>
LOAN NO. 16 - 133 EAST 58TH STREET LOAN AND PROPERTY
<TABLE>
<CAPTION>
- ---------------------------------- --------------------------- -------------------------------- ----------------------
<S> <C> <C> <C>
Cut-off Date Balance: $14,272,720 Property Type: Office
Loan Type: Principal & Interest; Location: New York, NY
Balloon
Origination Date: June 10, 1999 Year Built/Renovated: 1930
Maturity Date: 7/1/09 Net Rentable Square Feet: 107,556
Mortgage Rate: 7.00% Cut-off Date Balance/SF: $133
Annual Debt Service: $1,349,020 Appraised Value: $37,600,000
DSCR: 2.25x Cut-off Date LTV: 38%
Underwritable Cash Flow: $3,037,745 Balloon LTV: 25.9%
Balance at Maturity: $9,737,796 Percent Leased: 93.2%
Percent Leased as of Date: 11/01/99
- ---------------------------------- --------------------------- -------------------------------- ----------------------
</TABLE>
THE LOAN
The 133 East 58th Street Loan (the "133 East 58th Street Loan") is
secured by a first mortgage on a 107,556 net rentable square foot office
building (the "133 East 58th Street Property"), located in the Borough of
Manhattan in New York, New York. Predecessor loans to the 133 East 58th Street
Loan were originated by John Hancock Mutual Life Insurance Company (which has
changed its name to John Hancock Life Insurance Company) ("JHLICO") in September
of 1986 and August of 1992. Those loans were refinanced, to create the 133 East
58th Street Loan, by JHLICO on June 10, 1999. The 133 East 58th Street Loan was
sold to JHREF on November 2, 1999.
THE BORROWER. The borrower in the 133 E 58th Street Loan is 58th & Lex
Associates, a New York limited partnership (the "133 East 58th Street
Borrower"). The general partner of the 133 East 58th Street Borrower is 133 E.
58th Street Corp. (the "133 East 58th Street General Partner").
SECURITY. The 133 East 58th Street Loan is secured by a first mortgage
contained in a Consolidation, Extension and Modification Agreement ("Mortgage")
and certain additional security documents. The mortgage is a first lien on the
fee interest in the 133 East 58th Street property. The 133 East 58th Street Loan
is non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.00%. The 133 East 58th
Street loan requires monthly payments of principal and interest of $112,418.35
until its maturity on July 1, 2009, at which time all unpaid principal and
accrued but unpaid interest is due. The 133 East 58th Street Loan accrues
interest computed on the basis of twelve (12) thirty (30) day months and a
360-day year.
PREPAYMENT. The 133 East 58th Street Loan may be prepaid in whole, but
not in part, with at least 30 days, but not more than 90 days, prior written
notice on or after August 1, 2002 upon payment of a Prepayment Premium
calculated on the basis of the greater of a yield maintenance premium calculated
by reference to U.S. Treasury obligations or one percent (1%) of the then
outstanding principal balance of the note. No Prepayment Premium is due if the
133 East 58th Street Loan is prepaid within ninety (90) days prior to maturity.
If there is an event of default prior to August 1, 2002 and the lender
accelerates the 133 East 58th Street loan, the 133 East 58th Street Borrower
must pay a Prepayment Premium calculated on the basis of the greater of (i) a
yield maintenance premium calculated by reference to U.S. Treasury obligations
and (ii) ten percent (10%) of the then outstanding principal balance of the
note.
LATE FEES AND DEFAULT INTEREST. The 133 East 58th Street loan accrues
interest at 12% per annum while the 133 East 58th Street Loan is in default.
III-19
<PAGE>
TRANSFER OF PROPERTY OR INTERESTS IN THE BORROWER. The 133 East 58th
Street Loan becomes immediately due and payable upon the transfer of the 133
East 58th Street property except for the one time right to transfer the 133 East
58th Street Property, if among other things, (i) there is no event of default;
(ii) Lender reasonably approves the transferee's financial capacity,
creditworthiness, proven ability to manage property of the type and nature of
the 133 East 58th Street Property and the transferee's reputation in the
community; (iii) the transferee assumes The 133 East 58th Street loan.
The 133 East 58th Street Loan becomes immediately due and payable upon
the transfer of ownership interests in the 133 East 58th Street Borrower unless
certain conditions are satisfied, including without limitation (1) there is no
event of default; and (2) upon such transfer, members of the Resnick Family (the
principals of the 133 East 58th Street Borrower) own and control at least 51% of
the combined general and limited partnership interests of the 133 East 58th
Street Borrower.
ESCROW/RESERVES. There are no reserves in place for the 133 East 58th
Street loan.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness or encumbrances of the
133 East 58th Street property are prohibited except for a [one-time right] to
incur subordinated debt if the net annual income (the income from the operation
of the 133 East 58th Street Property after deducting all operating expenses,
provisions for taxes and reserves and all other property deductions) in any year
is more than 160% of the combined annual debt service and the combined loan to
value ratio does not exceed 60%.
THE PROPERTY
The 133 East 58th Street Property is a 14-story office building with
107,556 square feet of net rentable area. The 133 East 58th Street property was
93% occupied as of 11/1/99. A portion of the street level space of the building
is occupied by retail tenants and the remainder of the building is devoted to
office uses. The buildings exterior is a combination of masonry and terracotta
at each level above the second floor.
A major tenant of the 133 East 58th Street Property is Express, LLC. 58
other tenants occupy the remainder of the occupied space. Contractual lease
expirations during the loan term are as follows: 13,321 square feet (12%) in
2000, 2,490 square feet (2%) in 2001, 12,330 square feet (11%) in 2002, 14,380
square feet (13%) in 2003, 8,888 square feet (8%) in 2004, 17,786 square feet
(17%) in 2005, 891 square feet (1%) in 2006, 7,975 square feet (7%) in 2007,
21,425 square feet (20%) in 2008 and 754 square feet (1%) in 2009. As of
11/1/99, the average rent was $54.11 per square foot.
As part of the closing process, the 133 East 58th Street Borrower
delivered a municipal search report which revealed certain record violations.
The 133 East 58th Street Borrower signed an agreement at closing undertaking to
exercise best efforts to correct and cure the items disclosed in the municipal
search report, to pay any associated fines and to satisfy certain other due
diligence requirements. Certain of the violations have not been removed from the
records of the municipal offices, but Borrower has delivered certifications or
evidence that all the material requirements of the undertaking have been met.
MANAGEMENT
The 133 East 58th Street Property is managed by Jack Resnick & Sons,
Inc. (the "133 East 58th Street Property Manager"). According to information
supplied by the 133 East 58th Street Borrower, the 133 East 58th Street Property
Manager is an affiliated entity with the 133 East 58th Street Borrower and
manages approximately 5,000,000 square feet of commercial space.
III-20
<PAGE>
LOAN NO. 17 - THE NORWALK DISTRIBUTION CENTER LOAN AND PROPERTY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut off Date Balance: $13,778,154 Property Type: Industrial
Loan Type: Principal and Location: Santa Fe Springs,
Interest; Balloon CA
Origination Date: 11/24/1999 Year Built/Renovated 1999
Maturity Date: 12/1/2009 Square Footage: 355,590
Mortgage Rate: 8.515% Cut-off Date Balance/SF: $39
Annual Debt Service: $1,275,082 Appraisal Value: $20,800,000
DSCR: 1.18x Cut-off Date LTV: 66.2%
Underwritable Cash Flow: $1,509,059 Percent Leased: 100.0%
Balance at Maturity: $12,510,721 Percent Leased as of Date: 11/30/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOANS
The Norwalk Distribution Center loan (the "Loan") is secured by a first
mortgage on a new industrial warehouse building located in Santa Fe Springs, Los
Angeles County, California (the "Property"). The Loan was originated by Wells
Fargo Bank on November 24, 1999.
THE BORROWER. The borrowing entity is PDC Norwalk, LLC (the
"Borrower"), established in 1998 as a Special Purpose Entity. Nationwide
Theatres Corp owns 99% of the borrowing entity. PDC Norwalk, Inc., a Delaware
corporation owns 1% and manages the borrowing entity. Nationwide Theatres Corp
and the borrowing entity are controlled by the Forman Family. Michael Forman
serves as president and his son Christopher Forman is CEO of the controlling
entity.
SECURITY. The Loan is secured by a Deed of Trust, Assignment of Rents
and Leases, UCC Financing Statements and certain additional security documents.
The mortgage is a first lien on the Borrower's fee interest in the Property. The
Loan is non-recourse to the Borrower, subject to certain limited exceptions.
MAJOR TENANTS. The major tenant at the Property is Performance Team
Freight Systems Inc. Certain easement agreements established the rights and
obligations of the tenants and the Borrower.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.515% per annum. The Loan
requires monthly payments of principal and interest until its maturity date on
December 1, 2009, at which time all unpaid principal and accrued but unpaid
interest shall be due.
PREPAYMENT/DEFEASANCE. Voluntary prepayment is prohibited until the
greater of two years post-securitization or the third anniversary of the
Financing Documents. Defeasance is permitted only upon the satisfaction of
certain conditions specified in the Financing Documents, including confirmation
from each Rating Agency that defeasance would not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any class of
certificates. No prepayment penalty is due if the Loan is prepaid within ninety
(90) days prior to maturity.
LATE FEES AND DEFAULT INTEREST. There is a 4% late fee on overdue
installments, and the Loan accrues interest at the mortgage rate plus 5% per
annum while the Loan is in default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Mortgage Loan
Documents provide that the Loan will become immediately due and payable upon any
transfer of the borrower's interest in the property or upon the transfer of any
ownership interest in the borrower without the prior written consent of the
Lender, except in connection with any of the permitted transfers. Ownership
interests in the borrower or the property may be transferred so long as Michael
Forman or Christopher Forman retains at least 50% of the same type of ownership
interest in the borrower and property held at the time the loan was made and
Michael Forman or Christopher Forman
III-21
<PAGE>
continues to control the management of borrower and the property; and Michael
Forman and Christopher Forman may also transfer their interest into a inter
vivos family trust so long as the transferor is the trustee of the trust. The
following conditions precedent must be satisfied with respect to all of the
foregoing transfers: (a) 30 days' prior notice to the lender (together with
documentation regarding the new ownership structure); (b) execution and delivery
of documents that lender may reasonably require; (c) title insurance if required
by lender; (d) payment of a $1,000 transfer fee; and (d) reimbursement to lender
of all reasonable costs and expenses paid or incurred by lender.
ESCROW/RESERVES. The Financing Documents require escrow deposits of
$6,096 and $14,301 and monthly reserve deposits of $2,032 and $2,043 to pay for
taxes and insurance premiums respectively.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness and encumbrances are
prohibited by the Financing Documents.
THE PROPERTY
The subject property consists of a 15.622-acre rectangular-shaped,
level parcel of land located on the east side of Norwalk Boulevard within an
incorporated area of the city of Santa Fe Springs, Los Angeles Country,
California. The subject property is a new, 355,590-sf industrial warehouse
building with 30 foot clear heights. (The building is constructed of concrete
tilt-up panels on a reinforced concrete foundation) The building is configured
for one tenant, but is divisible to accommodate two tenants. The building
includes 40 truck loading/unloading doors (38 dock high, two at dock level,
accessible by ramp). The drives and parking areas are concrete on the truck
access side and asphalt paved at the rear of the building. The office buildout
totals approximately 16,497 sf or 5% of the building.
MANAGEMENT
The Property is managed by the Borrower.
III-22
<PAGE>
LOAN NO. 18 - INTERNATIONAL AIRPORT CENTERS LOAN AND PROPERTY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cut off Date Balance: $13,684,373 Property Type: Industrial
Loan Type: Principal and Location: Los Angeles, CA
Interest; Balloon
Origination Date: 9/9/1999 Year Built/Renovated 1953/1998
Maturity Date: 10/1/2009 Square Footage: 330,358
Mortgage Rate: 7.980% Cut-off Date Balance/SF: $41
Annual Debt Service: $1,206,214 Appraisal Value: $21,400,000
DSCR: 1.25x Cut-off Date LTV: 63.9%
Underwritable Cash Flow: $1,511,997 Percent Leased: 100.0%
Balance at Maturity: $12,290,805 Percent Leased as of Date: 9/30/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOANS
The International Airport Centers loan (the "Loan") is comprised of a
portfolio of eleven properties on a total of 14.65 acres acquired in July 1998.
Seven of the properties are improved with bulk industrial buildings comprising
244,010 sf of rentable space, located on 12.67 acres. These buildings were
developed between 1953-1978. Building clear heights range from 16 to 33 foot and
each building has either dock-high or grade-level truck loading. Overall, office
build-out ranges from 5 to 20%. The remaining four properties, 2.47 acres, are
land leases. The multiple sites are in close proximity to each other and to the
Los Angeles International Airport (LAX). Wells Fargo Bank originated the loan on
September 9, 1999.
THE BORROWER. IAC Aviation L.L.C. is the borrowing entity whose
managing member is International Airport Centers L.L.C. (99% ownership), with
IAC Investors - II L.L.C. (0.5%) and IAC Aviation Inc. (0.5%) as members.
SECURITY. The Loan is secured by, among other things, a Deed of Trust
and Absolute Assignment of Rents and Leases and Security Agreement (and Fixture
Filing) ("Deed of Trust") encumbering certain real property. The Loan is
non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.980% per annum. The Loan
requires monthly payments of principal and interest of $100,517.89 until October
1, 2009, at which time all unpaid principal and accrued but unpaid interest is
due. The loan accrues interest computed on the basis of the actual number of
days elapsed in each month in a 360-day year.
PREPAYMENT/DEFEASANCE. Voluntary prepayment is prohibited until the
greater of two years post-securitization or the third anniversary of the note.
However, the Borrower may defease at any time after the above lock-out has
expired. Defeasance is permitted only upon the satisfaction of certain
conditions specified in the loan documents, including, at lender's option,
confirmation from each Rating Agency that defeasance would not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any class of certificates. No prepayment penalty is due if the Loan is prepaid
within ninety (90) days prior to maturity.
LATE FEES AND DEFAULT INTEREST. There is a 4% late fee on overdue
installments and the loan accrues interest at the mortgage rate plus 5% per
annum while in default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER
The mortgage loan documents provide that the Loan will become
immediately due and payable upon any transfer of the borrower's interest in the
property or upon transfer of any ownership interest in the borrower without the
prior written consent of lender, except in connection with the permitted
transfer described below. The borrower may transfer no more than 49% in the
aggregate of the limited liability company membership interests in borrower
III-23
<PAGE>
provided no Default has occurred and upon the following conditions, among
others: a change in control of management of borrower shall not occur; the
borrower shall continue to be a single purpose asset bankruptcy remote entity;
the net worth of IAC shall not be less than immediately prior to such transfer;
lender's reasonable acceptance of the character and credit history of the
transferee. Provided however, borrower may transfer more than 49% of the limited
liability interest in borrower and transfer control or management of borrower
upon satisfaction of the above conditions and the following conditions, among
others: debt to asset ratio of 70% or less; proposed transferee possesses
ownership and management experience; payment of 0.5% transferee fee.
ESCROW/RESERVES. The loan documents require monthly escrow deposits in
the amount of $16,752 and $4,296 which are sufficient to pay taxes and insurance
premiums, respectively, when due. The documents also provide for a $5,781
monthly escrow to cover tenant improvements and leasing commissions. In
addition, the Documents provide for a $4,129 monthly escrow to cover replacement
reserves.
SUBORDINATED/OTHER DEBT. Secured subordinate indebtedness and
encumbrances are prohibited by the documents. Borrower shall be permitted to
enter into equipment leases for equipment to be used in the operation of the
Property; provided, however, the aggregate amount of all such equipment leases
shall be not more than $200,000.
THE PROPERTIES
The property at 5315 W. 102nd Street is a rectangular-shaped 0.60 acre
lot improved with a 11,870 rentable sf single-story light industrial building
constructed in 1955. A single tenant, Rentokil, occupies 100% of the building.
The property at 5330 and 5340 W. 102nd Street is a rectangular-shaped
1.68 acre parcel improved with a 73,085 rentable sf single-story light
industrial building constructed in 1960. It is 100% occupied by two tenants,
Warner Bros. and Custom Air. The majority of tenant space is warehouse-storage
space with 12% build-out for Warner Bros. and 15% build-out for Custom Air.
The property at 5540 W. 104th Street is a trapezoidal-shaped 0.46-acre
parcel improved with a single-story light industrial building constructed in
1958. The building consists of 20,055 rentable sf and is 100% occupied by one
tenant, Jack Mayesh Wholesale Florist.
The property at 5320 W. 104th Street is an irregular-shaped 1.65-acre
parcel improved with a 16,000 rentable sf single-story light industrial building
constructed in 1963. In addition, there are two auxiliary butler-type metal
buildings with 5,400 sf and 2,800 sf located at the rear side of the property
constructed by the tenant and not included in total square footage. These two
auxiliary buildings are constructed of pre-engineered metal and one is a "clean
room" laboratory and the other is a "cryogenic" test facility. The building is
100% leased to National Technical Systems.
The property at 5214 W. 104th Street is a rectangular-shaped 1.38 acre
lot improved with a 12,000 rentable sf single-story industrial building
constructed in 1978. It is 100% occupied by a single tenant, Mid America, and is
used as a warehouse facility. There is 2,400 sf (20%) of office space which was
added to the original building in 1994.
The property at 10419-10425 La Cienega Blvd. is a rectangular-shaped
1.84-acre lot improved with a 36,000 rentable sf single-story light industrial
building constructed in 1953. The building is 100% leased by Senderex Cargo,
Inc. A subtenant, Ted Solomon Trucking, occupies a portion of the building.
The property at 5540 Century Boulevard is a rectangular-shaped
2.98-acre lot improved with a 75,000 rentable sf single-story light industrial
building constructed in 1953. It is 100% occupied by a single tenant, Panalpina,
who sub-leases the building from the Neutrogena Corporation.
The property at 5470 W. 102nd St. is a 17,163 sf lot, which is ground
leased to Nordisk Aviation and is used as an open storage area. It is improved
with asphalt paving and is secured by perimeter fencing.
III-24
<PAGE>
The property at 5260 W. 104th St. is a 53,301 sf lot, which is ground
leased to 5260 W. 104th Street Associates (L.A. Times). It is improved with a
12,000-sf single-story light industrial building constructed in 1951 and owned
by the tenant.
The property at Tract 15691, lot 77 is a 12,134 sf lot, which is ground
leased to Enterprise Rent-a-Car. This lot is improved with asphalt paving and is
used as an additional parking lot for the tenant.
The property at 10201 S. La Cienega Boulevard is a 3,750 sf lot, which
is ground leased to LAX Partners and used as a sidewalk easement and parking
along the frontage of the Fox Rent-a-Car building. The lot is improved with
asphalt paving and a concrete sidewalk.
MANAGEMENT
The property is managed by International Airport Centers, LLC., an
affiliate of the borrower.
III-25
<PAGE>
LOAN NO. 19 - MANHATTAN GATEWAY LOAN AND PROPERTY
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
Cut off Date Balance: $13,183,119 Property Type: Retail
Loan Type: Principal and Location: Manhattan Beach,
Interest; Balloon CA
Origination Date: 11/23/1999 Year Built/Renovated 1999
Maturity Date: 1/1/2010 Square Footage: 82,000
Mortgage Rate: 8.247% Cut-off Date Balance/SF: $161
Annual Debt Service: $1,189,672 Appraisal Value: $17,000,000
DSCR: 1.18x Cut-off Date LTV: 77.5%
Underwritable Cash Flow: $1,406,597 Percent Leased: 100.0%
Balance at Maturity: $11,889,100 Percent Leased as of Date: 11/18/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE LOAN
The Manhattan Gateway loan (the "Loan") is secured by a newly
constructed retail shopping center located at 1800 Rosecrans Avenue in Manhattan
Beach, California. The Loan was originated by Wells Fargo Bank on November 23,
1999.
THE BORROWER. The borrowing entity is comprised of 1800 Rosecrans
Partners, LLC, with CCA Rosecrans, Inc. as a special purpose entity member. The
borrower and CCA Rosecrans, Inc. are special purpose entities whose
organizational documents do not permit them to engage in any business unrelated
to the mortgaged property, nor have any assets other than the mortgaged property
or any indebtedness (subject to limited exceptions such as trade payables
incurred in the ordinary course of business) other than the mortgage loan.
Additionally, CCA Rosecrans, Inc.'s organizational documents require the
unanimous vote of its directors in connection with the filing of a petition of
bankruptcy relating to the borrower or CCA Rosecrans, Inc.
SECURITY. The note is secured by, among other things, a Deed of Trust
and Absolute Assignment of Rents and Leases and Security Agreement (and Fixture
Filing) ("Deed of Trust") encumbering certain real property.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Lender shall, two
times only, consent to the voluntary sale or exchange of all of the Property by
Trustor (as defined in the Deed of Trust) to a bon-a-fide third party purchaser,
without any modification of the terms of this Note or the other Loan Documents,
if no Default has occurred and is continuing and all the conditions found in the
Promissory Note have been met.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.247% per annum. The Loan
requires monthly payments of principle and interest until its maturity date on
January 1, 2010, at which time all unpaid principal and accrued but unpaid
interest shall be due and owing in full.
PREPAYMENT/DEFEASANCE. Voluntary prepayment is prohibited until the
greater of two years post securitization or the third anniversary of the
financing documents, at which time the Borrower may defease. Defeasance is
permitted only upon the satisfaction of certain conditions specified in the
Financing Documents, including confirmation from each Rating Agency that
defeasance would not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any class of certificates. No prepayment
penalty is due if the Loan is prepaid within ninety (90) days prior to maturity.
LATE FEES AND DEFAULT INTEREST. There is a 4.0% late fee on overdue
installments, and the Loan accrues interest at the mortgage rate plus 5.0% per
annum while the Loan is in default.
THE PROPERTY
The subject property is a newly-constructed, specialty retail shopping
center known as Manhattan Gateway. The center is situated on two contiguous land
parcels encompassing approximately 7.22 acres, located at the
III-26
<PAGE>
southwest corner of Rosecrans Avenue and Aviation Boulevard in Manhattan Beach,
California. The entire development consists of 107,000 square feet with the
subject portion of the center totaling 82,000 square feet. There is 68,000
square feet of in-line space situated at the southern portion of the site. This
area is leased to four tenants, including Trader Joe's, Barnes & Noble, Pier 1,
and Old Navy. The spaces leased to these tenants range in size from 10,000 to
25,000 square feet. In addition to the in-line space, there is a 6000 square
foot retail building situated on a 39,277 square foot pad, near the northeast
corner of the center, which is leased to Gateway Computers. There is also a
ground lease pad situated along Rosecrans Avenue near the northwest corner of
the center. This 74,918 square foot pad is ground leased to II Fornaio
Restaurant, and contains an 8,000 square foot restaurant. An approximate 75,000
square foot portion of the total center site area was sold to REI in December
1998 where REI constructed its own 25,000 square foot building. The REI building
is not part of the loan collateral.
MANAGEMENT
The property is managed by Comstock, Crosser & Assoc. Mgmt., Inc., an
affiliate of the Borrower.
III-27
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- -------------------------------------------- ---------------------------------
MORGAN STANLEY DEAN WITTER [GRAPHIC OMMITTED] April 12, 2000
Securitized Products Group
MORGAN STANLEY DEAN WITTER
- -------------------------------------------- ---------------------------------
CMBS NEW ISSUE
TERM SHEET
------------------------------------------
EXPECTED PRICING DATE: APRIL 14, 2000
------------------------------------------
$626,951,030
(APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
AS DEPOSITOR
PRINCIPAL COMMERCIAL FUNDING, LLC
JOHN HANCOCK REAL ESTATE FINANCE, INC.
WELLS FARGO BANK, NATIONAL ASSOCIATION
MORGAN STANLEY DEAN WITTER MORTGAGE CAPITAL INC.
AS MORTGAGE LOAN SELLERS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.
NORWEST INVESTMENT SERVICES, INC.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
TRANSACTION FEATURES
>> Sellers:
- --------------------------------------------------------------------------------
NO. OF CUT-OFF DATE % OF
SELLERS LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
Principal Commercial Funding, LLC 65 325,011,895 47.1
John Hancock Real Estate Finance, Inc. 22 157,303,310 22.8
Wells Fargo Bank, N.A. 34 154,329,406 22.4
Morgan Stanley Dean Witter Mortgage 12 52,820,091 7.7
Capital Inc.
- --------------------------------------------------------------------------------
TOTAL: 133 $689,464,702 100.0%
- --------------------------------------------------------------------------------
>> Loan Pool:
o Average Cut-off Date Balance: $5,183,945
o Largest loan by Cut-off Date Balance (including crossed loans):
$20,833,699 (3.0% of Pool, secured by a cross-collateralized pool of 5
office properties)
o Five largest and ten largest loans (including crossed loans): 13.6%
and 23.8% of Pool, respectively
>> Credit Statistics:
o Weighted average debt service coverage ratio of 1.50x
o Weighted average loan-to-value of 65.4%; weighted average balloon
loan-to-value of 56.8%
>> Property Types:
o Retail, office, industrial and multifamily properties comprise 92.0%
of Pool
OFFICE INDUSTRIAL MULTIFAMILY RETAIL
31.8% 16.9% 10.3% 33.0%
ASSISTED LIVING - 3.1%
HOSPITALITY - 2.0%
SELF-STORAGE FACILITY - 1.4%
MOBILE HOME PARK - 0.8%
MIXED USE - 0.8%
>> Call Protection:
o Lockout period ranging from 24 to 59 months, then defeasance
provisions: 63.8%
o Lockout period ranging from 30 to 60 months, then the greater of yield
maintenance and 1.0%: 31.6%
o Lockout period ranging from 32 to 41 months, then the option of either
defeasance provisions or the greater of yield maintenance and 1.0%:
4.5%
>> Collateral Information Updates: Updated loan information is expected to be
part of the monthly Certificateholder Reports available from the Trustee in
addition to detailed payment and delinquency information. Information
provided by the Trustee is expected to be available at www.lnbabs.com.
Updated property operating and occupancy information, to the extent
delivered by borrowers, is expected to be available to Certificateholders
from the Master Servicer
>> Bond Information: Cash flows are expected to be modeled by TREPP, CONQUEST
and INTEX and are expected to be available on BLOOMBERG
>> Lehman Aggregate Bond Index: It is expected that this transaction will be
included in the Lehman Aggregate Bond Index
** NOTE THAT ALL NUMBERS PRESENTED HEREIN ARE AS OF A MARCH 1, 2000 CUT-OFF
DATE UNLESS OTHERWISE NOTED **
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-2
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
OFFERED CERTIFICATES
<TABLE>
<CAPTION>
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
INITIAL EXPECTED FINAL INITIAL
CERTIFICATE SUBORDINATION RATINGS AVERAGE PRINCIPAL DISTRIBUTION PASS-THROUGH
CLASS Balance(1) LEVELS (FITCH/S&P) LIFE(2) WINDOW(2)(3) DATE(2) RATE(4)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 $113,834,030 19.75% AAA/AAA 5.70 1-103 11/15/08 TBD(5)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
A-2 439,000,000 19.75 AAA/AAA 9.34 103-116 12/15/09 TBD(5)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
B 22,408,000 16.50 AA/AA 9.69 116-117 1/15/10 TBD(5)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
C 25,854,000 12.75 A/A 9.72 117-117 1/15/10 TBD(5)
D 8,619,000 11.50 A-/A- 9.72 117-117 1/15/10 TBD(5)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
E 17,236,000 9.00 BBB/BBB 9.74 117-118 2/15/10 TBD(5)
- ----------- -------------------- ---------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
PRIVATE CERTIFICATES (6)
<TABLE>
<CAPTION>
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
INITIAL AGGREGATE
CERTIFICATE EXPECTED FINAL INITIAL
BALANCE OR SUBORDINATION RATINGS AVERAGE PRINCIPAL DISTRIBUTION PASS-THROUGH
CLASS NOTIONAL AMOUNT(1) LEVELS (FITCH/S&P) LIFE(2) WINDOW(2)(3) DATE(2) RATE(4)
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
X $689,003,732(7) --- AAA/AAAr --- --- 11/15/19 Variable(8)
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
F 6,895,000 8.00 BBB-/BBB- 9.80 118-118 2/15/10 TBD(5)
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
G 1,724,000 7.75 NR/BBB- 9.80 118-118 2/15/10 TBD(5)
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
H - M 53,433,701 --- --- --- --- --- 6.50%
- ----------- ------------------- ---------------- --------------- ------------- --------------- ---------------- -------------------
</TABLE>
Notes: (1) As of April 1, 2000. In the case of each such Class, subject to a
permitted variance of plus or minus 5%.
(2) Based on the Structuring Assumptions described in the Prospectus
Supplement (including a settlement date of April 26, 2000) and
assuming 0% CPR.
(3) Principal window is the period (expressed in terms of months and
commencing with the month May) during which distributions of
principal are expected to be made to the holders of each
designated Class in accordance with the Structuring Assumptions,
assuming 0% CPR.
(4) The Class A-1 and A-2 will accrue interest at a fixed rate. The
Class B, C, D, E, F, G and X Certificates will accrue interest at
a variable rate as described below.
(5) The Pass-Through Rate on the Class A-1, A-2, B, C, D, E, F and G
certificates will be determined at pricing.
(6) Certificates to be offered privately pursuant to Rule 144A.
(7) Class X Notional Amount is equal to the sum of all Principal
Balance Certificates outstanding from time to time.
(8) The Pass-Through Rate on the Class X Certificates on each
Distribution Date will equal, in general, the NWAC Rate minus the
weighted average of the Pass-Through Rates of the classes of
certificates that have principal amounts.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-3
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
I. ISSUE CHARACTERISTICS
<TABLE>
<CAPTION>
<S> <C>
Issue Type: Public: Class A-1, A-2, B, C, D and E (the "Offered Certificates")
Private (Rule 144A): Class X, F and G
Securities Offered: $626,951,030 monthly pay, multi-class
sequential pay commercial mortgage REMIC
Pass-Through Certificates, including two
fixed-rate principal and interest classes (A-1
and A-2) and four variable-rate principal and
interest classes (B, C, D and E)
Collateral: The collateral consists of a $689,464,702 pool of 133 fixed-rate commercial and
multifamily Mortgage Loans
Sellers: Principal Commercial Funding, LLC, John Hancock Real Estate Finance, Inc., Wells
Fargo Bank, National Association and Morgan Stanley Dean Witter Mortgage Capital
Inc.
Lead Manager: Morgan Stanley & Co. Incorporated
Co-Manager: Goldman, Sachs & Co., Norwest Investment Services Inc.
Master Servicer: Wells Fargo Bank, National Association
Primary Servicers: Principal Capital Management, LLC, John Hancock Real Estate Finance, Inc. and
Wells Fargo Bank, National Association
Special Servicer: Lennar Partners, Inc.
Trustee/Fiscal Agent: LaSalle Bank National Association/ABN AMRO Bank N.V.
Paying Agent Norwest Bank, National Association
Expected Pricing Date: April 14, 2000
Closing Date: On or about April 26, 2000
Distribution Dates: The 15th of each month, commencing May 15, 2000
Cut-off Date: March 1, 2000 for any Mortgage Loan that has a due date on the first day of each
month. The Cut-off Date for any mortgage loan that has a due date on the date
other than the first day of each month shall be March 5, 2000. For purposes of
the information contained in this Term Sheet, we present those loans as if their
scheduled payments due in March 2000 were due on March 1, 2000, not the actual
day which such scheduled payments were due.
Minimum Denominations: $25,000 for Class A Certificates; $100,000 for all other Certificates (other than
the Class R Certificates)
Settlement Terms: DTC, Euroclear and Cedel, same day funds, with accrued interest
Legal/Regulatory Status: Class A-1 and A-2 Certificates are expected to be eligible for exemptive relief
under ERISA. No Class of Certificates is SMMEA eligible
Risk Factors: THE CERTIFICATES INVOLVE A DEGREE OF RISK AND MAY NOT BE SUITABLE FOR ALL
INVESTORS. SEE THE "RISK FACTORS" SECTION OF THE PROSPECTUS SUPPLEMENT AND THE
"RISK FACTORS" SECTION OF THE PROSPECTUS
</TABLE>
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-4
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
II. STRUCTURE CHARACTERISTICS
The Class A-1 and A-2 Certificates are fixed-rate, monthly pay, multi-class,
sequential pay REMIC Pass-Through Certificates. The Class B, C, D and E are
variable rate, monthly pay, multi-class, sequential pay REMIC Pass-Through
Certificates. The Class X Certificates are variable rate interest only REMIC
Pass-Through Certificates. All Classes of Certificates derive their cash flows
from the entire pool of Mortgage Loans.
CLASS X (1)(2)
CLASS A-1 $113.8MM
AAA/AAA
TBD
CLASS A-2 $439.0MM
AAA/AAA
TBD
CLASS B $22.4MM
AA/AA
TBD
CLASS C $25.9MM
A/A
TBD
CLASS D $8.6MM
A-/A-
TBD
CLASS E $17.2MM
BBB/BBB
TBD
CLASS F(2) $6.9MM
BBB-/BBB-
TBD
CLASS G(2) $1.7MM
NR/BBB-
TBD
CLASSES H - M(2) $53.4MM
6.50%
NR = NOT RATED
Notes: (1) Class X is entitled to interest (on a notional amount equal to the
aggregate pool balance) at the weighted average Class X Strip Rates
for the respective classes of Principal Balance Certificates. The
Class X Strip Rate for each such class for any Distribution Date is
equal to the NWAC minus the Pass-Through Rate for such class and
such Distribution Date.
(2) To be offered privately pursuant to Rule 144A.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-5
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
APPLIED LOSSES CASH FLOW
CLASS X
A-1
A-1
A-2 [X] Interest
[ ] Principal
A-2
B
B
C
C
D
D
E
E
F
F
G
G
H
H
J
J
K
K
L
L
M
M
0 50 100 150 200 250
MONTHS
Notes: (1) The class A-1, A-2 and X certificates will be paid interest on a
pro rata basis.
(2) The above analysis is based on the Maturity Assumptions and a 0%
CPR as described in the Prospectus Supplement.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-6
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
Interest Distributions: Each Class of Certificates (other than
the Class R-I, Class R-II, Class R-III
and Class R-IV Certificates) will be
entitled on each Distribution Date to
interest accrued at its Pass-Through Rate
on the outstanding Certificate Balance or
Notional Amount of such Class, as
applicable.
Pass-Through Rates: Class A-1: TBD
Class A-2: TBD
Class B: TBD
Class C: TBD
Class D: TBD
Class E: TBD
Class F: TBD
Class G: TBD
Classes H - M: 6.50%
Class X: See Note 1 on page T-5
The Pass-Through Rate for each class of
Principal Balance Certificates for any
Distribution Date will not exceed the
Weighted Average Net Mortgage Rate
("NWAC") for such Distribution Date.
Principal Distributions: Principal will be distributed on each
Distribution Date to the most senior
Class (i.e., the Class with the earliest
alphabetical/numerical Class
designation) of the Principal Balance
Certificates outstanding, until its
Certificate Balance is reduced to zero
(sequential order). If, due to losses,
the Certificate Balances of the Class B
through Class M Certificates are reduced
to zero or Appraisal Reductions exceed
the aggregate Certificate Balance of the
Subordinate Certificates, payments of
principal to the Class A-1 and A-2
Certificates will be made on a pro rata
basis.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-7
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
Prepayment Premium Allocation: Any Prepayment Premiums collected with
respect to a Mortgage Loan during any
particular Collection Period will be
distributed to the holders of each Class
of Principal Balance Certificates (other
than an excluded class as defined below)
then entitled to distributions of
principal on such distribution date
(allocable on a pro-rata basis based on
principal payments if there is more than
one Class of Principal Balance
Certificates enti
tled to a distribution
of principal) in an amount equal to the
lesser of (a) such Prepayment Premium
and (b) Prepayment Premium multiplied by
a fraction, the numerator of which is
equal to the excess, if any, of the
Pass-Through Rate applicable to the most
senior of such Classes of Principal
Balance Certificates then outstanding
(or, in the case of two Classes of Class
A Certificates, the one with the earlier
payment priority), over the relevant
Discount Rate (as defined in the
Prospectus Supplement), and the
denominator of which is equal to the
excess, if any, of the Mortgage Rate of
the Mortgage Loan that prepaid, over the
relevant Discount Rate.
The portion, if any, of the Prepayment
Premium remaining after such payments to
the holders of the Principal Balance
Certificates will be distributed to the
holders of the Class X Certificates. For
the purposes of the foregoing, the F and
G Certificates are the excluded classes.
The following is an example of the
Prepayment Premium Allocation under (b)
above based on the information contained
herein and the following assumptions:
o Two Classes of Certificates: Class
A-1 and X
o The characteristics of the Mortgage
Loan being prepaid are as follows:
- Loan Balance: $10,000,000
- Mortgage Rate: 8.00%
- Maturity Date: 10 years
(March 1, 2010)
o The Discount Rate is equal to 5.75%
o The Class A-1 Pass-Through Rate is
equal to 7.00%
CLASS A-1 CLASS X
METHOD CERTIFICATES CERTIFICATES
- ------------------------------------------ ------------ ------------
(Class A-1 Pass Through Rate - Discount (7.00%-5.75%) (100.00%-55.56%)
Rate)
- ------------------------------------------ ------------------
(Mortgage Rate - Discount Rate) (8.00%-5.75%)
------------------ -----------------
Prepayment Premium Allocation 55.56% 44.44%
Credit Enhancement: Each Class of Certificates (other than
Classes A-1, A-2 and X) will be
subordinate to all other Classes with an
earlier alphabetical Class designation.
Advancing: The Master Servicer, the Trustee and the
Fiscal Agent (in that order) will each
be obligated to make P&I Advances and
Servicing Advances, including delinquent
property taxes and insurance, but only
to the extent that such Advances are
deemed recoverable.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-8
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
Realized Losses and Expense Realized Losses and Expense Losses, if
Losses: any, will be allocated to Class M, Class
L, Class K, Class J, Class H, Class G,
Class F, Class E, Class D, Class C and
Class B Certificates, in that order, and
then to Classes A-1 and A-2 and, with
respect to losses allocated to interest,
Class X Certificates, pro rata, in each
case reducing amounts payable thereto.
Any interest shortfall of any Class of
Certificates will result in unpaid
interest for such Class which, together
with interest thereon compounded monthly
at one-twelfth the applicable
Pass-Through Rate for such Class, will be
payable in subsequent periods, subject to
available funds.
Prepayment Interest Shortfalls: For any Distribution Date, any Net
Aggregate Prepayment Interest Shortfall
not offset by the Master Servicing Fee
will generally be allocated pro rata to
each Class of Certificates in proportion
to its entitlement to interest.
Appraisal Reductions: An appraisal reduction generally will be
created in the amount, if any, by which
the 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 amount of advances
for such loan, which reduction will
result, in general, in a reduction of
interest distributable to the most
subordinate Class of Principal Balance
Certificate 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.
Operating Adviser: The Operating Adviser, which may be
appointed by the Controlling Class, will
have the right to receive notice from
the Special Servicer with respect to
certain actions regarding Specially
Serviced Mortgage Loans. Examples
include the right to make certain
modifications, foreclose, sell, bring an
REO Property into environmental
compliance or accept substitute or
additional collateral.
Controlling Class: The Controlling Class will generally be
the most subordinate Class of
Certificates outstanding at any time
or, if the Certificate Balance of such
Class is less than 25% of the initial
Certificate Balance of such Class, the
next most subordinate Class of Principal
Balance Certificates.
Special Servicer: In general, the Special Servicer has the
right to modify the terms of a Specially
Serviced Mortgage Loan if it determines
that such modification would increase
the net present value of the proceeds to
the Trust, provided that the Special
Servicer generally may not (i) extend
the maturity date of a Mortgage Loan
beyond two years prior to the Final
Rated Distribution Date or (ii) if the
Specially Serviced Mortgage Loan is
secured by a ground lease, extend the
maturity date beyond a date which is ten
(10) years prior to the expiration of
the ground lease.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-9
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
Optional Termination: The majority holders of the Controlling
Class, the Depositor, the Master
Servicer, the Special Servicer and the
holder of the majority interest in the
Class R-I Certificates, in that order,
will have the option to purchase, in
whole but not in part, the Mortgage
Loans and any other property remaining
in the Trust Fund on any Distribution
Date on or after the Distribution Date
on which the aggregate Certificate
Balance of all Classes of Principal
Balance Certificates then outstanding is
less than or equal to 1% of the Initial
Pool Balance. The purchase price for any
such purchase will be 100% of the
aggregate unpaid principal balances of
the Mortgage Loans, other than any
Mortgage Loans as to which the Master
Servicer has determined that all
payments or recoveries with respect
thereto have been made, plus accrued and
unpaid interest at the Mortgage Rate -
or the Mortgage Rates less the Master
Servicing Fee Rate if the Master
Servicer is the purchaser - to the Due
Date for each Mortgage Loan ending in
the Collection Period with respect to
which such purchase occurs, plus
un-reimbursed Advances, with interest
thereon at the Advance Rate and the fair
market value of any other property
remaining in the Trust Fund.
Reports to Certificateholders: The Trustee will prepare and deliver
monthly Certificateholder Reports. The
Special Servicer will prepare and
deliver to the Trustee a monthly Special
Servicer Report summarizing the status
of each Specially Serviced Mortgage
Loan. The Master Servicer and the
Special Servicer will prepare and
deliver to the Trustee an annual report
setting forth, among other things, the
debt service coverage ratios for each
Mortgage Loan, as available. Each of the
reports will be available to the
Certificateholders. A report containing
information regarding the Mortgage Loans
is expected to be available
electronically at www.lnbabs.com.
The foregoing terms and structural characteristics of the Certificates are in
all respects subject to the more detailed description thereof in the Prospectus,
Prospectus Supplement and Pooling and Servicing Agreement.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-10
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
III. SELLERS Principal Commercial Funding, LLC ("PCF")
The Mortgage Pool includes 65 Mortgage Loans, representing
47.1% of the Initial Pool Balance, that were originated by
PCF and/or its affiliates.
PCF is a wholly owned subsidiary of Principal Capital
Management, LLC, which is a wholly owned subsidiary of
Principal Life Insurance Company. PCF was formed as a
Delaware limited liability company to originate and acquire
loans secured by commercial and multi-family real estate.
Each of the PCF loans was originated and underwritten by PCF
and/or its affiliates.
John Hancock Real Estate Finance, Inc. ("JHREF")
The Mortgage Pool includes 22 Mortgage Loans,
representing 22.8% of the Initial Pool Balance, that
were originated by JHREF.
JHREF is a wholly owned subsidiary of John Hancock
Subsidiaries, Inc., which is a wholly owned subsidiary of
John Hancock Life Insurance Company. JHREF was founded in
1982 and is headquartered in Boston, Massachusetts.
JHREF presently has seven offices across the country and a
loan servicing center located in Atlanta, Georgia. Each of
the JHREF Loans was underwritten at JHREF's Boston
headquarters and closed by JHREF.
Wells Fargo Bank, National Association ("WF")
The Mortgage Pool includes 34 Mortgage Loans, representing
22.4% of the Initial Pool Balance, that were originated by
WF. WF is a national banking association and affiliate of
Wells Fargo & Company that provides a full range of banking
services to individual, agribusiness, real estate, commercial
and small business customers. The loans originated by WF were
originated through its Capital Markets Group, which has
completed eight previous conduit securitizations.
Morgan Stanley Dean Witter Mortgage Capital Inc. ("MSDWMC")
The Mortgage Pool includes 12 Mortgage Loans, representing
7.7% of the Initial Pool Balance, that were originated by or
on behalf of MSDWMC. MSDWMC is a subsidiary of Morgan Stanley
& Co. Incorporated and was formed to originate and purchase
mortgage loans secured by commercial and multifamily real
estate.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-11
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
IV. COLLATERAL DESCRIPTION
Summary: The Mortgage Pool consists of a $689,464,702 pool of 133 fixed-rate,
mortgage loans secured by first liens on commercial and multifamily
properties located throughout 26 states. As of the Cut-off Date, the
Mortgage Loans have a weighted average mortgage rate of 7.866% and a
weighted average remaining term to maturity of 116 months. See the
Appendices to the Prospectus Supplement for more detailed collateral
information.
TEN LARGEST LOANS
<TABLE>
<CAPTION>
- -------------------------------- ---------------- ------- ---------- --------------- --------- --------- -------- --------- --------
PROPERTY CUT-OFF DATE LOAN PER BALLOON
PROPERTY NAME CITY STATE TYPE BALANCE UNITS/SF UNIT/SF DSCR LTV LTV
- -------------------------------- ---------------- ------- ---------- --------------- --------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
325 West Huron Street Chicago IL Office $7,026,460 115,170 $59 1.49 73.1% 65.3%
322 South Green Street Chicago IL Office $5,306,697 84,330 $59 1.49 73.1% 65.3%
222 W. Hubbard Chicago IL Office $3,783,478 52,079 $59 1.49 73.1% 65.3%
212 W. Superior Chicago IL Office $2,899,029 64,771 $59 1.49 73.1% 65.3%
215 W. Superior Chicago IL Office $1,818,035 34,744 $59 1.49 73.1% 65.3%
----------
SUBTOTAL (1)$20,833,699
One Commerce Center Colorado CO Office $4,387,365 81,956 $48 1.57 51.4% 46.3%
Springs
Centennial Center Louisville CO Office $6,381,622 84,356 $48 1.57 51.4% 46.3%
Columbine Place Denver CO Office $6,281,910 145,137 $48 1.57 51.4% 46.3%
Erindale Square Retail Center Colorado CO Retail $2,891,673 103,010 $48 1.57 51.4% 46.3%
Springs ----------
SUBTOTAL (2)$19,942,570
Fontana Plaza Fontana CA Retail $8,083,152 124,399 $59 1.51 72.4% 64.5%
Plaza East Fontana CA Retail $5,356,861 98,246 $59 1.51 72.4% 64.5%
Foothill Plaza Fontana CA Retail $5,136,776 93,989 $59 1.51 72.4% 64.5%
----------
SUBTOTAL (3)$18,576,789
Jabil Circuit Building San Jose CA Industrial (4)$18,569,532 181,736 $102 1.26 74.7% 67.6%
Lincoln North Lincoln MA Office (5)$16,117,285 124,998 $129 1.51 68.3% 60.6%
120 East 23rd Street New York NY Office (6)$14,832,033 236,406 $63 1.85 43.0% 34.4%
133 East 58th Street New York NY Office (7)$14,272,720 107,556 $133 2.25 38.0% 25.9%
Norwalk Distribution Center Santa Fe CA Industrial (8)$13,778,154 355,590 $39 1.18 66.2% 60.1%
Springs
International Airport Center - Los Angeles CA Industrial (9)$13,684,373 330,358 $41 1.25 63.9% 57.4%
LAX
Manhattan Gateway Manhattan Beach CA Retail (10)$13,183,119 82,000 $161 1.18 77.5% 69.9%
- -------------------------------- ---------------- ------- ---------- --------------- --------- --------- -------- --------- --------
</TABLE>
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-12
<PAGE>
$$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
GEOGRAPHIC DISTRIBUTION
WA
1.8%
OR
0.9%
Northern
CA
13.9%
CA
35.3%
Southern
CA
21.4%
AZ
3.4%
CO
3.7%
NM
0.5%
OK
1.1%
TX
3.3%
MN
1.8%
LA
2.7%
WI
1.8%
IL
3.9%
MI
0.4%
OH
4.6%
NY
4.7%
PA
2.5%
VA
0.5%
NC
3.6%
SC
0.5%
GA
6.4%
FL
5.1%
MA
4.1%
RI
1.7%
CT
0.7%
NJ
4.0%
MD
1.3%
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-13
<PAGE>
$$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
CUT-OFF DATE
BALANCE ($)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
1,000,001 to 2,000,000 21 34,285,203 4.97
2,000,001 to 3,000,000 29 72,501,510 10.52
3,000,001 to 4,000,000 17 57,837,507 8.39
4,000,001 to 5,000,000 14 63,803,692 9.25
5,000,001 to 6,000,000 11 59,959,138 8.70
6,000,001 to 7,000,000 10 65,042,998 9.43
7,000,001 to 8,000,000 4 30,670,228 4.45
8,000,001 to 9,000,000 5 42,895,038 6.22
9,000,001 to 10,000,000 8 77,693,272 11.27
10,000,001 to 15,000,000 12 150,089,299 21.77
15,000,001 to 20,000,000 2 34,686,817 5.03
- -----------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- -----------------------------------------------------------------
Min: $1,148,373 Max: $18,569,532 Average: $5,183,945
- -----------------------------------------------------------------
STATE
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
California 45 243,233,659 35.28
Georgia 6 44,384,613 6.44
Florida 6 34,964,803 5.07
New York 3 32,241,186 4.68
Ohio 8 31,524,889 4.57
Massachusetts 3 28,501,376 4.13
New Jersey 6 27,564,971 4.00
Illinois 7 26,960,034 3.91
Colorado 6 25,580,717 3.71
North Carolina 4 24,830,378 3.60
Arizona 5 23,402,960 3.39
Texas 8 22,757,056 3.30
- -----------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- -----------------------------------------------------------------
PROPERTY TYPE
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
Retail 44 227,385,477 32.98
Office 40 219,004,669 31.76
Industrial/Warehouse 20 116,655,642 16.92
Multifamily 17 70,962,276 10.29
Health Care 2 21,332,134 3.09
Hospitality 2 13,914,858 2.02
Self Storage 4 9,354,372 1.36
Mobile Home Park 2 5,453,595 0.79
Mixed Use 2 $5,401,679 0.78
- -----------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- -----------------------------------------------------------------
<PAGE>
MORTGAGE RATE (%)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
6.501 to 7.000 4 34,787,883 5.05
7.001 to 7.500 28 167,152,140 24.24
7.501 to 8.000 37 184,183,564 26.71
8.001 to 8.500 52 248,279,431 36.01
8.501 to 9.000 12 55,061,684 7.99
- ---------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ---------------------------------------------------------------
Min: 6.760% Max: 8.930% Wtd Avg: 7.866%
- -----------------------------------------------------------
ORIGINAL TERM TO STATED MATURITY (MOS)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
1 to 60 2 3,873,849 0.56
61 to 120 123 653,804,857 94.83
121 to 180 6 25,399,589 3.68
181 to 240 2 6,386,407 0.93
- ---------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ---------------------------------------------------------------
Min: 60 Max: 240 Wtd Avg: 122
- ---------------------------------------------------------------
REMAINING TERM TO STATED MATURITY (MOS)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
1 to 60 2 3,873,849 0.56
61 to 120 124 656,087,835 95.16
121 to 180 5 23,116,610 3.35
181 to 240 2 6,386,407 0.93
- ---------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ---------------------------------------------------------------
Min: 52 Max: 236 Wtd Avg: 116
- ---------------------------------------------------------------
<PAGE>
CUT-OFF DATE LOAN-TO-VALUE RATIO (%)
- ----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- ----------------------------------------------------------------
30.1 to 40.0 4 22,907,493 3.32
40.1 to 50.0 15 64,141,457 9.30
50.1 to 60.0 20 97,558,205 14.15
60.1 to 70.0 40 202,672,829 29.40
70.1 to 80.0 54 302,184,718 43.83
- ----------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ----------------------------------------------------------------
Min: 33.7% Max: 79.9% Wtd Avg: 65.4%
- ----------------------------------------------------------------
BALLOON LOAN-TO-VALUE RATIO (%)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
0.1 to 10.0 6 14,143,705 2.05
20.1 to 30.0 4 22,907,493 3.32
30.1 to 40.0 4 25,660,798 3.72
40.1 to 50.0 20 93,861,992 13.61
50.1 to 60.0 36 156,007,369 22.63
60.1 to 70.0 56 338,968,744 49.16
70.0 to 80.0 7 37,914,600 5.50
- ------------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ------------------------------------------------------------------
Min: 0.3% Max: 72.3% Wtd Avg: 56.8%
- ------------------------------------------------------------------
DEBT SERVICE COVERAGE RATIO (X)
- -----------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- -----------------------------------------------------------------
1.16 to 1.25 17 101,388,617 14.71
1.26 to 1.35 28 144,633,995 20.98
1.36 to 1.50 40 188,282,924 27.31
1.51 to 1.75 26 138,682,243 20.11
1.76 to 2.00 10 55,095,297 7.99
2.01>= 12 61,381,626 8.90
- -----------------------------------------------------------------
TOTAL: 133 $689,464,702 100.00%
- ------------------------------------------------------------------
Min: 1.18x Max: 2.91x Wtd Avg: 1.50x
- ------------------------------------------------------------------
All numerical information concerning the Mortgage Loans is approximate. All
weighted average information regarding the Mortgage Loans reflects the weighting
of the Mortgage Loans based upon their outstanding principal balances as of the
Cut-off Date. Generally, for the purposes of the presentation of Mortgage Pool
information, multiple mortgaged properties securing a single mortgage loan have
been treated as multiple cross-collateralized and cross-defaulted mortgage
loans, each secured by one of the related mortgaged properties and each having a
principal balance in an amount equal to an allocated portion of the aggregate
indebtedness represented by such obligation.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-14
<PAGE>
$626,951,030 (APPROXIMATE)
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
<TABLE>
<CAPTION>
PERCENTAGE OF MORTGAGE POOL BALANCE BY PREPAYMENT RESTRICTION (%)
- ----------------------- ----------------- ------------------ ----------------- ----------------- ------------------ ----------------
PREPAYMENT MAR 00 MAR 01 MAR 02 MAR 03 MAR 04 MAR 05
RESTRICTIONS
- ----------------------- ----------------- ------------------ ----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 100.00% 100.00% 97.95% 84.52% 77.53% 63.98%
Yield Maintenance Total 0.00% 0.00% 2.05% 15.48% 22.19% 36.02%
Penalty Points:
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Open 0.00% 0.00% 0.00% 0.00% 0.29% 0.00%
- ----------------------- ----------------- ------------------ ----------------- ----------------- ------------------ ----------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------- ----------------- ------------------ ----------------- ----------------- ------------------ ----------------
Pool Balance $689,464,701.95 $682,881,108.76 $675,707,481.14 $667,914,557.31 $659,596,656.43 $646,839,417.03
Outstanding
% of Initial Pool 100.00% 99.05% 98.00% 96.87% 95.67% 93.82%
Balance
- ----------------------- ----------------- ------------------ ----------------- ----------------- ------------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF MORTGAGE POOL BALANCE BY PREPAYMENT RESTRICTION (%) - CONTINUED
- ---------------------- ------------------ ----------------- ----------------- ------------------ -----------------
PREPAYMENT
RESTRICTIONS MAR 06 MAR 07 MAR 08 MAR 09 MAR 10
- ---------------------- ------------------ ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Locked Out/Defeasance 64.07% 64.16% 64.26% 62.52% 97.23%
Yield Maintenance 35.93% 35.84% 32.71% 18.16% 2.77%
Total
Penalty Points:
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.00%
4.00% to 4.99% 0.00% 0.00% 0.00% 0.00% 0.00%
3.00% to 3.99% 0.00% 0.00% 0.00% 0.00% 0.00%
2.00% to 2.99% 0.00% 0.00% 0.00% 0.00% 0.00%
1.00% to 1.99% 0.00% 0.00% 0.00% 0.00% 0.00%
Open 0.00% 0.00% 3.03% 19.33% 0.00%
- ---------------------- ------------------ ----------------- ----------------- ------------------ -----------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------- ------------------ ----------------- ----------------- ------------------ -----------------
Pool Balance $636,859,556.10 $626,062,708.90 $614,490,019.24 $550,831,327.32 $22,605,224.74
Outstanding
% of Initial Pool 92.37% 90.80% 89.13% 79.89% 3.28%
Balance
- ---------------------- ------------------ ----------------- ----------------- ------------------ -----------------
</TABLE>
Notes: (1) The above analysis is based on Maturity Assumptions and a 0% CPR
as discussed in the Prospectus Supplement.
(2) Thirty-one (31) loans with an aggregate principal balance of
$146,617,473 are structured with a performance holdback or letter
of credit ("LOC") subject to achievement of certain release
conditions. If release conditions are not met, there will be
partial prepayments of said mortgage loans to be accompanied by a
yield maintenance premium. The aggregate amount of the partial
prepayments is $14,993,983.
(3) See footnote 14 in Appendix II for a description of the Yield
Maintenance.
- --------------------------------------------------------------------------------
This information is being delivered to a specific number of prospective
sophisticated investors in order to assist them in determining whether they have
an interest in the type of security described herein. It has been prepared
solely for information purposes and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any trading strategy. No representation or warranty can be given
with respect to the accuracy or completeness of the information, or with respect
to the terms of any future offer of securities conforming to the terms hereof.
Any such offer of securities would be made pursuant to a definitive Prospectus
or Private Placement Memorandum, as the case may be, prepared by the issuer
which could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus or Private Placement Memorandum. Such Prospectus or Private
Placement Memorandum will contain all material information in respect of any
securities offered thereby and any decision to invest in such securities should
be made solely in reliance upon such Prospectus or Private Placement Memorandum.
Certain assumptions may have been made in this analysis which have resulted in
any returns detailed herein. No representation is made that any returns
indicated will be achieved. Changes to the assumptions may have a material
impact on any returns detailed. Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Norwest Investment Services, Inc. (the "Underwriters") disclaim
any and all liability relating to this information, including without limitation
any express or implied representations and warranties for, statements contained
in, and omissions from, this information. Additional information is available
upon request. The Underwriters and others associated with them may have
positions in, and may effect transaction in, securities and instruments of
issuers mentioned herein and may also perform or seek to perform investment
banking services for the issuers of such securities and instruments. Past
performance is not necessarily indicative of future results. Price and
availability are subject to change without notice. This material may be filed
with the Securities and Exchange Commission (the "SEC") and incorporated by
reference into an effective registration statement previously filed with the SEC
under Rule 415 of the Securities Act of 1933, including in cases where the
material does not pertain to securities that are ultimately offered for sale
pursuant to such registration statement. To Morgan Stanley's readers worldwide:
In addition, please note that this publication has been issued by Morgan Stanley
& Co. Incorporated, approved by Morgan Stanley International Limited, a member
of The Securities and Futures Authority, any by Morgan Stanley Japan Ltd. Morgan
Stanley recommends that such readers obtain the advice of their Morgan Stanley &
Co. Incorporated, Morgan Stanley International or Morgan Stanley Japan Ltd.
representative about the investments concerned.
NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES
AND FUTURES AUTHORITY
- --------------------------------------------------------------------------------
T-15
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
DEPOSITOR
- -----------------------------------------
Morgan Stanley Dean Witter Capital I Inc.
1585 Broadway
New York, NY 10036
Contact: General Information Number
Phone Number: (212) 761-4700
- -----------------------------------------
MASTER SERVICER
- -----------------------------------------
Wells Fargo Bank, National Association
420 Montgomery Street, 10th Floor
San Francisco, CA 94104
Contact: Matilde Sanchez
Phone Number: (415) 222-2364
- -----------------------------------------
SPECIAL SERVICER
- -----------------------------------------
Lennar Partners, Inc.
700 N.W. 107th Avenue
Miami, FL 33172
Contact: Steve Bruha
Phone Number: (305) 229-6614
- -----------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
CERTIFICATE DISTRIBUTION DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Pass-Through Original Beginning Principal Interest
Class CUSIP Rate Balance Balance Distribution Distributon
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1 0.000000% 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00 0.00
I 0.000000% 0.00 0.00 0.00 0.00
J 0.000000% 0.00 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00 0.00
L 0.000000% 0.00 0.00 0.00 0.00
M 0.000000% 0.00 0.00 0.00 0.00
RI 0.000000% 0.00 0.00 0.00 0.00
RII 0.000000% 0.00 0.00 0.00 0.00
RIII 0.000000% 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Realized Loss/ Current
Prepayment Additional Trust Total Ending Subordination
Class Penalties Fund Expenses Distribution Balance Level(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 0.00 0.00 0.00 0.00 0.00%
A-2 0.00 0.00 0.00 0.00 0.00%
B 0.00 0.00 0.00 0.00 0.00%
C 0.00 0.00 0.00 0.00 0.00%
D 0.00 0.00 0.00 0.00 0.00%
E 0.00 0.00 0.00 0.00 0.00%
F 0.00 0.00 0.00 0.00 0.00%
G 0.00 0.00 0.00 0.00 0.00%
H 0.00 0.00 0.00 0.00 0.00%
I 0.00 0.00 0.00 0.00 0.00%
J 0.00 0.00 0.00 0.00 0.00%
K 0.00 0.00 0.00 0.00 0.00%
L 0.00 0.00 0.00 0.00 0.00%
M 0.00 0.00 0.00 0.00 0.00%
RI 0.00 0.00 0.00 0.00 0.00%
RII 0.00 0.00 0.00 0.00 0.00%
RIII 0.00 0.00 0.00 0.00 0.00%
- --------------------------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X 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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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-1 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
B 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
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
J 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
L 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
RI 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
RII 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
RIII 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Penalties Amount
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X 0.00000000 0.00000000 0.00000000 0.00000000
- --------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
RECONCILIATION DETAIL
<TABLE>
<CAPTION>
ADVANCE SUMMARY MASTER SERVICING FEE SUMMARY
<S> <C> <C> <C>
P&I Advances Outstanding 0.00 Current Period Accrued Master Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Master Servicing Fees on Delinquent Payments 0.00
Less Reductions to Master Servicing Fees 0.00
Reimbursement for Interest on P&I 0.00 Plus Master Servicing Fees for Delinquent Payments Received 0.00
Advances paid from general collections Plus Adjustments for Prior Master Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
Reimbursement for Interest on Servicing 0.00
Advances paid from general collections
</TABLE>
<TABLE>
<CAPTION>
CERTIFICATE INTEREST RECONCILIATION
- ------------------------------------------------------------------------------------------------------------------------------
Accrued Net Aggregate Distributable Distributable Additional Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Interest Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Distribution Certificate Interest
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 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
x 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B 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
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00 0.00 0.00
I 0.00 0.00 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00 0.00 0.00
M 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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
OTHER REQUIRED INFORMATION
- --------------------------------------------------------------------------------
Available Distribution Amount 0.00
Aggregrate Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Additional Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregage Trust Fund Expenses 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Interest Reserve Account
Deposits 0.00
Withdrawals 0.00
Additional Trust Fund Expenses 0
Fees paid to Special Servicer 0
Interest on Advances 0
Unanticipated expenses of the Trust 0
- --------------------------------------------------------------------------------
Appraisal Reduction Amount
- ------------------------------------------
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
- ------------------------------------------
NONE
- ------------------------------------------
Total
- ------------------------------------------
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
RATINGS DETAIL
- --------------------------------------------------------------------------------
Original Ratings Current Ratings (1)
------------------------------ -----------------------------
Class CUSIP DCR Fitch Moody's S&P DCR Fitch Moody's S&P
- --------------------------------------------------------------------------------
A-1
A-2
x
B
C
D
E
F
G
H
I
J
K
L
M
- --------------------------------------------------------------------------------
NR - Designates that the class was not rated by the above agency at the time of
original issuance.
X - Designates that the above rating agency did not rate any classes in this
transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because
the ratings may have changed, you may want to obtain current ratings directly
from the rating agencies.
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc.
55 East Monroe Street One State Street Plaza
Chicago, Illinois 60603 New York, New York 10004
(312) 368-3100 (212) 908-0500
Moody's Investors Service Standard & Poor's Rating Services
99 Church Street 55 Water Street
New York, New York 10007 New York, New York 10041
(212) 553-0300 (212) 208-8000
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NOTE RATE
- --------------------------------------------------------------------------------
% of
Note # of Scheduled Agg. WAM Weighted
Rate 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
- --------------------------------------------------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
- --------------------------------------------------------------------------------
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR (1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
- --------------------------------------------------------------------------------
% of
Remaining Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
- --------------------------------------------------------------------------------
% of
Remaining Stated # 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 CMSA
Standard Information Package.
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
MORTGAGE LOAN DETAIL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number Balance Balance Date Date Amount (2) (3)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------
</TABLE>
(1) 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
(2) 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
(3) Modification Code
---------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
HISTORICAL DETAIL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Delinquencies
- -------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications
Date # Balance # Balance # Balance # Balance # Balance # Balance
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------
Prepayments Rate and Maturities
- -------------------------------------------------------------------------
Distribution Curtailments Payoff Next Weighted Avg.
Date # Amount # Amount Coupon Remit WAM
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
DELINQUENCY LOAN DETAIL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P&I P&I Mortgage Strategy
Loan Number Cross-Reference Delinq. Date Advances Advances** Loan (1) Code (2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Current Outstanding
Servicing Foreclosure Servicing Servicing REO
Loan Number Transfer Date Date Advances Advances Bankruptcy Date Date
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(1) Status of Mortgage Loan
---------------------------
<S> <C> <C>
A - Payment Not Received 0 - Current 4 - Assumed Scheduled Payment
But Still in Grace Period 1 - One Month Delinquent (Performing Matured Balloon)
B - Late Payment But Less 2 - Two Months Delinquent 7 - Foreclosure
Than 1 Month Delinquent 3 - Three Or More Months Delinquent 9 - REO
</TABLE>
(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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
SPECIALLY SERVICED LOAN DETAIL - PART 1
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------
Net Remaining
Distribution Actual Operating NOI Note Maturity Amortization
Date Balance Income Date DSCR Date Date Term
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Resolution Strategy Code (2) Property Type Code
---------------------------- ----------------------
1 - Modification 7 - REO MF - Multi-Family OF - Office
2 - Foreclosure 8 - Resolved RT - Retail MU - Mixed Use
3 - Bankruptcy 9 - Pending Return HC - Health Care LO - Lodging
4 - Extension to Master Servicer IN - Industrial SS - Self Storage
5 - Note Sale 10 - Deed In Lieu Of WH - Warehouse OT - Other
6 - DPO Foreclosure MH - Mobile Home Park
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
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>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
MORGAN STANLEY DEAN WITTER CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-LIFE1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Payment Date: 04/17/2000
Record Date: 03/31/2000
- --------------------------------------------------------------------------------
LIQUIDATED LOAN DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Current Total
- -----------------------------------------------------------------------------------------------------------------
Cumulative Total
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses* Proceeds Actual Balance Loss (Y/N)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Current Total
- ------------------------------------------------------------------------------------------
Cumulative Total
- ------------------------------------------------------------------------------------------
</TABLE>
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid fees (servicing, trustee, etc.).
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Information contained in this Prospectus is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED December 13, 1999
PROSPECTUS
MORGAN STANLEY DEAN WITTER CAPITAL I INC.,
(FORMERLY KNOWN AS MORGAN STANLEY CAPITAL I INC.)
DEPOSITOR
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES BY SEPARATE TRUSTS)
--------------------
Morgan Stanley Dean Witter Capital I Inc. will periodically offer
certificates in one or more series and each series of certificates will
represent beneficial ownership interests in a different trust fund.
EACH TRUST FUND WILL CONSIST PRIMARILY OF ONE OR MORE SEGREGATED POOLS
OF:
1) multifamily or commercial mortgage loans;
2) mortgage participations, mortgage pass-through certificates or
mortgage-backed securities;
3) direct obligations of the United States or other governmental
agencies; or
4) any combination of the 1-3, above, as well as other property
as described in the accompanying prospectus supplement.
The certificates of any series may consist of one or more classes. A
given class may:
o provide for the accrual of interest based on fixed, variable
or adjustable rates;
o be senior or subordinate to one or more other classes in
respect of distributions;
o be entitled to principal distributions, with
disproportionately low, nominal or no interest distributions;
o be entitled to interest distributions, with disproportionately
low, nominal or no principal distributions;
o provide for distributions of accrued interest commencing only
following the occurrence of certain events, such as the
retirement of one or more other classes;
o provide for sequential distributions of principal;
o provide for distributions based on a combination of any of the
foregoing characteristics; or any combination of the above.
INVESTING IN THE CERTIFICATES OFFERED TO YOU INVOLVES RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 15 IN THIS PROSPECTUS AND ON PAGE S-21 OF THE RELATED
PROSPECTUS SUPPLEMENT.
This prospectus may be used to offer and sell any series of
certificates only if accompanied by the prospectus supplement for that series.
The information in this prospectus is not complete and may be changed. This
prospectus is not an offer to sell these securities in any state where the offer
or sale is not permitted.
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved of the certificates to be offered to you or
determined if this prospectus or the accompanying prospectus supplement are
truthful or complete. Any representation to the contrary is a criminal offense.
-------------------------------------------
MORGAN STANLEY DEAN WITTER
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND
THE ACCOMPANYING PROSPECTUS SUPPLEMENT
Information about the certificates being offered to you is contained in
two separate documents that progressively provide more detail: (a) this
prospectus, which provides general information, some of which may not apply to a
particular series of certificates; and (b) the accompanying prospectus
supplement, which describes the specific terms of your series of certificates,
including:
o the timing of interest and principal payments;
o applicable interest rates;
o information about the trust fund's assets;
o information about any credit support or cash flow agreement;
o the rating for each class of certificates;
o information regarding the nature of any subordination;
o any circumstance in which the trust fund may be subject to
early termination;
o whether any elections will be made to treat the trust fund or
a designated portion thereof as a "real estate mortgage
investment conduit" for federal income tax purposes;
o the aggregate principal amount of each class of certificates;
o information regarding any master servicer, sub-servicer or
special servicer; and
o whether the certificates will be initially issued in
definitive or book entry form.
IF THE TERMS OF THE CERTIFICATES OFFERED TO YOU VARY BETWEEN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE
INFORMATION IN THE PROSPECTUS SUPPLEMENT. Further, you should rely only on the
information contained in this prospectus and the accompanying prospectus
supplement. Morgan Stanley Dean Witter Capital I Inc. has not authorized anyone
to provide you with information that is different.
Distributions on the certificates will be made only from the assets of
the related trust fund. The certificates of each series will not be an
obligation of Morgan Stanley Dean Witter Capital I Inc. or any of its
affiliates. Neither the certificates nor any assets in the related trust fund
will be insured or guaranteed by any governmental agency or instrumentality or
any other person unless the related prospectus supplement so provides.
This prospectus and the accompanying prospectus supplement include
cross references to sections in these materials where you can find further
related discussions. The tables of contents in this prospectus and the
prospectus supplement identify the pages where these sections are located.
Morgan Stanley Dean Witter Capital I Inc.'s principal executive office
is located at 1585 Broadway, 37th Floor, New York, New York 10036, and the
telephone number is (212) 761-4700.
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<PAGE>
-----------------
Until 90 days after the date of each prospectus supplement, all dealers
that buy, sell or trade the certificates offered by that prospectus supplement,
whether or not participating in the offering, may be required to deliver a
prospectus supplement and this prospectus. This is in addition to the dealers'
obligation to deliver a prospectus supplement and the accompanying prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
-3-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice About Information Presented In This Prospectus And The Accompanying Prospectus Supplement........2
Summary Of Prospectus.............................................................................................7
Risk Factors.....................................................................................................17
Assets.......................................................................................................36
Mortgage Loans...............................................................................................36
Mortgage Backed Securities...................................................................................43
Government Securities........................................................................................44
Accounts.....................................................................................................45
Credit Support...............................................................................................45
Cash Flow Agreements.........................................................................................45
Use Of Proceeds..................................................................................................45
Yield Considerations.............................................................................................46
General......................................................................................................46
Pass-Through Rate............................................................................................46
Timing of Payment of Interest................................................................................46
Payments of Principal; Prepayments...........................................................................47
Prepayments--Maturity and Weighted Average Life..............................................................48
Other Factors Affecting Weighted Average Life................................................................49
The Depositor....................................................................................................50
Description Of The Certificates..................................................................................51
General......................................................................................................51
Distributions................................................................................................52
Available Distribution Amount................................................................................52
Distributions of Interest on the Certificates................................................................53
Distributions of Principal of the Certificates...............................................................54
Components...................................................................................................55
Distributions on the Certificates of Prepayment Premiums or in Respect of Equity Participations..............55
Allocation of Losses and Shortfalls..........................................................................55
Advances in Respect of Delinquencies.........................................................................55
Reports to Certificateholders................................................................................56
Termination..................................................................................................60
Book-Entry Registration and Definitive Certificates..........................................................60
Description Of The Agreements....................................................................................62
Assignment of Assets; Repurchases............................................................................63
Representations and Warranties; Repurchases..................................................................65
Certificate Account and Other Collection Accounts............................................................67
Collection and Other Servicing Procedures....................................................................71
Subservicers.................................................................................................72
Special Servicers............................................................................................73
Realization Upon Defaulted Whole Loans.......................................................................73
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Hazard Insurance Policies....................................................................................76
Rental Interruption Insurance Policy.........................................................................78
Fidelity Bonds and Errors and Omissions Insurance............................................................78
Due-on-Sale and Due-on-Encumbrance Provisions................................................................78
Retained Interest; Servicing Compensation and Payment of Expenses............................................79
Evidence as to Compliance....................................................................................79
Matters Regarding a Master Servicer and the Depositor........................................................80
Events of Default............................................................................................81
Rights Upon Event of Default.................................................................................82
Amendment....................................................................................................83
The Trustee..................................................................................................84
Duties of the Trustee........................................................................................84
Matters Regarding the Trustee................................................................................85
Resignation and Removal of the Trustee.......................................................................85
Description Of Credit Support....................................................................................86
General......................................................................................................86
Subordinate Certificates.....................................................................................87
Cross-Support Provisions.....................................................................................87
Insurance or Guarantees for the Whole Loans..................................................................87
Letter of Credit.............................................................................................87
Insurance Policies and Surety Bonds..........................................................................88
Reserve Funds................................................................................................88
Credit Support for MBS.......................................................................................89
Legal Aspects Of The Mortgage Loans And The Leases...............................................................89
General......................................................................................................89
Types of Mortgage Instruments................................................................................90
Interest in Real Property....................................................................................90
Leases and Rents.............................................................................................91
Personality..................................................................................................91
Foreclosure..................................................................................................92
Bankruptcy Laws..............................................................................................98
Junior Mortgages; Rights of Senior Lenders or Beneficiaries.................................................101
Environmental Legislation...................................................................................102
Due-on-Sale and Due-on-Encumbrance..........................................................................106
Subordinate Financing.......................................................................................107
Default Interest, Prepayment Premiums and Prepayments.......................................................107
Acceleration on Default.....................................................................................107
Applicability of Usury Laws.................................................................................108
Laws and Regulations; Types of Mortgaged Properties.........................................................109
Americans With Disabilities Act.............................................................................109
Soldiers' and Sailors' Civil Relief Act of 1940.............................................................109
Forfeitures in Drug and RICO Proceedings....................................................................110
Federal Income Tax Consequences.................................................................................110
General.....................................................................................................111
Grantor Trust Funds.........................................................................................111
REMICs......................................................................................................122
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Prohibited Transactions and Other Taxes.....................................................................141
Liquidation and Termination.................................................................................142
Administrative Matters......................................................................................142
Tax-Exempt Investors........................................................................................143
Residual Certificate Payments--Non-U.S. Persons.............................................................143
Tax Related Restrictions on Transfers of REMIC Residual Certificates........................................144
State Tax Considerations........................................................................................146
ERISA Considerations............................................................................................147
General.....................................................................................................147
Prohibited Transactions.....................................................................................147
Review by Plan Fiduciaries..................................................................................150
Legal Investment................................................................................................150
Plan Of Distribution............................................................................................153
Legal Matters...................................................................................................154
Financial Information...........................................................................................155
Rating..........................................................................................................155
Incorporation Of Information By Reference.......................................................................155
Glossary Of Terms...............................................................................................157
</TABLE>
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<PAGE>
SUMMARY OF PROSPECTUS
This summary highlights 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 AN OFFERING OF CERTIFICATES, READ
THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT CAREFULLY.
WHAT YOU WILL OWN
TITLE OF CERTIFICATES..... Mortgage Pass-Through Certificates, issuable in
series.
MORTGAGE POOL............. Each trust fund will consist primarily of one or more
segregated pools of:
1) multifamily or commercial mortgage
loans;
2) mortgage participations, mortgage
pass-through certificates or
mortgage-backed securities;
3) direct obligations of the United
States or other governmental
agencies; or
4) any combination of 1-3 above, as
well as other property as described
in the accompanying prospectus
supplement.
5) as to some or all of the mortgage
loans, assignments of the leases of
the related mortgaged properties or
assignments of the rental payments
due under those leases.
Each trust fund for a series of certificates may also
include:
o letters of credit, insurance
policies, guarantees, reserve funds
or other types of credit support;
and
o currency or interest rate exchange
agreements and other financial
assets.
RELEVANT PARTIES AND DATES
ISSUER.................... Morgan Stanley Dean Witter Capital I 199__-__ Trust.
DEPOSITOR................. Morgan Stanley Dean Witter Capital I Inc., a
wholly-owned subsidiary of Morgan Stanley Group Inc.
MASTER SERVICER........... The master servicer, if any, for each series of
certificates will be named in the related prospectus
supplement. The master servicer may be an affiliate
of Morgan Stanley Dean Witter Capital I Inc..
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<PAGE>
SPECIAL SERVICER.......... The special servicer, if any, for each series of
certificates will be named, or the circumstances in
accordance with which a special servicer will be
appointed will be described, in the related
prospectus supplement. The special servicer may be
an affiliate of Morgan Stanley Dean Witter
Capital I Inc..
TRUSTEE................... The trustee for each series of certificates will be
named in the related prospectus supplement.
ORIGINATOR................ The originator or originators of the mortgage loans
will be named in the related prospectus supplement.
An originator may be an affiliate of Morgan Stanley
Dean Witter Capital I Inc.. Morgan Stanley Dean
Witter Capital I Inc. will purchase the mortgage
loans or the mortgage backed securities or both, on
or before the issuance of the related series of
certificates.
INFORMATION ABOUT THE MORTGAGE POOL
THE TRUST FUND ASSETS.... Each series of certificates will represent in the
aggregate the entire beneficial ownership interest in
a trust fund consisting primarily of:
(A) MORTGAGE ASSETS.... The mortgage loans and the mortgage backed
securities, or one or the other, with respect to each
series of certificates will consist of a pool of:
o multifamily or commercial mortgage
loans or both;
o mortgage participations, mortgage
pass-through certificates or other
mortgage-backed securities
evidencing interests in or secured
by mortgage loans; or
o a combination of mortgage loans and
mortgage backed securities.
The mortgage loans will not be guaranteed or insured
by:
o Morgan Stanley Dean Witter Capital
I Inc. or any of its affiliates; or
o unless the prospectus supplement so
provides, any governmental agency
or instrumentality or other person.
The mortgage loans will be secured by first liens or
junior liens
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<PAGE>
on, or security interests in:
o residential properties consisting
of five or more rental or
cooperatively-owned dwelling units;
or
o office buildings, shopping centers,
retail stores, hotels or motels,
nursing homes, hospitals or other
health-care related facilities,
mobile home parks, warehouse
facilities, mini-warehouse
facilities or self-storage
facilities, industrial plants,
congregate care facilities, mixed
use commercial properties or other
types of commercial properties.
Unless otherwise provided in the prospectus
supplement, the mortgage loans:
o will be secured by properties
located in any of the fifty states,
the District of Columbia or the
Commonwealth of Puerto Rico;
o will have individual principal
balances at origination of at least
$25,000;
o will have original terms to
maturity of not more than 40 years;
and
o will be originated by persons other
than Morgan Stanley Dean Witter
Capital I Inc.
Each mortgage loan may provide for the following
payment terms:
o Each mortgage loan may provide for
no accrual of interest or for
accrual of interest at a fixed or
adjustable rate or at a rate that
may be converted from adjustable to
fixed, or vice versa, from time to
time at the borrower's election.
Adjustable mortgage rates may be
based on one or more indices.
o Each mortgage loan may provide for
scheduled payments to maturity or
payments that adjust from time to
time to accommodate changes in the
interest rate or to reflect the
occurrence of certain events.
o Each mortgage loan may provide for
negative
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<PAGE>
amortization or accelerated
amortization.
o Each mortgage loan may be fully
amortizing or require a balloon
payment due on the loan's stated
maturity date.
o Each mortgage loan may contain
prohibitions on prepayment or
require payment of a premium or a
yield maintenance penalty in
connection with a prepayment.
o Each mortgage loan may provide for
payments of principal, interest or
both, on due dates that occur
monthly, quarterly, semi-annually
or at another interval as specified
in the related prospectus
supplement.
(B) GOVERNMENT
SECURITIES......... If the related prospectus supplement so specifies,
the trust fund may include direct obligations of the
United States, agencies of the United States or
agencies created by government entities which provide
for payment of interest or principal or both.
(C) COLLECTION ACCOUNTS. Each trust fund will include one or more accounts
established and maintained on behalf of the
certificateholders. The person(s) designated
in the related prospectus supplement will, to the
extent described in this prospectus and the
prospectus supplement, deposit into this account all
payments and collections received or advanced with
respect to the trust fund's assets. The collection
account may be either interest bearing or
non-interest bearing, and funds may be held in the
account as cash or invested in short-term, investment
grade obligations.
(D) CREDIT SUPPORT..... If the related prospectus supplement so specifies,
one or more classes of certificates may be provided
with partial or full protection against certain
defaults and losses on a trust fund's mortgage loans
and mortgage backed securities.
This protection may be provided by one or more of the
following means:
o subordination of one or more other
classes of certificates,
o letter of credit,
o insurance policy,
o guarantee,
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<PAGE>
o reserve fund or
o another type of credit support, or
a combination thereof.
The related prospectus supplement will describe the
amount and types of credit support, the entity
providing the credit support, if applicable, and
related information. If a particular trust fund
includes mortgage backed securities, the related
prospectus supplement will describe any similar forms
of credit support applicable to those mortgage backed
securities.
(E) CASH FLOW AGREEMENTS. If the related prospectus supplement so provides, the
trust fund may include guaranteed investment
contracts pursuant to which moneys held in the
collection accounts will be invested at a specified
rate. The trust fund also may include agreements
designed to reduce the effects of interest rate or
currency exchange rate fluctuations on the trust
fund's assets or on one or more classes of
certificates.
Agreements of this sort may include:
o interest rate exchange agreements,
o interest rate cap or floor
agreements,
o currency exchange agreements or
similar agreements. Currency
exchange agreements might be
included in a trust fund if some or
all of the mortgage loans or
mortgage backed securities, such as
mortgage loans secured by mortgaged
properties located outside the
United States, are denominated in a
non-United States currency.
The related prospectus supplement will describe the
principal terms of any guaranteed investment contract
or other agreement and provide information with
respect to the obligor. If a particular trust fund
includes mortgage backed securities, the related
prospectus supplement will describe any guaranteed
investment contract or other agreements applicable to
those mortgage backed securities.
DISTRIBUTIONS ON
CERTIFICATES........... Each series of certificates will have the following
characteristics:
o if the certificates evidence an
interest in a trust fund that
includes mortgage loans, the
certificates
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<PAGE>
will be issued pursuant to a
pooling agreement;
o if the certificates evidence an
interest in a trust fund that does
not include mortgage loans, the
certificates will be issued
pursuant to a trust agreement;
o each series of certificates will
include one or more classes of
certificates;
o each series of certificates,
including any class or classes not
offered by this prospectus, will
represent, in the aggregate, the
entire beneficial ownership
interest in the related trust fund;
o each class of certificates being
offered to you, other than certain
stripped interest certificates,
will have a stated principal
amount;
o each class of certificates being
offered to you, other than certain
stripped principal certificates,
will accrue interest based on a
fixed, variable or adjustable
interest rate.
The related prospectus supplement will specify the
principal amount, if any, and the interest rate, if
any, for each class of certificates. In the case of a
variable or adjustable interest rate, the related
prospectus supplement will specify the method for
determining the rate.
The certificates will not be guaranteed or insured by
Morgan Stanley Dean Witter Capital I Inc. or any of
its affiliates. The certificates also will not be
guaranteed or insured by any governmental agency or
instrumentality or by any other person, unless the
related prospectus supplement so PROVIDES.
(A) INTEREST.......... Each class of certificates offered to you, other than
stripped principal certificates and certain classes
of stripped interest certificates, will accrue
interest at the rate indicated in the prospectus
supplement. Interest will be distributed to you as
provided in the related prospectus supplement.
Interest distributions:
o on stripped interest certificates
may be made on the basis of the
notional amount for that class, as
described in the related prospectus
supplement;
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<PAGE>
o may be reduced to the extent of
certain delinquencies, losses,
prepayment interest shortfalls, and
other contingencies described in
this prospectus and the related
prospectus supplement.
(B) PRINCIPAL......... The certificates of each series initially will have
an aggregate principal balance no greater than the
outstanding principal balance of the trust fund's
assets as of the close of business on the first day
of the month during which the trust fund is formed,
after application of scheduled payments due on or
before that date, whether or not received. The
related prospectus supplement may provide that the
principal balance of the trust fund's assets will be
determined as of a different date. The principal
balance of a certificate at a given time represents
the maximum amount that the holder is then entitled
to receive of principal from future cash flow on the
assets in the related trust fund.
Unless the prospectus supplement provides otherwise,
distributions of principal:
o will be made on each distribution
date to the holders of the class or
classes of certificates entitled to
principal distributions, until the
principal balances of those
certificates have been reduced to
zero; and
o will be made on a pro rata basis
among all of the certificates of a
given class or by random selection,
as described in the prospectus
supplement or otherwise established
by the trustee.
Stripped interest or interest-only certificates will
not have a principal balance and will not receive
distributions of principal.
ADVANCES............... Unless the related prospectus supplement otherwise
provides, if a scheduled payment on a mortgage loan
is delinquent and the master servicer determines that
an advance would be recoverable, the master servicer
will, in most cases, be required to advance the
shortfall. Neither Morgan Stanley Dean Witter Capital
I Inc. nor any of its affiliates will have any
responsibility to make those advances.
The master servicer:
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<PAGE>
o will be reimbursed for advances
from subsequent recoveries from the
delinquent mortgage loan or from
other sources, as described in this
prospectus and the related
prospectus supplement; and
o will be entitled to interest on
advances, if specified in the
related prospectus supplement.
If a particular trust fund includes mortgage backed
securities, the prospectus supplement will describe
any advance obligations applicable to those mortgage
backed securities.
TERMINATION............. The related prospectus supplement may provide for the
optional early termination of the series of
certificates through repurchase of the trust fund's
assets by a specified party, under specified
circumstances.
The related prospectus supplement may provide for the
early termination of the series of certificates in
various ways including:
o optional early termination where a
party identified in the prospectus
supplement could repurchase the
trust fund assets pursuant to
circumstances specified in the
prospectus supplement;
o termination through the
solicitation of bids for the sale
of all or a portion of the trust
fund assets in the event the
principal amount of a specified
class or classes declines by a
specified percentage amount on or
after a specified date.
REGISTRATION OF
CERTIFICATES............ If the related prospectus supplement so provides, one
or more classes of the certificates being offered to
you will initially be represented by one or more
certificates registered in the name of Cede & Co., as
the nominee of Depository Trust Company. If the
certificate you purchase is registered in the name of
Cede & Co., you will not be entitled to receive a
definitive certificate, except under the limited
circumstances described in this prospectus.
TAX STATUS OF THE
CERTIFICATES............ The certificates of each series will constitute
either:
o regular interests and residual
interests in a trust treated as a
real estate mortgage investment
conduit--known as a REMIC--under
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<PAGE>
Sections 860A through 860G of the
Internal Revenue Code; or
o interests in a trust treated as a
grantor trust under applicable
provisions of the Internal Revenue
Code.
(A) REMIC.............. The regular certificates of the REMIC generally will
be treated as debt obligations of the applicable
REMIC for federal income tax purposes. Some of the
regular certificates of the REMIC may be issued with
original issue discount for federal income tax
purposes.
A portion or, in certain cases, all of the income
from REMIC residual certificates:
o may not be offset by any losses
from other activities of the holder
of those certificates;
o may be treated as unrelated
business taxable income for holders
of the residual certificates of the
REMIC that are subject to tax on
unrelated business taxable income,
as defined in Section 511 of the
Internal Revenue Code; and
o may be subject to foreign
withholding rules.
To the extent described in this prospectus and the
related prospectus supplement, the certificates
offered to you will be treated as:
o assets described in
section 7701(a)(19)(C) of the
Internal Revenue Code; and
o "real estate assets" within the
meaning of section 856(c)(4)(A) of
the Internal Revenue Code.
(B) GRANTOR TRUST..... If no election is made to treat the trust fund
relating to a series of certificates as a REMIC, the
trust fund will be classified as a grantor trust and
not as an association taxable as a corporation for
federal income tax purposes. If the trust fund is a
grantor trust, you will be treated as an owner of an
undivided pro rata interest in the mortgage pool or
pool of securities and any other assets held by the
trust fund.
Investors are advised to consult their tax advisors
and to review "Federal Income Tax Consequences" in
this prospectus and the
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<PAGE>
related prospectus supplement.
ERISA CONSIDERATIONS..... If you are subject to Title I of the Employee
Retirement Income Security Act of 1974, as
amended--also known as ERISA, or Section 4975 of the
Internal Revenue Code, you should carefully review
with your legal advisors whether the purchase or
holding of certificates could give rise to a
transaction that is prohibited or is not otherwise
permissible under either statute.
In general, the related prospectus supplement will
specify that some of the classes of certificates may
not be transferred unless the trustee and Morgan
Stanley Dean Witter Capital I Inc. receive a letter
of representations or an opinion of counsel to the
effect that:
o the transfer will not result in a
violation of the prohibited
transaction provisions of ERISA or
the Internal Revenue Code;
o the transfer will not cause the
assets of the trust fund to be
deemed "plan assets" for purposes
of ERISA or the Internal Revenue
Code; and
o the transfer will not subject any
of the trustee, Morgan Stanley Dean
Witter Capital I Inc. or any
servicer to additional obligations.
LEGAL INVESTMENT........ The related prospectus supplement will specify
whether any classes of the offered certificates will
constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of
1984, as amended. If your investment authority is
subject to legal restrictions, you should consult
your legal advisors to determine whether any
restrictions apply to an investment in these
certificates.
RATING.................. At the date of issuance, each class of certificates
of each series that are offered to you will be rated
not lower than investment grade by one or more
nationally recognized statistical rating agencies.
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<PAGE>
RISK FACTORS
You should carefully consider the risks involved in owning a
certificate before purchasing a certificate. In particular, the timing and
payments you receive on your certificates will depend on payments received on
and other recoveries with respect to the mortgage loans. Therefore, you should
carefully consider the risk factors relating to the mortgage loans and the
mortgaged properties.
The risks and uncertainties described below under Risk Factors,
together with those described in the related prospectus supplement under Risk
Factors, summarize the material risks relating to your certificates.
THE LACK OF A SECONDARY
MARKET MAY MAKE IT
DIFFICULT FOR YOU TO RESELL
YOUR CERTIFICATES Secondary market considerations may make your
certificates difficult to resell or less valuable
than you anticipated for a variety of reasons,
including:
o there may not be a secondary market for the
certificates;
o if a secondary market develops, we cannot
assure you that it will continue or will
provide you with the liquidity of investment
you may have anticipated. Lack of liquidity
could result in a substantial decrease in
the market value of your certificates;
o the market value of your certificates will
fluctuate with changes in interest rates;
o the secondary market for certificates backed
by residential mortgages may be more liquid
than the secondary market for certificates
backed by multifamily and commercial
mortgages so if your liquidity assumptions
were based on the secondary market for
certificates backed by residential
mortgages, your assumptions may not be
correct;
o certificateholders have no redemption
rights; and
o secondary market purchasers are limited to
this prospectus, the related prospectus
supplement and to the reports delivered to
certificateholders for information
concerning the certificates.
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<PAGE>
Morgan Stanley & Co. Incorporated currently expects
to make a secondary market in your certificates, but
it has no obligation to do so.
THE TRUST FUND'S ASSETS
MAY BE INSUFFICIENT TO
ALLOW FOR REPAYMENT IN
FULL ON YOUR CERTIFICATES Unless the related prospectus supplement so
specifies, the sole source of payment on your
certificates will be proceeds from the assets
included in the trust fund for each series of
certificates and any form of credit enhancement
specified in the related prospectus supplement. You
will not have any claim against, or security interest
in, the trust fund for any other series. In addition,
in general, there is no recourse to Morgan Stanley
Dean Witter Capital I Inc. or any other entity, and
neither the certificates nor the underlying mortgage
loans are guaranteed or insured by any governmental
agency or instrumentality or any other entity.
Therefore, if the trust fund's assets are
insufficient to pay you your expected return, in most
situations you will not receive payment from any
other source. Exceptions include:
o loan repurchase obligations in connection
with a breach of certain of the
representations and warranties; and
o advances on delinquent loans, to the extent
the master servicer deems the advance will
be recoverable.
Because some of the representations and warranties
with respect to the mortgage loans or mortgage backed
securities may have been made or assigned in
connection with transfers of the mortgage loans or
mortgage backed securities prior to the closing date,
the rights of the trustee and the certificateholders
with respect to those representations or warranties
will be limited to their rights as assignees. Unless
the related prospectus supplement so specifies,
neither Morgan Stanley Dean Witter Capital I Inc.,
the master servicer nor any affiliate thereof will
have any obligation with respect to representations
or warranties made by any other entity.
There may be accounts, as described in the related
prospectus supplement, maintained as credit support.
The amounts in these accounts may be withdrawn, under
conditions described in the related prospectus
supplement. Any withdrawn amounts will not be
available for the future payment of principal or
interest on the certificates.
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If a series of certificates consists of one or more
classes of subordinate certificates, the amount of
any losses or shortfalls in collections of assets on
any distribution date will be borne first by one or
more classes of the subordinate certificates, as
described in the related prospectus supplement.
Thereafter, those losses or shortfalls will be borne
by the remaining classes of certificates, in the
priority and manner and subject to the limitations
specified in the related prospectus supplement.
PREPAYMENTS AND
REPURCHASES MAY REDUCE
THE YIELD ON YOUR
CERTIFICATES The yield on your certificates may be reduced by
prepayments on the mortgage loans or mortgage backed
securities because prepayments affect the average
life of the certificates. Prepayments can be
voluntary, if permitted, and involuntary, such as
prepayments resulting from casualty or condemnation,
defaults and liquidations or repurchases upon
breaches of representations and warranties. The
investment performance of your certificates may vary
materially and adversely from your expectation if the
actual rate of prepayment is higher or lower than you
anticipated.
Voluntary prepayments may require the payment of a
yield maintenance or prepayment premium.
Nevertheless, we cannot assure you that the existence
of the prepayment premium will cause a borrower to
refrain from prepaying its mortgage loan nor can we
assure you of the rate at which prepayments will
occur. Morgan Stanley Mortgage Capital Inc., under
certain circumstances, may be required to repurchase
a mortgage loan from the trust fund if there has been
a breach of a representation or warranty. The
repurchase price paid will be passed through to you,
as a certificateholder, with the same effect as if
the mortgage loan had been prepaid in part or in
full, except that no prepayment premium or yield
maintenance charge would be payable. Such a
repurchase may therefore adversely affect the yield
to maturity on your certificates.
In a pool of mortgage loans, the rate of prepayment
is unpredictable as it is influenced by a variety of
factors including:
o the terms of the mortgage loans;
o the length of any prepayment lockout period;
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o the prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or
prepayment premiums;
o the servicer's ability to enforce those
yield maintenance charges or prepayment
premiums;
o the occurrence of casualties or natural
disasters; and
o economic, demographic, tax, legal or other
factors.
There can be no assurance that the rate of
prepayments will conform to any model described in
this prospectus or in the related prospectus
supplement.
Some of the certificates may be more sensitive to
prepayments than other certificates and in certain
cases, the certificateholder holding these
certificates may fail to recoup its original
investment. You should carefully consider the
specific characteristics of the certificates you
purchase, as well as your investment approach and
strategy. For instance, if you purchase a certificate
at a premium, a prepayment may reduce the stream of
interest payments you are entitled to receive on your
certificate and your actual yield may be lower than
your anticipated yield. Similarly, if you purchase a
certificate which provides for the payment of
interest only, or a certificate which provides for
the payment of interest only after the occurrence of
certain events, such as the retirement of one or more
other classes of certificates of a series, you will
probably be extremely sensitive to prepayments
because a prepayment may reduce the stream of
interest payments you are entitled to receive on your
certificate.
IF PREPAYMENT PREMIUMS
ARE NOT ENFORCED, YOUR
CERTIFICATES MAY BE
ADVERSELY AFFECTED The yield on your certificates may be less than
anticipated because the prepayment premium or
yield maintenance required under certain prepayment
scenarios may not be enforceable in some states or
under federal bankruptcy laws.
o Some courts may consider the prepayment
premium to be usurious.
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o Even if the prepayment premium is
enforceable, we cannot assure you that
foreclosure proceeds will be sufficient to
pay the prepayment premium.
o Although the collateral substitution
provisions related to defeasance are not
suppose to be treated as a prepayment and
should not affect your certificates, we
cannot assure you that a court will not
interpret the defeasance provisions as
requiring a prepayment premium; nor can we
assure you that if it is treated as a
prepayment premium, the court will find the
defeasance income stream enforceable.
THE TIMING OF MORTGAGE
LOAN AMORTIZATION MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES As principal payments or prepayments are made on a
mortgage loan, the mortgage pool will be exposed to
concentration risks with respect to the diversity of
mortgaged properties, types of mortgaged properties
and number of borrowers. Classes that have a later
sequential designation or a lower payment priority
are more likely to be exposed to these concentration
risks than are classes with an earlier sequential
designation or higher priority. This is so because
principal on the certificates will be payable in
sequential order, and no class entitled to a
distribution of principal will receive its principal
until the principal amount of the preceding class or
classes entitled to receive principal have been
reduced to zero.
RATINGS DO NOT GUARANTY
PAYMENT Any rating assigned by a rating agency to a class of
certificates reflects the rating agency's assessment
of the likelihood that holders of the class of
certificates will receive the payments to which they
are entitled.
o The ratings do not assess the likelihood
that you will receive timely payments on
your certificates.
o The ratings do not assess the likelihood of
prepayments, including those caused by
defaults.
o The ratings do not assess the likelihood of
early optional termination of the
certificates.
Each rating agency rating classes of a particular
series will determine the amount, type and nature of
credit support required for that series. This
determination may be based
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on an actuarial analysis of the behavior of mortgage
loans in a larger group taking into account the
appraised value of the real estate and the commercial
and multifamily real estate market.
o We cannot assure you that the historical
data supporting the actuarial analysis will
accurately reflect or predict the rate of
delinquency, foreclosure or loss that will
be experienced by the mortgage loans in a
particular series.
o We cannot assure you that the appraised
value of any property securing a mortgage
loan in a particular series will remain
stable throughout the life of your
certificate.
o We cannot assure you that the real estate
market will not experience an overall
decline in property values nor can we assure
you that the outstanding balance of any
mortgage loan in a particular series will
always be less than the market value of the
property securing the mortgage loan.
RATINGS DO NOT GUARANTY
VALUE If one or more rating agencies downgrade certificates
of a series, your certificate will decrease in value.
Because none of Morgan Stanley Dean Witter Capital I
Inc., the seller, the master servicer, the trustee or
any affiliate has any obligation to maintain a rating
of a class of certificates, you will have no recourse
if your certificate decreases in value.
CASH FLOW FROM THE
PROPERTIES MAY BE VOLATILE
AND INSUFFICIENT TO ALLOW
TIMELY PAYMENT ON
YOUR CERTIFICATES Repayment of a commercial or multifamily mortgage
loan is dependent on the income produced by the
property. Therefore, the borrower's ability to repay
a mortgage loan depends primarily on the successful
operation of the property and the net operating
income derived from the property. Net operating
income can be volatile and may be adversely affected
by factors such as:
o economic conditions causing plant closings
or industry slowdowns;
o an oversupply of available retail space,
office space or multifamily housing;
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o changes in consumer tastes and preferences;
o decrease in consumer confidence;
o retroactive changes in building codes;
o the age, design and construction quality of
the property, including perceptions
regarding the attractiveness, convenience or
safety of the property;
o the age, design, construction quality and
proximity of competing properties;
o increases in operating expenses due to
external factors such as increases in
heating or electricity costs;
o increases in operating expenses due to
maintenance or improvements required at the
property;
o a decline in the financial condition of a
major tenant;
o a decline in rental rates as leases are
renewed or entered into with new tenants;
o the concentration of a particular business
type in a building;
o the length of tenant leases;
o the creditworthiness of tenants; and
o the property's "operating leverage."
Operating leverage refers to the percentage of total
property expenses in relation to revenue, the ratio
of fixed operating expenses to those that vary with
revenue and the level of capital expenditures
required to maintain the property and retain or
replace tenants.
If a commercial property is designed for a specific
tenant, net operating income may be adversely
affected if that tenant defaults under its
obligations because properties designed for a
specific tenant often require substantial renovation
before it is suitable for a new tenant. As a result,
the proceeds from liquidating this type of property
following foreclosure might be insufficient to cover
the principal and interest due under the loan.
It is anticipated that a substantial portion of the
mortgage loans included in any trust fund will be
nonrecourse loans or loans for which recourse may be
restricted or
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unenforceable. Therefore, if a borrower defaults,
recourse may be had only against the specific
property and any other assets that have been pledged
to secure the related mortgage loan.
PROPERTY VALUE MAY BE
ADVERSELY AFFECTED EVEN
WHEN THERE IS NO CHANGE
IN CURRENT OPERATING
INCOME Various factors may adversely affect the value of the
mortgaged properties without affecting the
properties' current net operating income. These
factors include among others:
o changes in governmental regulations, fiscal
policy, zoning or tax laws;
o potential environmental legislation or
liabilities or other legal liabilities;
o the availability of refinancing; and
o changes in interest rate levels or yields
required by investors in income producing
commercial properties.
THE OPERATION OF
COMMERCIAL PROPERTIES IS
DEPENDENT UPON SUCCESSFUL
MANAGEMENT The successful operation of a real estate project
depends upon the property manager's performance and
viability. The property manager is responsible for:
o responding to changes in the local market;
o planning and implementing the rental
structure;
o operating the property and providing
building services;
o managing operating expenses; and
o assuring that maintenance and capital
improvements are carried out in a timely
fashion.
A good property manager, by controlling costs,
providing appropriate service to tenants and seeing
to the maintenance of improvements, can improve cash
flow, reduce vacancy, leasing and repair costs and
preserve building value. On the other hand,
management errors can, in some cases, impair
short-term cash flow and the long term viability of
an income producing property. Properties deriving
revenues primarily from short-term sources are
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generally more management intensive than properties
leased to creditworthy tenants under long-term
leases.
Morgan Stanley Dean Witter Capital I Inc. makes no
representation or warranty as to the skills of any
present or future managers. Additionally, Morgan
Stanley Dean Witter Capital I Inc. cannot assure you
that the property managers will be in a financial
condition to fulfill their management
responsibilities throughout the terms of their
respective management agreements.
YOU SHOULD CONSIDER THE
NUMBER OF MORTGAGE
LOANS IN THE POOL Assuming pools of equal aggregate unpaid principal
balances, the concentration of default,
foreclosure and loss in a trust fund containing fewer
mortgage loans will generally be higher than that in
trust fund containing more mortgage loans.
YOUR INVESTMENT IS NOT
INSURED OR GUARANTEED
AND YOUR SOURCE FOR
REPAYMENTS IS LIMITED Payments under the mortgage loans are generally not
insured or guaranteed by any person or entity.
In general, the borrowers under the mortgage loans
will be entities created to own or purchase the
related commercial property. The borrowers are set up
this way, in significant part, to isolate the
property from the debts and liabilities of the person
creating the entity. Unless otherwise specified, the
loan will represent a nonrecourse obligation of the
related borrower secured by the lien of the related
mortgage and the related lease assignments. Even if
the loan is recourse, the borrower generally will not
have any significant assets other than the property
or properties and the related leases, which will be
pledged to the trustee. Therefore, payments on the
loans and, in turn, payments of principal and
interest on your certificates, will depend primarily
or solely on rental payments by the lessees. Those
rental payments will, in turn, depend on continued
occupancy by, or the creditworthiness of, those
lessees. Both continued occupancy and
creditworthiness may be adversely affected by a
general economic downturn or an adverse change in the
lessees' financial conditions.
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BORROWER MAY BE UNABLE
TO REPAY THE REMAINING
PRINCIPAL BALANCE ON ITS
MATURITY DATE WHICH
WOULD ADVERSELY AFFECT
PAYMENT ON YOUR
CERTIFICATES Some of the mortgage loans may not be fully
amortizing over their terms to maturity and will
require substantial principal payments--i.e., balloon
payments--at their stated maturity. Mortgage loans
with balloon payments involve a greater degree of
risk because a borrower's ability to make a balloon
payment typically will depend upon its ability either
to timely refinance the loan or to timely sell the
mortgaged property. However, refinancing a loan or
selling the property will be affected by a number of
factors, including:
o interest rates;
o the borrower's equity in the property;
o the financial condition and operating
history of the borrower and the property;
o tax laws;
o renewability of operating licenses;
o prevailing economic conditions and the
availability of credit for commercial and
multifamily properties;
o with respect to certain multifamily
properties and mobile home parks, rent
control laws; and
o with respect to hospitals, nursing homes and
convalescent homes, reimbursement rates from
private and public coverage providers.
YOUR CERTIFICATES WILL BEAR
LOSSES IF INSUFFICIENT
FUNDS ARE AVAILABLE TO SATISFY
ANY JUNIOR MORTGAGE LOANS If the prospectus supplement so specifies, some of
the mortgage loans may be secured primarily by junior
mortgages. In the event of a liquidation,
satisfaction of a mortgage loan secured by a junior
mortgage will be subordinate to the satisfaction of
the related senior mortgage loan. If the proceeds are
insufficient to satisfy the junior mortgage and the
related senior mortgage, the junior mortgage loan in
the trust fund would suffer a loss and the class of
certificate you own may bear that loss.
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Therefore, any risks of deficiencies associated with
first mortgage loans will be even greater in the case
of junior mortgage loans. See "--Risks Factors."
OBLIGOR DEFAULT MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES If the related prospectus supplement so specifies, a
master servicer, a sub-servicer or a special servicer
will be permitted, within prescribed parameters, to
extend and modify whole loans that are in default or
as to which a payment default is imminent. Any
ability to extend or modify may apply, in particular,
to whole loans with balloon payments. In addition, a
master servicer, a sub-servicer or a special servicer
may receive a workout fee based on receipts from, or
proceeds of, those whole loans. While any entity
granting this type of extension or modification
generally will be required to determine that the
extension or modification is reasonably likely to
produce a greater recovery on a present value basis
than liquidation, there is no assurance this will be
the case. Additionally, if the related prospectus
supplement so specifies, some of the mortgage loans
included in the mortgage pool may have been subject
to workouts or similar arrangements following prior
periods of delinquency and default.
TENANT BANKRUPTCY MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES The bankruptcy or insolvency of a major tenant, or of
a number of smaller tenants may adversely affect the
income produced by a mortgaged property. Under the
Bankruptcy Code, a tenant has the option of assuming
or rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim would be a
general unsecured claim against the tenant, absent
collateral securing the claim. The claim would be
limited to the unpaid rent reserved for the periods
prior to the bankruptcy petition or the earlier
surrender of the leased premises, which are unrelated
to the rejection, plus the greater of one year's rent
or 15% of the remaining rent reserved under the
lease, but not more than three years' rent to cover
any rejection related claims.
BORROWER BANKRUPTCY MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES Under the Bankruptcy Code, the filing of a petition
in bankruptcy by or against a borrower will stay the
sale of the real property owned by that borrower, as
well as the
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commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of
the mortgaged property is less than the principal
balance of the mortgage loan it secures, the court
may prevent a lender from foreclosing on the
mortgaged property, subject to certain protections
available to the lender. As part of a restructuring
plan, a court also may reduce the amount of secured
indebtedness to the then-value of the mortgaged
property. Such an action would make the lender a
general unsecured creditor for the difference between
the then-value 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.
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 on
the mortgaged property in a manner that would
substantially diminish the position of the junior
lien. Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain
special powers to avoid, subordinate or disallow
debts. In certain circumstances, the claims of the
trustee may be subordinated to financing obtained by
a debtor-in-possession subsequent to its bankruptcy.
Under the Bankruptcy Code, the lender will be stayed
from enforcing a borrower's assignment of rents and
leases. The Bankruptcy Code also may interfere with
the 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 the
borrower to maintain the mortgaged property or for
other court authorized expenses.
As a result of the foregoing, the lender'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.
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SOPHISTICATION OF THE
BORROWER MAY ADVERSELY
AFFECT PAYMENT ON YOUR
CERTIFICATES In general, the mortgage loans will be made to
partnerships, corporations or other entities rather
than individuals. This may entail greater risks of
loss from delinquency and foreclosure than do single
family mortgage loans. In addition, the borrowers
under commercial mortgage loans may be more
sophisticated than the average single family home
borrower. This may increase the likelihood of
protracted litigation or the likelihood of bankruptcy
in default situations.
CREDIT SUPPORT MAY NOT
COVER LOSSES OR RISKS
WHICH COULD ADVERSELY
AFFECT PAYMENT ON YOUR
CERTIFICATES Although the prospectus supplement for a series of
certificates will describe the credit support for the
related trust fund, the credit support will be
limited in amount and coverage and may not cover all
potential losses or risks. Use of credit support will
be subject to the conditions and limitations
described in the prospectus and in the related
prospectus supplement. Moreover, any applicable
credit support may not cover all potential losses or
risks. For example, credit support may not cover
fraud or negligence by a mortgage loan originator or
other parties.
A series of certificates may include one or more
classes of subordinate certificates, which may
include certificates being offered to you. Although
subordination is intended to reduce the senior
certificateholders' risk of delinquent distributions
or ultimate losses, the amount of subordination will
be limited and may decline under certain
circumstances. In addition, if principal payments are
made in a specified order of priority, and limits
exist with respect to the aggregate amount of claims
under any related credit support, the credit support
may be exhausted before the principal of the
certificate classes with lower priority has been
repaid. Significant losses and shortfalls on the
assets consequently may fall primarily upon classes
of certificates having a lower payment priority.
Moreover, if a form of credit support covers more
than one series of certificates, holders of
certificates evidencing an interest in a covered
series will be subject to the risk that the credit
support will be exhausted by the claims of other
covered series.
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The amount of any credit support supporting one or
more classes of certificates being offered to you,
including the subordination of one or more classes
will be determined on the basis of criteria
established by each pertinent rating agency. Those
criteria will be based on an assumed level of
defaults, delinquencies, other losses or other
factors. However, the loss experience on the related
mortgage loans or mortgage backed securities may
exceed the assumed levels. See "Description of Credit
Support."
Regardless of the form of any credit enhancement, the
amount of coverage will be limited and, in most
cases, will be subject to periodic reduction, in
accordance with a schedule or formula. The master
servicer generally will be permitted to reduce,
terminate or substitute all or a portion of the
credit enhancement for any series of certificates, if
the applicable rating agency indicates that the
then-current ratings will not be adversely affected.
A rating agency may lower the ratings of any series
of certificates if the obligations of any credit
support provider are downgraded. The ratings also may
be lowered if losses on the related mortgage loans or
MBS substantially exceed the level contemplated by
the rating agency at the time of its initial rating
analysis. Neither Morgan Stanley Dean Witter Capital
I Inc., the master servicer nor any of their
affiliates will have any obligation to replace or
supplement any credit enhancement, or to take any
other action to maintain any ratings of any series of
certificates.
INVESTORS IN SUBORDINATE
CLASSES OF CERTIFICATES MAY
BE SUBJECT TO DELAYS IN
PAYMENT AND MAY NOT
RECOVER THEIR INITIAL
INVESTMENTS
To the extent described in this prospectus, the
subordinate certificateholders' rights to receive
distributions with respect to the assets to which
they would otherwise be entitled will be subordinate
to the rights of the senior certificateholders and of
the master servicer, if the master servicer is paid
its servicing fee, including any unpaid servicing
fees with respect to one or more prior periods, and
is reimbursed for certain unreimbursed advances and
unreimbursed liquidation expenses. As a result,
investors in subordinate certificates must be
prepared to bear the risk that they may be subject to
delays in payment and may not recover their initial
investments.
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The yields on the subordinate certificates may be
extremely sensitive to the loss experience of the
assets and the timing of any losses. If the actual
rate and amount of losses experienced by the assets
exceed the rate and amount assumed by an investor,
the yields to maturity on the subordinate
certificates may be lower than anticipated.
DIFFICULTIES IN ENFORCEMENT
OF LOAN PROVISIONS MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES The mortgage loans may contain due-on-sale clauses,
which permit a lender to accelerate the maturity of
the mortgage loan if the borrower sells, transfers or
conveys the related mortgaged property or its
interest in the mortgaged property and
debt-acceleration clauses, which permit a lender to
accelerate the loan upon a monetary or non-monetary
default by the borrower. These clauses are generally
enforceable. The courts of all states will enforce
clauses providing for acceleration in the event of a
material payment default. The equity courts, however,
may refuse to enforce these clauses if acceleration
of the indebtedness would be inequitable, unjust or
unconscionable.
If the related prospectus supplement so specifies,
the mortgage loans will be secured by an assignment
of leases and rents. Pursuant to those assignments,
the borrower typically assigns its right, title and
interest as landlord under the leases on the related
mortgaged property and the income derived from the
leases to the lender as further security for the
related mortgage loan, while retaining a license to
collect rents as long as there is no default. If the
borrower defaults, the license terminates and the
lender is entitled to collect rents. These
assignments are typically not perfected as security
interests prior to actual possession of the cash
flows. Some state laws may require that the lender
take possession of the mortgaged property and obtain
judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or
in respect of the borrower, the lender's ability to
collect the rents may be adversely affected. See
"Legal Aspects of the Mortgage Loans and the
Leases--Leases and Rents."
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ENVIRONMENTAL ISSUES AT
THE MORTGAGED PROPERTIES
MAY ADVERSELY AFFECT
PAYMENT ON YOUR
CERTIFICATES Real property pledged as security for a mortgage loan
may be subject to environmental risks. Under the laws
of certain states, contamination of a property may
give rise to a lien on the property to assure the
costs of cleanup. In several states, this type of
lien has priority over the lien of an existing
mortgage against the property. Moreover, the presence
of hazardous or toxic substances, or the failure to
remediate the property, may adversely affect the
owner or operator's ability to borrow using the
property as collateral. In addition, under the laws
of some states and under CERCLA and other federal
law, a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or
threatened releases of hazardous substances that
require remedy at a property, if agents or employees
of the lender have become sufficiently involved in
the operations of the borrower. Liability may be
imposed even if the environmental damage or threat
was caused by a prior owner.
Under certain circumstances, a lender also risks this
type of liability on foreclosure of the mortgage.
Unless the related prospectus supplement specifies
otherwise, neither the master servicer, the
sub-servicer nor the special servicer may acquire
title to a mortgaged property or take over its
operation unless the master servicer has previously
determined, based upon a report prepared by a person
who regularly conducts environmental audits, that:
o the mortgaged property is in compliance with
applicable environmental laws, and there are
no circumstances present at the mortgaged
property for which investigation, testing,
monitoring, containment, clean-up or
remediation could be required under any
federal, state or local law or regulation;
or
o if the mortgaged property is not in
compliance with applicable environmental
laws or circumstances requiring any of the
foregoing actions are present, that it would
be in the best economic interest of the
trust fund to acquire title to the mortgaged
property and take the actions as would be
necessary and appropriate to effect
compliance or respond to those
circumstances.
See "Legal Aspects of the Mortgage Loans and
Leases--Environmental Legislation."
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IF YOU ARE SUBJECT TO
ERISA, YOU MAY NOT BE
ELIGIBLE TO PURCHASE
CERTIFICATES Generally, ERISA applies to investments made by
employee benefit plans and transactions involving the
assets of those plans. Due to the complexity of
regulations governing those plans, prospective
investors that are subject to ERISA are urged to
consult their own counsel regarding consequences
under ERISA of acquisition, ownership and disposition
of the offered certificates of any series.
THE INCOME TAX
CONSIDERATIONS SHOULD
IMPACT YOUR DECISION TO
PURCHASE A REMIC
RESIDUAL CERTIFICATE Except as provided in the prospectus supplement,
REMIC residual certificates are anticipated to have
"phantom income" associated with them. That is,
taxable income is anticipated to be allocated to the
REMIC residual certificates in the early years of the
existence of the related REMIC--even if the REMIC
residual certificates receive no distributions from
the related REMIC--with a corresponding amount of
losses allocated to the REMIC residual certificates
in later years. Accordingly, the present value of the
tax detriments associated with the REMIC residual
certificates may significantly exceed the present
value of the tax benefits related thereto, and the
REMIC residual certificates may have a negative
"value."
Moreover, the REMIC residual certificates will, in
effect, be allocated an amount of gross income equal
to the non-interest expenses of the REMIC, but those
expenses will be deductible only as itemized
deductions, and will be subject to all the
limitations applicable to itemized deductions, by
holders of REMIC residual certificates that are
individuals. Accordingly, investment in the REMIC
residual certificates generally will not be suitable
for individuals or for certain pass-through entities,
such as partnerships or S corporations, that have
individuals as partners or shareholders. In addition,
REMIC residual certificates are subject to
restrictions on transfer. Finally, prospective
purchasers of a REMIC residual Certificate should be
aware that final Treasury Department regulations
restrict the ability to mark-to-market certain
"negative value" REMIC residual interests.
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REQUIRED CONSENT IN
CONNECTION WITH SERVICING
THE PROPERTIES MAY EFFECT
THE TIMING OF PAYMENTS
ON YOUR CERTIFICATES Under certain circumstances, the consent or approval
of the holders of a specified percentage of the
aggregate principal balance of all outstanding
certificates of a series or a similar means of
allocating decision-making will be required to direct
certain actions. The actions may include directing
the special servicer or the master servicer regarding
measures to be taken with respect to some of the
mortgage loans and real estate owned properties and
amending the relevant pooling agreement or trust
agreement. The consent or approval of these holders
will be sufficient to bind all certificateholders of
the relevant series. See "Description of the
Agreements--Events of Default," "--Rights Upon Event
of Default," and "--Amendment."
LITIGATION ARISING OUT OF
ORDINARY BUSINESS MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES There may be pending or threatened legal proceedings
against the borrowers and managers of the mortgaged
properties and their respective affiliates arising
out of the ordinary business of the borrowers,
managers and affiliates. This litigation could cause
a delay in the payment on your certificates.
Therefore, we cannot assure you that this type of
litigation would not have a material adverse effect
on your certificates.
COMPLIANCE WITH THE
AMERICANS WITH DISABILITIES
ACT OF 1990 MAY BE
EXPENSIVE AND MAY
ADVERSELY AFFECT PAYMENT
ON YOUR CERTIFICATES Under the Americans with Disabilities Act of 1990,
all public accommodations are required to meet
federal requirements related to access and use by
disabled persons. Borrowers may incur costs complying
with the Americans with Disabilities Act of 1990. In
addition, noncompliance could result in the
imposition of fines by the federal government or an
award of damages to private litigants. These costs of
complying with the Americans with Disabilities Act of
1990 and the possible imposition of fines for
noncompliance would result in additional
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expenses on the mortgaged properties, which could
have an adverse effect on your certificates.
IF YOUR CERTIFICATE IS
BOOK-ENTRY, YOU WILL NOT
BE RECOGNIZED AS A
CERTIFICATEHOLDER BY THE
TRUSTEE If the prospectus supplement so provides, one or more
classes of the certificates offered to you will be
initially represented by one or more certificates for
each class registered in the name of Cede & Co., the
nominee for the Depository Trust Company. If you
purchase this type of certificate:
o your certificate will not be registered in
your name or the name of your nominee;
o you will not be recognized by the trustee as
a certificateholder; and
o you will be able to exercise your right as a
certificateholder only through the
Depository Trust Company and its
participating organizations.
You will be recognized as a certificateholder only if
and when definitive certificates are issued. See
"Description of the Certificates--Book-Entry
Registration and Definitive Certificates."
-------------------------------------------------
This prospectus also contains forward-looking statements that involve risks and
uncertainties. Actual results could differ from those anticipated in these
forward-looking statements as a result of a variety of factors, including the
risks described above under "Risk Factors" and elsewhere in this prospectus.
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DESCRIPTION OF THE TRUST FUNDS
Capitalized terms are defined in the "Glossary of Terms" beginning on
page 116.
ASSETS
Each series of certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund. The primary assets of each trust
fund will include:
o multifamily mortgage loans, commercial mortgage loans or both;
o mortgage participations, pass-through certificates or other
mortgage-backed securities evidencing interests in or secured
by one or more mortgage loans or other similar participations,
certificates or securities;
o direct obligations of the United States, agencies of the
United States or agencies created by government entities which
are not subject to redemption prior to maturity at the option
of the issuer and are (a) interest-bearing securities, (b)
non-interest bearing securities, (c) originally
interest-bearing securities from which coupons representing
the right to payment of interest have been removed, or (d)
interest-bearing securities from which the right to payment of
principal has been removed; or
o a combination of mortgage loans, mortgage backed securities
and government securities.
Neither the mortgage loans nor the mortgage backed securities will be
guaranteed or insured by Morgan Stanley Dean Witter Capital I Inc. or any of its
affiliates or, unless otherwise provided in the prospectus supplement, by any
government agency or instrumentality or by any other person. Each asset will be
selected by Morgan Stanley Dean Witter Capital I Inc. for inclusion in a trust
fund from among those purchased, either directly or indirectly, from a prior
holder thereof, which may be an affiliate of Morgan Stanley Dean Witter Capital
I Inc. and, with respect to mortgage loans or mortgage backed securities, which
prior holder may or may not be the originator of the mortgage loan or the issuer
of the mortgage backed securities.
Unless otherwise specified in the related prospectus supplement, the
certificates of any series will be entitled to payment only from the assets of
the related trust fund and will not be entitled to payments in respect of the
assets of any other trust fund established by Morgan Stanley Dean Witter Capital
I Inc. If specified in the related prospectus supplement, the assets of a trust
fund will consist of certificates representing beneficial ownership interests in
another trust fund that contains the assets.
MORTGAGE LOANS
GENERAL
The mortgage loans will be secured by liens on, or security interests
in, mortgaged properties consisting of:
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o Multifamily Properties which are residential properties
consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment
buildings; or
o Commercial Properties which are office buildings, shopping
centers, retail stores, hotels or motels, nursing homes,
hospitals or other health care-related facilities, mobile home
parks, warehouse facilities, mini-warehouse facilities or
self-storage facilities, industrial plants, congregate care
facilities, mixed use or other types of commercial properties.
The mortgaged properties will be located in any one of the fifty states, the
District of Columbia or the Commonwealth of Puerto Rico, or, in another
location, if specified in the related prospectus supplement. The mortgage loans
in the mortgage pool will be evidenced by promissory notes secured by first or
junior mortgages or deeds of trust or other similar security instruments
creating a first or junior lien on the mortgaged property. Multifamily
Properties may include mixed commercial and residential structures and may
include apartment buildings owned by private cooperative housing corporations.
The mortgaged properties may include leasehold interests in properties, the
title to which is held by third party lessors. Unless otherwise specified in the
prospectus supplement, the term of any leasehold will exceed the term of the
related mortgage note by at least five years. Each mortgage loan will have been
originated by a person other than Morgan Stanley Dean Witter Capital I Inc. The
related prospectus supplement will indicate if any originator or a mortgage loan
is an affiliate of Morgan Stanley Dean Witter Capital I Inc., mortgage loans
will generally also be secured by an assignment of leases and rents and
operating or other cash flow guarantees relating to the mortgage loan.
LEASES
If specified in the related prospectus supplement, some or all of the
mortgage loans will include assignments of the leases of the related mortgaged
properties and assignments of the rental payments due from lessee to lessor
under the leases. To the extent specified in the related prospectus supplement,
the commercial properties may be leased to lessees that respectively occupy all
or a portion of the properties. Pursuant to an assignment of a lease, the
related borrower may assign its rights, title and interest as lessor under each
lease and the income derived from the lease to the related lender, while
retaining a license to collect the rents for so long as there is no default. If
the borrower defaults, the license terminates and the lender or its agent is
entitled to collect the rents from the related lessee or lessees for application
to the monetary obligations of the borrower. State law may limit or restrict the
enforcement of the lease assignments by a lender until it takes possession of
the related mortgaged property or a receiver is appointed. See "Legal Aspects of
the Mortgage Loans and the Leases--Leases and Rents". Alternatively, if
specified in the related prospectus supplement, the borrower and the lender may
agree that payments under leases are to be made directly to the master servicer.
If described in the related prospectus supplement, the leases may
require the lessees to pay rent that is sufficient in the aggregate to cover all
scheduled payments of principal and interest on the related mortgage loans. In
some cases, the leases may require the lessees to pay their pro rata share of
the operating expenses, insurance premiums and real estate taxes associated with
the mortgaged properties. Some of the leases may require the borrower to bear
costs associated with structural repairs or the maintenance of the exterior or
other portions of the
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mortgaged property or provide for certain limits on the aggregate amount of
operating expenses, insurance premiums, taxes and other expenses that the
lessees are required to pay. If so specified in the related prospectus
supplement, under certain circumstances the lessees may be permitted to set off
their rental obligations against the obligations of the borrowers under the
leases. In those cases where payments under the leases, net of any operating
expenses payable by the borrowers are insufficient to pay all of the scheduled
principal and interest on the related mortgage loans, the borrowers must rely on
other income or sources, including security deposits, generated by the related
mortgaged property to make payments on the related mortgage loan.
To the extent specified in the related prospectus supplement, some
commercial properties may be leased entirely to one lessee. In these cases,
absent the availability of other funds, the borrower must rely entirely on rent
paid by the lessee in order for the borrower to pay all of the scheduled
principal and interest on the related mortgage loan. To the extent specified in
the related prospectus supplement, some of the leases may expire prior to the
stated maturity of the related mortgage loan. In these cases, upon expiration of
the leases the borrowers will have to look to alternative sources of income,
including rent payment by any new lessees or proceeds from the sale or
refinancing of the mortgaged property, to cover the payments of principal and
interest due on these mortgage loans unless the lease is renewed. As specified
in the related prospectus supplement, some of the leases may provide that upon
the occurrence of a casualty affecting a mortgaged property, the lessee will
have the right to terminate its lease, unless the borrower, as lessor, is able
to cause the mortgaged property to be restored within a specified period of
time. Some leases may provide that it is the lessor's responsibility, while
other leases provide that it is the lessee's responsibility, to restore the
mortgaged property after a casualty to its original condition. Some leases may
provide a right of termination to the related lessee if a taking of a material
or specified percentage of the leased space in the mortgaged property occurs, or
if the ingress or egress to the leased space has been materially impaired.
DEFAULT AND LOSS CONSIDERATIONS WITH RESPECT TO THE MORTGAGE LOANS
Mortgage loans secured by commercial and multifamily properties are
markedly different from owner-occupied single family mortgage loans. The
repayment of loans secured by commercial or multifamily properties is typically
dependent upon the successful operation of the property rather than upon the
liquidation value of the real estate. Unless otherwise specified in the
prospectus supplement, the mortgage loans will be non-recourse loans, which
means that, absent special facts, the lender may look only to the Net Operating
Income from the property for repayment of the mortgage debt, and not to any
other of the borrower's assets, in the event of the borrower's default. Lenders
typically look to the Debt Service Coverage Ratio of a loan secured by
income-producing property as an important measure of the risk of default on a
loan. The "Debt Service Coverage Ratio" of a mortgage loan at any given time is
the ratio of the Net Operating Income for a twelve-month period to the
annualized scheduled payments on the mortgage loan. "Net Operating Income"
means, for any given period, to the extent set forth in the related prospectus
supplement, the total operating revenues derived from a mortgaged property
during that period, minus the total operating expenses incurred in respect of
the mortgaged property during that period other than:
o non-cash items such as depreciation and amortization;
o capital expenditures; and
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o debt service on loans secured by the mortgaged property.
The Net Operating Income of a mortgaged property will fluctuate over
time and may be sufficient or insufficient to cover debt service on the related
mortgage loan at any given time.
As the primary component of Net Operating Income, rental income as well
as maintenance payments from tenant-stockholders of a cooperative is subject to
the vagaries of the applicable real estate market or business climate.
Properties typically leased, occupied or used on a short-term basis, such as
health care-related facilities, hotels and motels, and mini-warehouse and
self-storage facilities, tend to be affected more rapidly by changes in market
or business conditions than do properties leased, occupied or used for longer
periods, such as warehouses, retail stores, office buildings and industrial
plants. Commercial loans may be secured by owner-occupied mortgaged properties
or mortgaged properties leased to a single tenant. Accordingly, a decline in the
financial condition of the borrower or single tenant, as applicable, may have a
disproportionately greater effect on the Net Operating Income from the mortgaged
properties than would be the case with respect to mortgaged properties with
multiple tenants.
Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal property
tax rates and other operating expenses, including energy costs; changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; and acts of God may also affect the risk of default on the related
mortgage loan. As may be further described in the related prospectus supplement,
in some cases leases of mortgaged properties may provide that the lessee, rather
than the borrower, is responsible for payment of some or all of these expenses;
however, because leases are subject to default risks as well when a tenant's
income is insufficient to cover its rent and operating expenses, the existence
of "net of expense" provisions will only temper, not eliminate, the impact of
expense increases on the performance of the related mortgage loan. See
"--Leases" above.
The duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties.
However, that risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities and hospitals,
the income from which and the operating expenses of which are subject to state
and federal regulations, such as Medicare and Medicaid, and multifamily
properties and mobile home parks, which may be subject to state or local rent
control regulation and, in certain cases, restrictions on changes in use of the
property. Low-and moderate-income housing in particular may be subject to legal
limitations and regulations but, because of these regulations, may also be less
sensitive to fluctuations in market rents generally.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default because other factors may outweigh a high Debt
Service Coverage Ratio. For instance, where a mortgage loan requires substantial
principal payments at the stated maturity, the risk of default if the balloon
payment cannot be refinanced at maturity is significant, even though the related
Debt Service Coverage Ratio may be high.
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The liquidation value of any mortgaged property may be adversely
affected by risks generally incident to interests in real property, including
declines in rental or occupancy rates. Lenders generally use the Loan-to-Value
Ratio of a mortgage loan as a measure of risk of loss if a property must be
liquidated upon a default by the borrower.
Appraised values for income-producing properties may be based on:
o the recent resale value of comparable properties at the date
of the appraisal;
o the cost of replacing the property;
o a projection of value based upon the property's projected net
cash flow; or
o a selection from or interpolation of the values derived from
the methods listed here.
Each of these appraisal methods presents analytical challenges for the
following reasons:
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;
o income capitalization is inherently based on inexact
projections of income and expense and the selection of an
appropriate capitalization rate;
o more than one of the appraisal methods may be used and each
may produce significantly different results; and
o if a high Loan-to-Value Ratio accompanies a high Debt Service
Coverage Ratio or vice versa, the analysis of default and loss
risks is difficult.
While Morgan Stanley Dean Witter Capital I Inc. believes that the
foregoing considerations are important factors that generally distinguish the
multifamily and commercial loans from single family mortgage loans and provide
insight to the risks associated with income-producing real estate, there is no
assurance that these factors will in fact have been considered by the
originators of the multifamily and commercial loans, or that, for any of the
mortgage loans, they are complete or relevant. See "Risk Factors--Borrower May
Be Unable To Repay The Remaining Principal Balance On Its Maturity Date Which
Would Adversely Affect Payment On Your Certificates," "--Your Certificates Will
Bear Losses If Insufficient Funds Are Available to Satisfy Any Junior Mortgage
Loans," and "--Obligor Default May Adversely Affect Payment on Your
Certificates."
LOAN-TO-VALUE RATIO
The Loan-to-Value Ratio of a mortgage loan at any given time is the
ratio, expressed as a percentage, of the then outstanding principal balance of
the mortgage loan to the Value of the related mortgaged property. The Value of a
mortgaged property, other than with respect to Refinance Loans, is generally the
lesser of
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o the appraised value determined in an appraisal obtained by the
originator at origination of that loan and
o the sales price for that property.
Refinance Loans are loans made to refinance existing loans. Unless the related
prospectus supplement provides otherwise, the Value of the mortgaged property
securing a Refinance Loan is the appraised value determined in an appraisal
obtained at the time of origination of the Refinance Loan. The Value of a
mortgaged property as of the date of initial issuance of the related series of
certificates may be less than the Value at origination and will fluctuate from
time to time based upon changes in economic conditions and the real estate
market.
MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENTS
Each prospectus supplement will contain information, as of the date of
that prospectus supplement or the Cut-off Date, if applicable and specifically
known to Morgan Stanley Dean Witter Capital I Inc., with respect to the mortgage
loans, including:
o the aggregate outstanding principal balance and the largest,
smallest and average outstanding principal balance of the
mortgage loans, unless the related prospectus supplement
provides otherwise, the close of business on the Cut-off Date,
which is a day of the month of formation of the related trust
fund, as designated in the prospectus supplement;
o the type of property securing the mortgage loans, e.g.,
multifamily property or commercial property and the type of
property in each category;
o the weighted average, by principal balance, of the original
and remaining terms to maturity of the mortgage loans;
o the earliest and latest origination date and maturity date of
the mortgage loans;
o the weighted average, by principal balance, of the
Loan-to-Value Ratios at origination of the mortgage loans;
o the mortgage rates or range of mortgage rates and the weighted
average mortgage rate borne by the mortgage loans;
o the state or states in which most of the mortgaged properties
are located;
o information with respect to the prepayment provisions, if any,
of the mortgage loans;
o the weighted average Retained Interest, if any;
o with respect to mortgage loans with adjustable mortgage rates,
the Index, the frequency of the adjustment dates, the highest,
lowest and weighted average note margin and pass-through
margin, and the maximum mortgage rate or monthly payment
variation at the time of any adjustment thereof and over the
life of the adjustable rate loan and the frequency of monthly
payment adjustments;
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o the Debt Service Coverage Ratio either at origination or as of
a more recent date, or both; and
o information regarding the payment characteristics of the
mortgage loans, including without limitation balloon payment
and other amortization provisions.
The related prospectus supplement will also contain certain information
available to Morgan Stanley Dean Witter Capital I Inc. with respect to the
provisions of leases and the nature of tenants of the mortgaged properties and
other information referred to in a general manner under "--Default and Loss
Considerations with Respect to the Mortgage Loans" above. If specific
information respecting the mortgage loans is not known to Morgan Stanley Dean
Witter Capital I Inc. at the time certificates are initially offered, more
general information of the nature described in the bullet points in this section
will be provided in the prospectus supplement, and specific information will be
set forth in a report which will be available to purchasers of the related
certificates at or before the initial issuance thereof and will be filed as part
of a Current Report on Form 8-K with the Securities and Exchange Commission
within fifteen days after the initial issuance.
PAYMENT PROVISIONS OF THE MORTGAGE LOANS
Unless otherwise specified in the related prospectus supplement, all of
the mortgage loans will:
o have individual principal balances at origination of not less
than $25,000;
o have original terms to maturity of not more than 40 years; and
o provide for payments of principal, interest or both, on due
dates that occur monthly, quarterly or semi-annually or at
another interval as specified in the related prospectus
supplement.
Each mortgage loan may provide for no accrual of interest or for
accrual of interest thereon at a mortgage rate. Each mortgage loan may provide
for scheduled payments to maturity or payments that adjust from time to time to
accommodate changes in the mortgage rate or to reflect the occurrence of certain
events, and may provide for negative amortization or accelerated amortization,
in each case as described in the related prospectus supplement. Each mortgage
loan may be fully amortizing or require a balloon payment due on its stated
maturity date, in each case as described in the related prospectus supplement.
Each mortgage loan may contain a Lockout Period and Lockout Date, the date of
expiration of the Lockout Period, or require payment of a prepayment premium in
connection with a prepayment, in each case as described in the related
prospectus supplement.
In the event that holders of any class or classes of the offered
certificates in this prospectus supplement will be entitled to all or a portion
of any prepayment premiums collected in respect of mortgage loans, the related
prospectus supplement will specify the method or methods by which these amounts
will be allocated. A mortgage loan may also contain provisions entitling the
lender to a share of profits realized from the operation or disposition of the
mortgaged property, as described in the related prospectus supplement. In the
event that holders of any class or classes of offered certificates will be
entitled to all or a portion of an Equity Participation, the related prospectus
supplement will specify the terms and provisions of
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the Equity Participation and the method or methods by which distributions in
respect thereof will be allocated among the certificates.
MORTGAGE BACKED SECURITIES
Any MBS will have been issued pursuant to an MBS Agreement. A seller,
the MBS issuer, or the servicer of the underlying mortgage loans or Underlying
MBS, or a combination of those entities, will have entered into the MBS
Agreement with an MBS trustee, if any, or with the original purchaser of the
interest in the underlying mortgage loans or MBS evidenced by the MBS.
Distributions of any principal or interest, as applicable, will be made
on MBS on the dates specified in the related prospectus supplement. The MBS may
be issued in one or more classes with characteristics similar to the classes of
certificates described in this prospectus. Any principal or interest
distributions will be made on the MBS by the MBS trustee or the MBS servicer.
The MBS issuer or the MBS servicer or another person specified in the related
prospectus supplement may have the right or obligation to repurchase or
substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related prospectus supplement.
Enhancement in the form of reserve funds, subordination or other forms
of credit support similar to that described for the certificates under
"Description of Credit Support" may be provided with respect to the MBS. The
type, characteristics and amount of the credit support, if any, will be a
function of certain characteristics of the mortgage loans or Underlying MBS
evidenced by or securing the MBS and other factors and generally will have been
established for the MBS on the basis of requirements of any Rating Agency that
may have assigned a rating to the MBS or the initial purchasers of the MBS.
The prospectus supplement for a series of certificates evidencing
interests in assets that include MBS will specify, to the extent available:
o the aggregate approximate initial and outstanding principal
amount or Notional Amount, as applicable, and type of the MBS
to be included in the trust fund;
o the original and remaining term to stated maturity of the MBS,
if applicable;
o whether the MBS is entitled only to interest payments, only to
principal payments or to both;
o the pass-through or bond rate of the MBS or formula for
determining the rates, if any;
o the applicable payment provisions for the MBS, including, but
not limited to, any priorities, payment schedules and
subordination features;
o the MBS issuer, MBS servicer and MBS trustee, as applicable;
o characteristics of the credit support, if any, such as
subordination, reserve funds, insurance policies, letters of
credit or guarantees relating to the related Underlying
Mortgage Loans, the Underlying MBS or directly to the MBS;
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o the terms on which the MBS or the related Underlying Mortgage
Loans or Underlying MBS may, or are required to, be purchased
prior to their maturity;
o the terms on which mortgage loans or Underlying MBS may be
substituted for those originally underlying the MBS;
o the servicing fees payable under the MBS Agreement;
o the type of information in respect of the Underlying Mortgage
Loans described under "--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements" above, and the type of
information in respect of the Underlying MBS described in this
paragraph;
o the characteristics of any cash flow agreements that are
included as part of the trust fund evidenced or secured by the
MBS, and
o whether the MBS is in certificated form, book-entry form or
held through a depository such as The Depository Trust Company
or the Participants Trust Company.
If specified in the prospectus supplement for a series of certificates,
a trust fund may contain one or more MBS issued by Morgan Stanley Dean Witter
Capital I Inc. that each represent an interest in one or more Underlying
Mortgage Loans. The prospectus supplement for a series will contain the
disclosure concerning the MBS described in the preceding paragraph and, in
particular, will disclose the Underlying Mortgage Loans appropriately in light
of the percentage of the aggregate principal balance of all assets represented
by the principal balance of the MBS.
GOVERNMENT SECURITIES
The prospectus supplement for a series of certificates evidencing
interests in assets of a trust fund that include government securities will
specify, to the extent available:
o the aggregate approximate initial and outstanding principal
amounts or Notional Amounts, as applicable, and types of the
government securities to be included in the trust fund;
o the original and remaining terms to stated maturity of the
government securities;
o whether the government securities are entitled only to
interest payments, only to principal payments or to both;
o the interest rates of the government securities or the formula
to determine the rates, if any;
o the applicable payment provisions for the government
securities; and
o to what extent, if any, the obligation evidenced by the
related series of certificates is backed by the full faith and
credit of the United States.
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ACCOUNTS
Each trust fund will include one or more accounts established and
maintained on behalf of the certificateholders into which the person or persons
designated in the related prospectus supplement will, to the extent described in
this prospectus and in the related prospectus supplement deposit all payments
and collections received or advanced with respect to the assets and other assets
in the trust fund. Such an account may be maintained as an interest bearing or a
non-interest bearing account, and funds held in that account may be held as cash
or invested in short-term, investment grade obligations, in each case as
described in the related prospectus supplement. See "Description of the
Agreements--Certificate Account and Other Collection Accounts."
CREDIT SUPPORT
If so provided in the related prospectus supplement, partial or full
protection against certain defaults and losses on the assets in the related
trust fund may be provided to one or more classes of certificates in the related
series in the form of subordination of one or more other classes of certificates
in the series or by one or more other types of credit support, such as a letter
of credit, insurance policy, guarantee, reserve fund or another type of credit
support, or a combination thereof. The amount and types of coverage, the
identification of the entity providing the coverage if applicable and related
information with respect to each type of Credit Support, if any, will be
described in the prospectus supplement for a series of certificates. See "Risk
Factors--Credit Support May Not Cover Losses Or Risks Which Could Adversely
Affect Payment On Your Certificates."
CASH FLOW AGREEMENTS
If so provided in the related prospectus supplement, the trust fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds other agreements, such as interest rate exchange agreements, interest rate
cap or floor agreements, currency exchange agreements or similar agreements
provided to reduce the effects of interest rate or currency exchange rate
fluctuations on the assets or on one or more classes of certificates. Currency
exchange agreements might be included in the trust fund if some or all of the
mortgage loans or MBS, such as mortgage loans secured by mortgaged properties
located outside the United States, were denominated in a non-United States
currency. The principal terms of any guaranteed investment contract or other
agreement, including, without limitation, provisions relating to the timing,
manner and amount of payments and provisions relating to termination, will be
described in the prospectus supplement for the related series. In addition, the
related prospectus supplement will provide information with respect to the
obligor under any Cash Flow Agreement.
USE OF PROCEEDS
The net proceeds to be received from the sale of the certificates will
be applied by Morgan Stanley Dean Witter Capital I Inc. to the purchase of
assets and to pay for certain expenses incurred in connection with the purchase
of assets and sale of certificates. The depositor expects to sell the
certificates from time to time, but the timing and amount of offerings of
certificates will depend on a number of factors, including the volume of assets
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acquired by Morgan Stanley Dean Witter Capital I Inc., prevailing interest
rates, availability of funds and general market conditions.
YIELD CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price paid by
the certificateholder will accrue interest thereon based on a pass-through rate
of the certificate, the receipt and timing of receipt of distributions on the
certificate and the weighted average life of the assets in the related trust
fund, which may be affected by prepayments, defaults, liquidations or
repurchases. See "Risk Factors."
PASS-THROUGH RATE
Certificates of any class within a series may have fixed, variable or
adjustable pass-through rates, which may or may not be based upon the interest
rates borne by the assets in the related trust fund. The prospectus supplement
with respect to any series of certificates will specify
o the pass-through rate for each class of certificates or, in
the case of a variable or adjustable pass-through rate, the
method of determining the pass-through rate;
o the effect, if any, of the prepayment of any mortgage loan or
MBS on the pass-through rate of one or more classes of
certificates; and
o whether the distributions of interest on the certificates of
any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.
The effective yield to maturity to each holder of certificates entitled
to payments of interest will be below that otherwise produced by the applicable
pass-through rate and purchase price of the certificate because, while interest
may accrue on each asset during a certain period, the distribution of interest
will be made on a day which may be several days, weeks or months following the
period of accrual.
TIMING OF PAYMENT OF INTEREST
Each payment of interest on the certificates will have a stated
principal amount in addition to the certificate Balance of a class of Accrual
Certificates, and will be distributed to certificateholders as provided in the
related prospectus supplement and will include interest accrued during the
Interest Accrual Period for that Distribution Date. As indicated in this
prospectus under "--Pass-Through Rate" above, if the Interest Accrual Period
ends on a date other than a Distribution Date for the related series, the yield
realized by the holders of the certificates may be lower than the yield that
would result if the Interest Accrual Period ended on that Distribution Date. In
addition, if so specified in the related prospectus supplement, interest accrued
for an Interest Accrual Period for one or more classes of certificates may be
calculated on the assumption that distributions of principal, additions to the
Certificate Balance of Accrual Certificates and allocations of losses on the
assets may be made on the first day of the Interest Accrual Period for a
Distribution Date and not on that Distribution Date. This method would
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produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding during an Interest Accrual Period. The
Interest Accrual Period for any class of offered certificates will be described
in the related prospectus supplement.
PAYMENTS OF PRINCIPAL; PREPAYMENTS
The yield to maturity on the certificates will be affected by the rate
of principal payments on the assets including principal prepayments on mortgage
loans resulting from both voluntary prepayments by the borrowers and involuntary
liquidations. These payments may be directly dependent upon the payments on
leases underlying the mortgage loans. The rate at which principal prepayments
occur on the mortgage loans will be affected by a variety of factors, including,
without limitation, the terms of the mortgage loans, the level of prevailing
interest rates, the availability of mortgage credit and economic, demographic,
geographic, tax, legal and other factors. In general, however, if prevailing
interest rates fall significantly below the mortgage rates on the mortgage loans
comprising or underlying the assets in a particular trust fund, the mortgage
loans are likely to be the subject of higher principal prepayments than if
prevailing rates remain at or above the rates borne by the mortgage loans. In
this regard, it should be noted that assets may consist of mortgage loans with
different mortgage rates and the stated pass-through or pay-through interest
rate of certain MBS may be a number of percentage points higher or lower than
the underlying mortgage loans. The rate of principal payments on some or all of
the classes of certificates of a series
o will correspond to the rate of principal payments on the
assets in the related trust fund;
o is likely to be affected by the existence of Lockout Periods
and Prepayment Premium provisions of the mortgage loans
underlying or comprising the assets; and
o is likely to be affected to the extent the servicer of any
mortgage loan is able to enforce the Lockout Period and
Prepayment Premium provisions.
Mortgage loans with a Lockout Period or a Prepayment Premium provision, to the
extent enforceable, generally would be expected to experience a lower rate of
principal prepayments than otherwise identical mortgage loans without these
provisions, with shorter Lockout Periods or with lower Prepayment Premiums.
If the purchaser of a certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than that actually experienced on the assets, the
actual yield to maturity will be lower than that so calculated. Conversely, if
the purchaser of a certificate offered at a premium calculates its anticipated
yield to maturity based on an assumed rate of distributions of principal that is
slower than that actually experienced on the assets, the actual yield to
maturity will be lower than that so calculated. In either case, if so provided
in the prospectus supplement for a series of certificates, the effect on yield
on one or more classes of the certificates of the series of prepayments of the
assets in the related trust fund may be mitigated or exacerbated by any
provisions for sequential or selective distribution of principal to these
classes.
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When a full prepayment is made on a mortgage loan, the borrower is
charged interest on the principal amount of the mortgage loan so prepaid for the
number of days in the month actually elapsed up to the date of the prepayment.
Unless otherwise specified in the related prospectus supplement, the effect of
prepayments in full will be to reduce the amount of interest paid in the
following month to holders of certificates entitled to payments of interest
because interest on the principal amount of any mortgage loan so prepaid will be
paid only to the date of prepayment rather than for a full month. Unless
otherwise specified in the related prospectus supplement, a partial prepayment
of principal is applied so as to reduce the outstanding principal balance of the
related mortgage loan as of the Due Date in the month in which the partial
prepayment is received. As a result, to the extent set forth in the related
prospectus supplement, the effect of a partial prepayment on a mortgage loan
will be to reduce the amount of interest passed through to holders of
certificates in the month following the receipt of the partial prepayment by an
amount equal to one month's interest at the applicable pass-through rate on the
prepaid amount.
The timing of changes in the rate of principal payments on the mortgage
loans or MBS may significantly affect an investor's actual yield to maturity,
even if the average rate of distributions of principal is consistent with an
investor's expectation. In general, the earlier a principal payment is received
on the mortgage loans or the MBS and distributed on a certificate, the greater
the effect on the investor's yield to maturity. The effect on an investor's
yield of principal payments occurring at a rate higher or lower than the rate
anticipated by the investor during a given period may not be offset by a
subsequent like decrease or increase in the rate of principal payments.
PREPAYMENTS--MATURITY AND WEIGHTED AVERAGE LIFE
The rates at which principal payments are received on the assets
included in or comprising a trust fund and the rate at which payments are made
from any Credit Support or Cash Flow Agreement for the related series of
certificates may affect the ultimate maturity and the weighted average life of
each class of a series. Prepayments on the mortgage loans comprising or
underlying the mortgage loans or MBS in a particular trust fund will generally
accelerate the rate at which principal is paid on some or all of the classes of
the certificates of the related series.
If so provided in the prospectus supplement for a series of
certificates, one or more classes of certificates may have a final scheduled
Distribution Date, which is the date on or prior to which the certificate
Balance thereof is scheduled to be reduced to zero, calculated on the basis of
the assumptions applicable to that series set forth in the related prospectus
supplement.
Weighted average life refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
the security will be repaid to the investor. The weighted average life of a
class of certificates of a series will be influenced by the rate at which
principal on the mortgage loans comprising or underlying the mortgage loans or
MBS is paid to that class, which may be in the form of scheduled amortization or
prepayments which include prepayments, in whole or in part, and liquidations due
to default.
In addition, the weighted average life of the certificates may be
affected by the varying maturities of the mortgage loans comprising or
underlying the MBS. If any mortgage loans
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comprising or underlying the assets in a particular trust fund have actual terms
to maturity of less than those assumed in calculating final scheduled
Distribution Dates for the classes of certificates of the related series, one or
more classes of certificates may be fully paid prior to their respective final
scheduled Distribution Dates, even in the absence of prepayments. Accordingly,
the prepayment experience of the assets will, to some extent, be a function of
the mix of mortgage rates and maturities of the mortgage loans comprising or
underlying the assets. See "Description of the Trust Funds."
Prepayments on loans are also commonly measured relative to a
prepayment standard or model, such as the Constant Prepayment Rate prepayment
model. CPR represents a constant assumed rate of prepayment each month relative
to the then outstanding principal balance of a pool of loans for the life of the
loans.
Neither CPR nor any other prepayment model or assumption purports to be
a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of loans, including the mortgage
loans underlying or comprising the mortgage loans, the MBS or both. Moreover,
CPR was developed based upon historical prepayment experience for single family
loans. Thus, it is likely that prepayment of any mortgage loans comprising or
underlying the mortgage loans or the MBS for any series will not conform to any
particular level of CPR.
Morgan Stanley Dean Witter Capital I Inc. is not aware of any
meaningful publicly available prepayment statistics for multifamily or
commercial mortgage loans.
The prospectus supplement with respect to each series of certificates
will contain tables, if applicable, setting forth the projected weighted average
life of each class of offered certificates of the series and the percentage of
the initial certificate Balance of each class that would be outstanding on
specified Distribution Dates. The information in these tables will be based on
the assumptions stated in the prospectus supplement, including assumptions that
prepayments on the mortgage loans comprising or underlying the related assets
are made at rates corresponding to various percentages of CPR or at other rates
specified in the prospectus supplement. These tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
certificates to various prepayment rates and will not be intended to predict or
to provide information that will enable investors to predict the actual weighted
average life of the certificates. It is unlikely that prepayment of any mortgage
loans comprising or underlying the mortgage loans or MBS for any series will
conform to any particular level of CPR or any other rate specified in the
related prospectus supplement.
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
TYPE OF MORTGAGE ASSET
A number of mortgage loans may have balloon payments due at maturity.
Because the ability of a borrower to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the related
mortgaged property, there is a risk that mortgage loans having balloon payments
may default at maturity, or that the servicer may extend the maturity of this
type of mortgage loan in connection with a workout. In the case of defaults,
recovery of proceeds may be delayed by, among other things, bankruptcy of the
borrower or adverse conditions in the market where the property is located. In
order to minimize losses on defaulted
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mortgage loans, the servicer may, to the extent and under the circumstances set
forth in the related prospectus supplement, be permitted to modify mortgage
loans that are in default or as to which a payment default is imminent. Any
defaulted balloon payment or modification that extends the maturity of a
mortgage loan will tend to extend the weighted average life of the certificates.
This would lengthen the period of time elapsed from the date of issuance of a
certificate until it is retired.
FORECLOSURES AND PAYMENT PLANS
The number of foreclosures and the principal amount of the mortgage
loans comprising or underlying the mortgage loans or MBS that are foreclosed in
relation to the number and principal amount of mortgage loans that are repaid in
accordance with their terms will affect the weighted average life of the
mortgage loans comprising or underlying the mortgage loans or MBS and that of
the related series of certificates. Servicing decisions made with respect to the
mortgage loans, including the use of payment plans prior to a demand for
acceleration and the restructuring of mortgage loans in bankruptcy proceedings,
may also have an effect upon the payment patterns of particular mortgage loans
and thus the weighted average life of the certificates.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE CLAUSES
Acceleration of mortgage payments as a result of transfers of or the
creation of encumbrances upon underlying mortgaged property is another factor
affecting prepayment rates that may not be reflected in the prepayment standards
or models used in the relevant prospectus supplement. A number of the mortgage
loans comprising or underlying the assets may include "due-on-sale" clauses or
"due-on-encumbrance" clauses that allow the holder of the mortgage loans to
demand payment in full of the remaining principal balance of the mortgage loans
upon sale or other transfers of or the creation of encumbrances upon the related
mortgaged property. With respect to any Whole Loans, unless otherwise provided
in the related prospectus supplement, the master servicer, on behalf of the
trust fund, will be required to exercise--or waive its right to exercise--any
rights that the trustee may have as lender to accelerate payment of the Whole
Loan in a manner consistent with the Servicing Standard. See "Legal Aspects of
the Mortgage Loans and the Leases--Due-on-Sale and Due-on-Encumbrance" and
"Description of the Agreements--Due-on-Sale and Due-on-Encumbrance Provisions."
THE DEPOSITOR
Morgan Stanley Dean Witter Capital I Inc., the depositor, formerly
known as Morgan Stanley Capital I Inc., is a direct wholly-owned subsidiary of
Morgan Stanley Group Inc. and was incorporated in the State of Delaware on
January 28, 1985. The principal executive offices of Morgan Stanley Dean Witter
Capital I Inc. are located at 1585 Broadway, 37th Floor, New York, New York
10036. Its telephone number is (212) 761-4700.
Morgan Stanley Dean Witter Capital I Inc. does not have, nor is it
expected in the future to have, any significant assets.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The certificates of each series, including any class of certificates
not offered by this prospectus, will represent the entire beneficial ownership
interest in the trust fund created pursuant to the related Agreement. Each
series of certificates will consist of one or more classes of certificates that
may:
o provide for the accrual of interest thereon based on fixed,
variable or adjustable rates;
o be senior or subordinate to one or more other classes of
certificates in respect of distributions on the certificates;
o be entitled to principal distributions, with
disproportionately low, nominal or no interest distributions;
o be entitled to interest distributions, with disproportionately
low, nominal or no principal distributions;
o provide for distributions of accrued interest thereon
commencing only following the occurrence of events, such as
the retirement of one or more other classes of certificates of
the series;
o provide for payments of principal sequentially, based on
specified payment schedules, from only a portion of the assets
in the trust fund or based on specified calculations, to the
extent of available funds, in each case as described in the
related prospectus supplement;
o provide for distributions based on a combination of two or
more components thereof with one or more of the
characteristics described in this paragraph including a
Stripped Principal Certificate component and a Stripped
Interest Certificate component; or
o do all or any combination of the above.
Any of the foregoing may be included in the certificates being offered to you.
Each class of offered certificates of a series will be issued in
minimum denominations corresponding to the Certificate Balances or, in case of
Stripped Interest Certificates, Notional Amounts or percentage interests
specified in the related prospectus supplement. The transfer of any offered
certificates may be registered and these certificates may be exchanged without
the payment of any service charge payable in connection with the registration of
transfer or exchange. However Morgan Stanley Dean Witter Capital I Inc. or the
trustee or any of its agents may require payment of a sum sufficient to cover
any tax or other governmental charge. One or more classes of certificates of a
series may be issued in definitive form or in book-entry form, as provided in
the related prospectus supplement. See "Risk Factors--If Your Certificate Is
Book-Entry, You Will Not Be Recognized As Certificateholder By The Trustee."
Under limited circumstances, definitive certificates will be exchangeable for
other certificates of the same class
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and series of a like aggregate Certificate Balance, Notional Amount or
percentage interest but of different authorized denominations.
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the trustee on each Distribution Date as specified in the related
prospectus supplement from the Available Distribution Amount for the series and
the Distribution Date. Except as otherwise specified in the related prospectus
supplement, distributions other than the final distribution will be made to the
persons in whose names the certificates are registered on the Record Date, and
the amount of each distribution will be determined as of the close of business
on the date specified in the related prospectus supplement. All distributions
with respect to each class of certificates on each Distribution Date will be
allocated pro rata among the outstanding certificates in the class or by random
selection, as described in the related prospectus supplement or otherwise
established by the related trustee.
Payments will be made either by wire transfer in immediately available
funds to the account of a certificateholder at a bank or other entity having
appropriate facilities to receive payments by wire transfer, if the
certificateholder has so notified the trustee or other person required to make
the payments no later than the date specified in the related prospectus
supplement and, if so provided in the related prospectus supplement, holds
certificates in the requisite amount specified in the related prospectus
supplement, or by check mailed to the address of the person entitled to receive
payments as it appears on the Certificate Register. However, the final
distribution in retirement of the certificates, whether definitive certificates
or book-entry certificates, will be made only upon presentation and surrender of
the certificates at the location specified in the notice to certificateholders
of the final distribution.
AVAILABLE DISTRIBUTION AMOUNT
All distributions on the certificates of each series on each
Distribution Date will be made from the Available Distribution Amount described
in this paragraph, in accordance with the terms described in the related
prospectus supplement. Unless provided otherwise in the related prospectus
supplement, the Available Distribution Amount for each Distribution Date equals
the sum of the following amounts:
1. the total amount of all cash on deposit in the related
Certificate Account as of the corresponding Determination
Date, exclusive of:
o all scheduled payments of principal and interest
collected but due on a date subsequent to the related
Due Period;
o unless the related prospectus supplement provides
otherwise, all prepayments, together with related
payments of the interest thereon and related
prepayment premiums, Liquidation Proceeds, Insurance
Proceeds and other unscheduled recoveries received
subsequent to the related Due Period; and
o all amounts in the Certificate Account that are due
or reimbursable to Morgan Stanley Dean Witter Capital
I Inc., the trustee, an asset seller, a
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subservicer, a special servicer, the master servicer
or any other entity as specified in the related
prospectus supplement or that are payable in respect
of certain expenses of the related trust fund;
2. if the related prospectus supplement so provides, interest or
investment income on amounts on deposit in the Certificate
Account, including any net amounts paid under any Cash Flow
Agreements;
3. all advances made by a master servicer or any other entity as
specified in the related prospectus supplement with respect to
the Distribution Date;
4. if and to the extent the related prospectus supplement so
provides, amounts paid by a master servicer or any other
entity as specified in the related prospectus supplement with
respect to interest shortfalls resulting from prepayments
during the related Prepayment Period; and
5. unless the related prospectus supplement provides otherwise,
to the extent not on deposit in the related Certificate
Account as of the corresponding Determination Date, any
amounts collected under, from or in respect of any Credit
Support with respect to the Distribution Date.
The entire Available Distribution Amount will be distributed among the
related certificates, including any certificates not offered hereby, on each
Distribution Date, and accordingly will be released from the trust fund and will
not be available for any future distributions.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates, other than classes of Stripped Principal
Certificates that have no pass-through rate, may have a different pass-through
rate, which will be a fixed, variable or adjustable rate at which interest will
accrue on the class or a component thereof. The related prospectus supplement
will specify the pass-through rate for each class or component or, in the case
of a variable or adjustable pass-through rate, the method for determining the
pass-through rate. Unless otherwise specified in the related prospectus
supplement, interest on the certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
In general, distributions of interest in respect of the certificates of
any class will be made on each Distribution Date based on the Accrued
Certificate Interest for the class and the Distribution Date, subject to the
sufficiency of the portion of the Available Distribution Amount allocable to the
class on the Distribution Date. Accrual Certificates, however, will be entitled
to distributions of accrued interest commencing only on the Distribution Date,
or under the circumstances, specified in the related prospectus supplement. In
addition, any class of Stripped Principal Certificates are not entitled to any
distributions of interest. Prior to the time interest is distributable on any
class of Accrual Certificates, the amount of Accrued Certificate Interest
otherwise distributable on the class will be added to the Certificate Balance
thereof on each Distribution Date. Unless otherwise provided in the prospectus
supplement, Accrued Certificate Interest on Stripped Interest Certificates will
be equal to interest accrued for a specified period on the outstanding Notional
Amount thereof immediately prior to each Distribution Date, at the applicable
pass-through rate, reduced as described below in the next paragraph.
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The method of determining the Notional Amount for any class of Stripped
Interest Certificates will be described in the related prospectus supplement.
Reference to Notional Amount is solely for convenience in calculations and does
not represent the right to receive any distributions of principal. Unless
otherwise provided in the related prospectus supplement, the Accrued Certificate
Interest on a series of certificates will be reduced in the event of prepayment
interest shortfalls. Prepayment interest shortfalls are shortfalls in
collections of interest for a full accrual period resulting from prepayments
prior to the due date in the accrual period on the mortgage loans comprising or
underlying the mortgage loans or MBS in the trust fund for the series. The
particular manner in which these shortfalls are to be allocated among some or
all of the classes of certificates of that series will be specified in the
related prospectus supplement. The related prospectus supplement will also
describe the extent to which the amount of Accrued Certificate Interest that is
otherwise distributable on a class of offered certificates may be reduced as a
result of any other contingencies, including delinquencies, losses and deferred
interest on or in respect of the mortgage loans comprising or underlying the
mortgage loans or MBS in the related trust fund. Similarly, with respect to
Accrual Certificates, the related prospectus supplement will describe the extent
to which the amount of Accrued Certificate Interest that may be added to the
Certificate Balance of a Class of Offered Certificates may be reduced. Unless
otherwise provided in the related prospectus supplement, any reduction in the
amount of Accrued Certificate Interest otherwise distributable on a class of
certificates by reason of the allocation to the class of a portion of any
deferred interest on the mortgage loans comprising or underlying the mortgage
loans or MBS in the related trust fund will result in a corresponding increase
in the Certificate Balance of the class. See "Risk Factors--Prepayments And
Repurchases May Reduce The Yield On Your Certificates," and "--If Prepayment
Premiums Are Not Enforced, Your Certificates May Be Adversely Affected," and
"Yield Considerations."
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
The certificates of each series, other than certain classes of Stripped
Interest Certificates, will have a Certificate Balance. The Certificate Balance
will equal the maximum principal amount that the holder will be entitled to
receive out of future cash flow on the assets in the trust fund. The outstanding
Certificate Balance of a certificate will be reduced to the extent of
distributions of principal and, if and to the extent so provided in the related
prospectus supplement, by the amount of losses incurred in respect of the
related assets. The outstanding Certificate Balance may be increased in respect
of deferred interest on the related mortgage loans to the extent provided in the
related prospectus supplement. The outstanding Certificate Balance may be
increased in the case of Accrual Certificates, prior to the Distribution Date on
which distributions of interest are required to commence, by any related Accrued
Certificate Interest. Unless otherwise provided in the related prospectus
supplement, the initial aggregate Certificate Balance of all classes of
certificates of a series will not be greater than the outstanding aggregate
principal balance of the related assets as of the applicable Cut-off Date. The
initial aggregate Certificate Balance of a series and each class thereof will be
specified in the related prospectus supplement. Unless otherwise provided in the
related prospectus supplement, distributions of principal will be made on each
Distribution Date to the class or classes of certificates entitled thereto in
accordance with the provisions described in the prospectus supplement until the
Certificate Balance of that class has been reduced to zero. Stripped Interest
Certificates with no Certificate Balance are not entitled to any distributions
of principal.
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COMPONENTS
To the extent specified in the related prospectus supplement,
distribution on a class of certificates may be based on a combination of two or
more different components as described under "--General" above. To the extent,
the descriptions set forth under "--Distributions of Interests on the
Certificates" and "--Distributions of Principal of the Certificates" above also
relate to components of a class of certificates. In this case, references to
Certificate Balance and pass-through rate refer to the principal balance, if
any, of any component and the pass-through rate, if any, on any component,
respectively.
DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS OR IN RESPECT OF EQUITY
PARTICIPATIONS
If so provided in the related prospectus supplement, prepayment
premiums or payments in respect of Equity Participations that are collected on
the mortgage loans or MBS in the related trust fund will be distributed on each
Distribution Date to the class or classes of certificates entitled thereto in
accordance with the provisions described in the prospectus supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
If so provided in the prospectus supplement for a series of
certificates consisting of one or more classes of Subordinate Certificates, on
any Distribution Date in respect of which losses or shortfalls in collections on
the mortgage loans or MBS or both have been incurred, the amount of losses or
shortfalls will be borne first by a class of Subordinate Certificates in the
priority and manner and subject to the limitations specified in the prospectus
supplement. See "Description of Credit Support" for a description of the types
of protection that may be included in a trust fund against losses and shortfalls
on mortgage loans or MBS comprising the trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the related prospectus supplement, the
master servicer or another entity described in the prospectus supplement will be
required as part of its servicing responsibilities to advance on or before each
Distribution Date its own funds or funds held in the Certificate Account that
are not included in the Available Distribution Amount for the Distribution Date.
The master servicer or other entity required to make advances will do so, in an
amount equal to the aggregate of payments of principal, other than any balloon
payments, and interest, net of related servicing fees and Retained Interest,
that were due on the Whole Loans in the trust fund during the related Due Period
and were delinquent on the related Determination Date. The master servicer or
other entity required to make advances will advance, subject to that entity's
good faith determination that the advances will be reimbursable from Related
Proceeds. In the case of a series of certificates that includes one or more
classes of Subordinate Certificates and if so provided in the related prospectus
supplement, the master servicer's or another entity's advance obligation may be
limited only to the portion of the delinquencies necessary to make the required
distributions on one or more classes of Senior Certificates and may be subject
to the master servicer's or another entity's good faith determination that the
advances will be reimbursable not only from Related Proceeds but also from
collections on other assets otherwise
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distributable on one or more classes of Subordinate Certificates. See
"Description of Credit Support."
Advances are intended to maintain a regular flow of scheduled interest
and principal payments to holders of the class or classes of certificates.
Advances do not guaranty or insure against losses. Unless otherwise provided in
the related prospectus supplement, advances of the master servicer's or another
entity's funds will be reimbursable only out of Related Proceeds and, if so
provided in the prospectus supplement, out of any amounts otherwise
distributable on one or more classes of Subordinate Certificates of the series.
However, advances will be reimbursable from amounts in the Certificate Account
prior to distributions being made on the certificates, to the extent that the
master servicer or another entity shall determine in good faith that the advance
is a Nonrecoverable Advance. If advances have been made by the master servicer
from excess funds in the Certificate Account, the master servicer is required to
replace the funds in the Certificate Account on any future Distribution Date to
the extent that funds in the Certificate Account on the Distribution Date are
less than payments required to be made to certificateholders on that date. If so
specified in the related prospectus supplement, the obligations of the master
servicer or another entity to make advances may be secured by a cash advance
reserve fund, a surety bond, a letter of credit or another form of limited
guaranty. If applicable, information regarding the characteristics of, and the
identity of any obligor on, any surety bond, will be set forth in the related
prospectus supplement.
If and to the extent so provided in the related prospectus supplement,
the master servicer or another entity will be entitled to receive interest at
the rate specified in the prospectus supplement on its outstanding advances and
will be entitled to pay itself interest periodically from general collections on
the assets prior to any payment to certificateholders or as otherwise provided
in the related Agreement and described in the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes MBS will describe any corresponding
advancing obligation of any person in connection with the MBS.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise provided in the prospectus supplement, with each
distribution to holders of any class of certificates of a series, the master
servicer or the trustee, as provided in the related prospectus supplement, will
forward or cause to be forwarded to each holder, to Morgan Stanley Dean Witter
Capital I Inc. and to the other parties as may be specified in the related
Agreement, a statement setting forth, in each case to the extent applicable and
available:
(1) the amount of the distribution to holders of certificates of
that class applied to reduce the Certificate Balance thereof;
(2) the amount of the distribution to holders of certificates of
that class allocable to Accrued Certificate Interest;
(3) the amount of the distribution allocable to
(a) prepayment premiums and
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(b) payments on account of Equity
Participations;
(4) the amount of related servicing compensation received by a
master servicer and, if payable directly out of the related
trust fund, by any special servicer and any subservicer and
any other customary information as that master servicer or
trustee deem necessary or desirable, or that a
certificateholder reasonably requests, to enable
certificateholders to prepare their tax returns;
(5) the aggregate amount of advances included in that
distribution, and the aggregate amount of unreimbursed
advances at the close of business on that Distribution Date;
(6) the aggregate principal balance of the assets at the close of
business on that Distribution Date;
(7) the number and aggregate principal balance of Whole Loans in
respect of which:
o one scheduled payment is delinquent,
o two scheduled payments are delinquent,
o three or more scheduled payments are delinquent and
o foreclosure proceedings have been commenced;
(8) with respect to each Whole Loan that is delinquent two or more
months:
o the loan number thereof,
o the unpaid balance thereof,
o whether the delinquency is in respect of any balloon
payment,
o the aggregate amount of unreimbursed servicing
expenses and unreimbursed advances in respect
thereof,
o if applicable, the aggregate amount of any interest
accrued and payable on related servicing expenses and
related advances assuming the mortgage loan is
subsequently liquidated through foreclosure,
o whether a notice of acceleration has been sent to the
borrower and, if so, the date of the notice,
o whether foreclosure proceedings have been commenced
and, if so, the date so commenced and
o if the mortgage loan is more than three months
delinquent and foreclosure has not been commenced,
the reason therefor;
(9) with respect to any Whole Loan liquidated during the related
Due Period other than by payment in full:
o the loan number thereof,
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o the manner in which it was liquidated and
o the aggregate amount of liquidation proceeds
received;
(10) with respect to any Whole Loan liquidated during the related
Due Period,
o the portion of the liquidation proceeds payable or
reimbursable to the master servicer, or any other
entity, in respect of the mortgage loan and
o the amount of any loss to certificateholders;
(11) with respect to each REO Property relating to a Whole Loan and
included in the trust fund as of the end of the related Due
Period,
o the loan number of the related mortgage loan and
o the date of acquisition;
(12) with respect to each REO Property relating to a Whole Loan and
included in the trust fund as of the end of the related Due
Period:
o the book value,
o the principal balance of the related mortgage loan
immediately following the Distribution Date,
calculated as if the mortgage loan were still
outstanding taking into account certain limited
modifications to the terms thereof specified in the
Agreement,
o the aggregate amount of unreimbursed servicing
expenses and unreimbursed advances in respect thereof
and
o if applicable, the aggregate amount of interest
accrued and payable on related servicing expenses and
related advances;
(13) with respect to any REO Property sold during the related Due
Period
o the loan number of the related mortgage loan,
o the aggregate amount of sale proceeds,
o the portion of sales proceeds payable or reimbursable
to the master servicer or a special servicer in
respect of the REO Property or the related mortgage
loan and
o the amount of any loss to certificateholders in
respect of the related mortgage loan;
(14) the aggregate Certificate Balance or Notional Amount, as the
case may be, of each class of certificates including any class
of certificates not offered hereby at the close of business on
the Distribution Date, separately identifying any reduction in
the Certificate Balance due to the allocation of any loss and
increase in the Certificate Balance of a class
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of Accrual Certificates in the event that Accrued Certificate
Interest has been added to the balance;
(15) the aggregate amount of principal prepayments made during the
related Due Period;
(16) the amount deposited in the reserve fund, if any, on the
Distribution Date;
(17) the amount remaining in the reserve fund, if any, as of the
close of business on the Distribution Date;
(18) the aggregate unpaid Accrued Certificate Interest, if any, on
each class of certificates at the close of business on the
Distribution Date;
(19) in the case of certificates with a variable pass-through rate,
the pass-through rate applicable to the Distribution Date,
and, if available, the immediately succeeding Distribution
Date, as calculated in accordance with the method specified in
the related prospectus supplement;
(20) in the case of certificates with an adjustable pass-through
rate, for statements to be distributed in any month in which
an adjustment date occurs, the adjustable pass-through rate
applicable to the Distribution Date and the immediately
succeeding Distribution Date as calculated in accordance with
the method specified in the related prospectus supplement;
(21) as to any series which includes Credit Support, the amount of
coverage of each instrument of Credit Support included in the
Series as of the close of business on the Distribution Date;
and
(22) the aggregate amount of payments by the borrowers of:
o default interest,
o late charges and
o assumption and modification fees collected during the
related Due Period.
In the case of information furnished pursuant to subclauses (1)-(4)
above, the amounts generally will be expressed as a dollar amount per minimum
denomination of certificates. In addition, in the case of information furnished
pursuant to subclauses (1), (2), (14), (18) and (19) above, the amounts shall
also be provided with respect to each component, if any, of a class of
certificates. The master servicer or the trustee, as specified in the related
prospectus supplement, will forward or cause to be forwarded to each holder, to
Morgan Stanley Dean Witter Capital I Inc. and to any other parties as may be
specified in the Agreement, a copy of any statements or reports received by the
master servicer or the trustee, as applicable, with respect to any MBS. The
prospectus supplement for each series of offered certificates will describe any
additional information to be included in reports to the holders of the
certificates.
Within a reasonable period of time after the end of each calendar year,
the master servicer or the trustee, as provided in the related prospectus
supplement, shall furnish to each person who at any time during the calendar
year was a holder of a certificate a statement containing the
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information set forth in subclauses (1)-(4) above, aggregated for the calendar
year or the applicable portion thereof during which the person was a
certificateholder. This obligation of the master servicer or the trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the master servicer or the trustee pursuant to
any requirements of the Code as are from time to time in force. See "Description
of the Certificates--Book-Entry Registration and Definitive Certificates."
TERMINATION
The obligations created by the Agreement for each series of
certificates will terminate upon the payment to certificateholders of that
series of all amounts held in the Certificate Account or by the master servicer,
if any, or the trustee and required to be paid to them pursuant to the Agreement
following the earlier of
o the final payment or other liquidation of the last asset
subject thereto or the disposition of all property acquired
upon foreclosure of any Whole Loan subject thereto and
o the purchase of all of the assets of the trust fund by the
party entitled to effect the termination, under the
circumstances and in the manner set forth in the related
prospectus supplement.
In no event, however, will the trust fund created by the Agreement continue
beyond the date specified in the related prospectus supplement. Written notice
of termination of the Agreement will be given to each certificateholder, and the
final distribution will be made only upon presentation and surrender of the
certificates at the location to be specified in the notice of termination.
If so specified in the related prospectus supplement, a series of
certificates may be subject to optional early termination through the repurchase
of the assets in the related trust fund by the party specified in the prospectus
supplement, under the circumstances and in the manner set forth in the
prospectus supplement. If so provided in the related prospectus supplement, upon
the reduction of the Certificate Balance of a specified class or classes of
certificates by a specified percentage or amount, the party specified in the
prospectus supplement will solicit bids for the purchase of all assets of the
trust fund, or of a sufficient portion of the assets to retire the class or
classes or purchase the class or classes at a price set forth in the related
prospectus supplement, in each case, under the circumstances and in the manner
set forth in the prospectus supplement.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the related prospectus supplement, one or more
classes of the offered certificates of any series will be issued as book-entry
certificates, and each class will be represented by one or more single
certificates registered in the name of a nominee for the depository, the
Depository Trust Company ("DTC").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC was created to hold
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securities for its Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in their accounts, eliminating the need for physical movement of
certificates. Participants include Morgan Stanley & Co. Incorporated, securities
brokers and dealers, banks, trust companies and clearing corporations and may
include other organizations. Indirect access to the DTC system also is available
to Indirect Participants.
Unless otherwise provided in the related prospectus supplement,
investors that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
book-entry certificates may do so only through Participants and Indirect
Participants. In addition, these Certificate Owners will receive all
distributions on the book-entry certificates through DTC and its Participants.
Under a book-entry format, Certificate Owners will receive payments after the
related Distribution Date because, while payments are required to be forwarded
to Cede, as nominee for DTC, on each Distribution Date, DTC will forward the
payments to its Participants which thereafter will be required to forward them
to Indirect Participants or Certificate Owners. Unless otherwise provided in the
related prospectus supplement, the only certificateholder will be Cede, as
nominee of DTC, and the Certificate Owners will not be recognized by the trustee
as certificateholders under the Agreement. Certificate Owners will be permitted
to exercise the rights of certificateholders under the related Agreement only
indirectly through the Participants who in turn will exercise their rights
through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the book-entry certificates
and is required to receive and transmit distributions of principal of and
interest on the book-entry certificates. Participants and Indirect Participants
with which Certificate Owners have accounts with respect to the book-entry
certificates similarly are required to make book-entry transfers and receive and
transmit the payments on behalf of their respective Certificate Owners.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge its interest in the book-entry certificates to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of its interest in the book-entry certificates, may be limited due to
the lack of a physical certificate evidencing the interest.
DTC has advised Morgan Stanley Dean Witter Capital I Inc. that it will
take any action permitted to be taken by a certificateholder under the Agreement
only at the direction of one or more Participants to whose account with DTC
interests in the book-entry certificates are credited.
Unless otherwise specified in the related prospectus supplement,
certificates initially issued in book-entry form will be issued as definitive
certificates, rather than to DTC or its nominee only if
o Morgan Stanley Dean Witter Capital I Inc. advises the trustee
in writing that DTC is no longer willing or able to properly
discharge its responsibilities as depository
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with respect to the certificates and Morgan Stanley Dean
Witter Capital I Inc. is unable to locate a qualified
successor, or
o Morgan Stanley Dean Witter Capital I Inc., at its option,
elects to terminate the book-entry system through DTC.
Upon the occurrence of either of the events described in the
immediately preceding paragraph, DTC is required to notify all Participants of
the availability through DTC of definitive certificates for the Certificate
Owners. Upon surrender by DTC of the certificate or certificates representing
the book-entry certificates, together with instructions for reregistration, the
trustee will issue, or cause to be issued, to the Certificate Owners identified
in the instructions the definitive certificates to which they are entitled, and
thereafter the trustee will recognize the holders of the definitive certificates
as certificateholders under the Agreement.
DESCRIPTION OF THE AGREEMENTS
The certificates will be offered pursuant to a Pooling Agreement or a
Trust Agreement.
o A Pooling Agreement will be used where the trust fund includes
Whole Loans. The parties to a Pooling Agreement will be Morgan
Stanley Dean Witter Capital I Inc., a trustee, a master
servicer and any special servicer appointed as of the date of
the Pooling Agreement. If a master servicer is not appointed,
a servicer, with, generally, the same obligations as described
in this prospectus with respect to the master servicer, unless
otherwise specified in the prospectus supplement, will be
appointed. This servicer will service all or a significant
number of Whole Loans directly without a subservicer.
References in this prospectus to master servicer and its
rights and obligations, to the extent set forth in the related
prospectus supplement, shall be deemed to also be references
to any servicer servicing Whole Loans directly.
o A Trust Agreement will be used where the trust fund does not
include Whole Loans. The parties to a Trust Agreement will be
Morgan Stanley Dean Witter Capital I Inc. and a trustee. A
manager or administrator may be appointed pursuant to the
Trust Agreement for any trust fund to administer the trust
fund.
The provisions of each Agreement will vary depending upon the nature of
the certificates to be issued thereunder and the nature of the related trust
fund. A form of a Pooling Agreement has been filed as an exhibit to the
Registration Statement of which this prospectus is a part. Any Trust Agreement
will generally conform to the form of Pooling Agreement filed herewith, but will
not contain provisions with respect to the servicing and maintenance of Whole
Loans. The following summaries describe some of the provisions that may appear
in each Agreement. The prospectus supplement for a series of certificates will
describe any provision of the Agreement relating to a series that materially
differs from the description thereof contained in this prospectus. The summaries
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of the Agreement for each trust
fund and the description of the provisions in the related prospectus supplement.
Morgan Stanley Dean Witter Capital I Inc. will provide a copy of the Agreement,
without exhibits, relating to any series of certificates without charge upon
written request of a holder of a certificate of a series addressed
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to Morgan Stanley Dean Witter Capital I Inc., c/o Morgan Stanley & Co.
Incorporated, 1585 Broadway, 37th Floor, New York, New York 10036, Attention:
John E. Westerfield.
ASSIGNMENT OF ASSETS; REPURCHASES
At the time of issuance of any series of certificates, Morgan Stanley
Dean Witter Capital I Inc. will assign or cause to be assigned to the designated
trustee the assets to be included in the related trust fund, together with all
principal and interest to be received on or with respect to the assets after the
Cut-off Date, other than principal and interest due on or before the Cut-off
Date and other than any Retained Interest. The trustee will, concurrently with
the assignment, deliver the certificates to Morgan Stanley Dean Witter Capital I
Inc. in exchange for the assets and the other assets comprising the trust fund
for the series. Each mortgage loan and MBS will be identified in a schedule
appearing as an exhibit to the related Agreement. Unless otherwise provided in
the related prospectus supplement, the schedule will include detailed
information
o in respect of each Whole Loan included in the related trust
fund, including without limitation, the address of the related
mortgaged property and type of the property, the mortgage rate
and, if applicable, the applicable Index, margin, adjustment
date and any rate cap information, the original and remaining
term to maturity, the original and outstanding principal
balance and balloon payment, if any, the Value, Loan-to-Value
Ratio and the Debt Service Coverage Ratio as of the date
indicated and payment and prepayment provisions, if
applicable, and
o in respect of each MBS included in the related trust fund,
including without limitation, the MBS issuer, MBS servicer and
MBS trustee, the pass-through or bond rate or formula for
determining the rate, the issue date and original and
remaining term to maturity, if applicable, the original and
outstanding principal amount and payment provisions, if
applicable.
With respect to each Whole Loan, Morgan Stanley Dean Witter Capital I
Inc. will deliver or cause to be delivered to the trustee or to the custodian,
certain loan documents, which to the extent set forth in the related prospectus
supplement will include the original mortgage note endorsed, without recourse,
in blank or to the order of the trustee, the original mortgage or a certified
copy thereof with evidence of recording indicated thereon and an assignment of
the mortgage to the trustee in recordable form. Notwithstanding the foregoing, a
trust fund may include mortgage loans where the original mortgage note is not
delivered to the trustee if Morgan Stanley Dean Witter Capital I Inc. delivers
to the trustee or the custodian a copy or a duplicate original of the mortgage
note, together with an affidavit certifying that the original thereof has been
lost or destroyed. With respect to these mortgage loans, the trustee or its
nominee may not be able to enforce the mortgage note against the related
borrower. Unless otherwise specified in the related prospectus supplement, the
asset seller will be required to agree to repurchase, or substitute for, this
type of mortgage loan that is subsequently in default if the enforcement thereof
or of the related mortgage is materially adversely affected by the absence of
the original mortgage note. Unless otherwise provided in the related prospectus
supplement, the related Agreement will require Morgan Stanley Dean Witter
Capital I Inc. or another party specified in the Agreement to promptly cause
each assignment of mortgage to be recorded in the appropriate public office for
real property records. However, in the State of California or in other states
where, in the opinion of counsel acceptable to the trustee, recording is not
required to protect the
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trustee's interest in the related Whole Loan against the claim of any subsequent
transferee or any successor to or creditor of Morgan Stanley Dean Witter Capital
I Inc., the master servicer, the relevant asset seller or any other prior holder
of the Whole Loan, the assignment of mortgage for each related Whole Loan may
not be recorded.
The trustee or a custodian will review the Whole Loan documents within
a specified period of days after receipt thereof, and the trustee or a custodian
will hold the documents in trust for the benefit of the certificateholders.
Unless otherwise specified in the related prospectus supplement, if any of these
documents are found to be missing or defective in any material respect, the
trustee or custodian shall immediately notify the master servicer and Morgan
Stanley Dean Witter Capital I Inc., and the master servicer shall immediately
notify the relevant asset seller. If the asset seller cannot cure the omission
or defect within a specified number of days after receipt of notice, then to the
extent set forth in the related prospectus supplement, the asset seller will be
obligated, within a specified number of days of receipt of notice, to repurchase
the related Whole Loan from the trustee at the Purchase Price or substitute the
mortgage loan. There can be no assurance that an asset seller will fulfill this
repurchase or substitution obligation, and neither the master servicer nor
Morgan Stanley Dean Witter Capital I Inc. will be obligated to repurchase or
substitute the mortgage loan if the asset seller defaults on its obligation.
Unless otherwise specified in the related prospectus supplement, this repurchase
or substitution obligation constitutes the sole remedy available to the
certificateholders or the trustee for omission of, or a material defect in, a
constituent document. To the extent specified in the related prospectus
supplement, in lieu of curing any omission or defect in the asset or
repurchasing or substituting for the asset, the asset seller may agree to cover
any losses suffered by the trust fund as a result of this type of breach or
defect.
If so provided in the related prospectus supplement, Morgan Stanley
Dean Witter Capital I Inc. will, as to some or all of the mortgage loans, assign
or cause to be assigned to the trustee the related lease assignments. In certain
cases, the trustee, or master servicer, as applicable, may collect all moneys
under the related leases and distribute amounts, if any, required under the
lease for the payment of maintenance, insurance and taxes, to the extent
specified in the related lease agreement. The trustee, or if so specified in the
prospectus supplement, the master servicer, as agent for the trustee, may hold
the lease in trust for the benefit of the certificateholders.
With respect to each Government Security or MBS in certificated form,
Morgan Stanley Dean Witter Capital I Inc. will deliver or cause to be delivered
to the trustee or the custodian the original certificate or other definitive
evidence of the Government Security or MBS, as applicable, together with bond
power or other instruments, certifications or documents required to transfer
fully the Government Security or MBS, as applicable, to the trustee for the
benefit of the certificateholders. With respect to each Government Security or
MBS in uncertificated or book-entry form or held through a "clearing
corporation" within the meaning of the UCC, Morgan Stanley Dean Witter Capital I
Inc. and the trustee will cause the Government Security or MBS to be registered
directly or on the books of the clearing corporation or of a financial
intermediary in the name of the trustee for the benefit of the
certificateholders. Unless otherwise provided in the related prospectus
supplement, the related Agreement will require that either Morgan Stanley Dean
Witter Capital I Inc. or the trustee promptly cause any MBS and
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government securities in certificated form not registered in the name of the
trustee to be re-registered, with the applicable persons, in the name of the
trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the related prospectus supplement Morgan
Stanley Dean Witter Capital I Inc. will, with respect to each Whole Loan, make
or assign certain representations and warranties, as of a specified date
covering, by way of example, the following types of matters:
o the accuracy of the information set forth for the Whole Loan
on the schedule of assets appearing as an exhibit to the
related Agreement;
o the existence of title insurance insuring the lien priority of
the Whole Loan;
o the authority of the Warrantying Party to sell the Whole Loan;
o the payment status of the Whole Loan and the status of
payments of taxes, assessments and other charges affecting the
related mortgaged property;
o the existence of customary provisions in the related mortgage
note and mortgage to permit realization against the mortgaged
property of the benefit of the security of the mortgage; and
o the existence of hazard and extended perils insurance coverage
on the mortgaged property.
Any Warrantying Party, if other than Morgan Stanley Dean Witter Capital
I Inc., shall be an asset seller or an affiliate thereof or another person
acceptable to Morgan Stanley Dean Witter Capital I Inc. and shall be identified
in the related prospectus supplement.
Representations and warranties made in respect of a Whole Loan may have
been made as of a date prior to the applicable Cut-off Date. A substantial
period of time may have elapsed between the date on which the representations
are made and the date of initial issuance of the related series of certificates
evidencing an interest in the Whole Loan. Unless otherwise specified in the
related prospectus supplement, in the event of a breach of any representation or
warranty, the Warrantying Party will be obligated to reimburse the trust fund
for losses caused by the breach or either cure the breach or repurchase or
replace the affected Whole Loan as described in the next paragraph. Since the
representations and warranties may not address events that may occur following
the date as of which they were made, the Warrantying Party will have a
reimbursement, cure, repurchase or substitution obligation in connection with a
breach of a representation and warranty only if the relevant event that causes
such breach occurs prior to the date on which they were made. The Warranting
Party would have no obligations if the relevant event that causes the breach
occurs after that date.
Unless otherwise provided in the related prospectus supplement, each
Agreement will provide that the master servicer or trustee, or both, will be
required to notify promptly the relevant Warrantying Party of any breach of any
representation or warranty made by it in respect of a Whole Loan that materially
and adversely affects the value of the Whole Loan or the interests in the Whole
Loan of the certificateholders. If the Warrantying Party cannot cure the
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breach within a specified period following the date on which the party was
notified of the breach, then
o the Warrantying Party will be obligated to repurchase the
Whole Loan from the trustee within a specified period from the
date on which the Warrantying Party was notified of the
breach, at the Purchase Price; or
o if so provided in the prospectus supplement for a series, the
Warrantying Party, will have the option, within a specified
period after initial issuance of such series of certificates,
to cause the Whole Loan to be removed from the trust fund and
substitute in its place one or more other Whole Loans, in
accordance with the standards described in the related
prospectus supplement; or.
o if so provided in the prospectus supplement for a series, the
Warrantying Party, will have the option to reimburse the trust
fund or the certificateholders for any losses caused by the
breach.
Unless otherwise specified in the related prospectus supplement, this
reimbursement, repurchase or substitution obligation will constitute the sole
remedy available to holders of certificates or the trustee for a breach of
representation by a Warrantying Party.
Neither Morgan Stanley Dean Witter Capital I Inc., except to the extent
that it is the Warrantying Party, nor the master servicer will be obligated to
purchase or substitute for a Whole Loan if a Warrantying Party defaults on its
obligation to do so, and no assurance can be given that Warrantying Parties will
carry out their obligations with respect to Whole Loans.
Unless otherwise provided in the related prospectus supplement the
Warrantying Party will, with respect to a trust fund that includes government
securities or MBS, make or assign certain representations or warranties, as of a
specified date, with respect to the government securities or MBS, covering
o the accuracy of the information set forth therefor on the
schedule of assets appearing as an exhibit to the related
Agreement and
o the authority of the Warrantying Party to sell the assets.
The related prospectus supplement will describe the remedies for a breach
thereof.
A master servicer will make representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Agreement. A breach of any of these representations which materially
and adversely affects the interests of the certificateholders and which
continues unremedied for thirty days after the giving of written notice of the
breach to the master servicer, the trustee or Morgan Stanley Dean Witter Capital
I Inc. will constitute an Event of Default under the Agreement. See "--Events of
Default" and "--Rights Upon Event of Default," below.
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CERTIFICATE ACCOUNT AND OTHER COLLECTION ACCOUNTS
GENERAL
The master servicer or the trustee or both will, as to each trust fund,
establish and maintain or cause to be established and maintained, the
Certificate Account, which must be either
o an account or accounts the deposits in which are insured by
the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC, to the limits established by the FDIC, and
the uninsured deposits in which are otherwise secured such
that the certificateholders have a claim with respect to the
funds in the Certificate Account or a perfected first priority
security interest against any collateral securing the funds
that is superior to the claims of any other depositors or
general creditors of the institution with which the
Certificate Account is maintained or
o otherwise maintained with a bank or trust company, and in a
manner, satisfactory to the Rating Agency or Agencies rating
any class of certificates of the series.
The collateral eligible to secure amounts in the Certificate Account is limited
to Permitted Investments. A Certificate Account may be maintained as an interest
bearing or a non-interest bearing account and the funds held in the account may
be invested pending each succeeding Distribution Date in short-term Permitted
Investments. Unless otherwise provided in the related prospectus supplement, any
interest or other income earned on funds in the Certificate Account will be paid
to a master servicer or its designee as additional servicing compensation. The
Certificate Account may be maintained with an institution that is an affiliate
of the master servicer, if applicable, provided that the institution meets the
standards imposed by the Rating Agency or Agencies. If permitted by the Rating
Agency or Agencies and so specified in the related prospectus supplement, a
Certificate Account may contain funds relating to more than one series of
mortgage pass-through certificates and may contain other funds respecting
payments on mortgage loans belonging to the master servicer or serviced or
master serviced by it on behalf of others.
DEPOSITS
A master servicer or the trustee will deposit or cause to be deposited
in the Certificate Account for one or more trust funds on a daily basis, unless
otherwise provided in the related Agreement, the following payments and
collections received, or advances made, by the master servicer or the trustee or
on its behalf subsequent to the Cut-off Date, other than payments due on or
before the Cut-off Date, and exclusive of any amounts representing a Retained
Interest, all payments on account of principal, including principal prepayments,
on the assets;
1) all payments on account of interest on the assets, including
any default interest collected, in each case net of any
portion thereof retained by a master servicer, a subservicer
or a special servicer as its servicing compensation and net of
any Retained Interest;
2) all proceeds of the hazard, business interruption and general
liability insurance policies to be maintained in respect of
each mortgaged property securing a Whole
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Loan in the trust fund, to the extent the proceeds are not
applied to the restoration of the property or released to the
borrower in accordance with normal servicing procedures and
all Insurance Proceeds and all Liquidation Proceeds, together
with the net proceeds on a monthly basis with respect to any
mortgaged properties acquired for the benefit of
certificateholders by foreclosure or by deed in lieu of
foreclosure or otherwise;
3) any amounts paid under any instrument or drawn from any fund
that constitutes Credit Support for the related series of
certificates as described under "Description of Credit
Support";
4) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
5) any amounts representing prepayment premiums;
6) any amounts paid under any Cash Flow Agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements";
7) all proceeds of any asset or, with respect to a Whole Loan,
property acquired in respect thereof purchased by Morgan
Stanley Dean Witter Capital I Inc., any asset seller or any
other specified person as described above under "--Assignment
of Assets; Repurchases" and "--Representations and Warranties;
Repurchases," all proceeds of any defaulted mortgage loan
purchased as described below under "--Realization Upon
Defaulted Whole Loans," and all proceeds of any asset
purchased as described above under "Description of the
Certificates--Termination";
8) any amounts paid by a master servicer to cover certain
interest shortfalls arising out of the prepayment of Whole
Loans in the trust fund as described under "Description of the
Agreements--Retained Interest; Servicing Compensation and
Payment of Expenses";
9) to the extent that any item does not constitute additional
servicing compensation to a master servicer, any payments on
account of modification or assumption fees, late payment
charges, prepayment premiums or Equity Participations on the
mortgage loans or MBS or both;
10) all payments required to be deposited in the Certificate
Account with respect to any deductible clause in any blanket
insurance policy described below under "--Hazard Insurance
Policies";
11) any amount required to be deposited by a master servicer or
the trustee in connection with losses realized on investments
for the benefit of the master servicer or the trustee, as the
case may be, of funds held in the Certificate Account; and
12) any other amounts required to be deposited in the Certificate
Account as provided in the related Agreement and described in
the related prospectus supplement.
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WITHDRAWALS
A master servicer or the trustee may, from time to time, unless
otherwise provided in the related Agreement and described in the related
prospectus supplement, make withdrawals from the Certificate Account for each
trust fund for any of the following purposes:
(1) to make distributions to the certificateholders on each
Distribution Date;
(2) to reimburse a master servicer for unreimbursed amounts
advanced as described above under "Description of the
Certificates--Advances in Respect of Delinquencies," the
reimbursement to be made out of amounts received which were
identified and applied by the master servicer as late
collections of interest, net of related servicing fees and
Retained Interest, on and principal of the particular Whole
Loans with respect to which the advances were made or out of
amounts drawn under any form of Credit Support with respect to
those Whole Loans;
(3) to reimburse a master servicer for unpaid servicing fees
earned and certain unreimbursed servicing expenses incurred
with respect to Whole Loans and properties acquired in respect
thereof, such reimbursement to be made out of amounts that
represent Liquidation Proceeds and Insurance Proceeds
collected on the particular Whole Loans and properties, and
net income collected on the particular properties, with
respect to which the fees were earned or the expenses were
incurred or out of amounts drawn under any form of Credit
Support with respect to such Whole Loans and properties;
(4) to reimburse a master servicer for any advances described in
clause (2) above and any servicing expenses described in
clause (3) above which, in the master servicer's good faith
judgment, will not be recoverable from the amounts described
in clauses (2) and (3), respectively, the reimbursement to be
made from amounts collected on other assets or, if and to the
extent so provided by the related Agreement and described in
the related prospectus supplement, just from that portion of
amounts collected on other assets that is otherwise
distributable on one or more classes of Subordinate
Certificates, if any, remain outstanding, and otherwise any
outstanding class of certificates, of the related series;
(5) if and to the extent described in the related prospectus
supplement, to pay a master servicer interest accrued on the
advances described in clause (2) above and the servicing
expenses described in clause (3) above while these amounts
remain outstanding and unreimbursed;
(6) to pay for costs and expenses incurred by the trust fund for
environmental site assessments with respect to, and for
containment, clean-up or remediation of hazardous wastes,
substances and materials on, mortgaged properties securing
defaulted Whole Loans as described below under "--Realization
Upon Defaulted Whole Loans";
(7) to reimburse a master servicer, Morgan Stanley Dean Witter
Capital I Inc., or any of their respective directors,
officers, employees and agents, as the case may be,
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for certain expenses, costs and liabilities incurred thereby,
as and to the extent described below under "--Matters
Regarding a Master Servicer and the Depositor";
(8) if and to the extent described in the related prospectus
supplement, to pay or to transfer to a separate account for
purposes of escrowing for the payment of the trustee's fees;
(9) to reimburse the trustee or any of its directors, officers,
employees and agents, as the case may be, for certain
expenses, costs and liabilities incurred thereby, as and to
the extent described below under "--Matters Regarding the
Trustee";
(10) unless otherwise provided in the related prospectus
supplement, to pay a master servicer, as additional servicing
compensation, interest and investment income earned in respect
of amounts held in the Certificate Account;
(11) to pay the person entitled thereto any amounts deposited in
the Certificate Account that were identified and applied by
the master servicer as recoveries of Retained Interest;
(12) to pay for costs reasonably incurred in connection with the
proper operation, management and maintenance of any mortgaged
property acquired for the benefit of certificateholders by
foreclosure or by deed in lieu of foreclosure or otherwise,
these payments to be made out of income received on this type
of property;
(13) if one or more elections have been made to treat the trust
fund or designated portions thereof as a REMIC, to pay any
federal, state or local taxes imposed on the trust fund or its
assets or transactions, as and to the extent described below
under "Federal Income Tax Consequences--REMICs--Prohibited
Transactions Tax and Other Taxes";
(14) to pay for the cost of an independent appraiser or other
expert in real estate matters retained to determine a fair
sale price for a defaulted Whole Loan or a property acquired
in respect thereof in connection with the liquidation of the
defaulted Whole Loan or property;
(15) to pay for the cost of various opinions of counsel obtained
pursuant to the related Agreement for the benefit of
certificateholders;
(16) to pay for the costs of recording the related Agreement if
recordation materially and beneficially affects the interests
of certificateholders, provided that the payment shall not
constitute a waiver with respect to the obligation of the
Warrantying Party to remedy any breach of representation or
warranty under the Agreement;
(17) to pay the person entitled thereto any amounts deposited in
the Certificate Account in error, including amounts received
on any asset after its removal from the trust fund whether by
reason of purchase or substitution as contemplated by
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"--Assignment of Assets; Repurchase" and "--Representations
and Warranties; Repurchases" or otherwise;
(18) to make any other withdrawals permitted by the related
Agreement and described in the related prospectus supplement;
and
(19) to clear and terminate the Certificate Account at the
termination of the trust fund.
OTHER COLLECTION ACCOUNTS
Notwithstanding the foregoing, if so specified in the related
prospectus supplement, the Agreement for any series of certificates may provide
for the establishment and maintenance of a separate collection account into
which the master servicer or any related subservicer or special servicer will
deposit on a daily basis the amounts described under "--Deposits" above for one
or more series of certificates. Any amounts on deposit in any collection account
will be withdrawn therefrom and deposited into the appropriate Certificate
Account by a time specified in the related prospectus supplement. To the extent
specified in the related prospectus supplement, any amounts which could be
withdrawn from the Certificate Account as described under "--Withdrawals" above,
may also be withdrawn from any collection account. The prospectus supplement
will set forth any restrictions with respect to any collection account,
including investment restrictions and any restrictions with respect to financial
institutions with which any collection account may be maintained.
COLLECTION AND OTHER SERVICING PROCEDURES
The master servicer, directly or through subservicers, is required to
make reasonable efforts to collect all scheduled payments under the Whole Loans
and will follow or cause to be followed the collection procedures as it would
follow with respect to mortgage loans that are comparable to the Whole Loans and
held for its own account, provided the procedures are consistent with the
Servicing Standard. In connection therewith, the master servicer will be
permitted in its discretion to waive any late payment charge or penalty interest
in respect of a late Whole Loan payment.
Each master servicer will also be required to perform other customary
functions of a servicer of comparable loans, including the following:
o maintaining, or causing the borrower or lessee on each
mortgage or lease to maintain, hazard, business interruption
and general liability insurance policies and, if applicable,
rental interruption policies as described in this prospectus
and in any related prospectus supplement, and filing and
settling claims thereunder;
o maintaining escrow or impoundment accounts of borrowers for
payment of taxes, insurance and other items required to be
paid by any borrower pursuant to the Whole Loan;
o processing assumptions or substitutions in those cases where
the master servicer has determined not to enforce any
applicable due-on-sale clause; attempting to cure
delinquencies;
o supervising foreclosures;
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o inspecting and managing mortgaged properties under certain
circumstances; and
o maintaining accounting records relating to the Whole Loans.
Unless otherwise specified in the related prospectus
supplement, the master servicer will be responsible for filing
and settling claims in respect of particular Whole Loans under
any applicable instrument of Credit Support. See "Description
of Credit Support."
The master servicer may agree to modify, waive or amend any term of any
Whole Loan in a manner consistent with the Servicing Standard so long as the
modification, waiver or amendment will not
o affect the amount or timing of any scheduled payments of
principal or interest on the Whole Loan or
o in its judgment, materially impair the security for the Whole
Loan or reduce the likelihood of timely payment of amounts due
thereon.
The master servicer also may agree to any modification, waiver or amendment that
would so affect or impair the payments on, or the security for, a Whole Loan if,
unless otherwise provided in the related prospectus supplement,
o in its judgment, a material default on the Whole Loan has
occurred or a payment default is imminent and
o in its judgment, that modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect
to the Whole Loan on a present value basis than would
liquidation.
The master servicer is required to notify the trustee in the event of any
modification, waiver or amendment of any Whole Loan.
SUBSERVICERS
A master servicer may delegate its servicing obligations in respect of
the Whole Loans to subservicer, but the master servicer will remain obligated
under the related Agreement. Each subservicing agreement must be consistent with
the terms of the related Agreement and must provide that, if for any reason the
master servicer for the related series of certificates is no longer acting in
the capacity of master servicer, the trustee or any successor master servicer
may assume the master servicer's rights and obligations under the subservicing
agreement.
Unless otherwise provided in the related prospectus supplement, the
master servicer will be solely liable for all fees owed by it to any
subservicer, irrespective of whether the master servicer's compensation pursuant
to the related Agreement is sufficient to pay those fees. However, a subservicer
may be entitled to a Retained Interest in certain Whole Loans. Each subservicer
will be reimbursed by the master servicer for certain expenditures which it
makes, generally to the same extent the master servicer would be reimbursed
under an Agreement. See "--Retained Interest; Servicing Compensation and Payment
of Expenses" below.
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SPECIAL SERVICERS
To the extent so specified in the related prospectus supplement, a
special servicer may be appointed. The related prospectus supplement will
describe the rights, obligations and compensation of a special servicer. The
master servicer will only be responsible for the duties and obligations of a
special servicer to the extent set forth in the prospectus supplement.
REALIZATION UPON DEFAULTED WHOLE LOANS
A borrower's failure to make required payments may reflect inadequate
income or the diversion of that income from the service of payments due under
the mortgage loan, and may call into question the borrower's ability to make
timely payment of taxes and to pay for necessary maintenance of the related
mortgaged property. Unless otherwise provided in the related prospectus
supplement, the master servicer is required to:
o monitor any Whole Loan which is in default,
o contact the borrower concerning the default,
o evaluate whether the causes of the default can be cured over a
reasonable period without significant impairment of the value
of the mortgaged property,
o initiate corrective action in cooperation with the borrower if
cure is likely,
o inspect the mortgaged property, and
o take any other actions as are consistent with the Servicing
Standard.
A significant period of time may elapse before the master servicer is able to
assess the success of the corrective action or the need for additional
initiatives.
The time within which the master servicer makes the initial
determination of appropriate action, evaluates the success of corrective action,
develops additional initiatives, institutes foreclosure proceedings and actually
forecloses or takes a deed to a mortgaged property in lieu of foreclosure on
behalf of the certificateholders, may vary considerably depending on the
particular Whole Loan, the mortgaged property, the borrower, the presence of an
acceptable party to assume the Whole Loan and the laws of the jurisdiction in
which the mortgaged property is located. Under federal bankruptcy law, the
master servicer in certain cases may not be permitted to accelerate a Whole Loan
or to foreclose on a mortgaged property for a considerable period of time. See
"Legal Aspects of the Mortgage Loans and the Leases."
Any Agreement relating to a trust fund that includes Whole Loans may
grant to the master servicer or the holder or holders of certain classes of
certificates, or both, a right of first refusal to purchase from the trust fund
at a predetermined purchase price any Whole Loan as to which a specified number
of scheduled payments thereunder are delinquent. Any such right granted to the
holder of an offered certificate will be described in the related prospectus
supplement. The related prospectus supplement will also describe any such right
granted to any person if the predetermined purchase price is less than the
Purchase Price described under "--Representations and Warranties; Repurchases."
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Unless otherwise specified in the related prospectus supplement, the
master servicer may offer to sell any defaulted Whole Loan described in the
preceding paragraph and not otherwise purchased by any person having a right of
first refusal with respect thereto, if and when the master servicer determines,
consistent with the Servicing Standard, that this sale would produce a greater
recovery on a present value basis than would liquidation through foreclosure or
similar proceeding. The related Agreement will provide that any sale of this
type be made in a commercially reasonable manner for a specified period and that
the master servicer accept the highest cash bid received from any person
including itself, an affiliate of the master servicer or any certificateholder
that constitutes a fair price for the defaulted Whole Loan. In the absence of
any bid determined in accordance with the related Agreement to be fair, the
master servicer shall proceed with respect to the defaulted mortgage loan as
described in the paragraphs below. Any bid in an amount at least equal to the
Purchase Price described under "--Representations and Warranties; Repurchases"
will in all cases be deemed fair.
If a default on a Whole Loan has occurred or, in the master servicer's
judgment is imminent, and the action is consistent with the servicing standard,
the master servicer, on behalf of the trustee, may at any time:
o institute foreclosure proceedings,
o exercise any power of sale contained in any mortgage,
o obtain a deed in lieu of foreclosure, or
o otherwise acquire title to a mortgaged property securing the
Whole Loan.
Unless otherwise specified in the related prospectus supplement, the master
servicer may not acquire title to any related mortgaged property or take any
other action that would cause the trustee, for the benefit of
certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of that mortgaged property within the meaning of federal environmental laws,
unless the master servicer has previously determined, based on a report prepared
by a person who regularly conducts environmental audits, which report will be an
expense of the trust fund, that either:
o the mortgaged property is in compliance with applicable
environmental laws, and there are no circumstances present at
the mortgaged property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
wastes, or petroleum-based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation; or
o if the mortgaged property is not so in compliance or such
circumstances are so present, then it would be in the best
economic interest of the trust fund to acquire title to the
mortgaged property and further to take the actions as would be
necessary and appropriate to effect the compliance and respond
to the circumstances, the cost of which actions will be an
expense of the trust fund.
Unless otherwise provided in the related prospectus supplement, if
title to any mortgaged property is acquired by a trust fund as to which a REMIC
election has been made, the master servicer, on behalf of the trust fund, will
be required to sell the mortgaged property prior to the
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close of the third calendar year following the year of acquisition of the
mortgaged property by the trust fund, unless
o the Internal Revenue Service grants an extension of time to
sell the property or
o the trustee receives an opinion of independent counsel to the
effect that the holding of the property by the trust fund
subsequent to that period will not result in the imposition of
a tax on the trust fund or cause the trust fund to fail to
qualify as a REMIC under the Code at any time that any
certificate is outstanding.
Subject to the foregoing, the master servicer will be required to
o solicit bids for any mortgaged property so acquired by the
trust fund as will be reasonably likely to realize a fair
price for the property and
o accept the first and, if multiple bids are contemporaneously
received, the highest cash bid received from any person that
constitutes a fair price.
If the trust fund acquires title to any mortgaged property, the master
servicer, on behalf of the trust fund, may retain an independent contractor to
manage and operate the property. The retention of an independent contractor,
however, will not relieve the master servicer of any of its obligations with
respect to the management and operation of that property. Unless otherwise
specified in the related prospectus supplement, any property acquired by the
trust fund will be managed in a manner consistent with the management and
operation of similar property by a prudent lending institution.
The limitations imposed by the related Agreement and the REMIC
Provisions of the Code, if a REMIC election has been made with respect to the
related trust fund, on the operations and ownership of any mortgaged property
acquired on behalf of the trust fund may result in the recovery of an amount
less than the amount that would otherwise be recovered. See "Legal Aspects of
the Mortgage Loans and the Leases--Foreclosure."
If recovery on a defaulted Whole Loan under any related instrument of
Credit Support is not available, the master servicer nevertheless will be
obligated to follow or cause to be followed normal practices and procedures as
it deems necessary or advisable to realize upon the defaulted Whole Loan. If the
proceeds of any liquidation of the property securing the defaulted Whole Loan
are less than the outstanding principal balance of the defaulted Whole Loan plus
interest accrued thereon at the mortgage rate plus the aggregate amount of
expenses incurred by the master servicer in connection with such proceedings and
which are reimbursable under the Agreement, the trust fund will realize a loss
in the amount of that difference. The master servicer will be entitled to
withdraw or cause to be withdrawn from the Certificate Account out of the
Liquidation Proceeds recovered on any defaulted Whole Loan, prior to the
distribution of the Liquidation Proceeds to certificateholders, amounts
representing its normal servicing compensation on the Whole Loan, unreimbursed
servicing expenses incurred with respect to the Whole Loan and any unreimbursed
advances of delinquent payments made with respect to the Whole Loan.
If any property securing a defaulted Whole Loan is damaged and
proceeds, if any, from the related hazard insurance policy are insufficient to
restore the damaged property to a condition
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sufficient to permit recovery under the related instrument of Credit Support, if
any, the master servicer is not required to expend its own funds to restore the
damaged property unless it determines
o that the restoration will increase the proceeds to
certificateholders on liquidation of the Whole Loan after
reimbursement of the master servicer for its expenses and
o that the expenses will be recoverable by it from related
Insurance Proceeds or Liquidation Proceeds.
As servicer of the Whole Loans, a master servicer, on behalf of itself,
the trustee and the certificateholders, will present claims to the obligor under
each instrument of Credit Support, and will take reasonable steps as are
necessary to receive payment or to permit recovery thereunder with respect to
defaulted Whole Loans.
If a master servicer or its designee recovers payments under any
instrument of Credit Support with respect to any defaulted Whole Loan, the
master servicer will be entitled to withdraw or cause to be withdrawn from the
Certificate Account out of those proceeds, prior to distribution thereof to
certificateholders, amounts representing its normal servicing compensation on
the Whole Loan, unreimbursed servicing expenses incurred with respect to the
Whole Loan and any unreimbursed advances of delinquent payments made with
respect to the Whole Loan. See "--Hazard Insurance Policies" and "Description of
Credit Support."
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related prospectus supplement, each
Agreement for a trust fund that includes Whole Loans will require the master
servicer to cause the borrower on each Whole Loan to maintain a hazard insurance
policy providing for the coverage required under the related mortgage or, if any
mortgage permits the holder thereof to dictate to the borrower the insurance
coverage to be maintained on the related mortgaged property, then the coverage
that is consistent with the Servicing Standard. Unless otherwise specified in
the related prospectus supplement, the coverage will be in general in an amount
equal to the lesser of the principal balance owing on the Whole Loan and the
amount necessary to fully compensate for any damage or loss to the improvements
on the mortgaged property on a replacement cost basis, but in either case not
less than the amount necessary to avoid the application of any co-insurance
clause contained in the hazard insurance policy. The ability of the master
servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent upon its being named as an additional insured under any hazard
insurance policy and under any other insurance policy referred to below in this
section, or upon the extent to which information in this regard is furnished by
borrowers. All amounts collected by the master servicer under any policy, except
for amounts to be applied to the restoration or repair of the mortgaged property
or released to the borrower in accordance with the master servicer's normal
servicing procedures, subject to the terms and conditions of the related
mortgage and mortgage note, will be deposited in the Certificate Account. The
Agreement will provide that the master servicer may satisfy its obligation to
cause each borrower to maintain a hazard insurance policy by the master
servicer's maintaining a blanket policy insuring against hazard losses on the
Whole Loans. If the blanket policy contains a deductible clause, the master
servicer will be required to deposit in the
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Certificate Account all sums that would have been deposited in the Certificate
Account but for that clause.
In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies relating to the Whole Loans will be underwritten
by different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by respective state laws, and
most of these policies typically do not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement, including earthquakes, landslides and mudflows, wet or dry rot,
vermin, domestic animals and other kinds of uninsured risks.
The hazard insurance policies covering the mortgaged properties
securing the Whole Loans will typically contain a co-insurance clause that in
effect requires the insured at all times to carry insurance of a specified
percentage, generally 80% to 90%, of the full replacement value of the
improvements on the property in order to recover the full amount of any partial
loss. If the insured's coverage falls below this specified percentage, the
co-insurance clause generally provides that the insurer's liability in the event
of partial loss does not exceed the lesser of
o the replacement cost of the improvements less physical
depreciation and
o the proportion of the loss as the amount of insurance carried
bears to the specified percentage of the full replacement cost
of the improvements.
Each Agreement for a trust fund that includes Whole Loans will require
the master servicer to cause the borrower on each Whole Loan, or, in certain
cases, the related lessee, to maintain all other insurance coverage with respect
to the related mortgaged property as is consistent with the terms of the related
mortgage and the Servicing Standard, which insurance may typically include flood
insurance if the related mortgaged property was located at the time of
origination in a federally designated flood area.
In addition, to the extent required by the related mortgage, the master
servicer may require the borrower or related lessee to maintain other forms of
insurance including, but not limited to, loss of rent endorsements, business
interruption insurance and comprehensive public liability insurance, and the
related Agreement may require the master servicer, subservicer or special
servicer to maintain public liability insurance with respect to any REO
Properties. Any cost incurred by the master servicer in maintaining any
insurance policy will be added to the amount owing under the mortgage loan where
the terms of the mortgage loan so permit; provided, however, that the addition
of this cost will not be taken into account for purposes of calculating the
distribution to be made to certificateholders. These costs may be recovered by
the master servicer, subservicer or special servicer, as the case may be, from
the Collection Account, with interest thereon, as provided by the Agreement.
Under the terms of the Whole Loans, borrowers will generally be
required to present claims to insurers under hazard insurance policies
maintained on the related mortgaged properties. The master servicer, on behalf
of the trustee and certificateholders, is obligated to
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present or cause to be presented claims under any blanket insurance policy
insuring against hazard losses on mortgaged properties securing the Whole Loans.
However, the ability of the master servicer to present or cause to be presented
these claims is dependent upon the extent to which information in this regard is
furnished to the master servicer by borrowers.
RENTAL INTERRUPTION INSURANCE POLICY
If so specified in the related prospectus supplement, the master
servicer or the borrowers will maintain rental interruption insurance policies
in full force and effect with respect to some or all of the leases. Although the
terms of these policies vary to some degree, a rental interruption insurance
policy typically provides that, to the extent that a lessee fails to make timely
rental payments under the related lease due to a casualty event, the losses will
be reimbursed to the insured. If so specified in the related prospectus
supplement, the master servicer will be required to pay from its servicing
compensation the premiums on the rental interruption policy on a timely basis.
If so specified in the prospectus supplement, if the rental interruption policy
is canceled or terminated for any reason other than the exhaustion of total
policy coverage, the master servicer will exercise its best reasonable efforts
to obtain from another insurer a replacement policy comparable to the rental
interruption policy with a total coverage that is equal to the then existing
coverage of the terminated rental interruption policy. However, if the cost of
any replacement policy is greater than the cost of the terminated rental
interruption policy, the amount of coverage under the replacement policy will,
to the extent set forth in the related prospectus supplement, be reduced to a
level such that the applicable premium does not exceed, by a percentage that may
be set forth in the related prospectus supplement, the cost of the rental
interruption policy that was replaced. Any amounts collected by the master
servicer under the rental interruption policy in the nature of insurance
proceeds will be deposited in the Certificate Account.
FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE
Unless otherwise specified in the related prospectus supplement, each
Agreement will require that the master servicer and any special servicer obtain
and maintain in effect a fidelity bond or similar form of insurance coverage
which may provide blanket coverage or any combination thereof insuring against
loss occasioned by fraud, theft or other intentional misconduct of the officers,
employees and agents of the master servicer or the special servicer, as
applicable. The related Agreement will allow the master servicer and any special
servicer to self-insure against loss occasioned by the errors and omissions of
the officers, employees and agents of the master servicer or the special
servicer so long as criteria set forth in the Agreement are met.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Some of the Whole Loans may contain clauses requiring the consent of
the lender to any sale or other transfer of the related mortgaged property, or
due-on-sale clauses entitling the lender to accelerate payment of the Whole Loan
upon any sale or other transfer of the related mortgaged property. Some of the
Whole Loans may contain clauses requiring the consent of the lender to the
creation of any other lien or encumbrance on the mortgaged property or
due-on-encumbrance clauses entitling the lender to accelerate payment of the
Whole Loan upon the creation of any other lien or encumbrance upon the mortgaged
property. Unless otherwise
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provided in the related prospectus supplement, the master servicer, on behalf of
the trust fund, will exercise any right the trustee may have as lender to
accelerate payment of the Whole Loan or to withhold its consent to any transfer
or further encumbrance in a manner consistent with the Servicing Standard.
Unless otherwise specified in the related prospectus supplement, any fee
collected by or on behalf of the master servicer for entering into an assumption
agreement will be retained by or on behalf of the master servicer as additional
servicing compensation. See "Legal Aspects of the Mortgage Loans and the
Leases--Due-on-Sale and Due-on-Encumbrance."
RETAINED INTEREST; SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The prospectus supplement for a series of certificates will specify
whether there will be any Retained Interest in the assets, and, if so, the
initial owner thereof. If so, the Retained Interest will be established on a
loan-by-loan basis and will be specified on an exhibit to the related Agreement.
Unless otherwise specified in the related prospectus supplement, the
master servicer's and a subservicer's primary servicing compensation with
respect to a series of certificates will come from the periodic payment to it of
a portion of the interest payment on each asset. Since any Retained Interest and
a master servicer's primary compensation are percentages of the principal
balance of each asset, these amounts will decrease in accordance with the
amortization of the assets. The prospectus supplement with respect to a series
of certificates evidencing interests in a trust fund that includes Whole Loans
may provide that, as additional compensation, the master servicer or the
subservicers may retain all or a portion of assumption fees, modification fees,
late payment charges or prepayment premiums collected from borrowers and any
interest or other income which may be earned on funds held in the Certificate
Account or any account established by a subservicer pursuant to the Agreement.
The master servicer may, to the extent provided in the related
prospectus supplement, pay from its servicing compensation certain expenses
incurred in connection with its servicing and managing of the assets, including,
without limitation, payment of the fees and disbursements of the trustee and
independent accountants, payment of expenses incurred in connection with
distributions and reports to certificateholders, and payment of any other
expenses described in the related prospectus supplement. Certain other expenses,
including certain expenses relating to defaults and liquidations on the Whole
Loans and, to the extent so provided in the related prospectus supplement,
interest thereon at the rate specified in the related prospectus supplement, and
the fees of any special servicer, may be borne by the trust fund.
EVIDENCE AS TO COMPLIANCE
Each Agreement relating to assets which include Whole Loans will
provide that on or before a specified date in each year, beginning with the
first date at least six months after the related Cut-off Date, a firm of
independent public accountants will furnish a statement to the trustee to the
effect that, on the basis of the examination by that firm conducted
substantially in compliance with either the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced for the Federal
Home Loan Mortgage Corporation, the servicing by or on behalf of the master
servicer of mortgage loans under pooling agreements substantially similar to
each other, including the related Agreement, was conducted in compliance with
the terms of such agreements except for any significant exceptions or errors in
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records that, in the opinion of the firm, either the Audit Program for Mortgages
serviced for FHLMC, or paragraph 4 of the Uniform Single Attestation Program for
Mortgage Bankers, requires it to report. In rendering its statement that firm
may rely, as to matters relating to the direct servicing of mortgage loans by
subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, rendered
within one year of that statement, of firms of independent public accountants
with respect to the related subservicer.
Each Agreement will also provide for delivery to the trustee, on or
before a specified date in each year, of an annual statement signed by two
officers of the master servicer to the effect that the master servicer has
fulfilled its obligations under the Agreement throughout the preceding calendar
year or other specified twelve-month period.
Unless otherwise provided in the related prospectus supplement, copies
of annual accountants' statement and statements of officers will be obtainable
by certificateholders without charge upon written request to the master servicer
at the address set forth in the related prospectus supplement.
MATTERS REGARDING A MASTER SERVICER AND THE DEPOSITOR
The master servicer, if any, or a servicer for substantially all the
Whole Loans under each Agreement will be named in the related prospectus
supplement. The entity serving as master servicer or as servicer may be an
affiliate of Morgan Stanley Dean Witter Capital I Inc. and may have other normal
business relationships with Morgan Stanley Dean Witter Capital I Inc. or Morgan
Stanley Dean Witter Capital I Inc.'s affiliates. Reference to the master
servicer shall be deemed to be to the servicer of substantially all of the Whole
Loans, if applicable.
Unless otherwise specified in the related prospectus supplement, the
related Agreement will provide that the master servicer may resign from its
obligations and duties only upon a determination that its duties under the
Agreement are no longer permissible under applicable law or are in material
conflict by reason of applicable law with another activity carried on by it that
was performed by the master servicer on the date of the Agreement. No
resignation will become effective until the trustee or a successor servicer has
assumed the master servicer's obligations and duties under the Agreement.
Unless otherwise specified in the related prospectus supplement, each
Agreement will further provide that neither any master servicer, Morgan Stanley
Dean Witter Capital I Inc. nor any director, officer, employee, or agent of a
master servicer or Morgan Stanley Dean Witter Capital I Inc. will be under any
liability to the related trust fund or certificateholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to the
Agreement. However, neither a master servicer, Morgan Stanley Dean Witter
Capital I Inc. nor any director, officer, employee, or agent of a master
servicer or Morgan Stanley Dean Witter Capital I Inc. will be protected against
any breach of a representation, warranty or covenant made in the Agreement, or
against any liability specifically imposed by the Agreement, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties thereunder
or by reason of reckless disregard of obligations and duties thereunder. Unless
otherwise specified in the related
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prospectus supplement, each Agreement will further provide that any master
servicer, Morgan Stanley Dean Witter Capital I Inc. and any director, officer,
employee or agent of a master servicer or Morgan Stanley Dean Witter Capital I
Inc. will be entitled to indemnification by the related trust fund and will be
held harmless against any loss, liability or expense incurred in connection with
any legal action relating to the Agreement or the certificates; provided,
however, that the indemnification will not extend to any loss, liability or
expense:
o specifically imposed by the Agreement or otherwise incidental
to the performance of obligations and duties thereunder,
including, in the case of a master servicer, the prosecution
of an enforcement action in respect of any specific Whole Loan
or Whole Loans, except as any loss, liability or expense shall
be otherwise reimbursable pursuant to the Agreement;
o incurred in connection with any breach of a representation,
warranty or covenant made in the Agreement;
o incurred by reason of misfeasance, bad faith or gross
negligence in the performance of obligations or duties
thereunder, or by reason of reckless disregard of its
obligations or duties;
o incurred in connection with any violation of any state or
federal securities law; or
o imposed by any taxing authority if the loss, liability or
expense is not specifically reimbursable pursuant to the terms
of the related Agreement.
In addition, each Agreement will provide that neither any master servicer nor
Morgan Stanley Dean Witter Capital I Inc. will be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to its
respective responsibilities under the Agreement and which in its opinion may
involve it in any expense or liability. The master servicer or Morgan Stanley
Dean Witter Capital I Inc. may, however, in its discretion undertake any action
which it may deem necessary or desirable with respect to the Agreement and the
rights and duties of the parties thereto and the interests of the
certificateholders thereunder. In this event, the legal expenses and costs of
the action and any liability resulting therefrom will be expenses, costs and
liabilities of the certificateholders, and the master servicer or Morgan Stanley
Dean Witter Capital I Inc., as the case may be, will be entitled to be
reimbursed therefor and to charge the Certificate Account.
Any person into which the master servicer or Morgan Stanley Dean Witter
Capital I Inc. may be merged or consolidated, or any person resulting from any
merger or consolidation to which the master servicer or Morgan Stanley Dean
Witter Capital I Inc. is a party, or any person succeeding to the business of
the master servicer or Morgan Stanley Dean Witter Capital I Inc., will be the
successor of the master servicer or Morgan Stanley Dean Witter Capital I Inc.,
as the case may be, under the related Agreement.
EVENTS OF DEFAULT
Unless otherwise provided in the related prospectus supplement for a
trust fund that includes Whole Loans, Events of Default under the related
Agreement will include:
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(1) any failure by the master servicer to distribute or cause to
be distributed to certificateholders, or to remit to the
trustee for distribution to certificateholders, any required
payment;
(2) any failure by the master servicer duly to observe or perform
in any material respect any of its other covenants or
obligations under the Agreement which continues unremedied for
thirty days after written notice of the failure has been given
to the master servicer by the trustee or Morgan Stanley Dean
Witter Capital I Inc., or to the master servicer, Morgan
Stanley Dean Witter Capital I Inc. and the trustee by the
holders of certificates evidencing not less than 25% of the
Voting Rights;
(3) any breach of a representation or warranty made by the master
servicer under the Agreement which materially and adversely
affects the interests of certificateholders and which
continues unremedied for thirty days after written notice of
that breach has been given to the master servicer by the
trustee or Morgan Stanley Dean Witter Capital I Inc., or to
the master servicer, Morgan Stanley Dean Witter Capital I Inc.
and the trustee by the holders of certificates evidencing not
less than 25% of the Voting Rights; and
(4) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
and certain actions by or on behalf of the master servicer
indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing Events of Default--other than to shorten
cure periods or eliminate notice requirements--will be specified in the related
prospectus supplement. Unless otherwise specified in the related prospectus
supplement, the trustee shall, not later than the later of 60 days after the
occurrence of any event which constitutes or, with notice or lapse of time or
both, would constitute an Event of Default and five days after certain officers
of the trustee become aware of the occurrence of such an event, transmit by mail
to Morgan Stanley Dean Witter Capital I Inc. and all certificateholders of the
applicable series notice of the occurrence, unless the default shall have been
cured or waived.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default under an Agreement remains unremedied,
Morgan Stanley Dean Witter Capital I Inc. or the trustee may, and at the
direction of holders of certificates evidencing not less than 51% of the Voting
Rights, the trustee shall, terminate all of the rights and obligations of the
master servicer under the Agreement and in and to the mortgage loans, other than
as a certificateholder or as the owner of any Retained Interest, whereupon the
trustee will succeed to all of the responsibilities, duties and liabilities of
the master servicer under the Agreement, except that if the trustee is
prohibited by law from obligating itself to make advances regarding delinquent
mortgage loans, or if the related prospectus supplement so specifies, then the
trustee will not be obligated to make the advances, and will be entitled to
similar compensation arrangements. Unless otherwise specified in the related
prospectus supplement, in the event that the trustee is unwilling or unable so
to act, it may or, at the written request of the holders of certificates
entitled to at least 51% of the Voting Rights, it shall appoint, or petition a
court of competent jurisdiction for the appointment of, a loan servicing
institution acceptable to the Rating Agency with a net worth at the time of
appointment of at least $15,000,000 to act as
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successor to the master servicer under the Agreement. Pending appointment, the
trustee is obligated to act in the capacity of master servicer. The trustee and
any successor may agree upon the servicing compensation to be paid, which in no
event may be greater than the compensation payable to the master servicer under
the Agreement.
Unless otherwise described in the related prospectus supplement, the
holders of certificates representing at least 66 2/3% of the Voting Rights
allocated to the respective classes of certificates affected by any Event of
Default will be entitled to waive that Event of Default; provided, however, that
an Event of Default involving a failure to distribute a required payment to
certificateholders described in clause (1) under "--Events of Default" may be
waived only by all of the certificateholders. Upon any waiver of an Event of
Default, the Event of Default shall cease to exist and shall be deemed to have
been remedied for every purpose under the Agreement.
No certificateholder will have the right under any Agreement to
institute any proceeding with respect thereto unless the holder previously has
given to the trustee written notice of default and unless the holders of
certificates evidencing not less than 25% of the Voting Rights have made written
request upon the trustee to institute the proceeding in its own name as trustee
thereunder and have offered to the trustee reasonable indemnity, and the trustee
for sixty days has neglected or refused to institute any proceeding. The
trustee, however, is under no obligation to
o exercise any of the powers vested in it by any Agreement;
o make any investigation of matters arising under any Agreement;
or
o institute, conduct or defend any litigation under any
Agreement or related to any Agreement.
If any of the holders of certificates request, order or direct the trustee to
take any action, the trustee may require reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred.
AMENDMENT
Each Agreement may be amended by the parties to the Agreement without
the consent of any of the holders of certificates covered by the Agreement:
(1) to cure any ambiguity;
(2) to correct, modify or supplement any provision in the
Agreement which may be inconsistent with any other provision
in the Agreement;
(3) to make any other provisions with respect to matters or
questions arising under the Agreement which are not
inconsistent with the provisions thereof; or
(4) to comply with any requirements imposed by the Code;
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provided that the amendment--other than an amendment for the purpose specified
in clause (4) above--will not, as evidenced by an opinion of counsel to that
effect, adversely affect in any material respect the interests of any holder of
certificates covered by the Agreement.
Unless otherwise specified in the related prospectus supplement, each
Agreement may also be amended by Morgan Stanley Dean Witter Capital I Inc., the
master servicer, if any, and the trustee, with the consent of the holders of
certificates affected evidencing not less than 51% of the Voting Rights, for any
purpose. However, to the extent set forth in the related prospectus supplement,
no amendment may:
(1) reduce in any manner the amount of or delay the timing of,
payments received or advanced on mortgage loans which are
required to be distributed on any certificate without the
consent of the holder of that certificate;
(2) adversely affect in any material respect the interests of the
holders of any class of certificates in a manner other than as
described in (1), without the consent of the holders of all
certificates of that class; or
(3) modify the provisions of the Agreement described in this
paragraph without the consent of the holders of all
certificates covered by the Agreement then outstanding.
However, with respect to any series of certificates as to which a REMIC election
is to be made, the trustee will not consent to any amendment of the Agreement
unless it shall first have received an opinion of counsel to the effect that the
amendment will not result in the imposition of a tax on the related trust fund
or cause the related trust fund to fail to qualify as a REMIC at any time that
the related certificates are outstanding.
THE TRUSTEE
The trustee under each Agreement will be named in the related
prospectus supplement. The commercial bank, national banking association,
banking corporation or trust company serving as trustee may have a banking
relationship with Morgan Stanley Dean Witter Capital I Inc. and its affiliates
and with any master servicer and its affiliates.
DUTIES OF THE TRUSTEE
The trustee will make no representations as to the validity or
sufficiency of any Agreement, the certificates or any asset or related document
and is not accountable for the use or application by or on behalf of any master
servicer of any funds paid to the master servicer or its designee or any special
servicer in respect of the certificates or the assets, or deposited into or
withdrawn from the Certificate Account or any other account by or on behalf of
the master servicer or any special servicer. If no Event of Default has occurred
and is continuing, the trustee is required to perform only those duties
specifically required under the related Agreement. However, upon receipt of the
various certificates, reports or other instruments required to be furnished to
it, the trustee is required to examine the documents and to determine whether
they conform to the requirements of the Agreement.
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MATTERS REGARDING THE TRUSTEE
Unless otherwise specified in the related prospectus supplement, the
trustee and any director, officer, employee or agent of the trustee shall be
entitled to indemnification out of the Certificate Account for any loss,
liability or expense, including costs and expenses of litigation, and of
investigation, counsel fees, damages, judgments and amounts paid in settlement,
incurred in connection with the trustee's:
o enforcing its rights and remedies and protecting the
interests, and enforcing the rights and remedies, of the
certificateholders during the continuance of an Event of
Default;
o defending or prosecuting any legal action in respect of the
related Agreement or series of certificates;
o being the lender of record with respect to the mortgage loans
in a trust fund and the owner of record with respect to any
mortgaged property acquired in respect thereof for the benefit
of certificateholders; or
o acting or refraining from acting in good faith at the
direction of the holders of the related series of certificates
entitled to not less than 25% or a higher percentage as is
specified in the related Agreement with respect to any
particular matter of the Voting Rights for the series.
However, the indemnification will not extend to any loss,
liability or expense that constitutes a specific liability of
the trustee pursuant to the related Agreement, or to any loss,
liability or expense incurred by reason of willful
misfeasance, bad faith or negligence on the part of the
trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of the
obligations or duties, or as may arise from a breach of any
representation, warranty or covenant of the trustee made in
the related Agreement.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee may at any time resign from its obligations and duties
under an Agreement by giving written notice thereof to Morgan Stanley Dean
Witter Capital I Inc., the master servicer, if any, and all certificateholders.
Upon receiving the notice of resignation, Morgan Stanley Dean Witter Capital I
Inc. is required promptly to appoint a successor trustee acceptable to the
master servicer, if any. If no successor trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of the notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the trustee shall cease to be eligible to continue as
trustee under the related Agreement, or if at any time the trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the trustee or of its property shall be appointed, or any public officer
shall take charge or control of the trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then Morgan Stanley
Dean Witter Capital I Inc. may remove the trustee and appoint a successor
trustee acceptable to the master servicer, if any. Holders of the certificates
of any series entitled to at least 51% of the Voting Rights for that series may
at any time remove the trustee without cause and appoint a successor trustee.
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Any resignation or removal of the trustee and appointment of a
successor trustee shall not become effective until acceptance of appointment by
the successor trustee.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
For any series of certificates, Credit Support may be provided with
respect to one or more classes thereof or the related assets. Credit Support may
be in the form of the subordination of one or more classes of certificates,
letters of credit, insurance policies, guarantees, the establishment of one or
more reserve funds or another method of Credit Support described in the related
prospectus supplement, or any combination of the foregoing. If so provided in
the related prospectus supplement, any form of Credit Support may be structured
so as to be drawn upon by more than one series to the extent described in the
prospectus supplement.
Unless otherwise provided in the related prospectus supplement for a
series of certificates, the Credit Support will not provide protection against
all risks of loss and will not guarantee repayment of the entire Certificate
Balance of the certificates and interest thereon. If losses or shortfalls occur
that exceed the amount covered by Credit Support or that are not covered by
Credit Support, certificateholders will bear their allocable share of
deficiencies. Moreover, if a form of Credit Support covers more than one series
of certificates, holders of certificates evidencing interests in any of the
trusts will be subject to the risk that the Credit Support will be exhausted by
the claims of other trusts prior to the trust fund receiving any of its intended
share of coverage.
If Credit Support is provided with respect to one or more classes of
certificates of a series, or the related assets, the related prospectus
supplement will include a description of:
(1) the nature and amount of coverage under the Credit Support;
(2) any conditions to payment thereunder not otherwise described
in this prospectus;
(3) the conditions, if any, under which the amount of coverage
under the Credit Support may be reduced and under which the
Credit Support may be terminated or replaced;
(4) the material provisions relating to the Credit Support; and
(5) information regarding the obligor under any instrument of
Credit Support, including:
o a brief description of its principal business
activities;
o its principal place of business, place of
incorporation and the jurisdiction under which it is
chartered or licensed to do business;
o if applicable, the identity of regulatory agencies
that exercise primary jurisdiction over the conduct
of its business; and
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o its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date
specified in the prospectus supplement.
See "Risk Factors--Credit Support May Not Cover Losses or Risks Which Could
Adversely Affect Payment On Your Certificates."
SUBORDINATE CERTIFICATES
If so specified in the related prospectus supplement, one or more
classes of certificates of a series may be Subordinate Certificates. To the
extent specified in the related prospectus supplement, the rights of the holders
of Subordinate Certificates to receive distributions of principal and interest
from the Certificate Account on any Distribution Date will be subordinated to
the rights of the holders of Senior Certificates. If so provided in the related
prospectus supplement, the subordination of a class may apply only in the event
of or may be limited to certain types of losses or shortfalls. The related
prospectus supplement will set forth information concerning the amount of
subordination of a class or classes of Subordinate Certificates in a series, the
circumstances in which the subordination will be applicable and the manner, if
any, in which the amount of subordination will be effected.
CROSS-SUPPORT PROVISIONS
If the assets for a series are divided into separate groups, each
supporting a separate class or classes of certificates of a series, credit
support may be provided by cross-support provisions requiring that distributions
be made on Senior Certificates evidencing interests in one group of mortgage
loans or MBS prior to distributions on Subordinate Certificates evidencing
interests in a different group of mortgage loans or MBS within the trust fund.
The prospectus supplement for a series that includes a cross-support provision
will describe the manner and conditions for applying these provisions.
INSURANCE OR GUARANTEES FOR THE WHOLE LOANS
If so provided in the prospectus supplement for a series of
certificates, the Whole Loans in the related trust fund will be covered for
various default risks by insurance policies or guarantees. A copy of any
material instrument for a series will be filed with the Commission as an exhibit
to a Current Report on Form 8-K to be filed within 15 days of issuance of the
certificates of the related series.
LETTER OF CREDIT
If so provided in the prospectus supplement for a series of
certificates, deficiencies in amounts otherwise payable on the certificates or
certain classes thereof will be covered by one or more letters of credit, issued
by the letter of credit bank. Under a letter of credit, the letter of credit
bank will be obligated to honor draws thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, generally equal to a percentage
specified in the related prospectus supplement of the aggregate principal
balance of the mortgage loans or MBS or both on the related Cut-off Date or of
the initial aggregate Certificate Balance of one or more classes of
certificates. If so specified in the related prospectus supplement, the letter
of credit may permit draws in the event of only 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
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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 each series of certificates will expire at the earlier of the date
specified in the related prospectus supplement or the termination of the trust
fund. A copy of any letter of credit for a series will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed within 15
days of issuance of the certificates of the related series.
INSURANCE POLICIES AND SURETY BONDS
If so provided in the prospectus supplement for a series of
certificates, deficiencies in amounts otherwise payable on the certificates or
certain classes thereof will be covered by insurance policies or surety bonds
provided by one or more insurance companies or sureties. The instruments may
cover, with respect to one or more classes of certificates of the related
series, timely distributions of interest or full distributions of principal on
the basis of a schedule of principal distributions set forth in or determined in
the manner specified in the related prospectus supplement. A copy of any such
instrument for a series will be filed with the Commission as an exhibit to a
Current Report on Form 8-K to be filed with the Commission within 15 days of
issuance of the certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of
certificates, deficiencies in amounts otherwise payable on the certificates or
certain classes thereof will be covered by one or more reserve funds in which
cash, a letter of credit, Permitted Investments, a demand note or a combination
thereof will be deposited, in the amounts so specified in the prospectus
supplement. The reserve funds for a series may also be funded over time by
depositing in the reserve funds a specified amount of the distributions received
on the related assets as specified in the related prospectus supplement.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related prospectus supplement. A
reserve fund may be provided to increase the likelihood of timely distributions
of principal of and interest on the certificates. If so specified in the related
prospectus supplement, reserve funds may be established to provide limited
protection against only certain types of losses and shortfalls. Following each
Distribution Date amounts in a reserve fund in excess of any amount required to
be maintained in the reserve fund may be released from the reserve fund under
the conditions and to the extent specified in the related prospectus supplement
and will not be available for further application to the certificates.
Moneys deposited in any Reserve Funds will be invested in Permitted
Investments, except as otherwise specified in the related prospectus supplement.
Unless otherwise specified in the related prospectus supplement, any
reinvestment income or other gain from these investments will be credited to the
related Reserve Fund for the series, and any loss resulting from the investments
will be charged to the Reserve Fund. However, the income may be payable to any
related master servicer or another service provider as additional compensation.
The Reserve Fund, if any, for a series will not be a part of the trust fund to
the extent set forth in the related prospectus supplement.
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Additional information concerning any Reserve Fund will be set forth in
the related prospectus supplement, including the initial balance of the Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which the required balance will decrease over time, the manner of funding the
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make distributions to certificateholders and use of investment earnings from the
Reserve Fund, if any.
CREDIT SUPPORT FOR MBS
If so provided in the prospectus supplement for a series of
certificates, the MBS in the related trust fund or the mortgage loans underlying
the MBS may be covered by one or more of the types of Credit Support described
in this prospectus. The related prospectus supplement will specify as to each
form of Credit Support the information indicated above under "Description of
Credit Support--General," to the extent the information is material and
available.
LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties
that are general in nature. The legal aspects are governed by applicable state
law, which laws may differ substantially. As such, the summaries DO NOT:
o purport to be complete;
o purport to reflect the laws of any particular state; or
o purport to encompass the laws of all states in which the
security for the mortgage loans is situated.
The summaries are qualified in their entirety by reference to the applicable
federal and state laws governing the mortgage loans. See "Description of the
Trust Funds--Assets."
GENERAL
All of the mortgage loans are loans evidenced by a note or bond and
secured by instruments granting a security interest in real property. The
instrument granting a security interest may be a mortgage, deed of trust,
security deed or deed to secure debt, depending upon the prevailing practice and
law in the state in which the mortgaged property is located. Any of the
foregoing types of mortgages will create a lien upon, or grant a title interest
in, the subject property. The priority of the mortgage will depend on the terms
of the particular security instrument, as well as separate, recorded,
contractual arrangements with others holding interests in the mortgaged
property, the knowledge of the parties to the instrument as well as the order of
recordation of the instrument in the appropriate public recording office.
However, recording does not generally establish priority over governmental
claims for real estate taxes and assessments and other charges imposed under
governmental police powers.
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TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties--
o a borrower--the borrower and usually the owner of the subject
property, and
o a mortgagee--the lender.
In contrast, a deed of trust is a three-party instrument, among
o a trustor--the equivalent of a mortgagor or borrower,
o a trustee to whom the mortgaged property is conveyed, and
o a beneficiary--the lender--for whose benefit the conveyance is
made.
Under a deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale as security for the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties.
By executing a deed to secure debt, the grantor conveys title to, as
opposed to merely creating a lien upon, the subject property to the grantee
until the time that the underlying debt is repaid, generally with a power of
sale as security for the indebtedness evidenced by the related mortgage note. If
a borrower under a mortgage 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 executes a separate undertaking to make
payments on the mortgage note. The lender's authority under a mortgage, the
trustee's authority under a deed of trust and the grantee's authority under a
deed to secure debt are governed by the express provisions of the mortgage, the
law of the state in which the real property is located, certain federal laws
including, without limitation, the Soldiers' and Sailors' Civil Relief Act of
1940 and, in some cases, in deed of trust transactions, the directions of the
beneficiary.
INTEREST IN REAL PROPERTY
The real property covered by a mortgage, deed of trust, security deed
or deed to secure debt is most often the fee estate in land and improvements.
However, the mortgage, or other instrument, may encumber other interests in real
property such as:
o a tenant's interest in a lease of land or improvements, or
both, and
o the leasehold estate created by the lease.
A mortgage, or other instrument, covering an interest in real property other
than the fee estate requires special provisions in the instrument creating the
interest to protect the lender against termination of the interest before the
note secured by the mortgage, deed of trust, security deed or deed to secure
debt is paid. Unless otherwise specified in the prospectus supplement, Morgan
Stanley Dean Witter Capital I Inc. or the asset seller will make representations
and warranties in the Agreement with respect to the mortgage loans which are
secured by an interest in a leasehold
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estate. The representations and warranties will be set forth in the prospectus
supplement if applicable.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases. Typically, under an assignment of rents and
leases:
o the borrower assigns its right, title and interest as landlord
under each lease and the income derived from each lease to the
lender, and
o the borrower retains a revocable license to collect the rents
for so long as there is no default under the loan documents.
The manner of perfecting the lender's interest in rents may depend on whether
the borrower's assignment was absolute or one granted as security for the loan.
Failure to properly perfect the lender's interest in rents may result in the
loss of substantial pool of funds, which could otherwise serve as a source of
repayment for the loan. 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 obtain a court-appointed receiver before
becoming entitled to collect the rents. In most states, hotel and motel room
revenues are considered accounts receivable under the UCC; generally these
revenues are either assigned by the borrower, which remains entitled to collect
the revenues absent a default, or pledged by the borrower, as security for the
loan. In general, the lender must file financing statements in order to perfect
its security interest in the revenues and must file continuation statements,
generally every five years, to maintain perfection of the security interest.
Even if the lender's security interest in room revenues is perfected under the
UCC, the lender will generally be required to commence a foreclosure or
otherwise take possession of the property in order to collect the room revenues
after a default.
Even after a foreclosure, the potential rent payments from the property
may be less than the periodic payments that had been due under the mortgage. For
instance, the net income that would otherwise be generated from the property may
be less than the amount that would have been needed to service the mortgage debt
if the leases on the property are at below-market rents, or as the result of
excessive maintenance, repair or other obligations which a lender succeeds to as
landlord.
Lenders that actually take possession of the property, however, may
incur potentially substantial risks attendant to being a mortgagee in
possession. The risks include liability for environmental clean-up costs and
other risks inherent in property ownership. See "--Environmental Legislation"
below.
PERSONALITY
Certain types of mortgaged properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value from
personal property which does not constitute "fixtures" under applicable state
real property law and, hence, would not be subject to the lien of a mortgage.
The property is generally pledged or assigned as security to the lender under
the UCC. In order to perfect its security interest in the property, the lender
generally must file UCC
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financing statements and, to maintain perfection of the security interest, file
continuation statements generally every five years.
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 mortgaged property at public auction to satisfy the
indebtedness.
Foreclosure procedures with respect to the enforcement of a mortgage
vary from state to state. Two primary methods of foreclosing a mortgage are
judicial foreclosure and non-judicial foreclosure pursuant to a power of sale
granted in the mortgage instrument. There are several other foreclosure
procedures available in some states that are either infrequently used or
available only in certain limited circumstances, such as strict foreclosure.
JUDICIAL FORECLOSURE
A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated by
the service of legal pleadings upon all parties having a subordinate interest of
record in the real property and all parties in possession of the property, under
leases or otherwise, whose interests are subordinate to the mortgage. Delays in
completion of the foreclosure may occasionally result from difficulties in
locating defendants. When the lender's right to foreclose is contested, the
legal proceedings can be time-consuming. Upon successful completion of a
judicial foreclosure proceeding, the court generally issues a judgment of
foreclosure and appoints a referee or other officer to conduct a public sale of
the mortgaged property, the proceeds of which are used to satisfy the judgment.
The sales are made in accordance with procedures that vary from state to state.
EQUITABLE LIMITATIONS ON ENFORCEABILITY OF CERTAIN PROVISIONS
United States courts have traditionally imposed general equitable
principles to limit the remedies available to a lender in connection with
foreclosure. These equitable principles are generally designed to relieve the
borrower from the legal effect of mortgage defaults, to the extent that the
effect is perceived as harsh or unfair. Relying on these principles, a court may
alter the specific terms of a loan to the extent it considers necessary to
prevent or remedy an injustice, undue oppression or overreaching, or may require
the lender to undertake affirmative and expensive actions to determine the cause
of the borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose if the default under the mortgage is not monetary, e.g., the
borrower failed to maintain the mortgaged property adequately or the borrower
executed a junior mortgage on the mortgaged property. The exercise by the court
of its equity powers will depend on the individual circumstances of each case
presented to it. Finally, some courts have been faced with the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a
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borrower receive notice in addition to statutorily-prescribed minimum notice.
For the most part, these cases have upheld the reasonableness of the notice
provisions or have found that a public sale under a mortgage providing for a
power of sale does not involve sufficient state action to afford constitutional
protections to the borrower.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes require several years to complete. Moreover, a non-collusive,
regularly conducted foreclosure sale may be challenged as a fraudulent
conveyance, regardless of the parties' intent, if a court determines that the
sale was for less than fair consideration and that the sale occurred while the
borrower was insolvent or the borrower was rendered insolvent as a result of the
sale and within one year -- or within the state statute of limitations if the
trustee in bankruptcy elects to proceed under state fraudulent conveyance law --
of the filing of bankruptcy.
NON-JUDICIAL FORECLOSURE/POWER OF SALE
Foreclosure of a deed of trust is generally accomplished by a
non-judicial trustee's sale pursuant to the power of sale granted in the deed of
trust. A power of sale is typically granted in a deed of trust. It may also be
contained in any other type of mortgage instrument. A power of sale allows a
non-judicial public sale to be conducted generally following a request from the
beneficiary/lender to the trustee to sell the property upon any default by the
borrower under the terms of the mortgage note or the mortgage instrument and
after notice of sale is given in accordance with the terms of the mortgage
instrument, as well as applicable state law. In some states, prior to such sale,
the trustee under a deed of trust must record a notice of default and notice of
sale and send a copy to the borrower and to any other party who has recorded a
request for a copy of a notice of default and notice of sale. In addition, in
some states the trustee must provide notice to any other party having an
interest of record in the real property, including junior lienholders. A notice
of sale must be posted in a public place and, in most states, published for a
specified period of time in one or more newspapers. The borrower or junior
lienholder may then have the right, during a reinstatement period required in
some states, to cure the default by paying the entire actual amount in arrears,
without acceleration, plus the expenses incurred in enforcing the obligation. In
other states, the borrower or the junior lienholder is not provided a period to
reinstate the loan, but has only the right to pay off the entire debt to prevent
the foreclosure sale. Generally, the procedure for public sale, the parties
entitled to notice, the method of giving notice and the applicable time periods
are governed by state law and vary among the states. Foreclosure of a deed to
secure debt is also generally accomplished by a non-judicial sale similar to
that required by a deed of trust, except that the lender or its agent, rather
than a trustee, is typically empowered to perform the sale in accordance with
the terms of the deed to secure debt and applicable law.
PUBLIC SALE
A third party may be unwilling to purchase a mortgaged property at a
public sale because of the difficulty in determining the value of the property
at the time of sale, due to, among other things, redemption rights which may
exist and the possibility of physical deterioration of the property during the
foreclosure proceedings. For these reasons, it is common for the lender to
purchase the mortgaged property for an amount equal to or less than the
underlying debt and accrued and unpaid interest plus the expenses of
foreclosure. Generally, state law controls the
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amount of foreclosure costs and expenses which may be recovered by a lender.
Thereafter, subject to the borrower's right in some states to remain in
possession during a redemption period, if applicable, the lender will become the
owner of the property and have both the benefits and burdens of ownership of the
mortgaged property. For example, the lender will have the obligation to pay debt
service on any senior mortgages, to pay taxes, obtain casualty insurance and to
make the repairs at its own expense as are necessary to render the property
suitable for sale. Frequently, the lender employs a third party management
company to manage and operate the property. 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 costs of
management and operation of those mortgaged properties which are hotels, motels,
restaurants, nursing or convalescent homes or hospitals may be particularly
significant because of the expertise, knowledge and, with respect to nursing or
convalescent homes or hospitals, regulatory compliance, required to run the
operations and the effect which foreclosure and a change in ownership may have
on the public's and the industry's, including franchisors', perception of the
quality of the operations. The lender will commonly obtain the services of a
real estate broker and pay the broker's commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, a lender commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure or bankruptcy
proceedings. Furthermore, a few states require that any environmental
contamination at certain types of properties be cleaned up before a property may
be resold. In addition, a lender may be responsible under federal or state law
for the cost of cleaning up a mortgaged property that is environmentally
contaminated. See "--Environmental Legislation." Generally state law controls
the amount of foreclosure expenses and costs, including attorneys' fees, that
may be recovered by a lender.
A junior lender may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior mortgages
to avoid their foreclosure. In addition, in the event that the foreclosure of a
junior mortgage triggers the enforcement of a "due-on-sale" clause contained in
a senior mortgage, the junior lender may be required to pay the full amount of
the senior mortgage to avoid its foreclosure. Accordingly, with respect to those
mortgage loans, if any, that are junior mortgage loans, if the lender purchases
the property, the lender's title will be subject to all senior mortgages, prior
liens and certain governmental liens.
The proceeds received by the referee or trustee from the sale are
applied first to the costs, fees and expenses of sale and then in satisfaction
of the indebtedness secured by the mortgage under which the sale was conducted.
Any proceeds remaining after satisfaction of senior mortgage debt are generally
payable to the holders of junior mortgages and other liens and claims in order
of their priority, whether or not the borrower is in default. Any additional
proceeds are generally payable to the borrower. The payment of the proceeds to
the holders of junior mortgages may occur in the foreclosure action of the
senior mortgage or a subsequent ancillary proceeding or may require the
institution of separate legal proceedings by these holders.
REO PROPERTIES
If title to any mortgaged property is acquired by the trustee on behalf
of the certificateholders, the master servicer or any related subservicer or the
special servicer, on behalf
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of the holders, will be required to sell the mortgaged property prior to the
close of the third calendar year following the year of acquisition of such
mortgaged property by the trust fund, unless:
o the Internal Revenue Service grants an REO Extension, or
o it obtains an opinion of counsel generally to the effect that
the holding of the property beyond the close of the third
calendar year after its acquisition will not result in the
imposition of a tax on the trust fund or cause any REMIC
created pursuant to the Agreement to fail to qualify as a
REMIC under the Code.
Subject to the foregoing, the master servicer or any related subservicer or the
special servicer will generally be required to solicit bids for any mortgaged
property so acquired in a manner as will be reasonably likely to realize a fair
price for the property. The master servicer or any related subservicer or the
special servicer may retain an independent contractor to operate and manage any
REO Property; however, the retention of an independent contractor will not
relieve the master servicer or any related subservicer or the special servicer
of its obligations with respect to the REO Property.
In general, the master servicer or any related subservicer or the
special servicer or an independent contractor employed by the master servicer or
any related subservicer or the special servicer at the expense of the trust fund
will be obligated to operate and manage any mortgaged property acquired as REO
Property in a manner that would, to the extent commercially feasible, maximize
the trust fund's net after-tax proceeds from the property. After the master
servicer or any related subservicer or the special servicer reviews the
operation of the property and consults with the trustee to determine the trust
fund's federal income tax reporting position with respect to the income it is
anticipated that the trust fund would derive from the property, the master
servicer or any related subservicer or the special servicer could determine,
particularly in the case of an REO Property that is a hospitality or residential
health care facility, that it would not be commercially feasible to manage and
operate the property in a manner that would avoid the imposition of an REO Tax
at the highest marginal corporate tax rate--currently 35%. The determination as
to whether income from an REO Property would be subject to an REO Tax will
depend on the specific facts and circumstances relating to the management and
operation of each REO Property. Any REO Tax imposed on the trust fund's income
from an REO Property would reduce the amount available for distribution to
certificateholders. Certificateholders are advised to consult their tax advisors
regarding the possible imposition of REO Taxes in connection with the operation
of commercial REO Properties by REMICs. See "Federal Income Tax Consequences" in
this prospectus and "Federal Income Tax Consequences" in the prospectus
supplement.
RIGHTS OF REDEMPTION
The purposes of a foreclosure action are to enable the lender to
realize upon its security and to bar the borrower, and all persons who have an
interest in the property which is subordinate to the mortgage being foreclosed,
from exercise of their "equity of redemption." The doctrine of equity of
redemption provides that, until the property covered by a mortgage has been sold
in accordance with a properly conducted foreclosure and foreclosure sale, those
having an interest which is subordinate to that of the foreclosing lender have
an equity of redemption and
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may redeem the property by paying the entire debt with interest. In addition, in
some states, when a foreclosure action has been commenced, the redeeming party
must pay certain costs of the action. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be cut off and terminated.
The equity of redemption is a common-law or non-statutory right which
exists prior to completion of the foreclosure, is not waivable by the borrower,
must be exercised prior to foreclosure sale and should be distinguished from the
post-sale statutory rights of redemption. In some states, after sale pursuant to
a deed of trust or foreclosure of a mortgage, the borrower and foreclosed junior
lienors are given a statutory period in which to redeem the property from the
foreclosure sale. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
authorized if the former borrower pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser from a foreclosure sale or sale under a
deed of trust. 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.
Under the REMIC Provisions currently in effect, property acquired by
foreclosure generally must not be held beyond the close of the third calendar
year following the year of acquisition. Unless otherwise provided in the related
prospectus supplement, with respect to a series of certificates for which an
election is made to qualify the trust fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held beyond the close of the
third calendar year following the year of acquisition if the Internal Revenue
Service grants an extension of time within which to sell the property or
independent counsel renders an opinion to the effect that holding the property
for such additional period is permissible under the REMIC Provisions.
ANTI-DEFICIENCY LEGISLATION
Some or all of the mortgage loans may be nonrecourse loans, as to which
recourse may be had only against the specific property securing the related
mortgage loan and a personal money judgment may not be obtained against the
borrower. Even if a mortgage loan by its terms provides for recourse to the
borrower, some states impose prohibitions or limitations on recourse to the
borrower. For example, statutes in some states limit the right of the lender to
obtain a deficiency judgment against the borrower following foreclosure or sale
under a deed of trust. A deficiency judgment would be 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. Some states require the lender to exhaust the security afforded under a
mortgage by foreclosure in an attempt to satisfy the full debt before bringing a
personal action against the 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; however, in some of these states, the
lender, following judgment on a personal action, may be deemed to have elected a
remedy and may be precluded from exercising remedies with respect to the
security. In some cases, a lender will be precluded from exercising any
additional rights under the note or mortgage if it has taken any prior
enforcement action. Consequently, the practical effect of the
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election requirement, in those states permitting such election, is that lenders
will usually proceed against the security first rather than bringing a personal
action against the borrower. Finally, other statutory provisions limit any
deficiency judgment against the former borrower following a judicial sale to the
excess of the outstanding debt over the fair market value of the property at the
time of the public sale. The purpose of these statutes is generally to prevent a
lender from obtaining a large deficiency judgment against the former borrower as
a result of low or no bids at the judicial sale.
LEASEHOLD RISKS
Mortgage loans may be secured by a mortgage on a ground lease.
Leasehold mortgages are subject to certain risks not associated with mortgage
loans secured by the fee estate of the borrower. The most significant of these
risks is that the ground lease creating the leasehold estate could terminate,
leaving the leasehold lender without its security. The ground lease may
terminate if, among other reasons, the ground lessee breaches or defaults in its
obligations under the ground lease or there is a bankruptcy of the ground lessee
or the ground lessor. This risk may be minimized if the ground lease contains
certain provisions protective of the lender, but the ground leases that secure
mortgage loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include:
(1) the right of the leasehold lender to receive notices from the
ground lessor of any defaults by the borrower;
(2) the right to cure those defaults, with adequate cure periods;
(3) if a default is not susceptible of cure by the leasehold
lender, the right to acquire the leasehold estate through
foreclosure or otherwise;
(4) the ability of the ground lease to be assigned to and by the
leasehold lender or purchaser at a foreclosure sale and for
the concomitant release of the ground lessee's liabilities
thereunder;
(5) the right of the leasehold lender to enter into a new ground
lease with the ground lessor on the same terms and conditions
as the old ground lease in the event of a termination thereof;
(6) a ground lease or leasehold mortgage that prohibits the ground
lessee from treating the ground lease as terminated in the
event of the ground lessor's bankruptcy and rejection of the
ground lease by the trustee for the debtor-ground lessor; and
(7) a leasehold mortgage that provides for the assignment of the
debtor-ground lessee's right to reject a lease pursuant to
Section 365 of the Bankruptcy Code.
Without the protections described in (1) - (7) above, a leasehold lender may
lose the collateral securing its leasehold mortgage. However, the enforceability
of clause (7) has not been established. In addition, terms and conditions of a
leasehold mortgage are subject to the terms and conditions of the ground lease.
Although certain rights given to a ground lessee can be limited by the terms of
a leasehold mortgage, the rights of a ground lessee or a leasehold lender
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with respect to, among other things, insurance, casualty and condemnation will
be governed by the provisions of the ground lease.
BANKRUPTCY LAWS
The Bankruptcy Code and related state laws may interfere with or affect
the ability of a lender to realize upon collateral and to enforce a deficiency
judgment. For example, under the Bankruptcy Code, virtually all actions,
including foreclosure actions and deficiency judgment proceedings, are
automatically stayed upon the filing of the bankruptcy petition, and, usually,
no interest or principal payments are made during the course of the bankruptcy
case. The delay and the consequences thereof caused by an automatic stay can be
significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay the senior lender from
taking action to foreclose out the junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the lender are met, the amount and terms of a mortgage secured by
property of the debtor may be modified under certain circumstances. In many
jurisdictions, the outstanding amount of the loan secured by the real property
may be reduced to the then-current value of the property, with a corresponding
partial reduction of the amount of lender's security interest pursuant to a
confirmed plan or lien avoidance proceeding, thus leaving the lender a general
unsecured creditor for the difference between such value and the outstanding
balance of the loan. Other modifications may include the reduction in the amount
of each scheduled payment, which reduction may result from a reduction in the
rate of interest or the alteration of the repayment schedule with or without
affecting the unpaid principal balance of the loan, or an extension or reduction
of the final maturity date. Some courts with federal bankruptcy jurisdiction
have approved plans, based on the particular facts of the reorganization case,
that effected the curing of a mortgage loan default by paying arrearages over a
number of years. Also, under federal bankruptcy law, a bankruptcy court may
permit a debtor through its rehabilitative plan to de-accelerate a secured loan
and to reinstate the loan even though the lender accelerated the mortgage loan
and final judgment of foreclosure had been entered in state court provided no
sale of the property had yet occurred, prior to the filing of the debtor's
petition. This may be done even if the full amount due under the original loan
is never repaid.
Federal bankruptcy law provides generally that rights and obligation
under an unexpired lease of the debtor/lessee may not be terminated or modified
at any time after the commencement of a case under the Bankruptcy Code solely on
the basis of a provision in the lease to such effect or because of certain other
similar events. This prohibition on so-called "ipso facto clauses" could limit
the ability of the trustee for a series of certificates to exercise certain
contractual remedies with respect to the leases. In addition, Section 362 of the
Bankruptcy Code operates as an automatic stay of, among other things, any act to
obtain possession of property from a debtor's estate, which may delay a
trustee's exercise of remedies for a related series of certificates in the event
that a related lessee or a related borrower becomes the subject of a proceeding
under the Bankruptcy Code. For example, a lender would be stayed from enforcing
a lease assignment by a borrower related to a mortgaged property if the related
borrower was in a bankruptcy proceeding. The legal proceedings necessary to
resolve the issues could be time-consuming and might result in significant
delays in the receipt of the assigned rents. Similarly, the filing of a petition
in bankruptcy by or on behalf of a lessee of a mortgaged property would result
in a stay against the commencement or continuation of any state court
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proceeding for past due rent, for accelerated rent, for damages or for a summary
eviction order with respect to a default under the lease that occurred prior to
the filing of the lessee's petition. Rents and other proceeds of a mortgage loan
may also escape an assignment thereof if the assignment is not fully perfected
under state law prior to commencement of the bankruptcy proceeding. See
"--Leases and Rents" above.
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court,
o assume the lease and retain it or assign it to a third party
or
o reject the lease.
If the lease is assumed, the trustee in bankruptcy on behalf of the lessee, or
the lessee as debtor-in-possession, or the 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, however, as the lessor may be forced to continue under the
lease with a lessee that is a poor credit risk or an unfamiliar tenant if the
lease was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, the rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of filing the petition. As a consequence, the other party or parties to the
rejected lease, such as the borrower, as lessor under a lease, would have only
an unsecured claim against the debtor for damages resulting from the breach,
which could adversely affect the security for the related mortgage loan. In
addition, pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's
damages for lease rejection in respect of future rent installments are limited
to the rent reserved by the lease, without acceleration, for the greater of one
year or 15%, not to exceed three years, of the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat the lease as terminated by the rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of the term and
for any renewal or extension of the term that is enforceable by the lessee under
applicable nonbankruptcy law. The Bankruptcy Code provides that if a lessee
elects to remain in possession after a rejection of a lease, the lessee may
offset against rents reserved under the lease for the balance of the term after
the date of rejection of the lease, and any renewal or extension thereof, any
damages occurring after such date caused by the nonperformance of any obligation
of the lessor under the lease after such date. To the extent provided in the
related prospectus supplement, the lessee will agree under certain leases to pay
all amounts owing thereunder to the master servicer without offset. To the
extent that a contractual obligation remains enforceable against the lessee, the
lessee would not be able to avail itself of the rights of offset generally
afforded to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a borrower, action may be
taken seeking the recovery, as a preferential transfer or on other grounds, of
any payments made by the borrower, or made directly by the related lessee, under
the related mortgage loan to the trust fund. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
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Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a borrower with means
to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of some states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the lender have been unreasonable, the lien of the related mortgage
may be subordinated to the claims of unsecured creditors.
To the extent described in the related prospectus supplement, some of
the Borrowers may be partnerships. The laws governing limited partnerships in
some states provide that the commencement of a case under the Bankruptcy Code
with respect to a general partner will cause a person to cease to be a general
partner of the limited partnership, unless otherwise provided in writing in the
limited partnership agreement. This provision may be construed as an "ipso
facto" clause and, in the event of the general partner's bankruptcy, may not be
enforceable. To the extent described in the related prospectus supplement, some
of the limited partnership agreements of the Borrowers may provide that the
commencement of a case under the Bankruptcy Code with respect to the related
general partner constitutes an event of withdrawal--assuming the enforceability
of the clause is not challenged in bankruptcy proceedings or, if challenged, is
upheld--that might trigger the dissolution of the limited partnership, the
winding up of its affairs and the distribution of its assets, unless
o at the time there was at least one other general partner and
the written provisions of the limited partnership permit the
business of the limited partnership to be carried on by the
remaining general partner and that general partner does so or
o the written provisions of the limited partnership agreement
permit the limited partner to agree within a specified time
frame -- often 60 days -- after such withdrawal to continue
the business of the limited partnership and to the appointment
of one or more general partners and the limited partners do
so.
In addition, the laws governing general partnerships in some states provide that
the commencement of a case under the Bankruptcy Code or state bankruptcy laws
with respect to a general partner of such partnerships triggers the dissolution
of the partnership, the winding up of its affairs and the distribution of its
assets. The state laws, however, may not be enforceable or effective in a
bankruptcy case. The dissolution of a Borrower, the winding up of its affairs
and the distribution of its assets could result in an acceleration of its
payment obligation under a related mortgage loan, which may reduce the yield on
the related series of certificates in the same manner as a principal prepayment.
In addition, the bankruptcy of the general partner of a Borrower that
is a partnership may provide the opportunity for a trustee in bankruptcy for the
general partner, such general partner as a debtor-in-possession, or a creditor
of the general partner to obtain an order from a court consolidating the assets
and liabilities of the general partner with those of the Borrower pursuant
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to the doctrines of substantive consolidation or piercing the corporate veil. In
such a case, the respective mortgaged property, for example, would become
property of the estate of the bankrupt general partner. Not only would the
mortgaged property be available to satisfy the claims of creditors of the
general partner, but an automatic stay would apply to any attempt by the trustee
to exercise remedies with respect to the mortgaged property. However, such an
occurrence should not affect the trustee's status as a secured creditor with
respect to the Borrower or its security interest in the mortgaged property.
JUNIOR MORTGAGES; RIGHTS OF SENIOR LENDERS OR BENEFICIARIES
To the extent specified in the related prospectus supplement, some of
the mortgage loans for a series will be secured by junior mortgages or deeds of
trust which are subordinated to senior mortgages or deeds of trust held by other
lenders or institutional investors. The rights of the trust fund, and therefore
the related certificateholders, as beneficiary under a junior deed of trust or
as lender under a junior mortgage, are subordinate to those of the lender or
beneficiary under the senior mortgage or deed of trust, including the prior
rights of the senior lender or beneficiary:
o to receive rents, hazard insurance and condemnation proceeds,
and
o to cause the mortgaged property securing the mortgage loan to
be sold upon default of the Borrower or trustor. This would
extinguish the junior lender's or junior beneficiary's lien.
However, the master servicer or special servicer, as
applicable, could assert its subordinate interest in the
mortgaged property in foreclosure litigation or satisfy the
defaulted senior loan.
In many states a junior lender or beneficiary may satisfy a defaulted senior
loan in full, or may cure such default and bring the senior loan current, in
either event adding the amounts expended to the balance due on the junior loan.
Absent a provision in the senior mortgage, no notice of default is required to
be given to the junior lender unless otherwise required by law.
The form of the mortgage or deed of trust used by many institutional
lenders confers on the lender or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply the proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the lender or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the lender or beneficiary
under the senior mortgage or deed of trust will have the prior right to collect
any insurance proceeds payable under the hazard insurance policy and any award
of damages in connection with the condemnation and to apply the same to the
indebtedness secured by the senior mortgage or deed of trust. Proceeds in excess
of the amount of senior mortgage indebtedness will, in most cases, be applied to
the indebtedness of a junior mortgage or trust deed. The laws of some states may
limit the ability of lenders to apply the proceeds of hazard insurance and
partial condemnation awards to the secured indebtedness. In these states, the
borrower must be allowed to use the proceeds of hazard insurance to repair the
damage unless the security of the lender has been impaired. Similarly, in
certain states, the lender is entitled to the award for a partial condemnation
of the real property security only to the extent that its security is impaired.
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The form of mortgage or deed of trust used by many institutional
lenders typically contains a "future advance" clause, which provides in essence,
that additional amounts advanced to or on behalf of the borrower by the lender
are to be secured by the mortgage or deed of trust. While this type of clause is
valid under the laws of most states, the priority of any advance made under the
clause depends, in some states, on whether the advance was an "obligatory" or
"optional" advance. If the lender is obligated to advance the additional
amounts, the advance may be entitled to receive the same priority as amounts
initially made under the mortgage or deed of trust, notwithstanding that there
may be intervening junior mortgages or deeds of trust and other liens between
the date of recording of the mortgage or deed of trust and the date of the
future advance, and notwithstanding that the lender or beneficiary had actual
knowledge of the intervening junior mortgages or deeds of trust and other liens
at the time of the advance. Where the lender is not obligated to advance the
additional amounts and has actual knowledge of the intervening junior mortgages
or deeds of trust and other liens, the advance may be subordinated to such
intervening junior mortgages or deeds of trust and other liens. Priority of
advances under a "future advance" clause rests, in many other states, on state
law giving priority to all advances made under the loan agreement up to a
"credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed
of trust used by many institutional lenders obligates the borrower or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the lender or beneficiary under the
mortgage or deed of trust. Upon a failure of the borrower to perform any of
these obligations, the lender or beneficiary is given the right under the
mortgage or deed of trust to perform the obligation itself, at its election,
with the borrower agreeing to reimburse the lender on behalf of the borrower.
All sums so expended by the lender become part of the indebtedness secured by
the mortgage or deed of trust.
The form of mortgage or deed of trust used by many institutional
lenders typically requires the borrower to obtain the consent of the lender in
respect of actions affecting the mortgaged property, including, without
limitation, leasing activities, including new leases and termination or
modification of existing leases, alterations and improvements to buildings
forming a part of the mortgaged property and management and leasing agreements
for the mortgaged property. Tenants will often refuse to execute a lease unless
the lender or beneficiary executes a written agreement with the tenant not to
disturb the tenant's possession of its premises in the event of a foreclosure. A
senior lender or beneficiary may refuse to consent to matters approved by a
junior lender or beneficiary with the result that the value of the security for
the junior mortgage or deed of trust is diminished. For example, a senior lender
or beneficiary may decide not to approve the lease or to refuse to grant a
tenant a non-disturbance agreement. If, as a result, the lease is not executed,
the value of the mortgaged property may be diminished.
ENVIRONMENTAL LEGISLATION
Real property pledged as security to a lender may be subject to
unforeseen environmental liabilities. Of particular concern may be those
mortgaged properties which are, or have been, the site of manufacturing,
industrial or disposal activity. These environmental liabilities may give rise
to:
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o a diminution in value of property securing any mortgage loan;
o limitation on the ability to foreclose against the property;
or
o in certain circumstances, liability for clean-up costs or
other remedial actions, which liability could exceed the value
of the principal balance of the related mortgage loan or of
the mortgaged property.
Under the laws of many states, contamination on a property may give
rise to a lien on the property for cleanup costs. In several states, the a lien
has priority over all existing liens (a "superlien") including those of existing
mortgages; in these states, the lien of a mortgage contemplated by this
transaction may lose its priority to a superlien.
The presence of hazardous or toxic substances, or the failure to
remediate the property properly, may adversely affect the market value of the
property, as well as the owner's ability to sell or use the real estate or to
borrow using the real estate as collateral. In addition, certain environmental
laws and common law principles govern the responsibility for the removal,
encapsulation or disturbance of asbestos containing materials when these
asbestos containing materials are in poor condition or when a property with
asbestos containing materials is undergoing repair, renovation or demolition.
These laws could also be used to impose liability upon owners and operators of
real properties for release of asbestos containing materials into the air that
cause personal injury or other damage. In addition to cleanup and natural
resource damages actions brought by federal, state, and local agencies and
private parties, the presence of hazardous substances on a property may lead to
claims of personal injury, property damage, or other claims by private
plaintiffs.
Under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 and under other federal law and the law of some
states, a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a mortgaged property may
become liable in some circumstances either to the government or to private
parties for cleanup costs, even if the lender does not cause or contribute to
the contamination. Liability under some federal or state statutes may not be
limited to the original or unamortized principal balance of a loan or to the
value of the property securing a loan. CERCLA imposes strict, as well as joint
and several, liability on several classes of potentially responsible parties,
including current owners and operators of the property, regardless of whether
they caused or contributed to the contamination. Many states have laws similar
to CERCLA.
Lenders may be held liable under CERCLA as owners or operators.
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 exemption for
holders of a security interest such as a secured lender applies only in
circumstances where the lender acts to protect its security interest in the
contaminated facility or property. Thus, if a lender's activities encroach on
the actual management of the facility or property, the lender faces potential
liability as an "owner or operator" under CERCLA. Similarly, when a lender
forecloses and takes title to a contaminated facility or property -- whether it
holds the facility or property as an investment or leases it to a third party --
the lender may incur potential CERCLA liability.
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Whether actions taken by a lender would constitute an encroachment on
the actual management of a facility or property, so as to render the secured
creditor exemption unavailable to the lender has been a matter of judicial
interpretation of the statutory language, and court decisions have historically
been inconsistent.
This scope of the secured creditor exemption has been clarified by the
enactment of the Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996, which was signed into law by President Clinton on
September 30, 1996, and which lists permissible actions that may be undertaken
by a lender holding security in a contaminated facility without exceeding the
bounds of the secured creditor exemption, subject to certain conditions and
limitations. The Asset Conservation Act provides that in order to be deemed to
have participated in the management of a secured property, a lender must
actually participate in the operational affairs of the property or the borrower.
The Asset Conservation Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed-in-lieu of
foreclosure provided that the lender seeks to sell the mortgaged property at the
earliest practicable commercially reasonable time on commercially reasonable
terms. The protections afforded lenders under the Asset Conservation Act are
subject to terms and conditions that have not been clarified by the courts.
The secured creditor exemption does not protect a lender from liability
under CERCLA in cases where the lender arranges for disposal of hazardous
substances or for transportation of hazardous substances. In addition, the
secured creditor exemption does not govern liability for cleanup costs under
federal laws other than CERCLA or under state law. CERCLA's jurisdiction extends
to the investigation and remediation of releases of "hazardous substances." The
definition of "hazardous substances" under CERCLA specifically excludes
petroleum products. Therefore, a federal statute of particular significance is
Subtitle I of the Resource Conservation and Recovery Act, which governs the
operation and management of underground petroleum storage tanks. Under the Asset
Conservation Act, the holders of security interests in underground storage tanks
or properties containing these tanks are accorded protections similar to the
protections accorded to lenders under CERCLA. It should be noted, however, that
liability for cleanup of petroleum contamination may be governed by state law,
which may not provide for any specific protection for secured creditors.
In a few states, transfer of some types of properties is conditioned
upon clean up 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 cleanup the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action--for example, actions based on nuisance or on toxic tort
resulting in death, personal injury or damage to property--related to hazardous
environmental conditions on a property. While it may be more difficult to hold a
lender liable in these cases, unanticipated or uninsurable liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
If a lender is or becomes liable, it may bring an action for
contribution against the owner or operator who created the environmental hazard,
but that person or entity may be bankrupt or otherwise judgment proof. It is
possible that cleanup costs could become a liability of the trust
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fund and occasion a loss to certificateholders in certain circumstances if such
remedial costs were incurred.
Unless otherwise provided in the related prospectus supplement, the
Warrantying Party with respect to any Whole Loan included in a trust fund for a
particular series of certificates will represent that a "Phase I Assessment" as
described in and meeting the requirements of the then current version of Chapter
5 of the Federal National Mortgage Association Multifamily Guide has been
received and reviewed. In addition, unless otherwise provided in the related
prospectus supplement, the related Agreement will provide that the master
servicer, acting on behalf of the trustee, may not acquire title to a mortgaged
property or take over its operation unless the master servicer has previously
determined, based on a report prepared by a person who regularly conducts
environmental audits, that:
o the mortgaged property is in compliance with applicable
environmental laws, and there are no circumstances present at
the mortgaged property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
wastes, or petroleum based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation; or
o if the mortgaged property is not so in compliance or such
circumstances are so present, then it would be in the best
economic interest of the trust fund to acquire title to the
mortgaged property and further to take actions as would be
necessary and appropriate to effect compliance or respond to
such circumstances.
This requirement effectively precludes enforcement of the security for the
related mortgage note until a satisfactory environmental inquiry is undertaken
or any required remedial action is provided for, reducing the likelihood that a
given trust fund will become liable for an Environmental Hazard Condition
affecting a mortgaged property, but making it more difficult to realize on the
security for the mortgage loan. However, there can be no assurance that any
environmental assessment obtained by the master servicer or a special servicer,
as the case may be, will detect all possible Environmental Hazard Conditions or
that the other requirements of the Agreement, even if fully observed by the
master servicer or special servicer, as the case may be, will in fact insulate a
given trust fund from liability for Environmental Hazard Conditions. See
"Description of the Agreements--Realization Upon Defaulted Whole Loans."
Unless otherwise specified in the related prospectus supplement, Morgan
Stanley Dean Witter Capital I Inc. generally will not have determined whether
environmental assessments have been conducted with respect to the mortgaged
properties relating to the mortgage loans included in the pool of mortgage loans
for a series, and it is likely that any environmental assessments which would
have been conducted with respect to any of the mortgaged properties would have
been conducted at the time of the origination of the related mortgage loans and
not thereafter. If specified in the related prospectus supplement, a Warrantying
Party will represent and warrant that, as of the date of initial issuance of the
certificates of a series or as of another specified date, no related mortgaged
property is affected by a Disqualifying Condition. In the event that, following
a default in payment on a mortgage loan that continues for 60 days,
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o the environmental inquiry conducted by the master servicer or
special servicer, as the case may be, prior to any foreclosure
indicates the presence of a Disqualifying Condition that arose
prior to the date of initial issuance of the certificates of a
series and
o the master servicer or the special servicer certify that it
has acted in compliance with the Servicing Standard and has
not, by any action, created, caused or contributed to a
Disqualifying Condition the Warrantying Party, at its option,
will reimburse the trust fund, cure the Disqualifying
Condition or repurchase or substitute the affected Whole Loan,
as described under "Description of the
Agreements--Representations and Warranties; Repurchases."
No such person will however, be responsible for any Disqualifying Condition
which may arise on a mortgaged property after the date of initial issuance of
the certificates of the related series, whether due to actions of the Borrower,
the master servicer, the special servicer or any other person. It may not always
be possible to determine whether a Disqualifying Condition arose prior or
subsequent to the date of the initial issuance of the certificates of a series.
"Hazardous Materials" are generally defined under several federal and
state statutes, and include dangerous toxic or hazardous pollutants, chemicals,
wastes or substances, including, without limitation, those so identified
pursuant to CERCLA and RCRA, and specifically including, asbestos and asbestos
containing materials, polychlorinated biphenyls, radon gas, petroleum and
petroleum products, urea formaldehyde and any substances classified as being "in
inventory," "usable work in process" or similar classification which would, if
classified as unusable, be included in the foregoing definition.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Some of the mortgage loans may contain due-on-sale and
due-on-encumbrance clauses. These clauses generally provide that the lender may
accelerate the maturity of the loan if the borrower sells or otherwise transfers
or encumbers the related mortgaged property. Some of these clauses may provide
that, upon an attempted sale, transfer or encumbrance of the related mortgaged
property by the borrower of an otherwise non-recourse loan, the borrower becomes
personally liable for the mortgage debt. The enforceability of due-on-sale
clauses has been the subject of legislation or litigation in many states and, in
some cases, the enforceability of these clauses was limited or denied. However,
with respect to some of the loans, the Garn-St Germain Depository Institutions
Act of 1982 preempts state constitutional, statutory and case law that prohibits
the enforcement of due-on-sale clauses and permits lenders to enforce these
clauses in accordance with their terms subject to limited exceptions. Unless
otherwise provided in the related prospectus supplement, a master servicer, on
behalf of the trust fund, will determine whether to exercise any right the
trustee may have as lender to accelerate payment of any mortgage loan or to
withhold its consent to any transfer or further encumbrance in a manner
consistent with the Servicing Standard.
In addition, under federal bankruptcy laws, due-on-sale clauses may not
be enforceable in bankruptcy proceedings and may, under certain circumstances,
be eliminated in any modified mortgage resulting from a bankruptcy proceeding.
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SUBORDINATE FINANCING
Where a borrower encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risks including:
o the borrower may have difficulty servicing and repaying
multiple loans;
o if the junior loan permits recourse to the borrower--as junior
loans often do--and the senior loan does not, a borrower may
be more likely to repay sums due on the junior loan than those
on the senior loan.
o acts of the senior lender that prejudice the junior lender or
impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the
borrower and the senior lender agree to an increase in the
principal amount of or the interest rate payable on the senior
loan, the senior lender may lose its priority to the extent
any existing junior lender is harmed or the borrower is
additionally burdened;
o if the borrower defaults on the senior loan 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
o the bankruptcy of a junior lender may operate to stay
foreclosure or similar proceedings by the senior lender.
DEFAULT INTEREST, PREPAYMENT PREMIUMS AND PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the borrower to pay a late charge or additional interest if payments
are not timely made, and in some circumstances may provide for prepayment fees
or yield maintenance penalties if the obligation is paid prior to maturity or
prohibit prepayment for a specified period. In certain states, there are or may
be specific limitations upon the late charges which a lender may collect from a
borrower for delinquent payments. Certain states also limit the amounts that a
lender may collect from a borrower as an additional charge if the loan is
prepaid. The enforceability, under the laws of a number of states of provisions
providing for prepayment fees or penalties upon, or prohibition of, an
involuntary prepayment is unclear, and no assurance can be given that, at the
time a prepayment premium is required to be made on a mortgage loan in
connection with an involuntary prepayment, the obligation to make the payment,
or the provisions of any such prohibition, will be enforceable under applicable
state law. The absence of a restraint on prepayment, particularly with respect
to mortgage loans having higher mortgage rates, may increase the likelihood of
refinancing or other early retirements of the mortgage loans.
ACCELERATION ON DEFAULT
Unless otherwise specified in the related prospectus supplement, some
of the mortgage loans included in the pool of mortgage loans for a series will
include a "debt-acceleration" clause, which permits the lender to accelerate the
full debt upon a monetary or nonmonetary default of the Borrower. The courts of
all states will enforce clauses providing for acceleration
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in the event of a material payment default--as long as appropriate notices are
given. The equity courts of the state, however, may refuse to foreclose a
mortgage or deed of trust when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable. Furthermore, in some states, the borrower may avoid foreclosure
and reinstate an accelerated loan by paying only the defaulted amounts and the
costs and attorneys' fees incurred by the lender in collecting the defaulted
payments.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980, enacted in March 1980, provides that state usury
limitations shall not apply to certain types of residential, including
multifamily but not other commercial, first mortgage loans originated by certain
lenders after March 31, 1980. A similar federal statute was in effect with
respect to mortgage loans made during the first three months of 1980. The
statute authorized any state to reimpose interest rate limits by adopting,
before April 1, 1983, a law or constitutional provision that expressly rejects
application of the federal law. In addition, even where Title V is not so
rejected, any state is authorized by 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 or to limit discount
points or other charges.
Morgan Stanley Dean Witter Capital I Inc. has been advised by counsel
that a court interpreting Title V would hold that residential first mortgage
loans that are originated on or after January 1, 1980 are subject to federal
preemption. Therefore, in a state that has not taken the requisite action to
reject application of Title V or to adopt a provision limiting discount points
or other charges prior to origination of mortgage loans, any such limitation
under the state's usury law would not apply to the mortgage loans.
In any state in which application of Title V has been expressly
rejected or a provision limiting discount points or other charges is adopted, no
mortgage loan originated after the date of the state action will be eligible for
inclusion in a trust fund unless the mortgage loan provides:
o for the interest rate, discount points and charges as are
permitted in that state, or
o that the terms of the loan shall be construed in accordance
with the laws of another state under which the interest rate,
discount points and charges would not be usurious, and the
borrower's counsel has rendered an opinion that the choice of
law provision would be given effect.
Statutes differ in their provisions as to the consequences of a
usurious loan. One group of statutes requires the lender to forfeit the interest
due above the applicable limit or impose a specified penalty. Under this
statutory scheme, the borrower may cancel the recorded mortgage or deed of trust
upon paying its debt with lawful interest, and the lender may foreclose, but
only for the debt plus lawful interest. A second group of statutes is more
severe. A violation of this type of usury law results in the invalidation of the
transaction, permitting the borrower to cancel the recorded mortgage or deed of
trust without any payment or prohibiting the lender from foreclosing.
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LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
The mortgaged properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply together
with an inability to remedy a failure could result in a material decrease in the
value of a mortgaged property which could, together with the possibility of
limited alternative uses for a particular mortgaged property--e.g., a nursing or
convalescent home or hospital--result in a failure to realize the full principal
amount of the related mortgage loan. Mortgages on mortgaged properties which are
owned by the borrower under a condominium form of ownership are subject to the
declaration, by-laws and other rules and regulations of the condominium
association. Mortgaged properties which are hotels or motels may present
additional risk. Hotels and motels are typically operated pursuant to franchise,
management and operating agreements which may be terminable by the operator. In
addition, the transferability of the hotel's operating, liquor and other
licenses to the entity acquiring the hotel either through purchases or
foreclosure is subject to the vagaries of local law requirements. Moreover,
mortgaged properties which are multifamily residential properties may be subject
to rent control laws, which could impact the future cash flows of these
properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and
rules promulgated thereunder, in order to protect individuals with disabilities,
public accommodations such as hotels, restaurants, shopping centers, hospitals,
schools and social service center establishments must remove architectural and
communication barriers which are structural in nature from existing places of
public 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 site, owner, landlord or other applicable person. In
addition to imposing a possible financial burden on the Borrower in its capacity
as owner or landlord, the ADA may also impose these types of requirements on a
foreclosing lender who succeeds to the interest of the Borrower as owner of
landlord. Furthermore, since the "readily achievable" standard may vary
depending on the financial condition of the owner or landlord, a foreclosing
lender who is financially more capable than the Borrower of complying with the
requirements of the ADA may be subject to more stringent requirements than those
to which the Borrower is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, a borrower who enters military service after the origination of a
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 borrowers 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 borrowers 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 that may be
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affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the mortgage loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of certificates, and would not be covered by advances or, to
the extent set forth 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 the servicer to
foreclose on an affected mortgage loan during the borrower's period of active
duty status, and, under certain circumstances, during an additional three month
period thereafter. Thus, in the event that an affected mortgage loan goes into
default, there may be delays and losses occasioned as a result of the Relief
Act.
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 statute can be seized by the government if the property
was used in, or purchased with the proceeds of, such crimes. Under procedures
contained in the Comprehensive Crime Control Act of 1984, the 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.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of offered certificates
is based on the advice of Brown & Wood LLP or Cadwalader, Wickersham & Taft or
Latham & Watkins or such other counsel as may be specified in the related
prospectus supplement, counsel to Morgan Stanley Dean Witter Capital I Inc..
This summary is based on laws, regulations, including REMIC Regulations, rulings
and decisions now in effect or, with respect to regulations, proposed, all of
which are subject to change either prospectively or retroactively. This summary
does not address the federal income tax consequences of an investment in
certificates applicable to all categories of investors, some of which -- for
example, banks and insurance companies -- may be subject to special rules.
Prospective investors should consult their tax advisors regarding the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of certificates.
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GENERAL
The federal income tax consequences to certificateholders will vary
depending on whether an election is made to treat the trust fund relating to a
particular series of certificates as a REMIC under the Code. The prospectus
supplement for each series of certificates will specify whether a REMIC election
will be made.
GRANTOR TRUST FUNDS
If a REMIC election is not made, Brown & Wood LLP or Cadwalader,
Wickersham & Taft or Latham & Watkins or such other counsel as may be specified
in the related prospectus supplement will deliver its opinion that the trust
fund will not be classified as an association taxable as a corporation and that
the trust fund will be classified as a grantor trust under subpart E, Part I of
subchapter J of Chapter 1 of Subtitle A of the Code. In this case, owners of
certificates will be treated for federal income tax purposes as owners of a
portion of the trust fund's assets as described in this section of the
prospectus.
A. SINGLE CLASS OF GRANTOR TRUST CERTIFICATES
Characterization. The trust fund may be created with one class of
grantor trust certificates. In this case, each grantor trust certificateholder
will be treated as the owner of a pro rata undivided interest in the interest
and principal portions of the trust fund represented by the grantor trust
certificates and will be considered the equitable owner of a pro rata undivided
interest in each of the mortgage loans and MBS in the pool. Any amounts received
by a grantor trust certificateholder in lieu of amounts due with respect to any
mortgage loan or MBS because of a default or delinquency in payment will be
treated for federal income tax purposes as having the same character as the
payments they replace.
Each grantor trust certificateholder will be required to report on its
federal income tax return in accordance with the grantor trust
certificateholder's method of accounting its pro rata share of the entire income
from the mortgage loans in the trust fund represented by grantor trust
certificates, including interest, OID, if any, prepayment fees, assumption fees,
any gain recognized upon an assumption and late payment charges received by the
master servicer. Under Code Sections 162 or 212 each grantor trust
certificateholder will be entitled to deduct its pro rata share of servicing
fees, prepayment fees, assumption fees, any loss recognized upon an assumption
and late payment charges retained by the master servicer, provided that the
amounts are reasonable compensation for services rendered to the trust fund.
Grantor trust certificateholders that are individuals, estates or trusts will be
entitled to deduct their share of expenses as itemized deductions only to the
extent these expenses plus all other Code Section 212 expenses exceed two
percent of its adjusted gross income. In addition, the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds the applicable amount under Code Section
68(b)--which amount will be adjusted for inflation--will be reduced by the
lesser of
o 3% of the excess of adjusted gross income over the applicable
amount and
o 80% of the amount of itemized deductions otherwise allowable
for such taxable year.
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In general, a grantor trust certificateholder using the CASH METHOD OF
ACCOUNTING must take into account its pro rata share of income as and deductions
as and when collected by or paid to the master servicer or, with respect to
original issue discount or certain other income items for which the
certificateholder has made an election, as the amounts are accrued by the trust
fund on a constant interest basis, and will be entitled to claim its pro rata
share of deductions, subject to the foregoing limitations, when the amounts are
paid or the certificateholder would otherwise be entitled to claim the
deductions had it held the mortgage loans or MBS directly. A grantor trust
certificateholder using an ACCRUAL METHOD OF ACCOUNTING must take into account
its pro rata share of income as payment becomes due or is made to the master
servicer, whichever is earlier and may deduct its pro rata share of expense
items, subject to the foregoing limitations, when the amounts are paid or the
certificateholder otherwise would be entitled to claim the deductions had it
held the mortgage loans or MBS directly. If the servicing fees paid to the
master servicer are deemed to exceed reasonable servicing compensation, the
amount of the excess could be considered as an ownership interest retained by
the master servicer or any person to whom the master servicer assigned for value
all or a portion of the servicing fees in a portion of the interest payments on
the mortgage loans and MBS. The mortgage loans and MBS would then be subject to
the "coupon stripping" rules of the Code discussed below under "--Stripped Bonds
and Coupons."
Unless otherwise specified in the related prospectus supplement or
otherwise provided below in this section of the prospectus, as to each series of
certificates, counsel to Morgan Stanley Dean Witter Capital I Inc. will have
advised Morgan Stanley Dean Witter Capital I Inc. that:
o a grantor trust certificate owned by a "domestic building and
loan association" within the meaning of Code Section
7701(a)(19) representing principal and interest payments on
mortgage loans or MBS will be considered to represent "loans .
. . secured by an interest in real property which is . . .
residential property" within the meaning of Code Section
7701(a)(19)(C)(v), to the extent that the mortgage loans or
MBS represented by that grantor trust certificate are of a
type described in that Code section;
o a grantor trust certificate owned by a real estate investment
trust representing an interest in mortgage loans or MBS will
be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(4)(A), and interest income on
the mortgage loans or MBS will be considered "interest on
obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), to the extent that the
mortgage loans or MBS represented by that grantor trust
certificate are of a type described in that Code section; and
o a grantor trust certificate owned by a REMIC will represent
"obligation[s] . . . which [are] principally secured by an
interest in real property" within the meaning of Code Section
860G(a)(3).
The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application of
Code Section 593(d) to any taxable year beginning after December 31, 1995.
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Stripped Bonds and Coupons. Certain trust funds may consist of
government securities that constitute "stripped bonds" or "stripped coupons" as
those terms are defined in section 1286 of the Code, and, as a result, these
assets would be subject to the stripped bond provisions of the Code. Under these
rules, these government securities are treated as having original issue discount
based on the purchase price and the stated redemption price at maturity of each
Security. As such, grantor trust certificateholders would be required to include
in income their pro rata share of the original issue discount on each Government
Security recognized in any given year on an economic accrual basis even if the
grantor trust certificateholder is a cash method taxpayer. Accordingly, the sum
of the income includible to the grantor trust certificateholder in any taxable
year may exceed amounts actually received during such year.
Premium. The price paid for a grantor trust certificate by a holder
will be allocated to the holder's undivided interest in each mortgage loan or
MBS based on each asset's relative fair market value, so that the holder's
undivided interest in each asset will have its own tax basis. A grantor trust
certificateholder that acquires an interest in mortgage loans or MBS at a
premium may elect to amortize the premium under a constant interest method,
provided that the underlying mortgage loans with respect to the mortgage loans
or MBS were originated after September 27, 1985. Premium allocable to mortgage
loans originated on or before September 27, 1985 should be allocated among the
principal payments on such mortgage loans and allowed as an ordinary deduction
as principal payments are made. Amortizable bond premium will be treated as an
offset to interest income on such grantor trust certificate. The basis for such
grantor trust certificate will be reduced to the extent that amortizable premium
is applied to offset interest payments. It is not clear whether a reasonable
prepayment assumption should be used in computing amortization of premium
allowable under Code Section 171. A certificateholder that makes this election
for a mortgage loan or MBS or any other debt instrument that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
certificateholder acquires during the year of the election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a grantor trust certificate representing an
interest in a mortgage loan or MBS acquired at a premium should recognize a loss
if a mortgage loan or an Underlying Mortgage Loan with respect to an asset
prepays in full, equal to the difference between the portion of the prepaid
principal amount of such mortgage loan or underlying mortgage loan that is
allocable to the certificate and the portion of the adjusted basis of the
certificate that is allocable to such mortgage loan or underlying mortgage loan.
If a reasonable prepayment assumption is used to amortize the premium, it
appears that such a loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.
The Internal Revenue Service has issued Amortizable Bond Premium
Regulations. The Amortizable Bond Premium Regulations specifically do not apply
to prepayable debt instruments or any pool of debt instruments the yield on
which may be affected by prepayments, such as the trust fund, which are subject
to Section 1272(a)(6) of the Code. Absent further guidance from the IRS and to
the extent set forth in the related prospectus supplement, the trustee will
account for amortizable bond premium in the manner described in this section.
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Prospective purchasers should consult their tax advisors regarding amortizable
bond premium and the Amortizable Bond Premium Regulations.
Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described in this prospectus, the OID
Regulations will be applicable to a grantor trust certificateholder's interest
in those mortgage loans or MBS meeting the conditions necessary for these
sections to apply. Rules regarding periodic inclusion of OID income are
applicable to mortgages of corporations originated after May 27, 1969, mortgages
of noncorporate borrowers other than individuals originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Such OID could
arise by the financing of points or other charges by the originator of the
mortgages in an amount greater than a statutory de minimis exception to the
extent that the points are not currently deductible under applicable Code
provisions or are not for services provided by the lender. OID generally must be
reported as ordinary gross income as it accrues under a constant interest
method. See "--Multiple Classes of Grantor Trust Certificates--Accrual of
Original Issue Discount" below.
Market Discount. A grantor trust certificateholder that acquires an
undivided interest in mortgage loans or MBS may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an undivided
interest in the asset is considered to have been purchased at a "market
discount." Generally, the amount of market discount is equal to the excess of
the portion of the principal amount of the mortgage loan or MBS allocable to the
holder's undivided interest over the holder's tax basis in such interest. Market
discount with respect to a grantor trust certificate will be considered to be
zero if the amount allocable to the grantor trust certificate is less than 0.25%
of the grantor trust certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment, whether a scheduled
payment or a prepayment, or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986 shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time of such payment. The amount of accrued market discount for purposes of
determining the tax treatment of subsequent principal payments or dispositions
of the market discount bond is to be reduced by the amount so treated as
ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described in
the relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
grantor trust certificate is issued with OID, the amount of market discount that
accrues during any accrual period would be equal to the product of
o the total remaining market discount and
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o a fraction, the numerator of which is the OID accruing during
the period and the denominator of which is the total remaining
OID at the beginning of the accrual period.
For grantor trust certificates issued without OID, the amount of market discount
that accrues during a period is equal to the product of
o the total remaining market discount and
o a fraction, the numerator of which is the amount of stated
interest paid during the accrual period and the denominator of
which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period.
For purposes of calculating market discount under any of the above methods in
the case of instruments, such as the grantor trust certificates, that provide
for payments that may be accelerated by reason of prepayments of other
obligations securing such instruments, the same prepayment assumption applicable
to calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a grantor trust certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a grantor trust certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry the grantor trust certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which the market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
Election to Treat All Interest as OID. The OID Regulations permit a
certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method for certificates acquired on or after April 4,
1994. If this election were to be made with respect to a grantor trust
certificate with market discount, the certificateholder would be deemed to have
made an election to include in income currently market discount with respect to
all other debt instruments having market discount that such certificateholder
acquires during the year of the election or thereafter. Similarly, a
certificateholder that makes this election for a certificate that is acquired at
a premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
certificateholder owns or acquires. See "--Premium" in this prospectus. The
election to accrue interest, discount and premium on a constant yield method
with respect to a certificate is irrevocable without consent of the IRS.
Anti-Abuse Rule. The IRS can apply or depart from the rules contained
in the OID Regulations as necessary or appropriate to achieve a reasonable
result where a principal purpose in structuring a mortgage loan, MBS, or grantor
trust certificate or applying the otherwise applicable rules is to achieve a
result that is unreasonable in light of the purposes of the
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applicable statutes, which generally are intended to achieve the clear
reflection of income for both issuers and holders of debt instruments.
B. MULTIPLE CLASSES OF GRANTOR TRUST CERTIFICATES
1. Stripped Bonds and Stripped Coupons
Pursuant to Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from ownership
of the right to receive some or all of the principal payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of Code Sections 1271
through 1288, Code Section 1286 treats a stripped bond or a stripped coupon as
an obligation issued on the date that such stripped interest is created.
Excess Servicing will be Treated Under the Stripped Bond Rules. If the
Excess Servicing fee is less than 100 basis points, i.e., 1% interest on the
principal balance of the assets in the trust fund, or the certificates are
initially sold with a de minimis discount, assuming no prepayment assumption is
required, any non-de minimis discount arising from a subsequent transfer of the
certificates should be treated as market discount. The IRS appears to require
that reasonable servicing fees be calculated on an asset by asset basis, which
could result in some mortgage loans or MBS being treated as having more than 100
basis points of interest stripped off. See "--Non-REMIC Certificates" and
"Multiple Classes of Grantor Trust Certificates--Stripped Bonds and Stripped
Coupons".
Although not entirely clear, a Stripped Bond Certificate generally
should be treated as an interest in mortgage loans or MBS issued on the day the
certificate is purchased for purposes of calculating any OID. Generally, if the
discount on a mortgage loan or MBS is larger than a de minimis amount, as
calculated for purposes of the OID rules, a purchaser of such a certificate will
be required to accrue the discount under the OID rules of the Code. See
"--Non-REMIC Certificates" and "--Single Class of Grantor Trust
Certificates--Original Issue Discount". However, a purchaser of a Stripped Bond
Certificate will be required to account for any discount on the mortgage loans
or MBS as market discount rather than OID if either
o the amount of OID with respect to the mortgage loans or MBS is
treated as zero under the OID de minimis rule when the
certificate was stripped or
o no more than 100 basis points, including any Excess Servicing,
is stripped off of the trust fund's mortgage loans or MBS.
Pursuant to Revenue Procedure 91-49, issued on August 8, 1991, purchasers of
Stripped Bond Certificates using an inconsistent method of accounting must
change their method of accounting and request the consent of the IRS to the
change in their accounting method on a statement attached to their first timely
tax return filed after August 8, 1991.
The precise tax treatment of Stripped Coupon Certificates is
substantially uncertain. The Code could be read literally to require that OID
computations be made for each payment from each mortgage loan or MBS. Unless
otherwise specified in the related prospectus supplement, all payments from a
mortgage loan or MBS underlying a Stripped Coupon Certificate will be treated as
a single installment obligation subject to the OID rules of the Code, in which
case, all
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payments from the mortgage loan or MBS would be included in the stated
redemption price at maturity for the mortgage loan or MBS for purposes of
calculating income on the certificate under the OID rules of the Code.
It is unclear under what circumstances, if any, the prepayment of
mortgage loans or MBS will give rise to a loss to the holder of a Stripped Bond
Certificate purchased at a premium or a Stripped Coupon Certificate. If the
certificate is treated as a single instrument rather than an interest in
discrete mortgage loans and the effect of prepayments is taken into account in
computing yield with respect to the grantor trust certificate, it appears that
no loss will be available as a result of any particular prepayment unless
prepayments occur at a rate sufficiently faster than the assumed prepayment rate
so that the certificateholder will not recover its investment. However, if the
certificate is treated as an interest in discrete mortgage loans or MBS, or if
no prepayment assumption is used, then when a mortgage loan or MBS is prepaid,
the holder of the certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the certificate that is allocable to the
mortgage loan or MBS.
Holders of Stripped Bond Certificates and Stripped Coupon Certificates
are urged to consult with their own tax advisors regarding the proper treatment
of these certificates for federal income tax purposes.
Treatment of Certain Owners. Several Code sections provide beneficial
treatment to certain taxpayers that invest in mortgage loans or MBS of the type
that make up the trust fund. With respect to these Code sections, no specific
legal authority exists regarding whether the character of the grantor trust
certificates, for federal income tax purposes, will be the same as that of the
underlying mortgage loans or MBS. While Code Section 1286 treats a stripped
obligation as a separate obligation for purposes of the Code provisions
addressing OID, it is not clear whether such characterization would apply with
regard to these other Code sections. Although the issue is not free from doubt,
each class of grantor trust certificates, to the extent set forth in the related
prospectus supplement, should be considered to represent "real estate assets"
within the meaning of Code Section 856(c)(4)(A) and "loans . . . secured by, an
interest in real property which is . . . residential real property" within the
meaning of Code Section 7701(a)(19)(C)(v), and interest income attributable to
grantor trust certificates should be considered to represent "interest on
obligations secured by mortgages on real property" within the meaning of Code
Section 856(c)(3)(B), provided that in each case the underlying mortgage loans
or MBS and interest on such mortgage loans or MBS qualify for such treatment.
Prospective purchasers to which such characterization of an investment in
certificates is material should consult their own tax advisors regarding the
characterization of the grantor trust certificates and the income therefrom.
Unless otherwise specified in the related prospectus supplement, grantor trust
certificates will be "obligation[s] . . . which [are] principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A) and
"permitted assets" within the meaning of Code Section 860L(c).
2. Grantor Trust Certificates Representing Interests in Loans
Other Than Adjustable Rate Loans
The original issue discount rules of Code Sections 1271 through 1275
will be applicable to a certificateholder's interest in those mortgage loans or
MBS as to which the conditions for the application of those sections are met.
Rules regarding periodic inclusion of original issue
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discount in income are applicable to mortgages of corporations originated after
May 27, 1969, mortgages of noncorporate borrowers -- other than individuals --
originated after July 1, 1982, and mortgages of individuals originated after
March 2, 1984. Under the OID Regulations, such original issue discount could
arise by the charging of points by the originator of the mortgage in an amount
greater than the statutory de minimis exception, including a payment of points
that is currently deductible by the borrower under applicable Code provisions,
or under certain circumstances, by the presence of "teaser" rates on the
mortgage loans or MBS. OID on each grantor trust certificate must be included in
the owner's ordinary income for federal income tax purposes as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, in advance of receipt of the cash attributable to such
income. The amount of OID required to be included in an owner's income in any
taxable year with respect to a grantor trust certificate representing an
interest in mortgage loans or MBS other than adjustable rate loans likely will
be computed as described below under "--Accrual of Original Issue Discount." The
following discussion is based in part on the OID Regulations and in part on the
provisions of the Tax Reform Act of 1986. The OID Regulations generally are
effective for debt instruments issued on or after April 4, 1994, but may be
relied upon as authority with respect to debt instruments, such as the grantor
trust certificates, issued after December 21, 1992. Alternatively, proposed
Treasury regulations issued December 21, 1992 may be treated as authority for
debt instruments issued after December 21, 1992 and prior to April 4, 1994, and
proposed Treasury regulations issued in 1986 and 1991 may be treated as
authority for instruments issued before December 21, 1992. In applying these
dates, the issue date of the mortgage loans or MBS should be used, or, in the
case of Stripped Bond Certificates or Stripped Coupon Certificates, the date
such certificates are acquired. The holder of a certificate should be aware,
however, that neither the proposed OID Regulations nor the OID Regulations
adequately address certain issues relevant to prepayable securities.
Under the Code, the mortgage loans or MBS underlying the grantor trust
certificate will be treated as having been issued on the date they were
originated with an amount of OID equal to the excess of such mortgage asset's
stated redemption price at maturity over its issue price. The issue price of a
mortgage loan or MBS is generally the amount lent to the lender, which may be
adjusted to take into account certain loan origination fees. The stated
redemption price at maturity of a mortgage loan or MBS is the sum of all
payments to be made on these assets other than payments that are treated as
qualified stated interest payments. The accrual of this OID, as described below
under "--Accrual of Original Issue Discount," will, to the extent set forth in
the related prospectus supplement, utilize the Prepayment Assumption on the
issue date of such grantor trust certificate, and will take into account events
that occur during the calculation period. The Prepayment Assumption will be
determined in the manner prescribed by regulations that have not yet been
issued. In the absence of such regulations, the Prepayment Assumption used will
be the prepayment assumption that is used in determining the offering price of
such certificate. No representation is made that any certificate will prepay at
the Prepayment Assumption or at any other rate.
Accrual of Original Issue Discount. Generally, the owner of a grantor
trust certificate must include in gross income the sum of the "daily portions,"
as defined below in this section, of the OID on the grantor trust certificate
for each day on which it owns the certificate, including the date of purchase
but excluding the date of disposition. In the case of an original owner, the
daily portions of OID with respect to each component generally will be
determined as set forth
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under the OID Regulations. A calculation will be made by the master servicer or
other entity specified in the related prospectus supplement of the portion of
OID that accrues during each successive monthly accrual period, or shorter
period from the date of original issue, that ends on the day in the calendar
year corresponding to each of the Distribution Dates on the grantor trust
certificates, or the day prior to each such date. This will be done, in the case
of each full month accrual period, by
o adding (1) the present value at the end of the accrual
period--determined by using as a discount factor the original
yield to maturity of the respective component under the
Prepayment Assumption--of all remaining payments to be
received under the Prepayment Assumption on the respective
component and (2) any payments included in the stated
redemption price at maturity received during such accrual
period, and
o subtracting from that total the "adjusted issue price" of the
respective component at the beginning of such accrual period.
The adjusted issue price of a grantor trust certificate at the beginning of the
first accrual period is its issue price; the adjusted issue price of a grantor
trust certificate at the beginning of a subsequent accrual period is the
adjusted issue price at the beginning of the immediately preceding accrual
period plus the amount of OID allocable to that accrual period reduced by the
amount of any payment other than a payment of qualified stated interest made at
the end of or during that accrual period. The OID accruing during such accrual
period will then be divided by the number of days in the period to determine the
daily portion of OID for each day in the period. With respect to an initial
accrual period shorter than a full monthly accrual period, the daily portions of
OID must be determined according to an appropriate allocation under any
reasonable method.
Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of an
obligation is reduced when the obligation is acquired after its initial issuance
at a price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if the mortgage loans or MBS acquired by a certificateholder are purchased at a
price equal to the then unpaid principal amount of the asset, no original issue
discount attributable to the difference between the issue price and the original
principal amount of the asset--i.e., points--will be includible by the holder.
Other original issue discount on the mortgage loans or MBS--e.g., that arising
from a "teaser" rate--would still need to be accrued.
3. Grantor Trust Certificates Representing Interests in
Adjustable Rate Loans
The OID Regulations do not address the treatment of instruments, such
as the grantor trust certificates, which represent interests in adjustable rate
loans. Additionally, the IRS has not issued guidance under the Code's coupon
stripping rules with respect to such instruments. In the absence of any
authority, the master servicer will report Stripped ARM Obligations to holders
in a manner it believes is consistent with the rules described above under the
heading "--Grantor Trust Certificates Representing Interests in Loans Other Than
Adjustable Rate Loans" and with
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the OID Regulations. In general, application of these rules may require
inclusion of income on a Stripped ARM Obligation in advance of the receipt of
cash attributable to such income. Further, the addition of Deferred Interest to
the principal balance of an adjustable rate loan may require the inclusion of
the amount in the income of the grantor trust certificateholder when the amount
accrues. Furthermore, the addition of Deferred Interest to the grantor trust
certificate's principal balance will result in additional income, including
possibly OID income, to the grantor trust certificateholder over the remaining
life of such grantor trust certificates.
Because the treatment of Stripped ARM Obligations is uncertain,
investors are urged to consult their tax advisors regarding how income will be
includible with respect to such certificates.
C. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE
Sale or exchange of a grantor trust certificate prior to its maturity
will result in gain or loss equal to the difference, if any, between the amount
received and the owner's adjusted basis in the grantor trust certificate. Such
adjusted basis generally will equal the seller's purchase price for the grantor
trust certificate, increased by the OID included in the seller's gross income
with respect to the grantor trust certificate, and reduced by principal payments
on the grantor trust certificate previously received by the seller. Such gain or
loss will be capital gain or loss to an owner for which a grantor trust
certificate is a "capital asset" within the meaning of Code Section 1221, except
to the extent described above with respect to market discount, and will
generally be long-term capital gain if the grantor trust certificate has been
owned for more than one year. Long-term capital gains of individuals are subject
to reduced maximum tax rates while capital gains recognized by individuals on
capital assets held twelve months or less are generally subject to ordinary
income tax rates. The use of capital losses is limited.
It is possible that capital gain realized by holders of one or more
classes of grantor trust certificates could be considered gain realized upon the
disposition of property that was part of a "conversion transaction." A sale of a
grantor trust certificate will be part of a conversion transaction if
substantially all of the holder's expected return is attributable to the time
value of the holder's net investment, and:
o the holder entered the contract to sell the grantor trust
certificate substantially contemporaneously with acquiring the
grantor trust certificate;
o the grantor trust certificate is part of a straddle;
o the grantor trust certificate is marketed or sold as producing
capital gain; or
o other transactions to be specified in Treasury regulations
that have not yet been issued.
If the sale or other disposition of a grantor trust certificate is part of a
conversion transaction, all or any portion of the gain realized upon the sale or
other disposition would be treated as ordinary income instead of capital gain.
Grantor trust certificates will be "evidences of indebtedness" within
the meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a grantor trust certificate by a
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bank or a thrift institution to which such section applies will be treated as
ordinary income or loss.
D. NON-U.S. PERSONS
Generally, to the extent that a grantor trust certificate evidences
ownership in underlying mortgage loans or MBS that were issued on or before July
18, 1984, interest or OID paid by the person required to withhold tax under Code
Section 1441 or 1442 to
o an owner that is not a U.S. Person or
o a grantor trust certificateholder holding on behalf of an
owner that is not a U.S. Person
will be subject to federal income tax, collected by withholding, at a rate of
30% or such lower rate as may be provided for interest by an applicable tax
treaty, unless such income is effectively connected with a U.S. trade or
business of such owner or beneficial owner.
Accrued OID recognized by the owner on the sale or exchange of such a grantor
trust certificate also will be subject to federal income tax at the same rate.
Generally, such payments would not be subject to withholding to the extent that
a grantor trust certificate evidences ownership in mortgage loans or MBS issued
after July 18, 1984, by natural persons if such grantor trust certificateholder
complies with certain identification requirements, including delivery of a
statement, signed by the grantor trust certificateholder under penalties of
perjury, certifying that the grantor trust certificateholder is not a U.S.
Person and providing the name and address of the grantor trust
certificateholder. To the extent payments to grantor trust certificateholders
that are not U.S. Persons are payments of "contingent interest" on the
underlying mortgage loans or MBS, or the grantor trust certificateholder is
ineligible for the exemption described in the preceding sentence, the 30%
withholding tax will apply unless such withholding taxes are reduced or
eliminated by an applicable tax treaty and such holder meets the eligibility and
certification requirements necessary to obtain the benefits of such treaty.
Additional restrictions apply to mortgage loans or MBS where the borrower is not
a natural person in order to qualify for the exemption from withholding. If
capital gain derived from the sale, retirement or other disposition of a grantor
trust certificate is effectively connected with a U.S. trade or business of a
grantor trust certificateholder that is not a U.S. Person, the certificateholder
will be taxed on the net gain under the graduated U.S. federal income tax rates
applicable to U.S. Persons and, with respect to grantor trust certificates held
by or on behalf of corporations, also may be subject to branch profits tax. In
addition, if the trust fund acquires a United States real property interest
through foreclosure, deed in lieu of foreclosure or otherwise on a mortgage loan
or MBS secured by such an interest, which for this purpose includes real
property located in the United States and the Virgin Islands, a grantor trust
certificateholder that is not a U.S. Person will potentially be subject to
federal income tax on any gain attributable to such real property interest that
is allocable to such holder. Non-U.S. Persons should consult their tax advisors
regarding the application to them of the foregoing rules.
E. INFORMATION REPORTING AND BACKUP WITHHOLDING
The master servicer will furnish or make available, within a reasonable
time after the end of each calendar year, to each person who was a
certificateholder at any time during such year,
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the information as may be deemed necessary or desirable to assist
certificateholders in preparing their federal income tax returns, or to enable
holders to make the information available to beneficial owners or financial
intermediaries that hold such certificates as nominees on behalf of beneficial
owners. If a holder, beneficial owner, financial intermediary or other recipient
of a payment on behalf of a beneficial owner fails to supply a certified
taxpayer identification number or if the Secretary of the Treasury determines
that such person has not reported all interest and dividend income required to
be shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments to registered owners who are not "exempt
recipients." In addition, upon the sale of a grantor trust certificate to, or
through, a broker, the broker must withhold 31% of the entire purchase price,
unless either
o the broker determines that the seller is a corporation or
other exempt recipient, or
o the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Person,
certifies that the seller is a Non-U.S. Person, and other
conditions are met.
Such a sale must also be reported by the broker to the IRS, unless either
o the broker determines that the seller is an exempt recipient
or
o the seller certifies its non-U.S. Person status and other
conditions are met.
Certification of the registered owner's non-U.S. Person status normally would be
made on IRS Form W-8 under penalties of perjury, although in some cases it may
be possible to submit other documentary evidence. Any amounts deducted and
withheld from a distribution to a recipient would be allowed as a credit against
the recipient's federal income tax liability.
On October 6, 1997, the Treasury Department issued new regulations
which make certain modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
REMICS
The trust fund relating to a series of certificates may elect to be
treated as a REMIC. Qualification as a REMIC requires ongoing compliance with
certain conditions. Although a REMIC is not generally subject to federal income
tax (see, however "--Taxation of Owners of REMIC Residual Certificates" and
"--Prohibited Transactions and Other Taxes" below), if a trust fund with respect
to which a REMIC election is made fails to comply with one or more of the
ongoing requirements of the Code for REMIC status during any taxable year,
including the implementation of restrictions on the purchase and transfer of the
residual interests in a REMIC as described below under "--Taxation of Owners of
REMIC Residual Certificates," the Code provides that a trust fund will not be
treated as a REMIC for the year and thereafter. In that event, the entity may be
taxable as a separate corporation, and the REMIC Certificates may not be
accorded the status or given the tax treatment described below in this section.
While the Code authorizes the Treasury Department to issue regulations providing
relief in the event of an
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inadvertent termination of the status of a trust fund as a REMIC, no the
regulations have been issued. Any relief, moreover, may be accompanied by
sanctions, such as the imposition of a corporate tax on all or a portion of the
REMIC's income for the period in which the requirements for such status are not
satisfied. With respect to each trust fund that elects REMIC status, Brown &
Wood LLP or Cadwalader, Wickersham & Taft or Latham & Watkins or such other
counsel as may be specified in the related prospectus supplement will deliver
its opinion generally to the effect that, under then existing law and assuming
compliance with all provisions of the related Agreement, the trust fund will
qualify as a REMIC, and the related certificates will be considered to be REMIC
Regular Certificates or a sole class of REMIC Residual Certificates. The related
prospectus supplement for each series of Certificates will indicate whether the
trust fund will make a REMIC election and whether a class of certificates will
be treated as a regular or residual interest in the REMIC.
A "qualified mortgage" for REMIC purposes includes any obligation,
including certificates of participation in such an obligation and any "regular
interest" in another REMIC, that is principally secured by an interest in real
property and that is transferred to the REMIC within a prescribed time period in
exchange for regular or residual interests in the REMIC.
In general, with respect to each series of certificates for which a
REMIC election is made,
o certificates held by a thrift institution taxed as a "domestic
building and loan association" will constitute assets
described in Code Section 7701(a)(19)(C);
o certificates held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code
Section 856(c)(4)(A); and
o interest on certificates held by a real estate investment
trust will be considered "interest on obligations secured by
mortgages on real property" within the meaning of Code Section
856(c)(3)(B).
If less than 95% of the REMIC's assets are assets qualifying under any of the
foregoing Code sections, the certificates will be qualifying assets only to the
extent that the REMIC's assets are qualifying assets.
Tiered REMIC Structures. For certain series of certificates, two or
more separate elections may be made to treat designated portions of the related
trust fund as REMICs for federal income tax purposes. Upon the issuance of any
such series of certificates, Brown & Wood LLP or Cadwalader, Wickersham & Taft
or Latham & Watkins or such other counsel as may be specified in the related
prospectus supplement, counsel to Morgan Stanley Dean Witter Capital I Inc.,
will deliver its opinion generally to the effect that, assuming compliance with
all provisions of the related Agreement, the Master REMIC as well as any
Subsidiary REMIC will each qualify as a REMIC, and the REMIC Certificates issued
by the Master REMIC and the Subsidiary REMIC or REMICs, respectively, will be
considered REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Other than the residual interest in a Subsidiary REMIC, only REMIC
Certificates issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC or REMICs and the
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Master REMIC will be treated as one REMIC solely for purposes of determining
whether the REMIC Certificates will be:
o "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code;
o "loans secured by an interest in real property" under Section
7701(a)(19)(C) of the Code; and
o whether the income on the certificates is interest described
in Section 856(c)(3)(B) of the Code.
A. TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount and Premium. The REMIC Regular Certificates may
be issued with OID. Generally, the OID, if any, will equal the difference
between the "stated redemption price at maturity" of a REMIC Regular Certificate
and its "issue price." Holders of any class of certificates issued with OID will
be required to include the OID in gross income for federal income tax purposes
as it accrues, in accordance with a constant interest method based on the
compounding of interest as it accrues rather than in accordance with receipt of
the interest payments. The following discussion is based in part on the OID
Regulations and in part on the provisions of the Tax Reform Act of 1986. Holders
of REMIC Regular Certificates should be aware, however, that the OID Regulations
do not adequately address certain issues relevant to prepayable securities, such
as the REMIC Regular Certificates.
Rules governing OID are set forth in Code Sections 1271 through 1273
and 1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated reinvestment
rate, if any, relating to the REMIC Regular Certificates and prescribe a method
for adjusting the amount and rate of accrual of the discount where the actual
prepayment rate differs from the Prepayment Assumption. Under the Code, the
Prepayment Assumption must be determined in the manner prescribed by
regulations, which regulations have not yet been issued. The legislative history
provides, however, that Congress intended the regulations to require that the
Prepayment Assumption be the prepayment assumption that is used in determining
the initial offering price of such REMIC Regular Certificates. The prospectus
supplement for each series of REMIC Regular Certificates will specify the
Prepayment Assumption to be used for the purpose of determining the amount and
rate of accrual of OID. No representation is made that the REMIC Regular
Certificates will prepay at the Prepayment Assumption or at any other rate.
In general, each REMIC Regular Certificate will be treated as a single
installment obligation issued with an amount of OID equal to the excess of its
"stated redemption price at maturity" over its "issue price." The issue price of
a REMIC Regular Certificate is the first price at which a substantial amount of
REMIC Regular Certificates of that class are first sold to the public (excluding
bond houses, brokers, underwriters or wholesalers). If less than a substantial
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amount of a particular class of REMIC Regular Certificates is sold for cash on
or prior to the Closing Date, the issue price for that class will be treated as
the fair market value of that class on the Closing Date. The issue price of a
REMIC Regular Certificate also includes the amount paid by an initial
certificateholder for accrued interest that relates to a period prior to the
issue date of the REMIC Regular Certificate. The stated redemption price at
maturity of a REMIC Regular Certificate includes the original principal amount
of the REMIC Regular Certificate, but generally will not include distributions
of interest if the distributions constitute "qualified stated interest."
Qualified stated interest generally means interest payable at a single fixed
rate or qualified variable rate provided that the interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the REMIC Regular Certificate. Interest is payable at a single fixed rate
only if the rate appropriately takes into account the length of the interval
between payments. Distributions of interest on REMIC Regular Certificates with
respect to which Deferred Interest will accrue will not constitute qualified
stated interest payments, and the stated redemption price at maturity of the
REMIC Regular Certificates includes all distributions of interest as well as
principal thereon.
Where the interval between the issue date and the first Distribution
Date on a REMIC Regular Certificate is longer than the interval between
subsequent Distribution Dates, the greater of any original issue discount,
disregarding the rate in the first period, and any interest foregone during the
first period is treated as the amount by which the stated redemption price at
maturity of the certificate exceeds its issue price for purposes of the de
minimis rule described below in this section. The OID Regulations suggest that
all interest on a long first period REMIC Regular Certificate that is issued
with non-de minimis OID, as determined under the foregoing rule, will be treated
as OID. Where the interval between the issue date and the first Distribution
Date on a REMIC Regular Certificate is shorter than the interval between
subsequent Distribution Dates, interest due on the first Distribution Date in
excess of the amount that accrued during the first period would be added to the
certificate's stated redemption price at maturity. REMIC Regular Certificates
should consult their own tax advisors to determine the issue price and stated
redemption price at maturity of a REMIC Regular Certificate.
Under the de minimis rule, OID on a REMIC Regular Certificate will be
considered to be zero if the OID is less than 0.25% of the stated redemption
price at maturity of the REMIC Regular Certificate multiplied by the weighted
average maturity of the REMIC Regular Certificate. For this purpose, the
weighted average maturity of the REMIC Regular Certificate is computed as the
sum of the amounts determined by multiplying the number of full years, i.e.,
rounding down partial years, from the issue date until each distribution in
reduction of stated redemption price at maturity is scheduled to be made by a
fraction, the numerator of which is the amount of each distribution included in
the stated redemption price at maturity of the REMIC Regular Certificate and the
denominator of which is the stated redemption price at maturity of the REMIC
Regular Certificate. Although currently unclear, it appears that the schedule of
the distributions should be determined in accordance with the Prepayment
Assumption. The Prepayment Assumption with respect to a series of REMIC Regular
Certificates will be set forth in the related prospectus supplement. Holders
generally must report de minimis OID pro rata as principal payments are
received, and the income will be capital gain if the REMIC Regular Certificate
is held as a capital asset. However, accrual method holders may elect to accrue
all de minimis OID as well as market discount under a constant interest method.
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The prospectus supplement with respect to a trust fund may provide for
Super-Premium Certificates. The income tax treatment of such REMIC Regular
Certificates is not entirely certain. For information reporting purposes, the
trust fund intends to take the position that the stated redemption price at
maturity of such REMIC Regular Certificates is the sum of all payments to be
made on such REMIC Regular Certificates determined under the Prepayment
Assumption, with the result that such REMIC Regular Certificates would be issued
with OID. The calculation of income in this manner could result in negative
original issue discount, which delays future accruals of OID rather than being
immediately deductible when prepayments on the mortgage loans or MBS exceed
those estimated under the Prepayment Assumption. The IRS might contend, however,
that certain contingent payment rules contained in final regulations issued on
June 11, 1996, with respect to original issue discount, should apply to such
certificates. Although such rules are not applicable to instruments governed by
Code Section 1272(a)(6), they represent the only guidance regarding the current
views of the IRS with respect to contingent payment instruments. These proposed
regulations, if applicable, generally would require holders of Regular Interest
Certificates to take the payments considered contingent interest payments into
income on a yield to maturity basis in accordance with a schedule of projected
payments provided by Morgan Stanley Dean Witter Capital I Inc. and to make
annual adjustments to income to account for the difference between actual
payments received and projected payment amounts accrued. In the alternative, the
IRS could assert that the stated redemption price at maturity of such REMIC
Regular Certificates should be limited to their principal amount, subject to the
discussion below under "--Accrued Interest Certificates", so that such REMIC
Regular Certificates would be considered for federal income tax purposes to be
issued at a premium. If such a position were to prevail, the rules described
below under "--Premium" would apply. It is unclear when a loss may be claimed
for any unrecovered basis for a Super-Premium Certificate. It is possible that a
holder of a Super-Premium Certificate may only claim a loss when its remaining
basis exceeds the maximum amount of future payments, assuming no further
prepayments or when the final payment is received with respect to such
Super-Premium Certificate.
Under the REMIC Regulations, if the issue price of a REMIC Regular
Certificate, other than REMIC Regular Certificate based on a Notional Amount,
does not exceed 125% of its actual principal amount, the interest rate is not
considered disproportionately high. Accordingly, such REMIC Regular Certificate
generally should not be treated as a Super-Premium Certificate and the rules
described below under "--Premium" should apply. However, it is possible that
holders of REMIC Regular Certificates issued at a premium, even if the premium
is less than 25% of such certificate's actual principal balance, will be
required to amortize the premium under an original issue discount method or
contingent interest method even though no election under Code Section 171 is
made to amortize such premium.
Generally, a REMIC Regular Certificateholder must include in gross
income the "daily portions" of the OID that accrues on a REMIC Regular
Certificate for each day a certificateholder holds the REMIC Regular
Certificate, including the purchase date but excluding the disposition date. In
the case of an original holder of a REMIC Regular Certificate, a calculation
will be made of the portion of the OID that accrues during each successive
period--"an accrual period"--that ends on the day in the calendar year
corresponding to a Distribution Date, or if Distribution Dates are on the first
day or first business day of the immediately preceding month, interest may be
treated as payable on the last day of the immediately preceding month, and
begins on the day after the end of the immediately preceding
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accrual period or on the issue date in the case of the first accrual period.
This will be done, in the case of each full accrual period, by
o adding (1) the present value at the end of the accrual period
-- determined by using as a discount factor the original yield
to maturity of the REMIC Regular Certificates as calculated
under the Prepayment Assumption -- of all remaining payments
to be received on the REMIC Regular Certificates under the
Prepayment Assumption and (2) any payments included in the
stated redemption price at maturity received during such
accrual period, and
o subtracting from that total the adjusted issue price of the
REMIC Regular Certificates at the beginning of such accrual
period.
The adjusted issue price of a REMIC Regular Certificate at the beginning of the
first accrual period is its issue price; the adjusted issue price of a REMIC
Regular Certificate at the beginning of a subsequent accrual period is the
adjusted issue price at the beginning of the immediately preceding accrual
period plus the amount of OID allocable to that accrual period and reduced by
the amount of any payment other than a payment of qualified stated interest made
at the end of or during that accrual period. The OID accrued during an accrual
period will then be divided by the number of days in the period to determine the
daily portion of OID for each day in the accrual period. The calculation of OID
under the method described above will cause the accrual of OID to either
increase or decrease -- but never below zero -- in a given accrual period to
reflect the fact that prepayments are occurring faster or slower than under the
Prepayment Assumption. With respect to an initial accrual period shorter than a
full accrual period, the "daily portions" of OID may be determined according to
an appropriate allocation under any reasonable method.
A subsequent purchaser of a REMIC Regular Certificate issued with OID
who purchases the REMIC Regular Certificate at a cost less than the remaining
stated redemption price at maturity will also be required to include in gross
income the sum of the daily portions of OID on that REMIC Regular Certificate.
In computing the daily portions of OID for such a purchaser, as well as an
initial purchaser that purchases at a price higher than the adjusted issue price
but less than the stated redemption price at maturity, however, the daily
portion is reduced by the amount that would be the daily portion for such day,
computed in accordance with the rules set forth above, multiplied by a fraction,
the numerator of which is the amount, if any, by which the price paid by such
holder for that REMIC Regular Certificate exceeds the following amount:
(1) the sum of the issue price plus the aggregate amount of OID
that would have been includible in the gross income of an
original REMIC Regular Certificateholder, who purchased the
REMIC Regular Certificate at its issue price, less
(2) any prior payments included in the stated redemption price at
maturity, and the denominator of which is the sum of the daily
portions for that REMIC Regular Certificate for all days
beginning on the date after the purchase date and ending on
the maturity date computed under the Prepayment Assumption.
A holder who pays an acquisition premium instead may elect to accrue OID by
treating the purchase as a purchase at original issue.
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Variable Rate REMIC Regular Certificates. REMIC Regular Certificates
may provide for interest based on a qualifying variable rate. Interest based on
a variable rate will constitute qualified stated interest and not contingent
interest for OID purposes if, generally:
o the interest is unconditionally payable at least annually;
o the issue price of the debt instrument does not exceed the
total noncontingent principal payments; and
o interest is based on a "qualified floating rate," an
"objective rate," a combination of a single fixed rate and one
or more "qualified floating rates," one "qualified inverse
floating rate," or a combination of "qualified floating rates"
that do not operate in a manner that significantly accelerates
or defers interest payments on the REMIC Regular Certificates.
The amount of OID with respect to a REMIC Regular Certificate bearing a
variable rate of interest will accrue in the manner described above under
"--Original Issue Discount and Premium" by assuming generally that the Index
used for the variable rate will remain fixed throughout the term of the
certificate at the rate applicable on the date they are issued. Appropriate
adjustments are made for the actual variable rate.
Although unclear at present, Morgan Stanley Dean Witter Capital I Inc.
intends to treat interest on a REMIC Regular Certificate that is a weighted
average of the net interest rates on mortgage loans as qualified stated
interest. In such case, the weighted average rate used to compute the initial
pass-through rate on the REMIC Regular Certificates will be deemed to be the
Index in effect through the life of the REMIC Regular Certificates. It is
possible, however, that the IRS may treat some or all of the interest on REMIC
Regular Certificates with a weighted average rate as taxable under the rules
relating to obligations providing for contingent payments. No guidance is
currently available as to how OID would be determined for debt instruments
subject to Code Section 1272(a)(6) that provide for contingent interest. The
treatment of REMIC Regular Certificates as contingent payment debt instruments
may affect the timing of income accruals on the REMIC Regular Certificates.
Election to Treat All Interest as OID. The OID Regulations permit a
certificateholder to elect to accrue all interest, discount (including de
minimis market discount or original issue discount) and premium in income as
interest, based on a constant yield method. If such an election were to be made
with respect to a REMIC Regular Certificate with market discount, the
certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such certificateholder acquires during the year of the
election or thereafter. Similarly, a certificateholder that makes this election
for a certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such certificateholder owns or acquires. See
"--Premium" below. The election to accrue interest, discount and premium on a
constant yield method with respect to a certificate is irrevocable without the
consent of the IRS.
Market Discount. A purchaser of a REMIC Regular Certificate may also be
subject to the market discount provisions of Code Sections 1276 through 1278.
Under these provisions and the OID Regulations, "market discount" equals the
excess, if any, of (1) the REMIC Regular
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Certificate's stated principal amount or, in the case of a REMIC Regular
Certificate with OID, the adjusted issue price, determined for this purpose as
if the purchaser had purchased such REMIC Regular Certificate from an original
holder, over (2) the price for such REMIC Regular Certificate paid by the
purchaser. A certificateholder that purchases a REMIC Regular Certificate at a
market discount will recognize income upon receipt of each distribution
representing amounts included in such certificate's stated redemption price at
maturity. In particular, under Section 1276 of the Code such a holder generally
will be required to allocate each such distribution first to accrued market
discount not previously included in income, and to recognize ordinary income to
that extent. A certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, the election will apply to all market
discount bonds acquired by the certificateholder on or after the first day of
the first taxable year to which the election applies.
Market discount with respect to a REMIC Regular Certificate will be
considered to be zero if the amount allocable to the REMIC Regular Certificate
is less than 0.25% of the REMIC Regular Certificate's stated redemption price at
maturity multiplied by the REMIC Regular Certificate's weighted average maturity
remaining after the date of purchase. If market discount on a REMIC Regular
Certificate is considered to be zero under this rule, the actual amount of
market discount must be allocated to the remaining principal payments on the
REMIC Regular Certificate, and gain equal to the allocated amount will be
recognized when the corresponding principal payment is made. Treasury
regulations implementing the market discount rules have not yet been issued;
therefore, investors should consult their own tax advisors regarding the
application of these rules and the advisability of making any of the elections
allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment, whether a scheduled
payment or a prepayment, or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986, shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time of the payment. The amount of accrued market discount for purposes of
determining the tax treatment of subsequent principal payments or dispositions
of the market discount bond is to be reduced by the amount so treated as
ordinary income.
The Code also grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury, rules described in
the legislative history will apply. Under those rules, the holder of a market
discount bond may elect to accrue market discount either on the basis of a
constant interest method rate or according to one of the following methods. For
REMIC Regular Certificates issued with OID, the amount of market discount that
accrues during a period is equal to the product of
1) the total remaining market discount and
2) a fraction, the numerator of which is the OID accruing during
the period and the denominator of which is the total remaining
OID at the beginning of the period.
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For REMIC Regular Certificates issued without OID, the amount of market discount
that accrues during a period is equal to the product of
1) the total remaining market discount and
2) a fraction, the numerator of which is the amount of stated
interest paid during the accrual period and the denominator of
which is the total amount of stated interest remaining to be
paid at the beginning of the period.
For purposes of calculating market discount under any of the above methods in
the case of instruments such as the REMIC Regular Certificates that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same Prepayment Assumption applicable to
calculating the accrual of OID will apply.
A holder who acquired a REMIC Regular Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry the certificate purchased with market discount. For these purposes, the
de minimis rule referred to above applies. Any such deferred interest expense
would not exceed the market discount that accrues during such taxable year and
is, in general, allowed as a deduction not later than the year in which such
market discount is includible in income. If such holder elects to include market
discount in income currently as it accrues on all market discount instruments
acquired by such holder in that taxable year or thereafter, the interest
deferral rule described above will not apply.
Premium. A purchaser of a REMIC Regular Certificate that purchases the
REMIC Regular Certificate at a cost, not including accrued qualified stated
interest, greater than its remaining stated redemption price at maturity will be
considered to have purchased the REMIC Regular Certificate at a premium and may
elect to amortize the premium under a constant yield method. A certificateholder
that makes this election for a Certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such certificateholder
acquires during the year of the election or thereafter. It is not clear whether
the Prepayment Assumption would be taken into account in determining the life of
the REMIC Regular Certificate for this purpose. However, the legislative history
states that the same rules that apply to accrual of market discount, which rules
require use of a Prepayment Assumption in accruing market discount with respect
to REMIC Regular Certificates without regard to whether such certificates have
OID, will also apply in amortizing bond premium under Code Section 171. The Code
provides that amortizable bond premium will be allocated among the interest
payments on such REMIC Regular Certificates and will be applied as an offset
against the interest payment. The Amortizable Bond Premium Regulations do not
apply to prepayable securities described in Section 1272(a)(6) of the Code, such
as the REMIC Regular Certificates. Certificateholders should consult their tax
advisors regarding the possibility of making an election to amortize any such
bond premium.
Deferred Interest. Certain classes of REMIC Regular Certificates may
provide for the accrual of Deferred Interest with respect to one or more
adjustable rate loans. Any Deferred Interest that accrues with respect to a
class of REMIC Regular Certificates will constitute income to the holders of
such certificates prior to the time distributions of cash with respect to such
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Deferred Interest are made. It is unclear, under the OID Regulations, whether
any of the interest on such certificates will constitute qualified stated
interest or whether all or a portion of the interest payable on such
certificates must be included in the stated redemption price at maturity of the
certificates and accounted for as OID, which could accelerate such inclusion.
Interest on REMIC Regular Certificates must in any event be accounted for under
an accrual method by the holders of such certificates and, therefore, applying
the latter analysis may result only in a slight difference in the timing of the
inclusion in income of interest on such REMIC Regular Certificates.
Sale, Exchange or Redemption. If a REMIC Regular Certificate is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal to
the difference between the amount realized on the sale, exchange, redemption, or
retirement and the seller's adjusted basis in the REMIC Regular Certificate.
Such adjusted basis generally will equal the cost of the REMIC Regular
Certificate to the seller, increased by any OID and market discount included in
the seller's gross income with respect to the REMIC Regular Certificate, and
reduced, but not below zero, by payments included in the stated redemption price
at maturity previously received by the seller and by any amortized premium.
Similarly, a holder who receives a payment that is part of the stated redemption
price at maturity of a REMIC Regular Certificate will recognize gain equal to
the excess, if any, of the amount of the payment over an allocable portion of
the holder's adjusted basis in the REMIC Regular Certificate. A REMIC Regular
certificateholder who receives a final payment that is less than the holder's
adjusted basis in the REMIC Regular Certificate will generally recognize a loss.
Except as provided in the following paragraph and as provided under "--Market
Discount" above, any such gain or loss will be capital gain or loss, provided
that the REMIC Regular Certificate is held as a "capital asset" (generally,
property held for investment) within the meaning of Code Section 1221.
Such capital gain or loss will generally be long-term capital gain or
loss if the REMIC Regular Certificate was held for more than one year. Long-term
capital gains of individuals are subject to reduced maximum tax rates while
capital gains recognized by individual on capital assets held less than twelve
months are generally subject to ordinary income tax rates. The use of capital
losses is limited.
Gain from the sale or other disposition of a REMIC Regular Certificate
that might otherwise be 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 holder's
income with respect to the REMIC Regular Certificate had
income accrued thereon at a rate equal to 110% of the AFR as
defined in Code Section 1274(d) determined as of the date of
purchase of such REMIC Regular Certificate, over
o the amount actually includible in such holder's income.
Gain from the sale or other disposition of a REMIC Regular Certificate that
might otherwise be capital gain will be treated as ordinary income if the REMIC
Regular Certificate is held as part of a "conversion transaction" as defined in
Code Section 1258(c), up to the amount of interest that would have accrued on
the REMIC Regular certificateholder's net investment in the conversion
transaction at 120% of the appropriate applicable federal rate under Code
Section
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1274(d) in effect at the time the taxpayer entered into the transaction minus
any amount previously treated as ordinary income with respect to any prior
disposition of property that was held as part of such transaction, or if the
REMIC Regular Certificate is held as part of a straddle. Potential investors
should consult their tax advisors with respect to tax consequences of ownership
and disposition of an investment in REMIC Regular Certificates in their
particular circumstances.
It is possible that capital gain realized by holders of one or more
classes of REMIC Regular Certificates could be considered gain realized upon the
disposition of property that was part of a "conversion transaction." A sale of a
REMIC Regular Certificate will be part of a "conversion transaction" if
substantially all of the holder's expected return is attributable to the time
value of the holder's net investment, and:
o the holder entered the contract to sell the REMIC Regular
Certificate substantially contemporaneously with acquiring the
REMIC Regular Certificate;
o the REMIC Regular Certificate is part of a straddle;
o the REMIC Regular Certificate is marketed or sold as producing
capital gains; or
o other transactions to be specified in Treasury regulations
that have not yet been issued. If the sale or other
disposition of a REMIC Regular Certificate is part of a
conversion transaction, all or a portion of the gain realized
upon the sale or other disposition of the REMIC Regular
Certificate would be treated as ordinary income instead of
capital gain.
The certificates will be "evidences of indebtedness" within the meaning
of Code Section 582(c)(1), so that gain or loss recognized from the sale of a
REMIC Regular Certificate by a bank or a thrift institution to which this
section applies will be ordinary income or loss.
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 necessary to compute the accrual of any market discount that may
arise upon secondary trading of REMIC Regular Certificates. Because exact
computation of the accrual of market discount on a constant yield method would
require information relating to the holder's purchase price which the REMIC may
not have, it appears that the information reports will only provide information
pertaining to the appropriate proportionate method of accruing market discount.
Accrued Interest Certificates. Payment Lag Certificates may provide for
payments of interest based on a period that corresponds to the interval between
Distribution Dates but that ends prior to each Distribution Date. The period
between the Closing Date for Payment Lag Certificates and their first
Distribution Date may or may not exceed the interval. Purchasers of Payment Lag
Certificates for which the period between the Closing Date and the first
Distribution Date does not exceed the interval could pay upon purchase of the
REMIC Regular Certificates accrued interest in excess of the accrued interest
that would be paid if the interest paid on the Distribution Date were interest
accrued from Distribution Date to Distribution Date. If a portion of the initial
purchase price of a REMIC Regular Certificate is allocable to pre-issuance
accrued interest and the REMIC Regular Certificate provides for a payment of
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stated interest on the first payment date and the first payment date is within
one year of the issue date that equals or exceeds the amount of the pre-issuance
accrued interest, then the REMIC Regular Certificate's issue price may be
computed by subtracting from the issue price the amount of pre-issuance accrued
interest, rather than as an amount payable on the REMIC Regular Certificate.
However, it is unclear under this method how the OID Regulations treat interest
on Payment Lag Certificates. Therefore, in the case of a Payment Lag
Certificate, the trust fund intends to include accrued interest in the issue
price and report interest payments made on the first Distribution Date as
interest to the extent such payments represent interest for the number of days
that the certificateholder has held the Payment Lag Certificate during the first
accrual period.
Investors should consult their own tax advisors concerning the
treatment for federal income tax purposes of Payment Lag Certificates.
Non-Interest Expenses of the REMIC. Under temporary Treasury
regulations, if the REMIC is considered to be a "single-class REMIC," a portion
of the REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those REMIC Regular Certificates that are
"pass-through interest holders." Certificateholders that are pass-through
interest holders should consult their own tax advisors about the impact of these
rules on an investment in the REMIC Regular Certificates. See "Pass-Through of
Non-Interest Expenses of the REMIC" under "Taxation of Owners of REMIC Residual
Certificates" below.
Effects of Defaults, Delinquencies and Losses. Certain series of
certificates may contain one or more classes of Subordinated Certificates, and
in the event there are defaults or delinquencies on the mortgage loans or MBS,
amounts that would otherwise be distributed on the Subordinated Certificates may
instead be distributed on the Senior Certificates. Subordinated
certificateholders nevertheless will be required to report income with respect
to such certificates under an accrual method without giving effect to delays and
reductions in distributions on the Subordinated Certificates attributable to
defaults and delinquencies on the mortgage loans or MBS, except to the extent
that it can be established that the amounts are uncollectible. As a result, the
amount of income reported by a Subordinated certificateholder in any period
could significantly exceed the amount of cash distributed to the holder in that
period. The holder will eventually be allowed a loss (or will be allowed to
report a lesser amount of income) to the extent that the aggregate amount of
distributions on the Subordinated Certificate is reduced as a result of defaults
and delinquencies on the mortgage loans or MBS.
Although not entirely clear, it appears that holders of REMIC Regular
Certificates that are corporations should in general be allowed to deduct as an
ordinary loss any loss sustained during the taxable year on account of any such
certificates becoming wholly or partially worthless, and that, in general,
holders of certificates that are not corporations should be allowed to deduct as
a short-term capital loss any loss sustained during the taxable year on account
of any such certificates becoming wholly worthless. Potential investors and
holders of the certificates are urged to consult their own tax advisors
regarding the appropriate timing, amount and character of any loss sustained
with respect to such certificates, including any loss resulting from the failure
to recover previously accrued interest or discount income. Special loss rules
are applicable to banks and thrift institutions, including rules regarding
reserves for bad debts. These taxpayers are advised to consult their tax
advisors regarding the treatment of losses on certificates.
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Non-U.S. Persons. Generally, payments of interest on the REMIC Regular
Certificates, including any payment with respect to accrued OID, to a REMIC
Regular Certificateholder who is not a U.S. Person and is not engaged in a trade
or business within the United States will not be subject to federal withholding
tax if:
o the REMIC Regular Certificateholder does not actually or
constructively own 10 percent or more of the combined voting
power of all classes of equity in the issuer;
o the REMIC Regular Certificateholder is not a controlled
foreign corporation, within the meaning of Code Section 957,
related to the issuer; and
o the REMIC Regular Certificateholder complies with
identification requirements, including delivery of a
statement, signed by the REMIC Regular certificateholder under
penalties of perjury, certifying that the REMIC Regular
certificateholder is a foreign person and providing the name
and address of the REMIC Regular certificateholder.
If a REMIC Regular Certificateholder is not exempt from withholding,
distributions of interest to the holder, including distributions in respect of
accrued OID, may be subject to a 30% withholding tax, subject to reduction under
any applicable tax treaty. If the interest on a REMIC Regular Certificate is
effectively connected with the conduct by the Non-U.S. REMIC Regular
Certificateholder of a trade or business within the United States, then the
Non-U.S. REMIC Regular Certificateholder will be subject to U.S. income tax at
regular graduated rates. Such a Non-U.S. REMIC Regular Certificateholder also
may be subject to the branch profits tax.
Further, a REMIC Regular Certificate will not be included in the estate
of a non-resident alien individual that does not actually or constructively own
10% or more of the combined voting power of all classes of equity in the Issuer
and will not be subject to United States estate taxes. However,
certificateholders who are non-resident alien individuals should consult their
tax advisors concerning this question.
REMIC Regular Certificateholders who are not U.S. Persons and persons
related to such holders should not acquire any REMIC Residual Certificates,
REMIC Residual Certificateholder and persons related to REMIC Residual
Certificateholders should not acquire any REMIC Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so. In addition, the IRS may assert that non-U.S. Persons that own
directly or indirectly, a greater than 10% interest in any Borrower, and foreign
corporations that are "controlled foreign corporations" as to the United States
of which such a Borrower is a "United States shareholder" within the meaning of
Section 951(b) of the Code, are subject to United States withholding tax on
interest distributed to them to the extent of interest concurrently paid by the
related Borrower.
Information Reporting and Backup Withholding. The master servicer will
furnish or make available, within a reasonable time after the end of each
calendar year, to each person who was a REMIC Regular Certificateholder at any
time during that year, the information as may be deemed necessary or desirable
to assist REMIC Regular Certificateholders in preparing their federal income tax
returns, or to enable holders to make the information available to beneficial
owners or financial intermediaries that hold the REMIC Regular Certificates on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of
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a beneficial owner fails to supply a certified taxpayer identification number or
if the Secretary of the Treasury determines that such person has not reported
all interest and dividend income required to be shown on its federal income tax
return, 31% backup withholding may be required with respect to any payments with
respect to any payments to registered owners who are not "exempt recipients." In
addition, upon the sale of a REMIC Regular Certificate to, or through, a broker,
the broker must withhold 31% of the entire purchase price, unless either:
o the broker determines that the seller is a corporation or
other exempt recipient, or
o the seller provides, in the required manner, identifying
information and, in the case of a non-U.S. Person, certifies
that such seller is a Non-U.S. Person, and other conditions
are met.
o A sale of a REMIC Regular Certificate to, or through, a broker
must also be reported by the broker to the IRS, unless either:
o the broker determines that the seller is an exempt recipient,
or
o the seller certifies its non-U.S. Person status and other
conditions are met.
Certification of the registered owner's non-U.S. Person status normally would be
made on IRS Form W-8 under penalties of perjury, although in certain cases it
may be possible to submit other documentary evidence. Any amounts deducted and
withheld from a distribution to a recipient would be allowed as a credit against
such recipient's federal income tax liability.
On October 6, 1997, the Treasury Department issued the New Regulations,
which make certain modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
B. TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
Allocation of the Income of the REMIC to the REMIC Residual
Certificates. The REMIC will not be subject to federal income tax except with
respect to income from prohibited transactions and certain other transactions.
See "--Prohibited Transactions and Other Taxes" below. Instead, each original
holder of a REMIC Residual Certificate will report on its federal income tax
return, as ordinary income, its share of the taxable income of the REMIC for
each day during the taxable year on which the holder owns any REMIC Residual
Certificates. The taxable income of the REMIC for each day will be determined by
allocating the taxable income of the REMIC for each calendar quarter ratably to
each day in the quarter. Such a holder's share of the taxable income of the
REMIC for each day will be based on the portion of the outstanding REMIC
Residual Certificates that the holder owns on that day. The taxable income of
the REMIC will be determined under an accrual method and will be taxable to the
holders of REMIC Residual Certificates without regard to the timing or amounts
of cash distributions by the REMIC. Ordinary income derived from REMIC Residual
Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to the limitations on the deductibility
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of "passive losses." As residual interests, the REMIC Residual Certificates will
be subject to tax rules, described below, that differ from those that would
apply if the REMIC Residual Certificates were treated for federal income tax
purposes as direct ownership interests in the certificates or as debt
instruments issued by the REMIC.
A REMIC Residual Certificateholder may be required to include taxable
income from the REMIC Residual Certificate in excess of the cash distributed.
For example, a structure where principal distributions are made serially on
regular interests, that is, a fast-pay, slow-pay structure, may generate such a
mismatching of income and cash distributions --that is, "phantom income". This
mismatching may be caused by the use of certain required tax accounting methods
by the REMIC, variations in the prepayment rate of the underlying mortgage loans
or MBS and certain other factors. Depending upon the structure of a particular
transaction, the aforementioned factors may significantly reduce the after-tax
yield of a REMIC Residual Certificate to a REMIC Residual Certificateholder or
cause the REMIC Residual Certificate to have negative "value." Investors should
consult their own tax advisors concerning the federal income tax treatment of a
REMIC Residual Certificate and the impact of the tax treatment on the after-tax
yield of a REMIC Residual Certificate.
A subsequent REMIC Residual Certificateholder also will report on its
federal income tax return amounts representing a daily share of the taxable
income of the REMIC for each day that the REMIC Residual Certificateholder owns
the REMIC Residual Certificate. Those daily amounts generally would equal the
amounts that would have been reported for the same days by an original REMIC
Residual Certificateholder, as described above. The legislative history
indicates that certain adjustments may be appropriate to reduce or increase the
income of a subsequent holder of a REMIC Residual Certificate that purchased the
REMIC Residual Certificate at a price greater than or less than the adjusted
basis the REMIC Residual Certificate would have in the hands of an original
REMIC Residual Certificateholder. See "--Sale or Exchange of REMIC Residual
Certificates" below. It is not clear, however, whether the adjustments will in
fact be permitted or required and, if so, how they would be made. The REMIC
Regulations do not provide for any such adjustments.
Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of
o the income from the mortgage loans or MBS and the REMIC's
other assets and
o the deductions allowed to the REMIC for interest and OID on
the REMIC Regular Certificates and, except as described above
under "--Taxation of Owners of REMIC Regular
Certificates--Non-Interest Expenses of the REMIC," other
expenses.
REMIC taxable income is generally determined in the same manner as the taxable
income of an individual using the accrual method of accounting, except that:
o the limitations on deductibility of investment interest
expense and expenses for the production of income do not
apply;
o all bad loans will be deductible as business bad debts; and
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o the limitation on the deductibility of interest and expenses
related to tax-exempt income will apply.
The REMIC's gross income includes interest, original issue discount income, and
market discount income, if any, on the mortgage loans, reduced by amortization
of any premium on the mortgage loans, plus income on reinvestment of cash flows
and reserve assets, plus any cancellation of indebtedness income upon allocation
of realized losses to the REMIC Regular Certificates. Note that the timing of
cancellation of indebtedness income recognized by REMIC Residual
Certificateholders resulting from defaults and delinquencies on mortgage loans
or MBS may differ from the time of the actual loss on the assets. The REMIC's
deductions include interest and original issue discount expense on the REMIC
Regular Certificates, servicing fees on the mortgage loans, other administrative
expenses of the REMIC and realized losses on the mortgage loans. The requirement
that REMIC Residual Certificateholders report their pro rata share of taxable
income or net loss of the REMIC will continue until there are no certificates of
any class of the related series outstanding.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the REMIC Regular Certificates and the REMIC Residual Certificates, or, if a
class of certificates is not sold initially, its fair market value. The
aggregate basis will be allocated among the mortgage loans or MBS and other
assets of the REMIC in proportion to their respective fair market value. A
mortgage loan or MBS will be deemed to have been acquired with discount or
premium to the extent that the REMIC's basis in the mortgage loan or MBS is less
than or greater than its principal balance, respectively. Any such discount,
whether market discount or OID, will be includible in the income of the REMIC as
it accrues, in advance of receipt of the cash attributable to the income, under
a method similar to the method described above for accruing OID on the REMIC
Regular Certificates. The REMIC may elect under Code Section 171 to amortize any
premium on the mortgage loans or MBS. Premium on any mortgage loan or MBS to
which the election applies would be amortized under a constant yield method. It
is not clear whether the yield of a mortgage loan or MBS would be calculated for
this purpose based on scheduled payments or taking account of the Prepayment
Assumption. Additionally, such an election would not apply to the yield with
respect to any underlying mortgage loan originated on or before September 27,
1985. Instead, premium with respect to such a mortgage loan would be allocated
among the principal payments thereon and would be deductible by the REMIC as
those payments become due.
The REMIC will be allowed a deduction for interest and OID on the REMIC
Regular Certificates. The amount and method of accrual of OID will be calculated
for this purpose in the same manner as described above with respect to REMIC
Regular Certificates except that the 0.25% per annum de minimis rule and
adjustments for subsequent holders described therein will not apply.
A REMIC Residual Certificateholder will not be permitted to amortize
the cost of the REMIC Residual Certificate as an offset to its share of the
REMIC's taxable income. However, REMIC taxable income will not include cash
received by the REMIC that represents a recovery of the REMIC's basis in its
assets, and, as described above, the issue price of the REMIC Residual
Certificates will be added to the issue price of the REMIC Regular Certificates
in determining the REMIC's initial basis in its assets. See "--Sale or Exchange
of REMIC Residual Certificates" below. For a discussion of possible adjustments
to income of a subsequent holder
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of a REMIC Residual Certificate to reflect any difference between the actual
cost of the REMIC Residual Certificate to the holder and the adjusted basis the
REMIC Residual Certificate would have in the hands of an original REMIC Residual
Certificateholder, see "--Allocation of the Income of the REMIC to the REMIC
Residual Certificates" above.
Net Losses of the REMIC. The REMIC will have a net loss for any
calendar quarter in which its deductions exceed its gross income. The net loss
would be allocated among the REMIC Residual Certificateholders in the same
manner as the REMIC's taxable income. The net loss allocable to any REMIC
Residual Certificate will not be deductible by the holder to the extent that the
net loss exceeds the holder's adjusted basis in the REMIC Residual Certificate.
Any net loss that is not currently deductible by reason of this limitation may
only be used by the REMIC Residual Certificateholder to offset its share of the
REMIC's taxable income in future periods (but not otherwise). The ability of
REMIC Residual Certificateholders that are individuals or closely held
corporations to deduct net losses may be subject to additional limitations under
the Code.
Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that the IRS has finalized Mark-to-Market
Regulations which provide that a REMIC Residual Certificate acquired after
January 3, 1995 cannot be marked to market. The Mark-to-Market Regulations
replaced the temporary regulations which allowed a Residual Certificate to be
marked to market provided that it was not a "negative value" residual interest
and did not have the same economic effect as a "negative value" residual
interest.
Pass-Through of Non-Interest Expenses of the REMIC. As a general rule,
all of the fees and expenses of a REMIC will be taken into account by holders of
the REMIC Residual Certificates. In the case of a single class REMIC, however,
the expenses and a matching amount of additional income will be allocated, under
temporary Treasury regulations, among the REMIC Regular Certificateholders and
the REMIC Residual Certificateholders on a daily basis in proportion to the
relative amounts of income accruing to each certificateholder on that day. In
general terms, a single class REMIC is one that either:
o would qualify, under existing Treasury regulations, as a
grantor trust if it were not a REMIC, treating all interests
as ownership interests, even if they would be classified as
debt for federal income tax purposes, or
o is similar to such a trust and is structured with the
principal purpose of avoiding the single class REMIC rules.
Unless otherwise stated in the applicable prospectus supplement, the expenses of
the REMIC will be allocated to holders of the related REMIC Residual
Certificates in their entirety and not to holders of the related REMIC Regular
Certificates.
In the case of individuals or trusts, estates or other persons that
compute their income in the same manner as individuals, who own an interest in a
REMIC Regular Certificate or a REMIC Residual Certificate directly or through a
pass-through interest holder that is required to pass miscellaneous itemized
deductions through to its owners or beneficiaries, e.g., a partnership, an S
corporation or a grantor trust, such expenses will be deductible under Code
Section 67 only to the extent that such expenses, plus other "miscellaneous
itemized deductions"
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of the individual, exceed 2% of such individual's adjusted gross income. In
addition, Code Section 68 provides that the applicable amount will be reduced by
the lesser of
o 3% of the excess of the individual's adjusted gross income
over the applicable amount or
o 80% of the amount of itemized deductions otherwise allowable
for the taxable year.
The amount of additional taxable income recognized by REMIC Residual
Certificateholders who are subject to the limitations of either Code Section 67
or Code Section 68 may be substantial. Further, holders subject to the
alternative minimum tax other than corporations may not deduct miscellaneous
itemized deductions in determining such holders' alternative minimum taxable
income. The REMIC is required to report to each pass-through interest holder and
to the IRS such holder's allocable share, if any, of the REMIC's non-interest
expenses. The term "pass-through interest holder" generally refers to
individuals, entities taxed as individuals and certain pass-through entities,
but does not include real estate investment trusts. Accordingly, investment in
REMIC Residual Certificates will in general not be suitable for individuals or
for certain pass-through entities, such as partnerships and S corporations, that
have individuals as partners or shareholders.
Excess Inclusions. A portion of the income on a REMIC Residual
Certificate, referred to in the Code as an "excess inclusion", for any calendar
quarter will be subject to federal income tax in all events. Thus, for example,
an excess inclusion:
o may not, except as described below, be offset by any unrelated
losses, deductions or loss carryovers of a REMIC Residual
Certificateholder;
o will be treated as "unrelated business taxable income" within
the meaning of Code Section 512 if the REMIC Residual
Certificateholder is a pension fund or any other organization
that is subject to tax only on its unrelated business taxable
income, as discussed under "--Tax-Exempt Investors" below; and
o is not eligible for any reduction in the rate of withholding
tax in the case of a REMIC Residual Certificateholder that is
a foreign investor, as discussed under "--Residual Certificate
Payments--Non-U.S. Persons" below.
Except as discussed in the following paragraph, with respect to any
REMIC Residual Certificateholder, the excess inclusions for any calendar quarter
is the excess, if any, of (1) the income of such REMIC Residual
Certificateholder for that calendar quarter from its REMIC Residual Certificate
over (2) the sum of the "daily accruals" for all days during the calendar
quarter on which the REMIC Residual Certificateholder holds a REMIC Residual
Certificate. For this purpose, the daily accruals with respect to a REMIC
Residual Certificate are determined by allocating to each day in the calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at the beginning of the calendar quarter and 120
percent of the "Federal long-term rate" in effect at the time the REMIC Residual
Certificate is issued. For this purpose, the "adjusted issue price" of a REMIC
Residual Certificate at the beginning of any calendar quarter equals the issue
price of the REMIC Residual Certificate, increased by the amount of daily
accruals for all prior quarters, and decreased--but not below
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zero--by the aggregate amount of payments made on the REMIC Residual Certificate
before the beginning of the quarter. The "federal long-term 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.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Code Section 857(b)(2),
excluding any net capital gain), will be allocated among the shareholders of
such trust in proportion to the dividends received by the shareholders from such
trust, and any amount so allocated will be treated as an excess inclusion with
respect to a REMIC Residual Certificate as if held directly by the shareholder.
Regulated investment companies, common trust funds and certain cooperatives are
subject to similar rules.
The Small Business Job Protection Act of 1996 has eliminated the
special rule permitting Section 593 institutions ("thrift institutions") to use
net operating losses and other allowable deductions to offset their excess
inclusion income from REMIC residual certificates that have "significant value"
within the meaning of the REMIC Regulations, effective for taxable years
beginning after December 31, 1995, except with respect to residual certificates
continuously held by a thrift institution since November 1, 1995.
In addition, the Small Business Job Protection Act of 1996 provides
three rules for determining the effect on excess inclusions on the alternative
minimum taxable income of a residual holder. First, alternative minimum taxable
income for the residual holder is determined without regard to the special rule
that taxable income cannot be less than excess inclusions. Second, the amount of
any alternative minimum tax net operating loss deductions must be computed
without regard to any excess inclusions. Third, a residual holder's alternative
minimum taxable income for a tax year cannot be less than excess inclusions for
the year. The effect of this last statutory amendment is to prevent the use of
nonrefundable tax credits to reduce a taxpayer's income tax below its tentative
minimum tax computed only on excess inclusions. These rules are effective for
tax years beginning after December 31, 1986, unless a residual holder elects to
have such rules apply only to tax years beginning after August 20, 1996.
Payments. Any distribution made on a REMIC Residual Certificate to a
REMIC Residual Certificateholder will be treated as a non-taxable return of
capital to the extent it does not exceed the REMIC Residual Certificateholder's
adjusted basis in the REMIC Residual Certificate. To the extent a distribution
exceeds the adjusted basis, it will be treated as gain from the sale of the
REMIC Residual Certificate.
Sale or Exchange of REMIC Residual Certificates. If a REMIC Residual
Certificate is sold or exchanged, the seller will generally recognize gain or
loss equal to the difference between the amount realized on the sale or exchange
and its adjusted basis in the REMIC Residual Certificate except that the
recognition of loss may be limited under the "wash sale" rules described in the
next paragraph. A holder's adjusted basis in a REMIC Residual Certificate
generally equals the cost of the REMIC Residual Certificate to the REMIC
Residual Certificateholder, increased by the taxable income of the REMIC that
was included in the income of the REMIC Residual Certificateholder with respect
to the REMIC Residual Certificate, and decreased -- but not below zero -- by the
net losses that have been allowed as
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deductions to the REMIC Residual Certificateholder with respect to the REMIC
Residual Certificate and by the distributions received thereon by the REMIC
Residual Certificateholder. In general, any the gain or loss will be capital
gain or loss provided the REMIC Residual Certificate is held as a capital asset.
The capital gain or loss will generally be long-term capital gain or loss if the
REMIC Regular Certificate was held for more than one year. Long-term capital
gains of individuals are subject to reduced maximum tax rates while capital
gains recognized by individuals on capital assets held less than twelve months
are generally subject to ordinary income tax rates. The use of capital losses is
limited. However, REMIC Residual Certificates will be "evidences of
indebtedness" within the meaning of Code Section 582(c)(1), so that gain or loss
recognized from sale of a REMIC Residual Certificate by a bank or thrift
institution to which such section applies would be ordinary income or loss. In
addition, a transfer of a REMIC Residual Certificate that is a "noneconomic
residual interest" may be subject to different rules. See "--Tax Related
Restrictions on Transfers of REMIC Residual Certificates--Noneconomic REMIC
Residual Certificates" below.
Except as provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other REMIC Residual Certificate, any residual
interest in another REMIC or similar interest in a "taxable mortgage pool", as
defined in Code Section 7701(i), during the period beginning six months before,
and ending six months after, the date of such sale, such sale will be subject to
the "wash sale" rules of Code Section 1091. In that event, any loss realized by
the REMIC Residual Certificateholder on the sale will not be deductible, but,
instead, will increase such REMIC Residual Certificateholder's adjusted basis in
the newly acquired asset.
PROHIBITED TRANSACTIONS 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 means:
o the disposition of a mortgage loan or MBS,
o the receipt of income from a source other than a mortgage loan
or MBS or certain other permitted investments,
o the receipt of compensation for services, or
o gain from the disposition of an asset purchased with the
payments on the mortgage loans or MBS for temporary investment
pending distribution on the certificates.
It is not anticipated that the trust fund for any series of certificates will
engage in any prohibited transactions in which it would recognize a material
amount of net income.
In addition, certain contributions to a trust fund as to which an
election has been made to treat the trust fund as a REMIC made after the day on
which the trust fund issues all of its interests could result in the imposition
of the Contributions Tax. No trust fund for any series of certificates will
accept contributions that would subject it to such tax.
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In addition, a trust fund as to which an election has been made to
treat the trust fund as a REMIC may also be subject to federal income tax at the
highest corporate rate on "net income from foreclosure property," determined by
reference to the rules applicable to real estate investment trusts. "Net income
from foreclosure property" generally means income from foreclosure property
other than qualifying income for a real estate investment trust.
Where any Prohibited Transactions Tax, Contributions Tax, tax on net
income from foreclosure property or state or local income or franchise tax that
may be imposed on a REMIC relating to any series of certificates arises out of
or results from
o a breach of the related servicer's, trustee's or depositor's
obligations, as the case may be, under the related Agreement
for such series, such tax will be borne by such servicer,
trustee or depositor, as the case may be, out of its own funds
or
o Morgan Stanley Dean Witter Capital I Inc.'s obligation to
repurchase a mortgage loan,
such tax will be borne by Morgan Stanley Dean Witter Capital I Inc.
In the event that the servicer, trustee or depositor, as the case may be, fails
to pay or is not required to pay any Prohibited Transactions Tax, Contributions
Tax, tax on net income from foreclosure property or state or local income or
franchise tax, the tax will be payable out of the trust fund for the series and
will result in a reduction in amounts available to be distributed to the
certificateholders of the series.
LIQUIDATION AND TERMINATION
If the REMIC adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC's final tax return a date on which such adoption is deemed to occur,
and sells all of its assets other than cash within a 90-day period beginning on
such date, the REMIC will not be subject to any Prohibited Transaction Tax,
provided that the REMIC credits or distributes in liquidation all of the sale
proceeds plus its cash, other than the amounts retained to meet claims, to
holders of Regular and REMIC Residual Certificates within the 90-day period.
The REMIC will terminate shortly following the retirement of the REMIC
Regular Certificates. If a REMIC Residual Certificateholder's adjusted basis in
the REMIC Residual Certificate exceeds the amount of cash distributed to such
REMIC Residual Certificateholder in final liquidation of its interest, then it
would appear that the REMIC Residual Certificateholder would be entitled to a
loss equal to the amount of such excess. It is unclear whether such a loss, if
allowed, will be a capital loss or an ordinary loss.
ADMINISTRATIVE MATTERS
Solely for the purpose of the administrative provisions of the Code,
the REMIC generally will be treated as a partnership and the REMIC Residual
Certificateholders will be treated as the partners. Information will be
furnished quarterly to each REMIC Residual Certificateholder who held a REMIC
Residual Certificate on any day in the previous calendar quarter.
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Each REMIC Residual Certificateholder is required to treat items on its
return consistently with their treatment on the REMIC's return, unless the REMIC
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the REMIC. The IRS may assert a deficiency resulting
from a failure to comply with the consistency requirement without instituting an
administrative proceeding at the REMIC level. The REMIC does not intend to
register as a tax shelter pursuant to Code Section 6111 because it is not
anticipated that the 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 the
REMIC, in a manner to be provided in Treasury regulations, with the name and
address of such person and other information.
TAX-EXEMPT INVESTORS
Any REMIC Residual Certificateholder that is a pension fund or other
entity that is subject to federal income taxation only on its "unrelated
business taxable income" within the meaning of Code Section 512 will be subject
to such tax on that portion of the distributions received on a REMIC Residual
Certificate that is considered an excess inclusion. See "--Taxation of Owners of
REMIC Residual Certificates--Excess Inclusions" above.
RESIDUAL CERTIFICATE PAYMENTS--NON-U.S. PERSONS
Amounts paid to REMIC Residual Certificateholders who are not U.S.
Persons (see "--Taxation of Owners of REMIC Regular Certificates--Non-U.S.
Persons" above) are treated as interest for purposes of the 30%, or lower treaty
rate, United States withholding tax. Amounts distributed to holders of REMIC
Residual Certificates should qualify as "portfolio interest," subject to the
conditions described in "--Taxation of Owners of REMIC Regular Certificates"
above, but only to the extent that the underlying mortgage loans were originated
after July 18, 1984. Furthermore, the rate of withholding on any income on a
REMIC Residual Certificate that is excess inclusion income will not be subject
to reduction under any applicable tax treaties. See "--Taxation of Owners of
REMIC Residual Certificates--Excess Inclusions" above. If the portfolio interest
exemption is unavailable, such amount will be subject to United States
withholding tax when paid or otherwise distributed, or when the REMIC Residual
Certificate is disposed of, under rules similar to those for withholding upon
disposition of debt instruments that have OID. The Code, however, grants the
Treasury Department authority to issue regulations requiring that those amounts
be taken into account earlier than otherwise provided where necessary to prevent
avoidance of tax, for example, where the REMIC Residual Certificates do not have
significant value. See "--Taxation of Owners of REMIC Residual
Certificates--Excess Inclusions" above. If the amounts paid to REMIC Residual
Certificateholders that are not U.S. Persons are effectively connected with
their conduct of a trade or business within the United States, the 30%, or lower
treaty rate, withholding will not apply. Instead, the amounts paid to such
non-U.S. Person will be subject to U.S. federal income taxation at regular
graduated rates. For special restrictions on the transfer of REMIC Residual
Certificates, see "--Tax Related Restrictions on Transfers of REMIC Residual
Certificates" below.
REMIC Regular Certificateholders and persons related to such holders
should not acquire any REMIC Residual Certificates, and REMIC Residual
Certificateholders and persons related to
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REMIC Residual Certificateholders should not acquire any REMIC Regular
Certificates, without consulting their tax advisors as to the possible adverse
tax consequences of such acquisition.
TAX RELATED RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES
Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests in
the entity are not held by "disqualified organizations". Further, a tax is
imposed on the transfer of a residual interest in a REMIC to a "disqualified
organization." The amount of the tax equals the product of (A) an amount, as
determined under the REMIC Regulations, equal to the present value of the total
anticipated "excess inclusions" with respect to such interest for periods after
the transfer and (B) the highest marginal federal income tax rate applicable to
corporations. The tax is imposed on the transferor unless the transfer is
through an agent, including a broker or other middleman, for a disqualified
organization, in which event the tax is imposed on the agent. The person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnished to such person an affidavit that the transferee is not a
disqualified organization and, at the time of the transfer, such person does not
have actual knowledge that the affidavit is false. A "disqualified organization"
means:
(A) the United States, any State, possession or political
subdivision thereof, any foreign government, any international
organization or any agency or instrumentality of any of the
foregoing (provided that such term does not include an
instrumentality if all its activities are subject to tax and,
except for FHLMC, a majority of its board of directors is not
selected by any such governmental agency);
(B) any organization, other than certain farmers' cooperatives,
generally exempt from federal income taxes unless such
organization is subject to the tax on "unrelated business
taxable income"; and
(C) a rural electric or telephone cooperative.
A tax is imposed on a "pass-through entity" holding a residual interest
in a REMIC if at any time during the taxable year of the pass-through entity a
disqualified organization is the record holder of an interest in such entity,
provided that all partners of an "electing large partnership" as defined in
Section 775 of the Code, are deemed to be disqualified organizations. The amount
of the tax is equal to the product of (A) the amount of excess inclusions for
the taxable year allocable to the interest held by the disqualified organization
and (B) the highest marginal federal income tax rate applicable to corporations.
The pass-through entity otherwise liable for the tax, for any period during
which the disqualified organization is the record holder of an interest in such
entity, will be relieved of liability for the tax if such record holder
furnishes to such entity an affidavit that such record holder is not a
disqualified organization and, for such period, the pass-through entity does not
have actual knowledge that the affidavit is false. For this purpose, a
"pass-through entity" means:
o a regulated investment company, real estate investment trust
or common trust fund;
o a partnership, trust or estate; and
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o certain cooperatives.
Except as may be provided in Treasury regulations not yet issued, any person
holding an interest in a pass-through entity as a nominee for another will, with
respect to such interest, be treated as a pass-through entity. Electing large
partnerships -- generally, non-service partnerships with 100 or more members
electing to be subject to simplified IRS reporting provisions under Code
sections 771 through 777 -- will be taxable on excess inclusion income as if all
partners were disqualified organizations.
In order to comply with these rules, the Agreement will provide that no
record or beneficial ownership interest in a REMIC Residual Certificate may be
purchased, transferred or sold, directly or indirectly, without the express
written consent of the master servicer. The master servicer will grant consent
to a proposed transfer only if it receives the following:
o an affidavit from the proposed transferee to the effect that
it is not a disqualified organization and is not acquiring the
REMIC Residual Certificate as a nominee or agent for a
disqualified organization, and
o a covenant by the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the REMIC Residual
Certificate.
Noneconomic REMIC Residual Certificates. The REMIC Regulations
disregard, for federal income tax purposes, any transfer of a Noneconomic REMIC
Residual Certificate to a U.S. Person unless no significant purpose of the
transfer is to enable the transferor to impede the assessment or collection of
tax. A Noneconomic REMIC Residual Certificate is any REMIC Residual Certificate,
including a REMIC Residual Certificate with a positive value at issuance,
unless, at the time of transfer, taking into account the Prepayment Assumption
and any required or permitted clean up calls or required liquidation provided
for in the REMIC's organizational documents,
o the present value of the expected future distributions on the
REMIC Residual Certificate at least equals the product of the
present value of the anticipated excess inclusions and the
highest corporate income tax rate in effect for the year in
which the transfer occurs and
o the transferor reasonably expects that the transferee will
receive distributions from the REMIC at or after the time at
which taxes accrue on the anticipated excess inclusions in an
amount sufficient to satisfy the accrued taxes.
A significant purpose to impede the assessment or collection of tax exists if
the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its share
of the taxable income of the REMIC. A transferor is presumed not to have such
knowledge if:
o the transferor conducted a reasonable investigation of the
transferee, and
o the transferee acknowledges to the transferor that the
residual interest may generate tax liabilities in excess of
the cash flow and the transferee represents that
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it intends to pay such taxes associated with the residual
interest as they become due.
If a transfer of a Noneconomic REMIC Residual Certificate is disregarded, the
transferor would continue to be treated as the owner of the REMIC Residual
Certificate and would continue to be subject to tax on its allocable portion of
the net income of the REMIC.
Foreign Investors. The REMIC Regulations provide that the transfer of a
REMIC Residual Certificate that has a "tax avoidance potential" to a "foreign
person" will be disregarded for federal income tax purposes. This rule appears
to apply to a transferee who is not a U.S. Person unless the transferee's income
in respect of the REMIC Residual Certificate is effectively connected with the
conduct of a United Sates trade or business. A REMIC Residual Certificate is
deemed to have a tax avoidance potential unless, at the time of transfer, the
transferor reasonably expects that the REMIC will distribute to the transferee
amounts that will equal at least 30 percent of each excess inclusion, and that
such amounts will be distributed at or after the time the excess inclusion
accrues and not later than the end of the calendar year following the year of
accrual. If the non-U.S. Person transfers the REMIC Residual Certificate to a
U.S. Person, the transfer will be disregarded, and the foreign transferor will
continue to be treated as the owner, if the transfer has the effect of allowing
the transferor to avoid tax on accrued excess inclusions. The provisions in the
REMIC Regulations regarding transfers of REMIC Residual Certificates that have
tax avoidance potential to foreign persons are effective for all transfers after
June 30, 1992. The Agreement will provide that no record or beneficial ownership
interest in a REMIC Residual Certificate may be transferred, directly or
indirectly, to a non-U.S. Person unless the person provides the trustee with a
duly completed IRS Form 4224 or applicable successor form adopted by the IRS for
such purpose and the trustee consents to the transfer in writing.
Any attempted transfer or pledge in violation of the transfer
restrictions shall be absolutely null and void and shall vest no rights in any
purported transferee. Investors in REMIC Residual Certificates are advised to
consult their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax which may be imposed on a
pass-through entity.
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in
"Federal Income Tax Consequences," potential investors should consider the state
income tax consequences of the acquisition, ownership, and disposition of the
offered certificates. State income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state. Therefore, potential investors
should consult their own tax advisors with respect to the various tax
consequences of investments in the offered certificates.
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ERISA CONSIDERATIONS
GENERAL
Title I of ERISA and Section 4975 of the Code impose restrictions on
ERISA Plans, certain other Plans and on persons who are parties in interest or
disqualified persons with respect to ERISA Plans. Employee benefit plans, such
as governmental plans and church plans (if no election has been made under
Section 410(d) of the Code), are not subject to the restrictions of ERISA, and
assets of those plans may be invested in the certificates without regard to the
ERISA considerations described in this section, subject to other applicable
federal, state or local law. However, any such governmental or church plan which
is qualified under Section 401(a) of the Code and exempt from taxation under
Section 501(a) of the Code is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that an ERISA Plan's investments be made in
accordance with the documents governing the ERISA Plan.
PROHIBITED TRANSACTIONS
GENERAL
Section 406 of ERISA prohibits parties in interest with respect to an
ERISA Plan from engaging in certain transactions involving such Plan and its
assets unless a statutory, regulatory or administrative exemption applies to the
transaction. In some cases, a civil penalty may be assessed on non-exempt
prohibited transactions pursuant to Section 502(i) of ERISA. Section 4975 of the
Code imposes excise taxes on similar transactions between Plans, subject thereto
and disqualified persons with respect to such.
The United States Department of Department of Labor has issued a final
regulation (29 C.F.R. Section 2510.3-101) containing rules for determining what
constitutes the assets of a Plan. This regulation provides that, as a general
rule, the underlying assets and properties of corporations, partnerships, trusts
and some other entities in which a Plan makes an "equity investment" will be
deemed for purposes of ERISA and Section 4975 of the Code to be assets of the
Plan unless exceptions apply.
Under the terms of the regulation, the trust fund may be deemed to hold
plan assets by reason of a Plan's investment in a certificate; such plan assets
would include an undivided interest in the mortgage loans and any other assets
held by the trust fund. In such an event, Morgan Stanley Dean Witter Capital I
Inc., the master servicer, any subservicer, the trustee, any insurer of the
mortgage loans or MBS and other persons, in providing services with respect to
the assets of the trust fund, may become fiduciaries subject to the fiduciary
responsibility provisions of Title I of ERISA, or may otherwise become parties
in interest or disqualified persons, with respect to such Plan. In addition,
transactions involving such assets could constitute or result in prohibited
transactions under Section 406 of ERISA or Section 4975 of the Code unless such
transactions are subject to a statutory, regulatory or administrative exemption.
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The regulations contain a de minimis safe-harbor rule that exempts the
assets of an entity from plan assets status as long as the aggregate equity
investment in such entity by plans is not significant. For this purpose, equity
participation in the entity will be significant if immediately after any
acquisition of any equity interest in the entity, "benefit plan investors" in
the aggregate, own 25% or more of the value of any class of equity interest,
excluding from the calculation, the value of equity interests held by persons
who have discretionary authority or control with respect to the assets of the
entity or held by affiliates of such persons. "Benefit plan investors" are
defined as Plans as well as employee benefit plans not subject to Title I of
ERISA, e.g., governmental plans and foreign plans and entities whose underlying
assets include plan assets by reason of plan investment in such entities. To fit
within the safe harbor benefit plan, investors must own less than 25% of each
class of equity interests, regardless of the portion of total equity value
represented by such class, on an ongoing basis.
AVAILABILITY OF UNDERWRITER'S EXEMPTION FOR CERTIFICATES
DOL has granted to Morgan Stanley & Co. Incorporated Prohibited
Transaction Exemption 90-24, Exemption Application No. D-8019, 55 Fed. Reg.
20548 (1990) (the "Exemption") which exempts from the application of the
prohibited transaction rules transactions relating to:
o the acquisition, sale and holding by Plans of certain
certificates representing an undivided interest in certain
asset-backed pass-through trusts, with respect to which Morgan
Stanley & Co. Incorporated or any of its affiliates is the
sole underwriter or the manager or co-manager of the
underwriting syndicate; and
o the servicing, operation and management of such asset-backed
pass-through trusts, provided that the general conditions and
certain other conditions set forth in the Exemption are
satisfied.
The Exemption sets forth the following general conditions which must be
satisfied before a transaction involving the acquisition, sale and holding of
the certificates or a transaction in connection with the servicing, operation
and management of the trust fund may be eligible for exemptive relief
thereunder:
(1) The acquisition of the certificates by a Plan is on terms --
including the price for such certificates--that are at least
as favorable to the investing Plan as they would be in an
arm's-length transaction with an unrelated party;
(2) The rights and interests evidenced by the certificates
acquired by the Plan are not subordinated to the rights and
interests evidenced by other certificates of the trust fund
with respect to the right to receive payment in the event of
default or delinquencies in the underlying assets of the trust
fund;
(3) The certificates acquired by the Plan have received a rating
at the time of the acquisition that is in one of the three
highest generic rating categories from any of Duff & Phelps
Credit Rating Co., Fitch IBCA, Inc., Moody's Investors
Service, Inc. and Standard & Poor's Ratings Services;
(4) The trustee is not an affiliate of the Restricted Group;
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(5) The sum of all payments made to and retained by the
underwriter in connection with the distribution of the
certificates represents not more than reasonable compensation
for underwriting the certificates; the sum of all payments
made to and retained by the Asset Seller pursuant to the sale
of the mortgage loans to the trust fund represents not more
than the fair market value of the mortgage loans; the sum of
all payments made to and retained by any servicer represent
not more than reasonable compensation for the servicer's
services under the Agreement and reimbursement of the
servicer's reasonable expenses in connection therewith; and
(6) The Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of
1933 as amended.
The trust fund must also meet the following requirements:
o the corpus of the trust fund must consist solely of
assets of the type that have been included in other
investment pools;
o certificates evidencing interests in other investment
pools must have been rated in one of the three
highest rating categories of a Rating Agency for at
least one year prior to the Plan's acquisition of the
Securities; and
o certificates evidencing interests in other investment
pools must have been purchased by investors other
than Plans for at least one year prior to any Plan's
acquisition of the Securities.
Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
any person who has discretionary authority or renders investment advice with
respect to the investment of plan assets causes a Plan to acquire certificates
in a trust fund, provided that, among other requirements:
o the person or its affiliate is an obligor with
respect to five percent or less of the fair market
value of the obligations or receivables contained in
the trust fund;
o the Plan is not a plan with respect to which any
member of the Restricted Group is the "plan sponsor"
as defined in Section 3(16)(B) of ERISA;
o in the case of an acquisition in connection with the
initial issuance of certificates, at least fifty
percent of each class of certificates in which Plans
have invested is acquired by persons independent of
the Restricted Group and at least fifty percent of
the aggregate interest in the trust fund is acquired
by persons independent of the Restricted Group;
o a Plan's investment in certificates of any class does
not exceed twenty-five percent of all of the
certificates of that class outstanding at the time of
the acquisition; and
o immediately after the acquisition, no more than
twenty-five percent of the assets of any Plan with
respect to which the person has discretionary
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authority or renders investment advice are invested
in certificates representing an interest in one or
more trusts containing assets sold or serviced by the
same entity.
The Exemption does not apply to Plans sponsored by the Restricted Group
Before purchasing a certificate in reliance on the Exemption, a
fiduciary of a Plan should itself confirm
o that the certificates constitute "certificates" for
purposes of the Exemption and
o that the general conditions and other requirements
set forth in the Exemption would be satisfied.
REVIEW BY PLAN FIDUCIARIES
Any Plan fiduciary considering whether to purchase any certificates on
behalf of a Plan should consult with its counsel regarding the applicability of
the fiduciary responsibility and prohibited transaction provisions of ERISA and
the Code to such investment. Among other things, before purchasing any
certificates, a fiduciary of a Plan should make its own determination as to the
availability of the exemptive relief provided in the Exemption, and also
consider the availability of any other prohibited transaction exemptions. In
this regard, purchasers that are insurance companies should determine the extent
to which Prohibited Transaction Class Exemption 95-60 -- for certain
transactions involving insurance company general accounts -- may be available.
The prospectus supplement with respect to a series of certificates may contain
additional information regarding the application of the Exemption, Prohibited
Transaction Class Exemption 83-1 for certain transactions involving mortgage
pool investment trusts, or any other exemption, with respect to the certificates
offered by the related prospectus supplement.
LEGAL INVESTMENT
The prospectus supplement for each series of offered certificates will
identify those classes of offered certificates, if any, which constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984. Generally, only those classes of offered certificates
that
o are rated in one of the two highest rating categories by one
or more Rating Agencies and
o are part of a series representing interests in a trust fund
consisting of mortgage loans or MBS, provided that the
mortgage loans or the mortgage loans underlying the MBS are
secured by first liens on mortgaged property and were
originated by certain types of originators as specified in
SMMEA, will be the SMMEA Certificates.
As "mortgage related securities," the SMMEA Certificates will constitute legal
investments for persons, trusts, corporations, partnerships, associations,
business trusts and business entities
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including, but not limited to, depository institutions, insurance companies,
trustees and pension funds created pursuant to or existing under the laws of the
United States or of any state, including the District of Columbia and Puerto
Rico whose authorized investments are subject to state regulation to the same
extent that, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any agency or instrumentality
thereof constitute legal investments for such entities. Pursuant to SMMEA, a
number of states enacted legislation, on or before the October 3, 1991 for such
enactments, limiting to varying extents the ability of certain entities, in
particular, insurance companies, to invest in mortgage related securities, in
most cases by requiring the affected investors to rely solely upon existing
state law, and not SMMEA. Pursuant to Section 347 of the Riegle Community
Development and Regulatory Improvement Act of 1994, which amended the definition
of "mortgage related security" to include, in relevant part, offered
certificates satisfying the rating, first lien and qualified originator
requirements for "mortgage related securities," but representing interests in a
trust fund consisting, in whole or in part, of first liens on one or more
parcels of real estate upon which are located one or more commercial structures,
states were authorized to enact legislation, on or before September 23, 2001,
specifically referring to Section 347 and prohibiting or restricting the
purchase, holding or investment by state-regulated entities in such types of
offered certificates. Section 347 also provides that the enactment by a state of
any such legislative restrictions shall not affect the validity of any
contractual commitment to purchase, hold or invest in securities qualifying as
"mortgage related securities" solely by reason of Section 347 that was made, and
shall not acquire the sale or disposition of any securities acquired prior to
the enactment of such state legislation. Accordingly, investors affected by such
legislation, when and if enacted, will be authorized to invest in SMMEA
Certificates only to the extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
ss. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, OCC has amended
12 C.F.R. Part 1 to authorize national banks to purchase and sell for their own
account, without limitation as to a percentage of the bank's capital and surplus
(but subject to compliance with certain general standards in 12 C.F.R. ss. 1.5
concerning "safety and soundness" and retention of credit information, certain
"Type IV securities," defined in 12 C.F.R. ss. 1.2(1) to include certain
"commercial mortgage-related securities" and "residential mortgage-related
securities." As so defined, "commercial mortgage-related security" and
"residential mortgage-related security" mean, in relevant part,
"mortgage-related security" within the meaning of SMMEA, provided that, in the
case of a "commercial mortgage-related security," it "represents ownership of a
promissory note or certificate of interest or participation that is directly
secured by a first lien on one or more parcels of real estate upon which one or
more commercial structures are located and that is fully secured by interests in
a pool of loans to numerous obligors." In the absence of any rule or
administrative interpretation by the OCC defining the term "numerous obligors,"
no representation is made as to whether any class of offered certificates will
qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. The NCUA has
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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. section
section 703.140. The OTS has issued Thrift Bulletin 13a (December 1, 1998),
"Management of Interest Rate Risk, Investment Securities and Derivative
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 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 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.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any offered
certificates, as certain series or classes may be deemed to be unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines, in certain instances irrespective of SMMEA.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any offered certificates issued
in book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
If specified in the related prospectus supplement, other classes of
offered certificates offered pursuant to this prospectus will not constitute
"mortgage related securities" under SMMEA. The appropriate characterization of
such offered certificates under various legal investment restrictions, and thus
the ability of investors subject to these restrictions to purchase such offered
certificates, may be subject to significant interpretive uncertainties.
Except as to the status of the classes of offered certificates
identified in the prospectus supplement for a series as "mortgage related
securities" under SMMEA, no representations are made as to the proper
characterization of the offered certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase any offered certificates under
applicable legal investment restrictions. The uncertainties described in this
section and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the offered certificates may
adversely affect the liquidity of the offered certificates. Accordingly, all
investors whose investment activities are subject to legal investment laws and
regulations, regulatory capital requirements or review by regulatory authorities
should consult with their own legal advisors in
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determining whether and to what extent the offered certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions, and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
PLAN OF DISTRIBUTION
The offered certificates offered hereby and by the Supplements to this
prospectus will be offered in series. The distribution of the certificates may
be effected from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment therefor. If so
specified in the related prospectus supplement, the offered certificates will be
distributed in a firm commitment underwriting, subject to the terms and
conditions of the underwriting agreement, by Morgan Stanley & Co. Incorporated
acting as underwriter with other underwriters, if any, named in the prospectus
supplement. In such event, the prospectus supplement may also specify that the
underwriters will not be obligated to pay for any offered certificates agreed to
be purchased by purchasers pursuant to purchase agreements acceptable to Morgan
Stanley Dean Witter Capital I Inc.. In connection with the sale of offered
certificates, underwriters may receive compensation from Morgan Stanley Dean
Witter Capital I Inc. or from purchasers of offered certificates in the form of
discounts, concessions or commissions. The prospectus supplement will describe
any such compensation paid by Morgan Stanley Dean Witter Capital I Inc..
Alternatively, the prospectus supplement may specify that offered
certificates will be distributed by Morgan Stanley & Co. Incorporated acting as
agent or in some cases as principal with respect to offered certificates that it
has previously purchased or agreed to purchase. If Morgan Stanley & Co.
Incorporated acts as agent in the sale of offered certificates, Morgan Stanley &
Co. Incorporated will receive a selling commission with respect to such offered
certificates, depending on market conditions, expressed as a percentage of the
aggregate certificate Balance or Notional Amount of such offered certificates as
of the Cut-off Date. The exact percentage for each series of certificates will
be disclosed in the related prospectus supplement. To the extent that Morgan
Stanley & Co. Incorporated elects to purchase offered certificates as principal,
Morgan Stanley & Co. Incorporated may realize losses or profits based upon the
difference between its purchase price and the sales price. The prospectus
supplement with respect to any series offered other than through underwriters
will contain information regarding the nature of such offering and any
agreements to be entered into between Morgan Stanley Dean Witter Capital I Inc.
and purchasers of offered certificates of such series.
Morgan Stanley Dean Witter Capital I Inc. will indemnify Morgan Stanley
& Co. Incorporated and any underwriters against certain civil liabilities,
including liabilities under the Securities Act of 1933, or will contribute to
payments Morgan Stanley & Co. Incorporated and any underwriters may be required
to make.
In the ordinary course of business, Morgan Stanley & Co. Incorporated
and Morgan Stanley Dean Witter Capital I Inc. may engage in various securities
and financing transactions, including repurchase agreements to provide interim
financing of Morgan Stanley Dean Witter Capital I Inc.'s mortgage loans pending
the sale of such mortgage loans or interests in the mortgage loans, including
the certificates.
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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 in connection with reoffers and sales
by them of offered certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
If specified in the prospectus supplement relating to certificates of a
particular series offered hereby, Morgan Stanley Dean Witter Capital I Inc., any
affiliate thereof or any other person or persons specified in the prospectus
supplement may purchase some or all of the certificates of any series from
Morgan Stanley & Co. Incorporated and any other underwriters thereof. This
purchaser may thereafter from time to time offer and sell, pursuant to this
prospectus and the related prospectus supplement, some or all of the
certificates so purchased, directly, through one or more underwriters to be
designated at the time of the offering of the certificates, through dealers
acting as agent or principal or in such other manner as may be specified in the
related prospectus supplement. The offering may be restricted in the manner
specified in the prospectus supplement. The transactions may be effected at
market prices prevailing at the time of sale, at negotiated prices or at fixed
prices. Any underwriters and dealers participating in the purchaser's offering
of the certificates may receive compensation in the form of underwriting
discounts or commissions from such purchaser and such dealers may receive
commissions from the investors purchasing the certificates for whom they may act
as agent (which discounts or commissions will not exceed those customary in
those types of transactions involved). Any dealer that participates in the
distribution of the certificates may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any commissions and discounts received by
such dealer and any profit on the resale or such certificates by such dealer
might be deemed to be underwriting discounts and commissions under the
Securities Act.
All or part of any Class of certificates may be reacquired by Morgan
Stanley Dean Witter Capital I Inc. or acquired by an affiliate of Morgan Stanley
Dean Witter Capital I Inc. in a secondary market transaction or from an
affiliate, including Morgan Stanley & Co. Incorporated. Such certificates may
then be included in a trust fund, the beneficial ownership of which will be
evidenced by one or more classes of mortgage-backed certificates, including
subsequent series of certificates offered pursuant to this prospectus and a
prospectus supplement.
As to each series of certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any non-investment-grade class may be initially retained by Morgan Stanley Dean
Witter Capital I Inc., and may be sold by Morgan Stanley Dean Witter Capital I
Inc. at any time in private transactions.
LEGAL MATTERS
Certain legal matters in connection with the certificates, including
certain federal income tax consequences, will be passed upon for Morgan Stanley
Dean Witter Capital I Inc. by Cadwalader, Wickersham & Taft or Latham & Watkins,
or Brown & Wood LLP or such other counsel as may be specified in the related
prospectus supplement.
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FINANCIAL INFORMATION
A new trust fund will be formed with respect to each series of
certificates and no trust fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
certificates. Accordingly, no financial statements with respect to any trust
fund will be included in this prospectus or in the related prospectus
supplement.
RATING
It is a condition to the issuance of any class of offered certificates
that they shall have been rated not lower than investment grade, that is, in one
of the four highest rating categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage loans
and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood of
principal prepayments by borrowers or of the degree by which such prepayments
might differ from those originally anticipated. As a result, certificateholders
might suffer a lower than anticipated yield, and, in addition, holders of
stripped interest certificates in extreme cases might fail to recoup their
initial investments.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating.
INCORPORATION OF INFORMATION BY REFERENCE
Morgan Stanley Dean Witter Capital I Inc., as depositor, will file, or
cause to be filed, with the Commission, the periodic reports with respect to
each trust fund required under the Exchange Act and the rules and regulations of
the Commission.
All documents and reports filed, or caused to be filed, by Morgan
Stanley Dean Witter Capital I Inc. with respect to a trust fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of an offering of certificates are incorporated in this prospectus by reference.
Each person to whom this prospectus is delivered may obtain, without charge,
from Morgan Stanley Dean Witter Capital I Inc. a copy of any documents or
reports relating to the certificates being offered. (Exhibits to those documents
may only be obtained if they are specifically incorporated by reference in those
documents.) Requests for this information should be directed in writing to
Morgan Stanley Dean Witter Capital I Inc., c/o Morgan Stanley & Co.
Incorporated, 1585 Broadway, 37th Floor, New York, New York 10036, Attention:
John E. Westerfield, or by telephone at (212) 761-4700. Morgan Stanley Dean
Witter Capital I Inc. has determined that its financial statements are not
material to the offering of any certificates.
Morgan Stanley Dean Witter Capital I Inc. has filed with the Securities
and Exchange Commission a registration statement (of which this prospectus forms
a part) under the Securities
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Act of 1933, as amended, with respect to the offered certificates. This
prospectus and the accompanying prospectus supplement do not contain all of the
information set forth in the registration statement. For further information
regarding the documents referred to in this prospectus and the accompanying
prospectus supplement, you should refer to the registration statement and the
exhibits thereto. The registration statement and exhibits can be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at its Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its regional offices located as follows: Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and
New York Regional Office, Seven World Trade Center, New York, New York 10048.
If some or all of the mortgage loans owned by a trust fund are secured
by an assignment of lessors' rights in one or more leases, rental payments due
from the lessees may be a significant source (or even the sole source) of
distributions on the certificates. In these circumstances, reference should be
made to the related prospectus supplement for information concerning the lessees
and whether any of those lessees are subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended.
-----------------------------------
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GLOSSARY OF TERMS
The certificates will be issued pursuant to the Agreement. The
following Glossary of Terms is not complete. You should also refer to the
prospectus supplement and the Agreement for additional or more complete
definitions. If you send a written request to the trustee at its corporate
office, the trustee will provide to you without charge a copy of the Agreement
(without exhibits and schedules).
Unless the context requires otherwise, the definitions contained in
this Glossary of Terms apply only to this series of certificates.
"Accrual Certificates" means certificates which provide for
distributions of accrued interest commencing only following the occurrence of
certain events, such as the retirement of one or more other classes of
certificates of such series.
"Accrued Certificate Interest" means, with respect to each class of
certificates and each Distribution Date, other than certain classes of Stripped
Interest Certificates, the amount equal to the interest accrued for a specified
period on the outstanding Certificate Balance immediately prior to the
Distribution Date, at the applicable pass-through rate, as described in
"Distributions of Interest on the Certificates" in this prospectus.
"Agreement" means the Pooling Agreement or the Trust Agreement, as
applicable.
"Amortizable Bond Premium Regulations" means final regulations issued
by the IRS which deal with the amortizable bond premium.
"Assets" means the primary assets included in a trust fund.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended
(Title 11 of the United States Code).
"Book-Entry Certificates" means Certificates which are in book-entry
form.
"Cash Flow Agreements" means guaranteed investment contracts or other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, currency exchange agreements or similar agreements provided to
reduce the effects of interest rate or currency exchange rate fluctuations on
the assets or on one or more classes of certificates.
"Cede" means Cede & Company.
"CERCLA" means Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Certificate Account" means one or more separate accounts for the
collection of payments on the related assets.
"Certificate Balance" equals the maximum amount that a holder of a
certificate will be entitled to receive in respect of principal out of future
cash flow on the mortgage loans and other assets included in the trust fund.
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"Certificate Owners" means, with respect to a book-entry certificate,
the person who is the beneficial owner of such book-entry certificate, as may be
reflected on the books of the clearing agency, or on the books of a Person
maintaining an account with such clearing agency, directly or as an indirect
participant, in accordance with the rules of such clearing agency.
"Certificateholder" means, unless otherwise provided in the related
prospectus supplement, Cede, as nominee of DTC.
"Certificates" means any of the certificates issued, in one or more
series, by Morgan Stanley Dean Witter Capital I Inc.
"Closing Date" means the date the REMIC Regular Certificates were
initially issued.
"Commercial Loans" means the loans relating to the Commercial
Properties.
"Commercial Properties" means office buildings, shopping centers,
retail stores, hotels or motels, nursing homes, hospitals or other health
care-related facilities, mobile home parks, warehouse facilities, mini-warehouse
facilities or self-storage facilities, industrial plants, congregate care
facilities, mixed use or other types of commercial properties.
"Constant Prepayment Rate" or "CPR" means a rate that 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
mortgage loans for the life of such mortgage loans. CPR does not purport to be
either a historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any
mortgage loans.
"Contributions Tax" means a tax on the trust fund equal to 100% of the
value of the contributed property.
"Credit Support" means subordination of one or more other classes of
certificates in a series or by one or more other types of credit support, such
as a letter of credit, insurance policy, guarantee, reserve fund or another type
of credit support, or a combination thereof.
"Crime Control Act" means the Comprehensive Crime Control Act of 1984.
"Cut-off Date" means a day in the month of formation of the related
trust fund, as defined in the prospectus supplement.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at
any given time, the ratio of the Net Operating Income for a twelve-month period
to the annualized scheduled payments on the mortgage loan.
"Deferred Interest" means interest deferred by reason of negative
amortization.
"Definitive Certificate" means a fully registered physical certificate.
"Depositor" means Morgan Stanley Dean Witter Capital I Inc.
"Determination Date" means the close of business on the date specified
in the related prospectus supplement.
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"Disqualifying Condition" means a condition, existing as a result of,
or arising from, the presence of Hazardous Materials on a mortgaged property,
such that the mortgage loan secured by the affected mortgaged property would be
ineligible, solely by reason of such condition, for purchase by FNMA under the
relevant provisions of FNMA's Multifamily Seller/Servicer Guide in effect as of
the date of initial issuance of the certificates of such series, including a
condition that would constitute a material violation of applicable federal state
or local law in effect as of their date of initial issuance of the certificates
of such series.
"Distribution Date" means each of the dates on which distributions to
certificateholders are to be made.
"DOL" means the United States Department of Department of Labor.
"DTC" means the Depository Trust Company.
"Due Period" means the period which will commence on the second day of
the month in which the immediately preceding Distribution Date occurs, or the
day after the Cut-off Date in the case of the first Due Period, and will end on
the first day of the month of the related Distribution Date.
"Environmental Hazard Condition" means any condition or circumstance
that may give rise to an environmental claim.
"Equity Participations" means provisions entitling the lender to a
share of profits realized from the operation or disposition of a mortgaged
property, as described in the related prospectus supplement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" means employee benefit plans subject to ERISA.
"Events of Default" means, with respect to the master servicer under
the Pooling Agreement, any one of the following events:
o any failure by the master servicer to distribute or cause to
be distributed to certificateholders, or to remit to the
trustee for distribution to certificateholders, any required
payment;
o any failure by the master servicer duly to observe or perform
in any material respect any of its other covenants or
obligations under the Pooling Agreement which continues
unremedied for thirty days after written notice of such
failure has been given to the master servicer by the trustee
or Morgan Stanley Dean Witter Capital I Inc., or to the master
servicer, Morgan Stanley Dean Witter Capital I Inc. and the
trustee by the holders of certificates evidencing not less
than 25% of the Voting Rights;
o any breach of a representation or warranty made by the master
servicer under the Pooling Agreement which materially and
adversely affects the interests of certificateholders and
which continues unremedied for thirty days after written
notice of such breach has been given to the master servicer by
the trustee or Morgan Stanley Dean Witter Capital I Inc., or
to the master servicer, Morgan
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Stanley Dean Witter Capital I Inc. and the trustee by the
holders of certificates evidencing not less than 25% of the
Voting Rights; and
o certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
and certain actions by or on behalf of the master servicer
indicating its insolvency or inability to pay its obligations.
"Excess Servicing" means servicing fees in excess of reasonable
servicing fees.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"Government Securities" means direct obligations of the United States,
agencies thereof or agencies created thereby which are not subject to redemption
prior to maturity at the option of the issuer and are:
(a) interest-bearing securities;
(b) non-interest-bearing securities;
(c) originally interest-bearing securities from which coupons
representing the right to payment of interest have been removed; or
(d) interest-bearing securities from which the right to payment of
principal has been removed.
"Index" means the source for determination of an interest rate, to be
defined, if applicable, in the related prospectus supplement.
"Indirect Participants" means entities, such as banks, brokers, dealers
and trust companies, that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly.
"Insurance Proceeds" means proceeds of rental interruption policies, if
any, insuring against losses arising from the failure of lessees under a lease
to make timely rental payments because of casualty events.
"Liquidation Proceeds" means all other amounts received and retained in
connection with the liquidation of defaulted mortgage loans in the trust fund,
by foreclosure or otherwise.
"Loan to Value Ratio" or "LTV" means
"Lockout Date" means the expiration of the Lockout Period.
"Lockout Period" means a period during which prepayments on a mortgage
loan are prohibited.
"Market-to-Market Regulations" means the finalized IRS regulations
which provide that a REMIC Residual Certificate acquired after January 3, 1995
cannot be marked to market.
"Master Servicer" means an entity as named in the prospectus
supplement.
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"MBS" means mortgage participations, pass-through certificates or other
mortgage-backed securities evidencing interests in or secured by one or more
mortgage loans or other similar participations, certificates or securities.
"MBS Agreement" means any participation and servicing agreement,
pooling agreement, trust agreement, an indenture or similar agreement with
respect to the MBS.
"Mortgage" means a mortgage, deed of trust or other similar security
instrument.
"Mortgage Loans" means the multifamily mortgage loans or the
commercial mortgage loans or both included in a trust fund. As used in this
prospectus, mortgage loans refers to both whole mortgage loans and mortgage
loans underlying MBS.
"Mortgage Note" means a promissory note evidencing a respective
mortgage loan.
"Mortgage Rate" means the interest rate for a mortgage loan which
provides for no accrual of interest or for accrual of interest thereon at an
interest rate that is fixed over its term or that adjusts from time to time, or
that may be converted from an adjustable to a fixed mortgage rate, or from a
fixed to an adjustable mortgage rate, from time to time pursuant to an election
or as otherwise specified on the related mortgage note, in each case as
described in the related prospectus supplement.
"Multifamily Loans" means the loans relating to the Multifamily
Properties.
"Multifamily Properties" means residential properties consisting of
five or more rental or cooperatively-owned dwelling units in high-rise, mid-rise
or garden apartment buildings.
"NCUA" means the National Credit Union Administration.
"Net Operating Income" means, for any given period, to the extent set
forth in the related prospectus supplement, the total operating revenues derived
from a mortgaged property during that period, minus the total operating expenses
incurred in respect of the mortgaged property during that period other than:
o non-cash items such as depreciation and amortization;
o capital expenditures; and
o debt service on loans secured by the mortgaged property.
"New Regulations" means the regulations issued by the Treasury
Department on October 6, 1997.
"Nonrecoverable Advance" means an advance that is not ultimately
recoverable from Related Proceeds or from collections on other assets otherwise
distributable on Subordinate Certificates.
"Notional Amount" means [the aggregate Certificate Balance of each of
the Class [ ], Class [ ], Class [ ] and Class [ ] Certificates outstanding from
time to time, plus the amount of any unpaid interest shortfall on these classes]
or [the sum of the balance of components which
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correspond to the Certificate Balance of the Class [ ], Class [ ], Class [ ] and
Class [ ] Certificates].
"OCC" means the Office of the Comptroller of the Currency.
"OID" means original issue discount.
"OID Regulations" means the special rules of the Code relating to OID
(currently Code Sections 1271 through 1273 and 1275) and Treasury regulations
issued on January 27, 1994.
"OTS" means the Office of Thrift Supervision.
"Participants" means the participating organizations of DTC.
"Pass-Through Rate" means the fixed, variable or adjustable rate per
annum at which any class of certificates accrues interest.
"Payment Lag Certificates" means certain of the REMIC Regular
Certificates.
"Permitted Investments" means United States government securities and
other investment grade obligations specified in the Pooling Agreement.
"Plans" means ERISA Plans and other relevant plans and consequences,
including but not limited to individual retirement accounts and annuities.
"Pooling Agreement" means the Agreement under which certificates of a
series evidencing interests in a trust fund including Whole Loans will be
issued.
"Pre-Issuance Accrued Interest" means interest that has accrued prior
to the issue date.
"Prepayment Assumption" means the original yield to maturity of the
grantor trust certificate calculated based on a reasonable assumed prepayment
rate for the mortgage loans underlying the grantor trust certificates.
"Prepayment Premium" means with respect to any Distribution Date, the
aggregate of all Yield Maintenance Payments, or Percentage Premiums, if any,
received during the related Collection Period in connection with Principal
Prepayments.
"Prohibited Transactions Tax" means the tax the Code imposes on REMICs
equal to 100% of the net income derived from "prohibited transactions."
"Purchase Price" means, with respect to any Whole Loan and to the
extent set forth in the related prospectus supplement, the amount that is equal
to the sum of the unpaid principal balance, plus unpaid accrued interest at the
mortgage rate from the date as to which interest was last paid to the due date
in the Due Period in which the relevant purchase is to occur, plus certain
servicing expenses that are reimbursable to the master servicer.
"Rating Agency" means any of Duff & Phelps Credit Rating Co., Fitch
IBCA, Inc., Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services.
"RCRA" means the Resource Conservation and Recovery Act.
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"Record Date" means the last business day of the month immediately
preceding the month in which the Distribution Date for a class of certificates
occurs.
"Refinance Loans" means mortgage loans made to refinance existing
loans.
"Related Proceeds" means related recoveries on the mortgage loans,
including amounts received under any form of Credit Support, for which advances
were made.
"Relief Act" means the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"REMIC Certificates" means a certificate issued by a trust fund
relating to a series of certificate where an election is made to treat the trust
fund as a REMIC.
"REMIC Provisions" means provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Internal Revenue Code of
1986, as amended from time to time, and related provisions, and regulations
(including any proposed regulations) and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Regular Certificates" means REMIC Certificates issued by the
trust fund that qualify as REMIC Certificates and are considered to be regular
interests.
"REMIC Regular Certificateholders" means holders of REMIC Regular
Certificates.
"REMIC Regulations" means the REMIC regulations promulgated by the
Treasury Department.
"REMIC Residual Certificates" means the sole class of residual
interests in the REMIC.
"REMIC Residual Certificateholders" means holders of REMIC Regular
Certificates.
"REO Extension" means the extension of time the IRS grants to sell the
mortgaged property.
"REO Tax" means a tax on "net income from foreclosure property," within
the meaning of Section 857(b)(4)(B) of the Code.
"Restricted Group" means the Seller, depositor, any underwriter, any
servicer, the trustee, any insurer of the mortgage loans or MBS, any borrower
whose obligations under one or more mortgage loans constitute more than 5% of
the aggregate unamortized principal balance of the assets in the trust fund, or
any of their respective affiliates.
"Retained Interest" means an interest in an asset which represents a
specified portion of the interest payable. The Retained Interest will be
deducted from borrower payments as received and will not be part of the related
trust fund.
"RICO" means the Racketeer Influenced and Corrupt Organizations
statute.
"Senior Certificates" means certificates which are senior to one or
more other classes of certificates in respect of certain distributions on the
certificates.
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"Servicing Standard" means:
A. the standard for servicing the servicer must follow as defined
by the terms of the related Pooling Agreement and any related
hazard, business interruption, rental interruption or general
liability insurance policy or instrument of Credit Support
included in the related trust fund as described in this
prospectus under "Description of Credit Support" and in the
prospectus supplement;
B. applicable law; and
C. the general servicing standard specified in the related
prospectus supplement or, if no such standard is so specified,
its normal servicing practices.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"SMMEA Certificates" means "mortgage related securities" for purposes
of SMMEA.
"Special Servicer" means an entity as named in the prospectus
supplement.
"Stripped ARM Obligations" means OID on grantor trust certificates
attributable to adjustable rate loans
"Stripped Bond Certificates" means a class of grantor trust
certificates that represents the right to principal and interest, or principal
only, on all or a portion of the mortgage loans or MBS, if a trust fund is
created with two classes of grantor trust certificates.
"Stripped Coupon Certificates" means a class of grantor trust
certificates that represents the right to some or all of the interest on a
portion of the mortgage loans or MBS, if a trust fund is created with two
classes of grantor trust certificates.
"Stripped Interest Certificates" means certificates which are entitled
to interest distributions with disproportionately low, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled
to principal distributions with disproportionately low, nominal or no interest
distributions.
"Subordinate Certificates" means certificates which are subordinate to
one or more other classes of certificates in respect of certain distributions on
the certificates.
"Subservicer" means third-party servicers.
"Subservicing Agreement" means a sub-servicing agreement between a
master servicer and a Subservicer.
"Super-Premium Certificates" means certain REMIC Regular Certificates
to be issued at prices significantly exceeding their principal amounts or based
on notional principal balances.
"Title V" means Title V of the depository Institutions Deregulation and
Monetary Control Act of 1980.
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"Trust Agreement" means the Agreement under certificates of a series
evidencing interests in a trust fund not including Whole Loans will be issued.
"Trust Fund" means the trust fund created by the Agreement consisting
primarily of:
o mortgage Loans
o MBS
o direct obligations of the United States, agencies thereof or
agencies created thereby which are not subject to redemption
prior to maturity at the option of the issuer and are (a)
interest-bearing securities, (b) non-interest-bearing
securities, (c) originally interest-bearing securities from
which coupons representing the right to payment of interest
have been removed, or (d) government securities, or
o a combination of mortgage loans, MBS and government
securities.
"Underlying MBS" means any mortgage participations, pass-through
certificates or other asset-backed certificates in which an MBS evidences an
interest or which secure an MBS.
"Underlying Mortgage Loans" means the mortgage loans that secure, or
the interests in which are evidenced by, MBS.
"U.S. Person" means a citizen or resident of the United States, a
corporation or a partnership organized in or under the laws of the United States
or any political subdivision thereof (other than a partnership that is not
treated as a U.S. Person under any applicable Treasury regulations), an estate
the income of which from sources outside the United States is included in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States or a trust if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust. In addition, certain trusts
treated as U.S. Persons before August 20, 1996 may elect to continue to be so
treated to the extent provided in regulations.
"Value" means,
(a) with respect to any mortgaged property other than a mortgaged
property securing a Refinance Loan, generally the lesser of
o the appraised value determined in an appraisal obtained by the
originator at origination of that loan, and
o the sales price for that property; and
(b) with respect to any Refinance Loan, unless otherwise specified in
the related prospectus supplement, the appraised value determined in an
appraisal obtained at the time of origination of the Refinance Loan.
"Warranting Party" means the person making representations and
warranties.
"Whole Loans" means the mortgage loans that are not Underlying Mortgage
Loans.
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